Document:

Exhibit 10.1

 

Execution Copy

 

 

SECURITIES PURCHASE AGREEMENT

 

by and among

 

POWER-ONE, INC.,

 

SILVER LAKE SUMERU FUND, L.P.,

 

and

 

SILVER LAKE TECHNOLOGY INVESTORS SUMERU, L.P.

 

April 23, 2009

 

 

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Purchase and Sale

  	
  11

  
	
   

  	
  2.1

  	
  Purchase and Sale

  	
  11

  
	
   

  	
  2.2

  	
  Purchase Price Allocation

  	
  12

  
	
   

  	
  2.3

  	
  Closing

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Representations and Warranties of the Company

  	
  13

  
	
   

  	
  3.1

  	
  Organization and Power

  	
  13

  
	
   

  	
  3.2

  	
  Capitalization

  	
  13

  
	
   

  	
  3.3

  	
  Authorization

  	
  15

  
	
   

  	
  3.4

  	
  Valid Issuance

  	
  15

  
	
   

  	
  3.5

  	
  No Conflict

  	
  15

  
	
   

  	
  3.6

  	
  Consents

  	
  16

  
	
   

  	
  3.7

  	
  Permits

  	
  16

  
	
   

  	
  3.8

  	
  SEC Reports; Financial Statements

  	
  17

  
	
   

  	
  3.9

  	
  Litigation

  	
  18

  
	
   

  	
  3.10

  	
  Absence of Certain Changes

  	
  18

  
	
   

  	
  3.11

  	
  Compliance with Law

  	
  19

  
	
   

  	
  3.12

  	
  Intellectual Property

  	
  19

  
	
   

  	
  3.13

  	
  Employee Benefits

  	
  20

  
	
   

  	
  3.14

  	
  Labor Relations

  	
  22

  
	
   

  	
  3.15

  	
  Taxes

  	
  22

  
	
   

  	
  3.16

  	
  NASDAQ

  	
  23

  
	
   

  	
  3.17

  	
  Investment Company Act

  	
  23

  
	
   

  	
  3.18

  	
  Brokers

  	
  23

  
	
   

  	
  3.19

  	
  Subsidiaries

  	
  23

  
	
   

  	
  3.20

  	
  Environmental Matters

  	
  24

  
	
   

  	
  3.21

  	
  Assets

  	
  25

  
	
   

  	
  3.22

  	
  Insurance

  	
  25

  
	
   

  	
  3.23

  	
  Material Contracts

  	
  25

  
	
   

  	
  3.24

  	
  Rights Agreement

  	
  26

  
	
   

  	
  3.25

  	
  Anti-Takeover Statutes

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and Warranties of Each Purchaser

  	
  26

  
	
   

  	
  4.1

  	
  Organization

  	
  26

  
	
   

  	
  4.2

  	
  Authorization

  	
  26

  
	
   

  	
  4.3

  	
  No Conflict

  	
  27

  
	
   

  	
  4.4

  	
  Consents

  	
  27

  
	
   

  	
  4.5

  	
  Purchasers’ Financing

  	
  28

  
	
   

  	
  4.6

  	
  Brokers

  	
  28

  
	
   

  	
  4.7

  	
  Purchase Entirely for Own Account

  	
  28

  
	
   

  	
  4.8

  	
  Investor Status

  	
  28

  
	
   

  	
  4.9

  	
  Securities Not Registered

  	
  28

  
	
   

  	
  4.10

  	
  Litigation

  	
  28

  

 

 

	
   

  	
  4.11

  	
  Investment Company Act

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Covenants

  	
  29

  
	
   

  	
  5.1

  	
  Interim Conduct of the Business

  	
  29

  
	
   

  	
  5.2

  	
  Antitrust Approval

  	
  30

  
	
   

  	
  5.3

  	
  Shares Issuable Upon Conversion

  	
  30

  
	
   

  	
  5.4

  	
  PORTAL and CUSIPs

  	
  31

  
	
   

  	
  5.5

  	
  Commercially Reasonable Efforts; Further Assurances;
  Notification

  	
  31

  
	
   

  	
  5.6

  	
  Standstill

  	
  32

  
	
   

  	
  5.7

  	
  Preemptive Rights

  	
  34

  
	
   

  	
  5.8

  	
  Indemnification; Freedom to Pursue Opportunity

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Conditions Precedent

  	
  36

  
	
   

  	
  6.1

  	
  Conditions to Each Party’s Obligation to Consummate
  the Closing

  	
  36

  
	
   

  	
  6.2

  	
  Conditions to the Obligation of the Purchasers to
  Consummate the Closing

  	
  36

  
	
   

  	
  6.3

  	
  Conditions to the Obligation of the Company to
  Consummate the Closing

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Governance; Information Rights

  	
  38

  
	
   

  	
  7.1

  	
  Board Representation

  	
  38

  
	
   

  	
  7.2

  	
  Committees

  	
  41

  
	
   

  	
  7.3

  	
  D&O Insurance; Indemnification Agreements

  	
  42

  
	
   

  	
  7.4

  	
  Approval Rights

  	
  42

  
	
   

  	
  7.5

  	
  Board Composition

  	
  43

  
	
   

  	
  7.6

  	
  Rights Agreement; Charter Amendment

  	
  43

  
	
   

  	
  7.7

  	
  Information Rights

  	
  44

  
	
   

  	
  7.8

  	
  VCOC Rights

  	
  45

  
	
   

  	
  7.9

  	
  Confidentiality

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Transfers; Redemption

  	
  47

  
	
   

  	
  8.1

  	
  Transfer Restrictions

  	
  47

  
	
   

  	
  8.2

  	
  Right to Sell to the Company

  	
  48

  
	
   

  	
  8.3

  	
  Legends; Securities Act Compliance

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Termination

  	
  50

  
	
   

  	
  9.1

  	
  Conditions of Termination

  	
  50

  
	
   

  	
  9.2

  	
  Effect of Termination

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Miscellaneous Provisions

  	
  50

  
	
   

  	
  10.1

  	
  Public Statements or Releases

  	
  50

  
	
   

  	
  10.2

  	
  Interpretation

  	
  51

  
	
   

  	
  10.3

  	
  Notices

  	
  51

  
	
   

  	
  10.4

  	
  Severability

  	
  52

  
	
   

  	
  10.5

  	
  Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

  	
  52

  
	
   

  	
  10.6

  	
  Specific Performance

  	
  53

  
	
   

  	
  10.7

  	
  Waiver

  	
  53

  
	
   

  	
  10.8

  	
  Fees; Expenses

  	
  53

  

 

ii

 

	
   

  	
  10.9

  	
  Assignment

  	
  54

  
	
   

  	
  10.10

  	
  Survival

  	
  54

  
	
   

  	
  10.11

  	
  No Third Party Beneficiaries

  	
  54

  
	
   

  	
  10.12

  	
  Counterparts

  	
  54

  
	
   

  	
  10.13

  	
  Entire Agreement; Amendments

  	
  54

  
	
   

  	
  10.14

  	
  SLS Rights

  	
  55

  
	
   

  	
  10.15

  	
  Discussion Regarding Securities

  	
  55

  
	
   

  	
  10.16

  	
  Time is of the Essence

  	
  55

  
	
   

  	
  10.17

  	
  Exchange Reformation Clause

  	
  55

  
	
   

  	
  10.18

  	
  Investor Securityholder Fundamental Change

  	
  56

  

 

	
  Annexes

  
	
   

  
	
  Annex A

  	
  Purchasers

  
	
   

  	
   

  
	
  Exhibits

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Indenture (including Form of Notes)

  
	
  Exhibit B

  	
  Form of
  Series A Certificate of Designation

  
	
  Exhibit C

  	
  Form of
  Warrants

  
	
  Exhibit D

  	
  Form of
  Registration Rights Agreement

  
	
  Exhibit E

  	
  Form of
  Supplemental Indenture

  
	
  Exhibit F

  	
  Form of
  Amended and Restated Rights Agreement

  
	
  Exhibit G

  	
  Series B
  Junior Preferred Term Sheet

  
	
  Exhibit H

  	
  Series C
  Junior Preferred Term Sheet

  
	
  Exhibit I

  	
  Form of
  Pledge Agreement Amendment

  
	
  Exhibit J

  	
  Form of
  Consent and Purchase Agreement

  
	
  Exhibit K

  	
  Form of
  Transaction Fee Agreement

  
	
  Exhibit L

  	
  Form of
  Legal Opinion

  
	
  Exhibit M

  	
  Form of
  Indemnification Agreement

  

 

iii

 

INDEX
OF DEFINED TERMS

 

	
  8% Notes

  	
  1

  
	
  Affiliate

  	
  2

  
	
  Affiliate Transaction

  	
  42

  
	
  Affiliated Entity

  	
  2

  
	
  Agreement

  	
  1

  
	
  Annual Report

  	
  13

  
	
  Appointed Director

  	
  38

  
	
  Appraisal Firm

  	
  12

  
	
  Approved Stock Plan

  	
  2

  
	
  Approved Transaction

  	
  2

  
	
  Bankruptcy Event

  	
  3

  
	
  Beneficial Ownership

  	
  3

  
	
  Beneficially Own

  	
  3

  
	
  Beneficially Owned

  	
  3

  
	
  Benefit Plans

  	
  3

  
	
  Board

  	
  3

  
	
  Business Day

  	
  4

  
	
  Capitalization Date

  	
  13

  
	
  CEO

  	
  49

  
	
  Certificate of Designation

  	
  1

  
	
  Change

  	
  7

  
	
  Closing

  	
  12

  
	
  Closing Date

  	
  12

  
	
  Code

  	
  4

  
	
  Committee

  	
  41

  
	
  Committee Qualification Requirements

  	
  4

  
	
  Common Shares Outstanding

  	
  4

  
	
  Common Stock

  	
  4

  
	
  Company

  	
  1

  
	
  Company Change in Control Event

  	
  33

  
	
  Company Employees

  	
  4

  
	
  Company Option

  	
  4

  
	
  Company Securities

  	
  14

  
	
  Company Stock Plans

  	
  5

  
	
  Confidential Information

  	
  46

  
	
  Consent

  	
  16

  
	
  Contracts

  	
  26

  
	
  control

  	
  5

  
	
  controlled by

  	
  5

  
	
  controlling

  	
  5

  
	
  Conversion Shares

  	
  5

  
	
  Convertible Preferred Stock

  	
  1

  
	
  DGCL

  	
  5

  
	
  Director

  	
  5

  
	
  Disclosure Schedule

  	
  13

  
	
  Environmental Law

  	
  5

  
	
  ERISA

  	
  5

  
	
  ERISA Affiliate

  	
  5, 21

  
	
  Exchange

  	
  5

  
	
  Exchange Act

  	
  5

  
	
  Financial Statements

  	
  17

  
	
  Foreign Benefit Plan

  	
  5

  
	
  Fundamental Change

  	
  6

  
	
  GAAP

  	
  17

  
	
  Governmental Entity

  	
  6

  
	
  Guarantee Obligation

  	
  6

  
	
  Hazardous Substance

  	
  6

  
	
  HSR Act

  	
  6

  
	
  Incurrence

  	
  43

  
	
  Indebtedness

  	
  7

  
	
  Indenture

  	
  1

  
	
  Independent Director

  	
  39

  
	
  Information Rights Period

  	
  7

  
	
  Intellectual Property

  	
  7

  
	
  Investor Securityholders

  	
  7

  
	
  Junior Certificates of Designation

  	
  7

  
	
  Junior Preferred Stock

  	
  7

  
	
  Knowledge

  	
  7

  
	
  Law

  	
  16

  
	
  Legal Proceeding

  	
  7

  
	
  Liabilities

  	
  24

  
	
  Lien

  	
  16

  
	
  Material Adverse Effect

  	
  7

  
	
  Material Contract

  	
  25

  
	
  Nominated Director

  	
  39

  
	
  Nomination Entitlement Period

  	
  38

  
	
  Nomination Representation Entitlement

  	
  8

  
	
  Notes

  	
  1

  
	
  NYSE

  	
  23

  
	
  Participation Amount

  	
  35

  
	
  Participation Right

  	
  34

  
	
  Participation Rights Notice

  	
  34

  
	
  PB Warrant

  	
  8

  
	
  Permitted Lien

  	
  8

  
	
  Permitted Transferee

  	
  9

  
	
  Person

  	
  9

  
	
  Plan Asset Regulations

  	
  9

  
	
  Pledge Agreement Amendment

  	
  37

  

 

1

 

	
  Preferred Director

  	
  9

  
	
  Preferred Entitlement Period

  	
  38

  
	
  Preferred Representation Entitlement

  	
  9

  
	
  Preferred Stock

  	
  13

  
	
  primary obligor

  	
  6

  
	
  Public Sale

  	
  9

  
	
  Purchase Price

  	
  12

  
	
  Purchased Warrants

  	
  1

  
	
  Purchaser

  	
  1

  
	
  Purchaser Adverse Effect

  	
  27

  
	
  Purchasers

  	
  1

  
	
  Put Closing Date

  	
  49

  
	
  Put Exercise Notice

  	
  49

  
	
  Put Right

  	
  49

  
	
  Put Right Closing

  	
  49

  
	
  Redeeming Sellers

  	
  48

  
	
  Redemption Securities

  	
  49

  
	
  Registered Intellectual Property

  	
  7

  
	
  Registration Rights Agreement

  	
  1

  
	
  Representatives

  	
  45

  
	
  Restricted Period Termination Date

  	
  47

  
	
  Restriction Termination Event

  	
  9

  
	
  Rights

  	
  9

  
	
  Rights Agreement

  	
  2

  
	
  Rights Agreement Amendment

  	
  2

  
	
  Rule 144

  	
  28

  
	
  SEC

  	
  9

  
	
  SEC Reports

  	
  17

  
	
  Securities

  	
  12

  
	
  Securities Act

  	
  9

  
	
  Series B Certificate of Designation

  	
  9

  
	
  Series B Junior Preferred Stock

  	
  9

  
	
  Series B Junior Preferred Term Sheet

  	
  9

  
	
  Series C Certificate of Designation

  	
  10

  
	
  Series C Junior Preferred Stock

  	
  9

  
	
  Series C Junior Preferred Term Sheet

  	
  10

  
	
  Significant Subsidiary

  	
  10

  
	
  SLS Beneficial Ownership Percentage

  	
  10

  
	
  SLS Director Beneficial Ownership Percentage

  	
  10

  
	
  Standstill Period

  	
  32

  
	
  Subsequent Notice

  	
  35

  
	
  Subsidiary

  	
  10

  
	
  Subsidiary Securities

  	
  24

  
	
  Supplemental Indenture

  	
  2

  
	
  Survivor of a Fundamental Change

  	
  10

  
	
  Tax Returns

  	
  11

  
	
  Taxes

  	
  11

  
	
  Third Party

  	
  33

  
	
  Total Current Voting Power

  	
  11

  
	
  Transaction Agreements

  	
  11

  
	
  Transaction Expenses

  	
  53

  
	
  Transaction Fee Agreement

  	
  37

  
	
  Transfer

  	
  47

  
	
  Transferee

  	
  11

  
	
  Treasury Regulation

  	
  11

  
	
  Triggering Event

  	
  49

  
	
  Trustee

  	
  11

  
	
  under common control with

  	
  5

  
	
  VCOC Investor Securityholder

  	
  45

  
	
  Voting Stock

  	
  11

  
	
  Warrants

  	
  1

  

 

2

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES
PURCHASE AGREEMENT (this “Agreement”),
dated as of April 23, 2009, by and among Power-One, Inc., a Delaware
corporation (the “Company”),
Silver Lake Sumeru Fund, L.P. (together with its affiliated successors by merger,
consolidation or transfer of all or substantially all assets, “SLS”) and Silver Lake Technology Investors
Sumeru, L.P. (each, a “Purchaser”
and collectively, the “Purchasers”).

 

WHEREAS,
the Company has authorized the issuance of up to $36,375,000 aggregate
principal amount of its Convertible Senior Unsecured Notes due 2019 (the “Notes”) to be issued in accordance with the
terms and conditions of the Indenture for the Notes substantially in the form
attached hereto as Exhibit A (the “Indenture”),
which Notes shall be convertible into authorized but unissued shares of Common
Stock (as defined below);

 

WHEREAS,
the Company has authorized the issuance and sale of 23,625 shares of a new
series of Series A Convertible Preferred Stock, par value $.001 per share, of
the Company (the “Convertible Preferred Stock”),
the rights, preferences and privileges of which are to be set forth in a
Certificate of Designation substantially in the form attached hereto as Exhibit
B (the “Certificate of Designation”),
which shares of Convertible Preferred Stock shall be convertible into
authorized but unissued shares of Common Stock;

 

WHEREAS,
the Company has authorized the issuance of warrants to acquire 8,700,000 shares
of Common Stock (all such warrants acquired by the Purchasers, the “Purchased Warrants”) in accordance with the
terms and conditions substantially in the form attached hereto as Exhibit C
(the “Warrants”);

 

WHEREAS,
the Company desires to issue and sell to the Purchasers pursuant to this
Agreement, and each Purchaser, severally, desires to purchase from the Company,
the Securities (as defined below) in such amounts as is set forth opposite its
name in Annex A attached hereto;

 

WHEREAS,
the Board (as defined below) has approved the execution, delivery and performance
of this Agreement and the other Transaction Agreements and the consummation of
the transactions contemplated hereby and thereby in accordance with the DGCL
upon the terms and conditions contained herein and therein.

 

WHEREAS,
the Purchasers have approved the execution, delivery and performance of this
Agreement and the other Transaction Agreements to which they are a party and
the consummation of the transactions contemplated hereby and thereby in
accordance with applicable law upon the terms and conditions contained herein
and therein;

 

WHEREAS,
as a condition to the consummation of the transactions contemplated hereby, the
Company and the Purchasers will enter into the Registration Rights Agreement
substantially in the form attached hereto as Exhibit D (the “Registration Rights Agreement”) on the
Closing Date;

 

WHEREAS,
the Company agreed to purchase, and certain holders of the Company’s 8% Senior
Secured Convertible Notes Due 2013 (the “8%
Notes”) have agreed to sell, certain of the 8% Notes, which purchase
and sale of the 

 

 

8%
Notes is a condition to the Purchasers’ willingness to enter into this
Agreement and consummate the transactions contemplated hereby;

 

WHEREAS,
the Company and the holders of at least a majority of the aggregate principal
amount of the outstanding 8% Notes have agreed to enter into that certain
Supplemental Indenture substantially in the form attached hereto as Exhibit E
(the “Supplemental Indenture”),
the effectiveness of which is a condition to the Purchasers’ willingness to
enter into this Agreement and consummate the transactions contemplated hereby;

 

WHEREAS,
concurrently with the execution and delivery of this Agreement, and as a
condition and inducement to the willingness of the Purchasers to enter into
this Agreement, the Company and American Stock Transfer & Trust Company are
amending and restating that certain Rights Agreement, dated as of July 27,
2000, as amended and restated (the “Rights
Agreement”), substantially in the form attached hereto as Exhibit
F (the “Rights Agreement Amendment”),
so as to, among other things, render the rights issued thereunder inapplicable
to this Agreement, the other Transaction Agreements and the transactions
contemplated hereby and thereby;

 

NOW
THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as follows:

 

1.                                       Definitions. 
As used in this Agreement, the following terms shall have the following
respective meanings:

 

“Affiliate” means, with respect to any
Person, any other Person that directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with,
such specified Person. Notwithstanding the foregoing, (i) the Company, its
Subsidiaries and its other controlled Affiliates shall not be considered
Affiliates of the Investor Securityholders and (ii) none of the Investor
Securityholders shall be considered Affiliates of any portfolio company in
which the Investor Securityholders or any of their Affiliated Entities have
made a debt or equity investment.

 

“Affiliated Entity” shall mean any
investment fund or holding company formed for investment purposes that is
primarily managed, advised or serviced by a Purchaser or by an Affiliate of a
Purchaser; provided that no portfolio company of any Purchaser or any
Affiliated Entity of any Purchaser shall be deemed an Affiliated Entity
hereunder.

 

“Approved Stock Plan” means any stock option
plan or other equity-based compensation plan of the Company that has been approved
by the Board, which provides for the issuance of Company Securities to the
directors, officers, employees, agents or consultants of the Company or its
Subsidiaries.

 

“Approved Transaction” means any tender
offer, exchange offer, merger, consolidation, sale of the Company,
reclassification, reorganization, recapitalization or other transaction that
either (x) has been approved or recommended by the Board or (y) has not been
effectively precluded by operation of the Rights Agreement because either (1) the
Board has taken action such that the acquiring person in such transaction would
not be an “Acquiring Person” (as defined in the Rights Agreement or its
comparable term/provision under any successor or substitute shareholder rights
plan) or such that the “Distribution Date” (as defined in the Rights Agreement
or its comparable term/provision under any successor or

 

2

 

substitute shareholder
rights plan) would not occur in connection with such transaction or the Rights
will otherwise not effectively preclude such transaction or (2) an order,
injunction or decree has been issued invalidating or enjoining operation of the
Rights Agreement in respect of such transaction.

 

“Bankruptcy Event” shall mean with respect
to any Person, (a) an event which causes (i) the inability of such Person
generally to pay its debts as such debts become due or an admission in writing
by such Person of its inability to pay its debts generally or a general
assignment by such Person for the benefit of creditors; (ii) the filing of any
petition or answer by such Person seeking to adjudicate it bankrupt or
insolvent, or seeking for itself any liquidation, winding up, reorganization,
arrangement, adjustment, protection, composition or relief from debt under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking, consenting to or acquiescing in the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its property; or (iii) corporate or
other action taken by such Person to authorize any of the actions set forth
above; or (b) without the consent or acquiescence of such Person, (i) an event
which causes the entering of an order for relief or approving a petition for
relief or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other
similar relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation, or the filing of any such petition against such
Person, which petition shall not be dismissed within ninety (90) days; or (ii) the
entering of an order appointing a trustee, custodian, receiver or liquidator of
such Person or of all or any substantial part of the property of such Person,
which order shall not be dismissed within sixty (60) days.

 

“Beneficially Own,” “Beneficially Owned,” or “Beneficial Ownership” shall have the
meaning set forth in Rule 13d-3 of the rules and regulations promulgated under
the Exchange Act; provided, however, that (i) a Person will be
deemed to be the beneficial owner of any security which may be acquired by such
Person whether within 60 days or thereafter, upon the conversion, exchange or
exercise (without giving effect to any provision governing such security that
would limit, reduce or otherwise restrict the conversion, exchange or exercise
features of such security) of any rights, options, warrants or similar securities
to subscribe for, purchase or otherwise acquire such security and (ii) none of
the Investor Securityholders shall be deemed to Beneficially Own any securities
owned by their portfolio companies as long as the Investor Securityholders did
not directly or indirectly encourage, assist or provide any information to such
portfolio company in respect of the acquisition or voting of such securities.

 

“Benefit Plans” shall mean each “employee
benefit plan” (within the meaning of Section 3(3) of ERISA), and each stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation,
employee loan and all other similar employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA,
under which any Company Employee has any present or future right to benefits
and which are contributed to, sponsored by or maintained by the Company or any
of its Subsidiaries for such Company Employee.

 

“Board” shall mean the Board of Directors of
the Company.

 

3

 

“Business Day” shall mean any day, other
than a Saturday, Sunday and any day which is a legal holiday under the laws of
the State of California or New York or is a day on which banking institutions
located in the States of California or New York are authorized or required by
Law or other governmental action to close.

 

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

 

“Committee Qualification Requirements” shall
mean that the Appointed Director or Nominated Director (other than an
Independent Director), as the case may be, shall, in the good faith judgment of
the Board, meet at all times during such Director’s service on a particular
committee of the Board: (i) all independence requirements applicable to
companies listed on the primary Exchange on which the Common Stock is then
listed for members of the particular committee, (ii) in the case of the Board
of Director’s Compensation Committee, be a “non-employee director” (within the
meaning of Rule 16b-3 under the Exchange Act) and an “outside director” (within
the meaning of Section 162(m) of the Code), and (iii) in the case of the Board
of Director’s Audit Committee, satisfy the requirements of NASDAQ Marketplace Rule
5605(c)(2)(A) (or any equivalent rule promulgated by any other primary Exchange
on which the Common Stock is then listed) for serving on the Audit Committee.

 

“Common Shares Outstanding” shall mean, at
any time, the sum of (i) the number of outstanding shares of Common Stock plus
(ii) the number of shares of Common Stock issuable upon the conversion of
outstanding shares of Convertible Preferred Stock and Junior Preferred Stock
(in each case, without giving effect to any provision governing any such
security that would limit, reduce or otherwise restrict the conversion,
exchange or exercise features of such security) plus (iii) the number of
shares of Common Stock issuable upon the conversion of all outstanding Notes
(without giving effect to any provision governing such security that would
limit, reduce or otherwise restrict the conversion, exchange or exercise
features of such security) plus (iv) the number of shares of Common
Stock issuable upon the exercise of the Warrants (without giving effect to any
provision governing such security that would limit, reduce or otherwise
restrict the conversion, exchange or exercise features of such security).  For purposes of determining compliance with Section
5.6 in connection with any acquisition of Beneficial Ownership of shares of
Common Stock, the Investor Securityholders and their Affiliates will be
entitled to rely on (and the Common Shares Outstanding will be calculated by
reference to) the information set forth in the most recent report on Form 10-Q
or 10-K filed with the SEC unless the Company has provided SLS more recent
information regarding the components of the Common Shares Outstanding.

 

“Common Stock” shall mean the Common Stock,
par value $0.001 per share, of the Company, together with the Rights
appurtenant thereto issued under the Rights Agreement.

 

“Company Employees” shall mean each current
or former employee, director or consultant of the Company or any of its
Subsidiaries.

 

“Company Option” shall mean an option to
acquire shares of Common Stock that was issued to a Company Employee under any
Company Stock Plan or otherwise pursuant to a grant duly authorized by the
Board.

 

4

 

“Company Stock Plans” shall mean the Company’s
Amended and Restated 1996 Stock Incentive Plan, the Company’s 2001 Stock Option
Plan and the Company’s 2004 Stock Incentive Plan.

 

“control” (including the terms “controlling” “controlled by” and “under
common control with”) with respect to any Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

 

“Conversion Shares” shall mean (i) the
shares of Common Stock issuable upon the conversion of the Convertible
Preferred Stock as provided for in the Certificate of Designation; (ii) the
shares of Common Stock issuable upon the conversion of the Notes as provided
for in the Indenture; (iii) the shares of Common Stock issuable upon the
exercise of the Warrants as provided for therein; (iv) the shares of Series B
Preferred Stock issuable upon the conversion of the Convertible Preferred Stock
as provided for in the Certificate of Designation; (v) the shares of Series C
Preferred Stock issuable upon the conversion of the Notes as provided for in
the Indenture; and (vi) the shares of Common Stock issuable upon the conversion
of the Junior Preferred Stock as provided for in their respective Junior
Certificates of Designation.

 

“DGCL” shall mean the General Corporation
Law of the State of Delaware.

 

“Director” means any member of the Board.

 

“Environmental Law” shall mean any and all
Laws relating to the protection of human health or the environment (including ambient
air, surface water, groundwater or land) or natural resources, including for
the avoidance of doubt the European Union Restriction of Hazardous Substances
and Waste Electrical and Electronic Equipment Directives, the State of
California’s Proposition 65, and any other similar Laws concerning harmful or
deleterious substances in products.

 

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended.

 

“ERISA Affiliate” shall have the meaning set
forth in Section 3.13(c).

 

“Exchange” shall mean a United States
national securities exchange, including NASDAQ and the New York Stock Exchange.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended, and all of the rules and regulations
promulgated thereunder.

 

“Foreign Benefit Plan” shall mean any
Benefit Plan (other than a statutorily mandated plan) that is maintained
outside the jurisdiction of the United States, or covers any Company Employee
residing or working outside of the United States (other than employees based in
the United States working outside the United States on temporary assignment).

 

5

 

“Fundamental Change” has the meaning
assigned to it in the Certificate of Designation, provided that for all
purposes of this Agreement, clause (v) of such definition shall be disregarded
(and shall not constitute a Fundamental Change for purposes of this Agreement).

 

“Governmental Entity” shall mean any United
States, federal, state or local government, or any foreign government, or any
agency, bureau, board, commission, court, department, tribunal or
instrumentality thereof

 

“Guarantee Obligation” shall mean as to any
Person, any obligation, contingent or otherwise of such Person guaranteeing any
Indebtedness of any other third Person (the “primary
obligor”) in any manner, whether directly or indirectly, and
including, without limitation, any obligation of the guaranteeing Person (i) to
purchase any such Indebtedness or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (a) for the purchase or
payment of any such Indebtedness or (b) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor so as to enable such primary obligor to pay
such Indebtedness, (iii) to purchase property, securities or services for the
purpose of assuring the owner of any such Indebtedness of the ability of the
primary obligor to make payment of such Indebtedness or (iv) otherwise to
protect the owner of any such Indebtedness against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include (x) any
liability by endorsement of instruments for deposit or collection or similar
transactions in the ordinary course of business, (y) indemnification
obligations of the Company or any of its Subsidiaries entered into in the
ordinary course of business or (z) obligations of the Company or any of its
Subsidiaries under arrangements entered into in the ordinary course of business
whereby the Company or such Subsidiary sells goods or inventory to other
Persons under agreements obligating the Company or such Subsidiary to
repurchase such goods or inventory, at a price not exceeding the original sale
price, upon the occurrence of certain specified events. The amount of any
Guarantee Obligation of any guaranteeing Person at any time shall be deemed to
be the lower of (1) an amount equal to the stated or determinable amount of the
Indebtedness in respect of which such Guarantee Obligation is made at such time
and (2) the maximum amount for which such guaranteeing Person may be liable
pursuant to the terms of the instrument embodying such Guarantee Obligation at
such time, unless such Indebtedness and such maximum amount for which such
guaranteeing Person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing Person’s
maximum reasonably anticipated liability in respect thereof as determined by
the Company in good faith at such time; provided, however, that
for purposes of this definition the liability of the guaranteeing Person with
respect to any obligation as to which a third Person or Persons are jointly or
jointly and severally liable as a guarantor or otherwise as contemplated hereby
and have not defaulted on its or their portions thereof shall be only as to its
pro rata portion of such obligation.

 

“Hazardous Substance” shall mean any
substance, material or waste that is characterized or regulated under any
Environmental Law as “hazardous,” “pollutant,” “waste,” “contaminant,” “toxic”
or words of similar meaning or effect, 
and shall include petroleum and petroleum products, polychlorinated
biphenyls and asbestos.

 

“HSR Act” shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.

 

6

 

“Indebtedness” shall mean of any Person at
any date, without duplication, any indebtedness of such Person in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof, but
excluding, in any case, any undrawn letters of credits) or representing the
balance deferred and unpaid part of the purchase price of any property
(including pursuant to capital leases), except any such balance that
constitutes an accrued expense or trade liability, if and to the extent any of
the foregoing would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP, and all Guarantee Obligations of such Person; provided
that solely with respect to Section 7.4(b) and 7.4(d),
Indebtedness shall have the meaning ascribed thereto in the Indenture.

 

“Information Rights Period” shall mean the
period beginning with the Closing Date and ending when the SLS Beneficial
Ownership Percentage is less than 7.5%.

 

“Intellectual Property” shall mean all U.S.
or foreign intellectual property, including (i) patents, inventions,
trademarks, service marks, domain names, copyrights, works of authorship in any
medium, and trade secrets and (ii) applications for and registrations of such
patents, trademarks, service marks, domain names, and copyrights (“Registered Intellectual Property”).

 

“Investor Securityholders” shall mean each
of the Purchasers and their respective Permitted Transferees.

 

“Junior Preferred Stock” shall mean the Series
B Junior Preferred Stock and the Series C Junior Preferred Stock.

 

“Junior Certificates of Designation” shall
mean the Series B Certificate of Designation and the Series C Certificate of
Designation.

 

“Knowledge” shall mean, with respect to the
Company, actual knowledge of a particular fact or matter by any of Richard
Thompson, Neil Dial, Linda Heller, Alexander Levran, Tina McKnight, Richard
Gerrity and Mark Hogan.

 

“Legal Proceeding” shall mean any action,
suit, litigation, petition, claim, arbitration, proceeding (including any
civil, criminal, administrative, investigative or appellate proceeding),
hearing, inquiry, or investigation by or before, or otherwise involving, any
court or other Governmental Entity or arbitral body.

 

“Material Adverse Effect” shall mean any
fact, circumstance, event, change, effect, occurrence or development (each, a “Change”) that, individually or in the
aggregate with all other Changes, (a) has or would be reasonably expected to
have a material adverse effect on or with respect to the business, operations,
assets (including intangible assets), results of operation or financial
condition, in each case, of the Company and its Subsidiaries taken as a whole,
or (b) prevents or materially delays or materially impairs the ability of the
Company to consummate the transactions contemplated by the Transaction
Agreements, provided, however, that a Material Adverse Effect shall not
include any Change (by itself or when aggregated or taken together with any and
all other Changes) (i) generally affecting economic conditions in the United
States or other countries in which the Company or its Subsidiaries operate,
including effects on such industry, economy or markets resulting from any
regulatory and political conditions or 

 

7

 

developments in general,
or any outbreak or escalation of hostilities, declared or undeclared acts of
war or terrorism; (ii) resulting from changes in Law or GAAP (or authoritative
interpretations thereof); (iii) resulting from changes in the market price or
trading volume of the Company’s securities or from the failure of the Company
to meet public projections, forecasts or estimates,  provided that the exceptions in this clause (iii) are
strictly limited to any such change or failure in and of itself and shall not
prevent or otherwise affect a determination that any Change underlying such change
or such failure has resulted in, or contributed to, a Material Adverse Effect; (iv)
resulting from any conditions arising out of acts of terrorism or war, weather
conditions or earthquakes; (v) resulting from the announcement of this
Agreement or the pendency of the transactions contemplated hereby; or (vi) the
failure to take any action in the ordinary course of business prohibited by
this Agreement; except to the extent that, with respect to clauses (i), (ii) and
(iv), the impact of such Changes is materially disproportionately adverse to
the Company and its Subsidiaries, taken as a whole, relative to competitors of
the Company and its Subsidiaries.

 

“Nomination Representation Entitlement”
shall mean a number of Nominated Directors (rounded up to the nearest whole
number) equal to (a) the sum of (i) the product of (x) the total number of
members then comprising the full Board and (y) the lesser of SLS Director
Beneficial Ownership Percentage and 20%, plus (ii) for as long as the
product (rounded up to the nearest whole number) of the total number of members
then comprising the full Board multiplied by the SLS Director Beneficial
Ownership Percentage result in a larger number than that determined by clause
(i), one (1), minus (b) the Preferred Representation Entitlement; provided,
however, that, notwithstanding the foregoing, if at any time the SLS
Director Beneficial Ownership Percentage is less than 7.5%, the Nomination
Representation Entitlement shall be zero (0).

 

“PB Warrant” means the Warrant Agreement,
dated as of March 6, 2008, granting to PWER Bridge, LLC, a Nevada limited
liability company, warrants to purchase the Company’s Common Stock.

 

“Permitted Lien” shall mean any of the
following: (i) Liens for Taxes, assessments and governmental charges or levies
either not yet delinquent or which are being contested in good faith and by
appropriate proceedings and for which appropriate reserves have been
established to the extent required by GAAP; (ii) mechanics, carriers’, workmen’s,
warehouseman’s, repairmen’s, materialmen’s or other Liens or security interests
arising in the ordinary course of business that are not yet due or that are
being contested in good faith and by appropriate proceedings (and for which
adequate retainage or other reserves are held); (iii) Liens imposed by
applicable Law; (iv) pledges or deposits to secure obligations under workers’
compensation Laws or similar legislation or to secure public or statutory
obligations; (v) pledges and deposits to secure the performance of bids, trade
contracts, leases, surety and appeal bonds, performance bonds and other
obligations of a similar nature, in each case in the ordinary course of
business; (vi) defects, imperfections or irregularities in title, easements,
covenants and rights of way and other similar restrictions on real property,
each of which is of record, and zoning, building and other similar codes or
restrictions, in each case that do not adversely affect in any material respect
the current use and operation of the applicable property owned, leased, used or
held for use by the Company or any of its Subsidiaries; (vii) Liens the
existence of which are disclosed in the notes to the consolidated financial
statements of the Company included in the Annual Report;

 

8

 

(viii) statutory, common
law or contractual liens of landlords and (ix) Liens arising under or out of
the 8% Notes and the Indenture governing such 8% Notes, or permitted by such
Indenture as in effect prior to the effectiveness of the Supplemental
Indenture.

 

“Permitted Transferee” means any Affiliated
Entity.  Each of the Purchasers is a “Permitted
Transferee” of each other.

 

“Person” shall mean an individual,
partnership, corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, joint venture or any other
entity or organization.

 

“Plan Asset Regulations” shall mean the
regulations issued by the U.S. Department of Labor at Section 2510.3-101 of Part
2510 of Chapter XXV, Title 29 of the Code of Federal Regulations, or any
successor regulations as the same may be amended from time to time.

 

“Preferred Director” has the meaning
assigned to it in the Certificate of Designation.

 

“Preferred  Representation
Entitlement” has the meaning assigned to the definition of “Board
Representation Entitlement” (as defined in the Certificate of Designation).

 

“Public Sale” shall mean (i) an underwritten
public offering pursuant to an effective registration statement (other than a
registration statement on Form S-4, Form S-8 or any successor or other forms
promulgated for similar purposes) filed under the Securities Act or (ii) a “brokers’
transaction” (as defined in Rule 144).

 

“Restriction Termination Event” shall mean,
following the Closing, the earlier to occur of (a) consummation of a
Fundamental Change and (b) the Company failing to comply with any material
covenant, agreement or obligation contained in any Transaction Agreement, and
such failure continues for a period of at least fifteen (15) days after the
Company receives written notice of such failure from SLS on behalf of the
Investor Securityholders.

 

“Rights” shall have the meaning given
thereto in the Rights Agreement (or the comparable right under any successor or
substitute shareholder rights plan).

 

“SEC” shall mean the Securities and Exchange
Commission.

 

“Securities Act” shall mean the Securities
Act of 1933, as amended, and all of the rules and regulations promulgated
thereunder.

 

“Series B  Junior
Preferred Stock” shall mean that new series of Series B Junior
Participating Convertible Preferred Stock, par value $.001 per share, of the
Company, the rights, preferences and privileges of which are to be set forth in
a Certificate of Designation consistent with the terms set forth in the Term
Sheet (the “Series B Junior Preferred Term
Sheet”) attached hereto as Exhibit G (such Certificate of
Designation, the “Series B  Certificate of Designation”).

 

“Series C  Junior
Preferred Stock” shall mean that new series of Series C Junior
Participating Convertible Preferred Stock, par value $.001 per share, of the
Company, the rights,

 

9

 

preferences and
privileges of which are to be set forth in a Certificate of Designation
consistent with the terms set forth in the Term Sheet (the “Series C Junior Preferred Term Sheet”)
attached hereto as Exhibit H (the “Series
C  Certificate of Designation”).

 

“Significant Subsidiary” shall have the
meaning set forth in Rule 1-02(w) of Regulation S-X promulgated by the SEC (provided
that for purposes of this definition, the references to “10%” in the definition
of “significant subsidiary” in such Rule 1-02(w) shall be deemed to be
references to “5%”).

 

“SLS Beneficial Ownership Percentage” shall
mean, at any time, the quotient of (a) the aggregate number of shares of Common
Stock Beneficially Owned by the Investor Securityholders divided  by
(b) the number of Common Shares Outstanding.

 

“SLS Director Beneficial Ownership Percentage”
shall mean, at any time, the quotient of (a) the aggregate number of shares of
Common Stock Beneficially Owned (excluding the number of shares of Common Stock
issuable upon the exercise of the Warrants) by the Investor Securityholders divided
by (b) the number of Common Shares Outstanding (calculated without
giving effect to clause (iv) of “Common Shares Outstanding”).

 

“SLS Management” shall mean Silver Lake
Management Company Sumeru, L.L.C. (or its successor by merger, consolidation or
transfer of all or substantially all of its assets).

 

“SLS Ownership Limit” shall mean the SLS
Beneficial Ownership Percentage at the close of business on the Closing Date, provided
that if any Investor Securityholder effects a Transfer to any Person other than
one or more Permitted Transferees, then on and after the first day after the
end of the fiscal quarter of the Company in which such Transfer occurred (the “Transfer Quarter”) the SLS Ownership Limit
will equal the SLS Beneficial Ownership Percentage at the close of business on
the last day of such Transfer Quarter.

 

“Standstill Limit” shall mean, at any time,
the greater of:

 

(i) the product of (x) 10%
and (y) the number of Common Shares Outstanding; and

 

(ii) the product of (x) the
SLS Ownership Limit, plus one percent (1%) and (y) the number of Common
Shares Outstanding.

 

“Subsidiary” when used with respect to any
party shall mean any corporation or other organization, whether incorporated or
unincorporated, at least a majority of the securities or other interests of
which, having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries.

 

“Survivor of a Fundamental Change” shall
mean (a) the issuer of the securities received by the holders of Common Stock
(in their capacities as such) upon the consummation of a Fundamental Change, to
the extent the holders of Common Stock receive other securities in exchange,
conversion or substitution of their Common Stock in the transaction that
resulted in

 

10

 

such Fundamental Change
or (b) the Company (or its successor) in all other circumstances of a Fundamental
Change.

 

“Tax Returns” shall mean returns, reports,
information statements and other documentation (including any additional or
supporting material) filed or maintained, or required to be filed or
maintained, in connection with the calculation, determination, assessment or
collection of any Tax, including any schedules or amendments thereto.

 

“Taxes” shall mean any and all federal,
state, local, foreign and other taxes, levies, fees, imposts, duties and
charges of whatever kind (including any interest, penalties or additions to the
tax imposed in connection therewith or with respect thereto), including,
without limitation, taxes imposed on, or measured by, income, franchise,
profits or gross receipts, and any ad valorem, value added, sales, use, service,
real or personal property, capital stock, license, payroll, withholding,
employment, social security, workers’ compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premium, windfall
profits, transfer and gains taxes and customs or duties.

 

“Total Current Voting Power” shall mean,
with respect to any entity, at the time of determination of Total Current
Voting Power, the total number of votes which may be cast in the general
election of directors of such entity (or, in the event the entity is not a
corporation, the governing members, board or other similar body of such
entity).

 

“Transaction Agreements” shall mean this
Agreement, the Certificate of Designation, the Warrants, the Registration
Rights Agreement, the Transaction Fee Agreement, the Indemnification
Agreements, the Junior Certificates of Designation, the Indenture and the
Notes.

 

“Transferee” means any Person to whom any
Investor Securityholder or any Permitted Transferee or any Transferee thereof
Transfers Company Securities in accordance with the terms hereof.

 

“Treasury Regulation” shall mean the
Treasury Regulations promulgated under the Code.

 

“Trustee” shall have the meaning ascribed to
it in the Indenture.

 

“Voting Stock” shall mean securities of any
class or kind ordinarily having the power to vote generally for the election of
Directors of the Company or its successor (including the Common Stock and the
Convertible Preferred Stock).

 

2.                                       Purchase and Sale.

 

2.1                                 Purchase and Sale. 
Subject to and upon the terms and conditions of this Agreement, the
Company will (i) issue and sell to each Purchaser, and each Purchaser will
purchase from the Company, at the Closing, Notes in the principal amount
specified opposite such Purchaser’s name in Annex A, (ii) issue and sell
to each Purchaser, and each Purchaser will purchase from the Company, at the
Closing, that number of shares of Convertible Preferred Stock set forth
opposite such Purchaser’s name in Annex A, and (iii) issue to each
Purchaser, and each Purchaser shall acquire from the Company, at the Closing,
that number of Warrants set

 

11

 

forth opposite such Purchaser’s name in Annex A (such Purchased
Warrants, together with such purchased Notes and shares of Convertible
Preferred Stock, the “Securities”).  The aggregate purchase price (the “Purchase Price”) for the Securities shall
be $60,000,000, and shall be allocated among and paid by the Purchasers as set
forth on Annex A.

 

2.2                                 Purchase Price Allocation. 
As soon as practicable after the Closing, the Company shall deliver to
the Purchasers a statement allocating the Purchase Price among the Securities
for tax purposes.   If within ten (10) days after the delivery of
such statement SLS, on behalf of the Purchasers, notifies the Company in
writing that the Purchasers object to such allocation, the Company and SLS, on
behalf of the Purchasers, shall use commercially reasonable efforts to resolve
such dispute within twenty (20) days.  In
the event that SLS, on behalf of the Purchasers, and the Company are unable to
resolve such dispute within such time period, the Company and SLS, on behalf of
the Purchasers, shall jointly retain a nationally recognized accounting firm
(the “Appraisal Firm”) to resolve
such dispute, whose determination shall be final and binding on the parties.  The costs, fees and expenses of the Appraisal
Firm shall be borne equally by the Company, on the one hand, and the
Purchasers, on the other hand.  The
Company and the Purchasers agree to be bound for all tax purposes by the
allocation, and shall not take any contrary tax position regarding such
allocation, unless otherwise required pursuant to a “determination” (as defined
in Section 1313(a) of the Code) or a comparable concept under applicable Law or
otherwise required pursuant to applicable Law.

 

2.3                                 Closing.

 

(a)          Subject to the satisfaction or waiver of the
conditions set forth in Section 6 of this Agreement, the closing of the
purchase and sale of the Securities (the “Closing”)
shall take place at the offices of Simpson Thacher & Bartlett LLP, 2550
Hanover Street, Palo Alto, California, on the later of (i) the second Business
Day after the satisfaction or waiver of the conditions set forth in Section 6
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or waiver thereof) and (ii) May 8,
2009 (the “Closing Date”).

 

(b)         At the Closing:

 

(i)                                     (x)
the aggregate principal amount of the Notes shall be reflected in one or more global
notes representing the Notes and, if reasonably possible, held by The
Depository Trust Company or its nominee (or a custodian on its behalf) or if
such global notes are not available as of the Closing, the Company shall
deliver to each Purchaser one or more Note(s) in the aggregate principal amount
as set forth opposite such Purchaser’s name on Annex A, (y) the Company
shall deliver to each Purchaser one or more certificates for such number of
shares of Convertible Preferred Stock as set forth opposite such Purchaser’s
name on Annex A and (z) the Company shall deliver to each Purchaser
certificates representing the Warrants representing such number of Purchased
Warrants; and

 

(ii)                                  the
Purchasers shall deliver, or cause to be delivered, to the Company an amount
equal to the Purchase Price by wire transfer of immediately available funds to
an account that the Company shall designate at least one (1) Business Day prior
to the Closing Date.

 

12

 

3.                                       Representations
and Warranties of the Company.  Except (i) as
described in reasonable detail in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 28, 2008 (the “Annual
Report”) (other than disclosures in the “Risk Factors” section
included therein and any other disclosures included therein that are predictive
or forward-looking in nature) and (ii) as set forth in the disclosure schedule
delivered by the Company to the Purchasers on the date hereof (the “Disclosure Schedule”), the Company hereby
represents and warrants to each of the Purchasers as follows:

 

3.1                                 Organization and Power.

 

(a)          Each of the Company and its Subsidiaries is a legal
entity duly organized, validly existing and in good standing under the Laws of
its respective jurisdiction of organization. 
Each of the Company and its Subsidiaries has the requisite corporate
power and authority to carry on its respective business as it is presently
being conducted and to own, lease or operate its respective properties and assets,
except as would not, individually or in the aggregate, have a Material Adverse
Effect.

 

(b)         Each of the Company and its Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation (or
other legal entity) in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business requires such
qualification (to the extent the “good standing” concept is applicable in the
case of any jurisdiction outside the United States), except where the failure
to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect. 
Neither the Company nor any Significant Subsidiary is in violation of
its organizational or governing documents. 
The Company has delivered or made available to the Purchasers complete
and correct copies of the certificates of incorporation and bylaws or other
constituent documents, as amended to date and currently in full force and
effect, of the Company and its Significant Subsidiaries.

 

3.2                                 Capitalization.

 

(a)          As of the date of this Agreement, the authorized
shares of capital stock of the Company consist of 300,000,000 shares of Common
Stock and 30,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”), of which, 300,000 shares
have been designated Junior Participating Preferred Stock.  As of the close of business on March 23, 2009
(the “Capitalization Date”), (i) 87,942,177
shares of Common Stock were issued and outstanding, (ii) 8,806,827 shares of
Common Stock were reserved for issuance under the Company Stock Plans, (iii) no
shares of Preferred Stock were issued and outstanding, and (iv) no shares of
Common Stock or Preferred Stock were held by the Company as treasury
shares.  All outstanding shares of Common
Stock are validly issued, fully paid, nonassessable and free of any preemptive
or similar rights.  Since the
Capitalization Date, the Company has not sold or issued or repurchased,
redeemed or otherwise acquired any shares of the Company’s capital stock (other
than issuances pursuant to the exercise of any Company Option or vesting of any
share unit award that had been granted under any Company Stock Plan, or
repurchases, redemptions or other acquisitions pursuant to agreements contemplated
by a Company Stock Plan).  No Subsidiary
of the Company owns any Company Securities.

 

13

 

(b)         As of the Capitalization Date, with respect to the
Company Stock Plans, (i) there were 5,764,823 shares of Common Stock underlying
outstanding Company Options to acquire shares of Common Stock, such outstanding
Company Options having a weighted average exercise price per share as of the
Capitalization Date of $8.07, (ii) there were 1,467,504 shares of Common Stock
issuable upon the vesting of outstanding share award units, and (iii) 1,574,500
additional shares of Common Stock were reserved for issuance for future grants
pursuant to the Company Stock Plans.  All
outstanding shares of Common Stock and all shares of Common Stock reserved for
issuance as noted in the foregoing sentence, when issued in accordance with the
respective terms thereof, are or will be validly issued, fully paid,
nonassessable and free of any preemptive or similar rights.  Each Company Option was granted with an
exercise price per share equal to or greater than the per share fair market
value (as such term is used in Code Section 409A and the Department of Treasury
regulations and other interpretive guidance issued thereunder) of the Common Stock
underlying such Company Option on the grant date thereof and was otherwise
issued in compliance with applicable Law.

 

(c)          Except for the 8% Notes, the PB Warrant or as set
forth in this Section 3.2, as of the date of this Agreement, there are
no (i) outstanding shares of capital stock of, or other equity or voting
interest in, the Company, (ii) outstanding securities of the Company
convertible into or exchangeable for shares of capital stock of, or other
equity or voting interest in, the Company, (iii)  outstanding options, warrants, rights or other
commitments or agreements to acquire from the Company, or that obligates the
Company to issue, any capital stock of, or other equity or voting interest in,
or any securities convertible into or exchangeable for shares of capital stock
of, or other equity or voting interest in, the Company, (iv)  obligations of the Company to grant, extend or
enter into any subscription, warrant, right, convertible or exchangeable
security or other similar agreement or commitment relating to any capital stock
of, or other equity or voting interest (including any voting debt) in, the
Company (the items in clauses (i), (ii), (iii) and (iv), together with the
capital stock of the Company, being referred to collectively as “Company Securities”) and (v) no other
obligations by the Company or any of its Subsidiaries to make any payments
based on the price or value of any Company Securities. There are no outstanding
agreements of any kind which obligate the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities.

 

(d)         Except for the 8% Notes, the PB Warrant or as set
forth in the Transaction Agreements, neither the Company nor any of its
Subsidiaries is a party to any agreement relating to the voting of, requiring
registration of, or granting any preemptive, anti-dilutive rights or rights of
first refusal or other similar rights with respect to any Company Securities.

 

(e)          (i) Upon the filing of the Certificate of Designation,
the Series B Certificate of Designation and the Series C Certificate of
Designation, the Convertible Preferred Stock, the Series B Junior Preferred
Stock and the Series C Junior Preferred Stock, respectively, will be duly
authorized and (ii) the Common Stock into which the Notes, the Convertible
Preferred Stock, the Junior Preferred Stock or the Warrants may be convertible
or exercisable have been duly authorized and validly reserved for
issuance.  When the Convertible Preferred
Stock, the Series B Junior Preferred Stock, the Series C Junior Preferred Stock
or the Warrants are issued and paid for in accordance with the provisions of
this Agreement, the Certificate of Designation and the Junior Certificates of
Designation, all such Convertible Preferred Stock,

 

14

 

Junior Preferred Stock or
Warrants (A) will be duly authorized, validly issued, fully paid, nonassessable
and free of preemptive or similar rights and (B) will be delivered to the
Purchasers (or other assignee) free and clear of all Liens, excluding Liens
imposed by the Transaction Agreements and/or applicable Law.  When the Notes are issued and paid for in
accordance with the provisions of this Agreement and the Indenture, all such
Notes (A) will be duly authorized, validly issued and free of preemptive or
similar rights and (B) will be delivered to the Purchasers (or other assignee)
free and clear of all Liens, excluding Liens imposed by the Transaction
Agreements and/or applicable Law.  When
the shares of Common Stock into which the Notes, the Convertible Preferred
Stock, the Junior Preferred Stock or the Warrants may be convertible or
exercisable are issued in accordance with the provisions of the Certificate of
Designation, the Indenture, the Junior Certificates of Designation or such
Warrants, all such shares (A) will be duly authorized, validly issued, fully
paid, nonassessable and free of preemptive or similar rights and (B) will be
delivered to the Purchasers (or its Permitted Transferees) free and clear of
all Liens, excluding Liens imposed by the Transaction Agreements and/or
applicable Law.

 

3.3                                 Authorization. 
The Company has all requisite corporate power to enter into the
Transaction Agreements and to consummate the transactions contemplated by the
Transaction Agreements and to carry out and perform its obligations
thereunder.  All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of the Notes, the Convertible Preferred Stock, the Warrants and
the Conversion Shares, the authorization, execution, delivery and performance
of the Transaction Agreements has been taken. 
Upon their respective execution by the Company and the other parties
thereto and assuming that they constitute legal and binding agreements of the
Purchasers, each of the Transaction Agreements will constitute a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability (a) may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting or relating to creditors’ rights generally, and (b) is
subject to general principles of equity.

 

3.4                                 Valid Issuance. 
The Notes and the Warrants will, upon issuance pursuant to the terms
hereof and upon payment therefor, be valid and legally binding obligations of
the Company, enforceable in accordance with their terms and the terms of the
Indenture and the Warrant, respectively, except that such enforceability (a) may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting or relating to creditors’ rights generally, and (b)
is subject to general principles of equity Subject to the accuracy of the
representations made by the Purchasers in Sections 4.7 and 4.8,
the offer, sale and issuance of the Convertible Preferred Stock, the Junior
Preferred Stock, the Notes and the Warrants and the conversion of the
Convertible Preferred Stock, the Junior Preferred Stock and the Notes into, or
exercise of the Warrants for, Common Stock will be in compliance with
applicable exemptions from (i) the registration and prospectus delivery
requirements of the Securities Act and (ii) will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable Blue Sky
laws.

 

3.5                                 No Conflict. 
The execution, delivery and performance of the Transaction Agreements by
the Company, the issuance of the Common Stock upon conversion or exercise of
the Notes, the Convertible Preferred Stock, the Series B Junior Preferred
Stock, the Series C

 

15

 

Junior Preferred Stock and the Warrants in accordance with the Indenture,
the Certificate of Designation, the Series B Certificate of Designation, the Series
C Certificate of Designation and such Warrants, respectively, and the
consummation of the other transactions contemplated hereby will not (i) conflict
with or result in any violation of any provision of the restated certificate of
incorporation, as amended, or amended and restated bylaws of the Company, (ii) assuming
the execution and effectiveness of the Supplemental Indenture, result in any
breach or violation of, or default (with or without notice or lapse of time, or
both) under, require consent under, or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or to the loss of
any benefit under any Indebtedness, guarantee of Indebtedness, mortgage,
Contract, purchase or sale order, instrument, permit, concession, franchise,
right or license binding upon the Company or any of its Subsidiaries or result
in the creation of any liens, claims, mortgages, encumbrances, pledges, security
interests, equities or charges of any kind (each, a “Lien”) upon any of the properties, assets or rights of the
Company or any of its Subsidiaries that in the aggregate are material to the
Company and its Subsidiaries, taken as a whole, or (iii) assuming compliance
with the matters referred to in Section 3.6, conflict with or violate
any applicable law, statute, code, ordinance, rule, regulation, judgment,
order, injunction or decree (collectively, “Laws”
and each, a “Law”), other than, in
the case of clauses (ii) and (iii), as would not, individually or in the
aggregate, have a Material Adverse Effect.

 

3.6                                 Consents.  No consent,
approval, order, or authorization of, or filing or registration with, or
notification to (any of the foregoing being a “Consent”), any Governmental Entity is required on the part of
the Company under any Law in effect as of the date hereof in connection with (x)
the execution, delivery or performance of the Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby, (y) the
issuance of the Common Stock upon conversion of the Notes, the Convertible
Preferred Stock, the Series B Junior Preferred Stock and the Series C Junior
Preferred Stock in accordance with the Indenture, the Certificate of
Designation, the Series B Certificate of Designation and the Series C
Certificate of Designation, respectively, and (z) the issuance of the Common
Stock upon exercise of the Warrants in accordance with their terms, other than (i)
the filing and recordation of the Certificate of Designation with the Secretary
of State of the State of Delaware and such filings with Governmental Entities
to satisfy the applicable laws of states in which the Company and its
Subsidiaries are qualified to do business, (ii) the expiration or termination
of any applicable waiting periods under the HSR Act or any foreign antitrust
requirements in connection with the issuance of Common Stock upon conversion of
the Convertible Preferred Stock or the Notes or exercise of the Warrants, (iii)
those to be obtained, in connection with the registration of the Securities
under the Registration Rights Agreement, under the applicable requirements of
the Securities Act and Exchange Act and any related filings and approvals under
applicable state securities laws, (iv) such filings and approvals as may be
required by any federal or state securities laws, including compliance with any
applicable requirements of the Exchange Act, and (v) such other Consents, the
failure of which to make or obtain would not, individually or in the aggregate,
have a Material Adverse Effect.

 

3.7                                 Permits.  The Company
and each of its Subsidiaries possess all permits, licenses, authorizations,
consents, approvals and franchises of Governmental Entities that are required to
conduct their business as currently conducted, except for such permits or
licenses the absence of which would not, individually or in the aggregate, have
a Material Adverse Effect on

 

16

 

the ability of the Company and its Subsidiaries, taken as a whole, to
conduct their businesses in the ordinary course of business consistent with
past practices.

 

3.8                                 SEC Reports; Financial Statements.

 

(a)          The Company has filed all forms, reports and documents
with the SEC that have been required to be filed by it under applicable Laws
prior to the date hereof, and the Company will file prior to the Closing all
forms, reports and documents with the SEC that are required to be filed by it
under applicable Laws prior to such time (all such forms, reports and
documents, together with all exhibits and schedules thereto, the “SEC Reports”).  Each SEC Report complied as of its filing
date, as to form in all material respects with the applicable requirements of
the Securities Act or the Exchange Act, as the case may be, each as in effect
on the date such SEC Report was filed. 
True and correct copies of all SEC Reports filed prior to the date
hereof have been furnished to the Purchasers or are publicly available in the
Interactive Data Electronic Applications (IDEA) database of the SEC.  As of its filing date (or, if amended or
superseded by a filing prior to the date of this Agreement, on the date of such
amended or superseded filing), each SEC Report did not and will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. None of the Company’s
Subsidiaries is required to file any forms, reports or other documents with the
SEC.  Since January 1, 2008, neither the
Company nor any of its executive officers has received notice from any
Governmental Entity challenging or questioning the accuracy, completeness, form
or manner of filing of such certifications.

 

(b)         The consolidated financial statements (including all
related notes and schedules) of the Company and its Subsidiaries included in
the SEC Reports (collectively, the “Financial
Statements”) complied with the published rules and regulations of
the SEC in effect at the time of filing with respect thereto, fairly present in
all material respects the consolidated financial position of the Company and
its Subsidiaries as of the dates indicated, and the results of their operations
and their cash flows for the periods therein specified, all in accordance with
United States generally accepted accounting principles applied on a consistent
basis (“GAAP”) throughout the
periods therein specified (except as otherwise noted therein, and in the case
of quarterly financial statements except for the absence of footnote disclosure
and subject, in the case of interim periods, to normal year-end adjustments).

 

(c)          Except (i) as reflected or reserved against in the
Company’s consolidated balance sheet as of December 28, 2008 (or the notes
thereto) included in the SEC Reports filed prior to the date hereof and (ii) for
Liabilities pursuant to any Contract of a nature not required by GAAP to be set
forth on a consolidated balance sheet of the Company and its Subsidiaries or
the notes thereto, neither the Company nor any Subsidiary of the Company has
any Liabilities that would, individually or in the aggregate, have a Material
Adverse Effect.

 

(d)         To the Knowledge of the Company, since January 1, 2008,
the Company has (x) devised and maintained a system of internal accounting
controls sufficient to provide reasonable assurances regarding the reliability
of financial reporting and preparation of financial statements in accordance
with GAAP, and has evaluated such system on a quarterly basis and concluded
that it is effective and (y) disclosed to the Company’s auditors and the audit

 

17

 

committee of the Board (i)
all significant deficiencies and material weaknesses in the design or operation
of internal controls over financial reporting that have been identified and
which are reasonably likely to adversely affect the Company’s or any of its
Subsidiaries’ ability to record, process, summarize and report financial
information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the internal
controls of the Company.  The Company has
established and maintains disclosure controls and procedures (as such term is
defined in Rule 13a-14 under the Exchange Act); such disclosure controls and
procedures are designed to ensure that material information relating to the
Company and its Subsidiaries required to be included in the Company’s periodic
reports under the Exchange Act is made known to the Company’s principal
executive officer and its principal financial officer by others within those
entities, and, to the Knowledge of the Company, such disclosure controls and
procedures are effective in timely alerting the Company’s principal executive
officer and its principal financial officer to such material information
required to be included in the Company’s periodic reports required under the
Exchange Act.  There are no outstanding
loans made by the Company or any of its Subsidiaries to any executive officer
(as defined in Rule 3b-7 under the Exchange Act) or director of the
Company.  Since the enactment of the
Sarbanes-Oxley Act of 2002, neither the Company nor any of its Subsidiaries has
made any loans to any executive officer (as defined in Rule 3b-7 under the
Exchange Act) or director of the Company or any of its Subsidiaries.

 

(e)          Neither the Company nor any of its Subsidiaries is a
party to, or has any commitment to become a party to, (x) any off-balance sheet
partnership or any similar contract or arrangement (including any contract or
arrangement relating to any transaction or relationship between or among the
Company and any of its Subsidiaries, on the one hand, and any unconsolidated
Affiliate on the other hand), including any “off-balance sheet arrangement” (as
defined in Item 303(a) of Regulation S-K promulgated by the SEC); (y) any
hedging, derivatives or similar contract or arrangement, in each case in an
amount material to the Company and its Subsidiaries, taken as a whole, or (z) any
Contract pursuant to which the Company or any of its Subsidiaries is obligated
to make any capital contribution or other investment in or loan to any Person
(other than a Subsidiary of the Company).

 

3.9                                 Litigation.  Except as
specifically set forth in the Annual Report, there are no (i) investigations or
proceedings pending or, to the Knowledge of the Company, threatened by any
Governmental Entity with respect to the Company or any of its Subsidiaries or
any of their properties or assets, (ii) Legal Proceedings pending or, to the
Knowledge of the Company, currently threatened against or affecting the Company
or any of its Subsidiaries, or any of their respective properties or assets, at
Law or in equity, or (iii) material adverse orders, judgments or decrees of any
Governmental Entity against the Company or any of its Subsidiaries, except, in
the case of clauses (i) and (ii), for such matters that would not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect.

 

3.10                           Absence of Certain Changes. 
Since December 28, 2008, the business of the Company and its Significant
Subsidiaries has been conducted in the ordinary course of business consistent
with past practices and there has not been:

 

(a)          a Material Adverse Effect;

 

18

 

(b)         any default in the payment of any Indebtedness by the
Company or any of its Subsidiaries; or

 

(c)          any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
the Company, or any repurchase, redemption or other acquisition by the Company
or any of its Subsidiaries of any outstanding shares of capital stock or other
securities of the Company or any of its Subsidiaries.

 

3.11                           Compliance with Law.

 

(a)          The Company and each of its Subsidiaries are in
compliance with and are not in default under or in violation of, and have not
received any notices of non-compliance, default or violation with respect to,
any Laws, except for such violations or noncompliance that would not,
individually or in the aggregate have a Material Adverse Effect.

 

(b)         To the Knowledge of the Company, neither the Company
or any of its Subsidiaries nor any director, officer, employee, consultant or
agent of the Company or any of its Subsidiaries has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful payments
relating to political activity, (ii) made any unlawful payment to any foreign
or domestic government official or employee or to any foreign or domestic
political party or campaign or violated any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended, (iii) consummated any transaction,
made any payment, entered into any Contract or arrangement or taken any other
action in violation of Section 1128B(b) of the U.S. Social Security Act, as
amended, or (iv) made any other similar unlawful payment under any similar
foreign Laws.

 

(c)          No representation or warranty is made in this Section
3.11 with respect to (i) compliance with the Exchange Act, which are
covered in Section 3.8, (ii) applicable laws with respect to Taxes,
which are covered in Section 3.15, (iii) ERISA and other
employee-benefit related matters, which are covered in Section 3.13, or (iv)
Environmental Laws, which are covered in Section 3.20.

 

3.12                           Intellectual Property.

 

(a)          Except as would not, individually or in the aggregate,
have a Material Adverse Effect, the Company and its Subsidiaries own, license,
sublicense or otherwise possess legally enforceable rights to use all
Intellectual Property necessary to conduct the business of the Company and its
Subsidiaries, taken as a whole, as currently conducted, free and clear of all
Liens (other than Permitted Liens or licenses granted by the Company or its
Subsidiaries).

 

(b)         All Registered Intellectual Property which are owned
by the Company or any of its Subsidiaries are subsisting and have not been
cancelled or abandoned, except as would not, individually or in the aggregate,
have a Material Adverse Effect.  To the
Company’s Knowledge, no third party is infringing, violating or
misappropriating any of the Company Intellectual Property.

 

(c)          The execution and delivery of the Transaction
Agreements by the Company and the consummation of the transactions contemplated
hereby and thereby will not

 

19

 

result in the breach of, or create on behalf of any third party the
right to terminate or materially modify, (i) any license, sublicense or other
agreement relating to any Intellectual Property owned by the Company that is
material to the business of the Company and its Subsidiaries, taken as a whole,
as currently conducted (the “Company
Intellectual Property”), or (ii) any license, sublicense and other
agreement as to which the Company or any of its Subsidiaries is a party and
pursuant to which the Company or any of its Subsidiaries is authorized to use
any third party Intellectual Property that is material to the business of the
Company and its Subsidiaries, taken as a whole, as currently conducted,
excluding generally commercially available, off-the-shelf software programs
having a replacement value of less than $50,000 (the “Third Party Intellectual Property”).

