Document:

exv10w24

 

Exhibit 10.24

January 20, 2006

Mr. John Thuma

21 Clark Drive

San Mateo, CA 94401

Dear John:

This letter sets forth the terms of the agreement (the “Agreement”) that iPass Inc. (“iPass” or the
“Company”) is offering to you to aid in your employment transition in connection with the Company’s
merger with GoRemote Internet Communications, Inc. (“GRIC”) (the “Merger”).

     1.     Separation. Upon the Closing of the Merger (as that term is defined in the Merger
Agreement), your employment with the Company will continue under the terms and conditions contained
herein. Your employment will end upon the earliest to occur of the following: (i) termination of
this Agreement as provided in Paragraph 2(g) herein; or (ii) September 1, 2006 (either of which
shall be deemed the “Separation Date” if and when it occurs). On the Separation Date, the Company
will pay you all accrued salary and all accrued and unused vacation earned through the Separation
Date, subject to standard payroll deductions and withholdings.

     2.     Transition Period.

             (a)     Duties. Between now and the Separation Date (the “Transition Period”), you will continue
to work for the Company as its Vice President, Sales Integration. You will use your best efforts
to perform your current duties and responsibilities and/or such other duties as the Company’s Chief
Executive Officer, or his designees, may request. In addition, you will provide support and use
your best efforts to assist in the successful transition and integration of GRIC and iPass. After
the closing of the Merger, you will report to Tom Thimot, Senior Vice President of Worldwide Sales.
During the Transition Period, you will comply with the terms of this Agreement, the Company’s
policies, and the terms of your Employee Proprietary Information and Inventions Agreement (which is
attached hereto as Exhibit A).

             (b)      Compensation. During the Transition Period, the Company will continue to compensate you
for your services by paying your current full-time semi-monthly base salary of $10,416.67 and
paying you any variable compensation that you earn for Q1 and Q2 2006 pursuant to the terms of the
variable compensation plan. In addition, on the Separation Date, the Company will pay you a single
lump sum amount of $20,833, which is equal to two (2) months of your variable on-target
compensation for the months of July and August 2006. These payments will be subject to standard
payroll deductions and withholdings.

 

 

John Thuma

Page 2

             (c)     Benefits. During the Transition Period, you will be eligible to continue your current
Company benefits subject to the terms and limitations of the applicable plans. In light of this
Agreement, however, you will not be eligible for any severance benefits pursuant to the Company’s
current or future severance benefit plans unless the Company expressly states in writing that you
shall be entitled to such benefits.

             (d)     Stock Options. During the Transition Period, your stock options granted by the Company
will continue to vest according to the terms of the applicable plan documents and stock option
agreements. Any accelerated vesting provisions contained in your stock option agreements with the
Company shall not be affected by this Agreement and shall remain in full force and effect.

             (e)     Other Activities. During the Transition Period, you agree not to engage in any employment
or business activity that is competitive with, or would otherwise conflict with, employment by the
Company, or that could violate your duty of loyalty to the Company. Such competitive activity
would include, without limitation, any solicitation or hiring of any current iPass employees,
consultants, or independent contractors, either directly or indirectly, personally or through
others.

             (f)     Employment Agreement. During the Transition Period, the terms and conditions of your
employment will be as set forth herein. Accordingly, the terms set forth in this Agreement shall
supersede and replace the terms and conditions set forth in any other agreement you may have with
the Company, including your employment offer letter dated June 27, 2000 (“the Employment
Agreement”).

             (g)     Employment Status.

                      (i)     At-Will Employment. Your employment during the Transition Period will continue to be on
an at-will basis, meaning that either you or the Company may terminate your employment at any time,
with or without cause, and with or without advance notice.

                      (ii)   Change in Duties and Responsibilities. You acknowledge and agree that any change in
your duties and responsibilities as set forth in this Agreement shall not constitute a constructive
termination, resignation for good reason, or any other such triggering event for purposes of any
existing change of control agreements, stock option plans, or severance agreements you may have
with iPass.

                      (iii)  Severance Benefits If Employment Terminated Before September 1, 2006. If you resign
your employment during the Transition Period, or the Company elects to terminate your employment
during the Transition Period even though you have met all of your obligations under this Agreement,
then you shall be eligible to receive the Severance Benefits set forth in Paragraph 3 herein
subject to the terms of Paragraph 3.

 

 

John Thuma

Page 3

     3.      Severance Benefits. If you execute the Employment Termination Release attached hereto as
Exhibit B (the “Release”) on the Separation Date; and, allow the Release to become effective, then
the Company will provide you with the following severance benefits within ten (10) days of the
Separation Date:

             (a)     Severance Payment. The Company will pay you as severance a single lump sum amount equal
to: (a) three (3) months of your base salary ($62,500), and (b) three (3) months of your variable
on-target compensation ($31,250) (the “Severance Payment”). The Severance Payment will be subject
to standard payroll deductions and withholdings.

             (b)     Health Care Reimbursement. To the extent provided by the federal COBRA law or, if
applicable, state insurance laws, and by the Company’s current group health insurance policies, you
will be eligible to continue your group health insurance benefits at your own expense following the
Separation Date. Later, you may be able to convert to an individual policy through the provider of
the Company’s health insurance, if you wish. You will be provided with a separate notice
describing your rights and obligations under the applicable state and/or federal insurance laws.
As an additional severance benefit, if you timely elect continued coverage under COBRA, then the
Company will pay the premiums necessary to continue your current health care coverage for a period
of twelve (12) months following the Separation Date (the “COBRA Payments”). The COBRA Payments
cease if you become eligible for benefits under another employer’s medical benefit plan. You agree
to notify the Company in writing within three (3) days of such eligibility.

        4.     Expense Reimbursements. You agree that within thirty (30) days of the Separation Date you
will submit your final documented expense reimbursement statement reflecting all business expenses
you incurred through your last date of employment, if any, for which you seek reimbursement. The
Company will reimburse you for these expenses pursuant to its regular business practice.

        5.     No Other Compensation or Benefits. You acknowledge that, except as expressly provided in
this Agreement, you will not receive any additional compensation, bonuses, equity interests or
vesting, severance or other benefits after the Separation Date.

        6.     Return of Company Property. On the Separation Date, you agree to return to the Company all
Company documents (and all copies thereof) and other Company property which you have had in your
possession at any time, including, but not limited to, all Company files, notes, drawings, records,
business plans and forecasts, financial information, specifications, computer-recorded information,
tangible property, credit cards, entry cards, identification badges and keys; and any materials of
any kind which contain or embody any proprietary or confidential information of the Company (and
all reproductions thereof). Notwithstanding the foregoing, on the Separation Date you will be
allowed to keep your Company laptop computer as your own personal property provided that on or
before the Separation Date, you allow the Company’s IT personnel to remove any and all Company
information contained on that computer.

 

 

John Thuma

Page 4

     7.     Proprietary Information Obligations. You agree that, during the Transition Period and
thereafter, you will abide by your continuing obligations under your Employee Proprietary
Information and Inventions Agreement.

     8.     Nondisparagement. You agree not to disparage the Company and the Company’s officers,
directors, employees, shareholders and agents, in any manner likely to be harmful to them or their
business, business reputation or personal reputation; provided that you may respond accurately and
fully to any question, inquiry or request for information consistent with your obligations under
this Agreement.

     9.     Nonsolicitation. During the Transition Period and for a one (1) year period
following the Separation Date, you agree not to interfere with the business of the Company by
directly or indirectly soliciting, enticing, inducing, or encouraging, or attempting to solicit,
entice, induce or encourage any employee, consultant or independent contractor of the Company to
terminate his, her or its employment or relationship with the Company in order to become an
employee, consultant or independent contractor to or for any other person or entity.

     10.   Release of Claims. In exchange for the consideration under this Agreement to which you
would not otherwise be entitled, including but not limited to the continuation of your at-will
employment and the Severance Benefits set forth herein, you hereby generally and completely release
the Company and its parent or subsidiary entities, successors, predecessors and affiliates, and its
and their current or former directors, officers, employees, shareholders, agents, attorneys,
insurers, affiliates and assigns, from any and all claims, liabilities and obligations, both known
and unknown, that arise from or are in any way related to events, acts, conduct, or omissions
occurring at any time prior to and including the date you sign this Agreement. This general
release includes, but is not limited to: (a) all claims arising out of or in any way related to
your employment with the Company or the decision to terminate that employment; (b) all claims
related to your compensation or benefits from the Company, including salary, bonuses, commissions,
vacation pay, expense reimbursements, severance payments, fringe benefits, stock, stock options, or
any other ownership or equity interests in the Company; (c) all claims for breach of contract,
wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all
tort claims, including but not limited to claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (e) all federal, state, and local statutory claims,
including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act of 1967 (as
amended) (the “ADEA”), the California Labor Code, and the California Fair Employment and Housing
Act. You represent that you have no lawsuits, claims or actions pending in your name, or on behalf
of any other person or entity, against the Company or any other person or entity subject to the
release granted in this paragraph. Notwithstanding anything in this paragraph, you are not hereby
releasing the Company from any obligation it may otherwise have to indemnify you for your acts

 

 

John Thuma

Page 5

within the course and scope of your employment with the Company, nor from any obligations
undertaken by the Company in this Agreement.

     11.   ADEA Waiver. You hereby acknowledge that you are knowingly and voluntarily
waiving and releasing any rights you may have under the ADEA and that the consideration given for
the waiver and release in the preceding paragraph is in addition to anything of value to which you
were already entitled. You further acknowledge that you have been advised by this writing, as
required by the ADEA, that: (a) your waiver and release do not apply to any rights or claims that
may arise after you sign this Agreement; (b) you should consult with an attorney prior to executing
this Agreement (although you may voluntarily decide not to do so); (c) you have twenty-one (21)
days within which to consider this Agreement (although you may choose to voluntarily execute this
Agreement earlier); (d) you have seven (7) days following the execution of this Agreement to revoke
this Agreement (in a written revocation sent to the President of the Company); and (e) this
Agreement will not be effective until the eighth day after this Agreement has been signed both by
you and by the Company (the “Effective Date”).

     12.   Section 1542 Waiver. In giving the releases set forth in this Agreement, which include
claims which may be unknown to you at present, you acknowledge that you have read and understand
Section 1542 of the California Civil Code which reads as follows: “A general release does not
extend to claims which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his settlement with the
debtor.” You hereby expressly waive and relinquish all rights and benefits under that section and
any law or legal principle of similar effect in any jurisdiction with respect to the releases
granted herein, including but not limited to the release of unknown and unsuspected claims granted
in this Agreement.

     13.   Miscellaneous. This Agreement, including Exhibits A and B, constitutes the complete,
final and exclusive embodiment of the entire agreement between you and the Company with regard to
this subject matter. It is entered into without reliance on any promise or representation, written
or oral, other than those expressly contained herein, and it supersedes any other such promises,
warranties or representations. This Agreement may not be modified or amended except in a writing
signed by both you and a duly authorized officer of the Company. This Agreement shall bind the
heirs, personal representatives, successors and assigns of both you and the Company, and inure to
the benefit of both you and the Company, their heirs, successors and assigns. If any provision of
this Agreement is determined to be invalid or unenforceable, in whole or in part, this
determination will not affect any other provision of this Agreement and the provision in question
shall be modified by the court so as to be rendered enforceable in a manner consistent with the
intent of the parties insofar as possible under applicable law. This Agreement shall be deemed to
have been entered into and shall be construed and enforced in accordance with the laws of the State
of California as applied to contracts made and to be performed entirely within California. Any
ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver
of a breach of this Agreement, or rights hereunder, shall be in

 

 

John Thuma

Page 6

writing and shall not be deemed to be a waiver of any successive breach or rights hereunder.
This Agreement may be executed in counterparts which shall be deemed to be part of one original,
and facsimile signatures will suffice as original signatures.

If this Agreement is acceptable to you, please sign below and return the original to me.
Additionally, if you sign the Release attached hereto as Exhibit B on or after your final date of
employment with the Company, please return the signed original of the Release to me.

Sincerely,

	 	 	 	 	 
	iPass Inc.

 	 	 
	By:  	/s/ J. Michael Badgis
 	 	 
	 	J. Michael Badgis 	 	 
	 	Vice President, Human Resources 	 	 
	 

Exhibit A – Employee Proprietary Information and Inventions Agreement

Exhibit B – Employment Termination Release

	 	 	 	 	 
	Accepted and Agreed:

 	 	 
	/s/ John Thuma
 	 	 
	John Thuma 	 	 
	 
	 
	Dated:	 	  1/20/06 	 
	 

 

 

EXHIBIT A

EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

 

iPass Inc.

EMPLOYEE PROPRIETARY INFORMATION

AND INVENTIONS AGREEMENT

     In consideration of my employment or continued employment by iPass Inc. (the
"Company”), and the compensation now and hereafter paid to me, I hereby agree as follows:

1     Nondisclosure

     1.1 Recognition of Company’s Rights; Nondisclosure. At all times during my employment and
thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish
any of the Company’s Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or unless an officer of the
Company expressly authorizes such in writing. I will obtain Company’s written approval before
publishing or submitting for publication any material (written, verbal, or otherwise) that relates
to my work at Company and/or incorporates any Proprietary Information. I hereby assign to the
Company any rights I may have or acquire in such Proprietary Information and recognize that all
Proprietary Information shall be the sole property of the Company and its assigns.

     1.2 Proprietary Information. The term “Proprietary Information” shall mean any and all
confidential and/or proprietary knowledge, data or information of the Company. By way of
illustration but not limitation, “Proprietary Information” includes (a) trade secrets, inventions,
mask works, ideas, processes, formulas, source and object codes, data, programs, other works of
authorship, know-how, improvements, discoveries, developments, designs and techniques (hereinafter
collectively referred to as “Inventions”); and (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and unpublished financial
statements, licenses, prices and costs, suppliers and customers; and (c) information regarding the
skills and compensation of other employees of the Company. Notwithstanding the foregoing, it is
understood that, at all such times, I am free to use information which is generally known in the
trade or industry, which is not gained as result of a breach of this Agreement, and my own, skill,
knowledge, know-how and experience to whatever extent and in whichever way I wish.

     1.3 Third Party Information. I understand, in addition, that the Company has received and in
the future will receive from third parties confidential or proprietary information (“Third Party
Information”) subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and will not disclose
to anyone (other than Company personnel who need to know such information in connection with their
work for the Company) or use, except in connection with my work for the Company, Third Party
Information unless expressly authorized by an officer of the Company in writing.

     1.4 No Improper Use of Information of Prior Employers and Others. During my employment by the
Company I will not improperly use or disclose any confidential information or trade secrets, if
any, of any former employer or any other person to whom I have an obligation of confidentiality,
and I will not bring onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to whom I have an obligation of
confidentiality unless consented to in writing by that former employer or person. I will use in
the performance of my duties only information which is generally known and used by persons with
training and experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

2     Assignment of Inventions.

     2.1 Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret, patent,
copyright, mask work and other intellectual property rights throughout the world.

     2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the
commencement of my employment with the Company are excluded from the scope of this Agreement. To
preclude any possible uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all Inventions that I have, alone or jointly with others, conceived,
developed or reduced to practice or caused to be conceived, developed or reduced to practice prior
to the commencement of my employment with the Company, that I consider to be my property or the
property of third parties and that I wish to
have excluded from the scope of this Agreement (collectively referred to as “Prior Inventions”).
If disclosure of any such Prior Invention would

© Cooley Godward 1996

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cause me to violate any prior confidentiality
agreement, I understand that I am not to list such Prior Inventions in Exhibit B but am only to
disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs and
the fact that full disclosure as to such inventions has not been made for that reason. A space is
provided on Exhibit B for such purpose. If no such disclosure is attached, I represent that there
are no Prior Inventions. If, in the course of my employment with the Company, I incorporate a
Prior Invention into a Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to
sublicense through multiple tiers of sublicensees) to make, have made, modify, use and sell such
Prior Invention. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to
be incorporated, Prior Inventions in any Company Inventions without the Company’s prior written
consent.

     2.3 Assignment of Inventions. Subject to Sections 2.4, and 2.6, I hereby assign and agree to
assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice
or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest
in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not
patentable or registrable under copyright or similar statutes, made or conceived or reduced to
practice or learned by me, either alone or jointly with others, during the period of my employment
with the Company. Inventions assigned to the Company, or to a third party as directed by the
Company pursuant to this Section 2, are hereinafter referred to as “Company Inventions.”

     2.4 Nonassignable Inventions. This Agreement does not apply to an Invention which qualifies
fully as a nonassignable Invention under Section 2870 of the California Labor Code (hereinafter
"Section 2870”). I have reviewed the notification on Exhibit A (Limited Exclusion Notification)
and agree that my signature acknowledges receipt of the notification.

     2.5 Obligation to Keep Company Informed. During the period of my employment and for six (6)
months after termination of my employment with the Company, I will promptly disclose to the Company
fully and in writing all Inventions authored, conceived or reduced to practice by me, either alone
or jointly with others. In addition, I will promptly disclose to the Company all patent
applications filed by me or on my behalf within a year after termination of employment. At the
time of each such disclosure, I will advise the Company in writing of any Inventions that I believe
fully qualify for protection under Section 2870; and I will at that time provide to the Company in
writing all evidence necessary to substantiate that belief. The Company will keep in confidence
and will not use for any purpose or disclose to third parties without my consent any confidential
information disclosed in writing to the Company pursuant to this Agreement relating to Inventions
that qualify fully for protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection under Section 2870.

     2.6 Government or Third Party. I also agree to assign all my right, title and interest in and
to any particular Invention to a third party, including without limitation the United States, as
directed by the Company.

     2.7 Works for Hire. I acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of my employment and which are protectable by
copyright are “works made for hire,” pursuant to United States Copyright Act (17 U.S.C., Section
101).

     2.8 Enforcement of Proprietary Rights. I will assist the Company in every proper way to
obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to
Company Inventions in any and all countries. To that end I will execute, verify and deliver such
documents and perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify
and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation
to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any
and all countries shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually spent by me at the
Company’s request on such assistance.

     In the event the Company is unable for any reason, after reasonable effort, to secure my
signature on any document needed in connection with the actions specified in the preceding
paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act
for and in my behalf to execute, verify and file any such documents and to do all other lawfully
permitted acts to further the purposes of the preceding paragraph with the same legal force and
effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of
any nature whatsoever, which
I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the
Company.

3.     Records. I agree to keep and maintain adequate and

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current records (in the
form of notes, sketches, drawings and in any other form that may be required by the Company) of all
Proprietary Information developed by me and all Inventions made by me during the period of my
employment at the Company, which records shall be available to and remain the sole property of the
Company at all times.

4.     Additional Activities. I agree that during the period of my employment by the
Company I will not, without the Company’s express written consent, engage in any employment or
business activity which is competitive with, or would otherwise conflict with, my employment by the
Company. I agree further that for the period of my employment by the Company and for one (l) year
after the date of termination of my employment by the Company I will not induce any employee of the
Company to leave the employ of the Company.

5.     No Conflicting Obligation. I represent that my performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any agreement to keep in
confidence information acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any agreement either written
or oral in conflict herewith.

6.     Return of Company Documents. When I leave the employ of the Company, I will deliver to
the Company any and all drawings, notes, memoranda, specifications, devices, formulas, and
documents, together with all copies thereof, and any other material containing or disclosing any
Company Inventions, Third Party Information or Proprietary Information of the Company. I further
agree that any property situated on the Company’s premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject to inspection by
Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the
Company in completing and signing the Company’s termination statement.

7.     Legal and Equitable Remedies. Because my services are personal and unique and because
I may have access to and become acquainted with the Proprietary Information of the Company, the
Company shall have the right to enforce this Agreement and any of its provisions by injunction,
specific performance or other equitable relief, without bond and without prejudice to any other
rights and remedies that the Company may have for a breach of this Agreement.

8.     Notices. Any notices required or permitted hereunder shall be given to the appropriate
party at the address specified below or at such other address as the party shall specify in
writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if
sent by certified or registered mail, three (3) days after the date of mailing.

9.     Notification of New Employer. In the event that I leave the employ of the Company, I
hereby consent to the notification of my new employer of my rights and obligations under this
Agreement.

10.     General Provisions.

     10.1 Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by and
construed according to the laws of the State of California, as such laws are applied to agreements
entered into and to be performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal courts located in Santa
Clara County, California for any lawsuit filed there against me by Company arising from or related
to this Agreement.

     10.2 Severability. In case any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement,
and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to
the extent compatible with the applicable law as it shall then appear.

     10.3 Successors and Assigns. This Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of the Company, its
successors, and its assigns.

     10.4 Survival. The provisions of this Agreement shall survive the termination of my
employment and the assignment of this Agreement by the Company to any successor in interest or
other assignee.

     10.5 Employment. I agree and understand that nothing in this Agreement shall confer any right
with respect to continuation of employment by the Company, nor shall it interfere in any way with
my right or the Company’s right to terminate my employment at any time, with or without cause.

     10.6 Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of
any preceding or succeeding breach. No waiver by the Company of any right

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under this Agreement
shall be construed as a waiver of any other right. The Company shall not be required to give
notice to enforce strict adherence to all terms of this Agreement.

     10.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of this Agreement shall
apply to any time during which I was previously employed, or am in the future employed, by the
Company as a consultant if no other agreement governs nondisclosure and assignment of inventions
during such period. This Agreement is the final, complete and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes and merges all prior discussions between
us. No modification of or amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.

     This Agreement shall be effective as of the first day of my employment with the Company,
namely: 7/17/2000.

     I have read this Agreement carefully and understand its terms. I have completely filled
out Exhibit B to this Agreement.

Dated: 7/17/00                                        

/s/ John P. Thuma                                 

Signature

John P. Thuma                                       

(Printed Name)

Accepted and Agreed To:

iPass Inc.

By: /s/ Levie Tarantino                          

3800 Bridge Parkway                             

(Address)

Redwood City, CA 94065                      

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Exhibit A

LIMITED EXCLUSION NOTIFICATION

     This is to notify you in accordance with Section 2872 of the California Labor Code
that the foregoing Agreement between you and the Company does not require you to assign or offer to
assign to the Company any invention that you developed entirely on your own time without using the
Company’s equipment, supplies, facilities or trade secret information except for those inventions
that either:

     (1) Relate at the time of conception or reduction to practice of the invention to the
Company’s business, or actual or demonstrably anticipated research or development of the Company;

     (2) Result from any work performed by you for the Company.

     To the extent a provision in the foregoing Agreement purports to require you to assign an
invention otherwise excluded from the preceding paragraph, the provision is against the public
policy of this state and is unenforceable.

     This limited exclusion does not apply to any patent or invention covered by a contract between
the Company and the United States or any of its agencies requiring full title to such patent or
invention to be in the United States.

     I acknowledge receipt of a copy of this notification.

By: John P. Thuma                                        

(Printed Name of Employee)

Date:
7/17/00                                                   

Witnessed by:

Levie Tarantino                                        

(Printed Name of Representative)

Dated: 7/17/00                                           

© Cooley Godward 1996

A-1

 

Exhibit B

	 	 	 	 
	TO:

	 	iPass Inc.	 
	 
	 	 	 
	FROM:

	 	John P. Thuma	 
	 

	 	 	 
	 
	 	 	 
	DATE:

	 	7/17/00	 
	 

	 	 	 
	 
	 	 	 
	SUBJECT:

	 	Previous Inventions	 

     1. Except as listed in Section 2 below, the following is a complete list of all inventions or
improvements relevant to the subject matter of my employment by iPass Inc. (the “Company”) that
have been made or conceived or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:

	 	þ	 	No inventions or improvements.
	 
	 	o	 	See below:

	 	 	 	 
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	o	 	Additional sheets attached.

     2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1
above with respect to inventions or improvements generally listed below, the proprietary rights and
duty of confidentiality with respect to which I owe to the following party(ies):

	 	 	 	 	 	 	 
	 	 	Invention or Improvement	 	Party(ies)	 	Relationship
	 
	 	 	 	 	 	 
	1.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	2.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

	o	 	Additional sheets attached.

© Cooley Godward 1996

B-1

 

EXHIBIT B

EMPLOYMENT TERMINATION RELEASE

(to be signed on or after the Separation Date)

I understand that my employment with iPass, Inc. (the “Company”) terminated effective September 1,
2006. I also understand that, pursuant to the separation letter agreement between me and the
Company, which I signed on _______________, 2006 (the “Agreement”), I am required to sign
this Employment Termination Release (“Release”) in exchange for certain benefits under the
Agreement. I further understand that, regardless of whether I sign this Release, the Company will
pay me all accrued salary and vacation earned through my termination date, to which I am entitled
by law.

I hereby generally and completely release the Company and its current or former directors,
officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent
and subsidiary entities, insurers, affiliates, and assigns from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in any way related to events, acts,
conduct, or omissions occurring prior to my signing this Release. This general release includes,
but is not limited to: (1) all claims arising out of or in any way related to my employment with
the Company or the termination of that employment; (2) all claims related to my compensation or
benefits from the Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company; (3) all claims for breach of contract, wrongful termination, and breach
of the implied covenant of good faith and fair dealing, including claims arising under the
Employment Agreement; (4) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal, state, and local
statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or
other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans
with Disabilities Act of 1990 (as amended), the Age Discrimination in Employment Act of 1967
(“ADEA”), the California Labor Code, and the California Fair Employment and Housing Act (as
amended). I understand that I am not hereby releasing the Company from any obligation it may
otherwise have to indemnify me for my acts within the course and scope of my employment with the
Company, nor from any obligations undertaken by the Company in the Agreement.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under
the ADEA, as amended. I also acknowledge that the consideration given for the waiver and release
in the preceding paragraph hereof is in addition to anything of value to which I was already
entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may arise after the
execution date of this Release; (b) I have been advised hereby that I have the right to consult
with an attorney prior to executing this Release (although I may choose not to do so); (c) I have
forty-five (45) days to consider this Release (although I may choose to voluntarily execute this
Release earlier); (d) I have seven (7) days following the execution of this Release to revoke the
Release in a writing to the Company; and (e) this Release will not be effective until the date

 

 

upon which the revocation period has expired, which will be the eighth day after this Release is
executed by me (“Employment Termination Release Effective Date”).

I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. In giving
this release, which includes claims that may be unknown to me at present, I acknowledge that I have
read and understand Section 1542 of the California Civil Code which reads as follows: “A general
release does not extend to claims which the creditor does not know or suspect to exist in his favor
at the time of executing the release, which if known by him must have materially affected his
settlement with the debtor.” I expressly waive and relinquish all rights and benefits under that
section and any law of any jurisdiction of similar effect with respect to my release of any unknown
or unsuspected claims I may have against the Company.

Having read and understood the foregoing, I hereby agree to the terms and conditions stated
above.

 
 

John Thuma

 
 

Dateexv4w1

 

EXHIBIT 4.1

EXECUTION COPY

PIER 1 IMPORTS, INC.,

THE SUBSIDIARY GUARANTORS PARTIES HERETO,

AND

JPMorgan Chase Bank, National Association,

AS TRUSTEE

6.375% Convertible Senior Notes due 2036

INDENTURE

Dated as of February 14, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE 1
	 	 	 	 
	Definitions And Incorporation By Reference
	 	 	 	 
	 
	 	 	 	 
	Section 1.01. Definitions

	 	 	1	 
	Section 1.02. Other Definitions

	 	 	9	 
	Section 1.03. Incorporation by Reference of Trust Indenture Act

	 	 	10	 
	Section 1.04. Rules of Construction

	 	 	11	 
	 
	 	 	 	 
	ARTICLE 2
	 	 	 	 
	The Securities
	 	 	 	 
	 
	 	 	 	 
	Section 2.01. Title; Amount and Issue of Securities; Principal and Interest

	 	 	11	 
	Section 2.02. Form of Securities

	 	 	13	 
	Section 2.03. Legends

	 	 	13	 
	Section 2.04. Execution and Authentication

	 	 	17	 
	Section 2.05. Registrar and Paying Agent

	 	 	19	 
	Section 2.06. Paying Agent to Hold Money in Trust

	 	 	19	 
	Section 2.07. Securityholder Lists

	 	 	20	 
	Section 2.08. General Provisions Relating to Transfer and Exchange

	 	 	20	 
	Section 2.09. Book-Entry Provisions for the Global Securities

	 	 	21	 
	Section 2.10. Special Transfer Provisions

	 	 	23	 
	Section 2.11. Mutilated, Destroyed, Lost or Stolen Securities

	 	 	24	 
	Section 2.12. Outstanding Securities

	 	 	25	 
	Section 2.13. Temporary Securities

	 	 	26	 
	Section 2.14. Cancellation

	 	 	26	 
	Section 2.15. Payment of Interest; Defaulted Interest

	 	 	27	 
	Section 2.16. Computation of Interest

	 	 	28	 
	Section 2.17. Cusip and ISIN Numbers

	 	 	28	 
	 
	 	 	 	 
	ARTICLE 3
	 	 	 	 
	Covenants
	 	 	 	 
	 
	 	 	 	 
	Section 3.01. Payment of Securities

	 	 	29	 
	Section 3.02. Financial Statements

	 	 	29	 
	Section 3.03. Maintenance of Office or Agency

	 	 	30	 
	Section 3.04. Corporate Existence

	 	 	30	 
	Section 3.05. Payment of Taxes and Other Claims

	 	 	30	 
	Section 3.06. Compliance Certificate

	 	 	31	 
	Section 3.07. Further Instruments and Acts

	 	 	31	 
	Section 3.08. Statement by Officers as to Default

	 	 	31	 
	Section 3.09. Additional Interest

	 	 	31	 

ii

 

	 	 	 	 	 
	 	 	Page
	ARTICLE 4
	 	 	 	 
	 Successor Company
	 	 	 	 
	 
	 	 	 	 
	Section 4.01. Consolidation, Merger and Sale of Assets

	 	 	32	 
	 
	 	 	 	 
	ARTICLE 5
	 	 	 	 
	 Redemption Of Securities
	 	 	 	 
	 
	 	 	 	 
	Section 5.01. Optional Redemption

	 	 	33	 
	Section 5.02. Election to Redeem; Notice to Trustee

	 	 	33	 
	Section 5.03. Selection by Trustee of Securities to be Redeemed

	 	 	33	 
	Section 5.04. Notice of Redemption

	 	 	34	 
	Section 5.05. Deposit of Redemption Price

	 	 	35	 
	Section 5.06. Securities Payable on Redemption Date

	 	 	35	 
	Section 5.07. Securities Redeemed in Part

	 	 	36	 
	 
	 	 	 	 
	ARTICLE 6
	 	 	 	 
	 Defaults And Remedies
	 	 	 	 
	 
	 	 	 	 
	Section 6.01. Events of Default

	 	 	36	 
	Section 6.02. Acceleration

	 	 	38	 
	Section 6.03. Other Remedies

	 	 	39	 
	Section 6.04. Waiver of Past Defaults

	 	 	39	 
	Section 6.05. Control by Majority

	 	 	39	 
	Section 6.06. Limitation on Suits

	 	 	40	 
	Section 6.07. Rights of Holders to Receive Payment

	 	 	40	 
	Section 6.08. Collection Suit by Trustee

	 	 	40	 
	Section 6.09. Trustee May File Proofs of Claim

	 	 	41	 
	Section 6.10. Priorities

	 	 	41	 
	Section 6.11. Restoration of Rights and Remedies

	 	 	41	 
	Section 6.12. Undertaking of Costs

	 	 	42	 
	 
	 	 	 	 
	ARTICLE 7
	 	 	 	 
	Trustee
	 	 	 	 
	 
	 	 	 	 
	Section 7.01. Duties of Trustee

	 	 	42	 
	Section 7.02. Rights of Trustee

	 	 	43	 
	Section 7.03. Individual Rights of Trustee

	 	 	44	 
	Section 7.04. Trustee’s Disclaimer

	 	 	45	 
	Section 7.05. Notice of Defaults

	 	 	45	 
	Section 7.06. Reports by Trustee to Holders

	 	 	45	 
	Section 7.07. Compensation and Indemnity

	 	 	45	 
	Section 7.08. Replacement of Trustee

	 	 	46	 
	Section 7.09. Successor Trustee by Merger

	 	 	47	 
	Section 7.10. Eligibility; Disqualification

	 	 	48	 

iii

 

	 	 	 	 	 
	 	 	Page
	Section 7.11. Preferential Collection of Claims Against Company

	 	 	48	 
	Section 7.12. Trustee’s Application for Instruction from the Company

	 	 	48	 
	 
	 	 	 	 
	ARTICLE 8
	 	 	 	 
	 Discharge Of Indenture
	 	 	 	 
	 
	 	 	 	 
	Section 8.01. Discharge of Liability on Securities

	 	 	48	 
	Section 8.02. Reinstatement

	 	 	49	 
	Section 8.03. Officers’ Certificate; Opinion of Counsel

	 	 	50	 
	 
	 	 	 	 
	ARTICLE 9
	 	 	 	 
	Amendments
	 	 	 	 
	 
	 	 	 	 
	Section 9.01. Without Consent of Holders

	 	 	50	 
	Section 9.02. With Consent of Holders

	 	 	51	 
	Section 9.03. Compliance with Trust Indenture Act

	 	 	52	 
	Section 9.04. Revocation and Effect of Consents and Waivers

	 	 	52	 
	Section 9.05. Notation on or Exchange of Securities

	 	 	53	 
	Section 9.06. Trustee to Sign Amendments

	 	 	53	 
	 
	 	 	 	 
	ARTICLE 10
	 	 	 	 
	 Subsidiary Guarantee
	 	 	 	 
	 
	 	 	 	 
	Section 10.01. Subsidiary Guarantee

	 	 	54	 
	Section 10.02. Limitation on Liability; Termination, Release and Discharge Upon Merger or Consolidation; Termination on Conversion

	 	 	56	 
	Section 10.03. Right of Contribution

	 	 	57	 
	Section 10.04. No Subrogation

	 	 	57	 
	 
	 	 	 	 
	ARTICLE 11
	 	 	 	 
	 Purchase at Option of Holder Upon a Fundamental
	 	 	 	 
	 Change; Purchase at the Option of Holders
	 	 	 	 
	 
	 	 	 	 
	Section 11.01. Purchase at the Option of the Holder Upon a Fundamental Change

	 	 	58	 
	Section 11.02. Purchase of Securities at the Option of the Holder

	 	 	60	 
	Section 11.03. Further Conditions and Procedures for Purchase at the Option of the Holder Upon a Fundamental Change and Purchase of
Securities at the Option of the Holder

	 	 	62	 
	 
	 	 	 	 
	ARTICLE 12
	 	 	 	 
	 Conversion
	 	 	 	 
	 
	 	 	 	 
	Section 12.01. Conversion of Securities

	 	 	66	 
	Section 12.02. Adjustments to Conversion Rate

	 	 	70	 
	Section 12.03. Adjustment Upon Certain Fundamental Changes

	 	 	77	 

iv

 

	 	 	 	 	 
	 	 	Page
	Section 12.04. Conversion After a Public Acquirer Change of Control

	 	 	79	 
	Section 12.05. Effect of Reclassification, Consolidation, Merger or Sale

	 	 	80	 
	Section 12.06. Responsibility of Trustee

	 	 	82	 
	Section 12.07. Notice to Holders Prior to Certain Actions

	 	 	83	 
	Section 12.08. Stockholder Rights Plan

	 	 	83	 
	 
	 	 	 	 
	ARTICLE 13
	 	 	 	 
	 Miscellaneous
	 	 	 	 
	 
	 	 	 	 
	Section 13.01. Trust Indenture Act Controls

	 	 	84	 
	Section 13.02. Notices

	 	 	84	 
	Section 13.03. Communication by Holders with other Holders

	 	 	85	 
	Section 13.04. Certificate and Opinion as to Conditions Precedent

	 	 	85	 
	Section 13.05. Statements Required in Certificate or Opinion

	 	 	86	 
	Section 13.06. When Securities Disregarded

	 	 	86	 
	Section 13.07. Rules by Trustee, Paying Agent and Registrar

	 	 	86	 
	Section 13.08. Legal Holidays

	 	 	86	 
	Section 13.09. Governing Law; Waiver of Jury Trial

	 	 	87	 
	Section 13.10. No Recourse Against Others

	 	 	87	 
	Section 13.11. Successors

	 	 	87	 
	Section 13.12. Multiple Originals

	 	 	87	 
	Section 13.13. Qualification of Indenture

	 	 	87	 
	Section 13.14. Table of Contents; Headings

	 	 	88	 
	Section 13.15. Severability Clause

	 	 	88	 

EXHIBIT A            Form of the Security

EXHIBIT B            Form of Indenture Supplement to Add Subsidiary Guarantors

v

 

     INDENTURE dated as of February 14, 2006, among PIER 1 IMPORTS, INC., a Delaware corporation
(the “Company”), THE SUBSIDIARY GUARANTORS (as defined herein) and JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, as Trustee (the “Trustee”).

     Each party agrees as follows for the benefit of the other parties and for the equal and
ratable benefit of the Holders of the Company’s 6.375% Convertible Senior Notes due 2036 (the
“Securities”) on the date hereof and the guarantees thereof by the Subsidiary Guarantors.

ARTICLE 1

Definitions And Incorporation By Reference

     Section 1.01. Definitions.

     “Additional Interest” means all amounts, if any, payable pursuant to Section 2 of the
Registration Rights Agreement.

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling,
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; provided, however, that the existence of a
management contract by the Company or an Affiliate of the Company to manage another entity shall
not be deemed to be control.

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

     “Beneficial Owner” shall mean any person who is considered a beneficial owner of a security in
accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act.

     “Board of Directors” means, as to any Person, the board of directors of such Person or any
duly authorized committee thereof.

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

 

 

     “Business Day” means each day that is not a Saturday, Sunday or other day on which banking
institutions in New York, New York, Dallas, Texas or Houston, Texas are authorized or required by
law to close.

     “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, including any Preferred Stock, but excluding any debt securities convertible
into such equity.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Common Equity” of any Person means capital stock of such Person that is generally entitled to
(1) vote in the election of directors of such Person or (2) if such Person is not a corporation,
vote or otherwise participate in the selection of the governing body, partners, managers or others
that will control the management or policies of such Person.

     “Common Stock” means the Company’s Common Stock, par value $1.00 per share.

     “Company” means Pier 1 Imports, Inc. or its successors and assigns.

     “Continuing Director” means a director who either was a member of the Company’s board of
directors on February 8, 2006 or who becomes a director of the Company subsequent to that date and
whose election, appointment or nomination for election by stockholders of the Company, is duly
approved by a majority of the Continuing Directors on the board of directors of the Company at the
time of such approval, either by a specific vote or by approval of the proxy statement issued by
the Company on behalf of the entire board of directors of the Company in which such individual is
named as nominee for director.

     “Conversion Agent” means the office or agency appointed by the Company where Securities may be
presented for conversion. The Conversion Agent appointed by the Company shall initially be the
Trustee.

     “Conversion Price” means, in respect of each $1,000 principal amount of Securities, $1,000
divided by the Conversion Rate, as may be adjusted from time to time as set forth herein.

     “Conversion Rate” means, in respect of each $1,000 principal amount of Securities, initially
65.8328 shares of Common Stock, subject to adjustments as set forth herein.

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

2

 

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

     “Definitive Securities” means certificated Securities that are not Global Securities.

     “DTC” means The Depository Trust Company, its nominees and their respective successors and
assigns, or such other depository institution hereinafter appointed by the Company pursuant to the
terms of this Indenture.

     “Ex-Dividend Date” means, in respect of a dividend or distribution to holders of Common Stock,
the first date upon which a sale of the Common Stock does not automatically transfer the right to
receive the relevant dividend or distribution from the seller of the Common Stock to its buyer.

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

     “Fair Market Value” means the amount that a willing buyer would pay a willing seller in an
arm’s length transaction.

     A “Fundamental Change” shall be deemed to have occurred at such time after the original
issuance of the Securities as any of the following occurs:

	 	(1)	 	any “person” or “group” within the meaning of Section 13(d) of the Exchange
Act, other than the Company, any Subsidiary of the Company or any employee benefit
plan of the Company or any such Subsidiary, files a Schedule TO or any other
schedule, form or report under the Exchange Act disclosing that such person or group
has become the direct or indirect ultimate Beneficial Owner of Common Equity of the
Company representing more than 50% of the voting power of the Company’s Common
Equity;
	 
	 	(2)	 	consummation of any share exchange, consolidation or merger of the Company
pursuant to which the Common Stock will be converted into cash, securities or other
property or any sale, lease or other transfer (in one transaction or a series of
transactions) of all or substantially all of the consolidated assets of the Company
and its Subsidiaries, taken as a whole, to any Person other than one of the Company’s
Subsidiaries; provided, however, that a transaction where the holders of more than
50% of all classes of the Company’s Common Equity immediately prior to such
transaction own, directly or indirectly, more than 50% of all classes of Common
Equity of the continuing or surviving corporation or transferee immediately after such event shall not be a Fundamental
Change;

3

 

	 	 	 	 
	 
	 	(3)	 	Continuing Directors cease to constitute at least a majority of the
Company’s board of directors;
	 
	 	(4)	 	the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
	 
	 	(5)	 	the Company’s Common Stock ceases to be listed on a national securities
exchange or quoted on the Nasdaq National Market or another established automated
over-the-counter trading market in the United States;

provided, however, that a Fundamental Change shall not be deemed to have occurred if at least 90%
of the consideration, excluding cash payments for fractional shares, in the transaction or
transactions constituting the Fundamental Change consists of shares of common stock traded on a
national securities exchange or quoted on the Nasdaq National Market or which shall be so traded or
quoted when issued or exchanged in connection with such Fundamental Change (such securities being
referred to as “Publicly Traded Securities”) and as a result of such transaction or transactions
the Securities become convertible into such Publicly Traded Securities (excluding cash payments for
fractional shares) pursuant to the terms of this Indenture.

     “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 as in effect from time to time.

     “Global Securities” means certificated Securities in global form, without interest coupons,
substantially in the form of Exhibit A hereto and registered in the name of DTC or a nominee of
DTC.

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

     “Indenture” means this Indenture, as amended or supplemented from time to time.

     “Initial Purchaser” means J.P. Morgan Securities Inc., as initial purchaser under the Purchase
Agreement.

     “Issue Date” means February 14, 2006.

4

 

     “Last Reported Sale Price” of the Common Stock on any date means the closing sale price per
share (or, if no closing sale price is reported, the average of the bid and ask prices or, if more
than one in either case, the average of the average bid and average ask prices) on that date as
reported in the composite transactions for the principal U.S. securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a U.S. national or regional
securities exchange, as reported by the Nasdaq National Market.

     If the Common Stock is not listed for trading on a U.S. national or regional securities
exchange and not reported by the Nasdaq National Market on the relevant date, the Last Reported
Sale Price shall be the last quoted bid price for the Common Stock in the over-the-counter market
on the relevant date as reported by the National Quotation Bureau or similar organization.

     If the Common Stock is not so quoted, the Last Reported Sale Price shall be the average of the
mid-point of the last bid and ask prices for the Common Stock on the relevant date from each of at
least three nationally recognized independent investment banking firms selected by the Company for
this purpose.

     “Majority Owned” means having “beneficial ownership” (as defined in Rule 13(d)(3) under the
Exchange Act) of more than 50% of the total voting power of all shares of the respective entity’s
Common Equity. “Majority Owner” has the correlative meaning.

     “Market Disruption Event” means (i) failure by the primary United States national securities
exchange or market on which the Common Stock is listed or admitted to trading to open for trading
during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York
City time, on any scheduled Trading Day for the Common Stock for an aggregate one half hour period
of any suspension or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by the stock exchange or otherwise) in the Common Stock or in any options,
contracts or future contracts relating to the Common Stock.

     “Observation Period” means, with respect to a conversion of any Security, the 25 consecutive
Trading-Day period beginning on and including the second Trading Day immediately following the
Conversion Date for such Security, except that with respect to any Conversion Date for a Security
occurring after the date of issuance of a notice of redemption pursuant to Article 5, the
Observation Period shall be the 25 consecutive Trading Days beginning on and including the
twenty-eighth scheduled Trading Day prior to the applicable Redemption Date.

     “Offering Memorandum” means the offering memorandum, dated February 8, 2006, relating to the
offering by the Company of the Securities.

5

 

     “Officer” means the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company. The
term Officer of any Subsidiary Guarantor has a correlative meaning.

     “Officers’ Certificate” means a certificate signed by two Officers or attorneys-in-fact or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company or the
Subsidiary Guarantors, as applicable.

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

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

     “Preferred Stock”, as applied to the Capital Stock of any corporation, means Capital Stock of
any class or classes (however designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such corporation.

     “Public Acquirer Change of Control” means a Fundamental Change of the type set forth in clause
(2) in the definition thereof in which the acquirer has a class of common stock traded on any U.S.
national securities exchange or quoted on the Nasdaq National Market or which will be so traded or
quoted when issued or exchanged in connection with such Fundamental Change (the “Public Acquirer
Common Stock”). If an acquirer does not itself have a class of common stock satisfying the
foregoing requirement, it shall be deemed to have Public Acquirer Common Stock if a corporation
that directly or indirectly is the Majority Owner of the acquirer has a class of common stock
satisfying the foregoing requirement; in such case, all references to Public Acquirer Common Stock
shall refer to such class of common stock.

     “Public Acquirer Common Stock” has the meaning assigned to it in the definition of Public
Acquirer Change of Control in this Section 1.01.

     “Publicly Traded Securities” has the meaning provided in the definition of Fundamental Change
in this Section 1.01.

     “Purchase Agreement” means the Purchase Agreement dated as of February 8, 2006 between the
Company and the Initial Purchaser relating to the initial purchase and sale of the Securities.

6

 

     “QIB” means any “qualified institutional buyer” (as term is defined in Rule 144A).

     “Record Date” means, in respect of a dividend or distribution to holders of Common Stock, the
date fixed for determination of holders of Common Stock entitled to receive such dividend or
distribution.

     “Redemption Date” means, with respect to any redemption of Securities, the date of redemption
with respect thereto.

     “Registration Rights Agreement” means the Registration Rights Agreement dated as of the Issue
Date among the Initial Purchaser, the Subsidiary Guarantors and the Company.

     “Regular Record Date” for the payment of interest on the Securities (including Additional
Interest, if any), means the February 1 (whether or not a Business Day) next preceding an interest
payment date on February 15 and the August 1 (whether or not a Business Day) next preceding an
interest payment date on August 15.

     “Rule 144A” means Rule 144A under the Securities Act.

     “SEC” means the United States Securities and Exchange Commission.

     “Securities” has the meaning ascribed to it in the second introductory paragraph of this
Indenture.

     “Securities Act” means the Securities Act of 1933 (15 U.S.C. §§ 77a – 77aa), as amended, and
the rules and regulations of the SEC promulgated thereunder.

     “Securities Custodian” means the custodian with respect to the Global Security (as appointed
by DTC), or any successor Person thereto and shall initially be the Trustee.

     “Securities Register” means the register of Securities, maintained by the Registrar, pursuant
to Section 2.05.

     “Senior Credit Facility” means (i) the Credit Agreement dated as of November 22, 2005, among
the Company, Pier 1 Imports (U.S.), Inc., Pier 1 Kids, Inc., the borrowers named therein, Bank of
America, N.A., as administrative and collateral agent, and the lenders named therein and (ii) any
amendment, modification, renewal, extension or refinancing thereof.

     “Shelf Registration Statement” shall have the meaning contemplated by and in accordance with
the terms of the Registration Rights Agreement.

7

 

     “Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary” of the
Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

     “Stated Maturity” means, with respect to any security, the date specified in such security as
the fixed date on which the payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision, but shall not include any contingent obligations to
repay, redeem or repurchase any such principal prior to the date originally scheduled for the
payment thereof.

     “Stock Price” means, in respect of a Fundamental Change, the price per share of Common Stock
paid in connection with such Fundamental Change, which shall be equal to (i) if such Fundamental
Change is a transaction set forth in clause (2) of the definition thereof, and holders of Common
Stock receive only cash in such transaction, the cash amount paid per share of Common Stock and
(ii) in all other cases, the average of the Last Reported Sale Prices of Common Stock over the five
Trading-Day period ending on the Trading Day preceding the effective date of such Fundamental
Change.

     “Subsidiary” of the Company means (i) a corporation a majority of whose Capital Stock with
voting power, under ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by the Company, by the Company and one or more Subsidiaries of the Company or by
one or more Subsidiaries of the Company or (ii) any other Person (other than a corporation) in
which the Company, one or more Subsidiaries of the Company or the Company and one or more
Subsidiaries of the Company, directly or indirectly, at the date of determination thereof, has
greater than a 50% ownership interest.

     “Subsidiary Guarantee” means, individually, the guarantee of payment of the Securities by a
Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto
(including pursuant to Exhibit B), and, collectively, all such guarantees. Each such Subsidiary
Guarantee will be in the form prescribed by this Indenture.