 

(d)         Except as would not, individually or in the aggregate,
have a Material Adverse Effect, the conduct of the business of the Company and
its Subsidiaries as currently conducted does not infringe, violate or
constitute a misappropriation of any Intellectual Property of any third
party.  Since January 1, 2007, neither
the Company nor any of its Subsidiaries (i) has received any written claim or
notice alleging any such infringement, violation or misappropriation, or (ii) has
been or is subject to any settlement, order, decree, injunction, or stipulation
imposed by any Governmental Entity that may affect the use, validity or
enforceability of Company Intellectual Property.

 

(e)          No software included in the Company Intellectual
Property that is distributed by the Company uses, incorporates or has embedded
in it any source, object or other software code subject to an “open source,” “copyleft”
or other similar types of license terms (including, without limitation, any GNU
General Public License, Library General Public License, Lesser General Public
License, Mozilla License, Berkeley Software Distribution License, Open Source
Initiative License, MIT, Apache or public domain licenses, and the like) that
requires, or conditions the distribution of any such software on, (i) the
disclosure of any source code included in the Company Intellectual Property or (ii)
the unlimited distribution of any software included in the Company Intellectual
Property without charge.

 

(f)            The Company and its Subsidiaries take reasonable
actions to protect and preserve the confidentiality of their trade secrets,
including implementing a policy requiring employees and contractors who are
reasonably expected to receive access to trade secrets to sign nondisclosure
agreements and all employees who develop material Intellectual Property for the
Company to execute written agreements assigning all rights to such Intellectual
Property to the Company or its Subsidiaries.

 

3.13                           Employee Benefits.

 

(a)          With respect to any Benefit Plan, no Legal Proceeding
has been asserted, instituted, or, to the Knowledge of the Company, is
threatened or anticipated (other than routine claims for benefits, and appeals
of such claims) that would, individually or in the aggregate reasonably be
expected to have a Material Adverse Effect, and, to the Knowledge of the
Company, no facts or circumstances exist that could give rise to any such Legal
Proceeding.

 

20

 

(b)         Each Benefit Plan has been established and
administered in all material respects in accordance with its terms, and in
material compliance with the applicable provisions of ERISA, the Code and all
other applicable laws, rules and regulations.

 

(c)          Neither the Company, any of its Subsidiaries, nor any
other entity which, together with the Company or any of its Subsidiaries would
be treated as a single employer under Section 4001 of ERISA or Section 414 of
the Code (each such entity, an “ERISA
Affiliate”) sponsors, maintains, contributes to, or has had an
obligation at any time to sponsor, maintain or contribute to, or has had or has
any liability in respect of any “employee benefit plan” (as defined in Section 3(3)
of ERISA) subject to Section 412 of the Code or Section 302 of ERISA or Title
IV of ERISA, including any “multiemployer plan” (as defined in Section 4001(a)(15)
of ERISA), or any other plan which is subject to Section 4063, 4064 or 4069 of
ERISA.  Other than with respect to
Foreign Benefit Plans, neither the Company nor any of its Subsidiaries has any
material liability under any “employee pension benefit plan” (within the
meaning of Section 3(2) of ERISA) that is not intended to be qualified under Section
401(a) of the Code.  Except as required
by Section 4980B of the Code or any similar state, local or non-US law, no
Benefit Plan provides any retiree or post-employment medical, disability or
life insurance benefits to any person.

 

(d)         Except as would not, individually or in the aggregate,
have a Material Adverse Effect, with respect to any Benefit Plan, (i) there has
been no non-exempt prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) with respect to any Company Plan that would
reasonably be expected to subject the Company or any of its Subsidiaries to any
tax or penalty imposed by Section 502 of ERISA, Section 4975 of the Code or
otherwise, and (ii) no event has occurred and no condition exists that would
reasonably be expected to subject the Company or any of its Subsidiaries,
either directly or by reason of their affiliation with any ERISA Affiliate, to
any tax, fine, lien, penalty or liability imposed by or under any applicable
laws, rules and regulations, including ERISA and the Code.

 

(e)          Neither the execution of the Transaction Agreements
nor the consummation of the transactions contemplated hereby and thereby will (i)
accelerate the time of payment or vesting or increase the amount of
compensation or benefits due to any Company Employee, or (ii) give rise to any
other liability or funding obligation under any Benefit Plan or otherwise,
including liability for severance pay, unemployment compensation or termination
pay.

 

(f)            All Foreign Benefit Plans that are required to be
funded are fully funded, and with respect to all other Foreign Benefit Plans,
adequate reserves therefor have been established on the financial statements of
the Company or its applicable Subsidiary.

 

(g)         Except as would not, individually or in the aggregate
have a Material Adverse Effect, neither the Company nor any of its Subsidiaries
has any plan, contract or commitment, whether legally binding or not, to create
any additional employee benefit or compensation plans, policies or arrangements
or, except as may be required by Law, to modify any Benefit Plan.

 

21

 

3.14                           Labor Relations.

 

(a)          (i) No current Company Employee is represented by a
union other than Company Employees employed by Power-One Italy S.p.A., and, to
the Knowledge of the Company, no union organizing efforts have been conducted
within the last three years or are now being conducted, (ii) neither the
Company nor any of its Subsidiaries (other than Power-One Italy S.p.A.) is a
party to any material collective bargaining agreement or other labor contract,
and (iii) neither the Company nor any of its Subsidiaries currently has, or, to
the Knowledge of the Company, is there now threatened, a strike, picket, work
stoppage, work slowdown or other material labor dispute.

 

(b)         Except as would not, individually or in the aggregate
have a Material Adverse Effect, (i) each of the Company and its Subsidiaries is
in compliance with all applicable laws relating to employment, including all
applicable laws relating to wages, hours, collective bargaining, employment
discrimination, civil rights, safety and health, workers’ compensation, pay
equity and the collection and payment of withholding and/or social security
taxes, and (ii) neither the Company nor any of its Subsidiaries has incurred
any liability or obligation under the Worker Adjustment and Retraining
Notification Act or any similar state or local Law within the last six months
which remains unsatisfied.

 

3.15                           Taxes.

 

(a)          The Company and each of its Subsidiaries have filed
all material Tax Returns required to have been filed as of the date hereof (or
extensions have been duly obtained) and such Tax Returns are correct and
complete in all material respects and have paid all material Taxes required to
have been timely paid by it in full through the date hereof, except to the
extent such Taxes are both (A) being challenged in good faith and (B) adequately
provided for on the Financial Statements in accordance with GAAP.

 

(b)         Neither the Company nor any of its Subsidiaries has
any material current liability for Taxes of any Person (other than the Company
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law with respect to income taxes),
as a transferee or successor or by contract.

 

(c)          All material tax assets of the Company and its
Subsidiaries have been accounted for on the most recent Financial Statements in
accordance with GAAP principles.

 

(d)         As of the date of the Financial Statements and, to the
Knowledge of the Company, as of the date hereof, no deficiencies for any
material Taxes have been proposed or assessed in writing against or with
respect to the Company or any of its Subsidiaries that have not been adequately
provided for in such Financial Statements, and there is no outstanding material
audit, assessment, dispute or claim concerning any Tax liability of the Company
or any of its Subsidiaries pending or raised by an authority in writing other
than that provided for in the Financial Statements.

 

(e)                                   
To the Knowledge of the Company, neither the Company nor any of its
Subsidiaries has participated in a “listed transaction” within the meaning of
Treasury Regulation Section 1.6011-4(b)(2) as of date of the Financial
Statements.

 

22

 

3.16                           NASDAQ.  Shares of the
Common Stock are registered pursuant to Section 12(b) of the Exchange
Act and are listed on The NASDAQ Global Market (“NASDAQ”), and the Company has no action pending to terminate
the registration of the Common Stock under the Exchange Act or delist the
Common Stock from NASDAQ, nor has the Company received any written, or, to the
Knowledge of the Company, oral notification since January 1, 2008 to the
effect that the SEC or NASDAQ is currently contemplating terminating such registration
or listing.  Notwithstanding the
foregoing, each of the Purchasers acknowledges and understands that the Company
has not been in compliance with the applicable Nasdaq Marketplace Rule requiring
a minimum bid price of $1 per share.

 

3.17                           Investment Company Act. 
The Company and its Subsidiaries are not, and, and immediately after
receipt of payment for the Convertible Preferred Stock and the Notes will not
be, an “investment company” within the meaning of, and required to be
registered under, the Investment Company Act of 1940, as amended.

 

3.18                           Brokers.  Except in
respect of the Company’s engagement of Piper Jaffray & Co., the
Company has not retained, utilized or been represented by any broker or finder
who is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement.  The Company has delivered or made available
to the Purchasers complete and correct copies of all engagement letters entered
into in connection with the transactions contemplated by this Agreement by the
Company with Piper Jaffray & Co. or any of its Affiliates.

 

3.19                           Subsidiaries.

 

(a)          As
of the date hereof, the Company has no Subsidiaries other than as listed in the
Annual Report.

 

(b)         All
of the outstanding capital stock of, or other equity or voting interest in,
each Significant Subsidiary of the Company (i) have been duly authorized,
validly issued and are fully paid and nonassessable and (ii) are owned,
directly or indirectly, by the Company, free and clear of all Liens other than
Permitted Liens and free of any other restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
equity or voting interest) that would prevent the operation by the Surviving Corporation
of such Subsidiary’s business as presently conducted.  No Subsidiary of the Company owns any shares
of Common Stock.

 

(c)          There are no outstanding (i) securities of the
Company or any of its Subsidiaries convertible into or exchangeable for shares
of capital stock of, or other equity or voting interest in, any Subsidiary of
the Company, (ii) options, warrants, rights or other commitments or
agreements to acquire from the Company or any of its Subsidiaries, or that
obligate the Company or any of its Subsidiaries to issue, any capital stock of,
or other equity or voting interest in, or any securities convertible into or
exchangeable for shares of capital stock of, or other equity or voting interest
in, any Subsidiary of the Company, (iii) obligations of the Company to
grant, extend or enter into any subscription, warrant, right, convertible or
exchangeable security or other similar agreement or commitment relating to any
capital stock of, or other equity or voting interest (including any voting debt)
in, any Subsidiary of the Company 

 

23

 

(the items in clauses
(i), (ii) and (iii), together with the capital stock of the Subsidiaries
of the Company, being referred to collectively as “Subsidiary Securities”), or (iv) other obligations by the
Company or any of its Subsidiaries to make any payments based on the price or
value of any shares of any Subsidiary of the Company.  There are no outstanding agreements of any
kind which obligate the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding Subsidiary Securities.

 

3.20                           Environmental Matters.

 

(a)  Except for such matters as would not,
individually or in the aggregate, have a Material Adverse Effect:

 

(i)                                The Company and its Subsidiaries and
their respective operations are in compliance with all, and have not violated
any, applicable Environmental Laws, which compliance includes the possession
and maintenance of, and compliance with, all permits, licenses, authorizations,
consents, approvals and franchises from Governmental Entities required under
applicable Environmental Laws for the operation of the business of the Company
and its Subsidiaries.

 

(ii)                             Neither the Company nor any of its
Subsidiaries has transported, produced, processed, manufactured, generated,
used, treated, handled, stored, released or disposed of any Hazardous
Substances, except in compliance with applicable Environmental Laws and in a
manner that has not resulted in liability under any applicable Environmental
Law.

 

(iii)                          Neither the Company nor any of its
Subsidiaries has exposed any Company Employee or any third party to Hazardous
Substances in violation of, or in a manner that has resulted in liability
under, any applicable Environmental Law.

 

(iv)                         Neither the Company nor any of its
Subsidiaries is a party to or is the subject of any pending, or, to the
Knowledge of the Company, threatened, Legal Proceeding alleging any liability,
obligation or commitment (“Liabilities”)
under or noncompliance with any Environmental Law or seeking to impose any
financial responsibility for any investigation, cleanup, removal, containment
or any other remediation under any Environmental Law.  Neither the Company nor any of its
Subsidiaries is subject to any orders, judgments or decrees or agreement by or
with any Governmental Entity or third party imposing any Liabilities with
respect to any Environmental Laws or any Hazardous Substances.

 

(v)                            Neither the Company nor any of its
Subsidiaries manufactures any products that do not satisfy all Environmental
Laws applicable to such products to be imported, sold, or otherwise marketed in
any jurisdiction in which such products are currently, or within the last
complete fiscal year have been, imported, sold, or otherwise marketed.

 

(vi)                         To the Knowledge of the Company, none of
the products currently or formerly manufactured, distributed, sold, leased,
licensed, repaired or delivered by the Company or any of its Subsidiaries
contains or has contained any Hazardous Substance that 

 

24

 

has resulted in or could reasonably expected to result
in any liability to the Company and its Subsidiaries.

 

(b)  As of the date hereof, to the Knowledge
of the Company, all reports of environmental site assessments, reviews, audits,
or similar evaluations, and any material documents concerning material
environmental matters, in each case, relating to the Company or any of its
Subsidiaries, which reports or documents are in the possession or control of
the Company or any of its Subsidiaries, have been made available to the
Purchasers.

 

3.21                           Assets.  The Company
or its Subsidiaries have good and marketable title to all of its or their real
or personal properties (whether tangible or intangible), rights and assets,
free and clear of all Liens in all material respects other than Permitted
Liens.

 

3.22                           Insurance.  The Company
and its Significant Subsidiaries have all material policies of insurance
covering the Company, its Significant Subsidiaries or any of their respective
employees, properties or assets, including policies of life, property, fire,
workers’ compensation, products liability, directors’ and officers’ liability
and other casualty and liability insurance, that, to the Knowledge of the
Company, is in a form and amount that is customarily carried by persons
conducting business similar to that of the Company and which the Company
believes is adequate for the operation of its business.  All such insurance policies are in full force
and effect, no notice of cancellation has been received, and there is no
existing default or event which, with the giving of notice or lapse of time or
both, would constitute a default, by any insured thereunder, except for such
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect.  To the Knowledge of the
Company, there is no material claim pending under any of such policies as to
which coverage has been denied or disputed by the underwriters of such policies
and there has been no threatened termination of any such policies.

 

3.23                           Material Contracts.

 

(a)                                  For all purposes of and under this
Agreement, a “Material Contract”
shall mean:

 

(i)                                (x) all
contracts restricting the payment of dividends upon, or the redemption,
conversion or exercise of, the Convertible Preferred Stock, the Warrants or the
Common Stock issuable upon conversion or exercise thereof and (y) all
contracts restricting the payment of interest upon, or the redemption or
conversion of, the Notes or the Common Stock issuable upon conversion thereof;
and

 

(ii)                             any
written joint venture, partnership, limited liability or other similar Contract
or arrangement relating to the formation, creation, operation, management or
control of any Person that is material to the business of the Company and its
Subsidiaries, taken as a whole;

 

(iii)                          any
material Contract containing any covenant (x) limiting the right of the
Company or any of its Subsidiaries to sell, distribute or manufacture any
products or services or engage in any line of business or in any geographic
area, to make use of any material Intellectual Property or to compete with any
Person, or (y) prohibiting the Company or 

 

25

 

any
of its Subsidiaries from engaging in business with any Person or levying a
fine, charge or other payment for doing so; and

 

(iv)                         any “material contract” (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC, other
than those agreements and arrangements described in Item 601(b)(10)(iii))
with respect to the Company and its Subsidiaries, taken as a whole (the
Material Contracts together with any lease, binding commitment, option or other
contract, agreement, instrument or obligation (whether written or oral) to
which the Company or any of its Subsidiaries may be bound, the “Contracts”).

 

(b)  As of the date hereof, to the Knowledge
of the Company, all Material Contracts have been furnished or made available to
the Purchasers.

 

(c)  Each Material Contract and every other
Contract of the Company or its Subsidiaries, the breach or termination of
which, would have a Material Adverse Effect, is valid and binding on the
Company (and/or each such Subsidiary of the Company party thereto) and is in
full force and effect, and neither the Company nor any of its Subsidiaries that
is a party thereto, nor, to the Knowledge of the Company, any other party
thereto, is in breach of, or default under, any such Contract, and no event has
occurred that with notice or lapse of time or both would constitute such a
breach or default thereunder by the Company or any of its Subsidiaries, or, to
the Knowledge of the Company, any other party thereto, except for such failures
to be in full force and effect and such breaches and defaults that would not,
individually or in the aggregate, have a Material Adverse Effect or will be
waived or eliminated under the Supplemental Indenture.

 

3.24                           Rights Agreement. 
The Company has amended the Rights Agreement in the form attached hereto
as Exhibit F.

 

3.25                           Anti-Takeover Statutes. 
The Board has taken all necessary actions so that the restrictions on
business combinations set forth in Section 203 of the DGCL and any other
similar applicable Law are not applicable to the Transaction Agreements and the
transactions contemplated hereby and thereby. 
No other state takeover statute or similar regulation applies to or
purports to apply to the Transaction Agreements and the transactions
contemplated hereby and thereby.

 

4.                                       Representations
and Warranties of Each Purchaser.  Each Purchaser, severally for itself and not jointly
with the other Purchasers, represents and warrants to the Company as follows:

 

4.1                                 Organization. 
Such Purchaser is a limited partnership duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its organization and
has the requisite partnership power and authority to carry on business as it is
presently being conducted and to own, lease and operate its properties and
assets and to carry on its business as presently conducted.

 

4.2                                 Authorization. 
Such Purchaser has all requisite partnership power to enter into the
Transaction Agreements and to consummate the transactions contemplated by the
Transaction Agreements and to carry out and perform its obligations
thereunder.  All partnership 

 

26

 

action on the part of such Purchaser or its officers, stockholders,
members or partners necessary for the authorization, execution, delivery and
performance of the Transaction Agreements has been taken.  Upon their respective execution by such
Purchaser and the other parties thereto and assuming that they constitute legal
and binding agreements of the Company, each of the Transaction Agreements to
which such Purchaser will be a party will constitute a legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except that such enforceability (a) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting or relating to creditors’ rights generally, and (b) is
subject to general principles of equity.

 

4.3                                 No Conflict. 
The execution, delivery and performance of the Transaction Agreements by
such Purchaser, the issuance of the Common Stock upon conversion of the Notes,
the Convertible Preferred Stock, the Series B Junior Preferred Stock, the Series C
Junior Preferred Stock and the Warrants in accordance with the Indenture, the
Certificate of Designation, the Series B Certificate of Designation, the Series C
Certificate of Designation and such Warrants, respectively, and the
consummation of the other transactions contemplated hereby will not (i) conflict
with or result in any violation of any provision of the certificate of
incorporation, by-laws, limited liability company agreement, partnership
agreement or other equivalent organizational document, in each case as amended,
of such Purchaser, (ii) result in any breach or violation of, or default
(with or without notice or lapse of time, or both) under, require consent
under, or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to the loss of any benefit under any
Indebtedness, guarantee of Indebtedness, mortgage, Contract, purchase or sale
order, instrument, permit, concession, franchise, right or license binding upon
such Purchaser or result in the creation of any Liens upon any of the
properties, assets or rights of such Purchaser, or (iii) conflict with or
violate any applicable Laws, other than, in the case of clauses (ii) and
(iii), as would not, individually or in the aggregate, be reasonably expected
to materially delay or hinder the ability of such Purchaser to perform its
obligations under the Transaction Agreements (a “Purchaser Adverse Effect”).

 

4.4                                 Consents.  No Consent of
any Governmental Entity is required on the part of such Purchaser under any Law
in effect as of the date hereof in connection with (x) the execution,
delivery or performance of the Transaction Agreements to which such Purchaser
will be a party and the consummation of the transactions contemplated hereby
and thereby, (y) the issuance of the Common Stock upon conversion of the
Notes, the Convertible Preferred Stock, the Series B Junior Preferred
Stock and the Series C Junior Preferred Stock in accordance with the
Indenture, Certificate of Designation, the Series B Certificate of
Designation and the Series C Certificate of Designation, respectively, and
(z) the issuance of the Common Stock upon exercise of the Warrants in
accordance with their terms, other than (i) the expiration or termination
of any applicable waiting periods under the HSR Act or any foreign antitrust
requirements in connection with the issuance of Common Stock upon conversion of
the Convertible Preferred Stock or the Notes or exercise of the Warrants, (ii) those
to be obtained, in connection with the registration of Securities under the
Registration Rights Agreement, under the applicable requirements of the
Securities Act and Exchange Act and any related filings and approvals under
applicable state securities laws, (iii) such filings and approvals as may
be required by any federal or state securities laws, including compliance with
any applicable requirements of the Exchange Act, and (iv) such other
Consents the failure of which to make or obtain would not, individually or in
the aggregate, have a Purchaser Adverse Effect.

 

27

 

4.5                                 Purchasers’ Financing. 
At the Closing, such Purchaser will have all funds necessary to pay to
the Company the purchase price for the Securities being purchased by such
Purchaser hereby in immediately available funds.

 

4.6                                 Brokers.  Such
Purchaser has not retained, utilized or been represented by any broker or
finder in connection with the transactions contemplated by this Agreement whose
fees the Company would be required to pay.

 

4.7                                 Purchase Entirely for Own Account. 
Such Purchaser is acquiring the Securities for its own account and not
with a view to, or for sale in connection with, any distribution or offering of
the Securities in violation of the Securities Act, and such Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same.  Such Purchaser
does not presently have any contract, agreement, undertaking, arrangement,
obligation or commitment with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any
of  the Securities or the Common Stock
into which any of the Securities are convertible or exercisable.

 

4.8                                 Investor Status. 
Such Purchaser certifies and represents to the Company that such
Purchaser is an “accredited investor” as defined in Rule 501 of Regulation
D promulgated under the Securities Act. 
Such Purchaser’s financial condition is such that it is able to bear the
risk of holding the Securities for an indefinite period of time and the risk of
loss of its entire investment.  Such
Purchaser has been afforded the opportunity to ask questions of and receive
answers from the management of the Company concerning this investment and has
sufficient knowledge and experience in investing in companies similar to the
Company so as to be able to evaluate the risks and merits of its investment in
the Company.

 

4.9                                 Securities Not Registered.

 

(a)  Such
Purchaser understands that the Securities have not been registered under the
Securities Act or any state Blue Sky laws, by reason of their issuance by the
Company in a transaction exempt from the registration requirements of the
Securities Act and applicable state Blue Sky laws, and that the Securities must
continue to be held by such Purchaser unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from such registration.  Such Purchaser understands that the
exemptions from registration afforded by Rule 144 promulgated under the
Securities Act (“Rule 144”)
(the provisions of which are known to it) depend on the satisfaction of various
conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.

 

(b)  Such
Purchaser understands that the Securities shall be subject to the restrictions
contained herein.

 

(c)  Such
Purchaser understands that the Securities, and any securities issued in respect
thereof or exchange therefor, may bear one or all of the legends set forth in Section 8.3(a).

 

4.10                           Litigation.  There is no
Legal Proceeding pending or, to the knowledge of such Purchaser, threatened,
against or affecting such Purchaser or any of its properties that would, individually
or in the aggregate, have a Purchaser Adverse Effect.  Such Purchaser is not 

 

28

 

subject to any outstanding order, injunction, decree or agency
requirement that would, individually or in the aggregate, have a Purchaser
Adverse Effect.

 

4.11                           Investment Company Act. 
No Purchaser, nor any of its Subsidiaries, is, and immediately following
the Closing will not be, an “investment company” within the meaning of, and
required to be registered under, the Investment Company Act of 1940, as
amended.

 

5.                                       Covenants.

 

5.1                                 Interim Conduct of the Business. 
Except as (i) set forth in Section 5.1 of the
Disclosure Schedule or (ii) otherwise contemplated by the terms of this
Agreement, prior to the Closing, (x) the Company shall, and shall cause
its Subsidiaries to, except as would not, individually or in the aggregate have
a Material Adverse Effect, use commercially reasonable efforts to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and in compliance with all applicable Laws and (y) each
of the Company and its Subsidiaries shall not, without the prior consent of the
Purchasers:

 

(a)  take any action that would require the
consent of the Investor Securityholders pursuant to Section 7.4 if
effected following the Closing;

 

(b)  take any action that would require the
consent of the holders of the Convertible Preferred Stock if effected following
the Closing (other than the filing of the Certificate of Designation with the
Secretary of State of the State of Delaware at or prior to the Closing);

 

(c)  (i) declare, set aside or pay any
dividends on, or make any other distributions (whether in cash, securities or
other property) in respect of, or convertible into or exchangeable or
exercisable for, any of its capital stock (other than dividends and
distributions by a direct or indirect wholly-owned Subsidiary of the Company to
its parent); (ii) adjust, split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or any of its
other securities; (iii) purchase, redeem or otherwise acquire any shares
of its capital stock or any other Company Securities (other than repurchases of
Common Stock pursuant to existing compensation, benefits, option, restricted
share or employment agreement or plan existing on the date hereof); or (iv) take
any action that would result in an adjustment of the conversion price under the
Convertible Preferred Stock, the Notes or the Warrants had the Convertible
Preferred Stock, the Notes or the Warrants, as the case may be, been
outstanding at the time of such action;

 

(d)  increase the number of Directors from
seven (7) members or change the current and anticipated future structure
of the Board;

 

(e)  issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
Company Securities, except for issuances of Company Securities which would not
cause Section 5.7 to apply if effected following Closing;

 

29

 

(f)  (i) file, or consent by answer or
otherwise to the filing against the Company or any of its Subsidiaries of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, insolvency, reorganization, moratorium or other similar Law of any
jurisdiction, (ii) make an assignment for the benefit of the creditors of
the Company or any of its Subsidiaries, (iii) consent to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to the Company or any of its Subsidiaries or with respect to any
substantial part of its or their property, or (iv) take any corporate
action for the purpose of any of the foregoing;

 

(g)  dissolve, liquidate or wind up the
Company; or

 

(h)  authorize any of, or commit to agree to
take, any of the foregoing actions.

 

5.2                                 Antitrust Approval. 
The Company and the Purchasers acknowledge that one or more filings
under the HSR Act or a foreign antitrust Law may be necessary in connection
with the issuance of the Conversion Shares and/or the exercise of the rights
pursuant to Section 5.7. 
Promptly upon the request of the Investor Securityholders, to the extent
a filing is required under the HSR Act or any foreign antitrust requirements in
connection with any proposed conversion or exercise of the Securities, the
Junior Preferred Stock and/or the exercise of the rights pursuant to Section 5.7
by such Investor Securityholder, the Company and the Investor Securityholders
shall (a) file with the proper authorities all forms and other documents
necessary to be filed pursuant to the HSR Act or such foreign antitrust
requirement, and the regulations promulgated thereunder, in connection with the
issuance of Conversion Shares and/or the exercise of the rights pursuant to Section 5.7
and (b) shall cooperate with each other in promptly producing such
additional information as those authorities may reasonably require to comply
with statutory requirements of the U.S. Federal Trade Commission, the U.S.
Department of Justice or any other Governmental Entity.  For the avoidance of doubt, the foregoing
covenant shall apply to both the Company and the Investor Securityholders at
any time after the Closing Date (notwithstanding that the Securities may not be
convertible at such time and more than one such request may be made by the
Investor Securityholders with respect to the Securities).  Any filing fees
associated with any such filing shall be borne equally by the Company, on the
one hand, and the Investor Securityholders, on the other hand.  For the avoidance of doubt, any delivery of
Conversion Shares shall be subject to the terms and conditions of the
Certificate of Designation, the Indenture, the Junior Certificates of
Designation or the Warrants, as applicable, including any terms relating to
compliance with the HSR Act or any foreign antitrust requirements.

 

5.3                                 Shares Issuable Upon Conversion. 
The Company will at all times have and keep available for issuance such
number of shares of Common Stock as shall be sufficient to permit the
conversion or exercise of the Convertible Preferred Stock, the Notes, the
Junior Preferred Stock and the Warrants into Common Stock in accordance with
their terms and as provided for in Certificate of Designation, the Notes and
Indenture, the Junior Certificates of Designation and such Warrants,
respectively, including as may be adjusted for share splits, combinations or
other similar transactions as of the date of determination.  The Company will at all times have and keep
available for issuance such number of shares of Series B Junior Preferred
Stock and Series C Junior Preferred Stock as shall be sufficient to permit
the conversion of the 

 

30

 

Convertible Preferred and the Notes, respectively, into Junior
Preferred Stock in accordance with their terms and as provided for in the
Certificate of Designation, the Notes and Indenture, as applicable.  The Company will use reasonable best efforts
to cause any Common Stock issued upon conversion or exercise of the Convertible
Preferred Stock, the Notes and the Warrants to be listed with NASDAQ or such
other Exchange on which the Common Stock may then be listed.

 

5.4                                 PORTAL and CUSIPs. 
The Company will use its reasonable best efforts to (a) permit the
Notes to be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to the PORTAL Market as of the Closing
or as promptly as practicable thereafter and (b) obtain all necessary
Committee on Uniform Securities Identification Procedures numbers (CUSIP numbers)
for the Notes required for creating a market in Notes traded pursuant to Rule 144A
under the Securities Act or which are not “restricted securities” for purposes
of Rule 144.  Each Purchaser will
provide all reasonable assistance and cooperation as may be requested by the
Company to effectuate the intent and purposes of this Section 5.4.  The Company will use its reasonable best
efforts to cause all Notes Beneficially Owned by the Purchasers to be issued
(at the Closing and, failing that, as promptly as practicable thereafter) as an
interest in the IAI Global Note (as defined in the Indenture); provided,
however, that to the extent permitted by the Depository Trust Company
and the registrar for the Notes, such ownership interest may be transferred
into the Restricted Global Note (as defined in the Indenture).

 

5.5                                 Commercially Reasonable Efforts; Further
Assurances; Notification.

 

(a)  Upon the terms and subject to the
conditions set forth in this Agreement, each of the Purchasers and the Company
shall use its commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other party or parties hereto in doing, all things reasonably necessary,
proper or advisable under applicable Law to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement and the other Transaction Agreements, including using commercially
reasonable efforts to: (i) cause the conditions to the Closing set forth
in Section 6 to be satisfied; (ii) obtain all necessary
actions or non-actions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and make all necessary registrations, declarations
and filings with Governmental Entities; and (iii) execute or deliver any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement and the
other Transaction Agreements.

 

(b)  Each party agrees to cooperate with
each other and their respective officers, employees, attorneys, accountants and
other agents, and, generally, do such other reasonable acts and things in good
faith as may be necessary to effectuate the intents and purposes of this Agreement
and the other Transaction Agreements, subject to the terms and conditions
hereof and thereof and compliance with applicable Law, including taking
reasonable action to facilitate the filing of any document or the taking of
reasonable action to assist the other parties hereto in complying with the
terms hereof and thereof.

 

(c)  Prior to the Closing, the Company shall
give prompt written notice to the Purchasers of the occurrence or
non-occurrence of any event known to the Company the 

 

31

 

occurrence or non-occurrence of which would reasonably be expected to
cause any representation or warranty contained in Section 3 to be
untrue, or the failure of the Company to comply with or satisfy any covenant or
agreement under this Agreement.  Prior to
the Closing, the Purchasers shall give prompt written notice to the Company of
the occurrence or non-occurrence of any event known to the Purchasers the
occurrence or non-occurrence of which would reasonably be expected to cause any
representation or warranty contained in Section 4 to be untrue, or
the failure of the Purchasers to comply with or satisfy any covenant or
agreement under this Agreement.

 

5.6                                 Standstill.

 

(a)  The
Investor Securityholders parties hereto agree that, from Closing until the
earlier of (x) such time that the SLS Beneficial Ownership Percentage is
less than 10% and (y) the consummation of a Fundamental Change (the “Standstill Period”), except as required in
connection with the execution, delivery or performance of the Transaction
Agreements and the consummation of the transactions contemplated hereby and
thereby, without the prior consent of the Company (evidenced by action of the
Board), the Investor Securityholders shall not and the Investor Securityholders
shall cause each of their Affiliates not to, directly or indirectly:

 

(i)                                except (x) as a result of the
Beneficial Ownership of or exercise of any Rights, (y) for the receipt of
any Company Securities or other rights or securities from the Company pursuant
to the terms of the Conversion Shares or the Securities (or the exercise or
conversion of any such Company Securities or other rights or securities),
including any increase in the number of shares of Common Stock issuable upon
conversion or exercise of the Convertible Preferred Stock, the Junior Preferred
Stock, the Notes or the Warrants as a result of any anti-dilution or other
terms thereof or the exercise of rights pursuant to Section 5.7
hereof and (z) Company Securities issued to the Appointed Directors or
Nominated Directors in their capacities as such, if any, (A) acquire
any  Beneficial Ownership (or economic
right tantamount thereto) of Company Securities or (B) authorize or make a
tender offer, exchange offer or other offer or proposal, whether oral or
written, to acquire Company Securities, in each case, if the effect of such
acquisition would be that the Common Stock Beneficially Owned in the aggregate
by the Investor Securityholders and their Affiliates would exceed the
Standstill Limit, provided that for purposes of calculating the number
of shares of Common Stock Beneficially Owned by the Investor Securityholders
and their Affiliates, there shall be excluded from such calculation shares of
Common Stock Beneficially Owned by Affiliates of the Investor Securityholders
that are not also Beneficially Owned by the Investor Securityholders, up to a
maximum number of shares of Common Stock that will be excluded pursuant to this
clause equal to one percent (1%) of the Common Shares Outstanding;

 

(ii)                             make, or in any way participate, directly
or indirectly, in any “solicitation” of “proxies” to vote (as such terms are
used in the rules of the SEC), or seek to advise or influence any Person
(other than (x) the Investor Securityholders or their Affiliates or (y) other
than in accordance with and consistent with the recommendation of the Board)
with respect to the voting of any Voting Stock;

 

32

 

(iii)        authorize,
commence, encourage, support or endorse any tender offer or exchange offer for
shares of Voting Stock (for the avoidance of doubt, subject to compliance with Section 8.1,
tendering into any such offer will not violate this Section 5.6(a));

 

(iv)       form, join or in any way
participate in a “group” as defined in Section 13(d)(3) of the
Exchange Act (other than a group comprised solely of the Investor
Securityholders and their Permitted Transferees), for the purpose of voting,
acquiring, holding, or disposing of any Voting Stock;

 

(v)        publicly
announce, propose or submit to the Company a proposal or offer to effect any of
the following (each, a “Company  Change in Control Event”):  (1) a merger, consolidation or other
business combination or transaction to which the Company is a party if the
Voting Stock immediately prior to the effective date of such merger,
consolidation or other business combination or transaction (or the securities
such Voting Stock is converted or exchanged into), represents less than 50% of
the Total Current Voting Power of the surviving entity (or its parent)
following such merger, consolidation or other business combination or
transaction; (2) an acquisition by any Person, entity or “group” (as
defined in Section 13(d)(3) of the Exchange Act) of direct or
indirect Beneficial Ownership of Voting Stock of the Company representing 50%
or more of the Total Current Voting Power of the Company; (3) a sale of
all or substantially all of the assets of the Company to any Person or Persons;
or (4) a liquidation or dissolution of the Company;

 

(vi)       take any action that results
in the Investor Securityholders having to file or amend a statement on Schedule
13D pursuant to Rule 13d-1(a) of the rules and regulations
promulgated under the Exchange Act indicating an intention, plan or proposal
with respect to any of the events described in clauses (i) through (v) above
or with respect to any recapitalization or restructuring of the Company;

 

(vii)      otherwise act
in concert with others (other than with other Investor Securityholders and
their Affiliates) to publicly effect or seek, offer or propose to effect,
control of the Company in such a manner that would result in the Investor
Securityholders having to file or amend a statement on Schedule 13D pursuant to
Rule 13d-1(a) of the rules and regulations promulgated under the
Exchange Act; or

 

(viii)     enter into any
arrangements with any third party concerning any of the foregoing.

 

(b)  If,
at any time prior to the termination of the Standstill Period, (i) the
Company has entered into a definitive agreement, the consummation of which
would result in a Company Change in Control Event, (ii) a third party who
is not an Affiliate of the Investor Securityholders or an Affiliated Entity (a “Third Party”) acquires Beneficial Ownership
of 20% or more of the outstanding Voting Stock; or (iii) any Person shall
have commenced and not withdrawn a bona fide public tender or exchange offer
which if consummated would result in a Company Change in Control Event and the
Board has not recommended that the stockholders of the Company reject such
offer within the time period contemplated by Rule 14d-9 under the Exchange
Act, in each case, then for so long as such condition continues to apply, the
limitation on the actions described in clauses (ii), (iii), (iv), (v), (vi), (vii) and
(viii) of Section 5.6(a) (and 

 

33

 

any
related acquisition of Beneficial Ownership by the Investor Securityholders
and/or their Affiliates) shall not be applicable to the Investor
Securityholders.

 

(c)  Anything
in this Section 5.6 to the contrary notwithstanding, this Section 5.6
shall not be construed to prohibit or restrict any actions taken by the any
designee, nominee or appointee (including the Appointed Directors and the
Nominated Directors) on the Board, in their capacities as a member of the Board
and in compliance with and subject to his or her fiduciary duties as a member
of the Board or the exercise of the Investor Securityholders’ rights pursuant
to Section 7.4 and 8.2 (and any related disclosure on
Schedule 13D pursuant to Rule 13d-1(a) of the rules and
regulations promulgated under the Exchange Act).

 

5.7           Preemptive Rights.

 

(a)  From
Closing until such time that the SLS Beneficial Ownership Percentage is less
than 10%, the Company shall not issue any Company Securities to any Person,
unless the Company offers the right (the “Participation
Right”) to each Investor Securityholder to purchase its pro  rata
portion (as specified below) of such Company Securities at the same price per
security (payable in cash) and otherwise upon the same terms and conditions as
those offered to such Person in accordance with the procedures set forth in
this Section 5.7; provided that Participation Rights shall
not be applicable to the issuance of Company Securities:  (i) issued as consideration pursuant to
an acquisition of the stock, assets or business of another Person by the
Company or any of its Subsidiaries, (ii) issued to directors, officers,
employees or individuals who are consultants pursuant to any Approved Stock
Plan, (iii) pursuant to a stock split, stock dividend or similar
transaction in which all holders of Common Stock are treated equally on a pro
rata basis, (iv) pursuant to the payment of paid-in-kind interest on
indebtedness for borrowed money incurred by the Company or any of its
Subsidiaries, (v) pursuant to the conversion, exchange or exercise of a
Company Security that is either (A) outstanding on the Closing Date
substantially in accordance with the terms in effect on the Closing Date or (B) outstanding
after the Closing Date as long as, in the case of clause (B), the Investor
Securityholders have had an opportunity to exercise their Participation Rights
with respect to the underlying Company Security or such Company Security was
issued pursuant to clause (i), (ii) or (iv) of this sentence, and (vi) pursuant
to an offering of the type described to in clause (i) of the definition of
“Public Sale” of Company Securities.  For
purposes of clarity, the parties agree that the issuance of Conversion Shares
upon conversion or exercise of the Securities or the 8% Notes shall not be
subject to the Participation Rights.

 

(b)  The
Company shall send a written notice (the “Participation
Rights Notice”) to the Investor Securityholders stating the number
of Company Securities to be offered, a description of the terms of such Company
Securities if not Common Stock, the price and terms on which it proposes to
offer such Company Securities (including a description of any non-cash
consideration and the Company’s valuation thereof determined in good faith by
the Board), and a reference to the Investor Securityholders’ Participation
Rights hereunder.

 

(c)  Within
ten (10) Business Days after the delivery of the Participation Rights
Notice, each Investor Securityholder may elect by written notice to the
Company, to purchase such Company Securities, at the price and on the terms
specified in the Participation Rights Notice (or, if such price includes
non-cash consideration, an amount of cash equal to the 

 

34

 

fair
market value of such non-cash consideration as determined in good faith by the
Board), up to an amount (such amount, the “Participation
Amount”) equal to the product of (i) the number of Company
Securities of each class offered for sale by the Company multiplied  by
(ii) the quotient obtained by dividing (x) the number of shares of
Common Stock Beneficially Owned by such Investor Securityholder, by (y) the
number of Common Shares Outstanding. 
Such exercise notice will set forth the number of Company Securities of
each class being purchased by each Investor Securityholder; provided, however,
that the Investor Securityholder shall not be permitted to purchase any Company
Securities pursuant to this Section 5.7 if, and to the extent that,
such acquisition by such Investor Securityholder would require the consent of
the Company’s stockholders pursuant to the applicable rules of the primary
Exchange and the Company is not otherwise seeking the consent of its
stockholders in connection with the issuance of such Company Securities.

 

(d)  Subject
to the last sentence of this Section 5.7(d), the Company may offer
the Company Securities specified in the Participation Rights Notice in excess
of the Participation Amount, if any, to any Person or Persons at a price not
less than, and on terms no more favorable to such offerees than, those set
forth in such Participation Rights Notice, at any time after the Participation
Rights Notice is sent but on or before the 90th day after the Participation
Rights Notice was sent.  In addition,
during the period beginning ten (10) Business Days after the Participation
Rights Notice was sent and ending on the 90th day after the Participation
Rights Notice was sent, the Company may offer any Company Securities of the
Participation Amount that are not elected to be purchased by the Investor
Securityholders to any Person or Persons, provided that if such Company
Securities are to be offered at a price less than, or on terms materially more
favorable to such offerees than, those specified in the Participation Rights
Notice, the Company shall promptly notify the Investor Securityholders in
writing of such modified terms (a “Subsequent
Notice”) and the Investor Securityholders shall have five (5) Business
Days after the receipt of such notice in which to elect to purchase the
Participation Amount of such Company Securities at the price and on the terms
specified in such Subsequent Notice.

 

(e)  The
closing of the purchase of Company Securities by the Investor Securityholders
pursuant to this Section 5.7 shall occur as promptly as practicable
following the notice to the Company by the Investor Securityholders to exercise
their Participation Rights; provided that such closing shall be subject
to and shall occur not earlier than the later of (x) concurrently with the
closing of the purchase of Company Securities by such offeree and (y) 15
Business Days after delivery of written notice by the Investor Securityholders
of their election to purchase such Company Securities (unless the delay with
respect to the purchase by the Investor Securityholders results from the
requirement to obtain regulatory approval for the purchase by an Investor
Securityholders that is not required for purchasers which are not Investor
Securityholders, in which case the closing of the purchase by such Investor
Securityholders shall occur promptly after receipt of such regulatory
approval).  The closing of the purchase
of Company Securities by the Investor Securityholders pursuant to this Section 5.7
shall also be subject to the receipt of any necessary regulatory approvals, the
expiration of any required waiting periods and applicable Law.  Unless otherwise set forth in writing by the
Company, the Company shall have no obligation to consummate the issuance to
such third-party offerees giving rise to the Participation Rights and the
Company shall have no obligation to negotiate the price or other terms of the
offering of Company Securities with any Investor Securityholders.

 

35

 

5.8           Indemnification; Freedom to Pursue
Opportunity.  Sections 3 and 5 of the Transaction Fee
Agreement is incorporated herein, mutatis
mutandis, in the same manner as if the Investor Securityholders and
each of their respective partners, stockholders, members, directors, officers,
fiduciaries, managers, controlling Persons, employees and agents and each of
the partners, stockholders, members, directors, officers, fiduciaries,
managers, controlling Persons, employees and agents of each of the foregoing
were an “Indemnified Party” thereunder.

 

6.             Conditions
Precedent.

 

6.1           Conditions to Each Party’s Obligation to
Consummate the Closing.  The
respective obligations of each Purchaser and the Company to consummate the
Closing are subject to the satisfaction or waiver of the following conditions

 

(a)  No
Governmental Entity of competent jurisdiction shall have (i) enacted,
issued or promulgated any Law that is in effect and has the effect of making
the Closing illegal in any jurisdiction in which the Company has material
business or operations or which has the effect of prohibiting or otherwise
preventing the consummation of the Closing in any jurisdiction in which the Company
has material business or operations, or (ii) issued or granted any order,
decree or injunction that is in effect and has the effect of making the Closing
illegal.

 

(b)  The
Certificate of Designation shall have been accepted for filing with the Secretary
of State of the State of Delaware.

 

(c)  The
parties shall have worked in good faith to prepare and shall have finalized the
Series B Certificate of Designation and the Series C Certificate of
Designation in forms consistent with the terms of the Series B Junior
Preferred Term Sheet and the Series C Junior Preferred Term Sheet,
respectively.

 

6.2           Conditions to the Obligation of the
Purchasers to Consummate the Closing.  The several obligations of each Purchaser to
consummate the transactions to be consummated at the Closing, and to purchase
and pay for the Securities being purchased by it at the Closing pursuant to
this Agreement, are subject to the satisfaction or waiver of the following
conditions precedent:

 

(a)  The
representations and warranties of the Company contained herein shall be true
and correct on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date, except (i) for any failure to
be so true and correct which has not had and would not have, individually or in
the aggregate, a Material Adverse Effect (other than the representations and
warranties of the Company set forth in Sections 3.2, 3.3, 3.4
and 3.25, each of which shall be true and correct in all material
respects and subject to (ii) below), and (ii) for those
representations and warranties which address matters only as of a particular
date, which representations and warranties shall have been true and correct as
of such particular date, except for any failure to be so true and correct as of
such particular date which has not had and would not, individually or in the
aggregate, have a Material Adverse Effect (or, the case of Section 3.2,
which shall be true and correct in all material respects); provided, however,
that, for purposes of determining the accuracy of the representations and
warranties of the Company set 

 

36

 

forth
herein for purposes of this Section 6.2(a), all “Material Adverse
Effect” and “material” qualifications set forth in such representations and
warranties shall be disregarded.

 

(b)  The
Company shall have performed in all material respects all obligations and
conditions herein required to be performed or observed by the Company on or
prior to the Closing Date.

 

(c)  Each
Purchaser shall have received a certificate, dated the Closing Date, signed by
the Chief Executive Officer or the Chief Financial Officer of the Company,
certifying on behalf of the Company that the conditions specified in Sections
6.2(a), 6.2(b) and 6.2(d) have been fulfilled.

 

(d)  Since
the date of this Agreement, no Material Adverse Effect shall have occurred and
be continuing.

 

(e)  The
Company shall have executed and delivered the Registration Rights Agreement.

 

(f)  The
Company and the Trustee shall have executed and delivered the Indenture.

 

(g)  The
Company and The Bank of New York Mellon Trust Company, N.A., as trustee, shall
have executed and delivered the Supplemental Indenture.

 

(h)  The Pledgors (as defined in
the Pledge Agreement) and the Collateral Agent (as defined in the Pledge
Agreement) shall have executed and delivered the Amendment to the Pledge and
Security Agreement substantially in the form attached hereto as Exhibit I
(the “Pledge Agreement Amendment”).

 

(i)  The Company shall have purchased
no less than $20 million in aggregate principal amount of the 8% Notes pursuant
to Consent and Purchase Agreements substantially in the form attached hereto as
Exhibit J, which agreements shall not have been amended, modified,
supplemented or waived in any material respect following execution and delivery
thereof.

 

(j)  The Company shall have
executed and delivered the Transaction Fee Agreement in the form attached
hereto as Exhibit K (the “Transaction
Fee Agreement”).

 

(k)  Each Purchaser shall have
received from counsel to the Company, an opinion substantially in the form
attached hereto as Exhibit L.

 

6.3           Conditions to the Obligation of the
Company to Consummate the Closing.  The obligation of the Company to consummate
the transactions to be consummated at the Closing, and to issue and sell to
each Purchaser the Securities to be purchased by it at the Closing pursuant to
this Agreement, is subject to the satisfaction or waiver of the following
conditions precedent:

 

37

 

(a)  The
representations and warranties contained herein of each Purchaser shall be true
and correct on and as of the Closing Date, with the same force and effect as
though made on and as of the Closing Date, except (i) for any failure to
be so true and correct which has not had and would not have, individually or in
the aggregate, a Purchaser Adverse Effect (other than the representations and
warranties of such Purchaser set forth in Section 4.2, which shall
be true and correct in all material respects), and (ii) for those
representations and warranties which address matters only as of a particular
date, which representations shall have been true and correct as of such
particular date, except for any failure to be so true and correct as of such
particular date which has not had and would not, individually or in the
aggregate, have a Purchaser Adverse Effect.

 

(b)  Each
Purchaser shall have performed in all material respects all obligations and
conditions herein required to be performed or observed by such Purchaser on or
prior to the Closing Date.

 

(c)  The
Company shall have received a certificate, dated the Closing Date, on behalf of
each Purchaser, signed by a senior executive officer thereof, certifying on
behalf of each Purchaser that the conditions specified in the foregoing Sections
6.3(a) and 6.3(b) have been fulfilled.

 

(d)  The
Trustee shall have executed and delivered the Indenture.

 

(e)  The
Bank of New York Mellon Trust Company, N.A., as trustee, shall have executed
and delivered the Supplemental Indenture.

 

(f)  Each
Purchaser shall have executed and delivered the Registration Rights Agreement.

 

(g)  Each
Purchaser shall have delivered to the Company a properly executed withholding
certificate.

 

7.             Governance;
Information Rights.

 

7.1           Board Representation.

 

(a)  Immediately Following Closing.  Subject to the limitations set forth in this Section 7.1,
effective immediately following the Closing:

 

(i)    for so long as the Preferred
Representation Entitlement is greater than zero (0) (the “Preferred  Entitlement
Period”), the Investor Securityholders shall have the right to
designate, nominate or appoint that number of Directors, and the Company shall
nominate and recommend for election at each annual or special meeting of the
holders of Convertible Preferred Stock at which Preferred Directors are to be
elected such Directors (each, an “Appointed
Director”) equal to the Preferred Representation Entitlement; and

 

(ii)   without limiting, and in
addition to, the rights set forth in clause (i) above, for so long as the
Nomination Representation Entitlement is greater than zero (0) (the “Nomination Entitlement Period”), the
Investor Securityholders shall have the right to 

 

38

 

designate,
nominate or appoint that number of Directors, and the Company shall nominate
and recommend such Directors for election as a Director as part of the slate
that is included in the proxy statement (or consent solicitation or similar
document) of the Company relating to the election of Directors by the holders
of Common Stock, and shall provide the highest level of support for the
election of such Directors (each, a “Nominated
Director”) as the Company provides to any other individual standing
for election as a Director as part of the Company’s slate of Directors, equal
to the Nomination Representation Entitlement; provided that
notwithstanding the Nomination Representation Entitlement being greater than
zero (0), the Investor Securityholders shall not have the right to designate,
nominate or appoint any Nominated Director resulting from the application of
clause (a)(ii) of the definition of “Nomination Representation Entitlement”
until the earlier of (x) a vacancy created with respect to a Board seat
that was not held by an Appointed Director or a Nominated Director and (y) the
Company’s 2010 annual meeting of the stockholders; provided, further
that any nominee resulting from the application of clause (a)(ii) of the
definition of “Nomination Representation Entitlement” shall be a director  satisfying the criteria set forth in Section 7.1(c)(ii) hereof
(an “Independent Director”).

 

(b)  During the Entitlement Period.

 

(i)    Nominated
Directors.  Upon the
occurrence of an increase in the authorized number of Directors then constituting
the Board that results in an increase in the Nomination Representation
Entitlement to a number greater than the number of Nominated Directors then
serving on the Board, the Investor Securityholders shall have the right to
designate, nominate or appoint that number of additional Nominated Directors
such that the total number of Nominated Directors (after giving effect to such
designation, nomination or appointment) shall be equal to the Nomination
Representation Entitlement at such time.

 

(ii)   Vacancy. In the event
that a vacancy is created at any time with respect to a Board seat held by an
Appointed Director or a Nominated Director by reason of the death, disability,
retirement, resignation or removal (with or without cause) of such Director, the
Investor Securityholders may designate, nominate or appoint another individual
to be elected to fill the vacancy created thereby, and the Company shall use
its reasonable best efforts to take at any time and from time to time, all
actions necessary to accomplish the same, but in any case, only to the extent
required to maintain the then applicable Preferred Representation Entitlement
and/or Nomination Representation Entitlement, as applicable, provided
that for the avoidance of doubt, this sentence shall not be deemed to require
the Company to amend or seek to amend its restated certificate of
incorporation.  For the avoidance of
doubt, this Section 7.1(b)(ii) does not apply to any vacancy
arising as a result of failure of an Appointed Director or a Nominated
Director, as the case may be, who has been nominated and recommended by the
Company in accordance with Section 7.1(a) to be elected, but
any such failure to be elected shall in no way affect the right of the Investor
Securityholders to designate, nominate or appoint another individual in
replacement thereof as a nominee for Appointed Director or Nominated Director,
as the case may be, with respect to the next election.  In addition, upon the occurrence of an increase
in the authorized number of Directors then constituting the Board that results
in an increase in the Preferred Representation Entitlement and/or the
Nomination Representation Entitlement, as applicable, to a number greater than
the number of Appointed Directors or Nominated Directors, as applicable, then
serving on the Board, the Investor Securityholders shall 

 

39

 

have
the right to designate, nominate or appoint, and subject to this Section 7.1(b),
the Board shall appoint, that number of additional individuals to serve as
Appointed Directors or Nominated Directors, as applicable, such that the total
number of Appointed Directors or Nominated Directors, as applicable, (after
giving effect to such designation, nomination or appointment) shall be equal to
the Preferred Representation Entitlement and/or Nomination Representation
Entitlement, as applicable, at such time.

 

(iii)        Certain
Limitations. 
Notwithstanding the foregoing, if after the Closing there is a change in
the applicable rules of the primary Exchange on which the Common Stock is
listed at the time such change becomes effective or in the interpretation
thereof that would cause the Common Stock to be delisted by such Exchange as a
result of the terms of this Section 7.1(b), the voting rights of
the holders of the Convertible Preferred Stock set forth in this Section 7.1(b) shall
thereafter be limited to the extent required by such changed rules for the
Common Stock to continue to be listed on such Exchange.

 

(c)  Limitations
on Appointed and Nominated Directors.

 

(i)          Except as
provided in Section 7.1(c)(ii), unless otherwise agreed to by the
Company, each Appointed Director and Nominated Director (other than the
Independent Director) shall, at all times during which such Person serves as a
Director, (A) (x) be a present full-time managing director of SLS
Management (a “SLS Person”) or (y) otherwise
be reasonably acceptable (in terms of suitability) to the Company’s Nominating
and Governance Committee as determined in good faith in the discharge of its
fiduciary duties, and (B) not be (or be a representative of or otherwise
affiliated with) a direct competitor of the Company as determined in good faith
by the Board.  The Investor
Securityholders shall not nominate or appoint any such Appointed Director or
Nominated Director who does not meet the specifications set forth in this Section 7.1(c)(i) and
shall cause any Appointed Director or Nominated Director to immediately resign
if such director fails to meet either of the requirements set forth in clauses
(i)(A) or (i)(B) above.

 

(ii)         Each
Independent Director shall, at all times during which such Person serves as a
Director, (A) not be (or be a representative of or otherwise affiliated
with) a direct competitor of the Company as determined in good faith by the
Board, (B) not be an employee, officer or director of SLS Management or
any of its Affiliates (disregarding for this purpose clause (ii) of the
definition thereof), and (C) otherwise be reasonably acceptable (in terms
of suitability and independence) to the Company’s Nominating and Governance
Committee as determined in good faith in the discharge of its fiduciary
duties.  The Investor Securityholders
shall not nominate or appoint any such Independent Director who does not meet the
specifications set forth in this Section 7.1(c)(ii) and shall
cause any Independent Director to immediately resign if such director fails to
meet either the requirements set forth in clauses (ii)(A) or (ii)(B) above.

 

(d)  Notification Regarding Directors.  The Investor Securityholders shall notify the
Company in writing of each proposed Nominated Director a reasonable time in
advance of any action taken for the purpose of electing or appointing such
Nominated Director, to fill a vacancy and of the mailing of any proxy
statement, information statement or registration statement in which any Board
nominee or Board member of the Company would be named 

 

40

 

(which
in the event of any proxy statement relating to an annual meeting of
stockholders of the Company shall be no later than 30 days prior to the first
anniversary of the mailing of the proxy statement related to the previous year’s
annual meeting of stockholders), together with all information concerning such
nominee reasonably requested by the Company, so that the Company may determine
whether such nominee complies with the above qualifications and so that the
Company can comply with applicable disclosure rules; provided that in
the absence of such notice, the Investor Securityholders shall be deemed to
have designated, nominated or appointed the same Directors as set forth in the
most recent notice delivered to the Company pursuant to this Section 7.1(d).

 

(e)  Fundamental Change.  The rights granted to the Investor Securityholders
under this Section 7.1 shall survive a Fundamental Change to the
extent that the Investor Securityholders continue to Beneficially Own in the
aggregate no less than 7.5% of the Total Current Voting Power of the Survivor
of a Fundamental Change, provided that for all purposes of this Section 7.1,
the board of directors of the Survivor of a Fundamental Change shall be
substituted for the Board.  The Investor
Securityholders shall cause all Appointed Directors and/or Nominated Directors
to resign from the Board effective upon the occurrence of a Fundamental Change
to the extent that either (i) the Investor Securityholders are no longer
entitled to designate or nominate such directors as a result of this Section 7.1(e) or
(ii) the Company is not the Survivor of a Fundamental Change (subject to
the appointment of such persons to the board of directors of the Survivor of
the Fundamental Change, if required pursuant to the first sentence of this Section 7.1(e)).

 

(f)  Exercise of Rights; Resignation Letters.
Unless otherwise agreed in writing by the Investor Securityholders (which
agreement shall be delivered to the Company as a condition to its effectiveness
and which agreement will name another Investor Securityholder who will exercise
the rights pursuant to this Section 7.1), the Board designation,
nomination and appointment rights pursuant to this Section 7.1
shall be exercised by SLS.  In addition,
each Appointed Director will execute and deliver to the Company a signed,
undated letter of resignation which will be held by the Company and used
exclusively in the event that the provisions of Section 4(d) of the
Certificate of Designation are not implemented in accordance with the terms
thereof insofar as they require a Preferred Director to cease to serve as a
Preferred Director.

 

7.2           Committees.  Subject to the requirements of applicable
Law, the primary Exchange on which the Company’s securities are then traded and
Committee Qualification Requirements, for as long as there is an Appointed
Director or Nominated Director or the Preferred Representation Entitlement or
the Nomination Representation Entitlement are not zero (0), the Investor
Securityholders shall be entitled to designate at least one (1) Appointed
Director or Nominated Director and the Board shall appoint such Director, to
serve on each standing committee of the Board (each, a “Committee”), except that where the
requirements of applicable Law, the rules of the primary Exchange on which
the Company’s securities are then traded or Committee Qualification
Requirements prescribe certain qualifications for such service on a standing
committee of a board of directors and such Appointed Director or Nominated
Director does not meet such qualifications (excluding, for this purpose, the “exceptional
and limited circumstances” exception under the Marketplace Rules of
NASDAQ), the Investor Securityholders shall be entitled to have at least one (1) Appointed
Director or Nominated 

 

41

 

Director be an observer to such Committee who
will not be a member, voting or otherwise, of such Committee.  Notwithstanding any such observer status, any
Committee may hold executive sessions at which such observer is not permitted
to be present and may withhold information from such observer in order to avoid
any conflict of interest or in light of corporate governance concerns, or to
comply with applicable Laws, and rules of the primary Exchange on which
the Company’s securities are then traded, in each case as reasonably determined
in good faith by such Committee.

 

7.3           D&O Insurance; Indemnification
Agreements.

 

(a)  During
the period that an Appointed Director and/or a Nominated Director is a director
of the Board, such Director shall be entitled to benefits under any director
and officer insurance policy maintained by the Company to the same extent as
any similarly situated director of the Board.

 

(b)  The
Company agrees that in respect of each Appointed Director and Nominated
Director that is a SLS Person or an employee, officer or director of SLS
Management or its Affiliates, the Company shall duly authorize and enter into
an indemnification agreement substantially in the form attached hereto as Exhibit M
(an “Indemnification Agreement”)
with such Person or such other form of indemnification agreement as shall be
reasonably acceptable to the Company and SLS and each of the Company, and SLS
agrees to negotiate in good faith to seek to agree to and implement such
alternative form by July 31, 2009.

 

7.4           Approval Rights.  So long as the SLS Beneficial Ownership
Percentage exceeds 15%, the Company shall not and shall cause its Subsidiaries
to not, without the prior written consent of the Investor Securityholders:

 

(a)  enter
into or amend any Contract with any Affiliate (an “Affiliate Transaction”), or any series of related Affiliate
Transactions, unless (i) the terms of such Affiliate Transactions are fair
and reasonable to the Company, and no less favorable to the Company than could
have been obtained in an arm’s length transaction with a non-Affiliate, which
shall be deemed conclusively determined if the Company shall have received a
fairness opinion to such effect from a nationally-recognized investment bank, (ii) such
Contract is exclusively between or among the Company and one or more of its
Subsidiaries, or (iii) in respect of director, trustee, officer or
employee compensation (including bonuses) or other benefits (including pursuant
to any employment agreement or any retirement, health, stock option or other
benefit plan) or indemnification arrangements, in each case, as determined in
good faith by the Board or the Company’s senior management;

 

(b)  in
any single transaction or series of related transactions, purchase or acquire
any business, division, product line or capital stock, indebtedness or other
securities of any Person for aggregate consideration (which will include the
purchase price, plus the aggregate of any Indebtedness assumed) in excess of
the greater of (x) $25,000,000 and (y) 5% of the annual consolidated
net sales, determined in accordance with GAAP, of the Company and its
Subsidiaries during the prior four fiscal quarters;

 

42

 

(c)  sell,
transfer or otherwise dispose of, in any single transaction or series of
related transactions, (i) any Subsidiary of the Company, business, capital
stock, indebtedness or other securities of any or division of the Company or
its Subsidiaries, or (ii) other than in the ordinary course of the conduct
of business of the Company and its Subsidiaries, any assets, which assets (x) are
not obsolete, (y) are utilized in a material manner in the business of the
Company and its Subsidiaries at the time of such sale, and (z) are not
being replaced with assets of comparable utility or value, in each case having
a value in excess of the greater of (x) $25,000,000 and (y) 5% of the
annual consolidated net sales, determined in accordance with GAAP, of the Company
and its Subsidiaries during the prior four fiscal quarters; or

 

(d)  incur,
create, assume, guarantee or otherwise become liable for any Indebtedness (an “Incurrence”) unless after giving effect to
such Incurrence the outstanding consolidated Indebtedness of the Company and
its Subsidiaries does not exceed the Permitted Indebtedness Amount (as defined
in the Indenture).

 

7.5           Board Composition.  For so long as the Preferred Representation
Entitlement is equal to or greater than two (2), the Company shall not, without
the prior written consent of the Investor Securityholders, take any action that
would cause the Board to consist of fewer than nine (9) Directors.

 

7.6           Rights Agreement; Charter
Amendment.  During the
period commencing on the date hereof and ending at such time as the SLS
Beneficial Ownership Percentage is less than 15%:

 

(a)  The
Company agrees that it shall not take any action to amend, modify or supplement
the Rights Agreement (as amended and restated by the Rights Agreement
Amendment), or adopt, propose or implement any other shareholder rights plan,
in each case that is adverse to the Investor Securityholders and their
Affiliates relative to the terms of the Rights Agreement in effect on the date
hereof as amended and restated by the Right Agreement Amendment;

 

(b)  The
Company agrees that, if any Person becomes an “Acquiring Person” (or any
similarly defined term) under the Rights Agreement or any other shareholder
rights plan of the Company, then to the extent the Company causes or permits
the Rights Agreement or such other shareholder rights plan to dilute such
Acquiring Person (or similarly defined term) as contemplated by such Rights
Agreement or other shareholder rights plan in a manner other than through an
exchange of shareholder rights for shares of Common Stock pursuant to the terms
of Section 23 of the Rights Agreement (or the equivalent section of such
other shareholder rights plan), the Company shall obtain the prior written
consent of the Investor Securityholders to such manner of dilution.  The Company further agrees that, to the
extent it does effect such an exchange under Section 23 of the Rights
Agreement (or the equivalent section of such other shareholder rights plan),
the Company shall not effect such exchange with any securities, cash or other
assets of the Company other than Common Stock, in each case, unless the Company
has obtained the prior written consent of the Investor Securityholders to such
securities, cash or other assets.  In
each of the foregoing cases in this Section 7.6(b) where consent of
the Investor Securityholders is required, such consent shall not be
unreasonably withheld or delayed; and

 

43

 

(c)  The
Company agrees that it will not directly or indirectly (including through any
merger or consolidation) amend its restated certificate of incorporation in a
manner that would directly or indirectly adversely affect the ability of the
Investor Securityholders to Transfer the Securities and Conversion Shares to
any Person (taking into account the terms of the Rights Agreement and of the
relevant Securities and this Agreement) or to convert and exercise Securities
or Junior Preferred Stock.

 

7.7           Information Rights.

 

(a)   Subject to Sections 7.7(b) and
Section 7.9, during the Information Rights Period, the Company will
deliver to the Investor Securityholders the following information:

 

(i)    on an annual basis and
promptly after it has been made available to the Board, (A) an annual
budget of the Company, (B) a business plan of the Company, and (C) financial
forecasts for the next fiscal year of the Company, in each case, to the extent
and in such manner and form prepared by or for the Board;

 

(ii)   on an annual basis and
promptly after it has been made available to the Board, annual unaudited
financial and operating reports of the Company, to the extent and in such
manner and form prepared by or for the Board;

 

(iii)  on a quarterly basis and
promptly after it has been made available to the Board, unaudited quarterly financial
and operating reports of the Company, to the extent and in such manner and form
prepared by or for the Board;

 

(iv)  promptly following any
distribution of reports, documents or other materials to members of the Board
in their capacity as a director, copies of all such reports, documents and
other materials distributed, provided or otherwise made available to the Board;
and

 

(v)   such other financial,
management and operating reports reasonably requested by the Investor
Securityholders.

 

(b)   If during the Information Rights Period
the Company is no longer obligated to file an annual report on Form 10-K
or quarterly report on Form 10-Q with the SEC, the Company shall deliver
the following to the Investor Securityholders or an Appointed Director or
Nominated Director (other than an Independent Director) in such manner and form
as customarily provided to the Board:

 

(i)    as soon as practicable after
the end of each fiscal year of the Company, and in any event within ninety
(90) days thereafter (to the extent practicable), a consolidated balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year and
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such year, prepared in accordance with GAAP and setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and followed promptly thereafter (to the extent it shall
be available) with the opinion of the independent registered public 

 

44

 

accounting
firm selected by the Company’s Audit Committee with respect to such financial
statements; and

 

(ii)   in lieu of providing the
information required under Section 7.7(a)(iii), as soon as
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter (to the extent practicable), an unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
each such quarterly period, and unaudited consolidated statements of income and
cash flows of the Company and its Subsidiaries for such period and for the
current fiscal year to date, prepared in accordance with GAAP and setting forth
in comparative form the figures for the corresponding periods of the previous
fiscal year, subject to changes resulting from normal year-end audit
adjustments, all in reasonable detail, except that such financial statements
need not contain the notes required by GAAP.