     “Subsidiary Guarantor” means each Subsidiary of the Company that is a party to the Senior
Credit Facility as of the date hereof, as set forth in Schedule B hereto, and any other Subsidiary
that executes a Subsidiary Guarantee in accordance with the provisions of this Indenture; provided,
however, that upon the release and discharge of any Person from its Subsidiary Guarantee in
accordance with this Indenture, such Person shall cease to be a Subsidiary Guarantor;

8

 

     “TIA” or “Trust Indenture Act” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa
77bbbb), as in effect on the date of this Indenture, except as provided in Section 9.03.

     “Trading Day” means a day during which (i) trading in the Common Stock generally occurs, (ii)
there is no Market Disruption Event and (iii) a Last Reported Sale Price for the Common Stock may
be obtained for that day.

     “Trustee” means the party named as such in this Indenture until a successor replaces it and,
thereafter, means the successor.

     “Trust Officer” means, when used with respect to the Trustee, the officer within the corporate
trust department of the Trustee having direct responsibility for the administration of this
Indenture.

     “UCC” means the Uniform Commercial Code as in effect in the State of New York.

     Section 1.02. Other Definitions.

	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“Additional Shares”

	 	 	12.03	 
	“Adjustment Event”

	 	 	12.02	(m)
	“Agent”

	 	 	3.03	 
	“Agent Members”

	 	 	2.09	 
	“Authenticating Agent”

	 	 	2.04	 
	“Certificate of Destruction”

	 	 	2.14	 
	“Company Notice”

	 	 	11.03	(a)
	“Company Notice Date”

	 	 	11.03	(a)
	“Company Order”

	 	 	2.04	 
	“Conversion Date”

	 	 	12.01	(b)
	“cross acceleration provision”

	 	 	6.01	 
	“Daily Settlement Amount”

	 	 	12.01	(c)
	“Daily Conversion Value”

	 	 	12.01	(c)
	“Daily VWAP”

	 	 	12.01	(c)
	“Defaulted Interest”

	 	 	2.15	 
	“Determination Date”

	 	 	12.02	(m)
	“Effective Date”

	 	 	12.03	(b)
	“Event of Default”

	 	 	6.01	 
	“Expiration Time”

	 	 	12.02	(e)
	“Fundamental Change Purchase Date”

	 	 	11.01	 
	“Fundamental Change Purchase Notice”

	 	 	11.01	(b)
	“Fundamental Change Purchase Price”

	 	 	11.01	 
	“Global Security Legend”

	 	 	2.03	 

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	 	 	Defined in
	Term	 	Section
	“Initial Dividend Rate”

	 	 	12.02	(d)
	“judgment default provision”

	 	 	6.01	 
	“Legal Holiday”

	 	 	13.08	 
	“Obligations”

	 	 	10.01	 
	“Paying Agent”

	 	 	2.05	 
	“Purchase Date”

	 	 	11.02	(a)
	“Purchase Notice”

	 		11.02	(a)(i)
	“Purchase Price”

	 	 	11.02	(a)
	“Reorganization Event”

	 	 	12.05	(a)
	“Reference Property”

	 	 	12.05	(a)
	“Registrar”

	 	 	2.05	 
	“Redemption Price”

	 	 	5.01	 
	“Restricted Securities”

	 	 	2.03	(a)
	“Restricted Securities Legend”

	 	 	2.03	(a)
	“Settlement Amount”

	 	 	12.01	(c)
	“Special Interest Payment Date”

	 	 	2.15	(a)
	“Special Record Date”

	 	 	2.15	(a)
	“Spin-Off”

	 	 	12.02	(c)
	“Successor Company”

	 	 	4.01	(a)

     Section 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is subject
to the mandatory provisions of the TIA which are incorporated by reference in and made a part of
this Indenture. The following TIA terms have the following meanings:

     “Commission” means the SEC.

     “indenture securities” means the Securities.

     “indenture security holder” means a Securityholder.

     “indenture to be qualified” means this Indenture.

     “indenture trustee” or “institutional trustee” means the Trustee.

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

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

10

 

     Section 1.04. Rules of Construction. Unless the context otherwise requires:

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

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

     (c) “or” is not exclusive;

     (d) “including” means including without limitation;

     (e) words in the singular include the plural and words in the plural include the singular;

     (f) the principal amount of any non-interest bearing or other discount security at any date
shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated
such date prepared in accordance with GAAP; and

     (g) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of
such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater.

ARTICLE 2

The Securities

     Section 2.01. Title; Amount and Issue of Securities; Principal and Interest. (a) The
Securities shall be known and designated as the “6.375% Convertible Senior Notes due 2036” of the
Company. The aggregate principal amount of Securities which may be authenticated and delivered
under this Indenture is initially limited to $165.0 million, except for Securities authenticated
and delivered upon registration of, transfer of, or in exchange for, or in lieu of other Securities
pursuant to Section 2.03, Section 2.04, Section 2.08 2.09, 2.10, 2.11, 2.13, 5.07, 9.05, 11.03, or
12.01; provided that additional Securities may be issued in an unlimited aggregate principal amount
from time to time thereafter as set forth pursuant to Section 2.04. The Securities shall be
issuable in denominations of $1,000 or integral multiples thereof.

     (b) The Securities shall mature on February 15, 2036.

     (c) Interest on the Securities shall accrue from and including the date specified on the face
of such Securities until the principal thereof is paid or made available for payment. Interest shall be payable semi-annually in arrears on February 15 and
August 15 in each year, commencing August 15, 2006.

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     (d) A Holder of any Security after 5:00 p.m., New York City time, on a Regular Record Date
shall be entitled to receive interest (including any Additional Interest), on such Security on the
corresponding interest payment date. Holders of Securities after 5:00 p.m., New York City time, on
a Regular Record Date will receive payment of interest (including any Additional Interest) payable
on the corresponding interest payment date notwithstanding the conversion of such Securities at any
time after the close of business on such Regular Record Date. Securities surrendered for
conversion during the period after 5:00 p.m., New York City time, on any Regular Record Date to
9:00 a.m., New York City time, on the corresponding interest payment date must be accompanied by
payment of an amount equal to the interest (including any Additional Interest) that the Holder is
to receive on the Securities. Notwithstanding the foregoing, no such payment of interest
(including any Additional Interest) need be made by any converting Holder (i) if the Company has
specified a Redemption Date that is after a Regular Record Date and on or prior to the third
Trading Day after the corresponding interest payment date, (ii) if the Company has specified a
Fundamental Change Purchase Date during such period, or (iii) to the extent of any overdue interest
(including any Additional Interest) existing at the time of conversion of such Security. Except
where Securities surrendered for conversion must be accompanied by payment as described above, no
interest or Additional Interest on converted Securities will be payable by the Company on any
interest payment date subsequent to the date of conversion and delivery of the cash and shares of
Common Stock, if applicable, pursuant to Article 12 hereunder, together with any cash payment for
any fractional share, upon conversion will be deemed to satisfy the Company’s obligation to pay the
principal amount of the Securities and accrued and unpaid interest and Additional Interest, if any,
to, but not including, the related Conversion Date.

     (e) Principal of and interest (including Additional Interest, if any) on, Global Securities
shall be payable to DTC in immediately available funds.

     (f) Principal on Definitive Securities shall be payable at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan, The City of New York, initially the
corporate trust office of the Trustee at 4 New York Plaza, New York, New York 10004. Interest
(including Additional Interest, if any), on Definitive Securities will be payable (i) to Holders
having an aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these
Securities and (ii) to Holders having an aggregate principal amount of more than $5,000,000, either
by check mailed to each Holder or, upon application by a Holder to the Registrar not later than the
relevant Regular Record Date, by wire transfer in immediately available funds to that Holder’s
account within the United States, which application shall remain in effect until the Holder notifies,
in writing, the Registrar to the contrary.

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     Section 2.02. Form of Securities.

     (a) Except as otherwise provided pursuant to this Section 2.02, the Securities are issuable in
fully registered form without coupons in substantially the form of Exhibit A hereto, with such
applicable legends as are provided for in Section 2.03. The Securities are not issuable in bearer
form. The terms and provisions contained in the form of Security shall constitute, and are hereby
expressly made, a part of this Indenture and to the extent applicable, the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. Any of the Securities may have such letters,
numbers or other marks of identification and such notations, legends and endorsements as the
officers executing the same may approve (execution thereof to be conclusive evidence of such
approval) and as are not inconsistent with the provisions of this Indenture, or as may be required
to comply with any law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange or automated quotation system on which the Securities may be
listed or designated for issuance, or to conform to usage.

     (b) The Securities shall be issued initially in the form of one or more permanent Global
Securities, with the applicable legends as provided in Section 2.03. Each Global Security shall be
duly executed by the Company and authenticated and delivered by the Trustee, and shall be
registered in the name of DTC or its nominee and retained by the Trustee, as Securities Custodian,
at its corporate trust office, for credit to the accounts of the Agent Members holding the
Securities evidenced thereby. The aggregate principal amount of the Global Securities may from
time to time be increased or decreased by adjustments made on the records of the Trustee, as
Securities Custodian, and of DTC or its nominee, as hereinafter provided.

     Section 2.03. Legends.

     (a) Restricted Securities Legends. Each Security issued hereunder shall, upon issuance, bear
the legend set forth in Section 2.03(a)(i), and each Common Stock certificate representing shares
of the Common Stock issued upon conversion of any Security issued hereunder, shall, upon issuance,
unless as otherwise set forth below, bear the legend set forth in Section 2.03(a)(ii) (each such
legend, a “Restricted Securities Legend”), and such legend shall not be removed except as provided
in Section 2.03(a)(iii). Each Security that bears or is required to bear the Restricted Securities
Legend set forth in Section 2.03(a)(i) (together with each Common Stock certificate representing
shares of the Common Stock issued upon conversion of such Security that bears or is required to
bear the

13

 

Restricted Securities Legend set forth in Section 2.03(a)(ii), collectively, the “Restricted
Securities”) shall be subject to the restrictions on transfer set forth in this Section 2.03(a)
(including the Restricted Securities Legend set forth below), and the Holder of each such
Restricted Security, by such Holder’s acceptance thereof, shall be deemed to have agreed to be
bound by all such restrictions on transfer.

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

     (i) Restricted Securities Legend for Securities.

     Except as provided in Section 2.03(a)(iii), any certificate evidencing such Security (and all
Securities issued in exchange therefor or substitution thereof, other than stock certificates
representing shares of the Common Stock, if any, issued upon conversion thereof which shall bear
the legend set forth in Section 2.03(a)(ii), if applicable) shall bear a Restricted Securities
Legend in substantially the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF
SUCH SECURITY, EXCEPT (A) TO THE COMPANY; (B) UNDER A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES ACT) THAT IS PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH RULE 144A
(IF AVAILABLE); (D) THROUGH OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT; OR (E) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) IT WILL, PRIOR TO ANY TRANSFER OF THIS
SECURITY FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS MAY BE REQUIRED PURSUANT TO THE INDENTURE 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. AS USED HEREIN, THE TERM “UNITED STATES” HAS THE
MEANING GIVEN TO IT BY REGULATION S UNDER THE SECURITIES ACT.”

14

 

     (ii) Restricted Securities Legend for the Common Stock Issued Upon Conversion of the
Securities.

     Each stock certificate representing Common Stock issued upon conversion of Securities bearing
a Restricted Securities Legend will, subject to the availability of a Shelf Registration Statement
and registration thereunder as set forth in the Registration Rights Agreement, bear the following
legend:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER; (B) UNDER A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A ADOPTED
UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER
QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH RULE 144A (IF AVAILABLE); (D) THROUGH OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT; OR (E) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT; AND (2) IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY FURNISH TO THE TRANSFER
AGENT AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERM “UNITED
STATES” HAS THE MEANING GIVEN TO IT BY REGULATION S UNDER THE SECURITIES ACT.”

     (iii) Removal of the Restricted Securities Legends.

     The Restricted Securities Legend may be removed from any Security or any Common Stock
certificate representing shares of the Common Stock issued upon conversion of any Security if there
is delivered to the Company such

15

 

satisfactory evidence, which may include an opinion of independent counsel, as may be
reasonably required by the Company, that neither such legend nor the restrictions on transfer set
forth therein are required to ensure that transfers of such Security or shares of the Common Stock
issued upon conversion of Securities, as the case may be, will not violate the registration
requirements of the Securities Act or the qualification requirements under any state securities
laws. Upon provision of such satisfactory evidence, at the written direction of the Company, (i)
in the case of a Security, the Trustee shall authenticate and deliver in exchange for such Security
another Security or Securities having an equal aggregate principal amount that does not bear such
legend or (ii) in the case of a Common Stock certificate representing shares of the Common Stock,
the transfer agent for the Common Stock shall authenticate and deliver in exchange for the Common
Stock certificate or certificates representing such shares of Common Stock bearing such legend, one
or more new Common Stock certificates representing a like aggregate number of shares of Common
Stock that do not bear such legend. If the Restricted Securities Legend has been removed from a
Security or Common Stock certificates representing shares of the Common Stock issued upon
conversion of any Security as provided above, no other Security issued in exchange for all or any
part of such Security, or no other Common Stock certificates issued in exchange for such Common
Stock shall bear such legend, unless the Company has reasonable cause to believe that such other
Security is a “restricted security” (or such shares of Common Stock are “restricted securities”)
within the meaning of Rule 144 and instructs the Trustee in writing to cause a Restricted
Securities Legend to appear thereon.

     Any Security (or Security issued in exchange or substitution therefor) as to which the
conditions for removal of the Restricted Securities Legend set forth in Section 2.03(a)(i) as set
forth therein have been satisfied may, upon surrender of such Security for exchange to the
Registrar in accordance with the provisions of Section 2.08, be exchanged for a new Security or
Securities, of like tenor and aggregate principal amount, which shall not bear the Restricted
Securities Legend required by Section 2.03(a)(i).

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

     (iv) Global Security Legend

16

 

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

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, 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.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO IN THE TERMS OF SECURITIES ATTACHED HERETO.”

     (v) Legend for Definitive Securities

     Definitive Securities, in addition to the legend set forth in Section 2.03(a)(ii), will also
bear a legend substantially in the following form:

“THIS SECURITY WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL SECURITY
UNLESS THE HOLDER OF THIS SECURITY, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD NO SECURITIES.”

     Section 2.04. Execution and Authentication. One Officer shall sign the Securities for the
Company by manual or facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.

     A Security shall not be valid until an authorized signatory of the Trustee manually
authenticates the Security. The signature of the Trustee on a Security shall be conclusive
evidence that such Security has been duly and validly authenticated and issued under this
Indenture. A Security shall be dated the date of its authentication.

17

 

     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 in an unlimited aggregate principal amount
to the Trustee for authentication, together with a written order of the Company signed by two
Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company (the “Company Order”) for the authentication and delivery of such Securities, and the
Trustee in accordance with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise. All Securities issued on the Issue Date shall be
identical in all respects with any such Securities authenticated and delivered thereafter, other
than issue dates, the date from which interest accrues, appropriate CUSIP numbers or other
identifying notations and any changes relating thereto. Notwithstanding anything to the contrary
contained in this Indenture, subject to Section 2.12, all Securities issued under this Indenture
shall vote and consent together on all matters as one class and no series of Securities will have
the right to vote or consent as a separate class on any matter.

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

     In case the Company or any Subsidiary Guarantor, pursuant to Article 4 or Section 10.02, shall
be consolidated or merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to any Person, and the
successor Person resulting from such consolidation, or surviving such merger, or into which the
Company or any Subsidiary Guarantor shall have been merged, or the Person which shall have received
a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article 4, any of the Securities authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition
may, from time to time, at the request of the successor Person, be exchanged for other Securities
executed in the name of the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Order of the successor Person,
shall authenticate and deliver Securities as specified in such order for the purpose of such
exchange. If Securities shall at any time be authenticated and delivered in any new name of a

18

 

successor Person pursuant to this Section 2.04 in exchange or substitution for or upon
registration of transfer of any Securities, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Securities at the time outstanding
for Securities authenticated and delivered in such new name.

     Section 2.05. Registrar and Paying Agent. The Company shall maintain an office or agency
where Securities may be presented for registration of transfer or for exchange (the “Registrar”)
and an office or agency where Securities may be presented for payment (the “Paying Agent”). The
Company shall cause each of the Registrar and the Paying Agent to maintain an office or agency in
the Borough of Manhattan, The City of New York. The Registrar shall keep a register of the
Securities and of their transfer and exchange (the “Securities Register”). The Company may have
one or more co-registrars and one or more additional paying agents. The term “Paying Agent”
includes any additional paying agent and the term “Registrar” includes any co-registrar.

     The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent
or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The
agreement shall implement the provisions of this Indenture that relate to such agent. The Company
shall notify the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07. The Company or any of its domestically
organized, wholly owned Subsidiaries may act as Paying Agent, Registrar, co registrar or transfer
agent.

     The Company initially appoints the Trustee as Registrar and Paying Agent for the Securities.
The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or
Paying Agent and to the Trustee; provided, however, that no such removal shall become effective
until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement
entered into by the Company and such successor Registrar or successor Paying Agent, as the case may
be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve
as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i)
above. The Registrar or Paying Agent may resign at any time upon written notice to the Company and
the Trustee.

     Section 2.06. Paying Agent to Hold Money in Trust. By no later than 11:00 a.m., New York
City time, on the date on which any principal of or interest and Additional Interest, if any, on
any Security is due and payable, the Company shall deposit with the Paying Agent a sum sufficient
in immediately available funds to pay such principal or interest (including any Additional
Interest), when due. The Company shall require each Paying Agent (other than the Trustee) to

19

 

agree in writing that such Paying Agent shall hold in trust for the benefit of Securityholders
or the Trustee all money held by such Paying Agent for the payment of principal of or interest
(including any Additional Interest), on the Securities and shall notify the Trustee in writing of
any default by the Company or any Subsidiary Guarantor in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and
hold it as a separate trust fund. The Company at any time may require a Paying Agent (other than
the Trustee) to pay all money held by it to the Trustee and to account for any funds disbursed by
such Paying Agent. Upon complying with this Section 2.06, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money delivered to the Trustee.
Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee
shall serve as Paying Agent for the Securities.

     Section 2.07. Securityholder 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
Securityholders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar,
or to the extent otherwise required under the TIA, the Company, on its own behalf and on behalf of
each of the Subsidiary Guarantors, shall furnish or cause the Registrar to furnish to the Trustee,
in writing at least five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders and the Company shall otherwise
comply with TIA § 312(a).

     Section 2.08. General Provisions Relating to Transfer and Exchange. The Securities are
issuable only in registered form. A Holder may transfer a Security only by written application to
the Registrar stating the name of the proposed transferee and otherwise complying with the terms of
this Indenture. No such transfer shall be effected until, and such transferee shall succeed to the
rights of a Holder only upon, final acceptance and registration of the transfer by the Registrar in
the Securities Register. Furthermore, any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interests in such Global Security may be
effected only through a book-entry system maintained by the Holder of such Global Security (or its
agent) and that ownership of a beneficial interest in the Global Security shall be required to be
reflected in a book-entry.

     When Securities are presented to the Registrar with a request to register the transfer or to
exchange them for an equal aggregate principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as requested if its
requirements for such transactions are met (including that such Securities are duly endorsed or
accompanied by a written instrument of transfer duly executed by the Holder

20

 

thereof or by an attorney who is authorized in writing to act on behalf of the Holder).
Subject to Section 2.04, to permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Securities at the Registrar’s request. No service
charge shall be made for any registration of transfer or exchange or redemption of the Securities,
but the Company may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such transfer taxes or other
similar governmental charge payable upon exchanges in connection with which a Security is issued to
a Person other than the Holder submitting the Security for exchange).

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

     (a) for a period of 15 days prior to the mailing of a notice of redemption of Securities
selected for redemption under Article 5;

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

     (c) surrendered for conversion or, if a portion of any Security is surrendered for conversion,
the portion thereof surrendered for conversion.

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

     Section 2.09. Book-Entry Provisions for the Global Securities. (a) The Global Securities
initially shall:

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

     (ii) be delivered to the Trustee as custodian for DTC;

     (iii) bear the Restricted Securities Legend set forth in Section 2.03(a)(i); and

     (iv) bear the Global Security Legend set forth in Section 2.03(a)(iv).

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

     (b) The 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 which a Holder is entitled to take under this Indenture or the Securities.

     (c) A Global Security may not be transferred, in whole or in part, to any Person other than
DTC (or a nominee thereof), and no such transfer to any such other Person may be registered.
Beneficial interests in a Global Security may be transferred in accordance with the rules and
procedures of DTC and the provisions of Section 2.10.

     (d) If at any time:

     (i) DTC notifies the Company in writing that it is unwilling or unable to continue to
act as depositary for the Global Securities and a successor depositary for the Global
Securities is not appointed by the Company within 90 days of such notice;

     (ii) DTC ceases to be registered as a “clearing agency” under the Exchange Act and a
successor depositary for the Global Securities is not appointed by the Company within 90
days of such cessation;

     (iii) the Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the Definitive Securities under this Indenture in exchange for all
or any part of the Securities represented by a Global Security or Global Securities,
subject to the procedures of DTC; or

     (iv) an Event of Default has occurred and is continuing and the Registrar has
received a request from DTC for the issuance of Definitive Securities in exchange for such
Global Security or Global Securities;

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

     (e) Notwithstanding the foregoing, in connection with any transfer of beneficial interests in
a Global Security to the beneficial owners thereof pursuant to Section 2.09(d), the Registrar shall
reflect on its books and records the date and a decrease in the principal amount of such Global
Security in an amount equal to the principal amount of the beneficial interests in such Global
Security to be transferred.

     Section 2.10. Special Transfer Provisions. Unless a Security is no longer a Restricted
Security, the following provisions shall apply to any sale, pledge or other transfer of such
Securities:

     (a) Transfer of Securities to a QIB.

     The following provisions shall apply with respect to the registration of any proposed transfer
of Securities to a QIB:

     (i) If the Securities to be transferred consist of a beneficial interest in the
Global Securities, the transfer of such interest may be effected only through the
book-entry systems maintained by DTC.

     (ii) If the Securities to be transferred consist of Definitive Securities, the
Registrar shall register the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Security stating (or has
otherwise advised the Company and the Registrar in writing) that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed a certification
stating or has otherwise advised the Company and the Registrar in writing that:

     (A) it is purchasing the Securities for its own account or an account with
respect to which it exercises sole investment discretion;

     (B) it and any such account is a QIB within the meaning of Rule 144A;

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

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

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

     (b) General.

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

     The Registrar shall retain copies of all certifications, letters, notices and other written
communications received pursuant to Section 2.09 hereof or this Section 2.10. The Company shall
have the right to inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written notice to the
Registrar.

     Section 2.11. Mutilated, Destroyed, Lost or Stolen Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the requirements of Section 8-405 of the UCC are met, such that the
Securityholder (a) satisfies the Company or the Trustee within a reasonable time after such
Securityholder has notice of such loss, destruction or wrongful taking and the Registrar has not
registered a transfer prior to receiving such notification, (b) makes such request to the Company
or Trustee prior to the Security being

24

 

acquired by a protected purchaser as defined in Section 8-303 of the UCC and (c) satisfies any
other reasonable requirements of the Trustee. Such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent and the Registrar from any loss which any of them may suffer if a Security is
replaced, and, in the absence of notice to the Company, any Subsidiary Guarantor or the Trustee
that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon
Company Order the Trustee shall authenticate and make available for delivery, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount, bearing a number not contemporaneously outstanding.

     In case any such mutilated, destroyed, lost or stolen Security has become due and payable, the
Company in its discretion may, instead of issuing a new Security, pay such Security.

     Upon the issuance of any new Security under this Section 2.11, the Company may require the
payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee)
in connection therewith.

     Every new Security issued pursuant to this Section 2.11 in lieu of any mutilated, destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company, any Subsidiary Guarantor (if applicable) and any other obligor upon the Securities,
whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this Indenture equally and ratably with any and
all other Securities duly issued hereunder.

     The provisions of this Section 2.11 are exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities.

     Section 2.12. Outstanding Securities. Securities outstanding at any time are all Securities
authenticated by the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.12 as not outstanding. A Security does not
cease to be outstanding in the event the Company or a Subsidiary of the Company holds the Security;
provided, however, that (i) for purposes of determining which Securities are outstanding for
consent or voting purposes hereunder, the provisions of Section 13.06 shall apply and (ii) in
determining whether the Trustee shall be protected in making a determination whether the Holders of
the requisite principal amount of outstanding Securities are present at a meeting of Holders of
Securities for quorum purposes or have consented to or voted in favor of any request, demand,
authorization, direction,

25

 

notice, consent, waiver, amendment or modification hereunder, or relying upon any such quorum,
consent or vote, only Securities which a Trust Officer of the Trustee actually knows to be held by
the Company or an Affiliate of the Company shall not be considered outstanding.