 

(c)           During the Information
Rights Period, the Company shall (and shall cause its Subsidiaries to) (i) afford
to the Investor Securityholders and, if reasonably requested, the accountants,
counsel and other representatives and agents of the Investor Securityholders
(collectively, the “Representatives”)
reasonable access to its properties, records, books and Contracts during normal
business hours upon reasonable notice as such Persons may reasonably request
and (ii) make available to the Investor Securityholders and their
Representatives the appropriate individuals for discussions of its business,
properties and personnel upon reasonable notice as the Investor Securityholders
or the Representatives may reasonably request.

 

7.8           VCOC Rights.

 

(a)  With
respect to each Investor Securityholder and each Affiliated Entity or a
controlled Affiliate of an Investor Securityholder (for so long as they are
controlled Affiliates thereof), in each case that is intended to qualify as a “venture
capital operating company” as defined in the Plan Asset Regulations, that holds
Securities or Conversion Shares (each, a “VCOC
Investor Securityholder”), at the written request of such VCOC
Investor Securityholder, the Company shall, with respect to each such VCOC
Investor Securityholder:

 

(i)    provide such VCOC Investor
Securityholder or its designated representative with the following: (1) the
right to visit and inspect any of the offices and properties of the Company and
its Subsidiaries and inspect and copy the books and records of the Company and
its Subsidiaries, as the VCOC Investor Securityholder shall reasonably request;
(2) copies of the information set forth in Section 7.7(a) and
7.7(b); and (3) from and after the time, if any, that no Appointed
Director is serving on the Board pursuant to the rights afforded hereunder and
under the Certificate of Designation, copies of all materials provided to the
Board at the same time provided to the members of the Board; and

 

(ii)   make appropriate officers of
the Company and members of the Board available periodically and at such times
as reasonably requested by such VCOC Investor Securityholder for consultation
with such VCOC Investor Securityholder or its designated representative with
respect to matters (subject to the confidentiality provisions and procedures
described in Section 7.7(c)) relating to the business and affairs
of the Company and its Subsidiaries.

 

45

 

The Company reserves the right to withhold any
information and restrict access pursuant to this Section 7.8(a) to
the extent such information or access could adversely affect the
attorney-client privilege between the Company and its counsel.  Notwithstanding anything herein to the
contrary, in no event will the Company have any obligation to disclose any
information to any Person pursuant to the terms of this Agreement if such
Person is not subject to the confidentiality obligations of Section 7.9.

 

(b)   The Company agrees to consider, in good
faith, the recommendations of each VCOC Investor Securityholder or its
designated representative in connection with the matters on which it is
consulted as described above, recognizing that the ultimate discretion with
respect to all such matters shall be retained by the Company.

 

7.9           Confidentiality.  (a) The Investor Securityholders agree to and
shall cause each of their Affiliates and Representatives to (i) keep
confidential all proprietary and non-public information regarding the Company
and its Subsidiaries received pursuant to Sections 7.7, 7.8 or
otherwise hereunder, whether through an Appointed Director, a Nominated
Director or otherwise (the “Confidential
Information”), not disclose or reveal any such information to any
Person without the prior written consent of the Company other than those of its
Representatives who need to know such information for the purpose of
evaluating, monitoring or taking any other action with respect to the
investment by the Investor Securityholders in the Securities or Conversion
Shares and to cause those Permitted Representatives to observe the terms of
this Section 7.9 and agree for the benefit of the Company to do so
and (ii) not to use such proprietary and non-public information for any
purpose other than in connection with evaluating, monitoring or taking any
other action with respect to the investment by the Investor Securityholders in
the Securities or Conversion Shares (it being acknowledged by the Investor
Securityholders that they have the obligation to comply with any applicable
Laws with respect to insider trading); provided that nothing herein
shall prevent the Investor Securityholders or any of their Affiliates from
disclosing any such information that (1) is or becomes generally available
to the public in accordance with Law other than as a result of a disclosure by
an Investor Securityholder, any Affiliate, Permitted Representatives, or
Subsidiaries of an Investor Securityholder or in violation of this Section 7.9
or any other confidentiality agreement between the Company and such Person or
any other legal duty, fiduciary duty, or other duty of trust and confidence, of
such Person, (2) was within the Investor Securityholders’ or any of its
Affiliates’ possession or developed by it prior to being furnished with such
information (provided that the source of such information was not bound by a
confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to or other duty of trust and confidence to, the
Company or a Subsidiary of it with respect to such information), (3) becomes
available to the Investor Securityholders or any of its Affiliates on a
non-confidential basis from a source other than the Company or a Subsidiary
(provided that such source is not bound by a confidentiality agreement with, or
other contractual, legal or fiduciary obligation of confidentiality to or other
duty of trust and confidence to, the Company or a Subsidiary of it with respect
to such information), or (4) is required to be disclosed by Law (provided
that prior to such disclosure, the Investor Securityholder or such Affiliate
shall, unless prohibited by Law, promptly notify the Company of any such
disclosure, use reasonable efforts to limit the disclosure requirements of such
Law, and maintain the confidentiality of such information to the maximum extent
permitted by Law).  The Investor
Securityholders shall be responsible for any breach of this Section 7.9
by any their respective Affiliates or Representatives.

 

46

 

8.             Transfers;
Redemption.

 

8.1           Transfer Restrictions.

 

(a)           Subject to Section 8.1(c),
from the Closing and ending on the earlier of (x) twelve (12) months
following the Closing Date and (y) the occurrence of a Restriction
Termination Event (the earlier of (x) and (y), the “Restricted Period Termination Date”), no
Investor Securityholder shall, directly or indirectly, transfer, sell, offer,
assign, exchange, distribute, mortgage, pledge or otherwise dispose of (each, a
“Transfer”) any Securities or
Conversion Shares, other than as expressly permitted by, and in compliance
with, the following provisions of this Section 8.1(a):

 

(i)       An Investor Securityholder
may Transfer any or all of its Securities or Conversion Shares to any Permitted
Transferee of such Investor Securityholder; provided that such Permitted
Transferee (A) agrees to be bound hereunder as an Investor Securityholder,
(B) agrees that the representations, covenants and other agreements made
by the assignor herein are accurate in respect of, and shall be deemed to have
been made by and bind such Transferee, and (C) shall execute a counterpart
to this Agreement, the execution of which shall constitute such Transferee’s
agreement to the terms of this Section 8.1(a)(i).  Upon such a Transfer, the Permitted Transferee
shall be deemed an Investor Securityholder hereunder and shall be entitled to
the rights, and subject to the obligations and restrictions, contained herein.

 

(ii)      An Investor Securityholder
may Transfer any or all of its Securities or Conversion Shares upon written
consent by the Company permitting such Transfer.

 

(iii)     An Investor
Securityholder may Transfer any or all of its Securities or Conversion Shares (A) to
the Company or any of its Subsidiaries or (B) pursuant to any tender
offer, exchange offer, merger, consolidation, reclassification, reorganization,
recapitalization or other similar transaction in which stockholders of the
Company are offered, permitted or required to participate as holders of the
Company’s capital stock, provided that such transaction is an Approved
Transaction.

 

(iv)     An Investor Securityholder
may Transfer any or all of its Securities or Conversion Shares upon the
occurrence of a Bankruptcy Event with respect to the Company or any of its
Significant Subsidiaries.

 

(b)   Subject to Section 8.1(c), 8.1(d),
8.1(e) and 8.1(f), after the Restricted Period Termination
Date, the Investor Securityholders shall have the right to Transfer Securities
or Conversion Shares without restriction hereunder; provided that in the
case of any Transfer to a Permitted Transferee, such Permitted Transferee (i) agrees
to be bound hereunder as an Investor Securityholder, (ii) agrees that the
representations, covenants and other agreements made by the assignor herein
shall be deemed to have been made by such Transferee, and (iii) shall
execute a counterpart to this Agreement, the execution of which shall
constitute such Transferee’s agreement to the terms of this Section 8.1(b).  Upon such a Transfer, the Permitted
Transferee shall be deemed an Investor Securityholder hereunder and shall be
entitled to the rights, and subject to the obligations and restrictions,
contained herein.

 

47

 

(c)   No Investor Securityholder may, together
with its Affiliates, in any single transaction or series of related
transactions, whether on, before or after the Restricted Period Termination
Date, Transfer to any Person or group of related Persons (other than Permitted
Transferees) Securities or Conversion Shares to the extent such Person or group
of related Persons would, to the knowledge of such Investor Securityholder
after due inquiry (it being understood that due inquiry shall not be required
in circumstances where the purchaser in a sale transaction is not reasonably
identifiable, such as in a “brokers’ transaction” (as defined in Rule 144)
or in an underwritten public offering), upon completion of the Transfer of such
Securities or Conversion Shares Beneficially Own more than 7.5% of the Common
Shares Outstanding, unless such Transfer (i) has been approved by, or is
in connection with a transaction approved or recommended by, the Board or (ii) is
made pursuant to a tender offer, exchange offer, merger, consolidation or
similar transaction that is an Approved Transaction.  To the extent that any tender offer is not an
Approved Transaction, the Company will take such actions under its control as
are reasonably requested on a non-public basis and in compliance with Section 5.6
by the Investor Securityholders so as to enable the Investor Securityholders to
timely tender into such offer prior to expiration thereof (including any
extensions thereto), Securities and/or Conversion Shares, in the event the
tender offer becomes an Approved Transaction, without requiring conversion of
the Securities or Junior Preferred Stock until after such time as such tender
offer is an Approved Transaction.

 

(d)   Any Transfer not made in accordance with Section 8.1
shall be null and void and of no force or effect regardless of whether the
proposed Transferee had actual or constructive knowledge of the Transfer
restrictions set forth herein, and no such proposed Transfer will be recorded
in the books of the Company.

 

(e)   (i) Subject to applicable Law, the
Investor Securityholders (other than the Appointed Directors and the Nominated
Directors with respect to any Company Securities held directly by such Persons,
or indirectly by such Persons through family trusts, or similar arrangements or
held directly by family members sharing the same household as such Directors)
will not be subject to the Company’s trading policies requiring pre-clearance
or limiting trading to specified dates (it being understood that this is not
intended to modify the rights or obligations set forth in the Registration
Rights Agreement), and (ii) the Investor Securityholders acknowledge their
obligation hereunder not to Transfer Securities or Conversion Shares in
contravention of applicable Law, including each of Section 10(b) and Rule 10b-5
of the Exchange Act.

 

(f)    The Investor Securityholders shall not be
subject to any restrictions on Transfer other than as set forth in this
Agreement, applicable Law and to the extent applicable, the Registration Rights
Agreement.

 

8.2           Right to Sell to the Company.

 

(a)  Upon the occurrence of a
Triggering Event and for a period thereafter ending twenty (20) Business Days
after public announcement of the termination or appointment, as applicable, of
the CEO relating to any Triggering Event, the Investor Securityholders that
Beneficially Own any Notes and/or shares of Convertible Preferred Stock
(collectively, the “Redeeming Sellers”)
shall have the right (but not the obligation) to sell to the Company (the 

 

48

 

“Put Right”), and if the Put Right is
exercised, the Company shall purchase, all (but not less than all) such Notes
and shares of Convertible Preferred Stock held by the Redeeming Sellers (the “Redemption Securities”) at a price in cash
equal to (x) with respect to any Notes that constitute Redemption
Securities, the Redemption Price (as defined in the Indenture), plus accrued
but unpaid interest thereon, as of the Put Closing Date and (y) with
respect to any shares of Convertible Preferred Stock that constitute Redemption
Securities, the Redemption Price (as defined in the Certificate of Designation)
as of the Put Closing Date.

 

(b)  SLS,
on behalf of the Redeeming Sellers, shall exercise or waive the Put Right by
delivery to the Company of a written notice (the “Put Exercise Notice”) stating that SLS is exercising the Put
Right on behalf of the Redeeming Sellers.

 

(c)  The
closing of the exercise of the Put Right (the “Put Right Closing”) by the Redeeming Sellers pursuant to this Section 8.2
shall take place no later than ninety (90) days following delivery of the Put
Exercise Notice and shall occur at the time and place as mutually agreed upon
by the Company and SLS, on behalf of the Redeeming Sellers (such date, the “Put Closing Date”).

 

(d)  At
the Put Right Closing, (i) SLS, on behalf of the Redeeming Sellers, shall
deliver to the Company all the Redemption Securities free and clear of all
Liens; and (ii) the Company shall pay the Repurchase Price for the
securities being repurchased by wire transfer in immediately available funds to
the account(s) specified by SLS.

 

(e)  For
purposes hereof, a “Triggering Event”
shall mean the occurrence of any of the following:  (i) the removal or termination by the
Company (with or without cause) of the Company’s Chief Executive Officer (“CEO”) that is then currently in office
without the prior written consent of SLS, on behalf of the Investor
Securityholders, or (ii) following the departure of the CEO for any reason
(including with the consent of the Investor Securityholders), either (x) the
appointment of a successor CEO (or “acting” CEO) who is not acceptable to
SLS,  or (y) the failure of the
Company to appoint a successor CEO (who may be an “acting” CEO, provided that a
permanent CEO acceptable to SLS is appointed within 270 days after such
departure) within ninety (90) days after such departure.

 

8.3           Legends; Securities Act
Compliance.

 

(a)  Each certificate representing the
Securities and each certificate representing Conversion Shares will bear a
legend conspicuously thereon to the following effect:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT
BE OFFERED OR SOLD UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS. IN ADDITION, THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A SECURITIES PURCHASE AGREEMENT
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE WITH SUCH
AGREEMENT.”

 

49

 

(b)  The requirement imposed by Section 8.3(a) shall
cease and terminate as to any particular Security or Conversion Share (i) when,
in the opinion of counsel reasonably acceptable to the Company, such legend is
no longer required in order to assure compliance by the Company with the
Securities Act or (ii) when such Securities or Conversion Shares have been
effectively registered under the Securities Act or Transferred in compliance
with Rule 144.  Wherever such requirement shall cease and terminate
as to any Securities or Conversion Shares the holder thereof shall be entitled
to receive from the Company, without expense, new certificates not bearing the
legend set forth in Section 8.3(a).

 

(c)  In the event that any Notes,
shares of Convertible Preferred Stock, Conversion Shares or Warrants are
Transferred in compliance with Section 8.1(a)(iii), the Company
shall promptly, upon request, but in any event not later than is necessary in
order to consummate such Transfer, remove the second sentence of the legend set
forth above in connection with such Transfer.

 

9.             Termination.

 

9.1           Conditions of Termination.  Notwithstanding anything to the contrary
contained herein, this Agreement may be terminated at any time before the
Closing (a) by mutual consent of the Company and the Purchasers, (b) by
either the Company, on the one hand, or the Purchasers, on the other hand, if
the Closing shall not have occurred on or prior to 5:00 p.m., New York
time, on June 1, 2009 and the failure to close by such date shall not be
the result of the breach of this Agreement by the party or parties seeking to
terminate this Agreement pursuant to this Section 9.1(b) or by
any of their Affiliates, or (c) by either the Company, on the one hand,
and the Purchasers, on the other hand, if any Governmental Entity of competent
jurisdiction shall have (i) enacted, issued or promulgated any Law that is
in effect and has the effect of making the transactions contemplated by the
Transactions Agreements illegal or which has the effect of prohibiting or
otherwise preventing the consummation of the transaction contemplated by the
Transaction Agreement, or (ii) issued or granted any order, decree or
injunction that is in effect and has the effect of making the transactions
contemplated by the Transaction Agreements illegal or which has the effect of
prohibiting or otherwise preventing the transactions contemplated by the
Transaction Agreement, and such order, decree or injunction has become final
and non-appealable.

 

9.2           Effect of Termination.  In the event of any termination pursuant to Section 9.1
hereof, this Agreement shall become null and void and have no effect, with no
liability on the part of the Company or the Purchasers, or their directors,
partners, members, employees, affiliates, officers, stockholders or agents or
other representatives, with respect to this Agreement, except (a) for the
terms of this Section 9.2, which shall survive the termination of
this Agreement, and (b) that nothing herein shall relieve any party or
parties hereto, as applicable, from liability for any willful breach of, or
fraud in connection with, this Agreement.

 

10.           Miscellaneous
Provisions.

 

10.1         Public Statements or
Releases.  Neither the
Company nor any Purchaser shall make any public release or announcement with
respect to the existence or terms of this 

 

50

 

Agreement
or the transactions provided for herein without the prior approval of the
Company, on the one hand, and SLS, on behalf of the Purchasers, on the other
hand, which shall not be unreasonably withheld or delayed.  Notwithstanding the foregoing, nothing in
this Section 10.1 shall prevent any party from making any public
release or announcement it considers necessary in order to satisfy its
obligations under law or under the rules or regulations of any Exchange,
in which case the party or parties, as applicable, required to make the release
or announcement shall, to the extent reasonably practicable, allow the other
party or parties, as applicable, reasonable time to comment on such release or
announcement in advance of such issuance.

 

10.2         Interpretation.  The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement will refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
section and subsection references are to this Agreement unless otherwise
specified.  The headings in this
Agreement are included for convenience of reference only and will not limit or
otherwise affect the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including”
are used in this Agreement, they will be deemed to be followed by the words “without
limitation.”  The phrases “the date of
this Agreement,” “the date hereof” and terms of similar import, unless the
context otherwise requires, will be deemed to refer to the date set forth in
the first paragraph of this Agreement. 
The meanings given to terms defined herein will be equally applicable to
both the singular and plural forms of such terms. All matters to be agreed to
by any party hereto must be agreed to in writing by such party unless otherwise
indicated herein.  References to
agreements, policies, standards, guidelines or instruments, or to statutes or
regulations, are to such agreements, policies, standards, guidelines or
instruments, or statutes or regulations, as amended or supplemented from time
to time (or to successors thereto).  All
references herein to the Subsidiaries of a Person shall be deemed to include
all direct and indirect Subsidiaries of such Person, unless otherwise indicated
or the context otherwise requires.  The
parties hereto agree that they have been represented by counsel during the
negotiation and execution of the Transaction Agreements and, therefore, waive
the application of any Law, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.

 

10.3         Notices.  Any notices or other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
be given when delivered in person or by private courier with receipt, if
telefaxed when verbal or email confirmation from the recipient is received, or
three (3) days after being deposited in the United States mail,
first-class, registered or certified, return receipt requested, with postage
paid and,

 

(a)   if to the Company, addressed as follows:

 

Power-One, Inc.

740 Calle Plano

Camarillo, California  93012

Attention:   Tina Mcknight, Esq.

Facsimile:   (805) 383-5898

 

with copies (which shall not constitute notice) to:

 

51

 

Gibson, Dunn &
Crutcher LLP

333 South Grand Avenue

Los Angeles, California  90071

Attention:   Jennifer Bellah Maguire

Facsimile:   (213) 229-6986

 

(b)   if to any Purchaser, to:

 

c/o Silver Lake Sumeru Fund,
L.P.

2775 Sand Hill Road, Suite 100

Menlo Park, California  94025

Attention:   Karen King

Facsimile:   (650) 234-2502

 

with copies (which shall not
constitute notice) to:

 

Simpson
Thacher & Bartlett LLP

2550
Hanover Street

Palo
Alto, California  94304

Attention:   Richard Capelouto

Facsimile:   (650) 251-5002

 

Any
Person may change the address to which notices and communications to it are to
be addressed by notification as provided for herein.

 

10.4         Severability.  In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto.  The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such void or unenforceable provision.

 

10.5         Governing Law; Jurisdiction;
WAIVER OF JURY TRIAL.

 

(a)  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof.

 

(b)  Each
of the parties hereto irrevocably consents to the exclusive jurisdiction and
venue of any state court located within New Castle County, State of Delaware in
connection with any matter based upon or arising out of this Agreement or the
transactions contemplated hereby, agrees that process may be served upon them
in any manner authorized by the laws of the State of Delaware for such persons
and waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and process. Each party hereto
hereby agrees not to commence any legal proceedings relating to or arising out
of this Agreement or the transactions contemplated hereby in any jurisdiction
or courts other than as provided herein.

 

52

 

(c)   EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE
PURCHASERS OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.

 

10.6         Specific
Performance.  The parties hereto agree that the obligations
imposed on them in this Agreement are special, unique and of an extraordinary
character, and that, in the event of breach by any party, damages would not be
an adequate remedy and each of the other parties shall be entitled to specific
performance and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity; and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief.

 

10.7         Waiver.  Subject to Section 10.14, no
waiver of any term, provision or condition of this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
be construed as, a further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Agreement.  Any agreement on the part of
a party hereto to any waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party or parties, as applicable.  Any delay in exercising any right under this
Agreement shall not constitute a waiver of such right.

 

10.8         Fees;
Expenses.

 

(a)   Except
as set forth in Sections 5.2 and 5.8 and this Section 10.8,
all fees and expenses incurred in connection with the Transaction Agreements
and the transactions contemplated hereby and thereby shall be paid by the party
or parties, as applicable, incurring such expenses whether or not the
transactions contemplated hereby and thereby are consummated.

 

(b)   At the Closing, the Company shall reimburse the Purchasers
and their Affiliates for all of their reasonable, documented out-of-pocket fees
and expenses, including the fees and expenses of attorneys, accountants and
consultants employed by the Purchasers and/or the Affiliated Entities, incurred
in connection with the Purchasers’ due diligence review of the Company and its
Subsidiaries, the structuring of the transactions contemplated by this
Agreement and the other Transaction Agreements and the negotiation, execution
and delivery of this Agreement and the other Transaction Agreements and the
closing of the transactions hereunder (including, for the avoidance of doubt,
all fees and expenses relating to services or activities that by their nature
occur post-Closing or are typically rendered post-Closing (all such fees and
expenses included in this Section 10.8(b), the “Transaction Expenses”); provided that such
Transaction Expenses reimbursed pursuant to this Section 10.8(b) shall
not exceed $1,000,000.

 

(c)   The Company shall pay any and all documentary, stamp
or similar issue or transfer Tax payable in connection with this Agreement, the
issuance of the Securities at Closing.

 

53

 

(d)   The Company shall reimburse each Appointed Director
and each Nominated Director for their reasonable out of pocket expenses
incurred for the purpose of attending meetings of the Board or committees
thereof, to the extent covered by, and in accordance with, the Company’s
reimbursement policy in effect from time to time.

 

10.9         Assignment.  Except for the assumption of obligations of a
Permitted Transferee, none of the parties may assign its rights or obligations
under this Agreement or designate another person (i) to perform all or
part of its obligations under this Agreement or (ii) to have all or part
of its rights and benefits under this Agreement, in each case without the prior
written consent of (x) the Company, if an Investor Securityholder is
assigning its interests hereunder, and (y) SLS, on behalf of the Investor
Securityholders, if the Company is assigning its interests hereunder.  In the event of any assignment in accordance
with the terms of this Agreement, the assignee shall specifically assume and be
bound by the provisions of the Agreement by executing a writing agreeing to be
bound by and subject to the provisions of this Agreement and shall deliver an
executed counterpart signature page to this Agreement and, notwithstanding
such assumption or agreement to be bound hereby by an assignee, no such
assignment shall relieve any party assigning any interest hereunder from its
obligations or liability pursuant to this Agreement.  Notwithstanding the foregoing, other than the
rights provided for in the Registration Rights Agreement or provided to third
parties pursuant to Sections 5.8 and 10.8, none of the rights
provided to the Purchasers or the Investor Securityholders pursuant this
Agreement, and in particular in Sections 5 and 7, shall be
assignable or otherwise transferable to any other Person other than a Permitted
Transferee.

 

10.10       Survival.  The representations, warranties, covenants
and agreements of the Company and the Purchasers in this Agreement shall
survive the Closing Date.

 

10.11       No
Third Party Beneficiaries.  Except as specifically provided in Sections
5.8 (with respect to which any Person named therein shall be a third party
beneficiary), 7.1(f) (with respect to which any designating,
nominating or appointing Person named therein shall be a third party
beneficiaries), 7.3 (with respect to which the Appointed Directors and
Nominated Directors named therein shall be third party beneficiaries), 7.8
(with respect to which all VCOC Investor Securityholders provided therein shall
be third party beneficiaries), 10.8(b) (with respect to which all
Affiliated Entities named therein shall be third party beneficiaries) and 10.8(d) (with
respect to which all Appointed Directors and Nominated Directors named therein
shall be third party beneficiaries), this Agreement does not create any rights,
claims or benefits inuring to any Person that is not a party hereto nor create
or establish any third party beneficiary hereto.

 

10.12       Counterparts.  This Agreement may be executed and delivered
(including by facsimile or electronic transmission) in any number of
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed an original, but all of which taken
together shall constitute a single instrument.

 

10.13       Entire
Agreement; Amendments.  This Agreement and the documents and instruments
and other agreements among the parties hereto as contemplated by or referred to
herein, including the Disclosure Schedule, Annexes and the Exhibits hereto,
constitute the entire agreement between the parties hereto respecting the
subject matter hereof and supersede all prior agreements, negotiations,
understandings, representations and statements respecting the subject 

 

54

 

matter hereof, whether
written or oral.  No modification,
alteration, waiver or change in any of the terms of this Agreement shall be
valid or binding upon the parties hereto unless made in writing and duly
executed by the parties hereto; provided that, notwithstanding the
foregoing, this Agreement may be amended from time to time without the consent
of any other party to include a Permitted Transferee as a party and a signatory
hereto pursuant to Section 8.1 hereof.

 

10.14       SLS
Rights.  The rights provided by Sections 5.7
(with respect to Preemptive Rights), 7.1 (with respect to Board
Representation), 7.4 (with respect to Approval Rights), 7.5 (with
respect to Board Composition), 7.6 (with respect to the Rights
Agreement), 7.7 (with respect to Information Rights), 7.8 (with
respect to VCOC Rights), 8.2 (with respect to the limited Right to sell
the Notes and Convertible Preferred Stock to the Company) and 10.17
(with respect to the Exchange Reformation Clause) are exclusive to the Investor
Securityholders and their Permitted Transferees.  Any determinations to be made pursuant hereto
shall be made by the holders of a majority in interest of the Conversion Shares
(on an as-converted basis) or as they may otherwise agree amongst themselves,
provided that the Company shall have no duty to inquire as to such arrangements
and shall be protected and entitled to rely exclusively upon any and all
instructions or communications from SLS (or, following notice to the Company in
accordance with Section 10.3, such other Investor Securityholder as
specified by SLS), and in the absence of any such instruction or communication,
upon the determination of the holders of a majority in interest of the
Conversion Shares (on an as-converted basis) as communicated by the Investor
Securityholders.

 

10.15       Discussion
Regarding Securities.  If at any time following the Closing, the
Company determines that it would be in its interest to convert or exchange the
Convertible Preferred Stock for instruments evidencing convertible Indebtedness
of the Company, the Company may request SLS, on behalf of the Investor Securityholders,
to, and SLS shall, discuss with the Company in good faith a proposal by the
Company with respect to such conversion or exchange;  provided that nothing herein shall be construed to
require any Investor Securityholder to accept or otherwise agree to any such
proposal or otherwise amend, supplement, modify or waive any Transaction
Agreement or any provision therein in connection therewith.

 

10.16       Time
is of the Essence.    The parties acknowledge that time is of the
essence with respect to the fulfillment of the respective obligations of the
parties hereto and the Closing of the transactions contemplated by this
Agreement.

 

10.17       Exchange
Reformation Clause.  Notwithstanding anything herein to the
contrary, if there is a change in the applicable rules or the
interpretation thereof of the primary Exchange on which the Common Stock is
listed at the time such change becomes effective that would cause the Common
Stock to be delisted by such Exchange as a result of a provision or portion of
any provision in this Agreement, such provision or portion of any provision of
this Agreement shall be deemed invalid and unenforceable without any further
act on the part of any party hereto; provided, however, that the Company and
SLS shall promptly thereafter work in good faith to reform such provision or
portion of any provision of this Agreement so as to comply with such changed rules for
the Common Stock to continue to be listed on such primary Exchange while
preserving to the nearest extent reasonably possible the original intent of the
parties hereto with respect to such provision or portion of any provision of
this Agreement.

 

55

 

10.18       Investor
Securityholder Fundamental Change.  If the event referred to in clause (i) of
the definition of “Fundamental Change” shall have occurred, without the consent
of the Company, as a result of the Investor Securityholders or their Affiliates
filing a Schedule 13D or Schedule TO (or any successor schedule, form or
report) pursuant to the Exchange Act disclosing that any Investor
Securityholder or their Affiliates have become the direct or indirect
Beneficial Owner of shares with a majority of the total voting power of the
Company’s outstanding Voting Stock, then the Investor Securityholders shall
not, and shall cause each of their Affiliates not to, (a) exercise their
right to accept the Fundamental Change Offer (as defined in the Certificate of
Designation) or (b) exercise their right to require the Company to
purchase such Notes Beneficially Owned by such Investor Securityholder or their
Affiliates pursuant to Section 3.01 of the Indenture, in each case, solely
with respect to such Fundamental Change.

 

[Remainder of the Page Intentionally Left Blank]

 

56

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year first above
written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  POWER-ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard J. Thomspon

  
	
   

  	
  Name:

  	
  Richard J. Thompson

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  

 

[Signature
Page to Securities Purchase Agreement]

 

 

	
   

  	
  PURCHASERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SILVER LAKE SUMERU
  FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE TECHNOLOGY
  ASSOCIATES SUMERU, L.P.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SLTA SUMERU (GP),
  L.L.C.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE GROUP,
  L.L.C.,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Kyle T. Ryland

  
	
   

  	
  Name:

  	
  Kyle T. Ryland

  
	
   

  	
  Title: 

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SILVER LAKE TECHNOLOGY
  INVESTORS SUMERU, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE TECHNOLOGY
  ASSOCIATES SUMERU, L.P.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SLTA SUMERU (GP),
  L.L.C.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE GROUP,
  L.L.C.,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Kyle T. Ryland

  
	
   

  	
  Name:

  	
  Kyle T. Ryland

  
	
   

  	
  Title:

  	
  Managing Member

  

 

[Signature
Page to Securities Purchase Agreement]

 

 

Annex A

 

PURCHASERS

 

	
  Name of Purchaser

  	
   

  	
  Principal Amount

  of Notes

  	
   

  	
  Shares of Convertible

  Preferred Stock

  	
   

  	
  Number of Purchased

  Warrants

  	
   

  	
  Purchase Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SILVER LAKE
  SUMERU FUND, L.P.

  	
   

  	
  $

  	
  36,078,000

  	
   

  	
  23,432

  	
   

  	
  8,628,941

  	
   

  	
  $

  	
  59,510,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SILVER LAKE
  TECHNOLOGY INVESTORS SUMERU, L.P.

  	
   

  	
  $

  	
  297,000

  	
   

  	
  193

  	
   

  	
  71,059

  	
   

  	
  $

  	
  490,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  36,375,000

  	
   

  	
  23,625

  	
   

  	
  8,700,000

  	
   

  	
  $

  	
  60,000,000

  	
   

  

 

 

Exhibit A

 

FORM OF
INDENTURE (INCLUDING FORM OF NOTES)

 

 

POWER-ONE, INC.

as Issuer

 

and

 

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

as
Trustee

 

Indenture

 

dated as
of May   , 2009

 

$[                ]

 

6.0%/8.0%/10.0%
Convertible Senior Notes due 2019

 

 

TABLE OF
CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1. DEFINITIONS AND INCORPORATION BY
  REFERENCE

  	
  1

  
	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
  Section 1.02

  	
  Other Definitions

  	
  11

  
	
  Section 1.03

  	
  Incorporation by Reference of Trust Indenture Act

  	
  12

  
	
  Section 1.04

  	
  Rules of Construction

  	
  12

  
	
  Section 1.05

  	
  Acts of Holders

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2. THE NOTES

  	
  13

  
	
   

  	
   

  
	
  Section 2.01

  	
  Form, Dating and Denominations; Legends

  	
  13

  
	
  Section 2.02

  	
  Execution and Authentication

  	
  14

  
	
  Section 2.03

  	
  Registrar, Paying Agent and Conversion Agent

  	
  15

  
	
  Section 2.04

  	
  Paying Agent To Hold Money In Trust

  	
  16

  
	
  Section 2.05

  	
  Noteholder Lists

  	
  16

  
	
  Section 2.06

  	
  Transfer and Exchange

  	
  16

  
	
  Section 2.07

  	
  Replacement Notes

  	
  17

  
	
  Section 2.08

  	
  Outstanding Notes

  	
  18

  
	
  Section 2.09

  	
  Treasury Notes

  	
  18

  
	
  Section 2.10

  	
  Temporary Notes

  	
  18

  
	
  Section 2.11

  	
  Cancellation

  	
  19

  
	
  Section 2.12

  	
  CUSIP Numbers

  	
  19

  
	
  Section 2.13

  	
  Book-entry Provisions For Global Notes

  	
  19

  
	
  Section 2.14

  	
  Special Transfer Provisions

  	
  20

  
	
  Section 2.15

  	
  Record Date

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3. PURCHASES AND REDEMPTIONS

  	
  21

  
	
   

  	
   

  
	
  Section 3.01

  	
  Purchase At the Option of the Holder Upon a
  Fundamental Change

  	
  21

  
	
  Section 3.02

  	
  Effect of Fundamental Change Purchase Notice

  	
  25

  
	
  Section 3.03

  	
  Deposit of Fundamental Change Purchase Price

  	
  26

  
	
  Section 3.04

  	
  Right of Redemption

  	
  26

  
	
  Section 3.05

  	
  Notices to Trustee

  	
  27

  
	
  Section 3.06

  	
  Selection of Notes to be Redeemed

  	
  27

  
	
  Section 3.07

  	
  Notice of Redemption

  	
  27

  
	
  Section 3.08

  	
  Effect of Notice of Redemption

  	
  29

  
	
  Section 3.09

  	
  Deposit of Redemption Price

  	
  29

  
	
  Section 3.10

  	
  Purchase of Notes at Option of the Holder

  	
  29

  
	
  Section 3.11

  	
  Notes Purchased or Redeemed In Part

  	
  33

  
	
  Section 3.12

  	
  Covenant To Comply With Securities Laws Upon
  Repurchase of Notes

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4. COVENANTS

  	
  34

  
	
   

  	
   

  
	
  Section 4.01

  	
  Payment of Notes

  	
  34

  
	
  Section 4.02

  	
  Maintenance of Office or Agency

  	
  35

  

 

i

 

	
  TABLE OF CONTENTS

  
	
  (Continued)

  
	
   

  	
   

  
	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 4.03

  	
  Existence

  	
  35

  
	
  Section 4.04

  	
  Rule 144A Information and Annual Reports

  	
  35

  
	
  Section 4.05

  	
  Reports to Trustee

  	
  36

  
	
  Section 4.06

  	
  Stay, Extension and Usury Laws

  	
  36

  
	
  Section 4.07

  	
  Incurrence of Debt

  	
  36

  
	
  Section 4.08

  	
  Limitations on Liens

  	
  37

  
	
  Section 4.09

  	
  Limitation on Unlisting of Common Stock

  	
  37

  
	
  Section 4.10

  	
  Limitation on Modifying Junior Convertible Preferred
  Stock

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5. CONSOLIDATION, MERGER, SALE OR LEASE
  OF ASSETS

  	
  37

  
	
   

  	
   

  
	
  Section 5.01

  	
  Consolidation, Merger, Sale or Lease of Assets by
  the Company

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6. DEFAULT AND REMEDIES

  	
  38

  
	
   

  	
   

  
	
  Section 6.01

  	
  Events of Default

  	
  38

  
	
  Section 6.02

  	
  Acceleration

  	
  39

  
	
  Section 6.03

  	
  Other Remedies

  	
  40

  
	
  Section 6.04

  	
  Waiver of Past Defaults

  	
  40

  
	
  Section 6.05

  	
  Control by Majority

  	
  40

  
	
  Section 6.06

  	
  Limitation on Suits

  	
  40

  
	
  Section 6.07

  	
  Rights of Holders to Receive Payment

  	
  41

  
	
  Section 6.08

  	
  Collection Suit by Trustee

  	
  41

  
	
  Section 6.09

  	
  Trustee May File Proofs of Claim

  	
  41

  
	
  Section 6.10

  	
  Priorities

  	
  41

  
	
  Section 6.11

  	
  Restoration of Rights and Remedies

  	
  42

  
	
  Section 6.12

  	
  Undertaking for Costs

  	
  42

  
	
  Section 6.13

  	
  Rights and Remedies Cumulative

  	
  42

  
	
  Section 6.14

  	
  Delay or Omission Not Waiver

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7. THE TRUSTEE

  	
  42

  
	
   

  	
   

  
	
  Section 7.01

  	
  General

  	
  42

  
	
  Section 7.02

  	
  Certain Rights of Trustee

  	
  43

  
	
  Section 7.03

  	
  Individual Rights of Trustee

  	
  45

  
	
  Section 7.04

  	
  Trustee’s Disclaimer

  	
  45

  
	
  Section 7.05

  	
  Notice of Default

  	
  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

  	
  47

  
	
  Section 7.11

  	
  Money Held in Trust

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8. DISCHARGE

  	
  47

  
	
   

  	
   

  
	
  Section 8.01

  	
  Satisfaction and Discharge of the Indenture

  	
  47

  
	
  Section 8.02

  	
  Application of Trust Money

  	
  48

  
	
  Section 8.03

  	
  Repayment to Company

  	
  48

  
	
  Section 8.04

  	
  Reinstatement

  	
  48

  

 

ii

 

	
  TABLE OF CONTENTS

  
	
  (Continued)

  
	
   

  	
   

  
	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9. AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
  49

  
	
   

  	
   

  
	
  Section 9.01

  	
  Amendments Without Consent of Holders

  	
  49

  
	
  Section 9.02

  	
  Amendments With Consent of Holders

  	
  50

  
	
  Section 9.03

  	
  Effect of Consent

  	
  51

  
	
  Section 9.04

  	
  Trustee’s Rights and Obligations

  	
  51

  
	
  Section 9.05

  	
  Conformity With Trust Indenture Act

  	
  51

  
	
  Section 9.06

  	
  Payments for Consents

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10. CONVERSION

  	
  51

  
	
   

  	
   

  
	
  Section 10.01

  	
  Conversion Privilege

  	
  51

  
	
  Section 10.02

  	
  Conversion Procedure

  	
  52

  
	
  Section 10.03

  	
  Fractional Shares

  	
  53

  
	
  Section 10.04

  	
  Taxes On Conversion

  	
  54

  
	
  Section 10.05

  	
  Company To Provide Common Stock and Junior Convertible
  Preferred Stock

  	
  54

  
	
  Section 10.06

  	
  Adjustment for Change In Capital Stock

  	
  54

  
	
  Section 10.07

  	
  Adjustment for Rights Issue

  	
  55

  
	
  Section 10.08

  	
  Adjustment for Other Distributions

  	
  56

  
	
  Section 10.09

  	
  Adjustment for Cash Dividends

  	
  57

  
	
  Section 10.10

  	
  Adjustment for Certain Tender Offers or Exchange
  Offers

  	
  58

  
	
  Section 10.11

  	
  Provisions Governing Adjustment to Conversion Rate

  	
  58

  
	
  Section 10.12

  	
  Disposition Events

  	
  60

  
	
  Section 10.13

  	
  Discretionary Adjustment

  	
  61

  
	
  Section 10.14

  	
  When Adjustment May Be Deferred

  	
  61

  
	
  Section 10.15

  	
  When No Adjustment Required.

  	
  62

  
	
  Section 10.16

  	
  Notice of Adjustment

  	
  62

  
	
  Section 10.17

  	
  Notice of Certain Transactions

  	
  62

  
	
  Section 10.18

  	
  Right of Conversion

  	
  63

  
	
  Section 10.19

  	
  Company Determination Final

  	
  63

  
	
  Section 10.20

  	
  Trustee’s Adjustment Disclaimer

  	
  63

  
	
  Section 10.21

  	
  Simultaneous Adjustments

  	
  63

  
	
  Section 10.22

  	
  Successive Adjustments

  	
  64

  
	
  Section 10.23

  	
  Rights Issued in Respect of Common Stock Issued Upon
  Conversion

  	
  64

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11. PAYMENT OF INTEREST

  	
  64

  
	
   

  	
   

  
	
  Section 11.01

  	
  Interest Payments

  	
  64

  
	
  Section 11.02

  	
  Defaulted Interest

  	
  64

  
	
  Section 11.03

  	
  Interest Rights Preserved

  	
  65

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12. MISCELLANEOUS

  	
  65

  
	
   

  	
   

  
	
  Section 12.01

  	
  Trust Indenture Act of 1939

  	
  65

  
	
  Section 12.02

  	
  Noteholder Communications; Noteholder Actions

  	
  66

  
	
  Section 12.03

  	
  Notices.

  	
  66

  
	
  Section 12.04

  	
  Communication by Holders with Other Holders

  	
  67

  
	
  Section 12.05

  	
  Certificate and Opinion as to Conditions Precedent

  	
  68

  
	
  Section 12.06

  	
  Statements Required in Certificate or Opinion

  	
  68

  

 

iii

 

	
  TABLE OF CONTENTS

  
	
  (Continued)

  
	
   

  	
   

  
	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 12.07

  	
  Legal Holiday

  	
  68

  
	
  Section 12.08

  	
  Rules by Trustee, Paying Agent, Conversion
  Agent and Registrar

  	
  68

  
	
  Section 12.09

  	
  Governing Law

  	
  68

  
	
  Section 12.10

  	
  No Adverse Interpretation of Other Agreements

  	
  69

  
	
  Section 12.11

  	
  Successors and Assigns

  	
  69

  
	
  Section 12.12

  	
  Duplicate Originals

  	
  69

  
	
  Section 12.13

  	
  Separability

  	
  69

  
	
  Section 12.14

  	
  Table of Contents and Headings

  	
  69

  
	
  Section 12.15

  	
  No Liability of Directors, Officers, Employees,
  Incorporators, Members and Stockholders

  	
  69

  
	
  Section 12.16

  	
  Waiver of Jury Trial

  	
  69

  
	
  Section 12.17

  	
  Force Majeure

  	
  69

  

 

iv

 

	
  EXHIBIT A

  	
  Form of Note

  
	
   

  	
   

  
	
  EXHIBIT B

  	
  Restricted Common Stock
  Legend and IAI Common Stock Legend

  
	
   

  	
   

  
	
  EXHIBIT C

  	
  Form of
  Certificate of Designation for Junior Convertible Preferred Stock

  

 

v

 

CROSS
REFERENCE TABLE*

 

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

 

	
  TIA Section

  	
   

  	
  Indenture Section

  
	
  310(a)(1)

  	
   

  	
  7.10

  
	
  (a)(2)

  	
   

  	
  7.10

  
	
  (a)(3)

  	
   

  	
  N.A.

  
	
  (a)(4)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  7.08; 7.10

  
	
  (c)

  	
   

  	
  N.A.

  
	
  311(a)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.05

  
	
  (b)

  	
   

  	
  12.04

  
	
  (c)

  	
   

  	
  12.04

  
	
  313(a)

  	
   

  	
  7.06

  
	
  (b)(1)

  	
   

  	
  N.A.

  
	
  (b)(2)

  	
   

  	
  7.06

  
	
  (c)

  	
   

  	
  12.03

  
	
  (d)

  	
   

  	
  7.06

  
	
  314(a)

  	
   

  	
  4.04; 4.05;
  12.03

  
	
  (b)

  	
   

  	
  N.A.

  
	
  (c)(1)

  	
   

  	
  12.05

  
	
  (c)(2)

  	
   

  	
  12.05

  
	
  (c)(3)

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
  N.A.

  
	
  (e)

  	
   

  	
  12.06

  
	
  (f)

  	
   

  	
  N.A.

  
	
  315(a)

  	
   

  	
  7.01

  
	
  (b)

  	
   

  	
  7.05; 12.02

  
	
  (c)

  	
   

  	
  7.01

  
	
  (d)

  	
   

  	
  7.01

  
	
  (e)

  	
   

  	
  6.11

  
	
  316(a) (last
  sentence)

  	
   

  	
  2.08

  
	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  6.07

  
	
  317(a)(1)

  	
   

  	
  6.08

  
	
  (a)(2)

  	
   

  	
  6.09

  
	
  (b)

  	
   

  	
  2.04

  
	
  318(a)

  	
   

  	
  12.01

  

N.A. means not applicable

 

vi

 

INDENTURE, dated as of May   ,
2009, between Power-One, Inc., a Delaware corporation, as the “Company”
and The Bank of New York Mellon Trust Company, N.A., a national banking
corporation, as Trustee.

 

RECITALS

 

The Company has duly
authorized the execution and delivery of the Indenture to provide for the
initial issuance of $[           ]
aggregate principal amount of the Company’s 6.0%/8.0%/10.0% Convertible Senior
Notes Due 2019 (the “Notes”).  All things
necessary to make the Indenture a valid agreement of the Company, in accordance
with its terms, have been done, and the Company has done all things necessary
to make the Notes, when executed by the Company and authenticated and delivered
by the Trustee and duly issued by the Company, the valid obligations of the
Company as hereinafter provided.  This
Indenture is subject to, and will be governed by, the provisions of the Trust
Indenture Act that are required to be a part of and govern indentures qualified
under the Trust Indenture Act.

 

THIS INDENTURE WITNESSETH

 

For and in consideration
of the premises and the purchase of the Notes by the Holders thereof, the
parties hereto covenant and agree, for the equal and proportionate benefit of
all Holders, as follows:

 

ARTICLE 1.

DEFINITIONS AND
INCORPORATION BY REFERENCE

 

Section 1.01           Definitions.

 

“Affiliate” means, with
respect to any Person, any other Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, such
Person.  For purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling,” “controlled
by” and “under common control with”) with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Securities, by contract or otherwise; provided, however,
that, notwithstanding the foregoing, neither the Initial Purchasers nor any of
their Permitted Transferees will be deemed to be Affiliates of the Company or
its Subsidiaries.

 

“Agent” means any
Registrar, Paying Agent or Conversion Agent.

 

“Agent Member” means a
member of, or a participant in, the Depositary.

 

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

 

 

“Beneficially Own” and “Beneficial
Ownership” shall have the meaning set forth in Rule 13d-3 of the rules and
regulations under the Exchange Act.

 

“Beneficial Owner” means
any Person that Beneficially Owns a beneficial interest in a Global Note held
in accordance with the rules and procedures of the Depositary.

 

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

 

“Board of Directors”
means the board of directors or comparable governing body of the Company, or
any committee thereof duly authorized to act on its behalf.

 

“Board Resolution” means
a resolution duly adopted by the Board of Directors which is certified by the
Secretary or an Assistant Secretary of the Company and remains in full force
and effect as of the date of its certification.

 

“Business Day” means any
day except a Saturday, Sunday or other day on which commercial banks in New
York City or the Corporate Trust Office are authorized or obligated to close.

 

“Capital Stock” means,
with respect to any Person, any and all shares of stock of a corporation,
partnership interests or other equivalent interests (however designated,
whether voting or non-voting) in such Person’s equity, entitling the holder to
receive a share of the profits and losses, and a distribution of assets, after
liabilities, of such Person.

 

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

 

“Certificated Note” means
a Note in registered individual form without interest coupons.

 

“Change in Control” means
the occurrence of a Fundamental Change of the type described in the clauses (i), (ii), (iii) or (iv) of the
definition of “Fundamental Change” contained in Section 3.01(a).

 

“Close of Business” means
5:00 p.m. (New York City time).

 

“Closing 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 the average
ask prices) on that date as reported in composite transactions for the
principal U.S. securities exchange on which the Common Stock is listed or
admitted for trading or, if the Common Stock is not listed or admitted for
trading on a U.S. national  or regional
securities exchange, as reported on the quotation system on which such security
is quoted.  If the Common Stock is not
listed or admitted for trading on a U.S. national or regional securities
exchange and not reported on a quotation system on the relevant date, the “closing
price” will 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 will
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
investment banking firms selected by the Company for this purpose.

 

2

 

“Common Stock” means the
common stock of the Company, $0.001 par value, as it exists on the date of this
Indenture and any shares of any class or classes of Capital Stock of the
Company resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which are not subject to redemption by the Company; provided,
however, that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable on conversion of Notes shall be
substantially in the proportion which the total number of shares of such class resulting
from all such reclassifications bears to the total number of shares of all such
classes resulting from all such reclassifications.

 

“Company” means the party
named as such in the first paragraph of the Indenture or any successor obligor
under the Indenture and the Notes pursuant to Section 5.01.

 

“Consolidated
EBITDA” means for any period, without duplication, Consolidated Net Income for
such period, plus, to the extent reflected as a charge in the statement
of such Consolidated Net Income for such period, the sum of (i) taxes, (ii) Fixed
Charges, (iii) amortization or write-off of debt discount and debt
issuance costs and commissions, discounts and other fees and charges associated
with Indebtedness, (iv) depreciation and amortization, (v) amortization
of intangibles (including but not limited to goodwill) and organization costs, (vi) any
extraordinary charges, (vii) losses on Dispositions outside the ordinary
course of business, (viii) charges in respect of excess or obsolete
inventory in excess of $1,000,000 in any fiscal quarter, (ix) solely in
connection with the closure of a single facility site after the Issue Date,
charges incurred prior to April 4, 2011 relating to severance, the
termination of leases (including required repairs to such facility site) and
costs relating to the transportation of equipment located at such closing
facility site to other facilities, not in excess of $15.0 million in the
aggregate after the Issue Date, and (x) any other non-cash charges
(excluding any such charge incurred in the ordinary course of business that
constitutes an accrual of, or a reserve for, cash charges for any future
period), and minus, to the extent included in determining Consolidated
Net Income for such period, (A) any extraordinary gains, (B) gains on
Dispositions outside of the ordinary course of business, (C) any other
non-cash items increasing Consolidated Net Income for such period (excluding
any items that represent the reversal of any accrual of, or cash reserved for,
anticipated cash charges in any prior period that are described in the
parenthetical to clause (x)  above and (D) interest income.

 

“Consolidated
Net Income” means for any period, the net income of the Company and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.

 

“Continuing Director”
means a director who either was a member of the Board of Directors on the Issue
Date or who becomes a member of the Board of Directors subsequent to that date
and who was nominated or elected by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or whose
election to the Board of Directors was recommended or endorsed by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election, in each case either by a specific vote or by approval
of a proxy statement issued by the Company on behalf of the entire Board of
Directors in which such individual is named as a nominee of the Board of
Directors for election as director.

 

“Conversion Date” means
the date on which the Holder of the Note has complied with all requirements
under this Indenture to convert such Note.

 

3

 

“Conversion Price” means,
as of any date of determination, the dollar amount derived by dividing $1,000
by the Conversion Rate in effect on such date.

 

“Conversion Rate” means
740.7407407 shares of Common Stock per $1,000 principal amount of Notes,
subject to adjustment pursuant to Article 10.

 

“Corporate Trust Office”
means the office of the Trustee at which the trust created by this Indenture is
principally administered, which at the date of the Indenture is located at The
Bank of New York Mellon Trust Company, N.A., 700 South Flower Street, 5th Floor, Los
Angeles, California 90017, Attention: 
Corporate Unit, or such other address as the Trustee may designate from
time to time by notice to the Holders and the Company, or the principal
corporate trust office of any successor Trustee (or such other address as such
successor Trustee may designate from time to time by notice to the Holders and
the Company).

 

“Current Market Price” of
Common Stock on any day means the average of the Closing Prices per share of
Common Stock for each of the five consecutive Trading Days ending on the
earlier of the day in question and the day before the Ex-Dividend Date with
respect to the issuance or distribution requiring such computation.

 

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

 

“Depositary” means DTC or
the nominee thereof, or any successor thereto.

 

“Disposition” means any
sale, conveyance, assignment, transfer or other disposal of any of the Company’s
or its Subsidiary’s property, business or assets.

 

“DTC” means The
Depository Trust Company, a New York corporation, and its successors.

 

“Exchange” means the
NASDAQ Global Market or any other U.S. national securities exchange.

 

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

 

“Ex-Dividend Date” means,
with respect to any issuance or distribution, the first date on which the
shares of Common Stock trade on the applicable exchange or in the applicable
market, regular way, without the right to receive such issuance or
distribution.

 

“Fair Market Value”
means, with respect to any Notes of a Beneficial Owner  to
be redeemed pursuant to Section 3.10:

 

(i)            if such Beneficial Owner is able to obtain on the
Business Day prior to delivery of the Option Purchase Notice in respect of such
Beneficial Owner’s Notes in accordance with Section 3.10(a) a firm
price quote from one or more Brokers pursuant to which such Broker(s) offers
to purchase on such date all, but not less than all, of the Notes that such
Beneficial Owner wishes to redeem, the highest purchase price (net of
commissions) quoted; or

 

4

 

(ii)           if such Beneficial Owner is unable to obtain any price
quotes as contemplated in clause (i) of this definition (including, for
the avoidance of doubt, as a result of any Broker failing to respond to such
Beneficial Owner’s inquiry for, or to provide, a firm price quote with respect
to such Notes), then the Fair Market Value of such Notes shall conclusively be
deemed to be an amount less than 110% of the sum of (x) the Option
Purchase Price plus (y) accrued and unpaid interest, if any, on such
Notes.

 

“Fixed Charges” means, with respect to any specified Person for
any period, the sum, without duplication, of:

 

(i)            the consolidated interest expense of such Person and
its Subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with capital
lease obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers’ acceptance financings, and net of
the effect of all payments made or received pursuant to hedging obligations in
respect of interests rates; plus

 

(ii)           the aggregate amount of interest, on a consolidated
basis, of such Person and its Subsidiaries that was capitalized during such
period; plus

 

(iii)          any interest on Indebtedness of another Person that is
guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries, whether or not such Guarantee
or Lien is called upon; plus

 

(iv)          the product of (a) all dividends, whether paid or
accrued and whether or not in cash, on any series of preferred stock of such
Person or any of its Subsidiaries, other than dividends on capital stock
payable solely in capital stock of the Company or to the Company or a
Subsidiary of the Company, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, determined on a consolidated
basis in accordance with GAAP.

 

“GAAP” means generally
accepted accounting principles in the United States of America as in effect
from time to time.

 

“Global Note” means a
Note in registered global form without interest coupons that is deposited with
the Depositary or its custodian and registered in the name of the Depositary or
its nominee.

 

“Global Note Legend”
means the legend set forth in Exhibit A.

 

“Guarantee
Obligation” means as to any Person, any obligation, contingent or otherwise of
such Person guaranteeing any Indebtedness of any other third Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including,
without limitation, any obligation of the guaranteeing Person (i) to
purchase any such Indebtedness or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (a) for the
purchase or payment of any such Indebtedness or (b) to maintain working
capital or equity capital of the primary obligor or otherwise 

 

5

 

to maintain the net worth or solvency of the primary obligor so as to
enable such primary obligor to pay such Indebtedness, (iii) to purchase
property, securities or services for the purpose of assuring the owner of any
such Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness or (iv) otherwise to protect the owner of any such
Indebtedness against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include (x) any liability by endorsement of
instruments for deposit or collection or similar transactions in the ordinary
course of business, (y) indemnification obligations of the Company or any
of its Subsidiaries entered into in the ordinary course of business or (z) obligations
of the Company or any of its Subsidiaries under arrangements entered into in
the ordinary course of business whereby the Company or such Subsidiary sells
goods or inventory to other Persons under agreements obligating the Company or
such Subsidiary to repurchase such goods or inventory, at a price not exceeding
the original sale price, upon the occurrence of certain specified events. The
amount of any Guarantee Obligation of any guaranteeing Person at any time shall
be deemed to be the lower of (1) an amount equal to the stated or
determinable amount of the Indebtedness in respect of which such Guarantee
Obligation is made at such time and (2) the maximum amount for which such
guaranteeing Person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation at such time, unless such Indebtedness and
such maximum amount for which such guaranteeing Person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing Person’s maximum reasonably anticipated liability in
respect thereof as determined by the Company in good faith at such time;
provided, however, that for purposes of this definition the liability of the
guaranteeing Person with respect to any obligation as to which a third Person
or Persons are jointly or jointly and severally liable as a guarantor or
otherwise as contemplated hereby and have not defaulted on its or their
portions thereof shall be only as to its pro rata portion of such obligation.

 

“Hedging
Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, raw materials, equity
or debt instruments, or economic, financial or pricing indices or measures of
economic, financial or pricing risk or value or any similar transaction or any
combination of these transactions.

 

“Holder” or “Noteholder”
means the registered holder of any Note.

 

“IAI Certificated
Note” means a Certificated Note that bears the IAI Note Legend.

 

“IAI Common Stock Legend”
means the legend set forth in Exhibit B.

 

“IAI Global Note” means a
Global Note that bears the IAI Note Legend representing Notes initially issued
and sold pursuant to the Purchase Agreement to the Initial Purchasers, all of
which are Institutional Accredited Investors.

 

“IAI Note” means a Note
that bears the IAI Note Legend.

 

“IAI Note Legend” means
the legend set forth in Exhibit A.

 

“Indebtedness” means of any Person
at any date, without duplication, (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments and all obligations of such
Person upon which interest charges are 

 

6

 

customarily paid; (iii) all obligations of such Person under
conditional sale or other title retention agreements related to assets or other
property acquired by such Person; (iv) all obligations of such Person to
pay the deferred and unpaid purchase price of property or services, excluding
current accounts payable incurred in the ordinary course of business and any
earn-out obligations not recorded as liabilities under GAAP; (v) the
portion of the obligations of such Person as lessee under any lease of any
asset or other property which, in conformity with GAAP as in effect on the
Issue Date, that is required to be capitalized on a balance sheet of such
Person; (vi) all Guarantee Obligations of such Person; (vii) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; (viii) all net
obligations of such Person under Hedging Agreements; and (ix) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, or in respect of bankers’
acceptances.

 

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

 

“Initial Purchasers”
means the Purchasers named as such in the Purchase Agreement.

 

“Institutional Accredited
Investor” means an institutional “accredited investor” as described in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act.

 

“Interest Payment Date”
means each May    and November    of each year,
commencing November   , 2009.

 

“Issue Date” means the
date on which the Notes are originally issued under this Indenture.

 

“Junior Convertible
Preferred Stock” means shares of Junior Convertible Preferred Stock of the
Company issued pursuant to the Certificate of Designation in the form attached
as Exhibit C.

 

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

 

“Make-Whole Amount”
means, with respect to any Note being repurchased pursuant to Section 3.01,
the excess, if any, of (i) the present value on the date of such
repurchase of (a) 100% of the principal amount of such Note, assuming such
Note were redeemed on May 8, 2014 pursuant to Section 3.04(b), plus (b) all
required interest payments due on such Note through May 8, 2014 assuming
such Note were redeemed on May 8, 2014 pursuant to Section 3.04(b),
computed using a 3.125% discount rate over (ii) the principal amount of
such Note.

 

“Market Disruption Event”
means the occurrence or existence for more than one half hour period in the
aggregate on any scheduled Trading Day for the Common Stock of any suspension
or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by the primary exchange or trading system on which such shares
are traded) in the Common Stock or in any options, contracts or future
contracts relating to the Common Stock, and such suspension or limitation
occurs or exists at any time before 1:00 p.m. (New York City time) on such
day.

 

7

 

“Maturity Date” means May   ,
2019.

 

“Maximum Voting Power”
means, at the time of determination, the total number of votes which may be
cast by all capital stock on a matter subject to the vote of the Common Stock
and any other security that constitute Voting Securities of the Company voting
together as a single class after giving effect to any limitation on voting
power governing Voting Securities of the Company.

 

“Notes” has the meaning
assigned to such term in the Recitals.

 

“Officer” means the
chairman of the Board of Directors, the president or chief executive officer,
any vice president, the chief financial officer, the treasurer or any assistant
treasurer, or the secretary or any assistant secretary, of the Company.

 

“Officers’ Certificate”
means a certificate signed in the name of the Company (i) by the chairman
of the Board of Directors, the president or chief executive officer or a vice
president and (ii) by the chief financial officer, the chief accounting
officer, the treasurer or any assistant treasurer or the secretary or any
assistant secretary.

 

“OID Note Legend” means
the legend set forth in Exhibit A.

 

“Opinion of Counsel”
means a written opinion signed by legal counsel, satisfactory to the Trustee,
who may be an employee of or counsel to the Company.

 

“Paying Agent” refers to
a Person engaged to perform the obligations of the Trustee in respect of
payments made or funds held hereunder in respect of the Notes.

 

 “Permitted Indebtedness Amount” means, as of
any date, the greater of (i) $127.0 million and (ii) an amount equal
to 3.0 times the Company’s Consolidated EBITDA for the immediately preceding
four consecutive completed fiscal quarters for which financial statements of
the Company prepared in accordance with GAAP are available.

 

“Permitted
Liens” means:

 

(i)            Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of business;

 

(ii)           Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be required
in conformity with GAAP shall have been made therefor;

 

(iii)          Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, landlords operators, repairmen and other similar Liens incurred in
the ordinary course of business;

 

(iv)          easements, rights-of-way zoning restrictions,
reservations, encroachments and other similar encumbrances in respect of real
property, which do not, in the opinion of the Company, materially impair the
use of such property in the operation of the business of the Company or the
value of such property;

 

8

 

(v)           leases or subleases granted to others in the ordinary
course of business that do not materially interfere with the business of the
Company and its Subsidiaries;

 

(vi)          Liens incurred or deposits made in the ordinary course
of business in connection with workers’ compensation, unemployment insurance,
and other types of social security, including any Liens securing letters of
credit issued in the ordinary course of business consistent with past practice
in connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds or other similar obligations (exclusive
of obligations for the payment of borrowed money);

 

(vii)         Liens incurred or deposits made to secure liability to
insurance carriers under insurance or self-insurance arrangements, including
liens of judgments thereunder that are not currently dischargeable;

 

(viii)        Liens on any property held in trust pursuant to
defeasance or covenant defeasance provisions governing Indebtedness of the
Company arising in connection with any defeasance or covenant defeasance of
such Indebtedness;

 

(ix)           Liens to secure (or encumbering deposits securing)
obligations arising from warranty or contractual service obligations of the
Company or any of its Subsidiaries, including rights of offset and setoff; and

 

(x)            Liens securing Indebtedness permitted to
be incurred under Section 4.08.

 

“Permitted Transfer”
means any transfer of the Notes not prohibited under Section 8.1 of the
Purchase Agreement.

 

“Permitted Transferee”
has the meaning given such term in the Purchase Agreement.

 

“Person” means an individual,
a corporation, a partnership, a limited liability company, an association, a
trust or any other entity, including a government or political subdivision or
an agency or instrumentality thereof.

 

“Public Sale” has the
meaning set forth in the Purchase Agreement.

 

“Purchase Agreement”
means that certain Securities Purchase Agreement, dated as of April 23,
2009, among the Company and the Initial Purchasers.

 

“Purchase at Holder’s
Option” means a repurchase of Notes at Holders option in accordance with Section 3.10.

 

“Redemption Date” means
the date specified by the Company for redemption of the Notes in accordance
with Section 3.07.

 

“Redemption Price” means,
with respect to a Note to be redeemed by the Company in accordance with Section 3.04,
100% of the then outstanding principal amount of such Note to be redeemed.

 

9

 

“Register” has the
meaning assigned to such term in Section 2.03.

 

“Registrar” means a
Person engaged to maintain the Register.

 

“Registration Rights
Agreement” means the Registration Rights Agreement dated as of May    ,
2009, among the Company and the Initial Purchasers.

 

“Regular Record Date” for
the interest payable on any Interest Payment Date means the May    
or November     (whether or not a Trading Day) next
preceding such Interest Payment Date.

 

“Responsible Officer”
shall mean, when used with respect to the Trustee, any officer within the
corporate trust department of the Trustee, including any vice president,
assistant vice president, assistant secretary, assistant treasurer, trust
officer or any other officer of the Trustee who customarily performs functions
similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred
because of such person’s knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.

 

“Restricted Certificated
Note” means a Certificated Note that bears the Restricted Note Legend.

 

“Restricted Common Stock
Legend” means the legend set forth in Exhibit B.

 

“Restricted Global Note”
means a Global Note that bears the Restricted Note Legend representing Notes
transferred pursuant to Rule 144A and in accordance with the Purchase
Agreement.

 

“Restricted Note” means a
Note that bears the Restricted Note Legend.

 

“Restricted Note Legend”
means the legend set forth in Exhibit A.

 

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

 

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

 

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

 

“Subsidiary” means with
respect to any Person, any corporation, association or other business entity of
which more than 50% of the outstanding Voting Securities is owned, directly or
indirectly, by, or, in the case of a partnership, the sole general partner or
the managing partner or the only general partners of which are, such Person and
one or more Subsidiaries of such Person (or a combination thereof).  Unless otherwise specified, “Subsidiary”
means a Subsidiary of the Company.

 

A “Termination of Trading”
will be deemed to have occurred if, for a period of 10 consecutive Business
Days, the Common Stock (or other common stock into which the Notes are then
convertible) is neither listed for trading on a U.S. national securities exchange
nor approved for

 

10

 

trading on an
established U.S. automated interdealer quotation system and no American
Depositary Shares or similar instruments for such common stock are so listed or
approved for listing in the United States.

 

“Trading Day” means any
day on which (i) there is no Market Disruption Event and (ii) the
NASDAQ Global Market or, if the Common Stock is not listed on the NASDAQ Global
Market, the principal national securities exchange on which the Common Stock is
listed, is open for trading or, if the Common Stock is not so listed, admitted
for trading or quoted, any Business Day. 
A Trading Day only includes those days that have a scheduled closing
time of 4:00 p.m. (New York City time) or the then standard closing time
for regular trading on the relevant exchange or trading system.

 

“Trustee” means the party
named as such in the first paragraph of the Indenture or any successor trustee
under the Indenture pursuant to Article 7.

 

“Trust Indenture Act”
means the Trust Indenture Act of 1939, as amended.

 

“Unexpected Delisting”
means any delisting of the Common Stock from the NASDAQ Global Market directly
as a result of the execution of the Purchase Agreement and the consummation of
the transactions contemplated thereby.

 

“Voting Securities”
means, with respect to any Person, securities of any class or kind having the
power to vote generally for the election of directors, managers or other voting
members of the governing body of such Person.

 

Section 1.02                                Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
  “Act”

  	
   

  	
  1.05

  
	
  “Aggregate Amount”

  	
   

  	
  10.10

  
	
  “Average Sale Price”

  	
   

  	
  10.08

  
	
  “Bankruptcy Default”

  	
   

  	
  6.01

  
	
  “beneficial owner”

  	
   

  	
  3.01(a)

  
	
  “Brokers”

  	
   

  	
  3.10

  
	
  “Company Order”

  	
   

  	
  2.02

  
	
  “Conversion Agent”

  	
   

  	
  2.03

  
	
  “Defaulted Interest”

  	
   

  	
  11.02

  
	
  “Disposition Event”

  	
   

  	
  10.12

  
	
  “Distributed Assets”

  	
   

  	
  10.08(a)

  
	
  “Event of Default”

  	
   

  	
  6.01

  
	
  “Expiration Date”

  	
   

  	
  10.10

  
	
  “Expiration Time”

  	
   

  	
  10.10

  
	
  “Fundamental Change”

  	
   

  	
  3.01(a)

  
	
  “Fundamental Change
  Purchase Date”

  	
   

  	
  3.01(a)

  
	
  “Fundamental Change
  Purchase Notice”

  	
   

  	
  3.01(c)

  
	
  “Fundamental Change
  Purchase Price”

  	
   

  	
  3.01(a)

  
	
  “Legal Holiday”

  	
   

  	
  12.07

  

 

11

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
  “Option Purchase Date”

  	
   

  	
  3.10(a)

  
	
  “Option Purchase
  Notice”

  	
   

  	
  3.10(b)

  
	
  “Option Purchase Price”

  	
   

  	
  3.10(a)

  
	
  “Primary Registrar”

  	
   

  	
  2.03

  
	
  “Purchased Shares”

  	
   

  	
  10.10

  
	
  “QIB”

  	
   

  	
  2.01(b)

  
	
  “Reference Period”

  	
   

  	
  10.08(a)

  
	
  “Reference Property”

  	
   

  	
  10.12

  
	
  “Restricted Securities”

  	
   

  	
  2.14

  
	
  “Rights”

  	
   

  	
  10.23

  
	
  “Shareholders Rights
  Plan”

  	
   

  	
  10.23

  
	
  “Special Record Date”

  	
   

  	
  11.02

  
	
  “Trigger Event”

  	
   

  	
  10.11

  

 

Section 1.03                                Incorporation
by Reference of Trust Indenture Act.  Whenever this Indenture
refers to a provision of the Trust Indenture Act, the provision is incorporated
by reference in and made a part of this Indenture.  The following Trust Indenture Act terms used
in this Indenture have the following meanings:

 

“Commission” means the
Securities and Exchange Commission.

 

“indenture securities”
means the Notes.

 

“indenture security
holder” means a Noteholder.

 

“indenture to be
qualified” means this Indenture.

 

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

 

“obligor” on the
indenture securities means the Company.

 

All other Trust Indenture
Act terms used in this Indenture that are defined by the Trust Indenture Act,
defined by Trust Indenture Act reference to another statute or defined by
Securities Exchange Commission rule have the meanings assigned to them by
such definitions.

 

Section 1.04                                Rules of
Construction.  Unless the context otherwise requires or except as
otherwise expressly provided,

 

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

 

12

 

(d)                                 all
references to Sections or Articles or Exhibits refer to Sections or
Articles or Exhibits of or to the Indenture unless otherwise indicated;

 

(e)                                  references
to agreements or instruments, or to statutes or regulations, are to such
agreements or instruments as amended, restated or supplemented from time to
time, or statutes or regulations, as amended from time to time (or to successor
statutes and regulations);

 

(f)                                    in
the event that a transaction meets the criteria of more than one category of
permitted transactions or listed exceptions the Company may classify such
transaction as it, in its sole discretion, determines;

 

(g)                                 “or”
is not exclusive;

 

(h)                                 “including”
means including, without limitation; and

 

(i)                                     words
in the singular include the plural, and words in the plural include the
singular.

 

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

 

ARTICLE 2.

 

THE
NOTES

 

Section 2.01                                Form, Dating and
Denominations; Legends.

 

(a)                                  The
Notes and the Trustee’s certificate of authentication will be substantially in
the form attached as Exhibit A.  The
terms and provisions contained in the form of the Note attached as Exhibit A
constitute and are hereby expressly made a part of the Indenture.  The Notes may have notations, legends or
endorsements required by law, rules of or agreements with national
securities exchanges to which the Company is subject, or usage.  Each Note will be dated the date of its
authentication.  The Notes will be
issuable only in denominations of $2,000 in principal amount and any integral
multiple of $1,000 in excess thereof.

 

(b)                                 Restricted
Notes.  All of the Notes are
initially being offered and sold pursuant to the Purchase Agreement to the
Initial Purchasers, all of which are Institutional

 

13

 

Accredited Investors, and
are initially being issued in the form of an IAI Global Note (which will bear
the Global Note Legend, the OID Legend and the IAI Note Legend set forth in Exhibit A
hereto), which shall be duly executed by the Company and authenticated by the
Trustee as hereinafter provided and deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the Depositary’s nominee, Cede &
Co.  All Notes transferred by Initial
Purchasers to qualified institutional buyers as defined in Rule 144A
(collectively, “QIBs” or individually, each a “QIB”) in reliance on Rule 144A
under the Securities Act and in accordance with the Purchase Agreement, shall
be issued in the form of one or more Restricted Global Notes (which will bear
the Global Note Legend, the OID Legend and the Restricted Note Legend set forth
in Exhibit A hereto), which shall be duly executed by the Company and
authenticated by the Trustee as hereinafter provided and deposited on behalf of
the purchasers of the Notes represented thereby with the Trustee, as custodian
for the Depositary, and registered in the name of its nominee, Cede &
Co. The aggregate principal amount of each of the IAI Global Notes and the
Restricted Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee as hereinafter provided, subject
in each case to compliance with the Applicable Procedures.

 

(c)                                  Global
Notes in General.  Each Global Note
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Notes from time to time endorsed thereon and that the aggregate amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, purchases or conversions of
such Notes.  Any adjustment of the
aggregate principal amount of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee in accordance with instructions given by the
Holder thereof as required by Section 2.06 and shall be made on the
records of the Trustee and the Depositary.

 

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

 

(d)                                 Book
Entry Provisions.  The Company shall
use its reasonable efforts to execute and the Trustee shall, in accordance with
this Section 2.01(d), authenticate and deliver one or more Global Notes
that (i) shall be registered in the name of the Depositary, (ii) shall
be delivered by the Trustee to the Depositary or pursuant to the Depositary’s
instructions and (iii) shall bear the Global Note Legend and the OID
Legend substantially to the effect set forth in Exhibit A.  This Section 2.01(d) shall only
apply to Global Notes deposited with or on behalf of the Depositary.

 

Section 2.02                                Execution and
Authentication.  An Officer shall
sign the Notes for the Company by manual or facsimile signature attested by the
manual or facsimile signature of the Secretary or an Assistant Secretary of the
Company.  Typographic and other minor
errors or defects

 

14

 

in any
such facsimile signature shall not affect the validity or enforceability of any
Note which has been authenticated and delivered by the Trustee.

 

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

 

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

 

The Trustee shall
authenticate and make available for delivery Notes for original issue in the
aggregate principal amount of
$[          ] upon receipt of
a written order or orders of the Company signed by an Officer of the Company (a
“Company Order”).  The Company Order
shall specify the amount of Notes to be authenticated, shall provide that all
such Notes will be represented initially by a Global Note and the date on which
each original issue of Notes is to be authenticated.  The initial aggregate principal amount of
Notes outstanding at any time may not exceed
$[          ] except as
provided in Section 2.07 and except as provided in the next succeeding
paragraph.

 

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

 

The Notes shall be
issuable only in registered form without coupons and only in denominations of
$2,000 principal amount and any integral multiple of $1,000 in excess thereof.

 

Section 2.03                                Registrar, Paying
Agent and Conversion Agent.  The Company shall maintain one or
more offices or agencies where Notes may be presented for registration of
transfer or for exchange (each, a “Registrar”), one or more offices or agencies
where Notes may be presented for payment (each, a “Paying Agent”), one or more
offices or agencies where Notes may be presented for conversion (each, a
“Conversion Agent”) and one or more offices or agencies where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served.  The Company will at all times
maintain a Paying Agent, Conversion Agent, Registrar and an office or agency
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served in the United States.  One of the Registrars (the “Primary
Registrar”) shall keep a register of the Notes and of their transfer and
exchange (the “Register”).  The entries in the Register shall be
conclusive, absent manifest error, and the Company shall treat each Person
whose name is recorded in the Register as the owner of such Note as the owner
thereof for all purposes of this Indenture notwithstanding any notice to the
contrary.

 

The Company shall enter
into an appropriate agency agreement with any Agent not a party to this
Indenture.  The agreement shall implement
the provisions of this Indenture that relate to such Agent.  The Company shall notify the Trustee of the
name and address of any Agent not a party to this Indenture.  If the Company fails to maintain a Registrar,
Paying Agent, Conversion Agent or agent for service of notices and demands in
any place required by this Indenture, or fails to give the

 

15

 

foregoing notice,
the Trustee shall act as such.  The
Company or any Affiliate of the Company may act as Paying Agent (except for the
purposes of Article 8).

 

The Company hereby
initially designates the Trustee as Paying Agent, Registrar, and Conversion
Agent, and the Corporate Trust Office of the Trustee as such office or agency
of the Company for each of the aforesaid purposes.

 

Section 2.04                                Paying Agent To Hold
Money In Trust.  Prior to 11:00 a.m., New York City time, on
each date on which the principal amount of or interest, if any, on any Notes is
due and payable, the Company shall deposit with a Paying Agent a sum sufficient
to pay such principal amount or interest, if any, so becoming due.  A Paying Agent shall hold in trust for the
benefit of Noteholders or the Trustee all money held by the Paying Agent for
the payment of principal amount of or interest, if any, on the Notes, and shall
notify the Trustee of any default by the Company (or any other obligor on the
Notes) in making any such payment.  If
the Company or an Affiliate of the Company acts as Paying Agent, it shall,
before 11:00 a.m., New York City time, on each date on which a payment of
the principal amount of or interest on any Notes is due and payable, segregate
the money and hold it as a separate trust fund. 
The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee, and the Trustee may at any time during the continuance of
any default, upon written request to a Paying Agent, require such Paying Agent
to pay forthwith to the Trustee all sums so held in trust by such Paying
Agent.  Upon doing so, the Paying Agent
(other than the Company) shall have no further liability for the money.

 

Section 2.05                                Noteholder 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
Noteholders.  If the Trustee is not the
Primary Registrar, the Company shall furnish to the Trustee on or before each
semiannual 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 Noteholders.

 

Section 2.06                                Transfer and
Exchange.  Subject to compliance with any applicable additional
requirements contained in Section 2.14, when a Note is presented to a
Registrar with a request to register a transfer thereof or exchange such Note
for an equal principal amount of Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested if its
requirements for such transactions are met; provided, however, that every Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by an assignment form in the applicable form included
in Exhibit A, and in form satisfactory to the Registrar duly executed by
the Holder thereof or its attorney duly authorized in writing.  To permit registration of transfers and
exchanges, upon surrender of any Note for registration of transfer or exchange
at an office or agency maintained pursuant to Section 2.03, the Company
shall execute and the Trustee shall authenticate Notes of a like aggregate
principal amount at the Registrar’s request. 
Any exchange or transfer shall be without charge, except that the
Company or the Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto, and
provided, that this sentence shall not apply to any exchange pursuant to Section 2.10,
Section 3.11, Section 9.03(b) or Section 10.02(g) not
involving any transfer.  No transfer shall be effective unless
recorded in the Register.

 

16

 

The Company, Registrar or
the Trustee, as the case may be, shall not be required to register the transfer
of or to exchange any Note (i) for a period of 20 calendar days before
selecting, pursuant to Section 3.06, Notes to be redeemed or (ii) during
a period beginning at the opening of business 20 calendar days before the
mailing of a notice of redemption under Section 3.07 and ending at the
close of business on the day of such mailing or (iii) that has been
selected for redemption or for which a Fundamental Change Purchase Notice or
Purchase Notice has been delivered pursuant to Section 3.01 or 3.10, and
not withdrawn, in accordance with this Indenture, except, in the case of a
partial redemption, purchase or repurchase, that portion of such Note not being
redeemed or repurchased.

 

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

 

Any Registrar appointed
pursuant to Section 2.03 shall provide to the Trustee such information as
the Trustee may reasonably require in connection with the delivery by such
Registrar of Notes upon transfer or exchange of Notes.

 

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

 

The Trustee shall have no
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Note (including any
transfers between or among Agent Members or other beneficial owners of
interests in any Global Note) 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 2.07                                Replacement Notes.  If any mutilated Note is surrendered to the
Company, a Registrar or the Trustee, or the Company, a Registrar and the
Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, and there is delivered to the Company, the applicable
Registrar and the Trustee such security or indemnity as will be required by
them to save each of them harmless, then, in the absence of notice to the
Company, such Registrar or the Trustee that such Note has been acquired by a
protected purchaser, the Company shall execute, and upon its written request
the Trustee shall authenticate and deliver, in exchange for any such mutilated
Note or in lieu of any such destroyed, lost or stolen Note, a replacement Note
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.

 

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

 

Upon the issuance of any
replacement Notes under this Section 2.07, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be

 

17

 

imposed in
relation thereto and any other reasonable expenses (including the reasonable
fees and expenses of the Trustee or the Registrar) in connection therewith.

 

Every replacement Note
issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the mutilated, destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled
to all benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.

 

The provisions of this Section 2.07
are (to the extent lawful) exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes.

 

Section 2.08                                Outstanding Notes.  Notes outstanding at any time are all Notes
authenticated by the Trustee, except for those canceled by it, those converted
pursuant to Article 10, those delivered to it for cancellation or
surrendered for transfer or exchange and those described in this Section 2.08
as not outstanding.

 

If a Note is replaced
pursuant to Section 2.07, it ceases to be outstanding unless the Company
receives proof satisfactory to it that the replaced Note is held by a protected
purchaser.

 

If a Paying Agent holds
at 11:00 a.m., New York City time, on the Maturity Date Cash sufficient to
pay the principal amount of the Notes payable on that date, then on and after
the Maturity Date, such Notes shall cease to be outstanding and the principal
amount thereof shall cease to bear interest.

 

Subject to the
restrictions contained in Section 2.09, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.

 

Section 2.09                                Treasury Notes.  In determining whether the Holders of the
required principal amount of Notes have concurred in any notice, direction,
waiver or consent, Notes owned by the Company or any other obligor on the Notes
or by any Affiliate of the Company or of such other obligor shall be
disregarded, except that, for purposes of determining whether the Trustee shall
be protected in relying on any such notice, direction, waiver or consent, only
Notes which a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.  Notes so owned
which have been pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee’s right so to act
with respect to the Notes and that the pledgee is not the Company or any other
obligor on the Notes or any Affiliate of the Company or of such other
obligor.  Any Notes or shares of Common
Stock issued upon the conversion of Notes that are purchased or owned by the
Company or any Affiliate thereof may not be resold by the Company or such
Affiliate unless registered under the Securities Act or resold pursuant to an
exemption from the registration requirements of the Securities Act in a
transaction that results in such Notes or shares of Common Stock, as the case
may be, no longer being “restricted securities” (as defined under Rule 144).

 

Section 2.10                                Temporary Notes.  Until definitive Notes are ready for
delivery, the Company may prepare and execute, and, upon receipt of a Company
Order, the Trustee shall authenticate and deliver, temporary Notes.  Temporary Notes shall be substantially in the
form of definitive Notes but

 

18

 

may have variations that the Company considers appropriate
for temporary Notes and shall be reasonably acceptable to the Trustee.  Without unreasonable delay, the Company shall
prepare and, upon receipt of a Company Order, the Trustee shall authenticate
and deliver definitive Notes in exchange for temporary Notes.

 

Section 2.11                                Cancellation.  The Company at any time may deliver Notes to
the Trustee for cancellation.  The
Registrar, the Paying Agent and the Conversion Agent shall forward to the
Trustee or its agent any Notes surrendered to them for transfer, exchange,
payment or conversion.  The Trustee and
no one else shall cancel, in accordance with its standard procedures (subject
to the record retention requirements of the Exchange Act), all Notes
surrendered for transfer, exchange, payment, conversion, replacement or
cancellation and upon written request of the Company shall deliver written
certification of such cancellation of Notes to the Company.

 

Section 2.12                                CUSIP Numbers.  The Company in issuing any Notes may use one
or more “CUSIP” numbers (if then generally in use), and, if so, the Trustee
shall use “CUSIP” numbers in notices of purchase as a convenience to Holders;
provided that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Notes or as contained
in any notice of a purchase and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such purchase shall not be
affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee
of any change in the “CUSIP” numbers.

 

Section 2.13                                Book-entry
Provisions For Global Notes.

 

(a)                                  Transfers
of Global Notes shall be limited to transfers in whole, but not in part, to the
Depositary, its successors or their respective nominees.  In addition, Certificated Notes shall be
transferred to all beneficial owners, as identified by the Depositary, in
exchange for their beneficial interests in Global Notes only if (i) the
Depositary notifies the Company that the Depositary is unwilling or unable to
continue as depositary for any Global Note (or the Depositary ceases to be a “clearing
agency” registered under Section 17A of the Exchange Act) and a successor
Depositary is not appointed by the Company within 90 days of such notice or cessation
or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depositary to issue
Certificated Notes.

 

(b)                                 In
connection with the transfer of a Global Note in its entirety to beneficial
owners pursuant to Section 2.13(a), such Global Note shall be deemed to be
surrendered to the Trustee for cancellation, and the Company shall execute, and
the Trustee shall, upon receipt of a Company Order, authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in such Global Note, an equal aggregate principal amount of
Certificated Notes of authorized denominations.

 

(c)                                  Any
Certificated Note constituting a Restricted Certificated Note or an IAI Certificated
Note delivered in exchange for an interest in a Global Note pursuant to Section 2.13(a) shall,
except as otherwise provided by Section 2.14, bear the OID Legend and the
Restricted Note Legend or the IAI Note Legend, as applicable.

 

19

 

(d)                                 The Holder of any Global Note may grant
proxies and otherwise authorize any Person to take any action that a Holder is
entitled to take under this Indenture or the Notes.

 

Section 2.14                                Special Transfer Provisions.

 

(a)                                  The Initial Purchasers may only transfer
Notes in accordance with the Purchase Agreement, provided that  such transfers also comply with the transfer restrictions
set forth in the IAI Note Legend.  Unless
and until the Trustee receives written notice from the Company or a Holder that
a transfer of a Note has not been made in compliance with the Purchase
Agreement, the Trustee may assume without inquiry that such transfer was made
in accordance with the Purchase Agreement.

 

(b)                                 Notwithstanding any other provisions of
this Indenture, but except as provided in Section 2.14(c), a Global Note
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

 

(c)                                  Every Note that bears or is required
under this Section 2.14(c) to bear the Restricted Note Legend or the
IAI Note Legend, and any Common Stock that bears or is required under this Section 2.14(c) to
bear the Restricted Common Stock Legend or the IAI Common Stock Legend
(collectively, the “Restricted Securities”) shall be subject to the
restrictions on transfer set forth in the Restricted Note Legend, the IAI Note
Legend, the Restricted Common Stock Legend or the IAI Common Stock Legend, as
the case may be, unless such restrictions on transfer shall be waived by
written consent of the Company, and the holder of each such Restricted
Security, by such Notes holder’s acceptance thereof, agrees to be bound by all
such restrictions on transfer.  As used
in this Section 2.14(c), the term “transfer” encompasses any sale, pledge,
loan, transfer or other disposition whatsoever of any Restricted Security or
any interest therein.

 

Any certificate
evidencing such Note (and all securities issued in exchange therefor or
substitution thereof), and any stock certificate representing shares of Common
Stock issued upon conversion of any Note, shall bear a Restricted Note Legend,
IAI Note Legend, Restricted Common Stock Legend or IAI Common Stock Legend, as
the case may be, unless such Note or such shares of Common Stock have been sold
pursuant to a registration statement that has been declared effective under the
Securities Act (and which continues to be effective at the time of such
transfer) or pursuant to Rule 144 or any similar provision then in force,
or such shares of Common Stock have been issued upon conversion of Notes that
have been transferred pursuant to a registration statement that has been
declared effective under the Securities Act or pursuant to Rule 144 under
the Securities Act, or unless otherwise agreed by the Company in writing, with
written notice thereof to the Trustee.

 

Any Note (or security
issued in exchange or substitution therefor) as to which such restrictions on
transfer shall have expired in accordance with their terms or as to which
conditions for removal of the Restricted Note Legend or IAI Note Legend, as the
case may be, set forth therein have been satisfied may, upon surrender of such
Note for exchange to the Registrar in accordance with the provisions of Section 2.06,
be exchanged for a new Note or Notes, of like tenor and aggregate principal
amount, which shall not bear the Restricted Note Legend or IAI Note Legend, as

 

20

 

the case may
be.  If the Restricted Note surrendered
for exchange is represented by a Global Note bearing the Restricted Note Legend
or IAI Note Legend, as the case may be, the principal amount of the legended
Global Note shall be reduced by the appropriate principal amount and the
principal amount of a Global Note without the Restricted Note Legend or IAI
Note Legend, as the case may be, shall be increased by an equal principal
amount.  If a Global Note without the
Restricted Note Legend is not then outstanding, the Company shall execute and
the Trustee, upon receipt of a Company Order, shall authenticate and deliver an
unlegended Global Note to the Depositary.

 

Any such shares of Common
Stock as to which such restrictions on transfer shall have expired in
accordance with their terms or as to which the conditions for removal of the
Restricted Common Stock Legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the Restricted Common Stock Legend
required by this Section 2.14.

 

(d)                                 By its acceptance of any Note bearing the
Restricted Note Legend or the IAI Note Legend, as the case may be, each Holder
of such a Note acknowledges the restrictions on transfer of such Note set forth
in this Indenture and in the Restricted Note Legend or the IAI Note Legend, as
the case may be, and agrees that it will transfer such Note only as provided in
this Indenture.

 

(e)                                  The Registrar shall retain copies of all
letters, notices and other written communications received pursuant to Section 2.13
or this Section 2.14.  The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time during normal hours of
operation of the Registrar upon the giving of reasonable notice to the
Registrar.

 

Section 2.15                                Record Date.  The record date for purposes of determining
the identity of Holders of the Notes entitled to vote or consent to any action
by vote or consent authorized or permitted under this Indenture shall be
determined as provided for in Section 316(c) of the Trust Indenture
Act.

 

ARTICLE 3.

 

PURCHASES
AND REDEMPTIONS

 

Section 3.01                                Purchase At the Option of the Holder Upon a
Fundamental Change.

 

(a)                                  If there shall have occurred a
Fundamental Change, each Holder shall have the right, at such Holder’s option,
to require the Company to purchase for Cash all or any portion of such Holder’s
Notes in integral multiples of $1,000 principal amount on a date selected by
the Company (the “Fundamental Change Purchase Date”), which Fundamental Change
Purchase Date shall be no later than 35 Trading Days after the occurrence of
such Fundamental Change, unless such 35 Trading Days would not provide Holders
with at least 20 Trading Days’ notice, in which event the Fundamental Change
Purchase Date shall be the day that provides the shortest period necessary to
provide 20 Trading Days’ notice, at a purchase price equal to the sum of (x) 100%
of

 

21

 

the principal amount of
the Notes to be purchased, plus (y) in the case of a Fundamental Change
set forth in clause (i), (ii), (iii) or (iv) below only, the
Make-Whole Amount, plus (z) accrued and unpaid interest to, but excluding,
the Fundamental Change Purchase Date (the “Fundamental Change Purchase Price”),
subject to satisfaction by or on behalf of the Holder of the requirements set
forth in Section 3.01(c); provided that if the Fundamental Change Purchase
Date is after a Regular Record Date and on or prior to the Interest Payment
Date to which it relates, interest accrued to the Interest Payment Date will be
paid to Holders of the Notes as of the preceding Regular Record Date. The
Company shall determine the Make-Whole Amount.

 

A “Fundamental Change”
shall be deemed to have occurred at such time as any of the following events
shall occur:

 

(i)                           any “person” or “group”, other than the
Company, its Subsidiaries or any employee benefits plan of the Company or its
Subsidiaries, files, or is required by applicable law to file, a Schedule 13D
or Schedule TO (or any successor schedule, form or report) pursuant to the
Exchange Act, disclosing that such person has become the direct or indirect
beneficial owner of shares with a majority of the total voting power of the
Company’s outstanding Voting Securities; unless such beneficial ownership
arises solely as a result of a revocable proxy delivered in response to a proxy
or consent solicitation made pursuant to the applicable rules and
regulations under the Exchange Act;

 

(ii)                        the Company consolidates with or merges
with or into another Person (other than a Subsidiary of the Company), or sells,
conveys, transfers, leases or otherwise disposes of all or substantially all of
the consolidated properties and assets of the Company and its Subsidiaries to
any Person (other than a Subsidiary of the Company) or any Person (other than a
Subsidiary of the Company) consolidates with or merges with or into the
Company, provided that none of the circumstances set forth in this clause (ii) will
be a Fundamental Change if Persons that beneficially own the Voting Securities
of the Company immediately prior to the transaction own, directly or
indirectly, shares with a majority of the total voting power of all outstanding
Voting Securities of the surviving or transferee person immediately after the
transaction in substantially the same proportion as their ownership of the
Company’s Voting Securities immediately prior to the transaction;

 

(iii)                     Continuing Directors cease to constitute at least a
majority of the Board of Directors;

 

(iv)                    the Company’s stockholders or Board of Directors
adopts a plan for the liquidation or dissolution of the Company; or

 

(v)                       upon the occurrence of a Termination of
Trading (other than in connection with an Unexpected Delisting).

 

For purposes of defining
a Fundamental Change:

 

(x)                                   the term “person” and the term “group”
have the meanings given by Section 13(d) and 14(d) of the
Exchange Act or any successor provisions;

 

22

 

(y)                                 the term “group” includes any group
acting for the purpose of acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(1) under the Exchange Act or any
successor provision; and

 

(z)                                   the term “beneficial owner” is determined
in accordance with Rules 13d-3 and 13d-5 under the Exchange Act or any
successor provisions.

 

(b)                                 As promptly as practicable following the
date the Company publicly announces the Fundamental Change transaction, but in
no event less than 20 Trading Days prior to the anticipated effective date of a
Fundamental Change in the case of a Fundamental Change within the control of
the Company or of which the Company has at least 30 Trading Days prior notice,
the Company shall mail a written notice of Fundamental Change by first-class
mail to the Trustee and to each Holder at their addresses shown in the register
of the Registrar (and to beneficial owners as required by applicable law).  The notice shall include a form of
Fundamental Change Purchase Notice to be completed by the Noteholder and shall
state:

 

(i)                                     briefly, the events causing such
Fundamental Change;

 

(ii)                                  the anticipated effective date of such
Fundamental Change;

 

(iii)                               the date by which the Fundamental Change
Purchase Notice pursuant to this Section 3.01 must be given;

 

(iv)                              the Fundamental Change Purchase Price;

 

(v)                                 the Fundamental Change Purchase Date;

 

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

 

(vii)                           the then-current Conversion Rate and any
adjustments thereto;

 

(viii)                        that Notes with respect to which a
Fundamental Change Purchase Notice has been given by the Holder may be
converted pursuant to Article 10 hereof only if the Fundamental Change
Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;

 

(ix)                                briefly, the procedures a Holder must
follow to exercise rights under this Section 3.01;

 

(x)                                   that Notes must be surrendered to the
Paying Agent to collect payment of the Fundamental Change Purchase Price;

 

(xi)                                that the Fundamental Change Purchase
Price for any Note as to which a Fundamental Change Purchase Notice has been
duly given and not withdrawn, together with any accrued interest payable with
respect thereto, will be paid on or prior to the third Trading Day following
the later of the Fundamental Change Purchase Date and the time of surrender of
such Note;

 

23

 

(xii)                             briefly, the conversion rights of the
Notes;

 

(xiii)                          the procedures for withdrawing a
Fundamental Change Purchase Notice;

 

(xiv)                         that, unless the Company defaults in
making payment of such Fundamental Change Purchase Price and interest due, if
any, interest on Notes surrendered for purchase will cease to accrue on and
after the Fundamental Change Purchase Date; and

 

(xv)                            the CUSIP number of the Notes.

 

(c)                                                         A Holder may exercise its rights
specified in Section 3.01(a) by delivery of a written notice of
purchase (a “Fundamental Change Purchase Notice”) to the Paying Agent at any
time prior to the Close of Business on the Fundamental Change Purchase Date,
stating:

 

(i)                                     the certificate number of the Note which
the Holder will deliver to be purchased, if Certificated Notes have been
issued, or notice compliant with the relevant DTC procedures if the Notes are
not certificated;

 

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

 

(iii)                               that such Note shall be purchased
pursuant to the terms and conditions specified in this Section 3.01.

 

The delivery of such Note
to the Paying Agent prior to, on or after the Fundamental Change Purchase Date
(together with all necessary endorsements) at the offices of the Paying Agent
shall be a condition to the receipt by the Holder of the Fundamental Change
Purchase Price therefor; provided, however, that such Fundamental Change
Purchase Price shall be so paid pursuant to this Section 3.01 only if the
Note so delivered to the Paying Agent shall conform in all respects to the
description thereof set forth in the related Fundamental Change Purchase
Notice.

 

The Company shall
purchase from the Holder thereof, pursuant to this Section 3.01, a portion
of a Note if the principal amount of such portion is $1,000 or an integral
multiple of $1,000.  Provisions of this
Indenture that apply to the purchase of all of a Note also apply to the
purchase of such portion of such Note.

 

Any purchase by the
Company contemplated pursuant to the provisions of this Section 3.01 shall
be consummated by the delivery of the consideration to be received by the
Holder (together with accrued and unpaid interest) on or prior to the third
Business Day following the later of the Fundamental Change Purchase Date and
the time of delivery of the Note to the Paying Agent in accordance with this Section 3.01.

 

Notwithstanding anything
herein to the contrary, any Holder delivering to the Paying Agent the
Fundamental Change Purchase Notice contemplated by this Section 3.01(c) shall
have the right to withdraw such Fundamental Change Purchase Notice at any time
prior to the Close of Business on the Fundamental Change Purchase Date by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 3.02.

 

24

 

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

 

There shall be no
purchase of any Notes pursuant to this Section 3.01 if there has occurred
(prior to, on or after, as the case may be, the giving, by the Holders of such
Notes, of the required Fundamental Change Purchase Notice) and is continuing an
Event of Default (other than a default in the payment of the Fundamental Change
Purchase Price).  The Paying Agent will
promptly return to the respective Holders thereof any Notes (x) with
respect to which a Fundamental Change Purchase Notice 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 in the payment of the Fundamental
Change Purchase Price) in which case, upon such return, the Fundamental Change
Purchase Notice with respect thereto shall be deemed to have been withdrawn.

 

Section 3.02                                Effect of Fundamental Change Purchase Notice.

 

(a)                                  Upon receipt by the Paying Agent of the
Fundamental Change Purchase Notice specified in Section 3.01(c), the
Holder of the Note in respect of which such Fundamental Change Purchase Notice
was given shall (unless such Fundamental Change Purchase Notice is withdrawn as
specified in the following two paragraphs) thereafter be entitled to receive
solely the Fundamental Change Purchase Price, with respect to such Note.  Such Fundamental Change Purchase Price shall
be paid to such Holder, subject to receipt of funds by the Paying Agent, on or
prior to the third Business Day following the later of (x) the Fundamental
Change Purchase Date, with respect to such Note (provided the conditions in Section 3.01(c) have
been satisfied) and (y) the time of delivery of such Note to the Paying
Agent by the Holder thereof in the manner required by Section 3.01(c).  Notes in respect of which a Fundamental
Change Purchase Notice has been given by the Holder thereof may not be
converted pursuant to Article 10 hereof on or after the date of the
delivery of such Fundamental Change Purchase Notice unless such Fundamental
Change Purchase Notice has first been validly withdrawn as specified in the
following two paragraphs.

 

(b)                                 A Fundamental Change Purchase Notice may
be withdrawn by means of a written notice of withdrawal delivered to the office
of the Paying Agent in accordance with the Fundamental Change Purchase Notice
at any time prior to the Close of Business on the Fundamental Change Purchase
Date specifying:

 

(i)                       the certificate number of the Note which
the Holder will deliver to be purchased, if Certificated Notes have been
issued, or notice compliant with the relevant DTC procedures, if the Notes are
not certificated,

 

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

 

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

 

A written notice of
withdrawal of a Fundamental Change Purchase Notice may be in the form set forth
in the preceding paragraph.

 

25

 

Section 3.03                                Deposit of Fundamental Change Purchase Price. 
Prior to 10:00 a.m. (New York City time) on or prior to the third
Business Day following the Fundamental Change Purchase Date, the Company shall
deposit with the Trustee or with the Paying Agent (or, if the Company or a
Subsidiary or an Affiliate of either of them is acting as the Paying Agent,
shall segregate and hold in trust as provided in Section 2.04) an amount
of money (in immediately available funds if deposited on such Trading Day)
sufficient to pay the aggregate Fundamental Change Purchase Price of all the Notes
or portions thereof which are to be purchased as of the Fundamental Change
Purchase Date.

 

If the Trustee or the
Paying Agent holds money sufficient to pay the Fundamental Change Purchase
Price of a Note on the third Business Day following the Fundamental Change
Purchase Date in accordance with the terms hereof, then, immediately after the
Fundamental Change Purchase Date, interest on such Note will cease to accrue,
whether or not the Note is delivered to the Trustee or the Paying Agent, and
all other rights of the holder shall terminate, other than the right to receive
the Fundamental Change Purchase Price upon delivery of the Note.

 

Section 3.04                                Right of Redemption.

 

(a)                                  Subject to Section 3.04(c), (d) and
(e), the Company shall have the right, at the Company’s option, during the
period beginning on November    , 2011 and ending on May    ,
2014, at any time during such period, and from time to time during such period,
to redeem all or any part of the Notes at a price payable in Cash equal to the
Redemption Price plus accrued and unpaid interest, if any, to, but excluding,
the Redemption Date in the event that the Closing Price for each of 20 or more
Trading Days in a period of 30 consecutive Trading Days ending on the day prior
to mailing of a notice of redemption to Holders of the Notes in accordance with
Section 3.07 shall have exceeded 300% of the applicable Conversion Price,
provided, however, that the Company shall have made at least five scheduled
semi-annual interest payments (including the interest payments on November    ,
2011) in the full amount required by this Indenture with respect to the Notes
prior to redeeming any Notes pursuant to this Section 3.04(a).

 

(b)                                 Subject to Section 3.04(c), (d) and
(e), the Company shall have the right, at the Company’s option, after May    ,
2014, at any time, and from time to time, to redeem all or any part of Notes at
a price payable in Cash equal to the Redemption Price plus accrued and unpaid
interest, if any, to, but excluding, the Redemption Date.

 

(c)                                  In no event shall any Redemption Date be
a Legal Holiday. Furthermore, if the Redemption Date with respect to a Note is
after the close of business on a record date for the payment of an installment
of interest and on or before the related interest payment date, then accrued
and unpaid interest to, but excluding, such interest payment date shall be
paid, on such interest payment date, to the Holder of record of such Note
(without any surrender of such Note by such Holder) at the close of business on
such record date, and the Holder surrendering such Note for redemption shall
receive only the Redemption Price and shall not be entitled to any such
interest unless such Holder was also the Holder of record of such Note at the
close of business on such record date.

 

(d)                                 The Company shall not have the right to
redeem any Note pursuant to this Section 3.04 unless at the time of the
mailing of the applicable redemption notice either (x) the shelf
registration statement referred to in Section 2.2 of the Registration
Rights Agreement is effective and

 

26

 

available for resales of
the Common Stock issuable upon conversion of the Notes or (y) the shares
of Common Stock into which the Notes are convertible into may be sold by all Holders
and Beneficial Owners of the Notes under Rule 144 under the Securities Act
without volume or other limitation. 
Notwithstanding anything contained in the Registration Rights Agreement
to the contrary, the Company also agrees to keep such shelf registration
statement effective and available for resales of the Common Stock contemplated
thereby without limitation until and including the Redemption Date specified in
such redemption notice.

 

(e)                                  Notes in denominations larger than $1,000
principal amount may be redeemed pursuant to this Section 3.04 in part but
only in integral multiples of $1,000 principal amount.

 

Section 3.05                                Notices to Trustee.  If the
Company elects to redeem Notes pursuant to Section 3.04 and paragraph 7 of
the Notes, it shall notify the Trustee of the Redemption Date, the applicable
provision of this Indenture pursuant to which the redemption is to be made and
the aggregate principal amount of Notes to be redeemed, which notice shall be
provided to the Trustee by the Company at least 15 days prior to the mailing,
in accordance with Section 3.07, of the notice of redemption (unless a
shorter notice period shall be satisfactory to the Trustee).

 

Section 3.06                                Selection of Notes to be Redeemed. 
If the Company has elected to redeem less than all the Notes pursuant to
Section 3.04 and paragraph 7 of the Notes, the Trustee shall, within five
Business Days after receiving the notice specified in Section 3.05, select
the Notes to be redeemed by lot, on a pro rata basis
or in accordance with any other method the Trustee considers fair and
appropriate.  The Trustee shall make such
selection from Notes then outstanding and not already to be redeemed by virtue
of having been previously called for redemption.  The Trustee may select for redemption portions
of the principal amount of Notes that have denominations larger than $1,000
principal amount.  Notes and portions of
them the Trustee selects for redemption shall be in amounts of $1,000 principal
amount or integral multiples of $1,000 principal amount.  The Trustee shall promptly notify the Company
in writing of the Notes selected for redemption and the principal amount
thereof to be redeemed.

 

The
Registrar need not register the transfer of or exchange any Notes that have
been selected for redemption, except the unredeemed portion of the Notes being
redeemed in part.  As provided in Section 2.06,
the Registrar need not register the transfer of or exchange any Security for a
period of 20 days before selecting, pursuant to this Section 3.06, Notes
to be redeemed.

 

Section 3.07                                Notice of Redemption.  (A) At
least 20 Business Days but not more than 30 Business Days before a Redemption
Date with respect to a redemption pursuant to Section 3.04(a) and (B) at
least 30 days but not more than 60 days before a Redemption Date with respect
to a redemption pursuant to Section 3.04(b), the Company shall mail, or
cause to be mailed, by first-class mail a notice of redemption to each Holder
whose Notes are to be redeemed, at the address of such Holder appearing in the
security register.

 

The
notice shall identify the Notes and the aggregate principal amount thereof to
be redeemed pursuant to the redemption and shall state:

 

(i)                                     the Redemption Date;

 

27

 

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

 

(iii)                               the Conversion Rate;

 

(iv)                              the names and addresses of the Paying
Agent and the Conversion Agent;

 

(v)                                 that the right to convert the Notes called
for Redemption will terminate at the close of business on the Business Day
immediately preceding the Redemption Date, unless there shall be a Default in
the payment of the Redemption Price or accrued and unpaid interest, if any,
payable as provided in this Indenture upon redemption;

 

(vi)                              that Holders who want to convert Notes
into shares of Common Stock or shares of Junior Convertible Preferred Stock
must satisfy the requirements of Article 10;

 

(vii)                           the paragraph of the Notes pursuant to
which the Notes are to be redeemed;

 

(viii)                        that Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price plus, if
applicable, accrued and unpaid interest, if any, payable as herein provided
upon redemption;

 

(ix)                                that, unless there shall be a Default in
the payment of the Redemption Price or accrued and unpaid interest, if any,
payable as herein provided upon redemption (including, where the Redemption
Date is after a record date for the payment of an installment of interest and
on or before the related interest payment date, the payment, on such interest
payment date, of accrued and unpaid interest to, but excluding, such interest
payment date to the Holder of record at the close of business on such record
date), interest on Notes called for redemption ceases to accrue on and after
the Redemption Date, except as otherwise provided herein, and all rights of the
Holders of such Notes shall terminate on and after the Redemption Date, other
than the right to receive, upon surrender of such Notes and in accordance with
this Indenture, the amounts due hereunder on such Notes upon redemption (and
the rights of the Holder(s) of record of such Notes to receive, on the
applicable interest payment date, accrued and unpaid interest in accordance
herewith in the event the Redemption Date is after a record date for the
payment of an installment of interest and on or before the related interest
payment date); and

 

(x)                                   the CUSIP number or numbers, as the case
may be, of the Notes.

 

The
right, pursuant to Article 10, to convert Notes called for redemption
shall terminate at the close of business on the Business Day immediately
preceding the Redemption Date, unless there shall be a Default in the payment
of the Redemption Price or accrued and unpaid interest, if any, payable as
herein provided upon redemption.

 

28

 

At the
Company’s request, upon 5 days’ notice prior to the date of delivery of the
notice of redemption, the Trustee shall mail the notice of redemption in the
Company’s name and at the Company’s expense; provided, however, that the form
and content of such notice shall be prepared by the Company.

 

Section 3.08                                Effect of Notice of Redemption. 
Once notice of redemption is mailed, Notes called for redemption become
due and payable on the Redemption Date at the specified Redemption Price
(together with accrued and unpaid interest, if any, payable as provided herein)
and, on and after such Redemption Date (unless there shall be a Default in the
payment of such consideration), except as otherwise provided herein, such Notes
shall cease to bear interest, and all rights of the Holders of such Notes shall
terminate, other than the right to receive such consideration upon surrender of
such Notes to the Paying Agent.

 

If any
Note shall not be fully and duly paid in accordance herewith upon redemption,
the principal of, and accrued and unpaid interest on, such Note shall, until
paid, bear interest at the rate borne by such Note on the principal amount of such
Note, and such Note shall continue to be convertible pursuant to Article 10.

 

Notwithstanding
anything herein to the contrary, there shall be no purchase of any Note
pursuant to a redemption if there has occurred (prior to, on or after, as the
case may be, the mailing of the notice of redemption specified in Section 3.07)
and is continuing an Event of Default (other than a Default in the payment of
the consideration payable as herein provided upon redemption).  The Paying Agent will promptly return to the
respective Holders thereof any Notes held by it during the continuance of such
an Event of Default.

 

Section 3.09                                Deposit of Redemption Price. 
Prior to 11:00 a.m. (New York City time) on or prior to the
Business Day prior to the Redemption Date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an
Affiliate of either of them is acting as the Paying Agent, shall segregate and
hold in trust as provided in Section 2.04) an amount of money (in immediately
available funds if deposited on such Business Day) sufficient to pay the
consideration payable as herein provided upon redemption with respect to all
Notes to be redeemed on that date.  The
Paying Agent shall return to the Company, as soon as practicable, any money not
required for that purpose.

 

Section 3.10                                Purchase of Notes at Option of the Holder.

 

(a)                                  At the option of the Holder thereof,
Notes (or portions thereof that are integral multiples of $1,000 in principal
amount) shall be purchased by the Company pursuant to this Section 3.10
and paragraph 9 of the Notes on May    , 2014, May    ,
2015, May    , 2016, May    , 2017 and May    ,
2018 (each, an “Option Purchase Date”), at a purchase price, payable in Cash,
equal to 100% of the principal amount of the Notes (or such portions thereof)
to be so purchased (the “Option Purchase Price”), plus accrued and unpaid
interest, if any, to, but excluding, the applicable Option Purchase Date
(provided, that if such Option Purchase Date is after the close of business on
a record date for the payment of an installment of interest and on or before
the related interest payment date, then such accrued and unpaid interest shall
be paid, on such interest payment date, to the Holder of record of such Notes
(without any surrender of such Notes by such Holder) at the close of

 

29

 

business on such record date and the Holder
surrendering such Note for repurchase shall receive only the Option Purchase
Price and shall not be entitled to any such interest unless such Holder was
also the Holder of record of such Note at the close of business on such record
date), upon:

 

(i)                                     delivery to the Company (if it is acting
as its own Paying Agent), or to a Paying Agent designated by the Company for
such purpose in the Option Purchase Notice, by such Holder, at any time from
the opening of business on the date that is 20 Business Days prior to the
applicable Option Purchase Date until the close of business on the Business Day
immediately preceding the applicable Option Purchase Date, of an Option
Purchase Notice, in the form set forth in the Notes or any other form of
written notice substantially similar thereto, in each case, duly completed and
signed, with appropriate signature guarantee, stating:

 

(A)                              the certificate number of the Note which
the Holder will deliver to be purchased, if Certificated Notes have been
issued, or notice compliant with relevant DTC procedures if the Notes are not
certificated;

 

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

 

(C)                                that such Note shall be purchased
pursuant to the terms and conditions specified in Section 3.10 of this
Indenture; and

 

(D)                               that the Beneficial Owner of the Notes
attempted in good faith to obtain the price quotes referred to in clause (i) of
the definition of Fair Market Value and the Fair Market Value was equal to or
less than 110% of the sum of (x) the Option Purchase Price plus (y) accrued
and unpaid interest, if any, on the Notes subject to redemption pursuant to
this Section 3.10; and

 

(ii)                                  delivery to the Company (if it is acting
as its own Paying Agent), or to a Paying Agent designated by the Company for
such purpose in the Option Purchase Notice, at any time after delivery of such
Option Purchase Notice, of such Notes (together with all necessary
endorsements), such delivery being a condition to receipt by the Holder of the
Option Purchase Price therefor plus accrued and unpaid interest, if any,
payable as herein provided upon Purchase at Holder’s Option (provided, however,
that the Holder of record of such Notes on the record date immediately
preceding such Option Purchase Date need not surrender such Notes in order to
be entitled to receive, on the Option Purchase Date, the accrued and unpaid
interest due thereon).

 

If
such Notes are held in book-entry form through the Depositary, the Option
Purchase Notice shall comply with applicable procedures of the Depositary.

 

Notwithstanding
anything herein to the contrary, any Holder that has delivered the Option
Purchase Notice contemplated by this Section 3.10(a) to the Company
(if it is acting as its own Paying Agent) or to a Paying Agent designated by
the Company for such purpose in the Option Purchase Notice shall have the right
to withdraw such Option Purchase Notice by delivery, at any

 

30

 

time prior to the close of business on the Business
Day immediately preceding the applicable Option Purchase Date, of a written
notice of withdrawal to the Company (if acting as its own Paying Agent) or the
Paying Agent, which notice shall contain the information specified in Section 3.10(b)(viii).

 

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

 

(b)                                 The Company shall give notice (the “Option
Purchase Notice”) on a date not more than 60 days nor less than 30 days prior
to each Option Purchase Date to each Holder at its address shown in the
register of the Registrar and to each beneficial owner as required by
applicable law.  Such notice shall state:

 

(i)                                     the Option Purchase Price plus accrued
and unpaid interest, if any, to, but excluding, such Option Purchase Date and
the Conversion Rate;

 

(ii)                                  the Conversion Rate then applicable to
the Notes;

 

(iii)                               the names and addresses of the Paying
Agent and the Conversion Agent;

 

(iv)                              that Notes with respect to which a
Purchase Notice is given by a Holder may be converted pursuant to Article 10,
if otherwise convertible in accordance with Article 10, only if such
Purchase Notice has been withdrawn in accordance with this Section 3.10 or
if there shall be a Default in the payment of such Option Purchase Price or in
accrued and unpaid interest, if any, payable as herein provided upon Purchase
at Holder’s Option;

 

(v)                                 that Notes (together with any necessary
endorsements) must be surrendered to the Paying Agent to collect payment of the
Option Purchase Price plus (if such Holder was the Holder of record of the
applicable Note at the close of business on the record date immediately
preceding the Option Purchase Date) accrued and unpaid interest, if any,
payable as herein provided upon Purchase at Holder’s Option;

 

(vi)                              that the Option Purchase Price, plus
accrued and unpaid interest, if any, to, but excluding, such Option Purchase
Date, for any Note as to which a Purchase Notice has been given and not
withdrawn will be paid as promptly as practicable, but in no event later than
such Option Purchase Date or the time of delivery of the Note as described in
clause (v) above; provided, however, that such accrued and unpaid interest
shall be paid, on the applicable interest payment date, to the Holder of record
of such Note at the close of business on the record date immediately preceding
such Option Purchase Date;

 

(vii)                           the procedures the Holder must follow to
exercise rights under this Section 3.10 (including the name and address of
the Paying Agent) and a brief description of those rights;

 

31

 

(viii)        that a Holder will be
entitled to withdraw its election in the Purchase Notice if the Company (if
acting as its own Paying Agent) or the Paying Agent receives, at any time prior
to the close of business on the Business Day immediately preceding the
applicable Option Purchase Date, or such longer period as may be required by
law, a letter, telegram or facsimile transmission (with confirmation of good
transmission thereof) setting forth (I) the name of such Holder, (II) a
statement that such Holder is withdrawing its election to have Notes purchased
by the Company on such Option Purchase Date pursuant to a Purchase at Holder’s
Option, (III) the certificate number(s) of such Notes to be so
withdrawn, if such Notes are in certificated form, (IV) the principal
amount of the Notes of such Holder to be so withdrawn, which amount must be
$1,000 or an integral multiple thereof and (V) the principal amount, if
any, of the Notes of such Holder that remain subject to the Purchase Notice
delivered by such Holder in accordance with this Section 3.10, which
amount must be $1,000 or an integral multiple thereof;

 

(ix)           that on and after the
applicable Option Purchase Date (unless there shall be a Default in the payment
of the consideration payable as herein provided upon a Purchase at Holder’s
Option), interest on Notes subject to Purchase at Holder’s Option will cease to
accrue, and all rights of the Holders of such Notes shall terminate, other than
the right to receive, in accordance herewith, the consideration payable as
herein provided upon a Purchase at Holder’s Option; and

 

(x)            the CUSIP number or
numbers, as the case may be, of the Notes; and

 

(xi)           the names and
telephonic contact information for no more than three registered broker-dealers
affiliated with a reputable, nationally recognized brokerage house
(collectively, the “Brokers”).

 

At the
Company’s request, upon 5 days’ notice prior to the date of delivery of the
notice of redemption, the Trustee shall mail such Option Purchase Notice in the
Company’s name and at the Company’s expense; provided, however, that the form
and content of such Option Purchase Notice shall be prepared by the Company.

 

No
failure of the Company to give an Option Purchase Notice shall limit any Holder’s
right pursuant hereto to exercise its rights to require the Company to purchase
such Holder’s Notes pursuant to a Purchase at Holder’s Option.

 

(c)           Subject to the
provisions of this Section 3.10, the Company shall pay, or cause to be
paid, the Option Purchase Price, plus accrued and unpaid interest, if any, to,
but excluding, the applicable Option Purchase Date, with respect to each Note
subject to Purchase at Holder’s Option to the Holder thereof as promptly as
practicable, but in no event later than the applicable Option Purchase Date and
the time such Note (together with all necessary endorsements) is surrendered to
the Paying Agent; provided, however, that such accrued and unpaid interest
shall be paid, on the applicable interest payment date, to the Holder of record
of such Note at the close of business on the record date immediately preceding
such Option Purchase Date.

 

32

 

(d)           Prior to 11:00 a.m.
(New York City time) on or prior to the Business Day prior to the applicable
Option Purchase Date, the Company shall deposit with the Trustee or with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided for in Section 2.04) an amount of money in immediately available
funds if deposited on such Business Day sufficient to pay the Option Purchase
Price, plus accrued and unpaid interest, if any, to, but excluding, such Option
Purchase Date, with respect to all of the Notes that are to be purchased by the
Company on such Option Purchase Date pursuant to a Purchase at Holder’s
Option.  The Paying Agent shall return to
the Company, as soon as practicable, any money not required for that purpose.

 

(e)           Once the Purchase
Notice has been duly delivered in accordance with this Section 3.10, the
Notes to be purchased pursuant to the Purchase at Holder’s Option shall, on the
applicable Option Purchase Date, become due and payable in accordance herewith,
and, on and after such date (unless there shall be a Default in the payment of
the consideration payable as herein provided upon a Purchase at Holder’s
Option), such Notes shall cease to bear interest, and all rights of the Holders
of such Notes shall terminate, other than the right to receive, in accordance
herewith, the Option Purchase Price (together with accrued and unpaid interest,
if any, payable as provided herein).

 

(f)            Notes with respect to
which a Purchase Notice has been duly delivered in accordance with this Section 3.10
may be converted pursuant to Article 10, if otherwise convertible in
accordance with Article 10, only if such Purchase Notice has been
withdrawn in accordance with this Section 3.10 or if there shall be a
Default in the payment of the consideration payable as herein provided upon a
Purchase at Holder’s Option.

 

(g)           If any Note subject to
Purchase at Holder’s Option shall not be paid in accordance herewith, the
principal of, and accrued and unpaid interest on, such Note shall, until paid,
bear interest, payable in cash, at the rate borne by such Note on the principal
amount of such Note, and such Note shall continue to be convertible pursuant to
Article 10.

 

(h)           Any Note which is to be
submitted for Purchase at Holder’s Option only in part shall be delivered
pursuant to this Section 3.10 (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 its attorney duly authorized in writing, with a medallion
guarantee), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the Holder of such Security without service
charge, a new Note or Notes, of any authorized denomination as requested by
such Holder, of the same tenor and in aggregate principal amount equal to the
portion of such Note not submitted for Purchase at Holder’s Option.

 

Section 3.11           Notes
Purchased or Redeemed In Part.  Any
Note which is to be purchased or redeemed 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 shall authenticate and deliver to the Holder of
such Note, without service charge, a new Note or Note, of 

 

33

 

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 Note so surrendered that is not purchased or
redeemed.  If any Note selected for
partial redemption is converted in part, the principal amount of such Note
subject to redemption shall be reduced by the principal amount of the Note that
is converted.

 

Section 3.12           Covenant
To Comply With Securities Laws Upon Repurchase of Notes.  When complying with the provisions of Section 3.01
or Section 3.10 (provided, that such offer or purchase constitutes an “issuer
tender offer” for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act at the time of
such offer or purchase), and subject to any exemptions available under
applicable law, the Company shall:

 

(a)           comply with Rule 13e-4
and Rule 14e-1 (or any successor provision) under the Exchange Act, as
applicable;

 

(b)           file the related
Schedule TO (or any successor schedule, form or report) if required under
the Exchange Act, as applicable;

 

(c)           otherwise comply with
all federal and state securities laws so as to permit the rights and
obligations under Sections 3.01 and 3.10 to be exercised in the time and
in the manner specified therein.

 

To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of Sections 3.01 and 3.10, the Company’s compliance with such laws and
regulations shall not in and of itself cause a breach of its obligations under
Sections 3.01 and 3.10.

 

ARTICLE 4.

 

COVENANTS

 

Section 4.01           Payment
of Notes.

 

(a)           The Company agrees to
pay the principal of and interest on the Notes on the dates and in the manner
provided in the Notes and the Indenture. 
Not later than 11:00 a.m. (New York City time) on the due date of
any principal of or interest on any Notes, or any purchase price of the Notes,
the Company will deposit with the Trustee (or Paying Agent) money in
immediately available funds sufficient to pay such amounts, provided that if
the Company or any Affiliate of the Company is acting as Paying Agent, it will,
on or before each due date, segregate and hold in a separate trust fund for the
benefit of the Holders a sum of money sufficient to pay such amounts until paid
to such Holders or otherwise disposed of as provided in the Indenture.  In each case the Company will promptly notify
the Trustee of its compliance with this paragraph.

 

(b)           An installment of
principal or interest will be considered paid on the date due if the Trustee
(or Paying Agent, other than the Company or any Affiliate of the Company) holds
on that date money designated for and sufficient to pay the installment.  If the Company or any Affiliate of the Company
acts as Paying Agent, an installment of principal or interest will be
considered paid on the due date only if paid to the Holders.

 

34

 

(c)           The Company agrees to
pay interest on overdue principal, and, to the extent lawful, overdue installments
of interest at the rate per annum specified in the Notes plus 2%.

 

(d)           Payments in respect of
the Notes represented by the Global Notes are to be made by wire transfer of
immediately available funds to the accounts specified by the Holders of the
Global Notes.  With respect to
Certificated Notes, the Company will make all payments by wire transfer of
immediately available funds to the accounts specified by the Holders thereof
or, if no such account is specified, by mailing a check to each Holder’s registered
address.

 

Section 4.02           Maintenance
of Office or Agency.  The Company
will maintain in the United States, an office or agency where Notes may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Notes and the Indenture may be served. 
The Company hereby initially designates the Corporate Trust Office of
the Trustee as such office of the Company. 
The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency.  If at any time the Company fails to maintain
any such required office or agency or fails to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served to the Trustee.

 

The Company may also from
time to time designate one or more other offices or agencies where the Notes
may be surrendered or presented for any of such purposes and may from time to
time rescind such designations.  The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

 

Section 4.03           Existence.  The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence
and the material rights and franchises of the Company, except in the case of
such rights and franchises, where the failure to do so would not have a
material adverse effect on the business of the Company and its subsidiaries,
taken as a whole, or the Company has otherwise determined that it is not in the
best interest of the Company to do so; and provided, further, that this Section does
not prohibit any transaction otherwise permitted by Section 5.01.

 

Section 4.04           Rule 144A
Information and Annual Reports.

 

(a)           At any time the Company
is not subject to Sections 13 or 15(d) of the Exchange Act, the
Company shall, so long as any of the Notes or any shares of Common Stock
issuable upon conversion thereof shall, at such time, constitute “restricted
securities” within the meaning of Rule 144(a)(3) under the Securities
Act, promptly provide to the Trustee and shall, upon written request, provide
to any Noteholder, beneficial owner or prospective purchaser of Notes or any
shares of Common Stock issued upon conversion of any Notes, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act to permit the resale of such Notes or shares of Common Stock
pursuant to Rule 144A under the Securities Act.

 

(b)           The Company shall
deliver to the Trustee copies of the Company’s annual reports (which shall
contain audited financial statements of the Company), and quarterly and current
reports and of the other information and documents (or copies of such portions
of any of the foregoing as the Commission may by rules and regulations
prescribe) that the Company is required

 

35

 

to file with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act at the time the Company is
required to file such annual, quarterly and current reports and other
information and documents; provided that any such annual, quarterly and current
reports, other information or documents required to be filed with the
Commission shall be deemed delivered to the Trustee at the same time the same
is filed with the Commission. Until such time as the Indenture has been
qualified under the TIA, the Company shall be deemed to have complied with the previous
sentence to the extent that the Company shall have filed or furnished such
annual, quarterly and current reports or other information and documents to the
Commission via EDGAR (or any successor electronic delivery procedure).  In the event the Company is at any time no
longer subject to the reporting requirements of Section 13 or Section 15(d) of
the Exchange Act, the Company shall continue to provide the Trustee and, upon
written request, to each Noteholder, annual, quarterly and current reports or other
information and documents containing substantially the same information as
would have been required to be filed with the Commission had the Company
continued to have been subject to such reporting requirements.  In such event, such annual, quarterly and
current reports shall be provided at the times the Company would have been
required to provide the applicable report had it continued to have been subject
to such reporting requirements.  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 the Officers’ Certificates).

 

Section 4.05           Reports
to Trustee.

 

(a)           The Company will
deliver to the Trustee within 120 days after the end of each fiscal year a
certificate from the principal executive, financial or accounting officer of
the Company stating that the officer has conducted or supervised a review of
the activities of the Company and its Subsidiaries and their performance under
the Indenture and that, based upon such review, the Company has fulfilled its
obligations hereunder or, if there has been a Default, specifying the Default
and its nature and status.

 

(b)           The Company will
deliver to the Trustee, as soon as possible and in any event within 30 days
after the Company becomes aware or should reasonably become aware of the
occurrence of a Default, an Officers’ Certificate setting forth the details of
the Default, and the action which the Company proposes to take with respect
thereto.

 

Section 4.06           Stay,
Extension and Usury Laws.  The
Company covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (in each case, to the extent
that it may lawfully do so) hereby covenants that it will not, by resort to any
such law to the extent it would hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.

 

Section 4.07           Incurrence
of Debt.  The Company will not and
will not permit any of its Subsidiaries to incur, create, assume, guarantee or
otherwise become liable for any Indebtedness (an 

 

36

 

“incurrence”; provided that accretion or amortization
of original issue discount shall not constitute an incurrence) unless after
giving effect to such incurrence the outstanding consolidated Indebtedness of
the Company and its Subsidiaries does not exceed the Permitted Indebtedness
Amount.

 

Section 4.08           Limitations
on Liens.  The Company will not and
will not permit any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien of any kind, other than Permitted Liens, upon any of their
respective assets now owned or acquired on or after the Issue Date or upon any
income or profits therefrom.

 

Section 4.09           Limitation
on Unlisting of Common Stock.  Except
in connection with an Unexpected Delisting, the Company will not permit its
Common Stock to be unlisted for trading on the NASDAQ Global Market or another
Exchange for trading for a period in excess of 10 consecutive Business Days
(other than solely due to failure to comply with Nasdaq Marketplace Rule 4310(c)(4)).

 

Section 4.10           Limitation
on Modifying Junior Convertible Preferred Stock.  The Company will not permit any amendment or
other modification of the terms of the Junior Convertible Preferred Stock in a
manner adverse to the Holders of the Notes without the consent of Holders of a
majority in principal amount of the Notes.

 

ARTICLE 5.

 

CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS

 

Section 5.01           Consolidation,
Merger, Sale or Lease of Assets by the Company.

 

(a)           The Company, without
the consent of the Holders of any of the outstanding Notes, may not

 

(i)         consolidate with or merge
with or into any Person, or

 

(ii)        sell, convey, transfer, or
otherwise dispose of or lease all or substantially all of the consolidated
assets of the Company and its Subsidiaries as an entirety or substantially an
entirety, in one transaction or a series of related transactions, to any
Person;

 

unless

 

(A)          either (x) the
Company is the continuing Person or (y) the resulting, surviving or
transferee Person is a corporation, partnership, limited liability company or
trust organized and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of the Company under the
Indenture and the Notes and the Registration Rights Agreement;

 

(B)           immediately after
giving effect to the transaction, no Event of Default and no Default has
occurred and is continuing; and

 

37

 

(C)           the Company delivers to
the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating
that the consolidation, merger, transfer or lease and the supplemental
indenture (if any) comply with the Indenture;

 

provided, however, that in the event of a
consolidation or merger of a wholly-owned subsidiary of the Company with and
into the Company, the Company shall not be required to deliver such certificate
or opinion.

 

(b)           Upon the consummation
of any transaction effected in accordance with these provisions, if the Company
is not the continuing Person, the resulting, surviving or transferee Person
will succeed to, and be substituted for, and may exercise every right and power
of, the Company under the Indenture and the Notes with the same effect as if
such successor Person had been named as the Company in the Indenture.  Upon such substitution, except in the case of
a lease, unless the successor is one or more of the Company’s Subsidiaries, the
Company will be released from its obligations under the Indenture and the
Notes.

 

ARTICLE 6.

 

DEFAULT AND REMEDIES

 

Section 6.01           Events
of Default.  An “Event of Default”
occurs with respect to the Notes if:

 

(a)           the Company defaults in
the payment of the principal of any Note, or any Fundamental Change Purchase
Price when the same becomes due and payable on the Maturity Date, on the
Fundamental Change Purchase Date, upon acceleration, or otherwise;

 

(b)           the Company fails to
provide the notice required by Section 3.01(b) or 3.10(b) on a
timely basis;

 

(c)           the Company defaults in
the payment of interest on any Note when the same becomes due and payable, and
the default continues for a period of 30 days;

 

(d)           the Company fails to
deliver all cash and any shares of Common Stock when such cash and Common
Stock, if any, are required to be delivered upon conversion of a Note and the
Company does not remedy such default within 10 days;

 

(e)           the Company fails to
comply with any other covenant or agreement of the Company in the Indenture,
the Notes, the Registration Rights Agreement or the Purchase Agreement and the
default or breach continues for a period of 60 consecutive days (or 120
consecutive days in the case of a failure to comply with Section 4.04
(giving effect to any grace period provided by Rule 12b-25 under the
Exchange Act)) after receipt of written notice to the Company by the Trustee or
to the Company and the Trustee by the Holders of 25% or more in aggregate
principal amount of the Notes then outstanding.

 

(f)            (i) the failure
by the Company or any Subsidiary to make any payment by the end of any
applicable grace period after maturity of any principal with respect to
Indebtedness, where the amount of such unpaid and due principal is in an
aggregate amount in excess of $10,000,000, or (ii) there is an
acceleration of any principal with respect to Indebtedness where the 

 

38

 

amount of such accelerated principal is in an amount
in excess of $10,000,000 because of a default with respect to such
Indebtedness; in any such case of (i) or (ii), without such Indebtedness
having been paid or discharged or such acceleration having been cured, waived,
rescinded or annulled within a period of 30 days after written notice to the
Company by the Trustee or to the Company and the Trustee by the Holders of not
less than 25% in aggregate principal amount of the Notes then outstanding;
provided, however, if any such failure or acceleration referred to in (i) or
(ii) above shall cease or be cured, waived, rescinded or annulled, then
the Event of Default by reason thereof shall be deemed not to have occurred and
any acceleration hereunder as a result of the related Event of Default shall be
automatically rescinded;

 

(g)           the failure by the
Company or any Subsidiary to pay any judgment in excess of $10,000,00, which
judgments are not paid, discharged or stayed for a period of 30 consecutive
days;

 

(h)           the Company or any
Subsidiary, pursuant to or under or within the meaning of any Bankruptcy Law, (i) commences
a voluntary case or proceeding; (ii) consents to the entry of an order for
relief against it in an involuntary case or proceeding or the commencement of
any case against it; (iii) consents to the appointment of any receiver,
trustee, assignee, liquidator, custodian or similar official of it or for any
substantial part of its property; (iv) makes a general assignment for the
benefit of its creditors; (v) files a petition in bankruptcy or answer or
consent seeking reorganization or relief; or (vi) consents to the filing
of such petition or the appointment of or taking possession by any receiver,
trustee, assignee, liquidator, custodian or similar official; or

 

(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 Subsidiary in an involuntary case or
proceeding, or adjudicates the Company or any Subsidiary insolvent or bankrupt;
(ii) appoints any receiver, trustee, assignee, liquidator, custodian or
similar official of the Company or any Subsidiary or for any substantial part
of its property; or (iii) orders the winding up or liquidation of the
Company or any Subsidiary, and the order or decree remains unstayed and in
effect for 60 days (an event of default specified in clause (h) or (i) a
“Bankruptcy Default”).

 

Section 6.02           Acceleration.

 

(a)           If an Event of Default,
other than a Bankruptcy Default with respect to the Company, occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate of the outstanding principal amount of the Notes, by written notice
to the Company (and to the Trustee if the notice is given by the Holders), may,
and the Trustee at the request of such Holders shall, declare the principal of
and accrued interest on the Notes to be immediately due and payable.  Upon a declaration of acceleration, such
principal and interest will become immediately due and payable.  If a Bankruptcy Default occurs with respect
to the Company, the principal of and accrued interest on the Notes then
outstanding will become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.

 

(b)           The Holders of a majority
in principal amount of the outstanding Notes by written notice to the Company
and to the Trustee may waive all past defaults and rescind and annul a
declaration of acceleration with respect to such Notes and its consequences if:

 

39

 

(i)            all existing Events of
Default, other than the nonpayment of the principal of and interest on the
Notes that have become due solely by the declaration of acceleration, have been
cured or waived, and

 

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

 

Section 6.03           Other
Remedies.  If an Event of Default
occurs and is continuing, the Trustee may pursue, in its own name or as trustee
of an express trust, any available remedy by proceeding at law or in equity to
collect the payment of principal of and interest on the Notes or to enforce the
performance of any provision of the Notes or the Indenture.  The Trustee may maintain a proceeding even if
it does not possess any of the Notes or does not produce any of them in the
proceeding.