     If a Security is replaced or paid pursuant to Section 2.11, it ceases to be outstanding unless
the Trustee and the Company receive proof satisfactory to them that the replaced Security is held
by a bona fide purchaser.

     If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a
Redemption Date or at Stated Maturity, money sufficient to pay all principal and interest payable
on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on them ceases to
accrue.

     Section 2.13. Temporary Securities. In the event that Definitive Securities are to be issued
under the terms of this Indenture, until such Definitive Securities are ready for delivery, the
Company may prepare and upon receipt of a Company Order the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of Definitive Securities but
may have variations that the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and upon receipt of a Company Order the Trustee shall
authenticate Definitive Securities. After the preparation of Definitive Securities, the temporary
Securities shall be exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Company for that purpose and such exchange
shall be without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute, and the Trustee shall authenticate and make
available for delivery in exchange therefor, one or more Definitive Securities representing an
equal principal amount of Securities. Until so exchanged, the Holder of temporary Securities shall
in all respects be entitled to the same benefits under this Indenture as a Holder of Definitive
Securities.

     Section 2.14. Cancellation. The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer, exchange, payment or
cancellation and dispose of such Securities in accordance with its internal policies and customary
procedures including delivery of a certificate (a “Certificate of Destruction”) describing such
Securities disposed (subject to the record retention

26

 

requirements of the Exchange Act) or deliver canceled Securities to the Company pursuant to
written direction by an Officer. The Company may not issue new Securities to replace Securities it
has paid for or delivered to the Trustee for cancellation for any reason other than in connection
with a transfer or exchange.

     At such time as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such Global Security shall
be returned by DTC to the Trustee for cancellation or retained and canceled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global Security,
redeemed, repurchased or canceled, the principal amount of Securities represented by such Global
Security shall be reduced and an adjustment shall be made on the books and records of the Trustee
(if it is then the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.

     Section 2.15. Payment of Interest; Defaulted Interest. Interest (including any Additional
Interest) on any Security which is payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the Person in whose name such Security (or one or more
predecessor Securities) is registered at the close of business on the Regular Record Date for such
payment at the office or agency of the Company maintained for such purpose pursuant to Section
2.05.

     Any interest on any Security which is payable, but is not paid when the same becomes due and
payable and such nonpayment continues for a period of 30 days, shall forthwith cease to be payable
to the Holder on the Regular Record Date, and such defaulted interest and (to the extent lawful)
interest on such defaulted interest at the rate borne by the Securities (such defaulted interest
and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Company,
at its election in each case, as provided in clause (a) or (b) below:

     (a) 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 at the close of
business on a Special Record Date (as defined below) 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 and the date (not less than
30 days after such notice) of the proposed payment (the “Special Interest Payment 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
satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix

27

 

a record date (the “Special Record Date”) for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the Special Interest Payment Date
and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date, and 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 and Special Interest Payment Date therefor to be given in the manner
provided for in Section 13.02, 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 and Special Interest
Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special
Interest Payment Date 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 (b).

     (b) 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 provisions of this Section 2.15, 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 (including any Additional Interest) accrued and unpaid, and to
accrue, which were carried by such other Security.

     Section 2.16. Computation of Interest. Interest (including any Additional Interest) on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day months.

     Section 2.17. Cusip and ISIN Numbers. The Company in issuing the Securities may use “CUSIP”
and “ISIN” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP” and “ISIN”
numbers in notices of redemption as a convenience to Holders; provided, however, that any such
notice may state that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that reliance may be
placed only on the other identification numbers printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such CUSIP or ISIN numbers. The Company
shall promptly notify the Trustee in writing of any change in the CUSIP and ISIN numbers.

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ARTICLE 3

Covenants

     Section 3.01. Payment of Securities. The Company shall promptly pay the principal of and
interest (including any Additional Interest) on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest (including any Additional
Interest) shall be considered paid on the date due if on such date the Trustee or the Paying Agent
holds in accordance with this Indenture immediately available funds sufficient to pay all principal
and interest (including any Additional Interest) then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture.

     The Company shall pay interest on overdue principal at the rate specified therefor in the
Securities, and it shall pay interest on overdue installments of interest at the same rate to the
extent lawful.

     Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the
extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by
the United States of America from principal or interest (including any Additional Interest)
payments hereunder.

     Section 3.02. Financial Statements. In the event and for so long as the Company is not
subject to Section 13 or 15(d) of the Exchange Act, it shall file with the Trustee and cause to be
mailed to each Holder at such Holder’s registered address, upon the request of any Holder or
beneficial holder of the Securities or the Common Stock issued upon conversion thereof, and make
available to such Holder or beneficial holder of such Securities or Common Stock in connection with
any sale thereof and any prospective purchaser of Securities or Common Stock designated by such
Holder or beneficial holder, the information required pursuant to Rule 144A(d)(4) under the
Securities Act and it will take such further action as any Holder or beneficial holder of such
Securities or Common Stock may reasonably request, all to the extent required from time to time to
enable such Holder or beneficial holder to sell its Securities or Common Stock without registration
under the Securities Act within the limitation of the exemption provided by Rule 144A, as such Rule
may be amended from time to time.

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

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     Section 3.03. Maintenance of Office or Agency. The Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where the Securities may be presented or
surrendered for payment, where, if applicable, the 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 agency of the Trustee (the “Agent”) currently
located in The City of New York shall be such office or agency of the Company, unless the Company
shall designate and maintain some other office or agency for one or more of such purposes. The
Company will give prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Agent of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and
demands.

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

     Section 3.04. Corporate Existence. Except as otherwise provided in Article 4 and Section
10.02(b), the Company will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate, partnership, limited liability company
or other existence of each Subsidiary Guarantor and the rights (charter and statutory), licenses
and franchises of the Company and each Subsidiary Guarantor; provided, however, that the Company
shall not be required to preserve any such right, license or franchise or the corporate,
partnership, limited liability company or other existence of any Subsidiary Guarantor if the Board
of Directors of the Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and each of its Subsidiaries, taken as a whole, and that
the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders.

     Section 3.05. Payment of Taxes and Other Claims. The Company will pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon
the income, profits or property of the Company or any Subsidiary and (ii) all lawful claims for
labor, materials and supplies, which, if unpaid, might by law become a material liability

30

 

or lien upon the property of the Company or any Subsidiary; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which appropriate reserves, if necessary (in the good
faith judgment of management of the Company), are being maintained in accordance with GAAP or where
the failure to effect such payment will not be disadvantageous to the Holders.

     Section 3.06. 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, one of the signers
of which shall be the principal executive officer, principal financial officer or principal
accounting officer of the Company, stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of any Default or Event
of Default and whether or not the signers know of any Default or Event of Default that occurred
during such period. If they do, the certificate shall describe the Default or Event of Default,
its status and the action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA § 314(a)(4).

     Section 3.07. Further Instruments and Acts. Upon request of the Trustee, the Company will
execute and deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.

     Section 3.08. Statement by Officers as to Default. The Company shall deliver to the Trustee,
as soon as possible and in any event within 30 days after the Company becomes aware of the
occurrence of any Event of Default or an event which, with notice or the lapse of time or both,
would constitute an Event of Default, an Officers’ Certificate setting forth the details of such
Event of Default or default, its status and the action which the Company proposes to take with
respect thereto.

     Section 3.09. Additional Interest. If Additional Interest is payable by the Company pursuant
to the Registration Rights Agreement, the Company shall deliver to the Trustee an Officers’
Certificate to that effect stating (i) the amount of such Additional Interest that is payable and
(ii) the date on which such Additional Interest is payable. Unless and until a Trust Officer of
the Trustee receives such a certificate, the Trustee may assume without inquiry that no Additional
Interest is payable. If the Company has paid Additional Interest directly to the persons entitled
to it, the Company shall deliver to the Trustee an Officers’ Certificate setting forth the
particulars of such payment.

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ARTICLE 4

Successor Company

     Section 4.01. Consolidation, Merger and Sale of Assets. The Company shall not consolidate
with or merge with or into, or convey, transfer or lease all or substantially all its assets to,
another Person, unless:

     (a) the resulting, surviving or transferee Person (the “Successor Company”) if not the Company
shall be a corporation, partnership, trust or limited liability company organized and existing
under the laws of the United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, by supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of
the Company under the Securities, this Indenture and, to the extent that it is otherwise still
operative, the Registration Rights Agreement;

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

     (c) each Subsidiary Guarantor (unless it is the other party to the transactions described
above, in which case clause (a) and Section 10.02 shall apply) shall have by supplemental indenture
confirmed that its Subsidiary Guarantee shall apply for such Person’s obligations in respect of
this Indenture and the Securities and its obligations under the Registration Rights Agreement shall
continue to be in effect; and

     (d) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture,
if any, comply with this Indenture.

     For purposes of this Section 4.01, the sale, lease, conveyance, assignment, transfer, or other
disposition of all or substantially all of the properties and assets of one or more Subsidiaries of
the Company, which properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the Company on a
consolidated basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.

     The Successor Company will succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture, but, in the case of a lease of all or substantially
all its assets, the Company will not be released from the obligation to pay the principal of and
interest (including any Additional Interest) on the Securities.

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ARTICLE 5

Redemption Of Securities

     Section 5.01. Optional Redemption. Prior to February 15, 2011, the Securities shall not be
redeemable. On and after February 15, 2011, the Securities may be redeemed, as a whole or from
time to time in part, subject to the conditions set forth herein, at a price (the “Redemption
Price”) equal to 100% of the principal amount of Securities to be redeemed, plus accrued and unpaid
interest (including any Additional Interest) to the Redemption Date; provided that if the
Redemption Date occurs after a Regular Record Date for the payment of interest and on or prior to
the related interest payment date, the Redemption Price for any such Securities to be redeemed
shall be 100% of the principal amount of such Securities and accrued and unpaid interest (including
any Additional Interest) shall be paid to the Holder on such Regular Record Date.

     Section 5.02. Election to Redeem; Notice to Trustee. The election of the Company to redeem
any Securities pursuant to Section 5.01 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, on or prior to the date that is 15
days prior to the date on which notice is given to the Holders (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal
amount of Securities to be redeemed and shall deliver to the Trustee such documentation and records
as shall enable the Trustee to select the Securities to be redeemed pursuant to Section 5.03. Any
such notice may be cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.

     Section 5.03. Selection by Trustee of Securities to be Redeemed. If less than all the
Securities are to be redeemed at any time pursuant to an optional redemption, the particular
Securities to be redeemed shall be selected, not more than 60 days prior to the Redemption Date by
the Trustee, from the outstanding Securities not previously called for redemption, by lot, or on a
pro rata basis among the classes of Securities or by such other method as the Trustee shall deem
fair and appropriate (and in such manner as is not prohibited by applicable legal requirements) and
which may provide for the selection for redemption of portions of the principal of the Securities;
provided, however, that no such partial redemption shall reduce the portion of the principal amount
of a Security not redeemed to less than $1,000.

     The Trustee shall promptly notify the Company 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 redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of
such Security which has been or is to be redeemed.

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     If any Securities selected for partial redemption are thereafter surrendered for conversion in
part before termination of the conversion right with respect to the portion of the Securities so
selected, the converted portion of such Securities shall be deemed (so far as may be), solely for
purposes of determining the aggregate principal amount of Securities to be redeemed by the Company,
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. Nothing in this Section 5.03 shall affect the right of any Holder to convert any
Securities pursuant to Article 12 before the termination of the conversion right with respect
thereto.

     Section 5.04. Notice of Redemption. Notice of redemption shall be given in the manner
provided for in Section 13.02 not less than 45 nor more than 60 days prior to the Redemption Date,
to each Holder of Securities to be redeemed. The Trustee shall give notice of redemption in the
Company’s name and at the Company’s expense; provided, however, that the Company shall deliver to
the Trustee, at least 60 days prior to the Redemption Date, an Officers’ Certificate requesting
that the Trustee give such notice at the Company’s expense and setting forth the information to be
stated in such notice as provided in the following items.

     All notices of redemption shall state:

     (a) the Redemption Date,

     (b) the Redemption Price payable as provided in Section 5.06, if any,

     (c) the then current Conversion Rate and the related Observation Period for conversion of
Securities, and provide a statement that the Securities called for redemption may be converted at
any time before the close of business on the third scheduled Trading Day prior to the Redemption
Date, and that Holders who wish to convert Securities must comply with the procedures in paragraph
7 of the Securities,

     (d) if less than all outstanding Securities are to be redeemed, the identification of the
particular Securities (or portion thereof) to be redeemed, as well as the aggregate principal
amount of Securities to be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption,

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     (e) in case any Security is to be redeemed in part only, the notice which relates to such
Security shall state that on and after the Redemption Date, upon surrender of such Security, the Holder will receive, without charge, a new Security or
Securities of authorized denominations for the principal amount thereof remaining unredeemed,

     (f) that on the Redemption Date the Redemption Price will become due and payable upon each
such Security, or the portion thereof, to be redeemed, and, unless the Company defaults in making
the redemption payment, that interest (including any Additional Interest) on Securities called for
redemption (or the portion thereof) will cease to accrue on and after said date,

     (g) the place or places where such Securities are to be surrendered for payment of the
Redemption Price,

     (h) the name and address of the Paying Agent and the Conversion Agent,

     (i) that Securities called for redemption must be surrendered to the Paying Agent to collect
the Redemption Price,

     (j) the CUSIP or ISIN number, and that no representation is made as to the accuracy or
correctness of the CUSIP or ISIN number, if any, listed in such notice or printed on the
Securities, and

     (k) the paragraph of the Securities pursuant to which the Securities are to be redeemed.

     Section 5.05. Deposit of Redemption Price. Prior to any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 2.06) an amount of money sufficient to
pay the Redemption Price of all the Securities which are to be redeemed on that date other than
Securities or portions of Securities called for redemption that are beneficially owned by the
Company and have been delivered by the Company to the Trustee for cancellation.

     Section 5.06. 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, and from and after such date (unless the Company shall default in
the payment of the Redemption Price or accrued and unpaid interest (including any Additional
Interest)) such Securities shall cease to bear interest or Additional Interest. Upon surrender of
any such Security for redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price.

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     If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal shall, until paid, bear interest (including any Additional Interest) from
the Redemption Date at the rate borne by the Securities.

     Section 5.07. Securities Redeemed in Part. Any Security which is to be redeemed only in part
(pursuant to the provisions of this Article 5) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 3.03 (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 such Holder’s 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 at the expense of the Company, a new Security
or Securities, of any authorized denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unredeemed portion of the principal of the
Security so surrendered, provided that each such new Security will be in a principal amount of
$1,000 or integral multiple thereof.

ARTICLE 6

Defaults And Remedies

     Section 6.01. Events of Default. Each of the following is an “Event of Default”:

     (a) default in any payment of interest or Additional Interest (as required by the Registration
Rights Agreement) on any Security when the same becomes due and payable, and such default continues
for a period of 30 days;

     (b) default in the payment of the principal of any Security when the same becomes due and
payable at its Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise;

     (c) failure by the Company to comply with its obligation to convert the Securities into cash
or a combination of cash and Common Stock, as applicable, upon exercise of a Holder’s conversion
right and such failure continues for a period of five days;

     (d) failure by the Company to give a Fundamental Change notice to Holders or notice to Holders
required pursuant to Section 12.01(a)(iii), in each case when due;

     (e) failure by the Company or any Subsidiary Guarantor to comply with any of its obligations
under Article 4 or Section 10.02;

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     (f) default in the performance of or a breach by the Company of any other covenant or
agreement in this Indenture or under the Securities (other than those referred to in (a) through
Section 6.01(e) above or Section 6.01(g) through Section 6.01(i) below) and such default continues
for 60 days after the notice specified below;

     (g) default by the Company or any Subsidiary in the payment of the principal or interest on
any mortgage, agreement or other instrument under which there may be outstanding, or by which there
may be secured or evidenced any indebtedness for money borrowed in excess of $10 million in the
aggregate of the Company and/or any such Subsidiary, whether such indebtedness now exists or shall
hereafter be created, resulting in such indebtedness becoming or being declared due and payable,
and such acceleration shall not have been rescinded or annulled within 10 days after written notice
of such acceleration has been received by the Company or such Subsidiary;

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

     (i) commences a voluntary case or proceeding;

     (ii) consents to the entry of judgment, decree or order for relief against it in an
involuntary case or proceeding;

     (iii) consents to the appointment of a Custodian of it or for any substantial part of
its property;

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

     (v) consents to or acquiesces in the institution of a bankruptcy or an insolvency
proceeding against it;

     (vi) takes any corporate action to authorize or effect any of the foregoing; or

     (vii) takes any comparable action under any foreign laws relating to insolvency;

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

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

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     (ii) appoints a Custodian of the Company for all or substantially all of the
Company’s or any Significant Subsidiary’s property; or

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

and, in each case, the order or decree or relief remains unstayed and in effect for 90
days;

     (j) there has been entered in a court of competent jurisdiction a final judgment for the
payment of $10.0 million or more (excluding any amounts covered by insurance) rendered against the
Company or any Significant Subsidiary, which judgment is not discharged or stayed within 90 days
after (i) the date on which the right to appeal thereof has expired if no such appeal has
commenced, or (ii) the date on which all rights to appeal have been extinguished (“judgment default
provision”); or

     (k) except as permitted by this Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full
force and effect, or any Subsidiary Guarantor, or any Person acting on its behalf, shall deny or
disaffirm its obligation under the Subsidiary Guarantee.

     The foregoing will constitute Events of Default whatever the reason for any such Event of
Default and whether it is voluntary or involuntary or is 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.

     Notwithstanding the foregoing, a Default under clause (f) of this Section 6.01 will not
constitute an Event of Default until the Trustee or the Holders of 25% or more in principal amount
of the outstanding Securities notify the Company of the Default in writing and the Company does not
cure such Default within the time specified in clause (f) of this Section 6.01 after receipt of
such notice.

     The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written
notice in the form of an Officers’ Certificate of any Default or Event of Default under clauses
(d), (e), (f), (g), (j) or (k) of this Section 6.01, which notice shall contain the status thereof
and a description of the action being taken or proposed to be taken by the Company in respect
thereof.

     Section 6.02. Acceleration. If an Event of Default (other than an Event of Default specified
in Section 6.01(h) or 6.01(i) above) occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in

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outstanding principal amount of the outstanding Securities by notice to the Company and the
Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of and
accrued and unpaid interest, if any, and Additional Interest, if any, on all the Securities to be
due and payable. Upon such a declaration, such principal, premium, if any, and accrued and unpaid
interest and Additional Interest, if any, shall be due and payable immediately. If an Event of
Default specified in Section 6.01(h) or 6.01(i) above occurs and is continuing, the principal of
and accrued and unpaid interest, if any, and Additional Interest, if any, on all the Securities
outstanding shall be immediately due and payable with no further action by the Trustee or the
Holders.

     Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of or interest (including any
Additional Interest) on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.

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

     Section 6.04. Waiver of Past Defaults. The Holders of a majority in principal amount of the
outstanding Securities by notice to the Trustee may (a) waive, by their consent (including, without
limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer
for, Securities), an existing Default or Event of Default and its consequences except (i) a Default
or Event of Default in the payment of the principal of or interest (including any Additional
Interest) on a Security or (ii) a Default or Event of Default in respect of a provision that under
Section 9.02 cannot be amended without the consent of each Securityholder affected and (b) rescind
any such acceleration with respect to the Securities and its consequences if (i) rescission would
not conflict with any judgment or decree of a court of competent jurisdiction and (ii) all existing
Events of Default, other than the nonpayment of the principal of and interest (including any
Additional Interest) on the Securities that have become due solely by such declaration of
acceleration, have been cured or waived. When a Default or Event of Default is waived, it is
deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right.

     Section 6.05. Control by Majority. The Holders of a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture
or,

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subject to Sections 7.01 and 7.02, that the Trustee determines is unduly prejudicial to the
rights of other Securityholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction.

     Section 6.06. Limitation on Suits. Subject to Section 6.07, a Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:

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

     (b) Holders of at least 25% in principal amount of the outstanding Securities have requested
that the Trustee pursue the remedy;

     (c) such Holders have offered to the Trustee security or indemnity reasonably satisfactory to
it against any loss, liability or expense to be incurred in compliance with such request;

     (d) the Trustee has not complied with such request within 60 days after receipt of the request
and the offer of security or indemnity; and

     (e) the Holders of a majority in principal amount of the outstanding Securities have not given
the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request
within such 60-day period.

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

     Section 6.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of
this Indenture (including, without limitation, Section 6.06), the right of any Holder to receive
payment of principal of or interest (including any Additional Interest) on the Securities held by
such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.

     Section 6.08. Collection Suit by Trustee. If an Event of Default specified in clauses (a) or
(b) of Section 6.01 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 then due and owing
(together with interest on any unpaid interest (including any Additional Interest) to the extent
lawful) and the amounts provided for in Section 7.07.

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     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 (including any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Securityholders allowed in any judicial proceedings
relative to the Company, its Subsidiaries or its or their respective creditors or properties and,
unless prohibited by law or applicable regulations, may be entitled and empowered to participate as
a member of any official committee of creditors appointed in such matter, and may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and
any other amounts due to the Trustee under Section 7.07.

     Section 6.10. Priorities. If the Trustee collects any money or property pursuant to this
Article 6, it shall pay out the money or property in the following order:

     FIRST: to the Trustee for amounts due under Section 7.07;

     SECOND: to Securityholders for amounts due and unpaid on the Securities for
principal and interest (including any Additional Interest), ratably, without preference or
priority of any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and

     THIRD: to the Company.

     The Trustee may fix a record date and payment date for any payment to Securityholders pursuant
to this Section 6.10. At least 15 days before such record date, the Company shall mail to each
Securityholder and the Trustee a notice that states the record date, the payment date and amount to
be paid.

     Section 6.11. Restoration of Rights and Remedies. If the Trustee or any Holder has
instituted a proceeding to enforce any right or remedy under this Indenture and the proceeding has
been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or
to the Holder, then, subject to any determination in the proceeding, the Company, the Subsidiary
Guarantors, the Trustee, any Subsidiaries and the Holders will be restored severally and
respectively to their former positions hereunder and thereafter all rights and remedies of the
Company, any Subsidiary Guarantors, the Trustee, any

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Subsidiaries and the Holders will continue as though no such proceeding had been instituted.
 

     Section 6.12. Undertaking of Costs. In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.12 does not apply to a suit by the Trustee, a suit by the Company, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in outstanding principal
amount of the Securities.

ARTICLE 7

Trustee

     Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same
degree of care and skill in its exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person’s own affairs; provided that if an Event of Default
occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or
powers under this Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against loss, liability or expense
that might be incurred in compliance with such request or direction.

     (b) 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, opinions or orders furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such certificates, opinions
or orders which by any provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to determine whether or
not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).

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

     (i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

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

     (iii) 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) Every provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.

     (e) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company.

     (f) Money held in trust by the Trustee need not be segregated from other funds except to the
extent required by law.

     (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur 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 to believe that
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.

     (h) 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 7.01 and to
the provisions of the TIA.

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

     Section 7.02. Rights of Trustee. Subject to Section 7.01:

     (a) The Trustee may conclusively rely on any document (whether in its original or facsimile
form) reasonably believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the document. The Trustee
shall receive and retain

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financial reports and statements of the Company as provided herein, but shall have no duty to
review or analyze such reports or statements to determine compliance under covenants or other
obligations of the Company.

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

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

     (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers, unless the Trustee’s conduct
constitutes willful misconduct or negligence.

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

     (f) The Trustee shall not be responsible or liable for special, indirect, or consequential
loss or damage of any kind whatsoever (including, but not limited to, loss of profit) resulting
from actions taken in good faith and which the Trustee believes to be authorized or within its
rights or powers, unless the Trustee’s conduct constitutes willful misconduct or negligence.

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

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

     Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other
capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11. In addition, the Trustee shall be permitted to

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engage in transactions with the Company; provided, however, that if the Trustee acquires any
conflicting interest the Trustee must (i) eliminate such conflict within 90 days of acquiring such
conflicting interest, (ii) apply to the SEC for permission to continue acting as Trustee or (iii)
resign.

     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 Securities, shall not be
accountable for the Company’s use of the proceeds from the Securities, shall not be responsible for
the use or application of any money received by any Paying Agent other than the Trustee and shall
not be responsible for any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the Trustee’s
certificate of authentication.

     Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing
and if a Trust Officer of the Trustee has actual knowledge thereof, the Trustee shall mail by first
class mail to each Securityholder at the address set forth in the Securities Register notice of the
Default or Event of Default within 90 days after it occurs. Except in the case of a Default or
Event of Default in payment of principal of or interest (including any Additional Interest) on any
Security (including payments pursuant to the optional redemption or required repurchase provisions
of such Security, if any), the Trustee may withhold the notice if and so long as its board of
directors, a committee of its board of directors or a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.

     Section 7.06. Reports by Trustee to Holders. As promptly as practicable after each May 15
beginning with the May 15 following the date of this Indenture, and in any event prior to July 1 in
each year, the Trustee shall mail to each Securityholder a brief report dated as of such May 15
that complies with TIA § 313(a), if required by such TIA § 313(a). The Trustee also shall comply
with TIA § 313(b). The Trustee shall also transmit by mail all reports required by TIA § 313(c).

     Section 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to
time such compensation for its acceptance of this Indenture and services hereunder as the Company
and the Trustee shall from time to time agree in writing. The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust. In addition to the
compensation the Company shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it. Such expenses shall include the reasonable compensation and
out-of-pocket expenses, disbursements and advances of the Trustee’s agents, counsel, accountants
and experts. The Company shall indemnify the Trustee against any and all loss, liability, damages,
claims or expense (including reasonable attorneys’ fees and expenses) incurred by

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it without negligence or bad faith on its part in connection with the administration of this
trust and the performance of its duties hereunder, including the costs and expenses of enforcing
this Indenture (including this Section 7.07) and of defending itself against any claims (whether
asserted by any Securityholder, the Company or otherwise). 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 and the Trustee shall provide reasonable cooperation at the Company’s expense in the defense.
The Trustee may have separate counsel and the Company shall pay the fees and expenses of such
counsel, provided that the Company shall not be required to pay such fees and expenses if it
assumes the Trustee’s defense, and, in the reasonable judgment of outside counsel to the Trustee,
there is no conflict of interest between the Company and the Trustee in connection with such
defense. The Company need not reimburse any expense or indemnify against any loss, liability or
expense incurred by the Trustee through the Trustee’s own willful misconduct, negligence or bad
faith.

     To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a
lien prior to the Securities on all money or property held or collected by the Trustee other than
money or property held in trust to pay principal of and interest (including any Additional
Interest) on particular Securities. Such lien shall survive the satisfaction and discharge of this
Indenture. The Trustee’s right to receive payment of any amounts due under this Section 7.07 shall
not be subordinate to any other unsecured liability or debt of the Company.

     The Company’s payment obligations pursuant to this Section 7.07 shall survive the discharge of
this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in
clauses (h) and Section 6.01(i)of Section 6.01 with respect to the Company, the expenses are
intended to constitute expenses of administration under any Bankruptcy Law.

     Section 7.08. Replacement of Trustee. The Trustee may resign at any time by so notifying the
Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by
so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee
if:

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

     (b) the Trustee is adjudged bankrupt or insolvent;

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

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     (d) the Trustee otherwise becomes incapable of acting.

     If the Trustee resigns or is removed by the Company or by the Holders of a majority in
principal amount of the Securities and such Holders do not reasonably promptly appoint a successor
Trustee, or if a vacancy exists in the office of the Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Company shall promptly appoint 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
Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee
to the successor Trustee, subject to the lien provided for in Section 7.07.

     If a successor Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the
Securities may petition, at the Company’s expense, any court of competent jurisdiction for the
appointment of a successor Trustee.

     If the Trustee fails to comply with Section 7.10, unless the Trustee’s duty to resign is
stayed as provided in TIA § 310(b), any Securityholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     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.

     Section 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Trustee.

     In case at the time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture, any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the
name of the successor to the Trustee; provided that the right to

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adopt the certificate of authentication of any predecessor Trustee or authenticate Securities
in the name of any predecessor Trustee shall only apply to its successor or successors by merger,
consolidation or conversion.

     Section 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the
requirements of TIA § 310(a). The Trustee shall have a combined capital and surplus of at least
$100 million as set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA § 310(b); provided, however, that there shall be excluded from the operation
of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if the requirements
for such exclusion set forth in TIA § 310(b)(1) are met.

     Section 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply
with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has
resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

     Section 7.12. Trustee’s Application for Instruction from the Company. Any application by the
Trustee for written instructions from the Company may, at the option of the Trustee, set forth in
writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be effective. The Trustee
shall not be liable for any action taken by, or omission of, the Trustee in accordance with a
proposal included in such application on or after the date specified in such application (which
date shall not be less than three Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in writing to any earlier
date) unless prior to taking any such action (or the effective date in the case of an omission),
the Trustee shall have received written instructions in response to such application specifying the
action to be taken or omitted.

ARTICLE 8

Discharge Of Indenture

     Section 8.01. Discharge of Liability on Securities. When (1) the Company shall deliver to
the Registrar for cancellation all Securities theretofore authenticated (other than any Securities
which have been destroyed, lost or stolen and in lieu of or in substitution for which other
Securities shall have been authenticated and delivered) and not theretofore canceled, or (2) all
the Securities not theretofore canceled or delivered to the Registrar for cancellation shall have
(a) been deposited for conversion (after all related Observation Periods have elapsed) and the
Company shall deliver to the Holders cash and shares of Common Stock, as applicable, sufficient to
pay all amounts owing in respect of

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all Securities (other than any Securities which shall have been mutilated, destroyed, lost or
stolen and in lieu of or in substitution for which other Securities shall have been authenticated
and delivered) not theretofore canceled or delivered to the Registrar for cancellation or (b)
become due and payable on the Stated Maturity, Purchase Date, Fundamental Change Purchase Date or
Redemption Date, as applicable, and the Company shall deposit with the Trustee cash or shares of
Common Stock, as applicable, sufficient to pay all amounts owing in respect of all Securities
(other than any Securities which shall have been mutilated, destroyed, lost or stolen and in lieu
of or in substitution for which other Securities shall have been authenticated and delivered) not
theretofore canceled or delivered to the Registrar for cancellation, including the principal amount
and interest (including any Additional Interest) accrued and unpaid to such Stated Maturity,
Purchase Date, Fundamental Change Purchase Date or Redemption Date, as the case may be, and if in
either case (1) or (2) the Company shall also pay or cause to be paid all other sums payable
hereunder by the Company, then this Indenture with respect to the Securities shall cease to be of
further effect (except as to (i) remaining rights of registration of transfer, substitution and
exchange and conversion of Securities; (ii) rights hereunder of Holders to receive payments of the
amounts then due, including interest (including any Additional Interest) with respect to the
Securities and the other rights, duties and obligations of Holders, as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee; and (iii) the rights, obligations
and immunities of the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and Registrar
under this Indenture with respect to the Securities), and the Trustee, on demand of the Company
accompanied by an Officers’ Certificate and an Opinion of Counsel as required by Section 8.03 and
at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction
of and discharging this Indenture with respect to the Securities; the Company, however, hereby
agrees to reimburse the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and Registrar
for any costs or expenses thereafter reasonably and properly incurred by the Trustee,
Authenticating Agent, Paying Agent, Conversion Agent and Registrar and to compensate the Trustee,
Authenticating Agent, Paying Agent, Conversion Agent and Registrar for any services thereafter
reasonably and properly rendered by the Trustee, Authenticating Agent, Paying Agent, Conversion
Agent and Registrar in connection with this Indenture with respect to the Securities.

     Section 8.02. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money
to the Holders entitled thereto by reason of any order or judgment of any court of governmental
authority enjoining, restraining or otherwise prohibiting such application, the Company’s
obligations under this Indenture with respect to the Securities and the Securities 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

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accordance with this Indenture and the Securities to the Holders entitled thereto; provided,
however, that if the Company makes any payment of principal amount of or interest (including any
Additional Interest) on any Securities following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive such payment from
the money held by the Trustee or Paying Agent.

     Section 8.03. Officers’ Certificate; Opinion of Counsel. Upon any application or demand by
the Company to the Trustee to take any action under Section 8.01, the Company shall furnish to the
Trustee an Officers’ Certificate stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with, and an Opinion of Counsel
stating that, in the opinion of such counsel, all such conditions precedent have been complied
with.

     Each certificate or Opinion of Counsel provided for in this Indenture and delivered to the
Trustee with respect to compliance with a condition or covenant pursuant to the previous paragraph
shall include: (1) a statement that the Person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of the examination or
investigation upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such Person, such Person 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 or not, in the
opinion of such Person, such condition or covenant has been complied with.

ARTICLE 9

Amendments

     Section 9.01. Without Consent of Holders. The Company, the Subsidiary Guarantors and the
Trustee may amend this Indenture or the Securities without notice to or consent of any
Securityholder:

     (a) to cure any ambiguity, omission, defect or inconsistency;

     (b) to comply with Article 4 in respect of the assumption by a Successor Company of an
obligation of the Company or a Subsidiary Guarantor under this Indenture;

     (c) to provide for uncertificated Securities in addition to or in place of certificated
Securities; provided, however, that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code or in a

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manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
 

     (d) to add guarantees with respect to the Securities;

     (e) to secure the Securities;

     (f) to add to the covenants of the Company for the benefit of the Holders or to surrender any
right or power herein conferred upon the Company;

     (g) to comply with any requirement of the SEC in connection with the qualification of this
Indenture under the TIA;

     (h) to make any change that does not materially adversely affect the rights of any
Securityholder; or

     (i) to conform the provisions of this Indenture to the “Description of Notes” section of the
Offering Memorandum.

     After an amendment under this Section 9.01 becomes effective, the Company shall mail to
Securityholders a notice briefly describing such amendment. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity of an amendment
under this Section 9.01.

     Section 9.02. With Consent of Holders. The Company, the Subsidiary Guarantors and the
Trustee may amend this Indenture or the Securities without notice to any Securityholder but with
the written consent of the Holders of at least a majority in principal amount of the Securities
then outstanding (including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Securities) and compliance with the provisions of this
Indenture may be waived with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Securities). However,
without the consent of each Securityholder affected, an amendment or waiver may not:

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

     (b) reduce the rate of or extend the stated time for payment of interest, including Additional
Interest, on any Security;

     (c) reduce the principal of or extend the Stated Maturity of any Security;

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

     (e) reduce the Redemption Price, the Fundamental Change Purchase Price, the Purchase Price
payable upon the redemption or repurchase or conversion of any Security or amend or modify in any
manner adverse to holders of the Securities the Company’s obligation to make such payments, whether
through an amendment to or waiver of a provision in the covenants, definitions or otherwise;

     (f) make any Security payable in money other than that stated in the Security (it being
understood that all references to cash in this Indenture and the Securities are to U.S. legal
tender) or, other than in accordance with the provisions of this Indenture in effect on the Issue
Date, eliminate any existing Subsidiary Guarantee of the Securities;

     (g) impair the right of any Holder to receive payment of principal of and interest (including
any Additional Interest) on such Holder’s Securities on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such Holder’s Securities;
or

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

     It shall not be necessary for the consent of the Holders under this Section 9.02 to approve
the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof. A consent to any amendment or waiver under this Indenture by any
Holder of the Securities given in connection with a tender or exchange of such Holder’s Securities
will not be rendered invalid by such tender or exchange.

     After an amendment under this Section 9.02 becomes effective, the Company shall mail to
Securityholders a notice briefly describing such amendment. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity of an amendment
under this Section 9.02.

     Section 9.03. Compliance with Trust Indenture Act. Every amendment to this Indenture or the
Securities shall comply with the TIA as then in effect.

     Section 9.04. Revocation and Effect of Consents and Waivers. A consent to an amendment or a
waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security
or portion of the Security that evidences the same debt as the consenting Holder’s Security, even
if notation of the consent or waiver is not made on the Security. However, any such Holder or
subsequent

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Holder may revoke the consent or waiver as to such Holder’s Security or portion of the
Security if the Trustee receives the notice of revocation before the date the amendment or waiver
becomes effective or otherwise in accordance with any related solicitation documents. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An amendment or waiver
shall become effective upon receipt by the Trustee of the requisite number of written consents
under Section 9.01 or 9.02, as applicable.

     The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Securityholders entitled to give their consent or take any other action described
above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed,
then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at
such record date (or their duly designated proxies), and only those Persons, shall be entitled to
give such consent or to revoke any consent previously given or to take any such action, whether or
not such Persons continue to be Holders after such record date. No such consent shall become valid
or effective more than 120 days after such record date.

     Section 9.05. Notation on or Exchange of Securities. If an amendment changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange
for the Security shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment.

     Section 9.06. Trustee to Sign Amendments. The Trustee shall sign any amendment authorized
pursuant to this Article 9 if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In
signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory
to it and to receive, and (subject to Sections 7.01 and 7.02) shall be fully protected in relying
upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized
or permitted by this Indenture and that such amendment is the legal, valid and binding obligation
of the Company and any Subsidiary Guarantors, enforceable against them in accordance with its
terms, subject to customary exceptions, and complies with the provisions hereof (including Section
9.03).

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ARTICLE 10

Subsidiary Guarantee

     Section 10.01. Subsidiary Guarantee. Each Subsidiary Guarantor hereby fully, unconditionally
and irrevocably guarantees, as primary obligor and not merely as surety, jointly and severally with
each other Subsidiary Guarantor, to each Holder of the Securities and the Trustee the full and
punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the
principal of and interest, including any Additional Interest, on the Securities and all other
obligations and liabilities of the Company under this Indenture (including without limitation
interest (including any Additional Interest) accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to
the Company or any Subsidiary Guarantor whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) (all the foregoing being hereinafter collectively called
the “Obligations”). Each Subsidiary Guarantor further agrees (to the extent permitted by law) that
the Obligations may be extended or renewed, in whole or in part, without notice or further assent
from it, and that it will remain bound under this Article 10 notwithstanding any extension or
renewal of any Obligation.

     Each Subsidiary Guarantor waives presentation to, demand of payment from and protest to the
Company of any of the Obligations and also waives notice of protest for nonpayment. Each
Subsidiary Guarantor waives notice of any default under the Securities or the Obligations. The
obligations of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder to assert any claim or demand or to enforce any right or remedy against the Company or any
other person under this Indenture, the Securities or any other agreement or otherwise; (b) any
extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any
of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations or any of them; (e)
the failure of any Holder to exercise any right or remedy against any other Subsidiary Guarantor;
or (f) any change in the ownership of the Company.

     Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein constitutes a
Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require
that any resort be had by any Holder to any security held for payment of the Obligations.

     The obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than payment of the Obligations in
full), including any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by

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reason of the invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be (to the extent permitted by law) discharged or impaired or otherwise affected
by the failure of any Holder to assert any claim or demand or to enforce any remedy under this
Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by
any other act or thing or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of any Subsidiary Guarantor or would otherwise operate as a
discharge of such Subsidiary Guarantor as a matter of law or equity.

     Each Subsidiary Guarantor agrees that its Subsidiary Guarantee herein shall remain in full
force and effect until payment in full of all the Obligations or until such Subsidiary Guarantor is
released from its Subsidiary Guarantee upon the merger or the sale of all the Capital Stock or
assets of the Subsidiary Guarantor in compliance with Section 10.02. Each Subsidiary Guarantor
further agrees that its Subsidiary Guarantee herein shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or
interest (including any Additional Interest), on any of the Obligations is rescinded or must
otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or
otherwise.

     In furtherance of the foregoing and not in limitation of any other right which any Holder has
at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of the
Company to pay any of the Obligations when and as the same shall become due, whether at maturity,
by acceleration, by redemption or otherwise, each Subsidiary Guarantor hereby promises to and will,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders an amount equal to the sum of (i) the unpaid amount of such Obligations then due and owing
and (ii) accrued and unpaid interest (including any Additional Interest) on such Obligations then
due and owing (but only to the extent not prohibited by law).

     Each Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor, on the
one hand, and the Holders, on the other hand, (x) the maturity of the Obligations guaranteed hereby
may be accelerated as provided in this Indenture for the purposes of its Subsidiary Guarantee
herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in
respect of the Obligations guaranteed hereby and (y) in the event of any such declaration of
acceleration of such Obligations, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantor for the purposes of this Subsidiary Guarantee.

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     Each Subsidiary Guarantor also agrees to pay any and all reasonable costs and expenses
(including reasonable attorneys’ fees and expenses) incurred by the Trustee in enforcing any rights
under this Section 10.01.

     Section 10.02 . Limitation on Liability; Termination, Release and Discharge Upon Merger or
Consolidation; Termination on Conversion. (a) The obligations of each Subsidiary Guarantor
hereunder will be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including, without limitation, any
guarantees under the Senior Credit Facility) and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its contribution
obligations under this Indenture, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal
or state law and not otherwise being void or voidable under any similar laws affecting the rights
of creditors generally.

     (b) Each Subsidiary Guarantor may consolidate with or merge into or sell its assets to the
Company or another Subsidiary Guarantor without limitation. Subject to Section 3.04 and Article 4,
each Subsidiary Guarantor may (i) sell or otherwise dispose (including by way of merger or
consolidation), in one or more series of related transactions, of a majority of the total voting
power of the Capital Stock or other interests of such Subsidiary Guarantor, or (ii) sell or
otherwise dispose all or substantially all of such Subsidiary Guarantor’s assets; provided that if
the surviving Person of any such merger or consolidation is the Company or an Affiliate of the
Company, or any such sale is to the Company or an Affiliate of the Company, such merger,
consolidation or sale shall not be permitted unless:

     (A) the Person formed by or surviving any such consolidation or merger or
to whom such sale is made is a corporation, partnership, trust or limited
liability company organized existing under the laws of the United States of
America, any State thereof or the District of Columbia and assumes all the
obligations of such Subsidiary under the Subsidiary Guarantee pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee in respect of the Securities, this Indenture and the Subsidiary
Guarantee,

     (B) immediately after giving effect to such transaction, no Default or
Event of Default exists; and

     (C) the Company delivers to the Trustee an Officers’ Certificate and an
Opinion of Counsel addressed to the Trustee with respect to the foregoing
matters.

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Upon the sale or disposition of a Subsidiary Guarantor (by merger, consolidation, the sale of its
Capital Stock or the sale of all or substantially all of its assets (other than by lease)), which
sale or disposition is otherwise in compliance with this Indenture, such Subsidiary Guarantor will
be released from all its obligations
under this Indenture and its Subsidiary Guarantee will terminate. Each Subsidiary Guarantee with
respect to a Security will automatically terminate immediately prior to such Security’s conversion.

     (c) Each Subsidiary Guarantor will be deemed released from all its obligations under this
Indenture, its Subsidiary Guarantee and the Registration Rights Agreement and such Subsidiary
Guarantee will terminate upon the discharge of the Securities pursuant to the provisions of Article
8 hereof.

     Section 10.03 . Right of Contribution. Each Subsidiary Guarantor hereby agrees that to the
extent that any Subsidiary Guarantor shall have paid more than its proportionate share of any
payment made on the obligations under the Subsidiary Guarantees, such Subsidiary Guarantor shall be
entitled to seek and receive contribution from and against the Company or any other Subsidiary
Guarantor who has not paid its proportionate share of such payment. The provisions of this Section
10.03 shall in no respect limit the obligations and liabilities of each Subsidiary Guarantor to the
Trustee and the Holders and each Subsidiary Guarantor shall remain liable to the Trustee and the
Holders for the full amount guaranteed by such Subsidiary Guarantor hereunder.

     Section 10.04 . No Subrogation. Notwithstanding any payment or payments made by each
Subsidiary Guarantor hereunder, no Subsidiary Guarantor shall be entitled to be subrogated to any
of the rights of the Trustee or any Holder against the Company or any other Subsidiary Guarantor or
any collateral security or guarantee or right of offset held by the Trustee or any Holder for the
payment of the Obligations, nor shall any Subsidiary Guarantor seek or be entitled to seek any
contribution or reimbursement from the Company or any other Subsidiary Guarantor in respect of
payments made by such Subsidiary Guarantor hereunder, until all amounts owing to the Trustee and
the Holders by the Company on account of the Obligations are paid in full. If any amount shall be
paid to any Subsidiary Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such Subsidiary
Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Subsidiary
Guarantor, and shall, forthwith upon receipt by such Subsidiary Guarantor, be turned over to the
Trustee in the exact form received by such Subsidiary Guarantor (duly indorsed by such Subsidiary
Guarantor to the Trustee, if required), to be applied against the Obligations.

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ARTICLE 11

Purchase at Option of Holder Upon a Fundamental

Change; Purchase at the Option of Holders

     Section 11.01 . Purchase at the Option of the Holder Upon a Fundamental Change. If a
Fundamental Change shall occur at any time, each Holder shall have the right, at such Holder’s
option, to require the Company to purchase any or all of such Holder’s Securities on a date
specified by the Company that is no later than 35 calendar days after the date of the Company
Notice of the occurrence of such Fundamental Change (subject to extension to comply with applicable
law, as
provided in Section 11.03(d)) (the “Fundamental Change Purchase Date”). The Securities shall
be repurchased in integral multiples of $1,000 of the principal amount. The Company shall purchase
such Securities at a price (the “Fundamental Change Purchase Price”), which shall be paid in cash,
equal to 100% of the principal amount of the Securities to be purchased plus accrued and unpaid
interest, including any Additional Interest, to but excluding the Fundamental Change Purchase Date,
unless the Fundamental Change Purchase Date is between a Regular Record Date and the interest
payment date to which it relates, in which case the Fundamental Change Purchase Price shall equal
100% of the principal amount of Securities to be purchased and accrued and unpaid interest,
including Additional Interest, shall be paid to the Holder of record on the Regular Record Date.

     (a) Notice of Fundamental Change. The Company, or at its request (which must be received by
the Paying Agent at least three Business Days (or such lesser period as agreed to by the Paying
Agent) prior to the date the Paying Agent is requested to give such notice as described below) the
Paying Agent, in the name of and at the expense of the Company, shall mail to all Holders and the
Trustee a Company Notice of the occurrence of a Fundamental Change and of the purchase right
arising as a result thereof, including the information required by Section 11.03(a) hereof, on or
before the 20th calendar day after the occurrence of such Fundamental Change. The Company shall
promptly furnish to the Paying Agent a copy of such Company Notice.

     (b) Exercise of Option. For a Security to be so purchased at the option of the Holder, the
Paying Agent must receive such Security duly endorsed for transfer, together with a written notice
of purchase (a “Fundamental Change Purchase Notice”) in the form entitled “Form of Fundamental
Change Purchase Notice” attached to the Security duly completed, on or before the Business Day
immediately preceding the Fundamental Change Purchase Date, subject to extension to comply with
applicable law. The Fundamental Change Purchase Notice shall state:

     (i) if certificated, the certificate numbers of the Securities which the Holder shall
deliver to be purchased;

58

 

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

     (iii) that such Securities shall be purchased as of the Fundamental Change Purchase
Date pursuant to the terms and conditions specified in paragraph 6 of the Securities and
in this Indenture.

     (c) Procedures. The Company shall purchase from a Holder, pursuant to this Section 11.01,
Securities if the principal amount of such Securities is $1,000 or a multiple of $1,000 if so
requested by such Holder.

     Any purchase by the Company contemplated pursuant to the provisions of this Section 11.01
shall be consummated by the delivery of the Fundamental
Change Purchase Price to be received by the Holder promptly following the later of the
Fundamental Change Purchase Date or the time of book-entry transfer or delivery of the Securities.

     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Fundamental Change Purchase Notice contemplated by this Section 11.01 shall have the right at any
time prior to the close of business on the Business Day prior to the Fundamental Change Purchase
Date to withdraw such Fundamental Change Purchase Notice (in whole or in part) by delivery of a
written notice of withdrawal to the Paying Agent in accordance with Section 11.03(b).

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

     On or before 11:00 a.m. (New York City time) on the Fundamental Change Purchase Date, the
Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is
acting as the Paying Agent, shall segregate and hold in trust) cash sufficient to pay the aggregate
Fundamental Change Purchase Price of the Securities to be purchased pursuant to this Section 11.01.
Payment by the Paying Agent of the Fundamental Change Purchase Price for such Securities shall be
made promptly following the later of the Fundamental Change Purchase Date or the time of book-entry
transfer or delivery of such Securities. Subject to Section 12.02 herein, no payment or adjustment
shall be made for dividends on the Common Stock the record date for which occurred on or prior to
the Fundamental Change Purchase Date. If the Paying Agent holds, in accordance with the terms of
this Indenture, cash sufficient to pay the Fundamental Change Purchase Price of such Securities on
the Fundamental Change Purchase Date, then, on and after such date, such Securities shall cease to
be outstanding and interest (including any Additional Interest), on such Securities

59

 

shall cease to
accrue, whether or not book-entry transfer of such Securities is made or such Securities are
delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the
right to receive the Fundamental Change Purchase Price and previously accrued and unpaid interest
(including any Additional Interest), upon delivery or transfer of the Securities). Nothing herein
shall preclude any withholding tax required by law.