 

Section 6.04           Waiver
of Past Defaults.  Except as
otherwise provided in Section 6.02, Section 6.07 or Section 9.02(b),
the Holders of a majority in principal amount of the outstanding Notes may, by
notice to the Trustee, waive an existing Default and its consequences.  Upon such waiver, the Default will cease to
exist, and any Event of Default arising therefrom will be deemed to have been
cured, but no such waiver will extend to any subsequent or other Default or
impair any right consequent thereon.

 

Section 6.05           Control
by Majority.  The Holders of a
majority in aggregate principal amount of the outstanding Notes may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the
Trustee in personal liability, or that the Trustee determines in good faith may
be unduly prejudicial to the rights of Holders of Notes not joining in the
giving of such direction, and may take any other action it deems proper that is
not inconsistent with any such direction received from Holders of Notes.

 

Section 6.06           Limitation
on Suits.  A Holder may not institute
any proceeding, judicial or otherwise, with respect to the Indenture or the
Notes, or for the appointment of a receiver or trustee, or for any other remedy
under the Indenture or the Notes, unless:

 

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

 

(ii)           Holders of at least 25%
in aggregate principal amount of outstanding Notes have made written request to
the Trustee to institute proceedings in respect of the Event of Default in its
own name as Trustee under the Indenture;

 

(iii)          Holders have offered to
the Trustee indemnity reasonably satisfactory to the Trustee against any costs,
liabilities or expenses to be incurred in compliance with such request;

 

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

 

40

 

(v)           during such 60-day
period, the Holders of a majority in aggregate principal amount of the
outstanding Notes have not given the Trustee a direction that is inconsistent
with such written request.

 

Section 6.07           Rights
of Holders to Receive Payment. 
Notwithstanding anything to the contrary, the right of a Holder of a
Note to receive payment of principal of or interest on its Note on or after the
Stated Maturities thereof, or to bring suit for the enforcement of any such
payment on or after such respective dates, may not be impaired or affected
without the consent of that Holder.

 

Section 6.08           Collection
Suit by Trustee.  If an Event of
Default in payment of principal or interest specified in clause (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 for the whole amount of
principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent lawful, overdue installments of interest,
in each case at the rate specified in the Notes, and such further amount as is
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee hereunder.

 

Section 6.09           Trustee
May File Proofs of Claim.  The
Trustee may file 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 compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
hereunder) and the Holders allowed in any judicial proceedings relating to the
Company or its creditors or property, and is entitled and empowered to collect,
receive and distribute any money, securities or other property payable or
deliverable upon conversion or exchange of the Notes or upon any such
claims.  Any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, if the Trustee consents to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee
hereunder.  Nothing in the Indenture will
be deemed to empower the Trustee to authorize or consent to, or accept or adopt
on behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

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

 

First: to the Trustee for
all amounts due hereunder;

 

Second: to Holders for
amounts then due and unpaid for principal of and interest on the Notes,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal and interest; and

 

Third: to the Company or
as a court of competent jurisdiction may direct.

 

The Trustee, upon written
notice to the Company, may fix a record date and payment date for any payment
to Holders pursuant to this Section.  At
least 15 days before such record date, the

 

41

 

Trustee shall mail to
each Noteholder and the Company a notice that states the record date, the
payment date and the 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 the 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 Trustee and the Holders will be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Company, the Trustee and the Holders will continue as though no such proceeding
had been instituted.

 

Section 6.12           Undertaking
for Costs.  In any suit for the
enforcement of any right or remedy under the Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court may
require any party litigant in such suit (other than the Trustee) to file an
undertaking to pay the costs of the suit, and the court may assess reasonable
costs, including reasonable attorneys fees and expenses, against any party
litigant (other than the Trustee) in the suit having due regard to the merits
and good faith of the claims or defenses made by the party litigant.  This Section does not apply to a suit by
a Holder to enforce payment of principal of or interest on any Note on the
respective due dates, or a suit by Holders of more than 10% in principal amount
of the outstanding Notes.

 

Section 6.13           Rights
and Remedies Cumulative.  No right or
remedy conferred or reserved to the Trustee or to the Holders under this
Indenture is intended to be exclusive of any other right or remedy, and all
such rights and remedies are, to the extent permitted by law, cumulative and in
addition to every other right and remedy hereunder or now or hereafter existing
at law or in equity or otherwise.  The
assertion or exercise of any right or remedy hereunder, or otherwise, will not
prevent the concurrent assertion or exercise of any other right or remedy.

 

Section 6.14           Delay
or Omission Not Waiver.  No delay or
omission of the Trustee or of any Holder to exercise any right or remedy
accruing upon any Event of Default will impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence
therein.  Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or
by the Holders, as the case may be.

 

ARTICLE 7.

 

THE TRUSTEE

 

Section 7.01           General.

 

(a)           The duties and
responsibilities of the Trustee are as provided by the Trust Indenture Act and
as set forth herein.  Whether or not
expressly so provided, every provision of the Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee is subject
to this Article.

 

(b)           Except during the
continuance of an Event of Default, the Trustee need perform only those duties
that are specifically set forth in the Indenture and no others, and no 

 

42

 

implied covenants or obligations will be read into the
Indenture against the Trustee.  In case
an Event of Default has occurred and is continuing, the Trustee shall exercise
those rights and powers vested in it by the Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.

 

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

 

(i)         this Subsection shall not
be construed to limit the effect of Subsection (b) of this Section; and

 

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

 

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

 

Section 7.02           Certain
Rights of Trustee.  Subject to Trust
Indenture Act Sections 315(a) through (d):

 

(a)           In the absence of bad
faith on its part, the Trustee may rely, and will be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
Person.  The Trustee need not investigate
any fact or matter stated in the document, but, in the case of any document
which is specifically required to be furnished to the Trustee pursuant to any
provision hereof, the Trustee shall examine the document to determine whether
it conforms to the requirements of the Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).  The Trustee, in its
discretion, may make further inquiry or investigation into such facts or matters
as it sees fit.

 

(b)           Before the Trustee acts
or refrains from acting, it may require an Officers’ Certificate or an Opinion
of Counsel or both conforming to Section 12.06 and the Trustee will not be
liable for any action it takes or omits to take in good faith in reliance on
the certificate or opinion.

 

(c)           The Trustee may execute
any of the rights or powers hereunder or perform any duties hereunder either
directly or by or through its attorneys and agents and will not be responsible
for the misconduct or negligence of any agent appointed with due care.

 

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

 

43

 

(e)           The Trustee will not be liable for
any action it takes or omits to take in good faith that it believes to be
authorized or within its rights or powers or for any action it takes or omits
to take in accordance with the direction of the Holders in accordance with Section 6.05
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under the Indenture.

 

(f)            The Trustee may consult with counsel
of its selection, and the advice of such counsel or any Opinion of Counsel will
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

 

(g)           No provision of the Indenture will
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its duties hereunder, or in the
exercise of its rights or powers, unless it receives indemnity satisfactory to
it against any loss, liability or expense.

 

(h)           The Trustee shall not be deemed to
have notice or be charged with knowledge of any Default or Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or
shall have received from the Company or from Holders of Notes evidencing not
less than twenty-five percent (25%) of the then outstanding Notes, written
notice thereof at its address set forth in Section 12.03 and such notice
references the Notes and this Indenture.

 

(i)            Any request or direction of the
Company mentioned herein shall be sufficiently evidenced by a Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution.

 

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

 

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

 

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

 

(m)          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.

 

44

 

(n)           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 Notes
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not the Trustee. 
Any Agent may do the same with like rights.  However, the Trustee is subject to Trust
Indenture Act Sections 310(b) and 311.

 

Section 7.04           Trustee’s
Disclaimer.  The Trustee (i) makes
no representation as to the validity or adequacy of the Indenture or the Notes,
(ii) is not accountable for the Company’s use or application of the
proceeds from the Notes and (iii) is not responsible for any statement in
the Notes other than its certificate of authentication.

 

Section 7.05           Notice
of Default.  If any Default or Event
of Default occurs and is continuing and is known to the Trustee, the Trustee
will send notice of the Default or Event of Default to each Holder within 90
days after it occurs, unless the Default or Event of Default has been cured;
provided that, except in the case of a default in the payment of the principal
of or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interest of the Holders.  Notice to Holders under this Section will
be given in the manner and to the extent provided in Trust Indenture Act Section 313(c).

 

Section 7.06           Reports
by Trustee to Holders.  Within 60 days
after each January 15, beginning with January 15, 2010, the Trustee
will mail to each Holder, as provided in Trust Indenture Act Section 313(c),
a brief report dated as of such January 15, if required by Trust Indenture
Act Section 313(a), and file such reports with each stock exchange upon
which its Notes are listed and with the Commission as required by Trust
Indenture Act Section 313(d).

 

Section 7.07           Compensation
and Indemnity.

 

(a)           The
Company will pay the Trustee compensation as agreed upon in writing for its
services.  The compensation of the
Trustee is not limited by any law on compensation of a Trustee of an express
trust.  The Company will reimburse the
Trustee upon request for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by the Trustee, including the reasonable
compensation and expenses of the Trustee’s agents and counsel.

 

(b)           The Company will indemnify the
Trustee and its officers, directors, employees and agents for, and hold it
harmless against, any loss or liability or expense incurred by it without
negligence or willful misconduct on its part arising out of or in connection
with the acceptance or administration of the Indenture and its duties under the
Indenture and the Notes, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and of the
Trustee defending itself against any claim or liability and of complying with
any process served upon it or any of its officers in connection with the
exercise or performance of any of its powers or duties under the Indenture and
the Notes.  The Trustee will notify the
Company promptly for any claim for which it may seek indemnity.  Failure by the Trustee to so notify the

 

45

 

Company will not relieve the Company of its
obligations hereunder.  The Company will
defend the claim and the Trustee will cooperate in the defense.  The Trustee may have separate counsel and the
Company will pay the reasonable fees and expenses of such counsel.  The Company shall not be obligated to pay for
any settlement made without its consent, which consent will not be unreasonably
withheld.

 

(c)           To secure the Company’s payment
obligations in this Section, the Trustee will have a Lien prior to the Notes on
all money or property held or collected by the Trustee, in its capacity as
Trustee, except money or property held in trust to pay principal of, and
interest on particular Notes.  Such Lien
will survive the satisfaction and discharge of this Indenture.

 

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

 

The provisions of this Section 7.07
with respect to indemnification shall survive the termination of this
Indenture.

 

Section 7.08           Replacement
of Trustee.

 

(a)           (i)            The
Trustee may resign at any time by written notice to the Company.

 

(ii)           The Holders of a majority in
principal amount of the outstanding Notes may remove the Trustee by written
notice to the Trustee.

 

(iii)          If the Trustee is no longer eligible
under Section 7.10 or in the circumstances described in Trust Indenture
Act Section 310(b), any Holder that satisfies the requirements of Trust
Indenture Act Section 310(b) may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

 

(iv)          The Company may remove the Trustee if:
(A) the Trustee is no longer eligible under Section 7.10; (B) the
Trustee is adjudged a bankrupt or an insolvent; (C) a receiver or other
public officer takes charge of the Trustee or its property; or (D) the
Trustee becomes incapable of acting.

 

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

 

(b)           If the Trustee has been removed by
the Holders, Holders of a majority in principal amount of the Notes may appoint
a successor Trustee with the consent of the Company.  Otherwise, if the Trustee resigns or is
removed, or if a vacancy exists in the office of Trustee for any reason, the
Company will promptly appoint a successor Trustee.  If the successor Trustee does not deliver its
written acceptance within 30 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of a majority in principal
amount of the outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

 

46

 

(c)           Upon delivery by the successor
Trustee of a written acceptance of its appointment to the retiring Trustee and
to the Company, (i) the retiring Trustee will transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07(c),
(ii) the resignation or removal of the retiring Trustee will become
effective, and (iii) the successor Trustee will have all the rights,
powers and duties of the Trustee under the Indenture.  Upon request of any successor Trustee, the
Company will execute any and all reasonable instruments for fully and vesting
in and confirming to the successor Trustee all such rights, powers and
trusts.  The Company will give notice of
any resignation and any removal of the Trustee and each appointment of a
successor Trustee to all Holders, and include in the notice the name of the
successor Trustee and the address of its Corporate Trust Office.

 

(d)           Notwithstanding replacement of the
Trustee pursuant to this Section, the Company’s obligations under Section 7.07
will continue for the benefit of the retiring Trustee.

 

(e)           The Trustee agrees to give the
notices provided for in, and otherwise comply with, Trust Indenture Act Section 310(b).

 

Section 7.09           Successor
Trustee by Merger.  If the Trustee
consolidates with, merges or converts into, or transfers or sells all or
substantially all of its corporate trust business (including the administration
of this Indenture) to, another corporation or national banking association, the
resulting, surviving or transferee corporation or national banking association
without any further act will be the successor Trustee with the same effect as
if the successor Trustee had been named as the Trustee in the Indenture.

 

Section 7.10           Eligibility.  The Indenture must always have a Trustee that
satisfies the requirements of Trust Indenture Act Section 310(a) and
has a combined capital and surplus of at least $25,000,000 as set forth in its
most recent published annual report of condition.

 

Section 7.11           Money
Held in Trust.  The Trustee will not
be liable for interest on any money received by it except as it may agree with
the Company.  Money held in trust by the
Trustee need not be segregated from other funds except to the extent required
by law and except for money held in trust under Article 8.

 

ARTICLE 8.

 

DISCHARGE

 

Section 8.01           Satisfaction and Discharge of the
Indenture.

 

(a)           This Indenture shall cease to be of
further effect if either: (i) all outstanding Notes (other than Notes
replaced pursuant to Section 2.07) have been delivered to the Trustee for
cancellation or (ii) all outstanding Notes have become due and payable on
the Maturity Date or upon repurchase pursuant to Article 3, and the
Company irrevocably deposits, prior to the applicable date on which such
payment is due and payable, with the Trustee or the Paying Agent (if the Paying
Agent is not the Company or any of its Affiliates) Cash, shares of Common Stock
in respect of converted Notes, and, if applicable as herein provided and in
accordance herewith, such other consideration, sufficient to pay all amounts
due and owing on all outstanding Notes (other than Notes replaced pursuant to Section 2.07)
on the Maturity Date or, if all Notes have been submitted

 

47

 

for repurchase on the Fundamental Change Purchase
Date, the Fundamental Change Purchase Date, as the case may be; provided that,
in either case, the Company pays to the Trustee all other sums payable
hereunder by the Company.

 

(b)           The Company may exercise its
satisfaction and discharge option with respect to the Notes only if:

 

(i)            no Default or Event of Default with
respect to the Notes shall exist on the date of such deposit;

 

(ii)           such deposit shall not result in a
breach or violation of, or constitute a Default or Event of Default under, this
Indenture or any other agreement or instrument to which the Company is a party
or by which it is bound; and

 

(iii)          the Company has delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel (which may rely upon
such Officers’ Certificate as to the absence of Defaults and Events of Default
and as to any factual matters), each stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.

 

Notwithstanding the
satisfaction and discharge of this Indenture, the obligations of the Company to
the Trustee under Section 7.07 shall survive and, if money shall have been
deposited with the Trustee pursuant to clause (a) of this Section, the
provisions of Section 2.03, Section 2.04, Section 2.05, Section 2.06,
Section 2.07, Section 2.12, Section 3.01, Article 5, Article 10
and this Article 8, shall survive and the Company shall be required to
make all payments and deliveries required by such Sections or Articles, as
the case may be, irrespective of any prior satisfaction and discharge until the
Notes have been paid in full.

 

Section 8.02           Application
of Trust Money.  Subject to the
provisions of Section 8.03, the Trustee or a Paying Agent shall hold in
trust, for the benefit of the Holders, all money deposited with it pursuant to Section 8.01
and shall apply the deposited money in accordance with this Indenture and the
Notes to the payment of the principal amount of and interest on the Notes.

 

Section 8.03           Repayment
to Company.  The Trustee and each
Paying Agent shall promptly pay to the Company upon request any excess money (x) deposited
with them pursuant to Section 8.01 and (y) held by them at any time.

The Trustee and each
Paying Agent shall also pay to the Company upon request any money held by them
for the payment of the principal amount of Notes or interest thereon that
remains unclaimed for two years after a right to such money has matured (which
maturity shall occur, for the avoidance of doubt, on the Maturity Date or the
Fundamental Change Purchase Date (with respect to any Notes repurchased
pursuant to Article 3)).  After
payment to the Company, Holders entitled to money must look to the Company for
payment as general creditors unless an applicable abandoned property law
designates another person.

 

Section 8.04           Reinstatement.  If the Trustee or any Paying Agent is unable
to apply any money in accordance with Section 8.02 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting

 

48

 

such application, then the Company’s obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 until such time as the Trustee or such Paying
Agent is permitted to apply all such money in accordance with Section 8.02;
provided, however, that if the Company has made any payment of the principal
amount of or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive any such payment from the money held by the Trustee or
such Paying Agent.

 

ARTICLE 9.

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

Section 9.01           Amendments
Without Consent of Holders.  The
Company and the Trustee may amend or supplement the Indenture or the Notes
without notice to or the consent of any Noteholder:

 

(a)           to cure any ambiguity, omission,
defect or inconsistency in the Indenture or the Notes, provided that such
amendment or supplement does not adversely affect the rights of Holders of the
Notes;

 

(b)           to comply with Article 5 or Section 10.12;

 

(c)           to comply with the Trust Indenture
Act or any amendment thereto, or to comply with any requirements of the
Commission in connection with the qualification of the Indenture under the
Trust Indenture Act;

 

(d)           to evidence and provide for the
acceptance of an appointment hereunder by a successor Trustee;

 

(e)           to provide for uncertificated Notes
in addition to or in place of certificated Notes;

 

(f)            to secure the Notes;

 

(g)           to add guarantees with respect to the
Notes;

 

(h)           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;

 

(i)            to add any additional Events of
Default;

 

(j)            to comply with the rules of any
applicable securities depositary; or

 

(k)           to make any other change that does
not materially adversely affect the rights of any Holder.

 

49

 

Section 9.02           Amendments
With Consent of Holders.

 

(a)           Except as otherwise provided in Section 6.07
or paragraph (b) of this Section, the Company and the Trustee may amend
the Indenture and the Notes with the written consent of the Holders of a
majority in principal amount of the outstanding Notes, and the Holders of a
majority in principal amount of the outstanding Notes by written notice to the
Trustee may waive future compliance by the Company with any provision of the
Indenture or the Notes.

 

(b)           Notwithstanding the provisions of
paragraph (a) of this Section, without the consent of each Holder
affected, an amendment or waiver may not:

 

(i)            reduce the principal amount of,
Fundamental Change Purchase Price, Redemption Price or Option Purchase Price
with respect to, or any premium or interest payment on, any Note,

 

(ii)           make any Note payable in currency or
securities other than that stated in the Note,

 

(iii)          change the Stated Maturity of any
installment of principal of any Note,

 

(iv)          make any change that adversely affects
the conversion rights of Holders of any Note,

 

(v)           make any change that adversely
affects the Holders’ right to require the Company to purchase the Notes in
accordance with the terms thereof and this Indenture,

 

(vi)          impair the right to convert or receive
any principal or interest payment with respect to, a Note, or right to
institute suit for the enforcement of any payment with respect to, or
conversion of, the Notes,

 

(vii)         make any change in the percentage of
the principal amount of the Notes required for amendments or waivers, or

 

(viii)        make any change affecting the
requirement under this paragraph (b).

 

(c)           It is not necessary for Noteholders
to approve the particular form of any proposed amendment, supplement or waiver,
but is sufficient if their consent approves the substance thereof.

 

(d)           An amendment, supplement or waiver
under this Section will become effective on receipt by the Trustee of
written consents from the Holders of the requisite percentage in principal
amount of the outstanding Notes.  After
an amendment, supplement or waiver under this Section becomes effective,
the Company will send to the Holders affected thereby a notice briefly
describing the amendment, supplement or waiver. 
The Company will send supplemental indentures to Holders upon
request.  Any failure of the Company to
send such notice, or any defect therein, will not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver.

 

50

 

Section 9.03           Effect
of Consent.

 

(a)           After an amendment, supplement or
waiver becomes effective, it will bind every Holder unless it is of the type
requiring the consent of each Holder affected.  If the amendment, supplement or waiver is of
the type requiring the consent of each Holder affected, the amendment,
supplement or waiver shall bind each Holder that has consented to it and every
subsequent Holder of a Note that evidences the same debt as the Note of the
consenting Holder.

 

(b)           If an amendment, supplement or waiver
changes the terms of a Note, the Trustee may require the Holder to deliver it
to the Trustee so that the Trustee may place an appropriate notation of the
changed terms on the Note and return it to the Holder, or exchange it for a new
Note that reflects the changed terms. 
The Trustee may also place an appropriate notation on any Note
thereafter authenticated.  However, the
effectiveness of the amendment, supplement or waiver is not affected by any
failure to annotate or exchange Notes in this fashion.

 

Section 9.04           Trustee’s
Rights and Obligations.  The Trustee
shall receive, and will be fully protected in relying upon, an Officer’s
Certificate and an Opinion of Counsel each stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article is
authorized or permitted by the Indenture. 
If the Trustee has received such an Opinion of Counsel, it shall sign
the amendment, supplement or waiver so long as the same does not adversely
affect the rights of the Trustee.  The
Trustee may, but is not obligated to, execute any amendment, supplement or
waiver that affects the Trustee’s own rights, duties or immunities under the
Indenture.

 

Section 9.05           Conformity
With Trust Indenture Act.  Every
supplemental indenture executed pursuant to this Article shall conform to
the requirements of the Trust Indenture Act.

 

Section 9.06           Payments
for Consents.  Neither the Company
nor any of its Subsidiaries or Affiliates may, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Notes unless
such consideration is either (i) offered to be paid or agreed to be paid
to all Holders of the Notes that consent, waive or agree to amend such term or
provision within the time period set forth in the solicitation documents
relating to such consent, waiver or amendment or (ii) paid to all Holders
of the Notes (notwithstanding that some Holders may not agree to such consent,
waiver or amendment).

 

ARTICLE 10.

 

CONVERSION

 

Section 10.01         Conversion
Privilege.

 

(a)           Subject to and upon compliance with
the provisions of this Indenture, a Holder of a Note may, at such Holder’s
option, convert such Note at any time on or prior to the Close of Business on
the Business Day immediately preceding the Maturity Date into fully paid and
non-assessable shares of Common Stock of the Company at the Conversion Rate in
effect on the Conversion Date; provided, however, that all conversions will be
subject to Section 10.01(d); and provided, further, that the Company will
pay Cash in lieu of fractional shares otherwise issuable upon conversion of
such Note, pursuant to Section 10.03.

 

51

 

(b)           A Holder may convert a portion of the
principal amount of a Note if the portion is $1,000 or an integral multiple of
$1,000.  Provisions of this Indenture
that apply to conversion of all of a Note also apply to conversion of a portion
of a Note.

 

(c)           Notes with respect to which a
Fundamental Change Purchase Notice has been given by the Holder may be
converted pursuant to this Article 10 only if the Fundamental Change
Purchase Notice has been withdrawn in accordance with Section 3.02.

 

(d)           A Holder (other than the Depositary)
or a Beneficial Owner of the Notes may not convert any Notes pursuant to this Article 10
if, following such conversion, either (i) such Holder’s or such Beneficial
Owner’s, together with such Holder’s or such Beneficial Owner’s Affiliates,
aggregate voting power on a matter being voted on by holders of the Common
Stock would exceed 19.9% of the Maximum Voting Power or (ii) such Holder
or such Beneficial Owner, together with such Holder’s or such Beneficial Owner’s
Affiliates, would Beneficially Own more than 19.9% of the then outstanding
Common Stock; provided, however, that such conversion restriction shall not
apply in connection with and subject to completion of (A) a Public Sale of
the Common Stock to be issued upon such conversion, if following consummation
of such Public Sale such Holder or such Beneficial Owner  and
its respective Affiliates will not Beneficially Own in excess of 19.9% of the
then outstanding Common Stock and (B) a third party tender offer for the
Common Stock issuable thereupon.  For
purposes of the foregoing sentence, the number of shares of Common Stock
Beneficially Owned by a Holder or a Beneficial Owner of the Notes, together
with such Holder’s or such Beneficial Owner’s Affiliates, shall include the
number of shares of Common Stock issuable upon conversion of the Notes with
respect to which a conversion notice has been given, but shall exclude the number
of shares of Common Stock which would be issuable upon conversion or exercise
of (x) the Series A Preferred Stock, (y) any remaining,
unconverted portion of the Notes, and (z) any outstanding Warrants
Beneficially Owned by such Holder or such Beneficial Owner and its respective
Affiliates.

 

(e)           Subject to and upon compliance with
the provisions of this Indenture, after receiving a notice of redemption
specified in Section 3.07, a Holder of a Note may, at such Holder’s
option, convert such Note at any time on or prior to the Close of Business on
the Business Day immediately preceding the Redemption Date specified in such
notice into fully paid and non-assessable shares of Junior Convertible
Preferred Stock with a liquidation preference equal to the principal amount of
such Note.

 

Section 10.02         Conversion
Procedure.

 

(a)           To convert a Note represented by a
Global Note, a Noteholder must convert by book-entry transfer to the Conversion
Agent through the facilities of the Depositary. 
To convert a Note that is represented by a Certificated Note, a
Noteholder must (1) complete and manually sign a Conversion Notice
(specifying if such conversion is for shares of Common Stock or Junior
Convertible Preferred Stock), a form of which is on the back of the Note, and
deliver such Conversion Notice to the Conversion Agent, (2) surrender the
Note to the Conversion Agent, (3) if required by the Conversion Agent,
furnish appropriate endorsement and transfer documents, and (4) if
required, pay all transfer or similar taxes. 
The Conversion Agent shall, within one (1) Business Day of any
Conversion Date, provide notice to the Company, as set forth in Section 12.03,
of the occurrence of such Conversion Date.

 

52

 

(b)           As promptly as practicable and in any
case within three (3) Trading Days following the Conversion Date
applicable to the Notes being converted, the Company shall deliver to the
Holder, through the Conversion Agent, the shares of Common Stock or Junior
Convertible Preferred Stock, as applicable, required to be delivered upon the
conversion of such Notes and, if applicable, any Cash in lieu of fractional
shares pursuant to Section 10.03 hereof. 
The person in whose name the certificate representing any shares is
registered shall be treated as a stockholder of record on and after the
Conversion Date.

 

(c)           No payment or adjustment will be made
for dividends on, or other distributions with respect to, any Common Stock
except as provided in this Article 10. 
Upon conversion of a Note, a Noteholder will not receive, except as
described below, any separate Cash payment representing accrued interest.  Instead, accrued interest will be deemed paid
by the Common Stock or Junior Convertible Preferred Stock, as applicable, and,
if applicable, Cash in lieu of fractional shares, if any, received by the
Noteholder upon conversion.  Delivery to
the Noteholder of such shares of Common Stock or Junior Convertible Preferred
Stock, as applicable, and Cash, if any, will thus be deemed (1) to satisfy
the Company’s obligation to pay the principal amount of a Note and (2) to
satisfy the Company’s obligation to pay accrued and unpaid interest on the
Note.  As a result, upon conversion of a
Note, accrued and unpaid interest on such Note is deemed paid in full rather
than cancelled, extinguished or forfeited.

 

(d)           Holders of Notes surrendered for
conversion during the period from the Close of Business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business of such
Interest Payment Date will receive the semiannual interest payable on such
Notes on the corresponding Interest Payment Date notwithstanding the
conversion, and such Notes upon surrender must be accompanied by funds equal to
the amount of such payment; provided that no such payment need be made (x) in
connection with any conversion following the Regular Record Date immediately
preceding the Maturity Date, (y) if the Company has specified a
Fundamental Change Purchase Date that is after a Regular Record Date and on or
prior to the corresponding Interest Payment Date or (z) to the extent of
any Defaulted Interest, if any Defaulted Interest exists at the time of
conversion with respect to such Note. The Company shall not be required to
convert any Notes that are surrendered for conversion without payment of
interest as required by this paragraph.

 

(e)           If the Holder converts more than one
Note at the same time, the number of full shares of Common Stock or Junior
Convertible Preferred Stock, as applicable, that shall be delivered upon
conversion and the Cash payment, if any, in lieu of fractional shares shall be
based on the total principal amount of the Notes converted.

 

(f)            Upon surrender of a Note that is
converted in part, the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder, a new Note in an authorized
denomination equal in principal amount to the unconverted portion of the Note
surrendered.

 

Section 10.03         Fractional
Shares.  The Company will not issue a
fractional share of Common Stock upon conversion of a Note.  Instead, the Company will deliver Cash in
lieu of a fractional share based on the Closing Price of the Common Stock on
the Conversion Date (or if the Conversion Date is not a Trading Day, the next
preceding Trading Day), rounded to the nearest whole cent.

 

53

 

Section 10.04         Taxes On Conversion.  If a Holder converts a Note, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of any shares of Common Stock or Junior Convertible Preferred Stock, as
applicable, 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 Company may refuse to deliver
the certificates representing the Common Stock or Junior Convertible Preferred
Stock, as applicable, being issued in a name other than the Holder’s name until
the Company receives a sum sufficient to pay any tax which will be due because
the Common Stock or Junior Convertible Preferred Stock, as applicable, is to be
delivered in a name other than the Holder’s name.  Nothing herein shall preclude any tax
withholding required by law or regulations.

 

Section 10.05         Company To Provide Common Stock and Junior
Convertible Preferred Stock.  The
Company shall at all times have authorized and reserved and keep available for
issuance a sufficient number of shares of Common Stock and Junior Convertible
Preferred Stock to permit the delivery in respect of all outstanding Notes or
shares of Junior Convertible Preferred Stock, as applicable, of the number of
shares of Common Stock due upon conversion of the Notes or Junior Convertible
Preferred Stock, including as may be adjusted for share splits, combinations or
other similar transactions.

 

All shares of Common
Stock and Junior Convertible Preferred Stock delivered upon conversion of the
Notes or shares of Junior Convertible Preferred Stock, as applicable, 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.

 

The Company will comply
with all federal and state securities laws regulating the offer and delivery of
shares of Common Stock and Junior Convertible Preferred Stock upon conversion
of Notes or Junior Convertible Preferred Stock, as applicable, and will list or
cause to have quoted such shares of Common Stock on each national securities
exchange or in the over-the-counter market or such other market on which the
Common Stock is then listed or quoted.

 

In addition, if any
shares of Common Stock or Junior Convertible Preferred Stock which would be
issuable upon conversion of Notes or Junior Convertible Preferred Stock, as
applicable, hereunder require registration with or approval of any governmental
authority before such shares of Common Stock or Junior Convertible Preferred
Stock may be issued upon such conversion, the Company will use its reasonable
best efforts to cause such shares of Common Stock or Junior Convertible
Preferred Stock to be duly registered or approved, as the case may be.

 

Section 10.06         Adjustment for Change In Capital Stock.

 

(a)           If the Company shall,
at any time and from time to time while any of the Notes are outstanding, issue
a dividend or make a distribution on its Common Stock payable in shares of its
Common Stock to all or substantially all holders of its Common Stock, then the
Conversion Rate at the opening of business on the Ex-Dividend Date for such
dividend or distribution will be adjusted by multiplying such Conversion Rate
by a fraction:

 

(i)    the numerator of which shall
be the sum of the number of shares of Common Stock outstanding at the Close of
Business on the Business Day immediately preceding the

 

54

 

Ex-Dividend Date for such dividend or distribution,
plus the total number of shares of Common Stock constituting such dividend or
other distribution; and

 

(ii)   the denominator of which shall
be the number of shares of Common Stock outstanding at the close of business on
the Business Day immediately preceding such Ex-Dividend Date.

 

If any dividend or
distribution of the type described in this Section 10.06(a) is
declared but not so paid or made, the Conversion Rate shall again be adjusted
to the Conversion Rate which would then be in effect if such dividend or
distribution had not been declared. 
Except as set forth in the preceding sentence, in no event shall the
Conversion Rate be decreased pursuant to this Section 10.06(a).

 

(b)           If the Company shall,
at any time or from time to time while any of the Notes are outstanding,
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Conversion Rate in effect at the
opening of business on the day upon which such subdivision becomes effective
shall be proportionately increased, and conversely, if the Company shall, at
any time or from time to time while any of the Notes are outstanding, combine
or reclassify its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then the Conversion Rate in effect at the opening of
business on the day upon which such combination or reclassification becomes
effective shall be proportionately decreased. 
In each such case, the Conversion Rate shall be adjusted by multiplying
such Conversion Rate by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately after giving effect to such
subdivision, combination or reclassification and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
subdivision or combination.  Such
increase or reduction, as the case may be, shall become effective immediately
after the opening of business on the day upon which such subdivision,
combination or reclassification becomes effective.

 

Section 10.07         Adjustment for Rights Issue.  If the Company shall, at any time or from
time to time while the Notes are outstanding, distribute rights or warrants to
all or substantially all holders of its Common Stock entitling them, for a
period expiring within 60 days after the record date for such distribution, to
purchase shares of Common Stock at less than the average of the Closing Prices
for the five consecutive Trading Days immediately preceding the first public
announcement of the distribution, the Conversion Rate shall be adjusted so that
the same shall equal the rate determined by multiplying the Conversion Rate in
effect at the opening of business on the Ex-Dividend Date for such distribution
by a fraction:

 

	
  (x)

  	
  the numerator of which
  shall be the number of shares of Common Stock outstanding at the close of
  business on the Business Day immediately preceding the Ex-Dividend Date for
  such distribution, plus the total number of additional shares of Common Stock
  so offered for purchase; and

  
	
   

  	
   

  
	
  (y)

  	
  the denominator of
  which shall be the number of shares of Common Stock outstanding on the close
  of business on the Business Day immediately preceding the Ex-Dividend Date
  for such distribution, plus the number of shares of Common Stock that the
  aggregate offering price of the total number of shares of Common Stock so

  

 

55

 

	
   

  	
  offered would purchase
  at the Current Market Price of the Common Stock on the declaration date for
  such distribution (determined by multiplying such total number of shares of
  Common Stock so offered by the exercise price of such rights or warrants and
  dividing the product so obtained by such Current Market Price).

  

 

Such adjustment shall
become effective immediately after the opening of business on the Ex-Dividend
Date for such distribution.

 

To the extent that shares
of Common Stock are not delivered pursuant to such rights or warrants or upon
the expiration or termination 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 the delivery of only the number of shares of Common Stock actually
delivered.  In the event that such rights
or warrants are not so distributed, the Conversion Rate shall again be adjusted
to be the Conversion Rate which would then be in effect if the Ex-Dividend Date
for such distribution had not occurred. 
In determining whether any rights or warrants entitle the holders to
purchase shares of Common Stock at less than the average of the Closing Prices
for the five consecutive Trading Days immediately preceding the first public
announcement of the relevant distribution, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into
account any consideration received for such rights and the value of such
consideration if other than Cash, to be determined in good faith by the Board
of Directors.  Except as set forth in
this paragraph, in no event shall the Conversion Rate be decreased pursuant to
this Section 10.07.

 

Section 10.08         Adjustment for Other Distributions.

 

(a)           If the Company shall,
at any time or from time to time while the Notes are outstanding, distribute to
all or substantially all holders of its Common Stock any of its Capital Stock,
assets, or debt securities or any rights, warrants or options to purchase
securities of the Company (excluding (x) any distributions described in Section 10.06(a) above,
(y) any rights or warrants described in Section 10.07 above and (z) any
all-cash dividends or other cash distributions referred to in Section 10.09
below) (such Capital Stock, assets, debt securities or rights to purchase
securities of the Company being distributed hereinafter in this Section 10.08
called the “Distributed Assets”), and subject to Section 10.08(b) below,
the Conversion Rate shall be increased so that the same shall be equal to the
rate determined by multiplying the Conversion Rate in effect immediately prior
to the opening of business on the Ex-Dividend Date with respect to such
distribution by a fraction:

 

(i)    the numerator of which will be
the Current Market Price of the Common Stock, and

 

(ii)   the denominator of which will
be the Current Market Price of the Common Stock minus the fair market value, as
determined by the Board of Directors, of the portion of Distributed Assets so
distributed applicable to one share of the Common Stock (determined on the
basis of the number of shares of Common Stock outstanding on such Ex-Dividend
Date).

 

Such increase shall
become effective immediately after the opening of business on the Ex-Dividend
Date for such distribution.  In the event
that such distribution is not so made, the

 

56

 

Conversion Rate shall
again be adjusted to be the Conversion Rate which would then be in effect if
such distribution had not been declared. 
Except as set forth in the prior sentence, in no event shall the
Conversion Rate be decreased pursuant to this Section 10.08.

 

If the Board of Directors
determines the fair market value of any distribution for purposes of this Section 10.08
by reference to the actual or when issued trading market for any Distributed
Assets comprising all or part of such distribution, it must in doing so
consider the prices in such market over the same period (the “Reference
Period”) used in computing the Current Market Price for purposes of clause (i) above,
unless the Board of Directors determines in good faith that determining the
fair market value during the Reference Period would not be in the best interest
of the Holders.

 

(b)           With respect to an
adjustment pursuant to this Section 10.08 where there has been a payment
of a dividend or other distribution on Common Stock of shares of Capital Stock
of, or similar equity interests in, a Subsidiary or other business unit of the
Company, the Conversion Rate will be adjusted by multiplying the Conversion Rate
in effect immediately prior to the opening of business on the Ex-Dividend Date
with respect to such distribution by a fraction:

 

(i)    the numerator of which shall
be (a) the average of the closing 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 five Trading Days commencing on and
including the fifth Trading Day after the Ex-Dividend Date for such dividend or
distribution on the principal national securities exchange or inter-dealer
quotation system on which such securities are then listed or traded, plus (b) the
average of the Closing Prices over the five Trading Days commencing on and
including the fifth Trading Day after the Ex-Dividend Date for such dividend or
distribution (the “Average Sale Price”), and

 

(ii)   the denominator of which shall
be the Average Sale Price.

 

Section 10.09         Adjustment for Cash Dividends.  If the Company shall, at any time or from
time to time while any of the Notes are outstanding, by dividend or otherwise,
distribute to all or substantially all holders of its shares of Common Stock,
Cash (excluding (A) any distributions described in Section 10.10
below or (B) any dividend or distribution in connection with the Company’s
liquidation, dissolution or winding up), then the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the opening of business of the
Ex-Dividend Date for such distribution by a fraction:

 

	
  (x)

  	
  the numerator of which
  shall be equal to the Current Market Price per share of Common Stock; and

  
	
   

  	
   

  
	
  (y)

  	
  the denominator of
  which shall be equal to the Current Market Price per share of Common Stock on
  such date, less the amount of the distribution per share of Common Stock
  (subject to the immediately succeeding paragraph).

  

 

Such adjustment shall
become effective immediately after the opening of business on the Ex-Dividend
Date for such distribution.  In the event
that such distribution is not so made, the

 

57

 

Conversion Rate shall
again be adjusted to be the Conversion Rate which would then be in effect if
such dividend or distribution had not been declared.

 

Section 10.10         Adjustment for Certain Tender Offers or
Exchange Offers.  In case the Company
or any of its Subsidiaries shall, at any time or from time to time, while any
of the Notes are outstanding, distribute Cash or other consideration in respect
of a tender offer or an exchange offer (that is treated as a “tender offer”
under U.S. federal securities laws) made by the Company or any Subsidiary for
all or any portion of the Common Stock, where the sum of the aggregate amount
of such Cash distributed and the aggregate fair market value (as determined in
good faith by the Board of Directors, whose determination shall be conclusive
and set forth in a Board Resolution), as of the Expiration Date (as defined
below), of such other consideration distributed (such sum, the “Aggregate
Amount”) expressed as an amount per share of Common Stock validly tendered or
exchanged, and not withdrawn, pursuant to such tender offer or exchange offer
as of the Expiration Time (as defined below) (such tendered or exchanged shares
of Common Stock, the “Purchased Shares”) exceeds the Closing Price per share of
the Common Stock on the first Trading Day immediately following the last date
(such last date, the “Expiration Date”) on which tenders or exchanges could
have been made pursuant to such tender offer or exchange offer (as the same may
be amended through the Expiration Date), then, and in each case, immediately
after the close of business on such date, the Conversion Rate shall be
increased so that the same shall equal the rate determined by multiplying the Conversion
Rate in effect immediately prior to the close of business on the Trading Day
immediately following the Expiration Date by a fraction:

 

	
  (x)

  	
  the numerator of which
  is equal to the sum of (A) the Aggregate Amount and (B) the product
  of (I) an amount equal to (1) the number of shares of Common Stock
  outstanding as of the last time (the “Expiration Time”) at which tenders or
  exchanges could have been made pursuant to such tender offer or exchange
  offer less (2) the Purchased Shares and (II) the Closing Price per
  share of the Common Stock on the first Trading Day immediately following the
  Expiration Date; and

  
	
   

  	
   

  
	
  (y)

  	
  the denominator of
  which shall be equal to the product of (A) the number of shares of
  Common Stock outstanding as of the Expiration Time (including all Purchased
  Shares) and (B) the Closing Price per share of the Common Stock on the
  first Trading Day immediately following the Expiration Date.

  

 

An adjustment, if any, to
the Conversion Rate pursuant to this Section 10.10 shall become effective
immediately prior to the opening of business on the second Trading Day
immediately following the Expiration Date. 
In the event that the Company or a Subsidiary is obligated to purchase
shares of Common Stock pursuant to any such tender offer or exchange offer, but
the Company or such Subsidiary is permanently prevented by applicable law from
effecting any such purchases, or all such purchases are rescinded, then the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such tender offer or exchange offer had not been
made.  Except as set forth in the
preceding sentence, if the application of this Section 10.10 to any tender
offer or exchange offer would result in a decrease in the Conversion Rate, no
adjustment shall be made for such tender offer or exchange offer under this Section 10.10.

 

Section 10.11         Provisions Governing Adjustment to
Conversion Rate.  Rights, options or
warrants distributed by the Company to all or substantially all holders of
Common Stock entitling

 

58

 

the holders
thereof to subscribe for or purchase shares of the Company’s Capital Stock
(either initially or under certain circumstances), which rights, options or
warrants, until the occurrence of a specified event or events (“Trigger
Event”): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect
of future issuances of Common Stock, shall be deemed not to have been distributed
for purposes of Section 10.06, Section 10.07, Section 10.08,
Section 10.09 or Section 10.10 (and no adjustment to the Conversion
Rate under Section 10.06, Section 10.07, Section 10.08,
Section 10.09 or Section 10.10 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights, options and warrants
shall be deemed to have been distributed and, except as set forth in
Section 10.23, an appropriate adjustment (if any is required) to the
Conversion Rate shall be made under Section 10.07 (without giving effect
to the 60 day limit on the exercisability of rights and warrants ordinarily
subject to such Section 10.07) (if and to the extent such rights, options
and warrants are exercisable for shares of Common Stock or Common Stock
equivalents) and/or Section 10.08 (if and to the extent such rights,
options and warrants are exercisable for cash and/or any shares of the
Company’s Capital Stock other than shares of Common Stock or Common Stock
equivalents).  If any such right, option
or warrant, including any such existing rights, options or warrants distributed
prior to the date of this Indenture, are subject to events, upon the occurrence
of which such rights, options or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and Ex-Dividend Date with respect to new rights, options or
warrants with such rights (and a termination or expiration of the existing
rights, options or warrants without exercise by any of the holders thereof),
except as set forth in Section 10.23. 
In addition, except as set forth in Section 10.23, in the event of
any distribution (or deemed distribution) of rights, options or warrants, or
any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Rate under Section 10.06,
Section 10.07, Section 10.08, Section 10.09 or
Section 10.10 was made, (1) in the case of any such rights, options
or warrants that shall all have been redeemed or repurchased without exercise
by any holders thereof, the Conversion Rate shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a Cash distribution, equal to the per
share redemption or repurchase price received by a holder or holders of Common
Stock with respect to such rights, options or warrants (assuming such holder
had retained such rights, options or warrants), made to all or substantially
all holders of Common Stock as of the date of such redemption or repurchase,
and (2) in the case of such rights, options or warrants that shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Rate shall be readjusted as if such rights, options and warrants had
not been issued.  Notwithstanding the
foregoing, (A) to the extent any such rights, options or warrants are
redeemed by the Company prior to a Trigger Event or are exchanged by the
Company, in either case for shares of Common Stock, the Conversion Rate shall
be appropriately readjusted (if and to the extent previously adjusted pursuant
to this Section 10.11) as if such rights, options or warrants had not been
issued, and instead the Conversion Rate will be adjusted as if the Company had
issued the shares of Common Stock issued upon such redemption or exchange as a
dividend or distribution of shares of Common Stock subject to
Section 10.06(a), (B) to the extent any such rights, options or
warrants are redeemed by the Company prior to a Trigger Event or are exchanged
by the Company, in either case for cash, the Conversion Rate shall be
appropriately readjusted (if and to the extent previously adjusted pursuant to
this Section 10.11) as if such rights, options or warrants had not been
issued, and instead the Conversion Rate will be adjusted as if the Company

 

59

 

had delivered
cash upon such redemption or exchange as a dividend or distribution of cash
subject to Section 10.09 (without giving effect to any of the exceptions
contained therein) and (C) to the extent any such rights, options or
warrants are redeemed by the Company prior to a Trigger Event or are exchanged
by the Company, in either case for any capital stock, assets or debt securities
or any rights, warrants or options of the Company not otherwise provided
pursuant to the immediately foregoing clauses (A) or (B), the Conversion
Rate shall be appropriately readjusted (if and to the extent previously
adjusted pursuant to this Section 10.11) as if such rights, options or
warrants had not been issued, and instead the Conversion Rate will be adjusted
as if the Company had delivered capital stock, assets or debt securities or any
rights, warrants or options of the Company upon such redemption or exchange as
a distribution of capital stock, assets or debt securities or any rights,
warrants or options of the Company subject to Section 10.08 (without
giving effect to any of the exceptions contained therein).

 

Section 10.12         Disposition Events.  If any of the following events (any such
event, a “Disposition Event”) occurs:

 

(a)           any reclassification of
the Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination);

 

(b)           any merger,
consolidation or other combination involving the Company; or

 

(c)           any sale, conveyance,
lease, or other disposal of all or substantially all the properties and assets
of the Company to any other Person;

 

in each case, as a result
of which all or substantially all of the holders of Common Stock shall be
entitled to receive Cash, securities or other property for their shares of
Common Stock, 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, if such supplemental indenture is then required to
so comply) providing that notwithstanding the provisions of Section 10.01,
if a Holder converts its Notes on or after the effective date of any such
Disposition Event, Notes will be convertible into, in lieu of the shares of
Common Stock otherwise deliverable, the same amount and type (in the same
proportions) of consideration received by holders of Common Stock in the
relevant event (collectively, “Reference Property”) received upon the
occurrence of such Disposition Event by a holder of Common Stock holding,
immediately prior to the transaction, a number of shares of Common Stock equal
to the Conversion Rate immediately prior to such Disposition Event; provided
that if the Disposition Event provides the holders of Common Stock with the
right to receive more than a single type of consideration determined based in
part upon any form of stockholder election, the Reference Property shall be
comprised of the weighted average of the types and amounts of consideration
received by the holders of the Common Stock who affirmatively make such
election.

 

If the Conversion Rate of
the Notes shall be based on Reference Property as set forth above, the
Company’s obligation to deliver the consideration described in Section 10.01
with respect to each $1,000 principal amount of Notes tendered for conversion
after the effective date of any such Disposition Event, shall, notwithstanding
anything to the contrary set forth in Section 10.01, be settled in units
of Reference Property (if applicable) and the Company shall deliver an amount
in

 

60

 

Reference Property,
determined as set forth in Section 10.01(a), paragraph 10 of the Note
and the definition of “Conversion Rate”; provided that, in each case,
references to “shares of Common Stock” were instead references to “a unit of
Reference Property composed of the kind and amount of Cash, securities or other
property that a holder of one share of Common Stock immediately prior to such
Disposition Event would have owned or been entitled to receive.”

 

Such supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article 10.  If, in the case of any such Disposition
Event, the stock or other securities and assets receivable thereupon by a
holder of Common Stock includes shares of stock or other securities and assets
of a Person other than the successor or purchasing Person, as the case may be,
in such Disposition Event, then such supplemental indenture shall also be
executed by such other Person and shall contain such additional provisions to
protect the interests of the Noteholders as the Board of Directors shall
reasonably consider necessary by reason of the foregoing.

 

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

 

The above provisions of
this Section 10.12 shall similarly apply to successive Disposition Events.

 

If this Section 10.12
applies to any event or occurrence, none of Section 10.06, Section 10.07,
Section 10.08, Section 10.09 or Section 10.10 shall apply.

 

Section 10.13         Discretionary Adjustment.

 

(a)           The
Company may make such increases in the Conversion Rate, in addition to those
required by Sections 10.06, 10.07, 10.08, 10.09 and 10.10 as the Board of
Directors considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes.

 

(b)           To
the extent permitted by applicable law, the Company from time to time may
increase the Conversion Rate by any amount for any period of time if the period
is at least 20 days, the increase is irrevocable during the period and the
Board of Directors shall have made a determination that such increase would be
in the best interests of the Company, which determination shall be
conclusive.  Whenever the Conversion Rate
is increased pursuant to the preceding sentence, the Company shall mail to
holders of record of the Notes a notice of the increase at least 15 days prior
to the date the increased Conversion Rate takes effect, and such notice shall
state the increased Conversion Rate and the period during which it will be in
effect.

 

Section 10.14         When Adjustment May Be Deferred.  No adjustment in the Conversion Rate need be
made unless the adjustment would require an increase or decrease of at least 1%
of the

 

61

 

Conversion Rate.  Any adjustments
that are less than 1% of the Conversion Rate shall be carried forward and taken
into account in determining any subsequent adjustment.  In addition, the Company shall make any carry
forward adjustments not otherwise effected upon (a) notice of a required
purchase of the notes pursuant to Section 3.01 or Section 3.10,
(b) if the Company shall mail a notice of redemption pursuant to
Section 3.07, (c) on May     , 2018 and
(d) on the Business Day prior to the Maturity Date.

 

Section 10.15         When No Adjustment Required.

 

(a)           No
adjustment need be made for a transaction referred to in Section 10.06 or Section 10.07
if Noteholders participate, without conversion, in the transaction or event
that would otherwise give rise to an adjustment pursuant to such Section at
the same time as holders of the Common Stock participate with respect to such
transaction or event and on the same terms as holders of the Common Stock
participate with respect to such transaction or event as if Noteholders, at
such time, held a number of shares of Common Stock equal to the Conversion Rate
at such time.

 

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

 

(c)           No
adjustment need be made for a change in the par value or no par value of the
Common Stock.

 

(d)           To
the extent the Notes become convertible pursuant to this Article 10 into
Cash, no adjustment need be made thereafter as to the Cash.  Interest will not accrue on the Cash.

 

Section 10.16         Notice of Adjustment.  Whenever the Conversion Rate is adjusted, the
Company shall promptly mail to Noteholders a notice of the adjustment.  The Company shall file with the Trustee and
the Conversion Agent such notice and a certificate from the Company’s
independent public accountants briefly stating the facts requiring the
adjustment and the manner of computing it. 
The certificate shall be conclusive evidence that the adjustment is
correct.  Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such certificate except to exhibit the same to any Holder desiring inspection
thereof.

 

Section 10.17         Notice of Certain Transactions.  If (a) the Company takes any action that
would require an adjustment in the Conversion Rate pursuant to Section 10.06,
10.07, 10.08, 10.09 or 10.10 (unless no adjustment is to occur pursuant to Section 10.14
or Section 10.15), (b) the Company takes any action that would
require a supplemental indenture pursuant to Section 10.12, or (c)  there
is a liquidation or dissolution of the Company, then the Company shall mail to
Noteholders and file with the Trustee and the Conversion Agent a notice stating
the proposed Ex-Dividend Date for a dividend or distribution or the proposed
effective date of a subdivision, combination, reclassification, consolidation,
merger, binding share exchange, transfer, liquidation or dissolution.  The Company shall file and mail the notice at
least 15 days before such date; provided that if the Company elects to make a
distribution described in Section 10.07, Section 10.08, or Section 10.09,
and in the case of Section 10.08 or Section 10.09, that has a per
share value equal to more than 10% of the Closing Price per share of Common
Stock on the day preceding the declaration date for such distribution, the
Company shall give notice to Holders at least 20 Trading Days prior to the

 

62

 

Ex-dividend Date for such distribution. 
Failure to file or mail the notice or any defect in it shall not affect
the validity of the transaction.

 

Section 10.18         Right of Conversion.  Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right to convert its Note in
accordance with this Article 10 and paragraph 10 of the Notes and to bring
an action for the enforcement of any such right to convert, and such rights
shall not be impaired or affected without the consent of such Holder.

 

Section 10.19         Company Determination Final.  The Company shall be responsible for making
all calculations called for hereunder and under the Notes.  These calculations include, but are not
limited to, the Conversion Date, the Closing Price, the Conversion Rate and the
number of shares of Common Stock, if any, to be issued upon conversion of the
Notes.  The Company shall make all these
calculations in good faith and, absent manifest error, the Company’s
calculations will be final and binding on Noteholders.  The Company shall provide a schedule of the
Company’s calculations to the Trustee, and the Trustee is entitled to rely upon
the accuracy of the Company’s calculations without independent verification.

 

Section 10.20         Trustee’s Adjustment Disclaimer.  The Trustee has no duty to determine when an
adjustment under this Article 10 should be made, how it should be made or
what it should be.  The Trustee shall
have no duty to make any adjustment calculations or any other calculations
under this Indenture.  The Trustee has no
duty to determine whether a supplemental indenture under Section 10.12
need be entered into or whether any provisions of any supplemental indenture
are correct.  The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of Notes or for any of the
adjustments made hereby.  The Trustee
shall not be responsible for the Company’s failure to comply with this Article 10.  Each Conversion Agent shall have the same
protection under this Section 10.20 as the Trustee.

 

Section 10.21         Simultaneous Adjustments.

 

(a)           For
purposes of Section 10.08, Section 10.06(a) and Section 10.07,
any dividend or distribution to which Section 10.08 is applicable that
also includes shares of Common Stock, or rights, options or warrants to
subscribe for or purchase shares of Common Stock (or both), shall be deemed
instead to be (1) a dividend or distribution of the debt securities,
assets or shares of Capital Stock other than such shares of Common Stock or
rights (and any Conversion Rate adjustment required by Section 10.08 with
respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock
or such rights (and any further Conversion Rate adjustment required by Section 10.06(a) and
Section 10.07 with respect to such dividend or distribution shall then be
made), except any shares of Common Stock included in such dividend or
distribution shall not be deemed “outstanding at the close of business on the
Business Day immediately preceding such Ex-Dividend Date” within the meaning of
Section 10.06(a).

 

(b)           The
reclassification of the Common Stock into securities including securities other
than Common Stock other than any reclassification upon an event to which Section 10.12
applies shall be deemed to involve (a) a distribution of such securities
other than the Common Stock to all holders of Common Stock (and the effective
date of such reclassification shall be deemed to be the “Ex-Dividend Date”
within the meaning of this Section 10.08), and (b) a subdivision or

 

63

 

combination, as the case may be, of the number of shares of Common
Stock outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be “the day upon which such
subdivision becomes effective” or “the day upon which such combination becomes
effective,” as the case may be, and “the day upon which such subdivision or
combination becomes effective” within the meaning of Section 10.06(b)).

 

Section 10.22         Successive Adjustments.  After an adjustment to the Conversion Rate
under this Article 10, any subsequent event requiring an adjustment under
this Article 10 shall cause an adjustment to the Conversion Rate as so
adjusted.

 

Section 10.23         Rights Issued in Respect of Common Stock
Issued Upon Conversion.  In the event
the Company adopts or implements a shareholder rights agreement (a “Shareholder
Rights Plan”), including, without limitation, a rights agreement in existence
on the date of this Indenture, pursuant to which rights (“Rights”) are
distributed to the holders of Common Stock of the Company and such Shareholder
Rights Plan provides that each share of Common Stock issued upon conversion of
the Notes at any time prior to the distribution of separate certificates
representing such Rights will be entitled to receive such Rights, then there
shall not be any adjustment to the conversion privilege or Conversion Rate at
any time prior to the distribution of separate certificates representing such
Rights.  If, however, prior to any
conversion, the Rights have separated from the Common Stock, the Conversion
Rate shall be adjusted at the time of separation as described in Section 10.11
above, subject to readjustment upon occurrence of any of the events set forth
therein.

 

ARTICLE 11.

 

PAYMENT OF INTEREST

 

Section 11.01         Interest Payments.  Interest on any Note that is payable, and is
punctually paid or duly provided for, on any applicable Interest Payment Date
shall be paid to the person in whose name that Note is registered at the Close
of Business on the Regular Record Date for such interest at the office or
agency of the Company maintained for such purpose.  Each installment of interest payable in Cash
on any Note shall be paid in same-day funds by transfer to an account
maintained by the payee located inside the United States, if the Trustee shall
have received proper wire transfer instructions from such payee not later than
the related Regular Record Date or, if no such instructions have been received
by check drawn on a bank in the United States mailed to the payee at its
address set forth on the Registrar’s books. 
In the case of a Global Note, interest payable on any applicable payment
date will be paid by wire transfer of same-day funds to the Depositary, with
respect to that portion of such Global Note held for its account by Cede &
Co. for the purpose of permitting such party to credit the interest received by
it in respect of such Global Note to the accounts of the beneficial owners
thereof.

 

Section 11.02         Defaulted Interest.  Except as otherwise specified with respect to
the Note, any interest on any Note that is payable, but is not punctually paid
or duly provided for, within 30 days following any applicable payment date
(herein called “Defaulted Interest,” which term shall include any accrued and
unpaid interest that has accrued on such defaulted amount in accordance with
paragraph 1 of the Notes), shall forthwith cease to be payable to the registered
Holder thereof on the

 

64

 

relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below.

 

(a)           The Company may elect to
make payment of any Defaulted Interest to the persons in whose names the Notes
are registered at the Close of Business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner.  The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each Note and the date of the proposed payment (which shall not be less than 20
days after such notice is received by the Trustee), 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 on or
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 a 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 date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment (the “Special Record
Date”).  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 therefor to be mailed,
first-class postage prepaid, to each Holder of Notes at his address as it
appears on the list of Noteholders maintained pursuant to Section 2.05 not
less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the persons in whose names
the Notes 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 on the Notes in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which such Notes 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.

 

Section 11.03         Interest Rights Preserved.  Subject to the foregoing provisions of this Article 11
and Section 2.06, each Note delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any other Note
shall carry the rights to interest accrued and unpaid, and to accrue, which
were carried by such other Notes.

 

ARTICLE 12.

 

MISCELLANEOUS

 

Section 12.01         Trust Indenture Act of 1939.  The Indenture shall incorporate and be
governed by the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust Indenture Act.

 

65

 

Section 12.02         Noteholder Communications; Noteholder
Actions.

 

(a)           The
rights of Holders to communicate with other Holders with respect to the
Indenture or the Notes are as provided by the Trust Indenture Act, and the
Company and the Trustee shall comply with the requirements of Trust Indenture
Act Sections 312(a) and 312(b). 
Neither the Company nor the Trustee will be held accountable by reason
of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.

 

(b)           (i) Any
request, demand, authorization, direction, notice, consent to amendment,
supplement or waiver or other action provided by this Indenture to be given or
taken by a Holder (an “act”) may be evidenced by an instrument signed by the
Holder delivered to the Trustee.  The
fact and date of the execution of the instrument, or the authority of the
person executing it, may be proved in any manner that the Trustee deems
sufficient.

 

(ii) The Trustee may make reasonable rules for
action by or at a meeting of Holders, which will be binding on all the Holders.

 

(c)           Any
act by the Holder of any Note binds that Holder and every subsequent Holder of
a Note that evidences the same debt as the Note of the acting Holder, even if
no notation thereof appears on the Note. 
Subject to paragraph (d), a Holder may revoke an act as to its Notes,
but only if the Trustee receives the notice of revocation before the date the
amendment or waiver or other consequence of the act becomes effective.

 

(d)           The
Company may, but is not obligated to, fix a record date (which need not be
within the time limits otherwise prescribed by Trust Indenture Act Section 316(c))
for the purpose of determining the Holders entitled to act with respect to any
amendment or waiver or in any other regard, except that during the continuance
of an Event of Default, only the Trustee may set a record date as to notices of
default, any declaration or acceleration or any other remedies or other
consequences of the Event of Default.  If
a record date is fixed, those Persons that were Holders at such record date and
only those Persons will be entitled to act, or to revoke any previous act,
whether or not those Persons continue to be Holders after the record date.  No act will be valid or effective for more
than 90 days after the record date.

 

Section 12.03         Notices.

 

(a)           Any
notice or communication to the Company will be deemed given if in writing (i) when
delivered in person or (ii) five days after mailing when mailed by first
class mail, or (iii) when transmission is confirmed verbally or by email,
if sent by facsimile transmission.  In
each case the notice or communication should be addressed as follows:

 

if to the Company:

Power-One, Inc.

740 Calle Plano

Camarillo, CA 93012

Attention:  General Counsel

Tel:         (805) 987-8741

Fax:         (805) 383-5898

 

66

 

if to the Trustee:

The Bank of New York Mellon Trust Company, N.A.

700 South Flower Street,
5th Floor

Los Angeles, CA 90017

Attention: Corporate Unit

Tel:         (213) 630-6256

Fax:         (213) 630-6298

 

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

 

(b)           Except as otherwise
expressly provided with respect to published notices, any notice or
communication to a Holder will be deemed given when mailed to the Holder at its
address as it appears on the Register by first class mail or, as to any Global
Note registered in the name of the Depository or its nominee, as agreed by the
Company, the Trustee and the Depository. 
Copies of any notice or communication to a Holder, if given by the
Company, will be mailed to the Trustee at the same time.  Any defect in mailing a notice or
communication to any particular Holder will not affect its sufficiency with
respect to other Holders.

 

(c)           Where the Indenture
provides for notice, the notice may be waived in writing by the Person entitled
to receive such notice, either before or after the event, and the waiver will
be the equivalent of the notice.  Waivers
of notice by Holders must be filed with the Trustee, but such filing is not a
condition precedent to the validity of any action taken in reliance upon such
waivers.

 

The Trustee agrees to
accept and act upon instructions or directions pursuant to this Indenture sent
by unsecured e-mail, facsimile transmission or other similar unsecured
electronic methods; provided, however, that (a) the party providing such
written instructions, subsequent to such transmission of written instructions,
shall provide the originally executed instructions or directions to the Trustee
in a timely manner, and (b) such originally executed instructions or
directions shall be signed by an authorized representative of the party
providing such instructions or directions. 
If the party elects to give the Trustee e-mail or facsimile instructions
(or instructions by a similar electronic method) and the Trustee in its
discretion elects to act upon such instructions, the Trustee’s understanding of
such instructions shall be deemed controlling. 
The Trustee shall not be liable for any losses, costs or expenses
arising directly or indirectly from the Trustee’s reliance upon and compliance
with such instructions notwithstanding such instructions conflict or are
inconsistent with a subsequent written instruction.  The party providing electronic instructions
agrees to assume all risks arising out of the use of such electronic methods to
submit instructions and directions to the Trustee, including without limitation
the risk of the Trustee acting on unauthorized instructions, and the risk or
interception and misuse by third parties.

 

Section 12.04         Communication by Holders with Other Holders.  Noteholders may communicate pursuant to Section 312(b) of
the Trust Indenture Act with other Noteholders with respect to their rights
under this Indenture or the Notes.  The
Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and
anyone else shall have the protection of Section 312(c) of the Trust
Indenture Act.

 

67

 

Section 12.05  Certificate and Opinion as to Conditions
Precedent.  Upon any request or
application by the Company to the Trustee to take any action under the
Indenture, the Company will furnish to the Trustee:

 

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

 

(2)           an Opinion of Counsel stating that all
such conditions precedent have been complied with.

 

Section 12.06  Statements Required in Certificate or
Opinion.  Each certificate or opinion with respect to compliance
with a condition or covenant provided for in the Indenture must include:

 

(1)           a statement that each person signing the
certificate or opinion has read the covenant or condition and the related
definitions;

 

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

 

(3)           a statement that, in the opinion of each
such person, that person has made such examination or investigation as is
necessary to enable the person 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 each such person, such condition or covenant has been complied with,
provided that an Opinion of Counsel may rely on an Officers’ Certificate or
certificates of public officials with respect to matters of fact.

 

Section 12.07  Legal Holiday.  A “Legal
Holiday” is any day other than a Business Day. 
If any specified date (including a date for giving notice) is a Legal
Holiday, the action shall be taken on the next succeeding day that is not a
Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Notes, no interest shall accrue for the intervening period.

 

Section 12.08  Rules by Trustee, Paying Agent,
Conversion Agent and Registrar.  The Trustee may make reasonable rules for
action by or a meeting of Noteholders. 
The Registrar, Conversion Agent and the Paying Agent may make reasonable
rules for their functions.

 

Section 12.09  Governing Law.  THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS INDENTURE AND THE NOTES.

 

Section 12.10  No Adverse Interpretation of Other
Agreements.  The Indenture may not be used to interpret another
indenture or loan or debt agreement of the Company or any Subsidiary of the
Company, and no such indenture or loan or debt agreement may be used to
interpret the Indenture.

 

68

 

Section 12.11  Successors and Assigns.  All
agreements of the Company in the Indenture and the Notes will bind its
successors and assigns.  All agreements
of the Trustee in the Indenture will bind its successor and assigns.

 

Section 12.12  Duplicate Originals.  The parties may sign any number of copies of
the Indenture.  Each signed copy shall be
an original, but all of them together represent the same agreement.

 

Section 12.13  Separability.  In case any provision in the Indenture or in
the Notes is invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby.

 

Section 12.14  Table of Contents and Headings.  The
Table of Contents, Cross-Reference Table and headings of the Articles and
Sections of the Indenture have been inserted for convenience of reference
only, are not to be considered a part of the Indenture and in no way modify or
restrict any of the terms and provisions of the Indenture.

 

Section 12.15  No Liability of Directors, Officers,
Employees, Incorporators, Members and Stockholders.  No director, officer, employee, incorporator,
member or stockholder of the Company, as such, will have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations.  Each Holder of Notes by accepting a Note
waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.

 

Section 12.16  Waiver of Jury Trial.  EACH OF THE COMPANY AND THE TRUSTEE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

 

Section 12.17  Force Majeure.  In no event shall the Trustee be responsible
or liable for any failure or delay in the performance of its obligations
hereunder arising out of or caused by, directly or indirectly, forces beyond
its control, including, without limitation, strikes, work stoppages, accidents,
acts of war or terrorism, civil or military disturbances, nuclear or natural
catastrophes or acts of God, and interruptions, loss or malfunctions of
utilities, communications or computer (software and hardware) services; it
being understood that the Trustee shall use reasonable efforts which are
consistent with accepted practices in the banking industry to resume
performance as soon as practicable under the circumstances.

 

69

 

SIGNATURES

 

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

 

	
   

  	
  POWER-ONE, INC.