     The Company shall require each Paying Agent (other than the Trustee) to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all cash held by the
Paying Agent for the payment of the Fundamental Change Purchase Price and shall notify the Trustee
of any default by the Company in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall segregate the cash held by it as Paying Agent and hold it as
a separate trust fund. The Company at any time may require a Paying Agent to deliver all cash held
by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon doing so, the
Paying Agent shall have no further liability for the cash delivered to the Trustee.

     Section 11.02 . Purchase of Securities at the Option of the Holder.

     (a) On each of February 15, 2011, February 15, 2016, February 15, 2021, February 15, 2026 and
February 15, 2031 (each, a “Purchase Date”), at a price (the “Purchase Price”), which shall be paid
in cash, equal to 100% of the principal amount of the Securities to be repurchased plus any accrued
and unpaid interest, including any Additional Interest, to but excluding the Purchase Date, a
Holder shall have the option to require the Company to purchase any outstanding Securities, upon:

     (i) delivery to the Paying Agent by the Holder of a written notice of purchase (a
“Purchase Notice”) at any time from the opening of business on the date that is 20
Business Days prior to a Purchase Date until the close of business on the Business Day
prior to such Purchase Date, stating:

     (A) if certificated, the certificate numbers of the Securities which the
Holder will deliver to be purchased, or, if not certificated, the Purchase
Notice must comply with appropriate DTC procedures;

     (B) the portion of the principal amount of the Securities which the Holder
will deliver to be purchased, which portion must be $1,000 in principal amount
or an integral multiple thereof;

60

 

     (C) that such Securities shall be purchased as of the Purchase Date
pursuant to the terms and conditions specified in paragraph 6 of the Securities
and in this Indenture; and

     (ii) delivery or book-entry transfer of such Securities to the Paying Agent (together
with all necessary endorsements) at the offices of the Paying Agent, such delivery or
transfer being a condition to receipt by the Holder of the Purchase Price therefor;
provided, however, that such Purchase Price shall be so paid pursuant to this Section
11.02 only if the Securities so delivered or transferred to the Paying Agent shall conform
in all respects to the description thereof in the related Purchase Notice.

     (b) The Company shall purchase from a Holder, pursuant to this Section 11.02, Securities if
the principal amount of such Securities is $1,000 or a multiple of $1,000 if so requested by such
Holder.

     (c) Any purchase by the Company contemplated pursuant to the provisions of this Section 11.02
shall be consummated by the delivery of the Purchase Price to be received by the Holder promptly
following the later of the Purchase Date or the time of book-entry transfer or delivery of the
Securities.

     (d) Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent
the Purchase Notice contemplated by this Section 11.02 shall have the right at any time prior to
the close of business on the
Business Day prior to the Purchase Date to withdraw such Purchase Notice (in whole or in part)
by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section
11.03(b).

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

     (f) On or before 11:00 a.m. (New York City time) on the Purchase Date, the Company shall
deposit with the Paying Agent (or if the Company or an Affiliate of the Company is acting as the
Paying Agent, shall segregate and hold in trust) cash sufficient to pay the aggregate Purchase
Price of the Securities to be purchased pursuant to this Section 11.02. Payment by the Paying
Agent of the Purchase Price for such Securities shall be made promptly following the later of the
Purchase Date or the time of book-entry transfer or delivery of such Securities. Subject to
Section 12.02 herein and paragraph 6 of the Securities, no payment or adjustment shall be made for
dividends on the Common Stock the record date for which occurred on or prior to the Purchase Date.
If the Paying Agent holds, in accordance with the terms of this Indenture, cash sufficient to pay
the Purchase Price of such Securities on the Purchase Date, then, on and after such date, such
Securities shall cease to be outstanding and interest (including any Additional Interest) on such
Securities shall cease to accrue, whether or not book-

61

 

entry transfer of such Securities is made or
such Securities are delivered to the Paying Agent, and all other rights of the Holder shall
terminate (other than the right to receive the Purchase Price and previously accrued interest
(including any Additional Interest) upon delivery or transfer of the Securities). Nothing herein
shall preclude any withholding tax required by law.

     (g) The Company shall require each Paying Agent (other than the Trustee) to agree in writing
that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all cash held
by the Paying Agent for the payment of the Purchase Price and shall notify the Trustee of any
default by the Company in making any such payment. If the Company or an Affiliate of the Company
acts as Paying Agent, it shall segregate the cash held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to deliver all cash held by
it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon doing so, the
Paying Agent shall have no further liability for the cash delivered to the Trustee.

     Section 11.03 . Further Conditions and Procedures for Purchase at the Option of the Holder
Upon a Fundamental Change and Purchase of Securities at the Option of the Holder.

     (a) Notice of Purchase Date or Fundamental Change. The Company shall send notices (each, a
“Company Notice”) to the Holders (and to beneficial owners as required by applicable law) at their
addresses shown in the Securities Register maintained by the Registrar, and delivered to the
Trustee and Paying Agent, not less than 20 Business Days prior to each Purchase Date, or on or
before the 20th calendar day after the occurrence of the Fundamental Change, as the case may be
(each such date of delivery, a “Company Notice Date”). Each
Company Notice shall include a form of Purchase Notice or Fundamental Change Purchase Notice
to be completed by a Holder and shall state:

     (i) the applicable Purchase Price or Fundamental Change Purchase Price;

     (ii) Conversion Rate at the time of such notice and any expected adjustments to the
Conversion Rate;

     (iii) the applicable Purchase Date or Fundamental Change Purchase Date and the last
date on which a Holder may exercise its repurchase rights under Section 11.01 or Section
11.02 as applicable;

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

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     (v) that Securities must be surrendered to the Paying Agent to collect payment of the
Purchase Price or Fundamental Change Purchase Price;

     (vi) that Securities as to which a Purchase Notice or Fundamental Change Purchase
Notice has been given may be converted only if the applicable Purchase Notice or
Fundamental Change Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;

     (vii) that the Purchase Price or Fundamental Change Purchase Price for any Securities
as to which a Purchase Notice or a Fundamental Change Purchase Notice, as applicable, has
been given and not withdrawn shall be paid by the Paying Agent promptly following the
later of the Purchase Date or Fundamental Change Purchase Date, as applicable, or the time
of book-entry transfer or delivery of such Securities;

     (viii) the procedures the Holder must follow under Sections 11.01 or 11.02, as
applicable, and Section 11.03;

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

     (x) that, unless the Company defaults in making payment of such Purchase Price or
Fundamental Change Purchase Price on Securities covered by any Purchase Notice or
Fundamental Change Purchase Notice, as applicable, interest (including any Additional
Interest) will cease to accrue on and after the Purchase Date or Fundamental Change
Purchase Date, as applicable;

     (xi) the CUSIP or ISIN number of the Securities;

     (xii) the procedures for withdrawing a Purchase Notice or Fundamental Change Purchase
Notice; and

     (xiii) in the case of a Company Notice pursuant to Section 11.01, the events causing
a Fundamental Change and the date of the Fundamental Change.

     Simultaneously with providing such Company Notice, the Company will publish a notice
containing the information in such Company Notice in a newspaper of general circulation in The City
of New York or publish such information on its then existing website or through such other public
medium as it may use at the time.

     At the Company’s request, made at least five Business Days prior to the date upon which such
notice is to be mailed, and at the Company’s expense, the Paying Agent shall give the Company
Notice in the Company’s name; provided,

63

 

however, that, in all cases, the text of the Company Notice
shall be prepared by the Company.

     (b) Effect of Purchase Notice or Fundamental Change Purchase Notice; Withdrawal; Effect of
Event of Default. Upon receipt by the Company of the Purchase Notice or Fundamental Change
Purchase Notice specified in Section 11.02(a) or Section 11.01(b), as applicable, the Holder of the
Securities in respect of which such Purchase Notice or Fundamental Change Purchase Notice, as the
case may be, was given shall (unless such Purchase Notice or Fundamental Change Purchase Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely
the Purchase Price or Fundamental Change Purchase Price with respect to such Securities. Such
Purchase Price or Fundamental Change Purchase Price shall be paid by the Paying Agent to such
Holder promptly following the later of (x) the Purchase Date or the Fundamental Change Purchase
Date, as the case may be, with respect to such Securities (provided the conditions in this Article
11 have been satisfied) and (y) the time of delivery or book-entry transfer of such Securities to
the Paying Agent by the Holder thereof in the manner required by Section 11.02 or Section 11.01, as
applicable. Securities in respect of which a Purchase Notice or Fundamental Change Purchase Notice,
as the case may be, has been given by the Holder thereof may not be converted on or after the date
of the delivery of such Purchase Notice or Fundamental Change Purchase Notice, as the case may be,
unless such Purchase Notice or Fundamental Change Purchase Notice, as the case may be, has first
been validly withdrawn as specified in the following two paragraphs.

     A Purchase Notice or Fundamental Change Purchase Notice, as the case may be, may be withdrawn
by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time
prior to 5:00 p.m., New York City time, on the Business Day prior to the Purchase Date or the
Fundamental Change Purchase Date, as the case may be, to which it relates specifying:

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

     (ii) if certificated, the certificate number of the Securities in respect of which
such notice of withdrawal is being submitted, or, if not
certificated, the written notice of withdrawal must comply with appropriate DTC
procedures; and

     (iii) the principal amount, if any, of such Securities which remains subject to the
original Purchase Notice or Fundamental Change Purchase Notice, as the case may be, and
which has been or shall be delivered for purchase by the Company.

64

 

     There shall be no purchase of any Securities pursuant to Section 11.02 or Section 11.01, if an
Event of Default has occurred and is continuing (other than a default that is cured by the payment
of the Purchase Price or Fundamental Change Purchase Price, as the case may be). The Paying Agent
shall promptly return to the respective Holders thereof any Securities (x) with respect to which a
Purchase Notice or Fundamental Change Purchase Notice, as the case may be, has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an Event of Default
(other than a default that is cured by the payment of the Purchase Price or Fundamental Change
Purchase Price, as the case may be) in which case, upon such return, the Purchase Notice or
Fundamental Change Purchase Notice with respect thereto shall be deemed to have been withdrawn.

     (c) Securities Purchased in Part. Any Securities that are to be purchased only in part shall
be surrendered at the office of the Paying Agent (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 such Holder’s attorney duly authorized in writing)
and the Company shall execute and the Trustee or the Authenticating Agent shall authenticate and
deliver to the Holder of such Securities, 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 portion of the principal amount of the Securities so surrendered which is not
purchased or redeemed.

     (d) Covenant to Comply with Securities Laws Upon Purchase of Securities. In connection with
any offer to purchase Securities under Section 11.02 or Section 11.01, the Company shall, to the
extent applicable, (a) comply with Rules 13e-4 and 14e-1 (and any successor provisions thereto)
under the Exchange Act, if applicable; (b) file the related Schedule TO (or any successor schedule,
form or report) under the Exchange Act, if applicable; and (c) otherwise comply with all applicable
federal and state securities laws so as to permit the rights and obligations under Section 11.02 or
Section 11.01 to be exercised in the time and in the manner specified in Section 11.02 or Section
11.01.

     (e) Repayment to the Company. The Trustee and the Paying Agent shall return to the Company
any cash or property that remains unclaimed, as provided in paragraph 8 of the Securities, together
with interest that the Trustee or Paying Agent, as the case may be, has expressly agreed in writing
to pay, if any, that is held by them for the payment of a Purchase Price or Fundamental Change
Purchase Price, as the case may be; provided, however, that to the extent that the
aggregate amount of cash or property deposited by the Company pursuant to Section 11.01(c) or
Section 11.02(f), as applicable, exceeds the aggregate Purchase Price or Fundamental Change
Purchase Price, as the case may be, of the Securities or portions thereof which the Company is
obligated to purchase as of

65

 

the Purchase Date or Fundamental Change Purchase Date, as the case may
be, then promptly on and after the Business Day following the Purchase Date or Fundamental Change
Purchase Date, as the case may be, the Trustee and the Paying Agent shall return any such excess to
the Company together with interest that the Trustee or Paying Agent, as the case may be, has
expressly agreed in writing to pay, if any.

     (f) Officers’ Certificate. At least five Business Days before the Company Notice Date, the
Company shall deliver an Officers’ Certificate to the Trustee specifying whether the Company
desires the Trustee to give the Company Notice required by Section 11.03(a) herein.

ARTICLE 12

Conversion

     Section 12.01 . Conversion of Securities.

     (a) Right to Convert. Subject to the procedures for conversion set forth in this Article 12,
a Holder may convert its Securities on or prior to the close of business on the Business Day
immediately preceding Stated Maturity at the Conversion Rate when any of the conditions specified
below are met and during the related specified period. Whenever the Securities shall become
convertible upon one or more of the conditions stated below, 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 in Section 13.02, and the Company shall
also publicly announce such information by publication on the Company’s website or through such
other public medium as it may use at such time. Any notice so given shall be conclusively presumed
to have been duly given, whether or not the Holder receives such notice.

     (i) Conversion Upon Satisfaction of Sale Price Condition. A Holder may surrender all
or a portion of its Securities for conversion during any fiscal quarter (and only during
such fiscal quarter) commencing after May 27, 2006 if the Last Reported Sale Price for the
Common Stock for at least 20 Trading Days during the period of 30 consecutive Trading Days
ending on the last Trading Day of the immediately preceding fiscal quarter is greater than
or equal to 130% of the Conversion Price in effect on such last Trading Day.

     (ii) Conversion Upon Notice of Redemption. A Holder may surrender for conversion all
or a portion of its Securities called for redemption at any time prior to the close of
business on the third scheduled Trading Day prior to the related Redemption Date.

66

 

     (iii) Conversion Upon Specified Corporate Transactions.

     (A) If the Company (1) distributes to all or substantially all holders of
Common Stock rights entitling them to purchase, for a period expiring within 60
days after the date of the distribution, shares of Common Stock at less than the
Last Reported Sale Price of a share of Common Stock at the time of the
distribution, or (2) distributes to all or substantially all holders of Common
Stock assets, debt securities or rights to purchase securities of the Company,
which distribution has a per share Fair Market Value, as determined by the
Company’s Board of Directors, exceeding 10% of the Last Reported Sale Price of
the Common Stock on the day preceding the declaration date for such
distribution, then, in each case, the Company must notify the Holders, in the
manner provided in Section 13.02, at least 35 scheduled Trading Days prior to
the Ex-Dividend Date for such distribution. Once the Company has given such
notice, Holders may surrender Securities for conversion at any time until the
earlier of 5:00 p.m., New York City time, on the Business Day immediately prior
to such Ex-Dividend Date or the Company’s announcement that such distribution
will not take place.

     (B) If the Company is party to a transaction described in clause (2) of the
definition of Fundamental Change (without, for the avoidance of doubt, giving
effect to the proviso set forth in the definition thereof relating to Publicly
Traded Securities), the Company must notify Holders, in the manner provided in
Section 13.02, at least 35 scheduled Trading Days prior to the anticipated
effective date for such transaction. Once the Company has given such notice,
Holders may surrender Securities for conversion at any time until 35 calendar
days after the actual effective date of such transaction (or if such transaction
also constitutes a Fundamental Change, the related Fundamental Change Purchase
Date).

     (C) If a Fundamental Change of the type described in clause (1) or (5) in
the definition thereof occurs, Holders may surrender Securities for conversion
at any time beginning on the actual effective date of such Fundamental Change
until and including the date which is 30 calendar days after the actual
effective date of such transaction or, if later, until the related Fundamental
Change Purchase Date.

     A Holder may convert a portion of the principal amount of Securities if the portion is $1,000 or a
multiple of $1,000. The cash payable, and the number of

67

 

shares of Common Stock issuable, if any,
upon conversion of a Security shall be determined as set forth in Section 12.01(c).

     (b) Conversion Procedures. The following procedures shall apply to convert Securities:

     (i) In respect of a Definitive Security, a Holder must (A) complete and manually sign
the conversion notice attached to the Security, or facsimile of such conversion notice;
(B) deliver such conversion notice, which is irrevocable, and the Security to the
Conversion Agent at the office maintained by the Conversion Agent for such purpose; (C) to
the extent any shares of Common Stock issuable upon conversion are to be issued in a name
other than the Holder’s, furnish endorsements and transfer documents as may be required by
the Conversion Agent and, if required pursuant to Section 12.01(e) below, pay all transfer
or similar taxes; and (D) if required pursuant to Section 2.01(d) above, pay funds equal
to interest payable on the next interest payment date to which such Holder is not
entitled.

     (ii) In respect of a beneficial interest in a Global Security, a beneficial owner
must comply with DTC’s procedures for converting a beneficial interest in a Global
Security and, if required pursuant to Section 2.01(d) above, pay funds equal to interest
payable on the next interest payment date to which such beneficial owner is not entitled.

The date a Holder satisfies the foregoing requirements is the “Conversion Date” hereunder.

     If a Holder converts more than one Security at the same time, the cash and number of shares of
Common Stock issuable upon the conversion, if any, shall be based on the total principal amount of
the Securities converted.

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

     (c) Payment Upon Conversion. Upon any conversion of any Security, the Company will deliver to
converting Holders, in respect of each $1,000 principal amount of Securities being converted, a
“Settlement Amount” equal to the sum of the Daily Settlement Amount for each of the 25 Trading Days
during the Observation Period for such Security.

     “Daily Settlement Amount”, for each of the 25 Trading Days during the Observation Period,
shall consist of:

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     (i) cash equal to the lesser of $40 and the Daily Conversion Value; and

     (ii) to the extent the Daily Conversion Value exceeds $40, a number of shares equal
to (A) the difference between the Daily Conversion Value and $40, divided by (B) the Daily
VWAP for such day.

     “Daily Conversion Value” means, for each of the 25 consecutive Trading Days during the
Observation Period, 4% of the product of (1) the applicable Conversion Rate and (2) the Daily VWAP
of the Common Stock (or the consideration into which the Common Stock has been converted in
connection with transactions to which Section 12.05 is applicable) on such day.

     “Daily VWAP” means, for each of the 25 consecutive Trading Days during the Observation Period,
the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on
Bloomberg page “PIR<equity> AQR”, or any successor page, in respect of the period from 9:30
a.m. to 4:00 p.m., New York City time on such Trading Day (or if such volume-weighted average
price is unavailable, the market value of one share of Common Stock on such Trading Day as our
Board of Directors determines in good faith using a volume-weighted method).

     The Settlement Amount in respect of any Security converted will be delivered to converting
Holders on the third Business Day immediately following the last day of the Observation Period for
such Security.

     (d) Cash Payments in Lieu of Fractional Shares. The Company shall not issue a fractional share
of Common Stock upon conversion of Securities. Instead the Company shall 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 1/10,000th of a share by multiplying the Daily VWAP of a full share of
Common Stock on final Trading Day of the related Observation Period by the fractional amount and
rounding the product to the nearest whole cent.

     (e) Taxes on Conversion. If a Holder converts Securities, 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. 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 shall be
due because the shares are to be issued in a name other than the Holder’s name, but the Conversion
Agent shall have no duty to determine

69

 

if any such tax is due. Nothing herein shall preclude any
withholding of tax required by law.

     (f) Certain Covenants of the Company.

     (i) The Company shall, prior to issuance of any Securities hereunder, and from time
to time as may be necessary, reserve out of its authorized but unissued Common Stock or shares of Common Stock held in treasury, sufficient number of shares of Common Stock, free
of preemptive rights, to permit the conversion of the Securities.

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

     (iii) The Company shall endeavor promptly to comply with all federal and state
securities laws regulating the issuance and delivery of shares of Common Stock upon the
conversion of Securities, if any, and shall cause to have listed or quoted all such shares
of Common Stock on each U.S. national securities exchange or over-the-counter or other
domestic market on which the Common Stock is then listed or quoted.

     (iv) Before taking any action which would cause an adjustment increasing the
Conversion Rate to an amount that would cause the Conversion Price to be reduced below the
then par value per share the Common Stock , if any, of the shares of Common Stock issuable
upon conversion of the Securities, the Company will 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.

Section 12.02 . Adjustments to Conversion Rate. The Conversion Rate shall be adjusted from
time to time by the Company as follows:

     (a) If the Company issues shares of Common Stock as a dividend or distribution on shares of
the Common Stock, or effects a share split or share combination, the Conversion Rate will be
adjusted based on the following formula:

     where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to such

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	 	 	 	event
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after such event
	 
	 	 	 	 
	OS0

	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to such event
	 
	 	 	 	 
	OS'

	 	=
	 	the number of shares of Common Stock outstanding
immediately after such event.

Such adjustment shall become effective immediately after 9:00 a.m., New York City time, on the
Business Day following the Record Date for such dividend or distribution, or the date fixed for
determination for such share split or share combination. The Company will not pay any dividend or
make any distribution on shares of Common Stock held in treasury by the Company. If any dividend
or distribution of the type described in this Section 12.02(a) is declared but not so paid or made,
the Conversion Rate shall again be adjusted to the Conversion Rate that would then be in effect if
such dividend or distribution had not been declared.

     (b) If the Company issues to all or substantially all holders of its Common Stock any rights
or warrants entitling them for a period of not more than 60 calendar days to subscribe for or
purchase shares of Common Stock at a price per share less than the Last Reported Sale Price of the
Common Stock on the Business Day immediately preceding the date of announcement of such issuance,
the Conversion Rate will be adjusted based on the following formula (provided that the Conversion
Rate will be readjusted to the extent that such rights or warrants are not exercised prior to their
expiration):

     where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to such
event
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after such event
	 
	 	 	 	 
	OS0

	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to such event
	 
	 	 	 	 
	X

	 	=
	 	the total number of shares of Common Stock issuable
pursuant to such rights
	 
	 	 	 	 
	Y

	 	=
	 	the number of shares of Common Stock equal to the
aggregate price payable to exercise such rights divided
by the average of the Last Reported Sale Prices of the
Common Stock over the 10 consecutive Trading-Day period
ending on

71

 

	 	 	 	 	 
	 

	 	 	 	the Business Day immediately preceding the
Record Date for the issuance of such rights.

Such adjustment shall be successively made whenever any such rights or warrants are issued and
shall become effective immediately after 9:00 a.m., New York City time, on the Business Day
following the date fixed for such determination. The Company shall not issue any such rights,
options or warrants in respect of shares of Common Stock held in treasury by the Company. To the
extent that shares of Common Stock are not delivered after the expiration of such rights or
warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in
effect had the adjustments made upon the issuance of such rights or warrants been made on the basis
of delivery of only the number of shares of Common Stock actually delivered. If such rights or
warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate
that would then be in effect if such date fixed for the determination of stockholders entitled to
receive such rights or warrants had not been fixed.

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

     (c) If the Company distributes shares of Capital Stock, evidences of its indebtedness or other
assets or property of the Company to all or substantially all holders of the Common Stock,
excluding:

     (i) dividends or distributions and rights or warrants referred to in clause (a) or
(b) above; and

     (ii) dividends or distributions paid exclusively in cash;

     then the Conversion Rate will be adjusted based on the following formula:

     where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to such
distribution
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after such distribution
	 
	 	 	 	 
	SP0

	 	=
	 	the average of the Last Reported Sale Prices of the Common Stock
over the 10 consecutive Trading-Day period ending on the
Business

72

 

	 	 	 	 	 
	 

	 	 	 	Day immediately preceding the Record Date for such distribution
	 
	 	 	 	 
	FMV

	 	=
	 	the fair market value (as determined by the Board of Directors)
of the shares of Capital Stock, evidences of indebtedness,
assets or property distributed with respect to each outstanding
share of Common Stock on the Record Date for such distribution.

Such adjustment shall become effective immediately prior to 9:00 a.m., New York City time, on the
Business Day following the date fixed for the determination of stockholders entitled to receive
such distribution.

With respect to an adjustment pursuant to this clause (c) where there has been a payment of a
dividend or other distribution on the Common Stock or shares of Capital Stock of any class or
series, or similar equity interest, of or relating to a Subsidiary or other business unit (a
“Spin-Off”), the Conversion Rate in effect immediately before 5:00 p.m., New York City time, on the
effective date for such Spin-off will be increased based on the following formula:

     where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to such
distribution
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after such distribution
	 
	 	 	 	 
	FMV0

	 	=
	 	the average of the Last Reported Sale Prices of the Capital
Stock or similar equity interest distributed to holders of
Common Stock applicable to one share of Common Stock over the
first 10 consecutive Trading-Day period after the effective date
of the Spin-Off
	 
	 	 	 	 
	MP0

	 	=
	 	the average of the Last Reported Sale Prices of Common Stock
over the first 10 consecutive Trading-Day period after the
effective date of the Spin-Off.