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

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

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature
Page to Indenture]

 

 

EXHIBIT A

[FACE OF NOTE]

 

[Global Notes Legend]

 

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

 

THIS NOTE IS A GLOBAL
NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE
TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER
OF THIS NOTE FOR ALL PURPOSES.]

 

[OID Legend]

 

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

 

THIS NOTE HAS BEEN ISSUED
WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR PURPOSES OF SECTIONS 1271 ET SEQ. OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE ISSUE DATE OF THIS SECURITY
IS [         ], [         ].  FOR INFORMATION REGARDING THE ISSUE PRICE,
THE YIELD TO MATURITY AND THE AMOUNT OF OID PER $1,000 OF PRINCIPAL AMOUNT,
PLEASE CONTACT POWER-ONE, INC., AT 740 CALLE PLANO, CAMARILLO, CALIFORNIA
93012, ATTENTION: CHIEF FINANCIAL OFFICER.]

 

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

 

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

 

UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR REGISTERED NOTES IN DEFINITIVE
REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE,
THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH 

 

A-1

 

NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OR SUCH SUCCESSOR DEPOSITARY.]

 

A-2

 

[IAI Note Legend]

 

[The following legend
shall appear on the face of each IAI Note:

 

THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAW.  IN NO EVENT MAY THIS NOTE BE SOLD,
ASSIGNED, PLEDGED, LOANED, HEDGED OR OTHERWISE DISPOSED OF OR ENCUMBERED
(COLLECTIVELY, A “TRANSFER”) BY AN INITIAL PURCHASER PRIOR TO MAY     ,
2010; PROVIDED, HOWEVER, THAT AN INITIAL PURCHASER MAY TRANSFER A NOTE
PRIOR TO SUCH TIME (1) TO A PERMITTED TRANSFEREE (AS DEFINED IN THE
PURCHASE AGREEMENT), PROVIDED THAT SUCH TRANSFEREE AGREES TO BE BOUND BY THE
TRANSFER PROVISIONS OF THE INDENTURE, THE PURCHASE AGREEMENT AND THE
REGISTRATION RIGHTS AGREEMENT AND THE TRANSFERRING HOLDER AGREES TO CONTINUE TO
BE SO BOUND OR (2) OTHERWISE PURSUANT TO THE TERMS OF SECTION 8.1 OF
THE PURCHASE AGREEMENT.  ANY INITIAL
PURCHASER HOLDING THIS NOTE AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS
SIX MONTHS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS NOTE EVIDENCED
HEREBY AND THE LAST DATE ON WHICH THE COMPANY OR ANY “AFFILIATE” (AS DEFINED IN
RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE SECURITY
RESELL OR OTHERWISE TRANSFER THIS NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE OTHER THAN DURING THE TIMES DESCRIBED IN
THE PURCHASE AGREEMENT AND ONLY PURSUANT TO (1) A TRANSFER TO THE COMPANY,
(2) A PERMITTED TRANSFER, (3) SO LONG AS THIS NOTE IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (4) IN AN
OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (5) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT, (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR (7) A TRANSFER THAT IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT.

 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS NOTE IS ADDITIONALLY SUBJECT TO THE TRANSFER RESTRICTIONS CONTAINED IN
THE PURCHASE AGREEMENT.

 

IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION,
INCLUDING AN “ASSIGNMENT FORM” IN THE FORM ATTACHED TO 

 

A-3

 

THE BACK OF THIS NOTE, AS SUCH REGISTRAR OR
TRANSFER AGENT MAY REASONABLY REQUEST TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.]

 

A-4

 

[Restricted Note Legend]

 

[The following legend
shall appear on the face of each Restricted Note:

 

THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAW.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS SIX MONTHS AFTER THE LATER OF
THE ORIGINAL ISSUANCE OF THIS NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH
THE COMPANY OR ANY “AFFILIATE” (AS DEFINED IN RULE 144 UNDER THE SECURITIES
ACT) OF THE COMPANY WAS THE OWNER OF THE SECURITY (THE “RESTRICTION TERMINATION
DATE”) RESELL OR OTHERWISE TRANSFER THIS NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE OTHER THAN (1) TO THE COMPANY,
(2) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A,
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT, (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR (6) A
TRANSFER THAT IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS
OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES
ACT.  IN ANY CASE THE HOLDER HEREOF WILL
NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO
THIS NOTE OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE EXCEPT AS
PERMITTED BY THE SECURITIES ACT.]

 

A-5

 

Power-One, Inc.

 

6.0%/8.0%/10.0%
Convertible Senior Notes Due 2019

 

	
  CUSIP No. [                   ](1)

  
	
   

  
	
  [$                                         ]

  

 

No. [                   ]

 

Power-One, Inc., a
Delaware corporation (the “Company,” which term includes any successor under
the Indenture hereinafter referred to), for value received, promises to pay to                   ,
or its registered assigns, the principal sum of                      DOLLARS
($           ) on May    ,
2019[, which principal amount may from time to time be increased or decreased
to such other principal amount (which, taken together with the principal
amounts of all other outstanding Notes, shall not exceed $[           ])
by adjustments on the Schedule of Exchanges of Notes on the other side of
this Note in accordance with the Indenture.](1)

 

[Initial Interest
Rate:  6.0% per annum which shall accrue
from the Issue Date to the first anniversary of the Issue Date;  8.0% per annum which shall accrue from the
first anniversary of the Issue Date to the second anniversary of the Issue
Date; 10.0% per annum which shall accrue from the second anniversary of the
Issue Date to the Maturity Date].

 

Interest Payment Dates: May    and
November    , commencing November    ,
2009.

 

Regular Record Dates: May    
and November    .

 

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

 

(1) Include only if
the Note is a Global Note

 

A-6

 

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

 

	
  Date:

  	
   

  	
   

  	
  POWER-ONE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

Attest:

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-7

 

(Form of Trustee’s
Certificate of Authentication)

 

This is one of the
6.0%/8.0%/10.0% Convertible Senior Notes Due 2019 described in the Indenture
referred to in this Note.

 

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

  
	
  as Trustee

  
	
   

  
	
  By:

  
	
   

  
	
   

  	
   

  
	
  Authorized Signatory

  

 

A-8

 

[REVERSE SIDE OF NOTE]

 

Power-One, Inc.

 

6.0%/8.0%/10.0%
Convertible Senior Notes Due 2019

 

1.             Principal and
Interest.

 

The Company promises to
pay the principal of this Note on May    , 2019.

 

The Company promises to
pay interest on the principal amount of this Note on each Interest Payment
Date, as set forth on the face of this Note, at the rate of (i) 6.0% per
annum from the Issue Date to the first anniversary of the Issue Date, (ii) 8.0%
per annum from the first anniversary of the Issue Date to the second
anniversary of the Issue Date and (iii) 10.0% per annum from the second
anniversary of the Issue Date and thereafter (subject to adjustment as provided
below).

 

Interest will be payable
semiannually in arrears (to the holders of record of the Notes at the close of
business on the May    or November    
immediately preceding the interest payment date) on each interest payment date,
commencing November    , 2009.

 

Interest on this Note
will accrue from the most recent date to which interest has been paid on this
Note or the Note surrendered in exchange for this Note (or, if there is no
existing default in the payment of interest and if this Note is authenticated
between a regular record date and the next interest payment date, from such
interest payment date) or, if no interest has been paid, from the Issue
Date.  Interest will be computed in the
basis of a 360-day year of twelve 30-day months.

 

The Company will pay
interest on overdue principal, premium, if any, and, to the extent lawful,
interest at a rate per annum of (i) 8.0% accruing from the Issue Date to
the first anniversary of the Issue Date, (ii) 10.0% accruing from the
first anniversary of the Issue Date to the second anniversary of the Issue Date
and (iii) 12.0% from the second anniversary of the Issue Date and
thereafter.  Interest not paid when due
and any interest on principal, premium or interest not paid when due will be
paid to the Persons that are Holders on a special record date, which will
established as set forth in the Indenture referred to below.

 

Any payment required to
be made on any day that is not a Business Day will be made on the next
succeeding Business Day, without additional interest.

 

2.             Registration
Rights Agreement.

 

The Holder of this Note
is entitled to the benefits of the Registration Rights Agreement, dated as of May     ,
2009, between the Company and the Initial Purchasers named therein (the “Registration
Rights Agreement”).

 

3.             Method of
Payment.

 

Subject to the terms and
conditions of the Indenture, the Company shall pay interest on this Note to the
person who is the Holder of this Note at the close of business on the Regular
Record 

 

A-9

 

Date next preceding
the related Interest Payment Date.  The
Company will pay any Cash amounts in money of the United States that at the
time of payment is legal tender for payment of public and private debts.

 

4.             Paying Agent,
Conversion Agent and Registrar.

 

Initially, the Trustee
will act as Paying Agent, Conversion Agent and Registrar.  The Company may appoint and change any Paying
Agent, Conversion Agent, Registrar or co-registrar without notice, other than
notice to the Trustee.  The Company or
any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Conversion Agent, Registrar or co-registrar. 
The Company may maintain deposit accounts and conduct other banking
transactions with the Trustee in the normal course of business.

 

5.             Indenture.

 

This is one of the Notes
issued under an Indenture dated as of May     , 2009
(as amended from time to time, the “Indenture”), between the Company and [Name
of Trustee], as Trustee.  Capitalized
terms used herein are used as defined in the Indenture unless otherwise
indicated.  The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. 
The Notes are subject to all such terms, and Holders are referred to the
Indenture and the Trust Indenture Act for a statement of all such terms.  To the extent permitted by applicable law, in
the event of any inconsistency between the terms of this Note and the terms of
the Indenture, the terms of the Indenture will control.

 

The Notes are general unsecured
senior obligations of the Company.

 

6.             Purchase at the
Option of the Holder upon a Fundamental Change.

 

At the option of the
Holder and subject to the terms and conditions of the Indenture, upon the
occurrence of a Fundamental Change, the Company shall become obligated to
purchase the Notes held by such Holder on the date, at the purchase price and
as otherwise provided in the Indenture.

 

Holders have the right to
withdraw any Fundamental Change Purchase Notice by delivering to the Paying
Agent a written notice of withdrawal in accordance with the provisions of the
Indenture.

 

If Cash (and/or
securities if permitted under the Indenture) sufficient to pay the Fundamental
Change Purchase Price of, together with any accrued and unpaid interest with
respect to, all Notes or portions thereof to be purchased as of the Fundamental
Change Purchase Date is deposited with the Paying Agent on or prior to the
third Business Day following the Fundamental Change Purchase Date, interest
shall cease to accrue on such Notes (or portions thereof) immediately after
such Fundamental Change Purchase Date whether or not the Note is delivered to
the Paying Agent, and the Holder thereof shall have no other rights as such
(other than the right to receive the Fundamental Change Purchase Price and
accrued and unpaid interest upon surrender of such Notes).

 

A-10

 

7.             Optional
Redemption.

 

Subject to the terms of
the Indenture, the Company shall have the right, at the Company’s option, during
the period beginning on November    , 2011 and ending on May    ,
2014, at any time during such period, and from time to time during such period,
to redeem all or any part of the Notes at a price payable in Cash equal to the
Redemption Price plus accrued and unpaid interest, if any, to, but excluding,
the Redemption Date in the event that the Closing Price for each of 20 or more
Trading Days in a period of 30 consecutive Trading Days ending on the day prior
to mailing of a notice of redemption to Holders of the Notes in accordance with
Section 3.07 of the Indenture shall have exceeded 300% of the applicable
Conversion Price, provided, however, that the Company shall have made at least
five semi-annual scheduled interest payments (including the interest payments
on November    , 2011) in the full amount required by the
Indenture with respect to the Notes prior to redeeming any Notes pursuant to
this sentence.  Subject to the terms of
the Indenture, the Company shall also have the right, at the Company’s option,
after May    , 2014, at any time, and from time to time, to
redeem all or any part of Notes at a price payable in Cash equal to the
Redemption Price plus accrued and unpaid interest, if any, to, but excluding,
the Redemption Date.  In no event shall
any Redemption Date be a Legal Holiday. Furthermore, if the Redemption Date
with respect to a Note is after the close of business on a record date for the
payment of an installment of interest and on or before the related interest
payment date, then accrued and unpaid interest to, but excluding, such interest
payment date shall be paid, on such interest payment date, to the Holder of
record of such Note (without any surrender of such Note by such Holder) at the
close of business on such record date, and the Holder surrendering such Note
for redemption shall receive only the Redemption Price and shall not be
entitled to any such interest unless such Holder was also the Holder of record
of such Note at the close of business on such record date.

 

8.             Notice of
Redemption.

 

Notice of redemption will
be mailed (a) at least 20 Business Days but not more than 30 Business Days
before a Redemption Date with respect to a redemption pursuant to the first
sentence of Section 7 of this Note and (b) at least 30 calendar days
but not more than 60 calendar days before the Redemption Date with respect to a
redemption pursuant to the second sentence of Section 7 of this Note, to
each Holder of Notes to be redeemed at its address appearing in the security
register.  Notes in denominations larger
than $1,000 principal amount may be redeemed in part but only in integral
multiples of $1,000 principal amount.

 

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

 

Subject to the terms and
conditions of the Indenture, the Company shall become obligated to purchase, at
the option of each Holder, the Notes held by such Holder on May    ,
2014, May    , 2015, May    , 2016, May    ,
2017 and May    , 2018 (each, an “Option Purchase Date”) at
an Option Purchase Price, payable in Cash, equal to 100% of the principal
amount of the Notes to be purchased, plus accrued and unpaid interest, if any,
to, but excluding, the applicable Option Purchase Date, upon delivery of a
Purchase Notice containing the information set forth in the Indenture, at any
time from the opening of business on the date that is 20 Business Days prior to
the applicable Option Purchase Date until the close of business on the Business
Day immediately preceding the applicable Option Purchase Date and upon delivery
of the Securities to the Paying Agent by the Holder as set forth in the
Indenture; provided, that if such Option Purchase Date is after the close of
business on a 

 

A-11

 

record date for
the payment of an installment of interest and on or before the related interest
payment date, then such accrued and unpaid interest shall be paid on such
interest payment date to the Holder of record of such Notes (without any
surrender of such Notes by such Holder) at the close of business on such record
date and the Holder surrendering such Notes for purchase shall receive only the
Option Purchase Price and shall not be entitled to any such interest unless
such Holder was also the Holder of record of such Notes at the close of business
on such record date.

 

10.           Conversion.

 

Subject to and upon
compliance with the provisions of this Indenture, a Holder of a Note may, at
such Holder’s option, convert such Note at any time on or prior to the Close of
Business on the Business Day immediately preceding May    ,
2019 into fully paid and non-assessable shares of Common Stock of the Company
at the Conversion Rate in effect at the time of the conversion.  Subject to and upon compliance with the
provisions of this Indenture, after receiving a notice of redemption specified
in Section 3.07 of the Indenture, a Holder of a Note may, at such Holder’s
option, convert such Note at any time on or prior to the Close of Business on
the Business Day immediately preceding the Redemption Date specified in such
notice into fully paid and non-assessable shares of Junior Convertible
Preferred Stock with a liquidation preference equal to the principal amount of
such Note. To convert a Note represented by a Global Note, a Noteholder must
convert by book-entry transfer to the Conversion Agent through the facilities
of the DTC.  To convert a Note that is
represented by a Certificated Note, a Noteholder must (1) complete and
manually sign a Conversion Notice, a form of which is attached hereto, and
deliver such Conversion Notice to the Conversion Agent, (2) surrender the
Note to the Conversion Agent, (3) if required by the Conversion Agent,
furnish appropriate endorsement and transfer documents, and (4) if
required, pay all transfer or similar taxes. The Company will not issue a
fractional share of Common Stock upon conversion of a Note but, instead, will
deliver Cash in lieu of a fractional share as described in the Indenture.

 

Upon conversion of Note,
a Holder will not receive, except as provided below or in the Indenture, any
separate Cash payment representing accrued interest. Holders of Notes
surrendered for conversion during the period from the Close of Business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business of such Interest Payment Date will receive the semiannual interest
payable on such Notes on the corresponding Interest Payment Date
notwithstanding the conversion, and such Notes upon surrender must be
accompanied by funds equal to the amount of such payment; provided that no such
payment need be made (x) in connection with any conversion following the
Regular Record Date immediately preceding the Maturity Date, (y) if the
Company has specified a Fundamental Change Purchase Date that is after a
Regular Record Date and on or prior to the corresponding Interest Payment Date
or (z) to the extent of any Defaulted Interest, if any Defaulted Interest
exists at the time of conversion with respect to such Note. The Company shall
not be required to convert any Notes that are surrendered for conversion
without payment of interest as required by this paragraph.

 

No payment or adjustment
will be made for dividends on, or other distributions with respect to, any
Common Stock except as provided for in the Indenture.

 

A-12

 

Notes in respect of which
a Fundamental Change Purchase Notice has been given by the Holder thereof may
not be converted pursuant to the Indenture unless the Fundamental Change
Purchase Notice has first been validly withdrawn in accordance with the
Indenture.

 

11.           Defaults and
Remedies.

 

If an Event of Default,
as defined in the Indenture, occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes may declare all the
Notes to be due and payable, subject to certain limitations set forth in the
Indenture.  If a bankruptcy or insolvency
default with respect to the Company occurs and is continuing, the Notes
automatically become due and payable. 
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture.  The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Notes.  Subject to certain limitations,
Holders of a majority in principal amount of the Notes then outstanding may
direct the Trustee in its exercise of remedies.

 

12.           Amendment and
Waiver.

 

Subject to certain
exceptions set forth in the Indenture, the Indenture and the Notes may be
amended, or default may be waived, with the consent of the Holders of a
majority in principal amount of the outstanding Notes.  Without notice to or the consent of any
Holder, the Company and the Trustee may amend or supplement the Indenture or
the Notes to, among other things, cure any ambiguity, omission, defect or
inconsistency.

 

13.           Registered
Form; Denominations; Transfer; Exchange.

 

The Notes are in
registered form without coupons in denominations of $2,000 principal amount and
integral multiples of $1,000 in excess thereof. 
A Holder may register the transfer or exchange of Notes in accordance
with the Indenture.  The Trustee may
require a Holder to furnish appropriate endorsements and transfer documents and
to pay any taxes and fees required by law or permitted by the Indenture.  Pursuant to the Indenture, there are certain
periods during which the Trustee will not be required to issue, register the
transfer of or exchange any Note or certain portions of a Note.

 

14.           Persons Deemed
Owners.

 

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

 

15.           Unclaimed Money
or Notes.

 

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

 

A-13

 

16.           Trustee
Dealings with the Company.

 

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

 

17.           No Recourse
Against Others.

 

A director, officer,
incorporator, agent, subsidiary, employee, member or stockholder, as such, of
the Company shall not have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. 
By accepting a Note, each Noteholder waives and releases all such
liability.  The waiver and release are
part of the consideration for the issue of the Notes.

 

18.           Authentication.

 

This Note shall not be
valid until an authorized officer of the Trustee manually signs the Trustee’s
Certificate of Authentication on the other side of this Note.

 

19.           Governing Law.

 

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

 

20.           Abbreviations.

 

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

 

The Company will furnish
a copy of the Indenture to any Holder upon written request and without charge.

 

A-14

 

[FORM OF TRANSFER
NOTICE]

 

FOR VALUE RECEIVED the
undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

 

Insert Taxpayer
Identification No.

	
   

  
	
   

  

Please print or typewrite
name and address including zip code of assignee

 

	
   

  

the within Note and all
rights thereunder, hereby irrevocably constituting and appointing

	
   

  

 

attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.

 

	
  Date:

  	
   

  	
   

  	
  Your Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

*Signature guaranteed
by:

 

	
  By:

  	
   

  	
   

  

 

	
  *

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

  

 

A-15

 

CONVERSION NOTICE

 

To convert this Note into
shares of Common Stock, check the box: o

 

To
convert this Note into shares of Junior Convertible Preferred Stock, check the
box: o

 

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

 

If you want the Cash paid
to another person or the stock certificate, if any, made out in another person’s
name, fill in the form below:

 

	
   

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

  

 

	
   

  

 

	
   

  

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

and irrevocably appoint

 

	
   

  

 

agent to transfer this
Note on the books of the Company.  The
agent may substitute another to act for him or her.

 

	
  Date:

  	
   

  	
   

  	
  Your Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

*Signature
guaranteed by:

 

	
  By:

  	
   

  	
   

  

 

	
  *

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

  

 

A-16

 

PURCHASE NOTICE

Certificate
No. of Note:

 

If
you want to elect to have this Note purchased by the Company pursuant to the
terms and conditions specified in Section 3.01 of the Indenture, check the
box: o

 

If
you want to elect to have this Note purchased by the Company pursuant to the terms
and conditions specified in Section 3.10 of the Indenture, check the box: o  If this box has
been checked, the Beneficial Owner of this Note attempted in good faith to
obtain the price quotes referred to in clause (i) of the definition of
Fair Market Value and the Fair Market Value was equal to or less than 110% of
the sum of (x) the Option Purchase Price plus (y) accrued and unpaid
interest, if any, on this Note.

 

If
you want to elect to have only part of this Note purchased by the Company
pursuant to Section 3.01 or  Section 3.10
of the Indenture, as applicable, state the principal amount to be so purchased
by the Company:

 

	
   

  	
   

  	
  $

  
	
   

  	
   

  	
  (in
  an integral multiple of $1,000)

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Your
  Signatures:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  *Signatures guaranteed
  by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
						

 

	
  *

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

  

 

A-17

 

SCHEDULE
OF EXCHANGES OF NOTES(2)

 

The following exchanges of a part of this Global Note
for an interest in another Global Note or for Notes in certificated form, have
been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of decrease

  in Principal Amount

  of this Global Note

  	
   

  	
  Amount of Increase

  in Principal Amount

  of this Global Note

  	
   

  	
  Principal Amount of

  this Global Note

  following such

  decrease or increase

  	
   

  	
  Signature or

  authorized signatory

  of Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(2) This schedule
should be included only if the Note is a Global Note.

 

A-18

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

(I) or (we) assign and transfer this Note to

 

	
   

  	
   

  	
   

  
	
   

  	
  (Insert
  assignee’s social security or tax I.D. no.)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
   

  

 

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

 

	
  Your Signature:

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Medallion Signature
  Guarantee:

  	
   

  	
   

  
							

 

[FOR INCLUSION ONLY IF THIS NOTE BEARS AN IAI NOTE
LEGEND —] Other than pursuant to the sale or transfer of a Note to a transferee
that is not an Affiliate of the Initial Purchaser pursuant to an effective
shelf registration statement filed in connection with Section 2.2 of the
Registration Rights Agreement, dated as of May    , 2009,
between the Company and the purchasers named therein, in connection with any
transfer of any of the Notes evidenced by this certificate which are “restricted
securities” (as defined in Rule 144 (or any successor thereto) under the
Securities Act), the undersigned confirms that the Notes are being transferred
to a Person that is not an Affiliate of the Company and:

 

CHECK ONE BOX BELOW

 

	
  (1)

  	
  o

  	
   

  	
  To the Company.

  
	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
  o

  	
   

  	
  In connection with a
  Permitted Transfer.

  
	
   

  	
   

  	
   

  	
   

  
	
  (3)

  	
  o

  	
   

  	
  A transfer to a
  transferee that is not an Affiliate of any Initial Purchaser pursuant to
  Rule 144 under the Securities Act.

  
	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
  o

  	
   

  	
  A transfer to a person
  that is not an “Affiliate” of any Initial Purchaser (as described in
  Rule 144 under the Securities Act) pursuant to Rule 144A under the
  Securities Act or pursuant to Regulation S under the Securities Act.

  
	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
  o

  	
   

  	
  Solely if the
  conditions required to transfer pursuant to Rule 144 under the
  Securities Act, a transfer that is otherwise exempt from registration under
  the Securities Act.

  

 

A-19

 

Unless one of the boxes is checked, the Registrar will
refuse to register any of the Notes evidenced by this certificate in the name
of any Person other than the registered holder thereof; provided, however, that
if box (2) is checked, the Trustee may require, prior to registering any
such transfer of the Notes, such certifications and other information,
including legal opinions, as the Company has reasonably requested in writing,
by delivery to the Trustee of a standing letter of instruction, to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act of 1933.

 

	
  Your Signature:

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Medallion Signature
  Guarantee:

  	
   

  	
   

  
							

 

[FOR INCLUSION ONLY IF THIS NOTE BEARS A RESTRICTED
NOTE LEGEND —] Other than pursuant to the sale or transfer of the Note to a
transferee that is not an Affiliate of the Initial Purchaser pursuant to an
effective shelf registration statement filed in connection with Section 2.2
of the Registration Rights Agreement, dated as of May    ,
2009, between the Company and the purchasers named therein, in connection with
any transfer of any of the Notes evidenced by this certificate which are “restricted
securities” (as defined in Rule 144 (or any successor thereto) under the
Securities Act), the undersigned confirms that the Notes are being transferred
to a Person that is not an Affiliate of the Company and:

 

CHECK ONE BOX BELOW

 

	
  (1)

  	
  o

  	
   

  	
  to the Company; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
  o

  	
   

  	
  pursuant to and in
  compliance with Rule 144A under the Securities Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (3)

  	
  o

  	
   

  	
  pursuant to and in
  compliance with Regulation S under the Securities Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
  o

  	
   

  	
  pursuant to and in
  compliance with Rule 144 under the Securities Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
  o

  	
   

  	
  pursuant to and in
  compliance with any other exemption under the Securities Act of 1933.

  

 

Unless one of the boxes is checked, the Registrar will
refuse to register any of the Notes evidenced by this certificate in the name
of any Person other than the registered holder thereof; provided, however, that
if box (3) or (4) is checked, the Trustee may require, prior to
registering any such transfer of the Notes, such certifications and other
information, and if box (4) is checked such legal opinions, as the Company
has reasonably requested in writing, by delivery to the Trustee of a standing
letter of instruction, to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933; provided that this paragraph shall
not be applicable to any Notes which are not “restricted securities” (as
defined in Rule 144 (or any successor thereto) under the Securities Act).

 

A-20

 

	
  Your Signature:

  	
   

  	
   

  
	
   

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

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Medallion Signature
  Guarantee:

  	
   

  	
   

  
						

 

A-21

 

EXHIBIT B

 

FORM OF RESTRICTED COMMON STOCK LEGEND AND 

IAI COMMON STOCK LEGEND

 

[IAI Common Stock Legend]

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT.  IN NO EVENT MAY THIS
SECURITY BE SOLD, ASSIGNED, PLEDGED, LOANED HEDGED OR OTHERWISE DISPOSED OF OR
ENCUMBERED (COLLECTIVELY, A “TRANSFER”) BY AN INITIAL PURCHASER PRIOR TO MAY    ,
2010; PROVIDED,
HOWEVER, THAT AN INITIAL PURCHASER MAY TRANSFER
A NOTE PRIOR TO SUCH TIME (1) TO A PERMITTED TRANSFEREE, PROVIDED THAT
SUCH TRANSFEREE AND AGREES TO BE BOUND BY THE TRANSFER PROVISIONS OF THE
INDENTURE AND THE PURCHASE AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT AND
THE TRANSFERRING HOLDER AGREES TO CONTINUE TO BE SO BOUND OR (2) OTHERWISE
PURSUANT TO THE TERMS OF SECTION 8.1 OF THE PURCHASE AGREEMENT.  ANY
INITIAL PURCHASER HOLDING THIS NOTE AGREES THAT IT WILL NOT PRIOR TO THE
DATE THAT IS SIX MONTHS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS NOTE
EVIDENCED HEREBY AND THE LAST DATE ON WHICH THE COMPANY OR ANY “AFFILIATE” (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF
THE SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EVIDENCED HEREBY OTHER THAN DURING THE TIMES DESCRIBED IN
THE  PURCHASE AGREEMENT AND ONLY PURSUANT
TO (1) A TRANSFER TO THE COMPANY, (2) A PERMITTED TRANSFER,  (3) SO LONG AS THIS SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (4) IN
AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT)
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (5) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
(IF APPLICABLE) UNDER THE SECURITIES ACT, (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR (7) A TRANSFER THAT IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT.. 
THIS LEGEND SHALL BE REMOVED, AND
REPLACED BY A NEW LEGEND, IN EACH CASE IF APPLICABLE, UPON THE TRANSFER OF THE
SECURITY EVIDENCED HEREBY PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE.  IF THE PROPOSED TRANSFER IS PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY CLAUSE (5) ABOVE, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE 

 

B-1

 

PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT
AS PERMITTED BY THE SECURITIES ACT.

 

THIS SECURITY IS ADDITIONALLY SUBJECT TO THE TRANSFER
RESTRICTIONS CONTAINED IN THE PURCHASE AGREEMENT.

 

IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY, THE
HOLDER WILL DELIVER TO THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUEST TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

[Restricted Common Stock Legend]

 

THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT.  THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES THAT IT WILL NOT PRIOR TO
THE DATE THAT IS SIX MONTHS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS
SECURITY EVIDENCED HEREBY AND THE LAST DATE ON WHICH THE COMPANY OR ANY “AFFILIATE”
(AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER
OF THE SECURITY (THE “RESTRICTION TERMINATION DATE”) RESELL OR OTHERWISE
TRANSFER THIS SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH SECURITY OTHER THAN (1) TO THE COMPANY, (2) IN AN
OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR (5) A
TRANSFER THAT IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.  THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) NOT A
U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. 
IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE
IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY EXCEPT AS PERMITTED BY
THE SECURITIES ACT.

 

B-2

 

EXHIBIT C

 

FORM OF

CERTIFICATE OF DESIGNATION FOR

JUNIOR CONVERTIBLE PREFERRED STOCK

 

C-1

 

Exhibit B

 

Form of
Series A Certificate of Designation

 

 

CERTIFICATE
OF DESIGNATION

 

OF SERIES
A CONVERTIBLE PREFERRED STOCK

 

OF

 

POWER-ONE,
INC.

 

Power-One, Inc. (the
“Company”), a corporation organized and existing under the General
Corporation Law of the State of Delaware (the “DGCL”), hereby certifies,
pursuant to Section 151 of the DGCL, that the following resolutions were
duly adopted by its Board of Directors (the “Board”) on April 21,
2009:

 

WHEREAS, the Company’s
Restated Certificate of Incorporation (the “Certificate of Incorporation”)
authorizes 30,000,000 shares of preferred stock, par value $.001 per share (the
“Preferred Stock”) issuable from time to time in one or more series;

 

WHEREAS, the Certificate
of Incorporation authorizes the Board to provide by resolution for the issuance
of the shares of Preferred Stock in one or more series, and to establish from
time to time the number of shares to be included in each such series, and to
fix the designation, powers, privileges, preferences and relative
participating, optional or other rights, if any, of the shares of each such
series and the qualifications, limitations or restrictions thereof;

 

NOW, THEREFORE, BE IT
RESOLVED, that a series of Preferred Stock with the powers, designations,
preferences and rights and the qualifications, limitations and restrictions
thereof, as provided herein is hereby authorized and established as follows:

 

SECTION 1.         Number; Designation; Rank.

 

(a)           This series of convertible participating Preferred
Stock is designated as the “Series A Convertible Preferred Stock” (the “Series A
Preferred Stock”).  The number of
shares constituting the Series A Preferred Stock is [          ] shares, par value $.001 per share.

 

(b)           The Series A Preferred Stock ranks, with respect
to dividend rights and rights upon liquidation, dissolution or winding up of
the Company:

 

(i)            senior in preference and priority to the common stock
of the Company, par value $.001 per share (the “Common Stock”), the
series of Preferred Stock of the Company that is designated as “Junior
Participating Preferred Stock”, par value $.001 per share, and each other class
or series of Equity Security of the Company the terms of which do not expressly
provide that it ranks senior in preference or priority to or on parity, without
preference or priority, with the Series A Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company (collectively with the Common Stock, the “Junior Securities”);

 

(ii)           on parity, without preference and priority, with each
other class or series of Equity Security of the Company, the terms of which
expressly provide that it will rank on parity, without preference or priority,
with the Series A Preferred Stock with respect to dividend

 

 

rights or rights upon
liquidation, dissolution or winding up of the Company (collectively, the “Parity
Securities”), and

 

(iii)          junior in preference and priority to each other class
or series of Equity Security of the Company the terms of which expressly provide
that it will rank senior in preference or priority to the Series A
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company (collectively, the “Senior
Securities”).

 

SECTION 2.         Dividends.

 

(a)           Regular Dividends.

 

(i)            Each holder of issued and outstanding Series A
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board, on each share of Series A Preferred Stock, dividends (the “Regular
Dividends”) with respect to each Dividend Period equal to (A) the
Dividend Rate on the Regular Liquidation Preference per share of Series A
Preferred Stock minus (B) the amount of all Participating Dividends
paid in respect of a share of Series A Preferred Stock during the
applicable Dividend Period; provided that (x) in no event will the
Regular Dividend for any Dividend Period be less than zero (0) and (y) Participating
Dividends will not reduce the amount payable in respect of any Regular Dividend
that has accrued in any Dividend Period other than the Dividend Period during
which the Participating Dividend is paid. 
For purpose of this clause (a)(i), the amount of any Participating
Dividend that is not paid in cash will be deemed to equal the Fair Market Value
of the securities in the other property constituting such Participating
Dividend that is paid on a share of Series A Preferred Stock.

 

(ii)           Regular Dividends shall accrue on a daily basis and be
cumulative from the Series A Original Issuance Date and, without
duplication, unpaid Regular Dividends shall compound quarterly to the extent
not paid on the Dividend Payment Date relating to the applicable Dividend
Period (i.e., dividends shall begin to accrue on other dividends to the extent
that such other dividends are not paid on the Dividend Payment Date for the
Dividend Period for which such other dividends originally accrued).  Regular Dividends that are declared and
payable on the Series A Preferred Stock on any Dividend Payment Date shall
be payable in cash out of funds legally available therefor to holders of record
of the Series A Preferred Stock as they appear on the stock register of
the Company on the record date for such dividend, which shall be the date 15
days prior to the applicable Dividend Payment Date, provided that Regular
Dividends payable upon conversion of a share of Series A Preferred Stock
will be payable to the holder of record at the time of such conversion.

 

(iii)          Regular Dividends on the Series A Preferred Stock
in respect of any Dividend Period shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. 
The amount of dividends payable at the Dividend Rate on the Series A
Preferred Stock on any date prior to the end of a Dividend Period, and for the
initial Dividend Period, shall be computed on the basis of a 360-day year
consisting of twelve 30-day months, and actual days elapsed over a 30-day
month.

 

(iv)          Regular Dividends are payable only in cash.  Regular Dividends will accrue and cumulate
whether or not the Company has earnings or profits, whether or not there are

 

2

 

funds legally available
for the payment of Regular Dividends and whether or not Regular Dividends are
declared.

 

(b)           Participating Dividends.  (i) Each
holder of issued and outstanding Series A Preferred Stock will be entitled
to receive, when, as and if declared by the Board, out of funds legally
available for the payment of dividends for each share of Series A
Preferred Stock, dividends of the same type as any dividends or other
distribution, whether in cash, in kind or in other property, payable or to be
made on outstanding shares of Common Stock, in an amount equal to the amount of
such dividends or other distribution as would be made on the number of shares
of Common Stock into which such share of Series A Preferred Stock could be
converted on the applicable record date for such dividends or other
distribution on the Common Stock, without giving effect to the limitations set
forth in SECTION 5(b) (the “Participating Dividends”); provided,
however, that notwithstanding the above, the holders of Series A
Preferred Stock shall not be entitled to receive any dividends or distributions
for which an adjustment to the Conversion Price shall be made pursuant to SECTION 5(f)(i)(A) or
SECTION 5(f)(ii) (and such dividends or distributions that are not
payable to the holders of Series A Preferred Stock as a result of this
proviso shall not be deemed to be Participating Dividends).

 

(ii)           Participating Dividends are payable at the same time
as and when such dividend or other distribution on Common Stock is paid to the
holders of Common Stock and are payable to holders of record of Series A
Preferred Stock on the record date for the corresponding dividend or
distribution on the Common Stock; provided, however, that no
dividend or distribution on Common Stock shall be made to holders of the Common
Stock unless and until (A) all accrued and unpaid Regular Dividends and
Additional Dividends (other than Regular Dividends accruing pursuant to SECTION 2(a)(i) in
respect of the applicable Dividend Period in which the Participating Dividend
is paid) have been paid in full and (B) the Participating Dividends are
paid (or are concurrently being paid) pursuant to SECTION 2(b)(ii) hereof.

 

(c)           Additional Dividends. Following the occurrence of an Increase Event, and
for so long as such Increase Event continues, each holder of issued and
outstanding Series A Preferred Stock will be entitled to receive, when, as
and if declared by the Board, out of funds legally available for the payment of
dividends for each share of Series A Preferred Stock, with respect to each
Dividend Period, dividends at a rate per annum equal to the Additional Rate
multiplied by the Regular Liquidation Preference per share of the Series A
Preferred Stock (the “Additional Dividends” and, together with the
Regular Dividends and the Participating Dividends, the “Dividends”).  Any Additional Dividends payable pursuant to
this SECTION 2(c) shall be in addition to any Regular Dividends or
Participating Dividends, as applicable, payable pursuant to SECTION 2(a) and
2(b) hereof.  In addition, the right
of the holders of the Series A Preferred Stock to receive the Additional
Dividends is in addition to, and not in lieu of, any remedies such holders may
have at law or equity.

 

(i)            Additional Dividends will accrue on a daily basis and
be cumulative from the date on which an Increase Event occurs until such date
as such Increase Event is no longer continuing, and are payable in arrears on
each Dividend Payment Date until such date as the Increase Event is no longer
continuing.  Unpaid Additional Dividends
shall, without duplication, compound quarterly to the extent not paid on the
applicable Dividend Payment Date for such Additional Dividend.

 

3

 

(ii)           Additional Dividends in respect of any Dividend Period
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months.  The amount of Additional
Dividends payable for any dividend period shorter or longer than a full
quarterly dividend period, will be computed on the basis of a 360-day year
consisting of twelve 30-day months.

 

(iii)          Additional Dividends that are declared and payable on
a Dividend Payment Date will be paid to the holders of record of Series A
Preferred Stock as they appear in the records of the Company at the close of
business on the 15th day of the calendar month prior to the month in which the
applicable Dividend Payment Date falls, provided that Additional Dividends
payable upon conversion of a share of Series A Preferred Stock will be
payable to the holder of record at the time of such conversion.  Any payment of an Additional Dividend will
first be credited against the earliest accumulated but unpaid Additional Dividend
due with respect to each share that remains payable.

 

(iv)          Additional Dividends are payable only in cash.  Additional Dividends will accrue and cumulate
whether or not the Company has earnings or profits, whether or not there are
funds legally available for the payment of Additional Dividends and whether or
not Additional Dividends are declared.

 

(v)           While an Increase Event has occurred and is
continuing, neither the Company nor any of its subsidiaries may (A) declare,
pay or set aside for payment any dividends or distributions on any Junior
Securities, (B) repurchase, redeem or otherwise acquire any Junior
Securities or (C) make any loan or other advance to any direct or indirect
Beneficial Owner of a majority of the outstanding Common Stock or any direct or
indirect subsidiary of any such owner, except for repurchase of unvested
shares of restricted Common Stock from officers and employees pursuant to any
employment plan or agreement.

 

(vi)          Each of the following shall constitute an “Increase
Event” for the purposes hereof:

 

(A)          a failure by the Company to pay any Redemption Price
on the Redemption Date or the Company Redemption Date, including the absence of
funds legally available for such payment;

 

(B)           a failure by the Company to deliver the Fundamental
Change Notice to the holders of shares of Series A Preferred Stock
pursuant to SECTION 7(a)(ii) hereof within the time period provided
therein or to pay the Repurchase Price in respect of all shares of Series A
Preferred Stock on the Fundamental Change Purchase Date pursuant to SECTION 7
for any reason, including the absence of funds legally available for such
payment; or

 

(C)           a failure by the Company to deliver any cash
(including, without limitation, cash in lieu of fractional shares and accrued
and unpaid Dividends), shares of Common Stock and/or shares of Series B
Preferred Stock, when such cash, shares of Common Stock and/or shares of Series B
Preferred Stock, if any, are required to be delivered upon conversion of the Series A
Preferred Stock pursuant to SECTION 5 or SECTION 8, as applicable,
where the Company does not remedy such default within ten (10) days after
the

 

4

 

date such cash, shares of
Common Stock and/or shares of Series B Preferred Stock, if any, are
required to be delivered.

 

(d)           If Dividends are not paid in full, all Dividends
declared upon the Series A Preferred Stock and all dividends declared on
any Parity Securities shall be declared pro rata so that the amount of
Dividends declared per share of the Series A Preferred Stock and dividends
declared per share of such Parity Securities shall in all cases bear to each
other the same ratio that accrued and unpaid Dividends per share on the Series A
Preferred Stock and accrued and unpaid dividends per share of such Parity
Securities bear to each other.

 

(e)           The Company shall take all actions available to it
that are reasonably necessary or advisable under the DGCL to permit the payment
of Dividends to the holders of Series A Preferred Stock, including,
without limitation, through the revaluation of its assets in accordance with
Delaware law.  Holders of Series A
Preferred Stock are not entitled to any dividend, whether payable in cash, in
kind or other property, in excess of the Dividends as provided in this SECTION 2.

 

(f)            Any holder that, together with its Affiliates,
Beneficially Owns more than 1,000 shares of Series A Preferred Stock will
be entitled to receive all cash Dividends by wire transfer of immediately
available funds.

 

SECTION 3.         Liquidation Preference.

 

(a)           Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, each share of Series A Preferred
Stock entitles the holder thereof to receive and to be paid out of the assets
of the Company available for distribution, before any distribution or payment
may be made to a holder of any Junior Securities, an amount in cash per share
of Series A Preferred Stock equal to the sum of (i) the greater of (A) the
Original Purchase Price per share and (B) an amount equal to the amount
the holders of Series A Preferred Stock would have received per share of Series A
Preferred Stock upon liquidation, dissolution or winding up of the Company had
such holders converted their shares of Series A Preferred Stock into shares
of Common Stock immediately prior thereto, plus (ii) an amount equal
to all accrued and unpaid Dividends, if any, on such share of Series A
Preferred Stock (such sum, the “Regular Liquidation Preference” if
pursuant to subclauses (i)(A) and (ii) and the “Participating
Liquidation Preference” if pursuant to subclauses (i)(B) and
(ii), and such greater amount, the “Liquidation Preference”).

 

(b)           If upon any such liquidation, dissolution or winding
up of the Company, the assets of the Company available for distribution are
insufficient to pay the holders of Series A Preferred Stock the full
Liquidation Preference and the holders of all Parity Securities the full
liquidation preferences to which they are entitled, the holders of Series A
Preferred Stock and such Parity Securities will share ratably in any such
distribution of the assets of the Company in proportion to the full respective
amounts to which they are entitled.

 

(c)           After payment to the holders of Series A
Preferred Stock of the full Liquidation Preference to which they are entitled,
the holders of Series A Preferred Stock as such will have no right or
claim to any of the assets of the Company.

 

5

 

(d)           The value of any property not consisting of cash that
is distributed by the Company to the holders of the Series A Preferred
Stock will equal the Fair Market Value thereof on the date of distribution.

 

(e)           For the purposes of this SECTION 3, a
Fundamental Change (in and of itself) shall be deemed not to be a liquidation,
dissolution or winding-up of the Company subject to this SECTION 3 (it
being understood that an actual liquidation, dissolution or winding up of the Company in connection with a Fundamental Change will
be subject to this SECTION 3).

 

SECTION 4.         Voting Rights; Board Representation.

 

(a)           The holders of Series A Preferred Stock are
entitled to vote on all matters on which the holders of Common Stock are
entitled to vote, and except as otherwise provided herein or by law, the
holders of Series A Preferred Stock will vote together with the holders of
Common Stock as a single class.  Each
holder of Series A Preferred Stock is entitled to a number of votes equal
to the number of shares of Common Stock into which all of the outstanding
shares of Series A Preferred Stock held by such holder on the record date
for any such vote are convertible as of such record date without giving effect
to the limitations set forth in SECTION 5(b); provided, however,
that in any vote of the holders of the Series A Preferred Stock, Common
Stock and any other securities that constitute Voting Stock voting together as
a single class, to the extent that the aggregate voting power of a holder of Series A
Preferred Stock together with its Affiliates would exceed 19.9% of the Maximum
Voting Power (the “Maximum Voting Percentage”), then the aggregate
number of votes entitled to be cast in such vote by such holder and its
Affiliates with respect to the Series A Preferred Stock held by such
holder and its Affiliates will be reduced, pro rata, to that number (not less
than zero) that results in the aggregate voting power of such holder and its
Affiliates in such vote being equal to the Maximum Voting Percentage of
the Maximum Voting Power of the Company. 
For purposes hereof, “Maximum Voting Power” means, at the time of
determination of the Maximum Voting Power, the total number of votes which may
be cast by all capital stock on the applicable matter subject to the vote of
the Common Stock, Series A Preferred Stock and any other securities that
constitute Voting Stock voting together as a single class and after giving
effect to any limitation on voting power set forth in this Certificate of
Designation and the certificate of designation or other similar document
governing other Voting Stock.

 

(b)           Notwithstanding SECTION 4(a) hereof:

 

(i)            (A) For as long as the holders of Series A
Preferred Stock have the exclusive right to elect Preferred Directors pursuant
to SECTION 4(d), the holders of Series A Preferred Stock will not be
entitled to vote for the election of directors other than Preferred Directors,
and (B) at any time that the conditions in clause (A) are not
satisfied, the holders of Series A Preferred Stock will vote together with
the holders of Common Stock for the election of directors in accordance with SECTION 4(a).

 

(ii)           Following a Fundamental Change pursuant to which the Series A
Preferred Stock is converted, or convertible, into a security of an entity
other than (x) the Company or (y) the surviving entity of a merger or
consolidation to which the Company is a constituent party (a “Non-Constituent
Issuer Fundamental Change”), the Series A Preferred Stock (or the
security into which it is converted (the “Conversion Security”)) shall
not entitle the holder thereof to vote on any

 

6

 

matters other than those
set forth in SECTION 4(c)(i), (ii), (iii), (iv), (v) and (vi) (but
only to the extent clause (vi) relates to clauses (i), (ii), (iii), (iv) and
(v)) below and such other matters (if any) as shall be required by law. For
purposes of clarity, to the extent that the Conversion Security does not
entitle the holders thereof to vote on any matters other than those set forth
in SECTION 4(c)(i)-(vi) (but only to the extent clause (vi) relates
to clauses (i), (ii), (iii), (iv) and (v)) below and such other matters
(if any) as shall be required by law, the conversion of the Series A
Preferred Stock into the Conversion Security shall not be deemed to be an
amendment, repeal, alteration, addition, deletion or other change to the
powers, preferences, rights or privileges of the Series A Preferred Stock
in a manner adverse to the holders thereof.

 

(c)           So long as any shares of Series A Preferred Stock
are outstanding and except as otherwise expressly permitted hereby, the Company
and its subsidiaries may not take any of the following actions (including by
means of merger, consolidation, reorganization, recapitalization or otherwise)
without the prior vote or written consent of holders representing at least a
majority of the then-outstanding shares of Series A Preferred Stock,
voting together as a separate class:

 

(i)            any amendment, repeal, alteration, addition, deletion
or other change to the powers, preferences, rights or privileges of the Series A
Preferred Stock or the Series B Preferred Stock in a manner adverse to the
holders thereof (whether by Board resolution, amendment to the Certificate of
Incorporation or Bylaws, merger, consolidation or otherwise);

 

(ii)           any increase or decrease in the authorized amount of
shares of Series A Preferred Stock, except for the cancellation and
retirement of shares set forth in SECTION 10(a);

 

(iii)          any issuance of additional shares of Series A
Preferred Stock after the Series A Original Issuance Date;

 

(iv)          any authorization, creation or issuance (by reclassification or otherwise)
of any Senior Securities or Parity Securities;

 

(v)           declare, pay or set aside for payment any dividends or distributions on, or
repurchase, redeem or otherwise acquire any Junior Securities or Parity
Securities if (A) all accrued Dividends on the Series A Preferred
Stock (other than Regular Dividends accruing pursuant to SECTION 2(a)(i) in
respect of the applicable Dividend Period) have not been paid in full or (B) if
after giving effect to such action, the Company would not have sufficient funds
legally available to redeem all shares of Series A Preferred Stock for
the Regular Liquidation Preference; or

 

(vi)          agree to do any of the foregoing actions set forth in
clause (c)(i) through (c)(v), unless such agreement expressly provides
that the Company’s obligation to undertake any of the foregoing is subject to
the prior approval of holders of Series A Preferred Stock.

 

Without expanding the
scope of the foregoing voting rights of Series A Preferred Stock, it is
understood that in the context of a Fundamental Change, so long as immediately
following such Fundamental Change:

 

(i)  the Series A
Preferred Stock (or any preferred security into which the Series A
Preferred Stock is converted in such Fundamental Change as contemplated by
clause (ii)(B) below) is convertible into the kind and amount of shares of
capital stock, other securities or other property

 

7

 

receivable upon such
Fundamental Change by a holder of a number of shares of Common Stock issuable
upon conversion of such shares of Series A Preferred Stock in accordance
with SECTION 5(e); and

 

(ii)  the Series A
Preferred Stock either:

 

(A) remains
outstanding with the same powers, preferences, rights and privileges set forth
in this Certificate of Designation (except to the extent necessary or
appropriate to implement clause (i) above), or

 

(B) is converted
into or otherwise exchanged for preferred securities of the Acquirer, which preferred
securities have the same powers, preferences, rights and privileges (other than
those that by their terms automatically terminate or otherwise are altered
following such a Fundamental Change pursuant to the terms of this Certificate
of Designation and other than to the extent necessary or appropriate to reflect
the consummation of the transaction and the fact that the issuer is a different
entity) as the Series A Preferred Stock, provided that such
exchange does not result in income tax consequences generally to U.S.
individual holders of the Series A Preferred Stock that are more severe
than the income tax consequences such holders would have suffered if such
holders had been holders of Common Stock and been treated as such in the
Fundamental Change; and

 

(iii)  in connection
with such Fundamental Change, no action takes place that would otherwise
require the approval of the holders of the Series A Preferred Stock
pursuant to this SECTION 4(c), the Series A Preferred Stock shall not
have any vote or consent as a separate class with respect to such Fundamental
Change.  For the avoidance of doubt, the
foregoing shall not limit or otherwise modify any holder’s rights pursuant to SECTION 7.

 

(d)           Right to Designate/Elect Preferred Directors. From and after the Series A
Original Issuance Date and for as long as SLS and its Permitted Transferees
Beneficially Own a majority of the outstanding shares of Series A
Preferred Stock, but subject to a Representation Reduction Event, the holders
of shares of Series A Preferred Stock, voting together as a separate class
by a majority of the then-outstanding shares of Series A Preferred Stock
as of any applicable record date, shall have the exclusive right to elect a
total number of directors (such persons, the “Preferred Directors”), to
the Board equal to the Board Representation Entitlement.  If the holders of Series A Preferred
Stock fail to elect a number of Preferred Directors sufficient to fill the
Board Representation Entitlement, then the Board will take such actions as are
necessary to reduce the size of the Board until such time as the holders of Series A
Preferred Stock fill such directorship by vote or by written consent in lieu of
a meeting; and no such directorship may be filled by stockholders of the
Company other than the holders of Series A Preferred Stock.  In addition, upon the occurrence of an
increase in the authorized number of directors then constituting the Board that
results in an increase of the Board Representation Entitlement to a number greater
than the number of Preferred Directors then serving on the Board, the Board
will take such actions as are necessary to increase the authorized number of
Preferred Directors on the Board so that the total authorized number of
Preferred Directors is equal to the Board Representation Entitlement at such
time.

 

8

 

(i)            Term of Office. Unless a
Preferred Director’s term of office shall have terminated prior to such time
pursuant to SECTION 4(d)(ii), (iii), (iv), (v), (vi) or (vii) below,
such Preferred Director designated or elected pursuant to this SECTION 4
shall serve until the next special or annual meeting of stockholders of the
Company called for the purpose of electing Preferred Directors at which such
Preferred Director is up for election or at any special meeting of the holders
of Series A Preferred Stock, as the case may be, for the purpose of
removing Preferred Directors, or until his or her successor shall be duly
elected.

 

(ii)           Removal and Vacancies.  So long as the Board Representation
Entitlement is equal to at least one (1), a majority of the directors may call,
and upon the written request of holders of record of at least 50% of the
then-outstanding shares of Series A Preferred Stock, addressed to the
Secretary of the Company at the principal office of the Company, shall call, a
special meeting of the holders of shares of Series A Preferred Stock, for
the sole purpose of filling any vacancy caused by the resignation, death or
removal of a Preferred Director (but only to the extent required to maintain
the then applicable Board Representation Entitlement and permitted by the
Certificate of Incorporation), or to remove from office a Preferred Director
with or without cause. Such meeting shall be held as soon as reasonably
practicable after delivery of such request to the Secretary, at the place and
upon the notice provided by law and in the Bylaws for the holding of meetings
of stockholders. Subject to the Certificate of Incorporation and SECTION 4(d)(iii),
(iv), (v), (vi) or (vii) below, only the holders of a majority of the
then-outstanding shares of Series A Preferred Stock, voting together as a
single class, are entitled to fill any vacancy caused by the resignation, death
or removal of a Preferred Director (but only to the extent required to maintain
the then applicable Board Representation Entitlement and permitted by the
Certificate of Incorporation), and only the holders of Series A Preferred
Stock are entitled to remove from office a Preferred Director without
cause.  Any Preferred Director may be
removed from office (A) with or without cause by holders of a majority of
the then-outstanding shares of Series A Preferred Stock or (B) only
for cause by the holders of a majority of the then-outstanding shares of Common
Stock.

 

(iii)          Change Following Representation
Reduction Event. Upon the occurrence of a Representation Reduction Event,
the number of Preferred Directors on the Board (but not the number of directors
constituting the whole Board) shall be reduced immediately so that the total
number of Preferred Directors after the occurrence of a Representation
Reduction Event is equal to the Board Representation Entitlement at such time.
To effect such reduction, the term of office of the requisite number of
Preferred Directors shall immediately end, such person(s) shall cease to
be director(s), and neither the remaining Preferred Directors nor the holders
of shares of Series A Preferred Stock shall have any right to elect or
appoint a Preferred Director to replace such director.  To the extent that there is more than one
Preferred Director on the Board immediately prior to the Representation
Reduction Event, the holders of a majority of the then-outstanding shares of Series A
Preferred Stock shall have the right to designate which of the Preferred
Directors’ terms shall end pursuant to this SECTION 4(d)(iii) and
cause such person to resign from the Board; provided that if holders of
a majority of the then-outstanding shares of Series A Preferred Stock fail
to designate in advance which of the Preferred Directors’ terms shall end, the
directors (other than the Preferred Directors) shall then be entitled to make
such designation.

 

(iv)          Change Following Board Size
Decrease.  Upon the occurrence of a
decrease in the authorized number of directors then constituting the Board
that, as a result thereof results in a reduction of the Board Representation
Entitlement to less than the then authorized

 

9

 

number of Preferred
Directors (a “Board Size Decrease”), the number of Preferred Directors
on the Board shall be reduced immediately so that the total number of Preferred
Directors is equal to the Board Representation Entitlement at such time. To
effect such reduction, the term of office of that number of Preferred Directors
required to reduce the number of Preferred Directors to the new Board
Representation Entitlement shall immediately end, such person(s) shall
cease to be director(s), and neither the remaining Preferred Directors nor the
holders of shares of Series A Preferred Stock shall have any right to
elect or appoint a Preferred Director to replace such director at such
time.  To the extent that there is more than one Preferred
Director on the Board immediately prior
to the Board Size Decrease, the holders of a majority of the
then-outstanding shares of Series A Preferred Stock shall have the right
to designate which of the Preferred Directors’ terms shall end pursuant to this
SECTION 4(d)(iv) and cause such person to resign from the Board; provided
that if holders of a majority of the then-outstanding shares of Series A
Preferred Stock fail to designate in advance which of the Preferred Directors’
terms shall end, the directors (other than the Preferred Directors) shall then
be entitled to make such designation.

 

(v)           Loss of Preferred Directors on a
Non-Constituent Issuer Fundamental Change. 
Upon the occurrence of a Non-Constituent Issuer Fundamental Change, the
terms of office of all Preferred Directors shall immediately end, such persons
shall cease to be directors, and the holders of shares of Series A
Preferred Stock shall not have any right to elect or appoint Preferred
Directors to replace the directors whose terms of office shall have ended.

 

(vi)          Loss of Preferred Director on a
Fundamental Change Other than a Non-Constituent Issuer Fundamental Change.
Upon the occurrence of a Fundamental Change other than a Non-Constituent Issuer
Fundamental Change, if the Board Representation Entitlement is at least
one (1) Preferred Director at such time, the terms of office of all
but one (1) Preferred Director shall immediately end, such persons
shall cease to be directors (notwithstanding the proviso in SECTION 4(d)(vii) below),
and neither the remaining Preferred Director nor the holders of shares of Series A
Preferred Stock shall have any right to elect or appoint Preferred Directors to
replace the directors whose terms of office shall have ended pursuant to this SECTION 4(d)(vi).
To the extent that there is more than one Preferred Director on the Board
immediately prior to such Fundamental Change, the holders of a majority of the
then-outstanding shares of Series A Preferred Stock shall have the right
to designate which of the Preferred Directors’ terms shall end pursuant to this
SECTION 4(d)(vi) and cause such person to resign from the Board; provided
that if the holders of a majority of the then-outstanding shares of Series A
Preferred Stock fail to designate in advance which of the Preferred Directors’
terms shall end, the directors (other than the Preferred Directors) shall then
be entitled to make such designation.

 

(vii)         Loss of Board Representation
Entitlement.  From and after the
first time that the Board Representation Entitlement is equal to zero (0), the
holders of Series A Preferred Stock shall cease to have any rights under
this SECTION 4(d) (including, without limitation, the right to vote
to fill any vacancies of Preferred Directors other than pursuant to SECTION 4(d)(ix));
provided, however, that if, immediately following such time, the
Investor Securityholders continue to benefit from the contractual rights set
forth in Section 7.1 of the Securities Purchase Agreement, each Preferred
Director serving on the Board at such time (the “Transition Time”) shall
continue as a director, but not as a Preferred Director (other than with
respect to SECTION 4(d)(iii), pursuant to which such director shall not
continue as a director if the conditions therein for the elimination of such
director’s seat are met), until the next special or annual meeting of
stockholders of the 

 

10

 

Company called for the
purpose of electing directors, or until his or her successor shall be
elected.  From and after the Transition
Time, the holders of shares of Series A Preferred Stock shall not have any
right, voting as a separate class, to elect or appoint a Preferred Director to
replace such director.

 

(viii)        Filling Vacancy Upon Cessation of
Preferred Director. Any vacancy resulting from the cessation of the term of
office of a Preferred Director pursuant to SECTION 4(d)(iii), (v), (vi) or
(vii) may be filled by either (A) the Board or (B) to the extent
permitted by the Certificate of Incorporation, the holders of Common Stock
generally, and not the holders of Series A Preferred Stock voting as a
separate class, in accordance with the Certificate of Incorporation, the Bylaws
of the Company and applicable law.

 

(ix)           Additional Preferred Director
After Increase Event.  If an Increase
Event occurs, and for so long as such Increase Event continues, the holders of
shares of Series A Preferred Stock, voting together as a separate class by
a majority of the then-outstanding shares of Series A Preferred Stock as
of any applicable record date, shall have the exclusive right to elect one
director (the “Additional Director”) to the Board in addition to the number
of Preferred Directors that would otherwise constitute the Board Representation
Entitlement.  If the election of such
Additional Director would cause the size of the Board to exceed the maximum
number of directors permitted under the Certificate of Incorporation, the
Company shall take all reasonable actions to cause one director (other than a
Preferred Director or Nominated Director (as defined in the Securities Purchase
Agreement)) to immediately resign from the Board.  The term of such Additional Director shall
expire automatically upon such Increase Event no longer continuing.

 

(e)           Exchange Compliance.  Notwithstanding the foregoing, to the fullest
extent permitted by applicable law:

 

  (i)          the rights of the holders of the Series A
Preferred Stock set forth in SECTION 4(a) to vote as a single class
with the Common Stock shall be subject to applicable rules of the Exchange
on which the Company is then listed to the extent required such that the Common
Stock shall continue to be listed on such Exchange, including, without
limitation, compliance by the Company with Rule 4351 of Nasdaq (or any
successor thereto) insofar as it may be applied in the event that the
Conversion Price is determined to be less than the greater of “book or market
value” as defined in such rules, and such rights to vote with the Common Stock
shall be accordingly reduced or otherwise modified to the minimum extent
required to comply with such rules; and

 

  (ii)         if after the Series A Original
Issuance Date there is a change in the applicable rules of the primary
Exchange on which the Common Stock is listed at the time such change becomes
effective or in the interpretation of such applicable rules that would
cause the Common Stock to be delisted by such Exchange as a result of the terms
of this SECTION 4, the voting rights of the holders of the Series A
Preferred Stock set forth in this SECTION 4 shall thereafter be limited to
the extent required by such changed rules in order for the Common Stock to
continue to be listed on such Exchange.

 

SECTION 5.          Conversion.

 

Each share of Series A
Preferred Stock is convertible into shares of Common Stock as provided in this SECTION 5.

 

11

 

(a)           Conversion at the Option of
Holders of Series A Preferred Stock. 
Subject to SECTION 5(b) and SECTION 5(e)(viii), each
holder of Series A Preferred Stock is entitled to convert, at any time and
from time to time, at the option and election of such holder, any or all shares
of outstanding Series A Preferred Stock held by such holder into a number
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock equal to the amount (the “Conversion Amount”) determined by
dividing (i) the Original Purchase Price for each share of Series A
Preferred Stock to be converted by such holder by (ii) the Conversion
Price in effect at the time of conversion. 
The “Conversion Price” initially is $1.35, as adjusted from time
to time as provided in SECTION 5(f). 
In order to convert shares of Series A Preferred Stock into shares
of Common Stock, the holder must surrender the certificates representing such
shares of Series A Preferred Stock, accompanied by transfer instruments
reasonably satisfactory to the Company, free of any adverse interest or liens
at the office of the Company’s transfer agent for the Series A Preferred
Stock (or at the principal office of the Company, if the Company serves as its
own transfer agent), together with written notice that such holder elects to
convert all or such number of shares represented by such certificates as
specified therein.  With respect to a
conversion pursuant to this SECTION 5(a), the date of receipt of such
certificates, together with such notice, by the transfer agent or the Company
will be the date of conversion (the “Conversion Date”).

 

(b)           Limitations on Conversion.  Notwithstanding SECTION 5(a) or SECTION 5(c) but
subject to SECTION 8, the Company shall not effect any conversion of the Series A
Preferred Stock or otherwise issue shares of Common Stock pursuant to SECTION 5(a) or
(c), and no holder of Series A Preferred Stock will be permitted to
convert shares of Series A Preferred Stock into shares of Common Stock if,
and to the extent that, following such conversion, either (i) such holder’s,
together with such holder’s Affiliates’, aggregate voting power on a matter
being voted on by holders of Common Stock would exceed 19.9% of the Maximum
Voting Power or (ii) such holder, together with such holder’s Affiliates,
would Beneficially Own (disregarding for this purpose clause (ii) of the
definition of “Beneficially Own”) more than 19.9% of the then outstanding
Common Stock; provided, however, that such conversion restriction
shall not apply to any conversion in connection with and subject to completion
of (A) a Public Sale of the Common Stock to be issued upon such
conversion, if following consummation of such Public Sale such holder and its
Affiliates will not Beneficially Own (disregarding for this purpose clause (ii) of
the definition of “Beneficially Own”) in excess of 19.9% of the then
outstanding Common Stock or (B) a bona fide third
party tender offer for the Common Stock issuable thereupon.  For purposes of the foregoing sentence, the
number of shares of Common Stock Beneficially Owned by a holder and its Affiliates
shall include the number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock with respect to which a conversion notice has
been given, but shall exclude the number of shares of Common Stock which would
be issuable upon conversion or exercise of (x) the remaining, unconverted
portion of the Series A Preferred Stock and any Junior Preferred Stock (as
defined in the Securities Purchase Agreement), (y) any outstanding Notes,
or (z) any outstanding Warrants (as defined in the Securities Purchase
Agreement) Beneficially Owned by such holder or any of its Affiliates.  Upon the written request of the holder, the
Company shall within two (2) Business Days confirm in writing to any
holder the number of shares of Common Stock then outstanding.

 

(c)           Conversion at the Option of the
Company.  Subject to SECTION 5(b) and
SECTION 8, on and after the two-and-a-half year anniversary of the Series A
Original Issuance Date, at the Company’s option and election and upon its
compliance with this SECTION 5(c), all 

 

12

 

outstanding shares of Series A
Preferred Stock shall be converted automatically into a number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
equal to the Conversion Amount on the date of written notice by the Company to
the holders of Series A Preferred Stock notifying such holders of the
conversion contemplated by this SECTION 5(c), which conversion shall occur
on the date specified in such notice, not less than 10 Business Days nor more
than 30 days following the date of such notice (which date shall be the
Conversion Date in respect of a conversion pursuant to this SECTION 5(c)),
provided that such notice may be delivered by the Company only if (i) the
Closing Price per share of the Common Stock for each of 20 or more Trading Days
in a 30 consecutive Trading Day period ending on the Trading Day immediately
prior to delivery of a notice of conversion pursuant to this SECTION 5(c) was
at or above 300% of the then-applicable Conversion Price and (ii) all
requisite arrangements with the Company’s transfer agent, the Exchange on which
shares of the Common Stock are then listed, and any other requisite securities
intermediary (including The Depository Trust Company and Cede & Co.,
if applicable) to permit trading of such shares of Common Stock on the
Conversion Date shall have been completed; provided, however,
that the Company shall not have the right to require conversion of the Series A
Preferred Stock pursuant to this SECTION 5(c), unless (x) the Company
shall have, as of the Conversion Date, funds legally available therefor to pay
all accrued and unpaid Dividends on the shares of Series A Preferred Stock
that are being converted into Common Stock and (y) at the time of the
mailing of the notice of conversion, either (1) the shelf registration
statement referred to in Section 2.2 of the Registration Rights Agreement
is effective and available for resales of the Common Stock issuable upon
conversion of the Series A Preferred Stock or (2) the shares of
Common Stock for which the Series A Preferred Stock are convertible into
may be sold by all holders of the Series A Preferred Stock under Rule 144
under the Securities Act without volume or other limitation.  Once delivered, such notice shall be
irrevocable, unless the Company obtains the written consent of the holders
representing a majority of the outstanding shares of Series A Preferred
Stock. Notwithstanding the foregoing, the holders of Series A Preferred
Stock shall continue to have the right to convert their shares of Series A
Preferred Stock pursuant to SECTION 5(a) until and through the
Conversion Date contemplated in this SECTION 5(c) and if such shares
of Series A Preferred Stock are converted pursuant to SECTION 5(a) such
shares shall no longer be converted pursuant to this SECTION 5(c) and
the Company’s notice delivered to the holders pursuant to this SECTION 5(c) shall
be of no effect with respect to such shares converted pursuant to SECTION 5(a).