Such adjustment shall occur on the tenth Trading Day from, and including, the effective date of the
Spin-Off.

     (d) If any cash dividend or distribution is made to all or substantially all holders of Common
Stock, other than regular quarterly cash dividends that do not exceed $0.10 per share (the “Initial
Dividend Threshold”), the Conversion Rate will be adjusted based on the following formula:

73

 

     where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to
the Record Date for such distribution
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after the Record Date for such distribution
	 
	 	 	 	 
	SP0

	 	=
	 	the Last Reported Sale Prices of the Common Stock
on the Trading Day immediately preceding the
Ex-Dividend Date for such distribution
	 
	 	 	 	 
	C

	 	=
	 	the amount in cash per share the Company
distributes to holders of Common Stock in excess
of the Initial Dividend Threshold, in the case of
a regular quarterly dividend, or, in the case of
any other dividend or distribution, the full
amount of such dividend or distribution.

Such adjustment shall become effective immediately after 5:00 p.m., New York City time, on the
Record Date for such dividend or distribution; provided that if such dividend or distribution is
not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion rate that
would then be in effect if such dividend or distribution had not been declared.

The Initial Dividend Threshold is subject to adjustment in a manner inversely proportional to
adjustments to the Conversion Rate; provided that no adjustment will be made to the dividend
threshold amount for any adjustment made to the conversion rate under this clause (d).

     (e) If the Company or any of its Subsidiaries makes a payment in respect of a tender 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 exceeds the Last Reported Sale Price of the
Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be
made pursuant to such tender or exchange offer (such last date, the
“Expiration Time”), the Conversion Rate will be increased based on the following formula:

where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect on the date such
tender or exchange offer expires
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect on the day next succeeding the date such tender or exchange offer expires

74

 

	 	 	 	 	 
	AC

	 	=
	 	the aggregate value of all cash and any other
consideration (as determined by the Board of
Directors) paid or payable for shares purchased in
such tender or exchange offer
	 
	 	 	 	 
	OS0

	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to the date such tender or
exchange offer expires
	 
	 	 	 	 
	OS'

	 	=
	 	the number of shares of Common Stock outstanding
immediately after the date such tender or exchange
offer expires
	 
	 	 	 	 
	SP'

	 	=
	 	the average of the Last Reported Sale Prices of
Common Stock over the 10 consecutive Trading-Day
period commencing on the Trading Day next
succeeding the date such tender or exchange offer
expires.

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

     (f) If the application of the foregoing formulas would result in a decrease to the Conversion
Rate, no adjustment to the Conversion Rate will be made.

     (g) Notwithstanding the foregoing provisions of this Section 12.02, no adjustment shall be
made thereunder, nor shall an adjustment be made to the ability of a Holder of a Security to
convert, for any distribution described therein if the Holder will otherwise participate in the
distribution without conversion of such Holder’s Securities.

     (h) The Company may (but is not required to) make such increases in the Conversion Rate, in
addition to those required by clauses (a) through (e) of this Section 12.02 as the Board of
Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock
or rights to purchase Common Stock in connection with a dividend or distribution of shares (or
rights to acquire shares) or any similar event treated as such for income tax purposes.

     (i) 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 at least 20 days if 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.

     (j) No adjustment to the Conversion Rate need be made:

     (i) upon the issuance of any shares of Common Stock pursuant to any present or future
plan providing for the reinvestment of dividends or interest payable on securities of the
Company and the investment of additional optional amounts in shares of Common Stock under
any plan;

75

 

     (ii) upon the issuance of any shares of Common Stock or options or rights to purchase shares of Common Stock pursuant to any present or future employee, director or consultant
benefit plan or program of or assumed by the Company or any of its Subsidiaries;

     (iii) upon the issuance of any shares of Common Stock pursuant to any option,
warrant, right, or exercisable, exchangeable or convertible security not described in
clause (ii) above and outstanding as of the Issue Date;

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

     (v) for accrued and unpaid Interest (including any Additional Interest).

To the extent the Securities become convertible into cash, assets or property (other than capital
stock of the Company or securities to which Section 12.03 applies), no adjustment shall be made
thereafter as to the cash, assets or property. Interest shall not accrue on such cash, assets or
property.

     (k) All calculations under this Section 12.02 shall be made by the Company and shall be made
to the nearest cent or to the nearest one-ten thousandth (1/10,000) of a share, as the case may be.

     (l) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly
file with the Trustee and any Conversion Agent other than the Trustee an Officers’ Certificate
setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Unless and until a Trust Officer of the Trustee shall have
received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any
adjustment of the Conversion Rate and may assume that the last Conversion Rate of which it has
knowledge is still in effect. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion
Rate and the date on which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Rate to the Holder of each Security at such Holder’s last address
appearing on the Securities Register provided for in Section 2.05 of this Indenture within 20 days
after execution thereof. Failure to deliver such notice shall not affect the legality or validity
of any such adjustment.

     (m) Any case in which this Section 12.02 provides that an adjustment shall become effective
immediately after (i) a Record Date for an event, (ii) the date fixed for the determination of a
share split or combination pursuant to
Section 12.02(a), or (iii) the Expiration Time for any tender or exchange offer pursuant to
Section 12.02(e), (each a “Determination Date”), the Company may

76

 

elect to defer until the
occurrence of the applicable Adjustment Event (as hereinafter defined) (x) issuing to the holder of
any Security converted after such Determination Date and before the occurrence of such Adjustment
Event, the additional shares of Common Stock or other securities issuable upon such conversion by
reason of the adjustment required by such Adjustment Event over and above the Common Stock issuable
upon such conversion before giving effect to such adjustment and (y) paying to such holder any
amount in cash in lieu of any fraction pursuant to Section 12.01. For purposes of this Section
12.02(l), the term “Adjustment Event” shall mean:

     (iv) in any case referred to in clause (1) hereof, the occurrence of such event,

     (v) in any case referred to in clause (2) hereof, the date any such dividend or
distribution is paid or made,

     (vi) in any case referred to in clause (3) hereof, the date of expiration of such
rights or warrants, and

     (vii) in any case referred to in clause (4) hereof, the date a sale or exchange of
Common Stock pursuant to such tender or exchange offer is consummated and becomes
irrevocable.

     (n) For purposes of this Section 12.02, 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.

     (o) Whenever any provision of this Article 12 requires a calculation of an average of Last
Reported Sale Prices or Daily VWAP over a span of multiple days, the Company will make appropriate
adjustments (determined in good faith by the Board of Directors) to account for any adjustment to
the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion
Rate where the Ex-Dividend Date of the event occurs, at any time during the period from which the
average is to be calculated.

     Section 12.03 . Adjustment Upon Certain Fundamental Changes.

     (a) If a Holder elects to convert Securities pursuant to Section 12.01(a)(iii) above in
connection with a transaction described therein and the transaction (1) has an effective date
occurring on or prior to February 15, 2011 and (2) constitutes a Fundamental Change, subject to
Section 12.04 below, the Conversion Rate for such Securities shall be increased by an additional
number of

77

 

shares of Common Stock (the “Additional Shares”) as described below. Any conversion
occurring at a time when the Securities would be convertible in light of the expected or actual
occurrence of a Fundamental Change will be deemed to
have occurred in connection with such Fundamental Change notwithstanding the fact that a
Security may then be convertible because another condition to conversion has been satisfied.

     (b) The number of Additional Shares will be determined by reference to the table attached as
Schedule A hereto, based on the actual effective date of such transaction (the “Effective Date”)
and the Stock Price with respect to such transaction; provided that if the Stock Price is between
two Stock Price amounts set forth in such table or the Effective Date is between two Effective
Dates in the table, the number of Additional Shares will be determined by a straight-line
interpolation between the number of Additional Shares set forth for the higher and lower Stock
Price amounts and the two dates, as applicable, based on a 365-day year; provided further that if
the Stock Price is greater than $40.00 per share (subject to adjustment as set forth in clause (c)
below) or less than $10.85 per share, then no Additional Shares will be added to the Conversion
Rate. Notwithstanding the foregoing, in no event will the total number of shares of Common Stock
issuable upon conversion exceed 92.1659 shares per $1,000 principal amount of Securities, subject
to adjustments in the same manner as the Conversion Rate pursuant to Section 12.02.

     (c) The Stock Prices set forth in the first row of the table in Schedule A hereto will be
adjusted as of any date on which the Conversion Rate of the Securities is adjusted pursuant to
Section 12.02. The adjusted Stock Prices will equal the Stock Prices applicable immediately prior
to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate
immediately prior to such adjustment and the denominator of which is the Conversion Rate as so
adjusted. The number of Additional Shares set forth in such table will be adjusted in the same
manner as the Conversion Rate as set forth in Section 12.02.

     (d) Settlement of Securities tendered for conversion as to which the Conversion Rate will be
increased by Additional Shares pursuant to this Section 12.03 shall occur as follows:

     (i) if the last day of the Observation Period for such Securities is on or prior to
the fourth Trading Day immediately preceding the Effective Date, the Company shall deliver
the Settlement Amount (together with cash in lieu of fractional shares), determined in
accordance with Section 12.01(c) and Section 12.01(d) above, on the third Business Day
immediately following the last day of the Observation Period; provided that such
Settlement Amount and related Daily Conversion Values shall be based on the Conversion
Rate without giving effect to the

78

 

Additional Shares to be added thereto as set forth in
this subsection. As soon as practicable following the Effective Date, the Company shall
calculate an increased Settlement Amount for such Securities (based upon the same
Observation Period and the same Daily VWAP for each Trading Day in such Observation
Period) as if the Conversion Rate had been increased by the number of Additional Shares
pursuant to this subsection. Promptly following the Effective Date, the Company shall
deliver the
excess of the cash portion, if any, and Common Stock portion, if any, of such
increased Settlement Amount over the cash and Common Stock portions of the Settlement
Amount calculated without such Additional Shares. Any shares of Common Stock to be
delivered following the Effective Date shall be subject to Section 12.05 and shall be
delivered in Reference Property. In no event shall the Company pay any such increase to
the Settlement Amount if the transaction causing the increase to the Conversion Rate
pursuant to this subsection never becomes effective.

          (ii) If the last day of the Observation Period for such Securities is after the
fourth Trading Day immediately preceding the Effective Date, the Company shall deliver the
Settlement Amount (together with cash in lieu of fractional shares) in accordance with
Section 12.01(c) and Section 12.01(d) above (such determination, for the avoidance of
doubt, to include the number of Additional Shares to be added to the Conversion Rate as
set forth in this subsection) on the later to occur of (a) the Effective Date and (b) the
third Business Day immediately following the Conversion Date relating to such Securities.
Any shares of Common Stock to be delivered on or following the Effective Date shall be
subject to Section 12.05 and shall be delivered in Reference Property.

     Section 12.04 . Conversion After a Public Acquirer Change of Control.

     (a) In the event of a Public Acquirer Change of Control, the Company may, in lieu of
increasing the Conversion Rate by Additional Shares pursuant to Section 12.03 above, elect to
adjust the Conversion Rate and the related conversion obligation such that from and after the
Effective Date of such Public Acquirer Change of Control, Holders shall be entitled to convert
their Securities, in accordance with Section 12.01, into cash and a number of shares of Public
Acquirer Common Stock, if applicable. The adjusted Conversion Rate shall be the Conversion Rate in
effect immediately before the Public Acquirer Change of Control by multiplying it by a fraction:

     (i) the numerator of which will be the average of the Last Reported Sale Prices of
the Common Stock for the five consecutive Trading Days prior to but excluding the
Effective Date of such Public Acquirer Change of Control, and

79

 

     (ii) the denominator of which will be the average of the Last Reported Sale Prices of
the Public Acquirer Common Stock for the five consecutive Trading Days commencing on the
Trading Day next succeeding the Effective Date of such Public Acquirer Change of Control.

     (b) In order to make the election pursuant to this Section 12.04, the Company and the issuer
of the Public Acquirer Common Stock shall execute with 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) providing that each Security shall be exchangeable into Public Acquirer Common Stock and
execute an amendment to the Registration Rights Agreement (to the extent any Registrable Securities
(as defined therein) remain outstanding) to make
the provisions thereof to apply to the Public Acquirer Common Stock. Such supplemental
indenture shall provide for provisions and adjustments which shall be a nearly equivalent as may be
practicable to the provisions and adjustments provided for in this Article 12.

     (c) The Company will notify holders of its election by specifying, in its notice of such
transaction pursuant to Section 12.01(a)(iii)(B) above, whether it elects to modify the Conversion
Rate and related conversion obligation as set forth in this Section 12.04.

     Section 12.05 . Effect of Reclassification, Consolidation, Merger or Sale.

     (a) Except as otherwise provided in Section 12.04, if any of the following events occur: (i)
any recapitalization, reclassification or change of the outstanding shares of Common Stock (other
than a subdivision or combination to which Section 12.02(c) applies), (ii) any consolidation,
merger, binding share exchange or combination of the Company with another Person as a result of
which holders of Common Stock shall be entitled to receive cash, securities or other property (or
any combination thereof) with respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of all or substantially all of the properties and assets of the Company to any other
Person as a result of which holders of Common Stock shall be entitled to receive cash, securities
or other property (or any combination thereof) with respect to or in exchange for such Common Stock
(any such event or transaction, a “Reorganization Event”), then the Company or the successor or
purchasing Person, as the case may be, shall execute with 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) providing that each Security shall be convertible into the kind and amount
of cash, securities or other property (and in the same proportion) receivable (the “Reference
Property”) upon such Reorganization Event by a holder of a number of shares of Common Stock equal
to the Conversion Rate immediately prior to such Reorganization Event. For purposes of the
foregoing, the type and amount of consideration that a holder of Common Stock would have

80

 

been entitled to receive in the case of any such Reorganization Event that causes the Common Stock to be
converted into the right to receive more than a single type of consideration (determined based in
part upon any form of stockholder election) will be deemed to be the weighted average of the types
and amounts of consideration received by the holders of Common Stock that affirmatively make such
an election. Such supplemental indenture shall provide for provisions and adjustments which shall
be as nearly equivalent as may be practicable to the provisions and adjustments provided for in
this Article 12, Article 11 and Article 9 and the definition of Fundamental Change, as appropriate,
as determined in good faith by the Company (which determination shall be conclusive and binding),
to make such provisions apply to such other Person if different from the original issuer of the
Securities.

     (b) Following the effective time of any such Reorganization Event, settlement of Securities
converted shall be in cash and units of Reference Property determined in accordance with Section
12.01(c) above based on the Daily
Conversion Value and Daily VWAP of such Reference Property. For the purposes of determining
such Daily Conversion Value and Daily VWAP, (i) if the Reference Property includes securities for
which the price can be determined in a manner contemplated by the definition of Daily VWAP, then
the value of such securities shall be determined in accordance with the principles set forth in
such definition; (ii) if the Reference Property includes other property (other than securities as
to which clause (i) applies or cash), then the value of such property shall be the Fair Market
Value of such property as determined by the Company’s Board of Directors in good faith; and (iii)
if the Reference Property includes cash, then the value of such cash shall be the amount thereof.

     (c) Notwithstanding the foregoing, in the event of a Public Acquirer Change of Control in
which the Company has made the election pursuant to Section 12.03 to adjust the Conversion Rate and
related conversion obligation, then the Company and the issuer of the Public Acquirer Common Stock
shall execute and deliver to the Trustee a supplemental indenture (accompanied by an Opinion of
Counsel that such supplemental indenture complies with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture) modifying applicable provisions and adjustments
of this Article 12, Article 11 and Article 9 and the definition of Fundamental Change, as
appropriate, as determined in good faith by the Company (which determination shall be conclusive
and binding), to make such provisions and adjustments apply to such other Person if different from
the original issuer of the Securities.

     (d) Any issuer of securities included in the Reference Property shall execute an amendment to
the Registration Rights Agreement (to the extent any Registrable Securities (as defined therein)
remain outstanding) to make the provisions thereof applicable to such securities included in the
Applicable Consideration.

81

 

     (e) The Company shall cause notice of the execution of any supplemental indenture required by
this Section 12.05 to be mailed to each holder of Securities, at its address appearing on the
Securities Register provided for in Section 2.05 of this Indenture, within 20 calendar days after
execution thereof. Failure to deliver such notice shall not affect the legality or validity of
such supplemental indenture.

     (f) The above provisions of this Section 12.05 shall similarly apply to successive
Reorganization Events.

     (g) If this Section 12.05 applies to any event or occurrence, Section 12.02 shall not apply in
respect of such event or occurrence.

     (h) The Company shall not become a party to any Reorganization Event unless its terms are
consistent with the foregoing. None of the foregoing provisions shall affect the right of a Holder
of Securities to convert the Securities into cash and shares of Common Stock, if applicable, as set
forth in Section 12.01 prior to the effective time of such Reorganization Event.

     Section 12.06 . Responsibility of Trustee. The Trustee and any other Conversion Agent shall
not at any time be under any duty or responsibility to the Company or any Holder of Securities to
determine the Conversion Rate, or whether any facts exist which may require any adjustment of the
Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when
made, or with respect to the method employed in making the same. The Trustee and any other
Conversion Agent shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which may at any time be
issued or delivered upon the conversion of any Security; and the Trustee and any other Conversion
Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent
shall be responsible for any failure of the Company to issue, transfer or deliver any cash or
shares of Common Stock or stock certificates or other securities or property upon the surrender of
any Security for the purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article 12. Without limiting the generality of the
foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to
determine the correctness of any provisions contained in any supplemental indenture entered into
pursuant to Section 12.05 relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders upon the conversion of their Securities after any
Reorganization Event or to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.01, may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Company
shall be obligated to file with the

82

 

Trustee prior to the execution of any such supplemental
indenture) with respect thereto.

     Section 12.07 . Notice to Holders Prior to Certain Actions. In case:

     (a) the Company shall declare a dividend (or any other distribution) on its Common Stock that
would require an adjustment in the Conversion Rate pursuant to Section 12.02; or

     (b) the Company shall authorize the granting to the holders of all or substantially all of its
Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other
rights or warrants; or

     (c) of any reclassification or reorganization of the Common Stock of the Company (other than a
subdivision or combination of its outstanding Common Stock, or a change in par value, or from par
value to no par value, or from no par value to par value), or of any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the Company is required,
or of the sale or transfer of all or substantially all of the assets of the Company; or

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

the Company shall cause to be filed with the Trustee and to be mailed to each Holder of Securities
at his address appearing on the Securities Register provided
for in Section 2.05 of this Indenture, as promptly as possible but in any event at least three (3)
calendar days prior to the applicable date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution or rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding
up is expected to become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall
not affect the legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.

     Section 12.08 . Stockholder Rights Plan. To the extent that the Company has a rights plan in
effect upon conversion of the Securities into Common Stock, the Holder will receive, in addition to
the Common Stock, the rights under the rights plan, unless prior to any conversion, the rights have
separated from the Common Stock, in which case the Conversion Rate will be adjusted at the time of

83

 

separation as if the Company distributed to all holders of Common Stock shares of the Company’s
capital stock, evidences of indebtedness or assets as described in Section 12.02(c) above, subject
to readjustment in the event of the expiration, termination or redemption of such rights. In lieu
of any such adjustment, the Company may amend such applicable stockholder rights agreement to
provide that upon conversion of the Securities the Holders will receive, in addition to the Common
Stock issuable upon such conversion, the rights which would have attached to such Common Stock if
the rights had not become separated from the Common Stock under such applicable stockholder rights
agreement.

ARTICLE 13

Miscellaneous

     Section 13.01 . Trust Indenture Act Controls. If any provision of this Indenture limits,
qualifies or conflicts with another provision which is required to be included in this Indenture by
the TIA, the provision required by the TIA shall control. Each Subsidiary Guarantor in addition to
performing its obligations under its Subsidiary Guarantee shall perform such other obligations as
may be imposed upon it with respect to this Indenture under the TIA.

     Section 13.02 . Notices. Any notice or communication shall be in writing (including telecopy
promptly confirmed in writing) and delivered in person or mailed by first-class mail addressed as
follows:

if to the Company:

Pier 1 Imports, Inc.

100 Pier 1 Place

Fort Worth, Texas 76102

Attention: Charles H. Turner

Telecopy: (817) 334-0191

With a copy to:

Winstead Sechrest & Minick P.C.

5400 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

Attention: Bruce A. Cheatham, Esq.

Telecopy: (214) 645-5390

if to the Trustee:

84

 

JPMorgan Chase Bank, National Association

600 Travis, Suite 1150

Houston, Texas 77002

Attention: Worldwide Securities Services

Telecopy: (713) 216-2431

     For purposes of Section 2.05 (with respect to presentation of Securities for payment or for
registrations of transfer or exchange) if to the Trustee:

JPMorgan Chase Bank, National Association

2001 Bryan Street, 9th Floor

Dallas, Texas 75201

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

     Any notice or communication mailed to a registered Securityholder shall be mailed to the
Securityholder at the Securityholder’s address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time prescribed.

     Failure to mail a notice or communication to a Securityholder or any defect in it shall not
affect its sufficiency with respect to other Securityholders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the addressee receives it,
except that notices to the Trustee shall be effective only upon receipt.

     Section 13.03 . Communication by Holders with other Holders. Securityholders may communicate
pursuant to TIA § 312(b) with other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA § 312(c).

     Section 13.04 . Certificate and Opinion as to Conditions Precedent. Upon any request or
application by the Company to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:

     (a) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and

     (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating
that, in the opinion of such counsel, all such conditions precedent have been complied with.

85

 

     Section 13.05 . Statements Required in Certificate or Opinion. Each certificate or opinion
with respect to compliance with a covenant or condition provided for in this Indenture shall
include:

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

     (b) 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;

     (c) 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

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

     In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officers’
Certificate or on certificates of public officials.

     Section 13.06 . When Securities Disregarded. In determining whether the Holders of the
required principal amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be disregarded and deemed not
to be outstanding, except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities which a Trust
Officer of the Trustee actually knows are so owned shall be so disregarded. Also, subject to the
foregoing, only Securities outstanding at the time shall be considered in any such determination.

     Section 13.07 . Rules by Trustee, Paying Agent and Registrar. The Trustee may make
reasonable rules for action by, or a meeting of, Securityholders. The Registrar and the Paying
Agent may make reasonable rules for their functions.

     Section 13.08 . Legal Holidays. A “Legal Holiday” is a Saturday, a Sunday or other day on
which commercial banking institutions are authorized or required to be closed in New York City,
Houston, Texas or Dallas, Texas. If a payment date is a Legal Holiday, payment shall be made on
the next succeeding day that is not a Legal Holiday, and no interest or Additional Interest, if
any, shall accrue for the intervening period. If a Regular Record Date is a Legal Holiday, the
record date shall not be affected.

86

 

     Section 13.09 . Governing Law; Waiver of Jury Trial. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY; PROVIDED,
HOWEVER, THAT SUCH WAIVER OF TRIAL BY JURY BY THE COMPANY AND THE TRUSTEE SHALL IN NO WAY LIMIT ANY
AND ALL RIGHT TO TRIAL BY JURY OF ANY HOLDER OF THE SECURITIES IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 13.10 . No Recourse Against Others. An incorporator, director, officer, employee,
Affiliate or stockholder of the Company or any Subsidiary Guarantor, solely by reason of this
status, shall not have any liability for any obligations of the Company or any Subsidiary Guarantor
under the Securities, this Indenture or the Subsidiary Guarantees or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and release shall be part of
the consideration for the issue of the Securities.

     Section 13.11 . Successors. All agreements of the Company in this Indenture and the
Securities shall bind their respective successors. All agreements of the Trustee in this Indenture
shall bind its successors.

     Section 13.12 . Multiple Originals. The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.

     Section 13.13 . Qualification of Indenture. The Company shall qualify this Indenture under
the TIA in accordance with the terms and conditions of the Registration Rights Agreement and shall
pay all reasonable costs and expenses (including attorneys’ fees and expenses for the Company, the
Trustee and the Holders) incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of this Indenture and the Securities and printing this Indenture and the
Securities. The Trustee shall be entitled to receive from the
Company any such Officers’ Certificates, Opinions of Counsel or other documentation as it may
reasonably request in connection with any such qualification of this Indenture under the TIA.

87

 

     Section 13.14 . Table of Contents; Headings. The table of contents, cross-reference sheet
and headings of the Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not modify or restrict
any of the terms or provisions hereof.

     Section 13.15 . Severability Clause. In case any provision in this Indenture 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 and such provision shall be
ineffective only to the extent of such invalidity, illegality or unenforceability.

[Remainder of the page intentionally left blank]

88

 

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

THE COMPANY

	 	 	 	 	 
	 	PIER 1 IMPORTS, INC.

 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President - Finance, Chief

Financial Officer and Treasurer	 
	 

THE SUBSIDIARY GUARANTORS

	 	 	 	 	 
	 	PIER 1 ASSETS, INC.

 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President, Chief Financial

Officer and Treasurer	 
	 

	 	 	 	 	 
	 	PIER 1 KIDS, INC.

 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President	 
	 

	 	 	 	 	 
	 	PIER 1 LICENSING, INC.

 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President, Chief Financial

Officer and Treasurer	 
	 

	 	 	 	 	 
	 	PIER 1 IMPORTS (U.S.), INC.

 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President and Chief Financial

Officer	 

89

 

	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	PIER 1 VALUE SERVICES, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Pier 1 Imports (U.S.), Inc.,
	 

	 	 	 	 	 	its sole member and manager

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President and Chief

Financial Officer	 
	 

	 	 	 	 	 
	 	PIER 1 HOLDINGS, INC.

 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President and Chief

Financial Officer	 
	 

	 	 	 	 	 
	 	PIER 1 SERVICES COMPANY,
 a Delaware statutory trust	 
	 	 	 	 	 
	 	 	By: 	Pier 1 Holdings, Inc.,	 
	 	 	 	its managing trustee	 
	 	 	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
Charles H. Turner	 
	 	 	Name:  	Charles H. Turner	 
	 	 	Title:  	Executive Vice President and Chief

Financial Officer	 
	 

	 	 	 	 	 	 	 
	                                                                  THE TRUSTEE	 
	 
	 	 	 	 	 	 
	 	 	 	 	JPMORGAN CHASE BANK,
	 

	 	 	 	 	 	NATIONAL ASSOCIATION, as
	 

	 	 	 	 	 	Trustee

	 	 	 	 	 
	 	 	 
	 	By:  	/s/
Mary Jane Henson	 
	 	 	Name:  	Mary Jane Henson	 
	 	 	Title:  	Authorized Signatory	 
	 

90

 

SCHEDULE A

The following table sets forth the number of Additional Shares to be received per $1,000 principal
amount of Securities pursuant to Section 12.03 of this Indenture:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock price
	Effective Date	 	$ 10.85	 	$ 12.50	 	$ 15.00	 	$ 17.50	 	$ 20.00	 	$ 22.50	 	$ 25.00	 	$ 27.50	 	$ 30.00	 	$ 32.50	 	$ 35.00	 	$ 37.50	 	$ 40.00
	February 15, 2006
	 	26.3331	 	21.2297	 	14.6219	 	10.6388	 	8.0895	 	6.3732	 	5.1659	 	4.2835	 	3.6171	 	3.0991	 	2.6863	 	2.3502	 	0.0000
	February 15, 2007
	 	26.3331	 	20.1746	 	13.4247	 	9.4867	 	7.0548	 	5.4778	 	4.4074	 	3.6531	 	3.0997	 	2.6810	 	2.3549	 	2.0942	 	0.0000
	February 15, 2008
	 	26.3331	 	18.8501	 	11.8521	 	7.9304	 	5.6279	 	4.2152	 	3.3067	 	2.6991	 	2.2722	 	1.9608	 	1.7251	 	1.5400	 	0.0000
	February 15, 2009
	 	26.3331	 	17.3632	 	9.9841	 	6.1022	 	4.0115	 	2.8493	 	2.1757	 	1.7643	 	1.4974	 	1.3134	 	1.1789	 	1.0754	 	0.0000
	February 15, 2010
	 	26.3331	 	15.3715	 	7.1436	 	3.3338	 	1.6930	 	1.0193	 	0.7442	 	0.6239	 	0.5626	 	0.5254	 	0.4991	 	0.4787	 	0.0000
	February 15, 2011
	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000	 	0.0000

 

 

SCHEDULE B

SUBSIDIARY GUARANTORS

Pier 1 Imports (U.S.), Inc., a Delaware corporation

Pier 1 Kids, Inc., a Delaware corporation

Pier 1 Assets, Inc., a Delaware corporation

Pier 1 Licensing, Inc., a Delaware corporation

Pier 1 Holdings, Inc., a Delaware corporation

Pier 1 Services Company, a Delaware statutory trust

Pier 1 Value Services, LLC, a Virginia limited liability company

2

 

EXHIBIT A

[FORM OF FACE OF SECURITY]

[Restricted Securities Legend, if applicable]

[Global Security Legend, if applicable]

	 	 	 
	No. [___]

	 	Principal Amount $[___], as
	revised by the Schedule of Increases and Decreases in
Global Security attached hereto.

CUSIP NO.: [_________]

ISIN: [___________]

6.375% Convertible Senior Notes due 2036

     Pier 1 Imports, Inc., a Delaware corporation, promises to pay to [___________], or registered
assigns, the principal sum of [                                        ] Dollars, as revised by the Schedule of Increases
and Decreases in Global Security attached hereto, on February 15, 2036.

     Interest Payment Dates: February 15 and August 15

     Regular Record Dates: February 1 and August 1

     Additional provisions of this Security are set forth on the attached “Terms of Securities.”

     Dated: [___________]

	 	 	 	 	 
	 	PIER 1 IMPORTS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	TRUSTEE’S
CERTIFICATE OF
   AUTHENTICATION	 	 
	 

	 	 	 	 
	JPMORGAN CHASE BANK,	 	 
	NATIONAL ASSOCIATION	 	 
	as Trustee, certifies that this is one of the	 	 
	Securities referred to in the Indenture.	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 

A-1

 

TERMS OF SECURITIES

6.375% Convertible Senior Notes due 2036

     The Company issued this Securities under an Indenture dated as of February 14, 2006 (as it may
be amended or supplemented from time to time in accordance with the terms thereof, the
“Indenture”), among the Company, the Subsidiary Guarantors and the Trustee, to which reference is
hereby made for a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company, the Subsidiary Guarantors and the Holders.
Additional Securities may be issued under the Indenture in an unlimited aggregate principal amount
subject to certain conditions specified in the Indenture.

1) Interest

     Pier 1 Imports, Inc., a Delaware corporation (such corporation, and its successors and assigns
under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay
interest on the principal amount of this Security at the rate of 6.375% per annum until February
15, 2011 and at a rate of 6.125% per annum thereafter.

     The Company will pay interest semiannually on February 15 and August 15 of each year
commencing August 15, 2006. Interest on the Securities will accrue from the most recent date to
which interest has been paid on the Securities or, if no interest has been paid, from February 14,
2006. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

     The Holder of this Security after 5:00 p.m., New York City time, on a Regular Record Date
shall be entitled to receive interest (including any Additional Interest), on this Security on the
corresponding interest payment date. The Holder of this Security after 5:00 p.m., New York City
time, on a Regular Record Date will receive payment of interest (including any Additional Interest)
payable on the corresponding interest payment date notwithstanding the conversion of this Security
at any time after the close of business on such Regular Record Date. If this Security is
surrendered for conversion during the period after 5:00 p.m., New York City time, on any Regular
Record Date to 9:00 a.m., New York City time, on the corresponding interest payment date, it must
be accompanied by payment of an amount equal to the interest (including any Additional Interest)
that the Holder is to receive on the Securities. Notwithstanding the foregoing, no such payment of
interest (including any Additional Interest) need be made by any converting Holder (i) if the
Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the
third Trading Day after the corresponding interest payment date, (ii) if the Company has specified
a Fundamental Change Purchase Date during such period, or (iii) to the extent of

A-2

 

any overdue interest (including any Additional Interest) existing at the time of conversion of
such Security. Except where this Security is surrendered for conversion and must be accompanied by
payment as described above, no interest or Additional Interest thereon will be payable by the
Company on any interest payment date subsequent to the date of conversion, and delivery of the cash
and shares of Common Stock, if applicable, pursuant to Article 12 of the Indenture, together with
any cash payment for any fractional share, upon conversion will be deemed to satisfy the Company’s
obligation to pay the principal amount of the Securities and accrued and unpaid interest and
Additional Interest, if any, to, but not including, the related Conversion Date.

2) Method of Payment

     By no later than 11:00 a.m. (New York City time) on the date on which any principal of or
interest (including any Additional Interest), on any Security is due and payable, the Company shall
deposit with the Paying Agent money sufficient to pay such amount. The Company will pay principal
and interest in money of the United States that at the time of payment is legal tender for payment
of public and private debts. Payments in respect of Securities represented by a Global Security
(including principal and interest (including any Additional Interest)) will be made by wire
transfer of immediately available funds to the accounts specified by The Depository Trust Company.
The Company will pay principal of Definitive Securities at the office or agency designated by the
Company in the Borough of Manhattan, The City of New York. Interest (including any Additional
Interest), on Definitive Securities will be payable (i) to Holders having an aggregate principal
amount of $5,000,000 or less, by check mailed to the Holders of these Securities and (ii) to
Holders having an aggregate principal amount of more than $5,000,000, either by check mailed to
each Holder or, upon application by a Holder to the Registrar not later than the relevant record
date, by wire transfer in immediately available funds to that Holder’s account within the United
States, which application shall remain in effect until the Holder notifies, in writing, the
Registrar to the contrary.

3) Redemption

     No sinking fund is provided for the Securities. Subject to certain conditions specified in
the Indenture, the Securities will be redeemable, at the option of the Company, in whole at any
time or in part from time to time, at any time on or after February 15, 2011 at a Redemption Price
specified in the Indenture.

A-3

 

	4)	 	Purchase By the Company at the Option of the Holder; Purchase at the Option of the Holder
Upon a Fundamental Change

	 	a)	 	Subject to the terms and conditions of the Indenture, a Holder shall have the option
to require the Company to purchase all or a portion of its Securities held by such Holder
on February 15, 2011, February 15, 2016, February 15, 2021, February 15, 2026 and February
15, 2031 at a Purchase Price specified in the Indenture.
	 
	 	b)	 	If a Fundamental Change shall occur at any time, each Holder shall have the right, at
such Holder’s option and subject to the terms and conditions of the Indenture, to require
the Company to purchase all or a portion of its Securities at a Fundamental Change
Purchase Price specified in the Indenture.

5) Conversion

     Subject to the conditions and procedures set forth in the Indenture, and during the periods
specified in the Indenture, a Holder may convert Securities, on or prior to the close of business
on the Business Day immediately preceding Stated Maturity, into cash and shares of Common Stock, if
any, at the Conversion Rate.

     The initial Conversion Rate is 65.8328 shares of Common Stock per $1,000 principal amount of
Securities, subject to adjustment in certain events described in the Indenture. Upon conversion,
the Company will pay cash and shares of Common Stock, if any, based on a Daily Conversion Value
calculated on a proportionate basis for each day of the 25-day Observation Period, as set forth in
the Indenture. The Company shall deliver cash in lieu of any fractional share of Common Stock.

     A Holder may convert a portion of the Securities only if the principal amount of such portion
is $1,000 or a multiple of $1,000. No payment or adjustment shall be made for dividends on the
Common Stock except as provided in the Indenture.

6) Denominations; Transfer; Exchange

     The Securities are in registered form without coupons in denominations of principal amount of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange of Securities (i) for a
period of 15 days prior to the mailing of a notice of redemption of Securities selected for
redemption under Article 5 of the Indenture; (ii) so selected for redemption or, if a portion of
any Security is selected for redemption, the portion thereof selected for redemption; or (iii)
surrendered for conversion or,

A-4

 

if a portion of any Security is surrendered for conversion, the portion thereof surrendered
for conversion.

7) Persons Deemed Owners

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

8) Unclaimed Money

     If money for the payment of principal or interest (including any Additional Interest) remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company.
After any such payment, Holders entitled to the money must look only to the Company and not to the
Trustee for payment.

9) Amendment, Waiver

     The Indenture contains provisions permitting an amendment of the Indenture or the Securities
with the written consent of the Holders of at least a majority in principal amount of the then
outstanding Securities and the waiver of any Event of Default (other than with respect to
nonpayment or in respect of a provision that cannot be amended without the written consent of each
Securityholder affected) or noncompliance with any provision with the written consent of the
Holders of a majority in principal amount of the then outstanding Securities.

     In addition, the Indenture permits an amendment of the Indenture or the Security without the
consent of any Securityholder under circumstances specified in the Indenture.

10) Defaults and Remedies

     If an Event of Default specified in the Indenture occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all the Securities by
notice to the Company to be due and payable immediately. In addition, certain specified Events of
Default will cause the Securities to become immediately due and payable without further action by
the Holders.

     Securityholders may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives
reasonable indemnity or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default
(except a

A-5

 

Default or Event of Default in payment of principal or interest (including any Additional
Interest)) if it determines that withholding notice is in their interest.

11) Trustee Dealings with the Company

     Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Securities 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.

12) No Recourse Against Others

     An incorporator, director, officer, employee, Affiliate or stockholder, of each of the
Company, or any Subsidiary Guarantor, solely by reason of this status, shall not have any liability
for any obligations of the Company or any Subsidiary Guarantor under the Securities, the Indenture
or any Subsidiary Guarantee or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder waives and releases
all such liability. The waiver and release are part of the consideration for the issue of the
Securities.

13) Authentication

     This Security shall not be valid until an authorized signatory of the Trustee manually
authenticates this Security.

14) Abbreviations

     Customary abbreviations may be used in the name of a Securityholder or an assignee, such as
TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with
rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift
to Minors Act).

15) CUSIP Numbers

     Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.

	16)	 	Governing Law

A-6

 

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

     The Company will furnish to any Securityholder upon written request and without charge to the
Securityholder a copy of the Indenture which has in it the text of this Security. Requests may be
made to:

Pier 1 Imports, Inc.

100 Pier 1 Place

Fort Worth, Texas 76102

Attention: Charles H. Turner

A-7

 

[TO BE ATTACHED TO GLOBAL SECURITIES]

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

 

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

 

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

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

 

	 	 	 	 	 	 	 	 	 
	  Date:

	 	 	 	 	 	Your Signature:	 	 
	 

	 	 
	 	 	 	 	 	 

	 	 	 
	Signature Guarantee:
	 	 
	 

	 	 
	 

	 	                    (Signature must be guaranteed)

 

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

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions) with membership in an approved signature guarantee
medallion program, pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate
occurring prior to the date that is two years after the later of the date of original issuance of
such Securities and the last date, if any, on which such Securities were owned by the Company or
any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

	 	 	 	 	 	 	 
	o

	 	 	1	 	 	acquired for the undersigned’s own account, without transfer; or
	 
	 	 	 	 	 	 
	o

	 	 	2	 	 	transferred to the Company; or
	 
	 	 	 	 	 	 
	o

	 	 	3	 	 	transferred pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the “Securities Act”); or
	 
	 	 	 	 	 	 
	o

	 	 	4	 	 	transferred pursuant to and in compliance with Rule 144A under the
Securities Act; or
	 
	 	 	 	 	 	 
	o

	 	 	5	 	 	transferred pursuant to and in compliance with Regulation S under the
Securities Act; or
	 
	 	 	 	 	 	 
	o

	 	 	6	 	 	transferred pursuant to another available exemption from the

A-8

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	registration requirements of the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities
evidenced by this certificate in the name of any person other than the registered Holder thereof;
provided, however, that if box (5) or (6) is checked, the Trustee or the Company may require, prior
to registering any such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may reasonably request 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, such as the exemption provided by
Rule 144 under such Act.

	 	 	 
	 

	 	 
	 

	 	Signature:

Signature Guarantee:

	 	 	 
	 

	 	 
	(Signature must be guaranteed)

	 	Signature:

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions) with membership in an approved signature guarantee
medallion program, pursuant to S.E.C. Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

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

                                                                                                    

Dated:

A-9

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

	 	 	 	 	 	 	 	 	 
	 

	 	Amount of decrease
	 	Amount of increase
	 	Principal Amount of
	 	Signature of
	 

	 	in Principal Amount
	 	in Principal Amount
	 	this Global Security
	 	authorized signatory
	 

	 	of this Global
	 	of this Global
	 	following such
	 	of Trustee or
	Date

	 	Security
	 	Security
	 	decrease or increase
	 	Securities Custodian
	 

	 	 
	 	 
	 	 
	 	 

A-10

 

FORM OF CONVERSION NOTICE

To:      Pier 1 Imports, Inc.

     The undersigned registered holder of this Security hereby exercises the option to convert this
Security, or portion hereof (which is $1,000 principal amount or an integral multiple thereof)
designated below, for cash and shares of Common Stock of Pier 1 Imports, Inc., if any, in
accordance with the terms of the Indenture referred to in this Security, and directs that cash and
the shares, if any, issuable and deliverable upon such conversion, and any Securities representing
any unconverted principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If cash, shares or any portion of this Security
not converted are to be issued in the name of a Person other than the undersigned, the undersigned
shall pay all transfer taxes payable with respect thereto.

     This notice shall be deemed to be an irrevocable exercise of the option to convert this
Security.

	 	 	 
	Dated:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature(s)
	 
	 	 
	 

	 	The signature(s) should be guaranteed by
an eligible guarantor institution (banks,
stockbrokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program, pursuant to
S.E.C. Rule 17Ad-15.
	 
	 	 
	 

	 	 
	 

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

(Name)

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

$                    ,000
	 
	 	 
	 

(Street Address)

	 	 
	 
	 	 
	 

	 	 
	(City state and zip code)

	 	Social Security or Other Taxpayer Number
	Please print name and address
	 	 

A-11

 

FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE

To:      Pier 1 Imports, Inc.

     The undersigned registered holder of this Security hereby acknowledges receipt of a notice
from Pier 1 Imports, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect
to the Company and requests and instructs the Company to repurchase this Security, or the portion
hereof (which is $1,000 principal amount or an integral multiple thereof) designated below, in
accordance with the terms of the Indenture referred to in this Security and directs that the check
or Common Stock of the Company, as applicable, in payment for this Security or the portion thereof
and any Securities representing any unrepurchased principal amount hereof, be issued and delivered
to the registered holder hereof unless a different name has been indicated below. If any portion of
this Security not repurchased is to be issued in the name of a Person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.

	 	 	 
	Dated:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature(s)
	 
	 	 
	 

	 	The signature(s) should be guaranteed by
an eligible guarantor institution (banks,
stockbrokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program, pursuant to
S.E.C. Rule 17Ad-15.
	 
	 	 
	 

	 	 
	 

	 	Signature Guarantee
	 
	 	 
	Fill in if a check is to be issued, or Securities are to be issued, other than
to and in the name of registered holder:
	 
	 	 
	 

(Name)

	 	 Principal
amount to be purchased
	 

	 	(if less than all): $                    ,000
	 
	 	 
	 

(Street Address)

	 	 
	 
	 	 
	 

	 	 
	(City state and zip code)

	 	Social Security or Other Taxpayer Number
	Please print name and address
	 	 

A-12

 

FORM OF PURCHASE NOTICE

To:      Pier 1 Imports, Inc.

     The undersigned registered holder of this Security hereby acknowledges receipt of a notice
from Pier 1 Imports, Inc. (the “Company”) as to the holder’s option to require the Company to
repurchase this Security and requests and instructs the Company to repurchase this Security, or the
portion hereof (which is $1,000 principal amount or a integral multiple thereof) designated below,
in accordance with the terms of the Indenture referred to in this Security and directs that the
check or Common Stock of the Company, as applicable, in payment for this Security or the portion
thereof and any Securities representing any unrepurchased principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been indicated below. If any
portion of this Security not repurchased is to be issued in the name of a Person other than the
undersigned, the undersigned shall pay all transfer taxes payable with respect thereto.

	 	 	 
	Dated:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature(s)
	 
	 	 
	 

	 	The signature(s) should be guaranteed by
an eligible guarantor institution (banks,
stockbrokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program, pursuant to
S.E.C. Rule 17Ad-15.
	 
	 	 
	 

	 	 
	 

	 	Signature Guarantee
	 
	 	 
	Fill in if a check is to be issued, or Securities are to be issued, other than
to and in the name of registered holder:
	 
	 	 
	 

(Name)

	 	 Principal
amount to be purchased
	 

	 	(if less than all): $                    ,000
	 
	 	 
	 

(Street Address)

	 	 
	 
	 	 
	 

	 	 
	(City state and zip code)

	 	Social Security or Other Taxpayer Number
	Please print name and address
	 	 

A-13

 

EXHIBIT B

FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY

GUARANTORS

     This Supplemental Indenture, dated as of [                    ] (this “Supplemental Indenture” or
“Guarantee”), among [name of future Subsidiary Guarantor] (the “Guarantor”), Pier 1 Imports, Inc.
(together with its successors and assigns, the “Company”), each other then existing Subsidiary
Guarantor under the Indenture referred to below, and JPMorgan Chase Bank, National Association, as
Trustee under the Indenture referred to below.

W I T N E S S E T H:

     WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and
delivered an Indenture, dated as of February 14, 2006 (as amended, supplemented, waived or
otherwise modified, the “Indenture”), providing for the issuance of 6.375% Convertible Senior Notes
due 2036 of the Company (the “Securities”);

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee and the Company are authorized
to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of
any Securityholder;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guarantor, the Company, the other
Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit
of the Holders of the Securities as follows:

Article I

Definitions

     Section 1.01. Defined Terms. As used in this Supplemental Indenture, terms defined in the
Indenture or in the preamble or recital hereto are used herein as therein defined, except that the
term “Holders” in this Guarantee shall refer to the term “Holders” as defined in the Indenture and
the Trustee acting on behalf or for the benefit of such Holders. The words “herein,” “hereof” and
“hereby” and other words of similar import used in this Supplemental Indenture refer to this
Supplemental Indenture as a whole and not to any particular section hereof.

Article II

Agreement To Be Bound; Guarantee

     Section 2.01. Agreement to be Bound. The Guarantor hereby becomes a party to the Indenture
as a Subsidiary Guarantor and as such will have all of the

B-1

 

rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under
the Indenture. The Guarantor agrees to be bound by all of the provisions of the Indenture
applicable to a Subsidiary Guarantor and to perform all of the obligations and agreements of a
Subsidiary Guarantor under the Indenture.

     Section 2.02. Guarantee. The Guarantor fully, unconditionally and irrevocably Guarantees to
each Holder of the Securities and the Trustee the Obligations pursuant to Article 10 of the
Indenture on a senior basis.

Article III

Miscellaneous

     Section 3.01. Notices. All notices and other communications to the Guarantor shall be given
as provided in the Indenture to the Guarantor, at its address set forth below, with a copy to the
Company as provided in the Indenture for notices to the Company.

     Section 3.02. Parties. Nothing expressed or mentioned herein is intended or shall be
construed to give any Person, firm or corporation, other than the Holders and the Trustee, any
legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the
Indenture or any provision herein or therein contained.

     Section 3.03. Governing Law. This Supplemental Indenture shall be governed by, and construed
in accordance with, the laws of the State of New York.

     Section 3.04. Severability Clause. In case any provision in this Supplemental Indenture
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 and such provision shall
be ineffective only to the extent of such invalidity, illegality or unenforceability.

     Section 3.05. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except
as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental
Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no
representation or warranty as to the validity or sufficiency of this Supplemental Indenture.

B-2

 

     Section 3.06. Counterparts. The parties hereto may sign one or more copies of this
Supplemental Indenture in counterparts, all of which together shall constitute one and the same
agreement.

     Section 3.07. Headings. The headings of the Articles and the sections in this Guarantee are
for convenience of reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.

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

THE COMPANY

	 	 	 	 	 
	 	PIER 1 IMPORTS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

THE SUBSIDIARY GUARANTORS

	 	 	 	 	 
	 	PIER 1 ASSETS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	PIER 1 KIDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	PIER 1 LICENSING, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

B-3

 

	 	 	 	 	 
	 	PIER 1 IMPORTS (U.S.), INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	PIER 1 VALUE SERVICES, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Pier 1 Imports (U.S.), Inc.,
	 

	 	 	 	 	 	its sole member and manager

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	PIER 1 HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	PIER 1 SERVICES COMPANY,
 a Delaware statutory trust	 
	 	 	 	 	 
	 	 	By: 	 	 
	 	 	 	Pier 1 Holdings, Inc.,	 
	 	 	 	its managing trustee	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	[INSERT OTHER SUBSIDIARY GUARANTORS]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

B-4

 

	 	 	 	 	 	 	 
	 	 	THE TRUSTEE
	 
	 	 	 	 	 	 
	 	 	 	 	JPMORGAN CHASE BANK,
	 

	 	 	 	 	 	NATIONAL ASSOCIATION, as

Trustee

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

B-5

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