 

(d)           Fractional Shares.  No fractional shares of Common Stock will be
issued upon conversion of the Series A Preferred Stock.  In lieu of fractional shares, the Company
shall pay cash equal to such fractional amount multiplied by the Fair Market Value
of Common Stock as of the Conversion Date. 
If more than one share of Series A Preferred Stock is being
converted at one time by the same holder, then the number of full shares
issuable upon conversion will be calculated on the basis of the aggregate number
of shares of Series A Preferred Stock converted by such holder at such
time.

 

(e)           Mechanics of Conversion.

 

  (i)          As soon as practicable after the
Conversion Date (and in any event within three Business Days), the Company
shall (A) issue and deliver to such holder the number of shares of Common
Stock to which such holder is entitled, together with a check or cash for
payment of fractional shares, if any, in exchange for the certificates formerly
representing shares of Series A 

 

13

 

Preferred Stock and (B) pay
to such holder, to the extent of funds legally available therefor, all accrued
and unpaid Dividends on the shares of Series A Preferred Stock that are
being converted into Common Stock.  Such
conversion will be deemed to have been made on the Conversion Date, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such
shares of Common Stock on such Conversion Date. 
In case fewer than all the shares represented by any such certificate
are to be converted, a new certificate shall be issued representing the
unconverted shares without cost to the holder thereof, except for any
documentary, stamp or similar issue or transfer tax due because any
certificates for shares of Common Stock or Series A Preferred Stock are
issued in a name other than the name of the converting holder.  The Company shall pay any documentary, stamp
or similar issue or transfer tax due on the issue of Common Stock upon
conversion or due upon the issuance of a new certificate for any shares of Series A
Preferred Stock not converted other than any such tax due because shares of
Common Stock or a certificate for shares of Series A Preferred Stock are
issued in a name other than the name of the converting holder.

 

  (ii)         The Company shall at all times reserve
and keep available, free from any preemptive rights, out of its treasury or out
of authorized but unissued shares of Common Stock (or a combination of both)
for the purpose of effecting the conversion of the Series A Preferred
Stock the full number of shares of Common Stock deliverable upon the conversion
of all outstanding Series A Preferred Stock (as may be adjusted from time
to time pursuant to the terms of this SECTION 5 and assuming for the
purposes of this calculation that all outstanding shares of Series A
Preferred Stock are held by one holder), and the Company shall take all actions
to amend its Certificate of Incorporation to increase the authorized amount of
Common Stock if necessary therefor. 
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock, the Company will
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock at such adjusted Conversion Price.

 

  (iii)        From and after the Conversion Date, the
shares of Series A Preferred Stock to be converted on such Conversion Date
will no longer be deemed to be outstanding, and all rights of the holder
thereof as a holder of Series A Preferred Stock (except the right to
receive from the Company the Common Stock upon conversion, together with the
right to receive any payment in lieu of a fractional share of Common Stock and
any accrued and unpaid Dividends thereon) shall cease and terminate with
respect to such shares; provided, that in the event that a share of Series A
Preferred Stock is not converted, such share of Series A Preferred Stock
will remain outstanding and will be entitled to all of the rights as provided
herein.  Any shares of Series A
Preferred Stock that have been converted will, after such conversion, upon
issuance of the shares of Common Stock issuable upon conversion thereof and the
payment of all accrued and unpaid Dividends thereon and cash in lieu of
fractional shares of Common Stock, be deemed cancelled and retired, shall not
be reissued as such and, following the filing of any certificate required by
the DGCL, have the status of authorized but unissued Preferred Stock, without
designation as to series until such shares are once more designated as part of
a particular series by the Board; provided, however, that if such
shares become convertible into Senior Redeemable Preferred, such shares shall
not be deemed cancelled and retired but may instead be reissued as shares of
Senior Redeemable Preferred. 
Notwithstanding anything to the contrary set forth herein, in the event
that (1) any shares of Series A Preferred Stock are converted into
Common Stock pursuant to the terms hereof or Series B Preferred Stock
pursuant 

 

14

 

to SECTION 8, and (2) the
Company, at the time of such conversion, does not have sufficient lawfully
available funds to pay all accrued and unpaid Dividends then due and payable
thereon, upon such conversion the holder of such shares shall in addition to
receiving shares of Common Stock issuable pursuant to this SECTION 5 or Series B
Preferred Stock issuable pursuant to SECTION 8, as applicable, receive one
share of a series of preferred stock of the Company having the rights, powers
and preferences hereinafter described (the “Senior Redeemable Preferred”)
for each share of Series A Preferred Stock that was converted in lieu of
the accrued and unpaid Dividends then due and payable thereon.  The Company hereby covenants that, if any
shares of Series A Preferred Stock become convertible into Senior
Redeemable Preferred, the Board shall take all necessary action to authorize
the creation of the Senior Redeemable Preferred and to provide that the Senior
Redeemable Preferred shall rank senior to all Junior Securities, pari passu
with all Parity Securities and junior to all Senior Securities, and shall have
no special rights, powers or preferences, other than the following:  (A) each share of Senior Redeemable
Preferred shall be redeemed automatically by the Company, at such time as the
Company shall have sufficient lawfully available funds therefor, at a purchase
price equal to (x) the amount of accrued and unpaid Dividends attributable
to the share of Series A Preferred Stock that was converted into such
share of Senior Redeemable Preferred at the time of such conversion, plus (y) any
Dividends payable thereon at the rate and on the basis as would otherwise be
applicable pursuant to SECTION 2 hereof from the date of such conversion
through the date of redemption, (B) for so long as any shares of Senior
Redeemable Preferred are outstanding, the Company shall not take any of the
actions referenced in sub-clauses (i) — (vi) of SECTION 4(c) hereof
and (C) upon any voluntary or involuntary liquidation or dissolution or
winding up of the Company, the holders of Senior Redeemable Preferred shall
have a liquidation preference equal to an amount calculated in accordance with
clause (A) of this sentence.

 

  (iv)        If the conversion is in connection with
any sale, transfer or other disposition of the Common Stock issuable upon
conversion of the Series A Preferred Stock, the conversion may, at the
option of any holder tendering any share of Series A Preferred Stock for
conversion, be conditioned upon the closing of the sale, transfer or the
disposition of shares of Common Stock issuable upon conversion of Series A
Preferred Stock with the underwriter, transferee or other acquirer in such
sale, transfer or disposition, in which event such conversion of such shares of
Series A Preferred Stock shall not be deemed to have occurred until
immediately prior to the closing of such sale, transfer or other disposition.

 

  (v)         The Company shall comply with all
federal and state laws, rules and regulations and applicable rules and
regulations of the Exchange on which shares of the Common Stock are then
listed.  If any shares of Common Stock to
be reserved for the purpose of conversion of shares of Series A Preferred
Stock require registration with or approval of any person or group under any
federal or state law or the rules and regulations of the Exchange on which
shares of the Common Stock are then listed before such shares may be validly
issued or delivered upon conversion, then the Company will, as expeditiously as
possible, use its reasonable best efforts to secure such registration or
approval, as the case may be.  So long as
any shares of Common Stock into which the shares of Series A Preferred
Stock are then convertible is then listed on an Exchange, the Company will list
and keep listed on such Exchange, upon official notice of issuance, all shares
of such Common Stock issuable upon conversion.

 

  (vi)        All shares of Common Stock issued upon
conversion of the shares of Series A Preferred Stock will, upon issuance
by the Company, be duly and validly issued, fully paid 

 

15

 

and nonassessable, not
issued in violation of any preemptive rights arising under law or contract and
free from all taxes, liens and charges with respect to the issuance thereof,
and the Company shall take no action which will cause a contrary result.

 

  (vii)       If, prior to a Rights Trigger, shares of Series A
Preferred Stock are converted into Common Stock, upon the conversion of such
shares of Series A Preferred Stock, the shares of Common Stock issued in
respect thereof shall be issued with the same Rights, if any, attached thereto
as are attached to the then-outstanding shares of Common Stock.

 

  (viii)      Partial Cash Settlement.

 

(A)  The Company may in its sole discretion at any
time, and from time to time, deliver a written notice (a “Partial Cash
Notice”) to each holder of Series A Preferred Stock (1) stating (x) that
the Company is exercising its option pursuant to this SECTION 5(e)(viii) and
(y) the aggregate number of shares of Series A Preferred Stock
subject to, or the aggregate dollar amount payable by the Company pursuant to
this SECTION 5(e)(viii) in respect of, such option (the “Cash
Amount”), or (2) revoking an Outstanding Partial Cash Notice, as the
case may be.  Each Partial Cash Notice
will be effective on and after the tenth (10th) day such notice has been
delivered to a holder.

 

(B)   If an Outstanding Partial Cash Notice is
effective at the time that a holder delivers to the Company a notice of conversion
pursuant to SECTION 5(a) or the Company delivers a notice of
mandatory conversion pursuant to SECTION 5(c), then the Company shall
deliver the following on the applicable Conversion Date in lieu of such number
of shares of Common Stock that would otherwise be deliverable upon conversion
of Series A Preferred Stock: (1) cash, in an amount equal to Original
Purchase Price per share of Series A Preferred Stock to be converted, plus
cash in an amount equal to accrued and unpaid Dividends on the shares of Series A
Preferred Stock being converted and (2) a number of shares of Common Stock
equal to (x) the aggregate Fair Market Value (as of the Conversion Date)
of all shares of Common Stock issuable upon conversion of such share of Series A
Preferred Stock without giving effect to this SECTION 5(e)(viii) or
the limitations set forth in SECTION 5(b), less the Original
Purchase Price for such share of Series A Preferred Stock, divided  by
(y) the Fair Market Value of the Common Stock on the Conversion Date; provided
that in the event the holders of shares of Series A Preferred Stock seek
to convert, or the Company requires the conversion of, a number of shares of Series A
Preferred Stock that would exceed the then applicable Cash Amount (such shares
in excess of such Cash Amount, the “Unaffected Shares”), such Unaffected
Shares shall be converted without giving effect to this SECTION 5(e)(viii).

 

(C)   For purposes hereof, an “Outstanding
Partial Cash Notice” means a Partial Cash Notice pursuant to which the Company
has exercised its option pursuant to this SECTION 5(e)(viii) and
which has not been revoked by an effective subsequent Partial Cash Notice.

 

(f)            Adjustments to Conversion Price.

 

(i)    Adjustment for Change In Capital Stock.

 

(A)  If the Company shall, at any time and from
time to time while any shares of the Series A Preferred Stock are
outstanding, issue a dividend or make a distribution on its 

 

16

 

Common Stock payable in
shares of its Common Stock to all or substantially all holders of its Common
Stock, then the Conversion Price at the opening of business on the Ex-Dividend
Date for such dividend or distribution will be adjusted by multiplying such
Conversion Price by a fraction:

 

(1)   the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the Business Day
immediately preceding such Ex-Dividend Date; and

 

(2)   the denominator of which shall be the sum of
the number of shares of Common Stock outstanding at the close of business on
the Business Day immediately preceding the Ex-Dividend Date for such dividend
or distribution, plus the total number of shares of Common Stock constituting
such dividend or other distribution.

 

If any dividend or
distribution of the type described in this SECTION 5(f)(i) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared. 
Except as set forth in the preceding sentence, in no event shall the
Conversion Price be increased pursuant to this SECTION 5(f)(i).

 

(B)   If the Company shall, at any time or from
time to time while any of the Series A Preferred Stock are outstanding,
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Conversion Price in effect at the
opening of business on the day upon which such subdivision becomes effective
shall be proportionately decreased, and conversely, if the Company shall, at
any time or from time to time while any of the Series A Preferred Stock
are outstanding, combine or reclassify its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then the Conversion Price in effect
at the opening of business on the day upon which such combination or
reclassification becomes effective shall be proportionately increased.  In each such case, the Conversion Price shall
be adjusted by multiplying such Conversion Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such subdivision or combination and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after giving
effect to such subdivision, combination or reclassification.  Such increase or reduction, as the case may
be, shall become effective immediately after the opening of business on the day
upon which such subdivision, combination or reclassification becomes effective.

 

(ii)   Adjustment for Rights Issue.  If the
Company shall, at any time or from time to time, while any shares of the Series A
Preferred Stock are outstanding, distribute rights, options or warrants to all
or substantially all holders of its Common Stock entitling them, for a period
expiring within 60 days after the record date for such distribution, to
purchase shares of Common Stock, or securities convertible into, or
exchangeable or exercisable for, Common Stock, in either case, at less than the
average of the Closing Prices for the five consecutive Trading Days immediately
preceding the first public announcement of the distribution, then the
Conversion Price shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Price in effect at the opening of
business on the Ex-Dividend Date for such distribution by a fraction:

 

17

 

(A)  the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding on the close of
business on the Business Day immediately preceding the Ex-Dividend Date for
such distribution, plus (2) the number of shares of Common Stock that the
aggregate offering price of the total number of shares of Common Stock issuable
pursuant to such rights, options or warrants would purchase at the Current
Market Price of the Common Stock on the declaration date for such distribution
(determined by multiplying such total number of shares of Common Stock so
offered by the exercise price of such rights, options or warrants and dividing
the product so obtained by such Current Market Price); and

 

(B)   the denominator of which shall be the
number of shares of Common Stock outstanding at the close of business on the
Business Day immediately preceding the Ex-Dividend Date for such distribution,
plus the total number of additional shares of Common Stock issuable pursuant to
such rights, options or warrants.

 

Such adjustment shall
become effective immediately after the opening of business on the Ex-Dividend
Date for such distribution.

 

To the extent that shares
of Common Stock are not delivered pursuant to such rights, options or warrants
or upon the expiration or termination of such rights, options or warrants, the
Conversion Price shall be readjusted to the Conversion Price that would then be
in effect had the adjustments made upon the issuance of such rights, options or
warrants been made on the basis of the delivery of only the number of shares of
Common Stock actually delivered.  In the
event that such rights, options or warrants are not so distributed, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if the Ex-Dividend Date for such distribution had not
occurred.  In determining whether any
rights, options or warrants entitle the holders to purchase shares of Common
Stock at less than the average of the Closing Prices for the five consecutive
Trading Days immediately preceding the first public announcement of the
relevant distribution, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received for such rights, options or warrants and the value of such
consideration if other than cash, to be determined in good faith by the Board
of Directors.  Except as set forth in
this paragraph, in no event shall the Conversion Price be increased pursuant to
this SECTION 5(f)(ii).

 

(iii)  Adjustment for Certain Tender Offers or
Exchange Offers.  In case the Company or any of its
Subsidiaries shall, at any time or from time to time, while any shares of the Series A
Preferred Stock are outstanding, distribute cash or other consideration in
respect of a tender offer or an exchange offer (that is treated as a “tender
offer” under U.S. federal securities laws) made by the Company or any
Subsidiary for all or any portion of the Common Stock, where the sum of the
aggregate amount of such cash distributed and the aggregate Fair Market Value,
as of the Expiration Date (as defined below), of such other consideration
distributed (such sum, the “Aggregate Amount”) expressed as an amount
per share of Common Stock validly tendered or exchanged, and not withdrawn,
pursuant to such tender offer or exchange offer as of the Expiration Time (as
defined below) (such tendered or exchanged shares of Common Stock, the “Purchased
Shares”) exceeds the Closing Price per share of the Common Stock on the
first Trading Day immediately following the last date (such last date, the “Expiration
Date”) on which tenders or exchanges could have been made pursuant to such
tender offer or exchange offer (as the same may be amended through the
Expiration Date), then, and in each case, immediately after the close of
business on such date, the 

 

18

 

Conversion Price shall be
decreased so that the same shall equal the rate determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
Trading Day immediately following the Expiration Date by a fraction:

 

(A)  the numerator of which shall be equal to the
product of (A) the number of shares of Common Stock outstanding as of the
last time (the “Expiration Time”) at which tenders or exchanges could
have been made pursuant to such tender offer or exchange offer (including all
Purchased Shares) and (B) the Closing Price per share of the Common Stock
on the first Trading Day immediately following the Expiration Date; and

 

(B)   the denominator of which is equal to the sum
of (x) the Aggregate Amount and (y) the product of (I) an amount
equal to (1) the number of shares of Common Stock outstanding as of the
Expiration Time, less (2) the Purchased Shares and (II) the Closing
Price per share of the Common Stock on the first Trading Day immediately
following the Expiration Date.

 

An adjustment, if any, to
the Conversion Price pursuant to this SECTION 5(f)(iii) shall become
effective immediately prior to the opening of business on the second Trading
Day immediately following the Expiration Date. 
In the event that the Company or a Subsidiary is obligated to purchase
shares of Common Stock pursuant to any such tender offer or exchange offer, but
the Company or such Subsidiary is permanently prevented by applicable law from
effecting any such purchases, or all such purchases are rescinded, then the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer or exchange offer had not been
made.  Except as set forth in the preceding
sentence, if the application of this SECTION 5(f)(iii) to any tender
offer or exchange offer would result in an increase in the Conversion Price, no
adjustment shall be made for such tender offer or exchange offer under this SECTION 5(f)(iii).

 

(iv)  Disposition Events.

 

(A)          If any of the following events (any
such event, a “Disposition Event”) occurs:

 

(1)           any reclassification or exchange of
the Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination);

 

(2)           any merger, consolidation or other
combination to which the Company is a constituent party; or

 

(3)           any sale, conveyance, lease, or other
disposal of all or substantially all the properties and assets of the Company
to any other person;

 

in each case, as a result
of which all of the holders of Common Stock shall be entitled to receive cash,
securities or other property for their shares of Common Stock, the Company or
the successor or purchasing person, as the case may be, shall provide that the Series A
Preferred Stock converted following the effective date of any Disposition
Event, shall be converted, in lieu of the Common Stock otherwise deliverable,
into the same amount and type (in the same proportion) of cash, securities or other
property received by holders of Common Stock in the relevant event

 

19

 

(collectively, “Reference
Property”) received upon the occurrence of such Disposition Event by a
holder of Common Stock holding, immediately prior to the transaction, a number
of shares of Common Stock equal to the Conversion Amount (without giving effect
to any limitations on conversion set forth in SECTION 5(b)) immediately
prior to such Disposition Event; provided that if the Disposition Event
provides the holders of Common Stock with the right to receive more than a
single type of consideration determined based in part upon any form of
stockholder election, the Reference Property shall be comprised of the weighted
average of the types and amounts of consideration received by the holders of
the Common Stock.  The Company may not
cause, or agree to cause, a Disposition Event to occur, unless the issuer of
any securities or other property into which the Series A Preferred Stock
that remains outstanding thereafter (if any) becomes convertible agrees, for
the express benefit of the holders of record of Series A Preferred Stock
(including making them beneficiaries of such agreement), to issue such
securities or property.

 

(B)           The above provisions of this SECTION 5(f)(iv) shall
similarly apply to successive Disposition Events.  If this SECTION 5(f)(iv) applies to
any event or occurrence, neither SECTION 5(f)(i) nor SECTION 5(f)(iii) shall
apply; provided, however, that this SECTION 5(f)(iv) shall
not apply to any stock split or combination to which SECTION 5(f)(i) is
applicable or to a liquidation, dissolution or winding up to which SECTION 3
applies.  To the extent that equity
securities of a company are received by the holders of Common Stock in
connection with a Disposition Event, the portion of the Series A Preferred
Stock which will be convertible into such equity securities will continue to be
subject to the anti-dilution adjustments set forth in this SECTION 5(f).

 

(v)   Minimum Adjustment.  Notwithstanding the foregoing, the Conversion
Price will not be reduced if the amount of such reduction would be an amount
less than $0.01, but any such amount will be carried forward and reduction with
respect thereto will be made at the time that such amount, together with any
subsequent amounts so carried forward, aggregates to $0.01 or more.

 

(vi)  When No Adjustment Required.

 

(A)  No adjustment need be made for a transaction
referred to in SECTION 5(f)(i) or SECTION 5(f)(ii) if the Series A
Preferred Stock participates, without conversion, in the transaction or event
that would otherwise give rise to an adjustment pursuant to such Section at
the same time as holders of the Common Stock participate with respect to such
transaction or event and on the same terms as holders of the Common Stock
participate with respect to such transaction or event as if the holders of Series A
Preferred Stock, at such time, held a number of shares of Common Stock equal to
the Conversion Amount at such time.

 

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

 

(C)   No adjustment need be made for a change in
the par value or no par value of the Common Stock.

 

20

 

(D)    To the extent the Series A Preferred
Stock become convertible pursuant to this SECTION 5 into cash, no
adjustment need be made thereafter as to the cash.  Interest will not accrue on the cash.

 

(vii)         Rules of Calculation; Treasury
Stock.  All calculations will be made
to the nearest one-hundredth of a cent or to the nearest one-ten thousandth of
a share.  Except as explicitly provided
herein, the number of shares of Common Stock outstanding will be calculated on the
basis of the number of issued and outstanding shares of Common Stock, not
including shares held in the treasury of the Company.  The Company shall not pay any dividend on or
make any distribution to shares of Common Stock held in treasury.

 

(viii)        Waiver.  Notwithstanding the foregoing, the Conversion
Price will not be reduced if the Company receives, prior to the effective time
of the adjustment to the Conversion Price, written notice from the holders
representing at least a majority of the then outstanding shares of Series A
Preferred Stock, voting together as a separate class, that no adjustment is to
be made as the result of a particular issuance of Common Stock or other
dividend or other distribution on shares of Common Stock.  This waiver will be limited in scope and will
not be valid for any issuance of Common Stock or other dividend or other
distribution on shares of Common Stock not specifically provided for in such
notice.

 

(ix)           Tax Adjustment.  Anything in this SECTION 5
notwithstanding, the Company shall be entitled to make such downward
adjustments in the Conversion Price, in addition to those required by this SECTION 5,
as the Board in its sole discretion shall determine to be advisable in order
that any event treated for federal income tax purposes as a dividend or stock
split will not be taxable to the holders of Common Stock.

 

(x)            Par Value.  Anything in this SECTION 5
notwithstanding, no adjustment to the Conversion Price shall reduce the
Conversion Price below the then par value per share of Common Stock, and any
such purported adjustment shall instead reduce the Conversion Price to such par
value.

 

(xi)           No Duplication.  If any action would require adjustment of the
Conversion Price pursuant to more than one of the provisions described in this SECTION 5
in a manner such that such adjustments are duplicative, only one adjustment
shall be made.

 

(xii)          Provisions Governing Adjustment to
Conversion Price.  Rights, options or warrants distributed by the
Company to all or substantially all holders of Common Stock entitling the
holders thereof to subscribe for or purchase shares of the Company’s capital
stock (either initially or under certain circumstances), which rights, options
or warrants, until the occurrence of a specified event or events (“Rights
Trigger”): (A) are deemed to be transferred with such shares of Common
Stock; (B) are not exercisable; and (C) are also issued in respect of
future issuances of Common Stock, shall be deemed not to have been distributed
for purposes of SECTION 5(f)(i), (ii), (iii) or (iv) (and no
adjustment to the Conversion Price under SECTION 5(f)(i), (ii), (iii) or
(iv) will be required) until the occurrence of the earliest Rights
Trigger, whereupon such rights, options and warrants shall be deemed to have
been distributed, except as set forth in SECTION 5(e)(vii), and (x) if
and to the extent such rights, options and warrants are exercisable for shares
of Common Stock or Common Stock equivalents, an appropriate adjustment (if any
is required) to the 

 

21

 

Conversion Price shall be
made under SECTION 5(f)(ii) (without giving effect to the 60 day
limit on the exercisability of rights, options and warrants ordinarily subject
to such SECTION 5(f)(ii)), and/or (y) if and to the extent such
rights, options and warrants are exercisable for cash and/or any shares of the
Company’s capital stock other than shares of Common Stock or Common Stock
equivalents, shall be subject to the provisions of SECTION 2(b) applicable
to Participating Dividends and shall be distributed to the holders of Series A
Preferred Stock.  If any such right, option or warrant, including any such
existing rights, options or warrants distributed prior to the Series A
Original Issuance Date, are subject to events, upon the occurrence of which such
rights, options or warrants become exercisable to purchase different
securities, evidences of indebtedness or other assets, then the date of the
occurrence of any and each such event shall be deemed to be the date of
distribution and Ex-Dividend Date with respect to new rights, options or
warrants with such rights (and a termination or expiration of the existing
rights, options or warrants without exercise by any of the holders thereof),
except as set forth in SECTION 5(e)(vii).  In addition, except as set
forth in SECTION 5(e)(vii), in the event of any distribution (or deemed
distribution) of rights, options or warrants, or any Rights Trigger or other
event (of the type described in the preceding sentence) with respect thereto
that was counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under SECTION 5(f)(i), (ii), (iii) or
(iv) was made, (1) in the case of any such rights, options or
warrants that shall all have been redeemed or repurchased without exercise by
any holders thereof, the Conversion Price shall be readjusted at the opening of
business on following such final redemption or repurchase by multiplying such
Conversion Price by a fraction (x) the numerator of which shall be the
Current Market Price per share of Common Stock on such date, less the
amount equal to the per share redemption or repurchase price received by a
holder or holders of Common Stock with respect to such rights, option or
warrants (assuming such holder had retained such rights, options or warrants),
made to all or substantially all holders of Common Stock as of the date of such
redemption or repurchase and (y) the denominator of which shall be the
Current Market Price, and (2) in the case of such rights, options or
warrants that shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights,
options and warrants had not been issued. 
Notwithstanding the foregoing, (A) to the extent any such rights,
options or warrants are redeemed by the Company prior to a Rights Trigger or
are exchanged by the Company, in either case for shares of Common Stock, the
Conversion Price shall be appropriately readjusted (if and to the extent
previously adjusted pursuant to this SECTION 5(f)(xii)) as if such rights,
options or warrants had not been issued, and instead the Conversion Price will
be adjusted as if the Company had issued the shares of Common Stock issued upon
such redemption or exchange as a dividend or distribution of shares of Common
Stock subject to SECTION 5(f)(i)(A) and (B) to the extent any
such rights, options or warrants are redeemed by the Company prior to a Rights
Trigger or are exchanged by the Company, in either case for any shares of the
Company’s capital stock (other than Common Stock) or any other assets of the
Company, such redemption or exchange shall be deemed to be a distribution and
shall be subject to, and paid to the holders of Series A Preferred Stock
pursuant to, the provisions of SECTION 2(b) applicable to
Participating Dividends.

 

(g)           Notice of Record Date.  In the event of:

 

(i)    any stock split or combination of the
outstanding shares of Common Stock;

 

22

 

(ii)   any declaration or making of a dividend or
other distribution to holders of Common Stock in Additional Shares of Common
Stock, any other capital stock, other securities or other property (including
but not limited to cash and evidences of indebtedness);

 

(iii)  any reclassification or change to which SECTION 5(f)(i)(B) applies;

 

(iv)  the dissolution, liquidation or winding up of
the Company; or

 

(v)   any other event constituting a Fundamental
Change of the type described in clause (ii) of the definition thereof in SECTION 9(s);

 

then the Company
shall file with its corporate records and mail to the holders of the Series A
Preferred Stock at their last addresses as shown on the records of the Company,
at least 10 days prior to the record date specified in (A) below or 10
days prior to the date specified in (B) below, a notice stating:

 

(A)  the record date of such stock split,
combination, dividend or other distribution, 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 stock split, combination, dividend or other distribution are
to be determined, or

 

(B)   the date on which such reclassification,
change, dissolution, liquidation, winding up or other event constituting a
Fundamental Change of the type described in clause (ii) of the definition
thereof in SECTION 9(s), is estimated to become effective, and the date as
of which it is expected that holders of Common Stock of record will be entitled
to exchange their shares of Common Stock for the capital stock, other
securities or other property (including but not limited to cash and evidences
of indebtedness) deliverable upon such reclassification, change, liquidation,
dissolution, winding up or other Fundamental Change.

 

Disclosures made by the
Company in any filings required to be made under the Exchange Act shall be
deemed to satisfy the notice requirements set forth in this SECTION 5(g).

 

(h)           Certificate of Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this SECTION 5, the Company
at its expense shall promptly as reasonably practicable compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each holder
of Series A Preferred Stock a certificate, signed by an officer of the
Company, setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based and shall file a
copy of such certificate with its corporate records.  The Company shall, upon the reasonable
written request of any holder of Series A Preferred Stock, furnish to such
holder a similar certificate setting forth (i) the calculation of such
adjustments and readjustments in reasonable detail, (ii) the Conversion
Price then in effect, and (iii) the number of shares of Common Stock and
the amount, if any, of capital stock, other securities or other property
(including but not limited to cash and evidences of indebtedness) which then
would be received upon the conversion of Series A Preferred Stock.

 

23

 

SECTION 6.         Redemption.

 

Each share of Series A
Preferred Stock is redeemable as provided in this SECTION 6.

 

(a)           Redemption at the Option of
Holders.

 

(i)    Subject to compliance with SECTION 6(a)(iii),
each holder of shares of Series A Preferred Stock shall have the right
(the “Redemption Right”), at such holder’s option, to require the
Company to purchase (out of funds legally available therefor) all or any
portion of such holder’s shares of Series A Preferred Stock pursuant to
this SECTION 6(a) on any Redemption Date, at a purchase price,
payable in cash, equal to 100% of the Regular Liquidation Preference as of such
Redemption Date (the “Redemption Price”).

 

(ii)   At least 30 days, but not more than 60 days,
prior to each Redemption Date, the Company shall mail a notice of optional
redemption by first-class mail, postage prepaid to each holder of Series A
Preferred Stock, which notice shall state (A) the Redemption Date and the
Redemption Price, (B) the date upon which the Redemption Right terminates,
(C) the then applicable Conversion Price for the Series A Preferred
Stock, (D) the names and telephonic contact information for no more than
three (3) registered broker-dealers affiliated with a reputable,
nationally recognized brokerage house (collectively, the “Brokers”) and (E) reference
to this SECTION 6(a).

 

(iii)  Any holder may, in its sole discretion,
exercise its Redemption Right with respect to all or any portion of the Series A
Preferred Stock (the “Redemption Securities”) Beneficially Owned by such
holder by delivery to the Company of a written notice (a “Redemption
Acceptance Notice”) no less than seven nor more than 30 days prior to the
Redemption Date stating (A) that such holder is exercising the Redemption
Right, (B) the number of shares of the Redemption Securities with respect
to which such holder is exercising its Redemption Right, (C) the price
quotes provided, if any, by the Brokers with respect to such Redemption
Securities, (D) the names of the Brokers contacted by such holder and (E) that
such holder attempted in good faith to obtain the price quotes referred to in
clause (A) of the definition of Redemption Fair Market Value.

 

(iv)  Notwithstanding the foregoing, the Redemption
Right shall be exercisable by any holder only if the Redemption Fair Market
Value of the Redemption Securities Beneficially Owned by such holder is equal
to or less than 110% of the aggregate Redemption Price of the Redemption
Securities Beneficially Owned by such holder.

 

(v)   For purposes of this Section 6(a), “Redemption
Fair Market Value” shall mean, with respect to the Redemption Securities
Beneficially Owned by any holder:

 

(A)  if such holder is able to obtain on the
Business Day prior to such holder’s mailing or other transmittal to the Company
of the Redemption Acceptance Notice a firm price quote from one or more Brokers
pursuant to which such Broker offers to purchase on such date all, but not less
than all, of the Redemption Securities that such holder wishes to redeem, the
highest net purchase price quoted; or

 

(B)   if such holder is unable to obtain any price
quotes as contemplated in clause (A) (including, for the avoidance of
doubt, as a result of any Broker failing to respond to such holder’s inquiry
for, or to provide, a firm price quote with respect to such Redemption
Securities), then the Redemption Fair Market Value of such Redemption
Securities shall conclusively be deemed to be an amount less than 110% of the
Redemption Price.

 

24

 

(b)           Redemption at the Option of the
Company.

 

(i)    At any time after the fifth anniversary of
the Series A Original Issuance Date, the Company, at its option and
election, may redeem (out of funds legally available therefor) any or all of
the outstanding shares of Series A Preferred Stock at the Redemption
Price; provided that the Company shall not have the right to redeem any
shares of Series A Preferred Stock pursuant to this SECTION 6(b) unless
at the time of the mailing of the notice of redemption, either (x) the
shelf registration statement referred to in Section 2.2 of the
Registration Rights Agreement is effective and available for resales of the
Common Stock issuable upon conversion of the Series A Preferred Stock or (y) the
shares of Common Stock for which the Series A Preferred Stock are
convertible into may be sold by all holders of the Series A Preferred
Stock under Rule 144 under the Securities Act without volume or other
limitation.

 

(ii)   If the Company elects to redeem the Series A
Preferred Stock pursuant to SECTION 6(b)(i), the “Company Redemption
Date” shall be the date on which the Company elects to consummate such
redemption.  The Company shall deliver a
notice of redemption not less than 15 nor more than 30 Business Days prior to
the Company Redemption Date, addressed to the holders of record of the Series A
Preferred Stock as they appear in the records of the Company as of the date of
such notice.  Each notice must state the
following: (A) the Company Redemption Date; (B) the number of shares
to be redeemed; (C) the Redemption Price as of the Company Redemption Date
(it being understood that the actual Redemption Price will be determined as of
the actual Company Redemption Date); (D) the name of the redemption agent
to whom, and the address of the place to where, the Series A Preferred
Stock are to be surrendered for payment of the Redemption Price; and (E) that
Dividends, if any, on the shares to be redeemed will cease to accrue on such
Company Redemption Date provided that the Redemption Price shall have been paid
on the Company Redemption Date.

 

(iii)  If the Company has elected to redeem less than
all the Series A Preferred Stock pursuant to this SECTION 6(b), the
Company shall select the shares of Series A Preferred Stock to be redeemed
by lot, on a pro rata basis or in
accordance with any other method the Company considers fair and
appropriate.  The Company shall make such
selection from shares of Series A Preferred Stock then outstanding and not
already to be redeemed by virtue of having been previously called for
redemption.

 

(c)           Mechanics of Redemption.

 

(i)    Prior to 2:00 p.m. (New York City time)
on or prior to Business Day prior to the Redemption Date or Company Redemption
Date, as applicable (such date, the “Irrevocable Date”), the Company
shall deposit with a redemption agent an amount of money (in immediately
available funds) sufficient to pay the Redemption Price on the Redemption Date
or the Company Redemption Date, as the case may be.  The redemption agent shall return to the
Company, as soon as practicable, any money not required for that purpose.  If the Company or an Affiliate of the Company
acts as redemption agent, it shall, before 3:00 p.m., New York City time
on or prior to Business Day prior to the Redemption Date or Company Redemption
Date, as applicable, segregate the money and hold it as a separate trust fund.

 

25

 

(ii)   The redemption agent on behalf of the Company
shall pay the applicable Redemption Price on the Redemption Date or Company
Redemption Date, as the case may be, upon surrender of the certificates
representing the shares of Series A Preferred Stock to be redeemed
(properly endorsed or assigned for transfer, if the Company shall so require
and letters of transmittal and instructions therefor on reasonable terms are
included in the notice sent by the Company); provided that if such
certificates are lost, stolen or destroyed, the Company may require such holder
to indemnify the Company, in a reasonable amount and in a reasonable manner,
and post a customary bond in respect of such indemnity, prior to paying such
Redemption Price.  Notwithstanding the
foregoing, the Company shall remain liable for the payment of the Redemption
Price to the extent such amounts are not paid as provided herein.  Any holder that, together with its
Affiliates, Beneficially Owns more than 1,000 shares of Series A Preferred
Stock will be entitled to receive all cash payments hereunder by wire transfer
of immediately available funds.

 

(iii)  Shares of Series A Preferred Stock to be
redeemed on the Redemption Date or Company Redemption Date, as the case may be,
will from and after such date, no longer be deemed to be outstanding; and all
powers, designations, preferences and other rights of the holder thereof as a
holder of Series A Preferred Stock (except the right to receive from the
Company the applicable Redemption Price) shall cease and terminate with respect
to such shares; provided that in the event that a share of Series A
Preferred Stock is not redeemed due to a default in payment by the Company or
because the Company is otherwise unable to pay the applicable Redemption Price
in cash in full, such share of Series A Preferred Stock will remain
outstanding and will be entitled to all of the powers, designations,
preferences and other rights (including but not limited to the accrual and
payment of Dividends and the conversion rights) as provided herein.

 

(iv)  Notwithstanding anything in this SECTION 6
to the contrary, each holder shall retain the right to convert shares of Series A
Preferred Stock to be redeemed at any time on or prior to the Redemption Date
or Company Redemption Date, as the case may be; provided, however,
that any shares of Series A Preferred Stock for which a holder delivers a
conversion notice to the Company prior to the Redemption Date or Company
Redemption Date, as the case may be, shall not be redeemed pursuant to this SECTION 6.

 

(v)   Any redemption of the Series A Preferred
Stock pursuant to this SECTION 6 (such redemption, the “Redemption”)
shall be payable out of any cash legally available therefor, and if there is
not a sufficient amount of cash available, then out of the remaining assets of
the Company legally available therefor (valued at the Fair Market Value thereof
on the date of payment).  At the time of
the Redemption, the Company shall take all actions required or permitted under
Delaware law to permit the Redemption, including, without limitation, through
the revaluation of its assets in accordance with Delaware law, to make funds
legally available for such Redemption. 
To the extent that the Company has insufficient funds to redeem all of
the shares of Series A Preferred Stock upon the Redemption, the Company
shall use available funds to redeem a pro
rata portion of such Series A Preferred Stock.

 

26

 

SECTION 7.         Fundamental Change.

 

(a)           Offer to Repurchase.

 

(i)    In connection with any Fundamental Change,
unless waived by holders representing a majority of the outstanding shares of Series A
Preferred Stock, each holder shall have the right, at such holder’s option, to
require the Company to, or to cause the Survivor of a Fundamental Change (such
Survivor of a Fundamental Change, the “Acquirer”) to, purchase each
share of Series A Preferred Stock then-outstanding (the “Fundamental
Change Offer”) at a purchase price per share (such amount being the “Repurchase
Price”) in cash equal to the sum of (x) 101% of the Regular
Liquidation Preference, plus (y) in the case of a Fundamental
Change of the type described in clause (i), (ii), (iii) or (iv) of
the definition of “Fundamental Change” (each, a “Change in Control”),
the Make Whole Amount, on a date selected by the Company (the “Fundamental
Change Purchase Date”), which Fundamental Change Purchase Date shall be the
date on which the Fundamental Change is consummated (provided that in the case
of a Fundamental Change described in clause (i) of the definition thereof,
the Fundamental Change Purchase Date shall be a date no later than
35 Business Days following the date of the first public announcement of
such Fundamental Change having occurred).

 

(ii)   As promptly as practicable following the date
of announcement of such transaction or execution of such agreement providing
for such Fundamental Change, but in no event less than 20 Business Days prior
to the anticipated effective date of a Fundamental Change in the case of a
Fundamental Change within the control of the Company or of which the Company
has at least 30 Business Days prior notice, the Company shall mail a written
notice of Fundamental Change (the “Fundamental Change Notice”) by
first-class mail addressed to the holders of record of the Series A
Preferred Stock as they appear in the records of the Company as of the date of
announcement of such transaction or execution of such agreement providing for
such Fundamental Change.  Each notice
must state that: (A) the Fundamental Change Offer may be accepted by
delivery of a written revocable notice specifying the number of shares to be
repurchased, and the date by which such notice must be given pursuant to this SECTION 7(a);
(B) the expected Repurchase Price as of the expected Fundamental Change
Purchase Date, and specifying the individual components thereof (it being
understood that the actual Repurchase Price will be determined as of the actual
Fundamental Change Purchase Date); (C) the name of the paying agent to
whom, and the address of the place to where, the Series A Preferred Stock
are to be surrendered for payment of the Repurchase Price; (D) any shares
of Series A Preferred Stock not tendered for payment shall continue to be
outstanding and holders thereof shall remain entitled to, among other things,
the payment of Dividends thereon and exercise their conversion rights (whether
on the date of consummation of the Fundamental Change or otherwise), (E) the
consummation of the Fundamental Change Offer and the payment of the Repurchase
Price shall be subject to the consummation of the Fundamental Change, and (F) the
circumstances and material facts regarding such Fundamental Change, including
the anticipated effective date of the Fundamental Change.  If the Fundamental Change is not consummated,
the Fundamental Change Offer shall be automatically withdrawn.

 

(iii)  Notwithstanding this SECTION 7, the
Fundamental Change Offer shall be subject to, and be made in compliance with,
Regulation 14E under the Exchange Act and any other federal and state
securities laws, as applicable, including any applicable time periods.  The Company shall notify the holders Series A
Preferred Stock of the results of the Fundamental Change Offer on or as soon as
practicable after the Fundamental Change Purchase Date.

 

27

 

(b)           Mechanics of Repurchase.

 

(i)    Prior to 2:00 p.m. (New York City time)
on or prior to the Business Day prior to the Fundamental Change Purchase Date,
the Company shall deposit with a paying agent an amount of money (in
immediately available funds) sufficient to pay the aggregate Repurchase Price
upon on the Fundamental Change Purchase Date. 
The paying agent shall return to the Company, as soon as practicable,
any money not required for that purpose.  
If the Company or an Affiliate of the Company acts as paying agent, it
shall, before 3:00 p.m., New York City time on or prior to Business Day
prior to the Fundamental Change Purchase Date, as applicable, segregate the
money and hold it as a separate trust fund. 
Notwithstanding the deposit of such funds, the Company shall remain
liable for the payment of the Repurchase Price to the extent such Repurchase
Price is not paid as provided herein.

 

(ii)   The paying agent on behalf of the Company
shall pay the Repurchase Price on the Fundamental Change Purchase Date upon
surrender of the certificates representing the shares of Series A
Preferred Stock to be repurchased (properly endorsed or assigned for transfer,
if the Company shall so require and letters of transmittal and instructions
therefor on reasonable terms are included in the notice sent by the Company); provided
that if such certificates are lost, stolen or destroyed, the Company may
require such holder to indemnify the Company, and post a customary bond in
respect of such indemnity, in a reasonable amount and in a reasonable manner,
prior to paying such Repurchase Price. 
Notwithstanding the foregoing, the Company shall remain liable for the
payment of the Repurchase Price to the extent such amounts are not paid as
provided herein.  Any holder that,
together with its Affiliates, Beneficially Owns more than 1,000 shares of Series A
Preferred Stock will be entitled to receive all cash payments hereunder by wire
transfer of immediately available funds.

 

(iii)  In case fewer than all the shares represented
by any such certificate are to be repurchased, a new certificate shall be
issued representing the shares not purchased, without cost to the holder
thereof, except for any documentary, stamp or similar issue or transfer tax due
because any certificate for shares Series A Preferred Stock are issued in
a name other than the name of the selling holder.  The Company shall pay any documentary, stamp
or similar issue or transfer tax due upon the issuance of a new certificate for
any shares of Series A Preferred Stock not repurchased other man any such
tax due because a certificate for shares Series A Preferred Stock is
issued in a name other than the name of the selling holder.

 

(iv)  Subject to clause (vi) below, from and
after the Fundamental Change Purchase Date, shares of the Series A
Preferred Stock to be repurchased on such Fundamental Change Purchase Date will
no longer be deemed to be outstanding; and all powers, designations,
preferences and other rights of the holder thereof as a holder of Series A
Preferred Stock (except the right to receive from the Company the Repurchase
Price) shall cease and terminate with respect to such shares; provided
that in the event that a share of Series A Preferred Stock is not
repurchased due to a default in payment by the Company or because the Company
is otherwise unable to pay the Repurchase Price in full, such share of Series A
Preferred Stock will remain outstanding and will be entitled to all of the
powers, designations, preferences and other rights (including but not limited
to the payment of dividends and the conversion rights) as provided herein.

 

(v)   Notwithstanding anything in this SECTION 7
to the contrary, each holder shall retain the right to (A) convert shares
of Series A Preferred Stock to be repurchased at any time on or prior to
the Fundamental Change Purchase Date or (B) withdraw an election to have 

 

28

 

such shares repurchased
or any tender of such shares in the Fundamental Change Offer on or prior to the
Fundamental Change Purchase Date; provided, however, that, where
a holder of Series A Preferred Stock exercises its rights under (A) or
(B) above, the shares of Series A Preferred Stock of such holder
shall not be repurchased pursuant to this SECTION 7.

 

(vi)  The Company shall not be required to make a Fundamental
Change Offer if an Affiliate in control of the Company makes the Fundamental
Change Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this SECTION 7 and purchases all shares of Series A
Preferred Stock validly tendered and not withdrawn under such Fundamental
Change Offer; provided, that if an Affiliate in control of the Company
makes such repurchase, the shares of Series A Preferred Stock so purchased
shall remain outstanding in the hands of such Affiliate.

 

(vii) The Company will not enter into any agreement
providing for or otherwise authorize a Fundamental Change unless the Acquirer
agrees to cause the Company to make the repurchases contemplated in this SECTION 7
and agrees, for the benefit of the holders of record of the Series A
Preferred Stock (including making them beneficiaries of such agreement), that
to the extent the Company is not legally able to repurchase the Series A
Preferred Stock, the Acquirer will purchase the Series A Preferred Stock.

 

(viii)  Any repurchase of the Series A Preferred
Stock pursuant to this SECTION 7 shall be payable out of any cash legally
available therefor, and if there is not a sufficient amount of cash available,
then out of the remaining assets of the Company legally available therefor
(valued at the Fair Market Value thereof on the date of payment).  The Company shall take all actions required
or permitted under Delaware law to permit the repurchase of the Series A
Preferred Stock, including, without limitation, through the revaluation of its
assets in accordance with Delaware law, to make funds legally available for
such repurchase. To the extent that the Company has insufficient funds to
repurchase all of the shares of Series A Preferred Stock pursuant to this SECTION 7,
the Company shall use available funds to repurchase a pro rata portion of such Series A
Preferred Stock.

 

SECTION 8.         Conversion Into Series B
Preferred Stock.

 

(a)           After receiving a notice of
conversion pursuant to SECTION 5(c) or a notice of redemption
pursuant to SECTION 6(b), any holder of shares of Series A Preferred
Stock as to whom relevant the provisions of the following sentence are
applicable may, at such holder’s option, convert shares of Series A
Preferred Stock subject to such conversion or redemption, as the case may be,
at any time on or prior to the close of business on the Business Day
immediately preceding the Conversion Date or the Company Redemption Date, as
the case may be, specified in such notice into Series B Preferred Stock to
the extent necessary to address the conditions described in the immediately
following sentence.  If such holder would
not be permitted to convert one or more shares of its Beneficially Owned Series A
Preferred Stock (such shares, the “Preferred Conversion Shares”) or
Notes into shares of Common Stock due to the restrictions contained in SECTION 5(b) or
because any applicable waiting period has not lapsed, or approval has not been
obtained, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or other applicable antitrust law, then each Preferred Conversion
Share of such holder shall be converted into one share of Series B
Preferred Stock on the Conversion Date or the Company Redemption Date, as the
case may be.

 

29

 

(b)           As soon as practicable (and in any
event within three Business Days of receipt of the notice described in this SECTION 8(b)),
which notice shall include the amount of shares of Series B Preferred
Stock to which such holder is entitled and the basis for such conversion into Series B
Preferred Stock, the Company shall (i) issue and deliver to such holder a
certificate for the number of shares of Series B Preferred Stock, if any,
to which such holder is entitled in exchange for the certificates formerly
representing shares of Series A Preferred Stock and (ii) pay to such
holder, to the extent of funds legally available therefor, all accrued and
unpaid Dividends on the shares of Series A Preferred Stock that are being
converted into Series B Preferred Stock. 
Such conversion will be deemed to have been made on the Conversion Date
or the Company Redemption Date, as applicable, and the person entitled to
receive the shares of Series B Preferred Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such
shares of Series B Preferred Stock on such Conversion Date or Company
Redemption Date, as the case may be.  In
case fewer than all the shares of Series A Preferred Stock represented by
any such certificate are to be converted into Series B Preferred Stock, a
new certificate shall be issued representing the unconverted shares without
cost to the holder thereof, except for any documentary, stamp or similar issue
or transfer tax due because any certificates for shares of Series B
Preferred Stock or Series A Preferred Stock are issued in a name other
than the name of the converting holder. 
The Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of Series B Preferred Stock upon conversion
or due upon the issuance of a new certificate for any shares of Series A
Preferred Stock not converted other than any such tax due because shares of Series B
Preferred Stock or a certificate for shares of Series A Preferred Stock
are issued in a name other than the name of the converting holder.

 

(c)           The Company shall at all times
reserve and keep available, free from any preemptive rights, out of its
treasury or out of authorized but unissued shares of Series B Preferred
Stock (or a combination of both) for the purpose of effecting the conversion of
the Series A Preferred Stock the full number of shares of Series B
Preferred Stock deliverable upon the conversion all outstanding Series A
Preferred Stock, and the Company shall take all actions to amend its
Certificate of Incorporation to increase the authorized amount of Preferred
Stock if necessary therefor.

 

(d)           All shares of Series B Preferred
Stock issued upon conversion of the shares of Series A Preferred Stock
will, upon issuance by the Company, be duly and validly issued, fully paid and
nonassessable, not issued in violation of any preemptive rights arising under
law or contract and free from all taxes, liens and charges with respect to the
issuance thereof, and the Company shall take no action which will cause a
contrary result.

 

SECTION 9.         Additional Definitions.  For purposes of these resolutions, the
following terms shall have the following meanings:

 

(a)           “Additional Rate” means an
annual rate initially equal to 2.0% per annum, and increasing by 1.0% on every
six month anniversary of the occurrence of the Increase Event, up to a maximum
of 16% per annum.

 

(b)           “Affiliate” means, with
respect to any person, any other person that directly or indirectly through one
or more intermediaries, controls, is controlled by or is under common control 

 

30

 

with, such specified person. Notwithstanding the
foregoing, the Company, its subsidiaries and its other controlled Affiliates
shall not be considered Affiliates of the Investor Securityholders.

 

(c)           “Beneficial Owner”, “Beneficially
Own” and “Beneficial Ownership” shall have the meaning set forth in Rule 13d-3
of the rules and regulations promulgated under the Exchange Act; provided,
however, that (i) a person will be deemed to be the Beneficial
Owner of any security which may be acquired by such person whether within
60 days or thereafter, upon the conversion, exchange or exercise (without
giving effect to any provision governing such security that would limit, reduce
or otherwise restrict the conversion, exchange or exercise features of such
security) of any rights, options, warrants or similar securities to subscribe
for, purchase or otherwise acquire such security and (ii) none of the Investor
Securityholders shall be deemed to Beneficially Own any securities owned by
their portfolio companies as long as the Investor Securityholders did not
directly or indirectly encourage, assist or provide any information to such
portfolio company in respect of the acquisition or voting of such securities.

 

(d)           “Board Representation Entitlement”
means a number of Preferred Directors (rounded up to the nearest whole number)
equal to the product of (x) the total number of members then comprising
the full Board (including the Preferred Directors) and (y) the lesser of (1) 20.0%
and (2) the SLS Director Beneficial Ownership Percentage; provided,
however, that, notwithstanding the foregoing, (A) at any time that
the Investor Securityholders and their Affiliates in the aggregate cease to
Beneficially Own a number of shares of Series A Preferred Stock that if
then converted would be convertible into a number of shares of Common Stock
that is greater than or equal to 7.5% of the shares of Common Stock then outstanding
based on the Conversion Price that is in effect at the time of such calculation
(including shares of Series A Preferred Stock pledged pursuant to a bond fide pledge but not foreclosed
thereon) without giving effect to the limitations in SECTION 5(b), the
Board Representation Entitlement shall be zero (0) Preferred Directors, (B) from
and after the occurrence of a Non-Constituent Issuer Fundamental Change, the
Board Representation Entitlement shall be zero (0) Preferred Directors and
(C) from and after the occurrence of a Fundamental Change described in
clause (i) of the definition thereof other than a Non-Constituent
Issuer Fundamental Change, the Board Representation Entitlement shall be no
more than one (1) Preferred Director.

 

(e)           “Business Day” means any day
except a Saturday, Sunday or other day on which commercial banks in New York,
New York are authorized or obligated to close.

 

(f)            “capital stock” means any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests (whether
general or limited) or equivalent ownership interests in or issued by such
person, and with respect to the Company includes, without limitation, any and
all shares of Common Stock and the Preferred Stock.

 

(g)           “Closing 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 the average ask prices) on
that date as reported in composite transactions for the principal U.S.
securities exchange on which the Common Stock is listed or admitted for trading
or, if the Common Stock is not listed or admitted for trading on a U.S.
national or regional securities exchange, as reported on the quotation system
on which such security is quoted. If the Common Stock is not listed or admitted
for trading on a United 

 

31

 

States national or regional securities exchange and
not reported on a quotation system on the relevant date, the “closing price”
will 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 will 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 investment banking firms
selected by the Company for this purpose.

 

(h)           “Company Rights Plan” means
that certain Amended and Restated Rights Agreement, dated as of April [23],
2009, between the Company and American Stock Transfer & Trust Company.

 

(i)            “control,” “controlling,”
“controlled by” and “under common control with,” with respect to
any person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of Voting Stock, by contract or otherwise.

 

(j)            “Current Market Price” of
Common Stock on any day means the average of the Closing Prices per share of
Common Stock for each of the five (5) consecutive Trading Days ending on
the earlier of the day in question and the day before the Ex-Dividend Date with
respect to the issuance or distribution requiring such computation.

 

(k)           “Dividend Payment Date” means (i) each
January 1, April 1, July 1 and October 1 of each year,
commencing on July 1, 2009, (ii) with respect to any shares of Series A
Preferred Stock that is to be converted or redeemed, the Conversion Date, the
Redemption Date or the Company Redemption Date, as applicable, and (iii) any
date on which Participating Dividends are paid (if any); provided that
if any such Dividend Payment Date would otherwise occur on a day that is not a
Business Day, such Dividend Payment Date shall instead be (and any dividend
payable on Series A Preferred Stock on such Dividend Date shall instead be
payable on) the immediately succeeding Business Day.

 

(l)            “Dividend Period” means the
period which commences on and includes a Dividend Payment Date (other than the
initial Dividend Period which shall commence on and include the Series A
Original Issuance Date) pursuant to clauses (i) and (ii) of the
definition of “Dividend Payment Date” and ends on and includes the calendar day
next preceding the next Dividend Payment Date.

 

(m)          “Dividend Rate” means 10.0% per
annum.

 

(n)           “Equity Securities” means (x) any
shares of capital stock of the Company, (y) any rights, options, warrants
or similar securities to subscribe for, purchase or otherwise acquire any
shares of capital stock of the Company, and (z) capital stock or other
equity securities directly or indirectly convertible into or exercisable or
exchangeable for any shares of capital stock of the Company, excluding, for all
purposes, any debt, including, without limitation, any debt convertible into
any of the foregoing described in clauses (x) through (z).

 

32

 

(o)           “Ex-Dividend Date”
means, with respect to any issuance or distribution, the first date on which
the shares of Common Stock trade on the applicable exchange or in the
applicable market, regular way, without the right to receive such issuance or
distribution.

 

(p)           “Exchange” means
Nasdaq or any other U.S. national securities exchange.

 

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

 

(r)            “Fair Market Value”
of Common Stock or any other security or property means the fair market value
thereof as determined in good faith by the Board, which determination must be
set forth in a written resolution of the Board, in accordance with the
following rules:

 

(i)         for Common Stock or other
security traded or quoted on an Exchange, the Fair Market Value will be the
average of the Closing Prices of such security on such Exchange over a ten (10) consecutive
trading day period, ending on the trading day immediately prior to the date of
determination;

 

(ii)        for any security that is
not so traded or quoted, or for any other property, the Fair Market Value shall
be determined by the Board in good faith assuming a willing buyer and a willing
seller in an arms’-length transaction; provided that if any
determination of the Board pursuant to this clause (ii) that in the
aggregate for all shares of Series A Preferred Stock is in excess of
$10,000,000, the holders representing a majority of the then-outstanding shares
of Series A Preferred Stock may object to such determination.  In the event of such an objection by such
holders, the Fair Market Value of such property shall be as determined by a
nationally recognized investment bank, appraisal or accounting firm (whose fees
and expenses will be paid by the Company) selected by mutual agreement between
the Board and such holders.

 

(s)           “Fundamental Change”
shall be deemed to have occurred at such time as any of the following events
shall occur:

 

(i)    any “person” or “group”, other
than the Company, its Subsidiaries or any employee benefits plan of the Company
or its Subsidiaries, files, or is required by applicable law to file, a
Schedule 13D or Schedule TO (or any successor schedule, form or report)
pursuant to the Exchange Act, disclosing that such person has become the direct
or indirect beneficial owner of shares with a majority of the total voting
power of the Company’s outstanding Voting Stock; unless such beneficial
ownership arises solely as a result of a revocable proxy delivered in response
to a proxy or consent solicitation made pursuant to the applicable rules and
regulations under the Exchange Act;

 

(ii)   the Company consolidates with
or merges with or into another person (other than a Subsidiary of the Company),
or sells, conveys, transfers, leases or otherwise disposes of all or
substantially all of the consolidated properties and assets of the Company and
its Subsidiaries to any person (other than a Subsidiary of the Company) or any
person (other than a Subsidiary of the Company) consolidates with or merges
with or into the Company, provided that none of the circumstances set forth in
this clause (ii) will be a Fundamental Change if persons that beneficially
own the Voting Securities of the Company immediately prior to the transaction
own, directly or indirectly, shares with a majority of the total voting power
of all outstanding Voting 

 

33

 

Stock the surviving or transferee person immediately
after the transaction in substantially the same proportion as their ownership
of the Company’s Voting Stock immediately prior to the transaction;

 

(iii)          Continuing Directors
cease to constitute at least a majority of the Board of Directors, “Continuing
Director” means a director who either was a member of the Board on the Series A
Original Issuance Date or who becomes a member of the Board of Directors
subsequent to that date and who was nominated or elected by at least a majority
of the directors who were Continuing Directors at the time of such nomination
or election or whose election to the Board of Directors was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election, in each case either by a specific
vote or by approval of a proxy statement issued by the Company on behalf of the
entire Board of Directors in which such individual is named as a nominee of the
Board of Directors for election as director;

 

(iv)          the Company’s
stockholders or Board of Directors adopts a plan for the liquidation or
dissolution of the Company; or

 

(v)           upon the occurrence of
a Termination of Trading (other than in connection with an Unexpected
Delisting).

 

(t)            “group” has the
meaning assigned to such term in Section 13(d)(3) of the Exchange
Act.

 

(u)           “hereof”; “herein”
and “hereunder” and words of similar import refer to these resolutions
as a whole and not merely to any particular clause, provision, section or
subsection.

 

(v)           “Investor
Securityholder” shall have the meaning ascribed thereto in the Securities
Purchase Agreement.

 

(w)          “Make Whole Amount” means, with respect to any share of Series A
Preferred Stock being repurchased pursuant to SECTION 7, the excess, if
any, of (a) the present value on the date of such repurchase of (i) 100%
of the Regular Liquidation Preference of such share as of such date, assuming
such share of Series A Preferred Stock was redeemed at the option of the
company on May 8, 2014 pursuant to SECTION 6(b), plus (ii) all
Regular Dividends payable on such share of Series A Preferred Stock
through May 8, 2014, computed using a 3.125% discount rate over (b) 100%
of the Regular Liquidation Preference as of such date.

 

(x)            “Market Disruption
Event” means the occurrence or existence for more than one half hour period
in the aggregate on any scheduled Trading Day for the Common Stock of any
suspension or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by the Nasdaq National Market or otherwise) in the
Common Stock or in any options, contracts or future contracts relating to the
Common Stock, and such suspension or limitation occurs or exists at any time
before 1:00 p.m. (New York City time) on such day.

 

(y)           “Nasdaq” means
The NASDAQ Global Market.

 

(z)            “Notes” means
the 6.0%/8.0%/10.0% Convertible Senior Notes due 2019 of the Company.

 

34

 

(aa)         “Original Purchase
Price” means $1,000 per share of Series A Preferred Stock, as adjusted
for any stock dividends, splits, combinations and similar events on the Series A
Preferred Stock.

 

(bb)         “person” means any
individual, corporation, limited liability company, limited or general
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government, any agency or political subdivisions
thereof or other “person” as contemplated by Section 13(d) of the
Exchange Act.

 

(cc)         “Permitted Transferee”
shall have the meaning set forth in the Securities Purchase Agreement.

 

(dd)         “Public Sale” has
the meaning set forth in the Securities Purchase Agreement.

 

(ee)         “Redemption Date”
means May [    ], 2014 and May [    ]
of each subsequent year on which any of the Series A Preferred Stock is
outstanding, or, if any such day is not a Business Day, the immediately
succeeding Business Day.

 

(ff)           “Representation
Reduction Event” means a decrease,
for any reason, in the SLS Director Beneficial Ownership Percentage that
results in a reduction in the number of directors of the Board that constitutes
the Board Representation Entitlement.

 

(gg)         “Rights” shall
have the meaning given thereto in the Company Rights Plan (or the comparable
right under any successor, substitute or additional stockholder rights plan).

 

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

 

(ii)           “Securities Purchase
Agreement” means that certain Securities Purchase Agreement, dated April [23],
2009, among the Company, SLS and Silver Lake Technology Investors Sumeru, L.P.

 

(jj)           “Series A
Original Issuance Date” means the date on which the first share of Series A
Preferred Stock was issued.

 

(kk)         “Series B
Preferred Stock” means the Series B Junior Participating Convertible
Preferred Stock so denominated and authorized by the Company concurrently with
the Series A Preferred Stock.

 

(ll)           “SLS” means
Silver Lake Sumeru Fund, L.P.

 

(mm)       “SLS Director Beneficial
Ownership Percentage” means, at any time, the quotient of (a) the
aggregate number of shares of Common Stock Beneficially Owned (excluding the
number of shares of Common Stock issuable upon the exercise of the Warrants (as
defined in the Securities Purchase Agreement)) by the Investor Securityholders divided
by (b) the number of Common Shares Outstanding (as defined in the
Securities Purchase Agreement) (calculated without giving effect to clause (iv) of
“Common Shares Outstanding”).

 

35

 

(nn)         “Subsidiary” means
with respect to any person, any corporation, association or other business
entity of which more than 50% of the outstanding Voting Stock is owned,
directly or indirectly, by, or, in the case of a partnership, the sole general
partner or the managing partner or the only general partners of which are, such
person and one or more Subsidiaries of such person (or a combination
thereof).  Unless otherwise specified, “Subsidiary”
means a Subsidiary of the Company.

 

(oo)         “Survivor of a
Fundamental Change” means the issuer of the securities received by the
holders of Common Stock (in their capacities as such) upon the consummation of
a Fundamental Change, to the extent the holders of Common Stock receive other
securities in exchange, conversion or substitution of their Common Stock in the
transaction that resulted in such Fundamental Change.

 

(pp)         “Termination of Trading”
will be deemed to have occurred if for 10 consecutive Business Days the Common
Stock (or other common stock into which the Series A Preferred Stock are
then convertible) is neither listed for trading on a U.S. national securities
exchange nor approved for trading on an established U.S. automated interdealer
quotation system and no American Depositary Shares or similar instruments for
such common stock are so listed or approved for listing in the United States.

 

(qq)         “Trading Day”
means any day on which (i) there is no Market Disruption Event and (ii) Nasdaq
or, if the Common Stock is not listed on Nasdaq, the principal national
securities exchange on which the Common Stock is listed, is open for trading
or, if the Common Stock is not so listed, admitted for trading or quoted, any
Business Day.  A Trading Day only
includes those days that have a scheduled closing time of 4:00 p.m. (New
York City time) or the then standard closing time for regular trading on the
relevant exchange or trading system.

 

(rr)           “Unexpected
Delisting” means any delisting of the Common Stock from the Nasdaq directly
as a result of the execution of the Securities Purchase Agreement and the
consummation of the transactions contemplated thereby.

 

(ss)         “Voting Stock”
shall mean the Series A Preferred Stock and securities of any class or
kind ordinarily having the power to vote generally for the election of
directors of the Board of the Company or its successor (including the Common
Stock).

 

(tt)           Each of the following
terms is defined in the Section set forth opposite such term:

 

	
  Term

  	
   

  	
  Section

  
	
  Acquirer

  	
   

  	
  SECTION 7(a)(i)

  
	
  Additional Director

  	
   

  	
  Section 4(d)(ix)

  
	
  Additional Dividends

  	
   

  	
  SECTION 2(c)

  
	
  Aggregate Amount

  	
   

  	
  SECTION 5(f)(iii)

  
	
  Board

  	
   

  	
  Recital

  
	
  Board Size Decrease

  	
   

  	
  SECTION 4(d)(iv)

  
	
  Brokers

  	
   

  	
  SECTION 6(a)(ii)

  
	
  Cash Amount

  	
   

  	
  SECTION 5(e)(viii)(A)

  
	
  Certificate of Incorporation

  	
   

  	
  Recital

  

 

36

 

	
  Term

  	
   

  	
  Section

  
	
  Change in Control

  	
   

  	
  SECTION 7(a)(i)

  
	
  Common Stock

  	
   

  	
  SECTION 1(b)(i)

  
	
  Company

  	
   

  	
  Recital

  
	
  Company Redemption Date

  	
   

  	
  SECTION 6(b)(ii)

  
	
  Conversion Amount

  	
   

  	
  SECTION 5(a)

  
	
  Conversion Date

  	
   

  	
  SECTION 5(a)

  
	
  Conversion Price

  	
   

  	
  SECTION 5(a)

  
	
  Conversion Security

  	
   

  	
  SECTION 4(b)(ii)

  
	
  DGCL

  	
   

  	
  Recital

  
	
  Disposition Event

  	
   

  	
  SECTION 5(f)(iv)

  
	
  Dividends

  	
   

  	
  SECTION 2(c)

  
	
  Expiration Date

  	
   

  	
  SECTION 5(f)(iii)

  
	
  Expiration Time

  	
   

  	
  SECTION 5(f)(iii)(A)

  
	
  Fundamental Change Notice

  	
   

  	
  SECTION 7(a)(ii)

  
	
  Fundamental Change Offer

  	
   

  	
  SECTION 7(a)(i)

  
	
  Fundamental Change Purchase Date

  	
   

  	
  SECTION 7(a)(i)

  
	
  Increase Event

  	
   

  	
  SECTION 2(c)(vi)

  
	
  Irrevocable Date

  	
   

  	
  SECTION 6(c)(i)

  
	
  Junior Securities

  	
   

  	
  SECTION 1(b)(i)

  
	
  Liquidation Preference

  	
   

  	
  SECTION 3(a)

  
	
  Maximum Voting Percentage

  	
   

  	
  SECTION 4(a)

  
	
  Maximum Voting Power

  	
   

  	
  SECTION 4(a)

  
	
  Non-Constituent Issuer Fundamental Change

  	
   

  	
  SECTION 4(b)(ii)

  
	
  Outstanding Partial Cash Notice

  	
   

  	
  SECTION 5(e)(viii)(C)

  
	
  Parity Securities

  	
   

  	
  SECTION 1(b)(ii)

  
	
  Partial Cash Notice

  	
   

  	
  SECTION 5(e)(viii)(A)

  
	
  Participating Dividends

  	
   

  	
  SECTION 2(b)

  
	
  Participating Liquidation Preference

  	
   

  	
  SECTION 3(a)

  
	
  Preferred Conversion Shares

  	
   

  	
  SECTION 8(a)

  
	
  Preferred Directors

  	
   

  	
  SECTION 4(d)

  
	
  Preferred Stock

  	
   

  	
  Recital

  
	
  Purchased Shares

  	
   

  	
  SECTION 5(f)(iii)

  
	
  Redemption

  	
   

  	
  SECTION 6(c)(v)

  
	
  Redemption Acceptance Notice

  	
   

  	
  SECTION 6(a)(iii)

  
	
  Redemption Fair Market Value

  	
   

  	
  SECTION 6(a)(v)

  
	
  Redemption Price

  	
   

  	
  SECTION 6(a)(i)

  
	
  Redemption Right

  	
   

  	
  SECTION 6(a)(i)

  
	
  Redemption Securities

  	
   

  	
  SECTION 6(a)(iii)

  
	
  Reference Property

  	
   

  	
  SECTION 5(f)(iv)

  
	
  Regular Dividends

  	
   

  	
  SECTION 2(a)

  
	
  Regular Liquidation Preference

  	
   

  	
  SECTION 3(a)

  
	
  Repurchase Price

  	
   

  	
  SECTION 7(a)(i)

  
	
  Rights Trigger

  	
   

  	
  SECTION 5(f)(xii)

  
	
  Senior Redeemable Preferred

  	
   

  	
  SECTION 5(e)(iii)

  
	
  Senior Securities

  	
   

  	
  SECTION 1(b)(iii)

  

 

37

 

	
  Term

  	
   

  	
  Section

  
	
  Series A Preferred Stock

  	
   

  	
  SECTION 1(a)

  
	
  Transition Time

  	
   

  	
  SECTION 4(d)(vii)

  
	
  Unaffected Shares

  	
   

  	
  SECTION 5(e)(viii)(B)

  

 

SECTION 10.      Miscellaneous.  For purposes of these resolutions, the
following provisions shall apply:

 

(a)           Status of Cancelled
Shares.  Shares of Series A
Preferred Stock which have been converted, redeemed, repurchased or otherwise
acquired by the Company or cancelled shall be retired, not be reissued as such
and, following the filing of any certificate required by the DGCL, have the
status of authorized and unissued shares of Preferred Stock, without
designation as to series until such shares are once more, subject to SECTION 4,
designated as part of a particular series by the Board.

 

(b)           Severability.  If any right, preference or limitation of the
Preferred Stock set forth in this resolution (as such resolution may be amended
from time to time) is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other rights, preferences
and limitations set forth in this resolution (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed herein.

 

(c)           Headings.  The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.

 

(d)           Amendment.  Any provision in this Certificate of
Designation (including, but not limited to, any notice requirements) may be
waived, in whole or in part, amended or otherwise modified by the prior vote or
written consent of holders representing at least a majority of the
then-outstanding shares of Series A Preferred Stock, voting together as a
separate class.

 

[Rest of page intentionally
left blank.]

 

38

 

IN WITNESS WHEREOF, the
Company has caused this Certificate of Designation to be executed by a duly
authorized officer of the Company as of
[                ],
2009.

 

	
   

  	
  POWER-ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  

 

39

 

Exhibit C

 

FORM OF WARRANTS

 

 

POWER-ONE, INC.

 

WARRANT FOR THE PURCHASE OF
SHARES OF

COMMON STOCK OF POWER-ONE, INC.

 

	
  No. [      ]

  	
  Warrant to Purchase

  [         ] Shares

  

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR ANY NON-U.S. OR STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH. 
THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
VOTING AND OTHER MATTERS AS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT,
COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM THE COMPANY OR ANY
SUCCESSOR THERETO.

 

FOR VALUE RECEIVED,  Power-One, Inc.,
a Delaware corporation (the “Company”), hereby certifies that
[                ],
its successor or permitted assigns (the “Holder”), is entitled, subject
to the provisions of this Warrant, to purchase from the Company, at the times
specified herein, up to an aggregate of [       
] fully paid and non-assessable shares of Common Stock, par value $.001
per share, of the Company (the “Common Stock”), at a purchase price per
share of Common Stock equal to the Exercise Price (as hereinafter
defined).  The number of shares of Common
Stock to be received upon the exercise of this Warrant and the Exercise Price
are subject to adjustment from time to time as hereinafter set forth, and all
references to “Common Stock”, “Warrant Shares” and “Exercise Price” herein
shall be deemed to include any such adjustment or series of adjustments.

 

1.          Definitions.

 

(a)   The following terms, as used herein, have the
following meanings:

 

“Board of Directors”
means the board of directors or comparable governing body of the Company, or
any committee thereof duly authorized to act on its behalf.

 

“Business Day” means
any day, other than a Saturday, Sunday and any day which is a legal holiday
under the laws of the State of California or New York or is a day on which
banking institutions located in the States of California or New York are
authorized or required by law or other governmental action to close.

 

“Closing 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 the average
ask prices) on that date as reported in composite transactions for the
principal U.S. securities exchange on which the Common Stock is listed or
admitted for trading or, if the Common Stock is not listed or admitted for
trading on a U.S. national or regional securities

 

 

exchange,
as reported on the quotation system on which such security is quoted. If the
Common Stock is not listed or admitted for trading on a United States national
or regional securities exchange and not reported on a quotation system on the
relevant date, the “closing price” will 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 “closing
price” will 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 investment banking firms selected by the Company for this purpose.

 

“Current Market
Price  Per Common Share”  as of any date means the average of the
Closing Prices per share of Common Stock for each of the five (5) consecutive
Trading Days ending (i) on the Trading Day prior to the Exercise Date (in
the case of Section 2(d)) or (ii) on the earlier of the day in
question and the day before the Ex-Dividend Date with respect to the issuance
or distribution requiring such computation (in the case of Section 10).

 

“Ex-Dividend Date”
means, with respect to any issuance or distribution, the first date on which
the shares of Common Stock trade on the applicable exchange or in the
applicable market, regular way, without the right to receive such issuance or
distribution.

 

“Exercise Price”
means $1.33 per Warrant Share, as adjusted from time to time in accordance
herewith.

 

“Expiration Date”
means [Insert 7 year anniversary of the Original Issuance Date]
[          ], 2016 at 5:00 p.m.,
New York City time, or if such day is not a Business Day, then on the next
succeeding day that shall be a Business Day.

 

“Fair Market Value”
of Common Stock or any other security or property means the fair market value
thereof as determined in good faith by the Board of Directors, which
determination must be set forth in a written resolution of the Board of
Directors, in accordance with the following rules: (i) for Common Stock or
other security traded or quoted on an Exchange, the Fair Market Value will be
the average of the closing prices of such security on such Exchange over a ten (10) consecutive
Trading Day period, ending on the Trading Day immediately prior to the date of
determination; (ii) for any security that is not so traded or quoted, the
Fair Market Value shall be determined: (x) mutually by the Board of
Directors and Holder, or (y) by a nationally recognized investment bank,
appraisal or accounting firm (whose fees and expenses will be paid by the
Company) selected by mutual agreement between the Board of Directors and the
holders representing a majority of the then-outstanding shares of Convertible
Preferred Stock; or (iii) for any other property, the Fair Market Value
shall be determined by the Board of Directors in good faith assuming a willing
buyer and a willing seller in an arms’-length transaction; provided that if
holders representing a majority of the then-outstanding shares of Convertible
Preferred Stock object to a determination of the Board of Directors made
pursuant to this clause (iii), the Fair Market Value of such property shall be
as determined by nationally recognized investment bank, appraisal or accounting
firm

 

 

(whose
fees and expenses will be paid by the Company) selected by mutual agreement
between the Board of Directors and such holders.

 

“Market Disruption Event”
means the occurrence or existence for more than one half hour period in the
aggregate on any scheduled Trading Day for the Common Stock of any suspension
or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by the primary exchange or trading system on which such shares
are traded) in the Common Stock or in any options, contracts or future
contracts relating to the Common Stock, and such suspension or limitation
occurs or exists at any time before 1:00 p.m. (New York City time) on such
day.

 

“Original Issuance Date”
means [May             ],
2009.

 

“Securities Purchase
Agreement” means that certain Securities Purchase Agreement, dated as of April [23],
2009, between the Company, SLS and Silver Lake Technology Investors Sumeru,
L.P.

 

“SLS” means Silver
Lake Sumeru Fund, L.P.

 

“Trading Day” means
any day on which (i) there is no Market Disruption Event and (ii) the
NASDAQ Global Market or, if the Common Stock is not listed on the NASDAQ Global
Market, the principal national securities exchange on which the Common Stock is
listed, is open for trading or, if the Common Stock is not so listed, admitted
for trading or quoted, any Business Day. 
A Trading Day only includes those days that have a scheduled closing
time of 4:00 p.m. (New York City time) or the then standard closing time
for regular trading on the relevant exchange or trading system.

 

“Warrant” means this
Warrant, issued pursuant to the Securities Purchase Agreement.

 

“Warrant Shares”
means the shares of Common Stock deliverable upon exercise of this Warrant, as
adjusted from time to time.

 

(b)   Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Securities Purchase
Agreement.

 

2.          Exercise of Warrant; Term.

 

(a)   Subject to Section 2(e),
the Holder is entitled to exercise the right to purchase the Warrant Shares
represented by this Warrant, in whole or in part, but
not for less than 100,000 Warrant Shares (or such lesser number of Warrant
Shares which may then constitute the maximum number purchasable pursuant to
this Warrant), such number being subject to adjustment as provided in Section 10, at any time
or from time to time after the earlier of (a) the fifteen-month
anniversary of the Original Issuance Date and (b) the occurrence of a
Fundamental Change (as defined in the Certificate of Designation) until the
Expiration Date.  To exercise this
Warrant, the Holder shall deliver to the Company (i) an executed Warrant
Exercise Notice substantially in the form

 

 

annexed
hereto and (ii) this Warrant.  Upon
such delivery and payment (the “Exercise Date”), the Holder shall be
deemed to be the holder of record of the Warrant Shares subject to such
exercise and shall have all of the rights associated with such Warrant Shares
to which the Holder is entitled pursuant to this Warrant, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually
delivered to the Holder.

 

(b)   If the Holder exercises this Warrant in part,
this Warrant shall be surrendered by the Holder to the Company and a new
Warrant of the same tenor and for the unexercised number of Warrant Shares
shall be executed by the Company within a reasonable time, and in any event not
exceeding three (3) Business Days after the Exercise Date.  The Company shall register the new Warrant in
the name of the Holder or in such name or names of its transferee pursuant to Section 6
hereof as may be directed in writing by the Holder, and deliver the new Warrant
to the Person or Persons entitled to receive the same.

 

(c)   Upon surrender of this Warrant and delivery
of the Warrant Exercise Notice in conformity with the foregoing provisions, the
Company shall transfer to the Holder appropriate evidence of ownership of any
Warrant Shares and/or other securities or property (including any money) to
which the Holder is entitled, registered or otherwise placed in, or payable to
the order of, the Holder or such name or names of its transferee pursuant to Section 6
hereof as may be directed in writing by the Holder, and shall deliver such
evidence of ownership and any other securities or property (including any
money) to the Person or Persons entitled to receive the same, together with an
amount in cash in lieu of any fraction of a share as provided in Section 5
below, within a reasonable time, not to exceed three (3) Business Days
after the Exercise Date.

 

(d)   Upon exercise of the Warrant pursuant to Section 2(a),
the Holder shall be entitled to receive Warrant Shares equal to the value (as
determined below) of the Warrant (or the portion thereof being exercised) by
surrender of this Warrant and delivery of the Warrant Exercise Notice, in which
event the Company will promptly issue to the Holder a number of Warrant Shares
computed using the following equation:

 

X = (A - B) x C  

              A

 

where:

 

X  =                          the number of
Warrant Shares issuable to the Holder upon exercise pursuant to this Section 2(d).

 

A  =                         the Current
Market Price Per Common Share (as of the Exercise Date).

 

B  =                           the Exercise
Price (as of the Exercise Date).

 

 

C  =                           the number of
Warrant Shares issuable under this Warrant or, if only a portion of this
Warrant is being exercised, the portion of the Warrant being exercised (as of
the Exercise Date).

 

If the foregoing calculation
results in zero or a negative number, then no Warrant Shares shall be issued
upon exercise pursuant to this Section 2(d).

 

(e)   No Holder will be permitted to exercise the
right to purchase Warrant Shares if and to the extent, following such exercise,
either (i) such Holder’s, together with such Holder’s Affiliates,
aggregate voting power on a matter being voted on by holders of the Common
Stock would exceed 19.9% of the Maximum Voting Power (as defined in the
Certificate of Designation) or (ii) such Holder, together with such Holder’s
Affiliates, would Beneficially Own (disregarding for this purpose clause (ii) of
the definition of “Beneficially Own”) more than 19.9% of the then outstanding
Common Stock; provided, however, that such exercise restriction
shall not apply in connection with and subject to completion of (A) a
Public Sale of the Common Stock to be issued upon such exercise, if following
consummation of such Public Sale such Holder and its Affiliates will not
Beneficially Own in excess of 19.9% of the then outstanding Common Stock or (B) a
bona fide third party tender offer for
the Common Stock issuable thereupon.  For purposes of the foregoing sentence, the
number of shares of Common Stock Beneficially Owned by a Holder and its
Affiliates shall include the number of Warrant Shares to be issued with respect
to which a Warrant Exercise Notice has been given, but shall exclude the number
of shares of Common Stock which would be issuable upon conversion or exercise
of (w) the Convertible Preferred Stock, (x) any Junior Preferred
Stock, (y) any outstanding Notes, and (z) any other outstanding
Warrants Beneficially Owned by such Holder or any of its Affiliates.  Upon the written request of the Holder, the
Company shall within two (2) Business Days confirm in writing to the
Holder the number of shares of Common Stock then outstanding.

 

3.     Restrictive Legend. 
Certificates representing shares of Common Stock issued pursuant to this
Warrant shall bear a legend substantially in the form of the legend set forth
on the first page of this Warrant to the extent that and for so long as
such legend is required pursuant to the Securities Purchase Agreement or
applicable securities laws.

 

4.     Reservation of Shares; Listing.  The Company hereby agrees at all times to
keep reserved for issuance and delivery upon exercise of this Warrant such
number of its authorized but unissued shares of Common Stock or other
securities of the Company from time to time issuable upon exercise of this
Warrant as will be sufficient to permit the exercise in full of this
Warrant.  The Company hereby represents
that all such shares shall be duly authorized and, when issued upon such
exercise pursuant to the terms of this Warrant, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (other than restrictions
on transfer contemplated by Section 6 or those created by the Holder) and
free and clear of all preemptive rights. 
The Company will use its reasonable best efforts to ensure that the
Common Stock may be issued without violation of any law or

 

 

regulation
applicable to the Company or of any requirement of any securities exchange
applicable to the Company on which the shares of Common Stock are listed or
traded.

 

5.     No Fractional Warrant Shares or Scrip.  No fractional Warrant Shares or scrip
representing fractional Warrant Shares shall be issued upon the exercise of
this Warrant.  In lieu of delivery of any
such fractional Warrant Share upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the
Current Market Price Per Common Share at the date of such exercise.

 

6.     Transfer or
Assignment of Warrant. 
Subject to compliance with the Securities Purchase Agreement, the Holder
shall be entitled, without obtaining the consent of the Company, to assign and
transfer this Warrant or any rights hereunder, at any time in whole or from
time to time in part, but not for less than 100,000 Warrant
Shares (or such lesser number of Warrant Shares which may then constitute the
maximum number purchasable pursuant to this Warrant), such number being subject
to adjustment as provided in Section 10, to any Person or
Persons.  Subject to the preceding
sentence, upon surrender of this Warrant to the Company, together with the
attached Warrant Assignment Form duly executed, the Company shall, without
charge, execute and deliver a new Warrant in the name of the assignee or
assignees named in such instrument of assignment and, if the Holder’s entire
interest is not being assigned, in the name of the Holder and this Warrant
shall promptly be canceled.  All expenses
(other than stock transfer taxes) and other charges payable in connection with
the preparation, execution and delivery of the new Warrants pursuant to this Section 6
shall be paid by the Company.

 

7.     Charges,
Taxes and Expenses.  Issuance
of certificates for Warrant Shares (or other securities) to the Holder upon
exercise of this Warrant shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance of
such certificates, all of which taxes and expenses shall be paid by the
Company.

 

8.     Exchange and Registry of
Warrant.  The Company shall maintain a registry showing
the name and address of the Holder as the registered holder of this Warrant,
and the Company shall be entitled to rely in all respects, prior to written
notice to the contrary, upon such registry. 
This Warrant is exchangeable, upon the surrender hereof by the Holder to
the Company, for a new Warrant or Warrants of like tenor and representing the
right to purchase the same aggregate number of Warrant Shares.

 

9.     Loss, Theft, Destruction or Mutilation of Warrant.  Upon receipt by the Company of evidence
satisfactory to it (in the exercise of its reasonable discretion) of the loss,
theft, destruction or mutilation of this Warrant, and in the case of any such
loss, theft or destruction, upon the receipt of a bond, indemnity or security
reasonably satisfactory to the Company, and upon surrender and cancellation of
this Warrant, if mutilated, the Company shall execute and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and date and representing the right to purchase the same aggregate number of
Warrant Shares as provided for in such lost, stolen, destroyed or mutilated
Warrant.

 

 

10.   Anti-dilution Provisions.

 

(a)   Adjustment for Change In Capital Stock.

 

(i)    If
the Company shall, at any time and from time to time while this Warrant is
outstanding, issue a dividend or make a distribution on its Common Stock
payable in shares of its Common Stock to all or substantially all holders of
its Common Stock, then at the opening of business on the Ex-Dividend Date for
such dividend or distribution:

 

(A)  The
Exercise Price will be adjusted by multiplying such Exercise Price by a
fraction: (1) the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the Business Day
immediately preceding such Ex-Dividend Date; and (2) the denominator of
which shall be the sum of the number of shares of Common Stock outstanding at
the close of business on the Business Day immediately preceding the Ex-Dividend
Date for such dividend or distribution, plus the total number of shares of
Common Stock constituting such dividend or other distribution.

 

(B)   The
number of Warrant Shares will be adjusted by multiplying such number by a
fraction: (1) the numerator of which shall be the Exercise Price
immediately prior to the adjustment pursuant to Section 10(a)(i)(A); and (2) the
denominator of which shall be the Exercise Price immediately after such
adjustment.

 

If any dividend or distribution of the type
described in this Section 10(a)(i) is declared but not so paid or
made, the Exercise Price and number of Warrant Shares issuable shall again be
adjusted to the Exercise Price and number of Warrant Shares issuable which
would then be in effect if such dividend or distribution had not been
declared.  Except as set forth in the
preceding sentence, in no event shall the Exercise Price be increased or the
number of Warrant Shares issuable be decreased pursuant to this Section 10(a)(i).

 

(ii)   If
the Company shall, at any time or from time to time while this Warrant is
outstanding, subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares of Common Stock, then the Exercise Price in
effect at the opening of business on the day upon which such subdivision
becomes effective shall be proportionately decreased, and conversely, if the
Company shall, at any time or from time to time while this Warrant is
outstanding, combine or reclassify its outstanding shares of Common Stock into
a smaller number of shares of Common Stock, then the Exercise Price in effect
at the opening of business on the day upon which such combination or

 

 

reclassification becomes
effective shall be proportionately increased. 
In each such case, effective immediately after the opening of business
on the day upon which such subdivision, combination or reclassification becomes
effective:

 

(A)  The
Exercise Price shall be adjusted by multiplying such Exercise Price by a
fraction: (1) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such subdivision or combination
and (2) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after giving effect to such subdivision,
combination or reclassification.

 

(B)   The
number of Warrant Shares will be adjusted by multiplying such number by a
fraction:  (1) the numerator of
which shall be the Exercise Price immediately prior to the adjustment pursuant
to Section 10(a)(ii)(A) and (2) the denominator of which shall
be the Exercise Price immediately after such adjustment.

 

(b)   Adjustment for Rights Issue.  If the Company shall, at any time or from
time to time while this Warrant is outstanding, distribute rights, options or
warrants to all or substantially all  holders
of its Common Stock entitling them, for a period expiring within 60 days after
the record date for such distribution, to purchase shares of Common Stock, or
securities convertible into, or exchangeable or exercisable for, Common Stock,
in either case, at less than the average of the Closing Price for the five
consecutive Trading Days immediately preceding the first public announcement of
the distribution, then, effective immediately after the opening of business on
the Ex-Dividend Date:

 

(i)    The
Exercise Price shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise Price in effect at the opening of
business on the Ex-Dividend Date for such distribution by a fraction: (A) the
numerator of which shall be the number of shares of Common Stock outstanding on
the close of business on the Business Day immediately preceding the Ex-Dividend
Date for such distribution, plus the number of shares of Common Stock
that the aggregate offering price of the total number of shares of Common Stock
issuable pursuant to such rights, options or warrants would purchase at the
Current Market Price Per Common Share on the declaration date for such
distribution (determined by multiplying such total number of shares of Common
Stock so offered by the exercise price of such rights, options or warrants and
dividing the product so obtained by such Current Market Price Per Common
Share); and (B) the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the Business Day
immediately preceding the Ex-Dividend Date for such

 

 

distribution, plus the total number of additional shares of
Common Stock issuable pursuant to such rights, options or warrants.

 

(ii)   The
number of Warrant Shares will be adjusted by multiplying such number by a
fraction: (A) the numerator of which shall be the Exercise Price
immediately prior to the adjustment pursuant to Section 10(b)(i) and (B) the
denominator of which shall be the Exercise Price immediately after such adjustment.

 

Such
adjustment shall become effective immediately after the opening of business on
the Ex-Dividend Date for such distribution. 
To the extent that shares of Common Stock are not delivered pursuant to
such rights, options or warrants or upon the expiration or termination of such
rights, options or warrants, the Exercise Price and number of Warrant Shares
issuable under this Warrant shall be readjusted to the Exercise Price and
number of Warrant Shares issuable that would then be in effect had the adjustments
made upon the issuance of such rights, options or warrants been made on the
basis of the delivery of only the number of shares of Common Stock actually
delivered.  In the event that such
rights, options or warrants are not so distributed, the Exercise Price and
number of Warrant Shares shall again be adjusted to be the Exercise Price and
the number of Warrant Shares issuable which would then be in effect if the
Ex-Dividend Date for such distribution had not occurred.  In determining whether any rights, options or
warrants entitle the holders to purchase shares of Common Stock at less than
the average of the Closing Prices for the five consecutive Trading Days
immediately preceding the first public announcement of the relevant
distribution, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received for
such rights and the value of such consideration if other than cash, to be
determined in good faith by the Board of Directors.  Except as set forth in this Section, in no
event shall the Exercise Price be increased or the number of Warrant Shares
decreased pursuant to this Section 10(b).

 

(c)   Adjustment for Other Distributions.

 

(i)    If
the Company shall, at any time or from time to time while this Warrant is
outstanding, distribute to all or substantially all holders of its Common Stock
any of its Capital Stock (as defined in the Indenture), assets, or debt securities or any
rights, warrants or options to purchase securities of the Company
(excluding (x) any distributions described in Section 10(a)(i), (y) any
rights or warrants described in Section 10(b) and (z) any
all-cash dividends or other cash distributions referred to in Section 10(d))
(such Capital Stock, assets, debt securities or rights to purchase securities
of the Company being distributed hereinafter in this Section 10(c) called
the “Distributed Assets”), and subject to Section 10(c)(ii), then
at the opening of business of the Ex-Dividend Date for such distribution:

 

 

(A)          The
Exercise Price will be adjusted by multiplying such Exercise Price by a
fraction: (1) the numerator of which will be the Current Market Price Per
Common Share, less the Fair Market Value of the portion of Distributed Assets
so distributed applicable to one share of the Common Stock (determined on the
basis of the number of shares of Common Stock outstanding on such Ex-Dividend
Date); and (2) the denominator of which will be the Current Market Price
Per Common Share on such date specified in clause (1).

 

(B)           The
number of Warrant Shares will be adjusted by multiplying such number by a
fraction:  (1) the numerator of
which shall be the Exercise Price immediately prior to the adjustment pursuant
to Section 10(c)(i)(A); and (2) the denominator of which shall be the
Exercise Price immediately after such adjustment.

 

Such
increase shall become effective immediately after the opening of business on
the Ex-Dividend Date for such distribution. 
In the event that such distribution is not so made, the Exercise Price
and the number of Warrant Shares issuable shall again be adjusted to be the
Exercise Price and number of Warrant Shares issuable which would then be in
effect if such distribution had not been declared.  Except as set forth in the prior sentence, in
no event shall the Exercise Price be increased or the number of Warrant Shares
issuable be decreased pursuant to this Section 10(c).

 

(ii)        With
respect to an adjustment pursuant to this Section 10(c) where there
has been a payment of a dividend or other distribution on Common Stock of
shares of Capital Stock (as defined in the Indenture) of, or similar equity
interests in, a Subsidiary or other business unit of the Company, then at the
opening of business of the Ex-Dividend Date for such distribution:

 

(A)          The
Exercise Price will be adjusted by multiplying such Exercise Price by a
fraction: (1) the numerator of which shall be the average of the Closing
Prices over the five Trading Days commencing on and including the fifth Trading
Day after the Ex-Dividend Date for such dividend or distribution (the “Average
Sale Price”); and (2) the denominator of which shall be (x) the
average of the closing 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 five Trading Days commencing on and including the fifth
Trading Day after the Ex-Dividend Date for such dividend or distribution on the
principal national securities exchange or inter-dealer quotation system on
which such securities are then listed or traded, plus (y) the Average Sale
Price specified in clause (1).

 

 

(B)           The
number of Warrant Shares will be adjusted by multiplying such number by a
fraction:  (A) the numerator of
which shall be the Exercise Price immediately prior to the adjustment pursuant
to Section 10(c)(ii)(A) and (B) the denominator of which shall
be the Exercise Price immediately after such adjustment.

 

(d)   Adjustment for Cash Dividends.  If the Company shall, at any time or from
time to time while this Warrant is outstanding, by dividend or otherwise,
distribute to all or substantially all holders of its shares of Common Stock,
cash (excluding (A) any distributions described in Section 10(e) below
or (B) any dividend or distribution in connection with the Company’s
liquidation, dissolution or winding up), then at the opening of business of the
Ex-Dividend Date for such dividend or distribution:

 

(i)         The
Exercise Price will be adjusted by multiplying such Exercise Price by a
fraction: (A) the numerator of which shall be the Current Market Price Per
Common Share on such date, less the amount of the dividend or distribution per
share of Common Stock; and (B) the denominator of which shall be the
Current Market Price Per Common Share.

 

(ii)        The
number of Warrant Shares will be adjusted by multiplying such number by a
fraction:  (A) the numerator of
which shall be the Exercise Price immediately prior to the adjustment pursuant
to Section 10(d)(i) and (B) the denominator of which shall be
the Exercise Price immediately after such adjustment.

 

Such adjustment shall become effective
immediately after the opening of business on the Ex-Dividend Date for such
dividend or distribution.  In the event
that such dividend or distribution is not so made, the Exercise Price and the
number of Warrant Shares issuable shall again be adjusted to be the Exercise
Price and the number of Warrant Shares issuable which would then be in effect
if such dividend or distribution had not been declared.  Except as set forth in the preceding sentence,
in no event shall the Exercise Price be increased or the number of Warrant
Shares issuable be decreased pursuant to this Section 10(c).

 

(e)   Adjustment for Certain Tender Offers or
Exchange Offers.  In case the Company
or any of its Subsidiaries shall, at any time or from time to time, while this
Warrant is outstanding, distribute cash or other consideration in respect of a
tender offer or an exchange offer (that is treated as a “tender offer”
under U.S. federal securities laws) made by the Company or any Subsidiary for
all or any portion of the Common Stock, where the sum of the aggregate amount
of such cash distributed and the aggregate Fair Market Value, as of the
Expiration Date (as defined below), of such other consideration distributed
(such sum, the “Aggregate Amount”) expressed as an amount per share of
Common Stock validly tendered or exchanged, and not withdrawn, pursuant to such
tender offer

 

 

or exchange offer as of the
Expiration Time (as defined below) (such tendered or exchanged shares of Common
Stock, the “Purchased Shares”) exceeds the Closing Price per share of
the Common Stock on the first Trading Day immediately following the last date
(such last date, the “Expiration Date”) on which tenders or exchanges
could have been made pursuant to such tender offer or exchange offer (as the
same may be amended through the Expiration Date), then, and in each case,
effective immediately after the close of business on such date:

 

(i)         The
Exercise Price will be adjusted by multiplying such Exercise Price in effect
immediately prior to the close of business on the Trading Day immediately
following the Expiration Date by a fraction:

 

(A) the
numerator of which shall be equal to the product of (x) the number of
shares of Common Stock outstanding as of the last time (the “Expiration Time”)
at which tenders or exchanges could have been made pursuant to such tender
offer or exchange offer (including all Purchased Shares) and (y) the
Closing Price per share of the Common Stock on the first Trading Day immediately
following the Expiration Date; and

 

(B) the
denominator of which is equal to the sum of (x) the Aggregate Amount and (y) the
product of (I) an amount equal to (1) the number of shares of Common
Stock outstanding as of the Expiration Time, less (2) the Purchased Shares
and (II) the Closing Price per share of the Common Stock on the first
Trading Day immediately following the Expiration Date.

 

(ii)        The
number of Warrant Shares issuable upon exercise of this Warrant will be
adjusted by multiplying such number by a fraction: (A) the numerator of
which shall be the Exercise Price immediately prior to the adjustment pursuant
to Section 10(e)(i) and (B) the denominator of which shall be
the Exercise Price immediately after such adjustment.

 

An adjustment, if any, to the Exercise Price
and the number of Warrant Shares issuable pursuant to this Section 10(e) shall
become effective immediately prior to the opening of business on the second
Trading Day immediately following the Expiration Date.  In the event that the Company or a Subsidiary
is obligated to purchase shares of Common Stock pursuant to any such tender
offer or exchange offer, but the Company or such Subsidiary is permanently
prevented by applicable law from effecting any such purchases, or all such
purchases are rescinded, then the Exercise Price and the number of Warrant
Shares issuable shall again be adjusted to be the Exercise Price and the number
of Warrant Shares issuable which would then be in effect if such tender offer
or exchange offer had not been made. 
Except as set forth in the preceding sentence, if the application of
this Section 10(e) to any tender offer or exchange offer would result
in an increase in the Exercise Price or a decrease in the number of Warrant

 

 

Shares issuable, no adjustment shall be made
for such tender offer or exchange offer under this Section 10(e).

 

(f)    Disposition Events.

 

(i)    If
any of the following events (any such event, a “Disposition Event”)
occurs:

 

(A)          any
reclassification or exchange of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination);

 

(B)           any
merger, consolidation or other combination to which the Company is a
constituent party; or

 

(C)           any
sale, conveyance, lease, or other disposal of all or substantially all the
properties and assets of the Company to any other Person;

 

in each case, as a result of which all or
substantially all of the holders of Common Stock shall be entitled to receive
cash, securities or other property for their shares of Common Stock, the
Company or the successor or purchasing Person, as the case may be, shall
provide that this Warrant be exercised following the effective date of any
Disposition Event, shall be exercised, in lieu of the Common Stock otherwise
deliverable, into the same amount and type (in the same proportion) of cash,
securities or other property received by holders of Common Stock in the
relevant event (collectively, “Reference Property”) received upon the
occurrence of such Disposition Event by a holder of Common Stock holding,
immediately prior to the transaction, a number of shares of Common Stock equal
to the number of Warrant Shares issuable under this Warrant (without giving
effect to any of the exceptions contained herein) immediately prior to such
Disposition Event; provided that if the Disposition Event provides the
holders of Common Stock with the right to receive more than a single type of
consideration determined based in part upon any form of stockholder election,
the Reference Property shall be comprised of the weighted average of the types
and amounts of consideration received by the holders of the Common Stock.  The Company may not cause, or agree to cause,
a Disposition Event to occur, unless the issuer of any securities or other
property into which this Warrant thereafter becomes exercisable agrees, for the
express benefit of the holders of record of this Warrant (including making them
beneficiaries of such agreement), to issue such securities or property.

 

(ii)   The
provisions of this Section 10(f) shall similarly apply to successive
Disposition Events.  If this Section 10(f) applies
to any

 

 

event or occurrence, neither Section 10(a) nor Section 10(e) shall
apply; provided, however, that this Section 10(f) shall
not apply to any stock split or combination to which Section 10(a) is
applicable.  To the extent that equity
securities of a company are received by the holders of Common Stock in
connection with a Disposition Event, the portion of this Warrant which will be
exercisable into such equity securities will continue to be subject to the
anti-dilution adjustments set forth in this Section 10.

 

(g)   Provisions Governing Adjustment to
Exercise Price and number of Warrant Shares Issuable.  Rights, options or warrants distributed by
the Company to all or substantially all holders of Common Stock entitling the
holders thereof to subscribe for or purchase shares of the Company’s capital
stock (either initially or under certain circumstances), which rights, options
or warrants, until the occurrence of a specified event or events (“Rights
Trigger”): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect
of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of Section 10(a), 10(b), 10(c), 10(d), 10(e) or
10(f) (and no adjustment to the Exercise Price or number of Warrant Shares
issuable under Section 10(a), 10(b), 10(c), 10(d), 10(e) or 10(f) will
be required) until the occurrence of the earliest Rights Trigger, whereupon
such rights, options and warrants shall be deemed to have been distributed and,
except as set forth in Section 10(q), an appropriate adjustment (if any is
required) to the Exercise Price and the number of Warrant Shares issuable shall
be made under Section 10(b) (without giving effect to the 60 day
limit on the exercisability of rights and warrants ordinarily subject to such Section 10(b))
(if and to the extent such rights, options and warrants are exercisable for
shares of Common Stock or Common Stock equivalents) and/or Section 10(c) (if
and to the extent such rights, options and warrants are exercisable for cash
and/or any shares of the Company’s capital stock other than shares of Common
Stock or Common Stock equivalents).  If
any such right, option or warrant, including any such existing rights, options
or warrants distributed prior to the date of this Warrant, are subject to
events, upon the occurrence of which such rights, options or warrants become
exercisable to purchase different securities, evidences of indebtedness or
other assets, then the date of the occurrence of any and each such event shall
be deemed to be the date of distribution and Ex-Dividend Date with respect to
new rights, options or warrants with such rights (and a termination or
expiration of the existing rights, options or warrants without exercise by any
of the holders thereof), except as set forth in Section 10(q).  In addition, except as set forth in Section 10(q),
in the event of any distribution (or deemed distribution) of rights, options or
warrants, or any Rights Trigger or other event (of the type described in the
preceding sentence) with respect thereto that was counted for purposes of
calculating a distribution amount for which an adjustment to the Exercise Price
or the number of Warrant Shares issuable under Section 10(a), 10(b),
10(c), 10(d), 10(e) or 10(f) was made, (1) in the case of any
such rights, options or warrants that shall all have been redeemed or
repurchased without exercise by any holders thereof, the Exercise Price and the
number of Warrant Shares issuable shall be readjusted

 

 

upon such final redemption
or repurchase to give effect to such distribution or Rights Trigger, as the
case may be, as though it were a cash distribution, equal to the per share
redemption or repurchase price received by a holder or holders of Common Stock
with respect to such rights, options or warrants (assuming such holder had
retained such rights, options or warrants), made to all or substantially all
holders of Common Stock as of the date of such redemption or repurchase, and (2) in
the case of such rights, options or warrants that shall have expired or been
terminated without exercise by any holders thereof, the Exercise Price and the
number of Warrant Shares issuable shall be readjusted as if such rights,
options and warrants had not been issued. 
Notwithstanding the foregoing, (A) to the extent any such rights,
options or warrants are redeemed by the Company prior to a Rights Trigger or
are exchanged by the Company, in either case for shares of Common Stock, the
Exercise Price and number of Warrant Shares issuable shall be appropriately
readjusted (if and to the extent previously adjusted pursuant to this Section 10(g))
as if such rights, options or warrants had not been issued, and instead the
Exercise Price and number of Warrant Shares issuable will be adjusted as if the
Company had issued the shares of Common Stock issued upon such redemption or
exchange as a dividend or distribution of shares of Common Stock subject to Section 10(a)(i),
(B) to the extent any such rights, options or warrants are redeemed by the
Company prior to a Rights Trigger or are exchanged by the Company, in either case
for cash, the Exercise Price and number of Warrant Shares issuable shall be
appropriately readjusted (if and to the extent previously adjusted pursuant to
this Section 10(g)) as if such rights, options or warrants had not been
issued, and instead the Exercise Price and number of Warrant Shares issuable
will be adjusted as if the Company had delivered cash upon such redemption or
exchange as a dividend or distribution of cash subject to Section 10(d) (without
giving effect to any of the exceptions contained therein) and (C) to the
extent any such rights, options or warrants are redeemed by the Company prior
to a Rights Trigger or are exchanged by the Company, in either case for any
capital stock, assets or debt securities or any rights, warrants or options of
the Company not otherwise provided pursuant to the immediately foregoing
clauses (A) or (B), the Exercise Price and number of Warrant Shares
issuable shall be appropriately readjusted (if and to the extent previously
adjusted pursuant to this Section 10(g)) as if such rights, options or
warrants had not been issued, and instead the Exercise Price and number of
Warrant Shares issuable will be adjusted as if the Company had delivered
capital stock, assets or debt securities or any rights, warrants or options of
the Company upon such redemption or exchange as a distribution of capital
stock, assets or debt securities or any rights, warrants or options of the
Company subject to Section 10(c) (without giving effect to any of the
exceptions contained therein).

 

(h)   Minimum Adjustment.  Notwithstanding the foregoing, the Exercise
Price will not be reduced (and the corresponding increase to the number of
Warrant Shares will not occur) if the amount of such reduction would be an
amount less than $0.01, but any such amount will be carried forward and
reduction with respect to the Exercise Price (and increase with respect to the

 

 

number of Warrant Shares)
will be made at the time that such amount, together with any subsequent amounts
so carried forward, aggregates to $0.01 or more.

 

(i)    When No Adjustment Required.

 

(i)         No
adjustment need be made for a transaction referred to in Section 10(a) or
10(b) if the Holder participates, without exercising this Warrant, in the
transaction or event that would otherwise give rise to an adjustment pursuant
to such section at the same time as holders of the Common Stock participate
with respect to such transaction or event and on the same terms as holders of
the Common Stock participate with respect to such transaction or event as if
the Holder, at such time, held a number of shares of Common Stock equal to the
Warrant Shares at such time.

 

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

 

(iii)       No
adjustment need be made for a change in the par value or no par value of the
Common Stock.

 

(iv)       To
the extent this Warrant becomes exercisable pursuant to this Section 10
into cash, no adjustment need be made thereafter as to the cash.  Interest will not accrue on the cash.

 

(j)    Rules of Calculation; Treasury Stock.  All calculations will be made to the nearest
one-hundredth of a cent or to the nearest one-ten thousandth of a share.  Except as otherwise explicitly provided
herein, the number of shares of Common Stock outstanding will be calculated on
the basis of the number of issued and outstanding shares of Common Stock, not
including shares held in the treasury of the Company.  The Company shall not pay any dividend on or
make any distribution to shares of Common Stock held in treasury.

 

(k)   Waiver.  Notwithstanding the foregoing, the Exercise
Price will not be reduced and the number of Warrant Shares issuable will not be
increased if the Company receives, prior to the effective time of the adjustment
to the Exercise Price and number of Warrant Shares issuable, written notice
from the Holder that no adjustment is to be made as the result of a particular
issuance of Common Stock or other dividend or other distribution on shares of
Common Stock.  This waiver will be
limited in scope and will not be valid for any issuance of Common Stock or
other dividend or other distribution on shares of Common Stock not specifically
provided for in such notice.

 

(l)    Tax Adjustment.  Anything in this Section 10 notwithstanding,
the Company shall be entitled to make such downward adjustments in the Exercise
Price (and corresponding increase to the number of Warrant Shares issuable), in
addition to those required by this Section 10, as the Board of Directors
in its sole

 

 

discretion shall determine
to be advisable in order that any event treated for federal income tax purposes
as a dividend or stock split will not be taxable to the holders of Common
Stock.

 

(m)          Par Value.  Anything in this Section 10
notwithstanding, no adjustment to the Exercise Price shall reduce the Exercise
Price below the then par value per share of Common Stock, and any such
purported adjustment shall instead reduce the Exercise Price to such par value.

 

(n)           No Duplication.  If any action would require adjustment of the
Exercise Price and the number of Warrant Shares pursuant to more than one of
the provisions described in this Section 10 in a manner such that such
adjustments are duplicative, only one adjustment shall be made.

 

(o)           Notice of Record Date.  In the event (i) the Company takes any
action that would require an adjustment in the Exercise Price and/or the number
of Warrant Shares pursuant to Section 10(a), 10(b), 10(c), 10(d), 10(e) or
10(f) (unless no adjustment is to occur pursuant to Sections 10(h) or
10(i) or (ii) there is a liquidation or dissolution of the Company,
then the Company shall file with its corporate records and mail to the Holder
at the Holder’s last addresses as shown on the records of the Company, at least
10 days prior to such the proposed Ex-Dividend Date or proposed effective date,
as the case may be, a notice stating the proposed Ex-Dividend Date for a
dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, binding share exchange,
transfer, liquidation or dissolution. 
Failure to file or mail the notice or any defect in it shall not affect
the validity of the transaction.

 

(p)           Certificate of Adjustments.  Upon the occurrence of each adjustment or readjustment
of the Exercise Price and the number of Warrant Shares issuable pursuant to
this Section 10, the Company at its expense shall promptly as reasonably
practicable compute such adjustment or readjustment in accordance with the
terms hereof and furnish to the Holder a certificate, signed by an officer of
the Company, setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based and shall
file a copy of such certificate with its corporate records.  The Company shall, upon the reasonable
written request of the Holder, furnish to such Holder a similar certificate
setting forth (i) the calculation of such adjustments and readjustments in
reasonable detail, (ii) the Exercise Price then in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of capital stock,
other securities or other property (including but not limited to cash and
evidences of indebtedness) which then would be received upon the exercise of
this Warrant.

 

(q)           Rights Issued in Respect of
Warrant Shares Issued Upon Exercise. 
In the event the Company adopts or implements a shareholder rights
agreement (a “Shareholder Rights Plan”), including, without limitation,
a rights agreement in existence on the Original Issuance Date, pursuant to
which rights (“Rights”) are

 

 

distributed to the holders
of Common Stock of the Company and such Shareholder Rights Plan provides that
each Warrant Share issued upon exercise of this Warrant at any time prior to
the distribution of separate certificates representing such Rights will be
entitled to receive such Rights, then there shall not be any adjustment to the
exercise right or Exercise Price at any time prior to the distribution of
separate certificates representing such Rights. 
If, however, prior to any conversion, the Rights have separated from the
Common Stock, the Exercise Price and the number of Warrant Shares issuable
shall be adjusted at the time of separation as described in Section 10(c) above,
subject to readjustment in the events set forth therein.

 

11.        Notices. 
Any notice, demand or delivery authorized by this Warrant shall be in
writing and shall be given to the Holder or the Company, as the case may be, at
its address (or facsimile number) set forth below, or such other address (or
facsimile number) as shall have been furnished to the party giving or making
such notice, demand or delivery:

 

If
to the Company, to it at the following address:

 

Power-One, Inc.

740 Calle Plano

Camarillo,
California

Attention:
Chief Executive Officer

Facsimile:
(805) 383-5898

 

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

 

Gibson, Dunn &
Crutcher LLP

333 South Grand Avenue

Los Angeles, California 90071

Facsimile: (213) 229-7520

Attention: Jennifer Bellah Maguire

 

If
to the Holder:

 

[Name
of Holder]

2775 Sand Hill Road, Suite 100

Menlo
Park, California 94025

Attention:  Karen King

Facsimile:
(650) 234-2502

 

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

 

Simpson
Thacher & Bartlett LLP

2550
Hanover Street

Palo
Alto, California 94304

 

 

Facsimile:
(650) 251-5002

Attention:
Richard Capelouto

 

Each such notice, demand or
delivery shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of receipt and such
day is a Business Day.  Otherwise, any
such notice, demand or delivery shall be deemed not to have been received until
the next succeeding Business Day.

 

12.        Rights of the Holder; Transfer Books.  Prior to any exercise of this Warrant, the
Holder shall not, by virtue hereof, be entitled to any rights of a shareholder
of the Company, including, without limitation, the right to vote, to receive
dividends or other distributions, to exercise any preemptive right or to
receive any notice of meetings of stockholders or any notice of any proceedings
of the Company except as may be specifically provided for herein.  The Company will at no time close its stock
transfer books against transfer of this Warrant in any manner which interferes
with the timely exercise of this Warrant.

 

13.        GOVERNING LAW. 
THIS WARRANT AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND
THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH
LAWS.

 

14.        Binding
Effect.  This Warrant shall be
binding upon any successors or assigns of the Company.

 

15.        Amendments; Waivers.  Any provision of this Warrant may be amended
or waived if, and only if, such amendment or waiver is in writing and signed,
in the case of an amendment, by the Holder and the Company, or in the case of a
waiver, by the party against whom the waiver is to be effective.  No failure or delay by either party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

16.        Entire Agreement.  This Warrant and the forms attached hereto
and the Securities Purchase Agreement contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangement or undertakings with respect thereto.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the
Company has duly caused this Warrant to be signed by its duly authorized
officer and to be dated as of [·].

 

	
   

  	
  POWER-ONE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Acknowledged
and Agreed:

 

 

	
  [NAME OF HOLDER]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

[Signature
Page to Warrant]

 

 

WARRANT EXERCISE NOTICE FORM

 

To:          Power-One, Inc.

 

The undersigned irrevocably
exercises the Warrant for the purchase of
                    
shares (the “Warrant Shares”) of Common Stock, par value $.001 per
share, of Power-One, Inc. (the “Company”) at
$           per share (the
Exercise Price currently in effect pursuant to the Warrant) and herewith makes
payment of
$                      
(such payment being made as specified below), all on the terms and conditions specified
within the Warrant, surrenders the Warrant and all right, title and interest
therein to the Company and directs that the Warrant Shares and replacement
Warrant, if applicable, deliverable upon the exercise of this Warrant or
portion of this Warrant be registered or placed in the name and at the address
specified below and delivered thereto.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature
  of Holder)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City)

  	
  (State)

  	
  (Zip
  Code)

  

 

	
  Payment:

  	
  o

  	
  $                  wire
  transfer

  
	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  $                  check

  
	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  Reduction in number of Warrant Shares that would
  otherwise be issued upon exercise pursuant to Section 2(d) of 

  
	
   

  	
  the Warrant

  

 

	
  Securities and/or check to
  be issued to:

  	
   

  
	
   

  
	
  Please insert social
  security or identifying number:

  	
   

  
	
   

  
	
  Name:

  	
   

  
	
   

  
	
  Street Address:

  	
   

  
	
   

  
	
  City, State and Zip Code:

  	
   

  
	
   

  
	
  Any
  unexercised portion of the Warrant evidenced by the within Warrant to be
  issued to:

  	
   

  
	
   

  
	
  Please insert social
  security or identifying number:

  	
   

  
								

 

 

	
  Name:

  	
   

  
	
   

  
	
  Street Address:

  	
   

  
	
   

  
	
  City, State and Zip Code:

  	
   

  
				

 

 

WARRANT ASSIGNMENT FORM

 

Dated
                        ,          

 

FOR VALUE
RECEIVED,                        hereby
sells, assigns and transfers unto                                        
(the “Assignee”),

(please type or print in
block letters)

 

                                                                                                                                                                                                           

(insert address)

 

its
right to purchase up to
           shares of Common
Stock represented by this Warrant and does hereby irrevocably constitute and
appoint
                                attorney-in-fact,
to transfer the same on the books of the Company, with full power of
substitution in the premises.

 

 

	
   

  	
  Signature:

  	
   

  

 

 

Exhibit D

 

FORM OF REGISTRATION RIGHTS
AGREEMENT

 

 

POWER-ONE, INC.

 

REGISTRATION RIGHTS
AGREEMENT

 

Dated as of [May    ], 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
   

  	
  Certain Defined Terms

  	
   

  	
  1

  
	
  SECTION 1.2.

  	
   

  	
  Other Capitalized Terms

  	
   

  	
  1

  
	
  SECTION 1.3.

  	
   

  	
  Effectiveness of this Agreement

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II REGISTRATION RIGHTS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
   

  	
  Piggyback Registrations

  	
   

  	
  1

  
	
  SECTION 2.2.

  	
   

  	
  Demand Registration

  	
   

  	
  3

  
	
  SECTION 2.3.

  	
   

  	
  Exceptions to the Company’s Obligations

  	
   

  	
  6

  
	
  SECTION 2.4.

  	
   

  	
  Registration Procedures

  	
   

  	
  9

  
	
  SECTION 2.5.

  	
   

  	
  Information Supplied

  	
   

  	
  13

  
	
  SECTION 2.6.

  	
   

  	
  Expenses

  	
   

  	
  13

  
	
  SECTION 2.7.

  	
   

  	
  Restrictions on Disposition

  	
   

  	
  13

  
	
  SECTION 2.8.

  	
   

  	
  Indemnification

  	
   

  	
  13

  
	
  SECTION 2.9.

  	
   

  	
  Required Reports

  	
   

  	
  16

  
	
  SECTION 2.10.

  	
   

  	
  Selection of Counsel

  	
   

  	
  16

  
	
  SECTION 2.11.

  	
   

  	
  Market Standoff Agreement

  	
   

  	
  16

  
	
  SECTION 2.12.

  	
   

  	
  No Inconsistent Agreements

  	
   

  	
  17

  
	
  SECTION 2.13.

  	
   

  	
  Termination of Registration Rights

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III MISCELLANEOUS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
   

  	
  Expenses

  	
   

  	
  18

  
	
  SECTION 3.2.

  	
   

  	
  Successors and Assigns; Assignment

  	
   

  	
  18

  
	
  SECTION 3.3.

  	
   

  	
  No Third Party Beneficiaries

  	
   

  	
  18

  
	
  SECTION 3.4.

  	
   

  	
  Entire Agreement

  	
   

  	
  18

  
	
  SECTION 3.5.

  	
   

  	
  Severability

  	
   

  	
  18

  
	
  SECTION 3.6.

  	
   

  	
  Amendment and Waiver

  	
   

  	
  18

  
	
  SECTION 3.7.

  	
   

  	
  Delays or Omissions

  	
   

  	
  19

  
	
  SECTION 3.8.

  	
   

  	
  Notices

  	
   

  	
  19

  
	
  SECTION 3.9.

  	
   

  	
  Interpretation

  	
   

  	
  19

  
	
  SECTION 3.10.

  	
   

  	
  Governing Law; Jurisdiction; Waiver of Jury Trial

  	
   

  	
  20

  
	
  SECTION 3.11.

  	
   

  	
  Specific Performance

  	
   

  	
  20

  
	
  SECTION 3.12.

  	
   

  	
  Counterparts

  	
   

  	
  20

  

 

i

 

REGISTRATION RIGHTS
AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered
as of [May    ], 2009, among Power-One, Inc. a
Delaware corporation (together with any other issuer of Registrable Securities,
the “Company”), Silver Lake Sumeru Fund, L.P., a Delaware limited partnership
(“SLS”), and Silver Lake Technology Investors Sumeru, L.P. (together
with their respective Permitted Transferees, the “Investor Stockholders”).

 

RECITALS

 

WHEREAS, the Company, SLS and Silver Lake Technology Investors Sumeru,
L.P. have entered into a Securities Purchase Agreement, dated as of April 23,
2009 (the “Purchase Agreement”), pursuant to which the Investor
Stockholders have agreed to purchase (i) an aggregate of 23,625 shares
(the “Purchased Shares”) of the Company’s Series A Preferred Stock
(as defined below) initially convertible into 17,500,000 shares of the Company’s
Common Stock (as defined below); (ii) Warrants (as defined below)
initially exercisable for 8,700,000 Warrant Shares (as defined below); and (iii) Notes
(as defined below) initially convertible into 26,944,444 shares of the Company’s
Common Stock (as defined below); and

 

WHEREAS, the parties hereto desire to enter into certain arrangements
relating to the Company, the Purchased Shares, the Warrant Shares, the Notes
and the Conversion Shares (as defined below).

 

NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:

 

ARTICLE
I

 

DEFINITIONS

 

SECTION 1.1.                       Certain
Defined Terms.  Certain terms used herein shall have the meanings
given to them in Exhibit A.

 

SECTION 1.2.                       Other
Capitalized Terms.  Capitalized terms used but not defined herein or
in Exhibit A shall have the meanings given to them in the Purchase
Agreement.

 

SECTION 1.3.                       Effectiveness
of this Agreement.  Notwithstanding any other provision to the
contrary in this Agreement, this Agreement shall not take effect until the
Closing, and in the event the Purchase Agreement is terminated prior to the
Closing having occurred, this Agreement shall be void ab initio.

 

ARTICLE
II

 

REGISTRATION RIGHTS

 

SECTION 2.1.                       Piggyback
Registrations.  If the Company
proposes to register Equity Securities under the Securities Act (other than a
registration on Form S-4 or Form S-8, or any

 

 

successor or other forms promulgated for similar
purposes, and other than demand registrations pursuant to Section 2.2)
involving the offering of such Equity Securities at any time on or after the
last day of the Restricted Period (the “Restricted Period Termination Date”),
whether or not for sale for its own account, in a manner which would permit
registration of Registrable Securities the same class of such Equity Securities
for sale to the public under the Securities Act, it will, at each such time,
give prompt written or telephonic notice (a “Piggyback Offering Notice”)
to the Holders (excluding Holders of Hedging Common Stock) of:  its intention to do so, the form on which the
Company expects to effect such registration (e.g.,
Form S-1, Form S-3, Form S-3ASR), the anticipated filing date
with the SEC of such registration statement, the anticipated date that the
registration statement will be declared or otherwise become effective, whether
the offering is to be underwritten, in the case of Form S-3 or Form S-3ASR,
the anticipated date and time that the offering will be made.  The registration rights provided for in this Section 2.1
are in addition to, and not in lieu of, registrations made upon the demand of
any Holder in accordance with Section 2.2.

 

(a)                                  Form S-1.  If the Company indicates in the Piggyback
Offering Notice that it intends to effect a registration pursuant to Form S-1,
upon the written request of any Holder (which request shall specify the
Registrable Securities intended to be registered by such Holder), made within
ten (10) days after the receipt of any such notice but in no event later
than two (2) Business Days prior to the date the Form S-1 is filed
with the SEC, the Company will, subject to the conditions set forth in Section 2.3
and the provision of the information specified in Section 2.5, use
reasonable best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the Holders thereof.

 

(b)                                 Form S-3.  If the Company indicates in the Piggyback
Offering Notice that it intends to effect a registration pursuant to Form S-3,
upon the written request of any Holder (which request shall specify the
Registrable Securities intended to be registered by such Holder), made within
seven (7) days after the receipt of any such notice, notifying the Company
whether any Holders intend to include within the Form S-3 or any
Prospectus included therein Registrable Securities, the Company will, subject
to the conditions set forth in Section 2.3 and the provision of the
information specified in Section 2.5, use 
reasonable best efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof.

 

(c)                                  Form S-3ASR.  If the Company indicates in the Piggyback
Offering Notice that it intends to effect a registration pursuant to Form S-3ASR,
upon the written request of any Holder (which request shall specify the
Registrable Securities intended to be registered by such Holder), made within
seven (7) days after the receipt of any such notice, prior to the date and
time of the offering as specified in the Company’s notice, notifying the
Company whether any Holders intend to include within such Form S-3ASR or
any Prospectus included therein Registrable Securities, the Company will,
subject to the conditions set forth in Section 2.3 and the provision of
the information specified in Section 2.5, use  reasonable best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Holders thereof.

 

(d)                                 Right
to Withdraw.  If a registration
pursuant to this Section 2.1 involves an underwritten offering, any Holder
requesting to be included in such registration may elect, in writing prior to
the effective date of the registration statement filed in connection with such
registration, not

 

2

 

to register all or any part of such Holder’s
Registrable Securities in connection with such registration.

 

(e)                                  Conversion
into Registrable Securities.  Nothing
in this Section 2.1 shall limit the right of any Holder to request the
registration of the Registrable Securities issuable upon (i) conversion of
the Series A Preferred Stock or Junior Convertible Preferred Stock by such
Holder (subject to such conversion occurring prior to the completion of the
sale of the underlying Registrable Securities prior to such registration), (ii) exercise
of the Warrants by such Holder (subject to such exercise occurring prior to the
completion of the sale of the underlying Registrable Securities prior to such
registration) or (iii) conversion of the Notes by such Holder (subject to
such conversion occurring prior to the completion of the sale of the underlying
Registrable Securities prior to such registration), notwithstanding the fact
that at the time of the request such Holder holds Series A Preferred
Stock, Junior Convertible Preferred Stock, Warrants or Notes, as the case may
be, and not the underlying Common Stock.

 

SECTION 2.2.     Demand
Registration.

 

(a)                                  General.

 

(i)                                     Subject
to the provisions of this Section 2.2(a), upon the written request (a “Demand
Notice”) of holders holding at least 35% of the aggregate Registrable
Securities then held by the Holders (collectively the “Demand Party”)
(assuming conversion of all outstanding shares of Series A Preferred
Stock, Junior Convertible Preferred Stock and Notes into Conversion Shares and
exercise of all outstanding Warrants into Warrant Shares) requesting that the
Company effect the registration under the Securities Act of all or part of such
Demand Party’s Registrable Securities, which Registrable Securities will be
offered for sale on or after the Restricted Period Termination Date, and
specifying the amount and intended methods of disposition thereof, including
pursuant to a shelf registration statement utilizing Rule 415 of the
Securities Act (or its successor provision) (a “Shelf Registration”),
thereupon the Company will promptly give written notice of such requested
registration to each of the other Holders and thereupon will, as expeditiously
as reasonably practicable (and in any event no later than 45 days after
the date of the Demand Notice), file and use its  commercially reasonable efforts to cause to
be declared effective under the Securities Act a registration statement to
effect the registration under the Securities Act of the following, provided
that, notwithstanding the foregoing: (x) to the extent a Demand Notice is
delivered not less than 45 days prior to the Restricted Period Termination
Date requesting a Shelf Registration, the Company shall use its  reasonable best efforts to cause such
registration statement to become effective no later than the Restricted Period
Termination Date, and (y) under no circumstances under this Section 2.2(a) (including
the foregoing clause (x)) shall the Company be required to file any
registration statement prior to the date that is 45 days prior to the
Restricted Period Termination Date:

 

(1)                                  such
Registrable Securities which the Company has been so requested to register by
the Demand Party under the Demand Notice; and

 

(2)                                  the
Registrable Securities of Holders which the Company has been requested to
register by written request to the Company by the Holders within ten (10)

 

3

 

days after the giving of such written notice by the
Company to the Holders (which request shall specify the amount and intended
methods of disposition of such securities).

 

all to the extent necessary to permit the disposition
(in accordance with the intended method thereof as aforesaid) of the
Registrable Securities and such other securities so to be registered.

 

(ii)                                  Nothing
in this Section 2.2 shall limit the right of any Holder to request the
registration of the Registrable Securities issuable upon (i) conversion of
the Series A Preferred Stock and Junior Convertible Preferred Stock by
such Holder (subject to such conversion occurring prior to the completion of
the sale of the underlying Registrable Securities prior to such registration), (ii) exercise
of the Warrants by such Holder (subject to such exercise occurring prior to the
completion of the sale of the underlying Registrable Securities prior to such
registration) or (iii) conversion of the Notes by such Holder (subject to
such conversion occurring prior to the completion of the sale of the underlying
Registrable Securities prior to such registration), notwithstanding the fact
that at the time of the request such Holder holds Series A Preferred
Stock, Junior Convertible Preferred Stock, Warrants or Notes, as the case may
be, and not the underlying Common Stock.

 

(b)                                 Shelf
Take-Downs.  Any of the Holders whose
Registrable Securities have been registered pursuant to a Shelf Registration
may initiate an offering or sale of Registrable Securities pursuant to such
Shelf Registration (each, a “Shelf Take-Down”) and, except as set forth
in this Section 2.2(b) with respect to Marketed Underwritten
Offerings (as defined below in Section 2.4(q)), such Holder shall not be
required to permit the offer and sale of Registrable Securities by other
Holders in connection with such Shelf Take-Down.  If the initiating Holders so elect by written
request to the Company, a Shelf Take-Down may be in the form of an underwritten
offering (an “Underwritten Shelf Take-Down”), and the Company shall, if
so requested, file and effect an amendment or supplement of the Shelf
Registration for such purpose as soon as practicable.  Only the Demand Party shall have the right to
initiate an Underwritten Shelf Take-Down that is a Marketed Underwritten
Offering, and any such Underwritten Shelf Take-Down that is a Marketed
Underwritten Offering shall be deemed to be a registration pursuant to Section 2.2(a),
and the Company shall provide notice to the other Holders of such registration
in accordance with the provisions of Section 2.2(a).

 

(c)                                  Effective
Registration Statement.  A
registration requested pursuant to this Section 2.2 will not be deemed to
have been effected unless: (i) it has been declared effective by the SEC
or has otherwise become effective under the Securities Act, or (ii) it has
been filed with the SEC but abandoned or withdrawn at the request of the Demand
Party prior to effectiveness, other than an abandonment or withdrawal requested
because of: (A) the stock price of the Company’s Common Stock falling 15%
or more since the delivery of a request for registration pursuant to this Section 2.2
(provided that such registration shall be deemed to have been effected,
unless (x) the Holders participating in the registration reimburse the
Company for Registration Expenses incurred or payable by the Company up until
the receipt of notice of an abandonment or withdrawal pursuant to this
clause (A) and for the withdrawal of the registration statement, and (y) a
Demand Party has not previously requested abandonment or withdrawal of a
registration pursuant to this clause (A) (it being understood that an
abandonment or withdrawal pursuant to this clause (A) may be made
only once)), (B) the delivery of a postponement notice pursuant to Section 2.3(b)(iv),
(C) a material adverse change in the Company’s and its Subsidiaries’
prospects, business, operations, properties,

 

4

 

assets, liabilities, financial condition or results of
operations, taken as a whole, which became known to the Holders or the public
after the delivery of a request for registration pursuant to this Section 2.2,
or (D) the discovery of materially adverse, non-public information
concerning the Company and its Subsidiaries, taken as a whole.

 

(d)                                 Selection
of Underwriters.  If a requested
registration pursuant to this Section 2.2 involves an underwritten
offering, the investment bankers, underwriters and managers for such
registration shall be selected by the Holders of a majority of the Registrable
Securities which the Company has been requested to register; provided, however,
that such selection of investment bankers, underwriters and managers shall be
subject to the reasonable approval by the Company.

 

(e)                                  Priority
in Demand Registrations; Right to Abandon or Withdraw.  If a requested registration pursuant to this Section 2.2
involves an underwritten offering and the managing underwriter advises the
Company in writing that, in its opinion, the number of Equity Securities
(including Registrable Securities) to be included in such registration as
contemplated by the Holders and the Company would be likely to exceed the largest
number of Equity Securities that can be sold without having an adverse effect
on the success of such offering, including any impact on the selling price or
the number of Equity Securities that can be sold (the “Maximum Offering Size”),
then the Company shall include in such registration (i) first, 100%
of the Registrable Securities requested to be included in such registration by
the Demand Party and other Holders of Registrable Securities who have requested
that their Registrable Securities be included up to the Maximum Offering Size
(such Registrable Securities allocated, if necessary for the offering not to
exceed the Maximum Offering Size, pro rata among the Demand Party and the other
Holders of Registrable Securities so requested to be included in such
registration by each) and (ii) second, to the extent the managing
underwriter believes additional securities can be sold in the offering without
exceeding the Maximum Offering Size, the securities the Company proposes to
sell up to the number of securities that, in the opinion of such managing
underwriter, can be sold without exceeding the Maximum Offering Size.  Notwithstanding the foregoing, if the
managing underwriter of any underwritten offering shall advise the Holders
participating in a registration pursuant to this
Section 2.2 that the Registrable Securities covered
by the registration statement cannot be sold in such offering within a price
range acceptable to the Demand Party or that all of the Registrable Securities
requested to be included in a registration by a Demand Party pursuant to this Section 2.2
cannot be sold in the manner requested, then the Demand Party shall have the
right to notify the Company that it has determined that the registration
statement be abandoned or withdrawn, in which event the Company shall abandon
or withdraw such registration statement; it  being  understood
that in the event the Demand Party exercises its right set forth in this
sentence, the Company shall remain liable for any Registration Expenses
pursuant to Section 2.6 and that the abandonment or withdrawal of the
registration statement shall nevertheless constitute a registration for
purposes of Section 2.3(b)(i) unless the Demand Party elects to pay
(or reimburse the Company for) such Registration Expenses, in which case such
registration statement shall not constitute a registration for purposes of Section 2.3(b)(i).

 

(f)                                    Minimum
Offering Size.  Any underwritten sale
pursuant to a Shelf Registration pursuant to this Section 2.2 must be for
a number of Registrable Securities which, based on the good faith determination
of the Holders, will result in gross proceeds of at least $25 million in
the case of any Marketed Underwritten Offering or $10 million in the case
of any other underwritten offering.

 

5

 

(g)                                 Method
of Disposition.  Subject to Section 2.7, each Holder of
Registrable Securities may, pursuant to the registration statement covering
such Registrable Securities, from time to time, sell, transfer or otherwise
dispose of any or all of such Holder’s shares of Registrable Securities on any
stock exchange, market or trading facility on which the Registrable Securities
are traded or in private transactions. 
Each Holder of Registrable Securities may use any method, or combination
of methods, of disposing of such Registrable Securities or interests therein by
any method, or combination of methods, permitted pursuant to applicable law,
including, without limitation, short sales entered into after the effective
date of the registration statement covering such Registrable Securities and
through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise.  For the avoidance of doubt, to the extent
permitted by applicable law, each Holder may, in connection with the sale of
Registrable Securities or interests in Registrable Securities, enter into
hedging transactions with broker-dealers or other financial institutions, which
may in turn, to the extent so permitted, engage in short sales of the Common
Stock in the course of hedging the positions they assume, and each Holder may
also sell shares of Common Stock short and deliver these securities to close
out such Holder’s short positions, or loan or pledge the Common Stock to
broker-dealers that in turn may sell these securities.  Each Holder may also enter into option or
other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to
such broker-dealer or other financial institution of Registrable Securities
offered by the applicable registration statement, which Registrable Securities,
to the extent they may be included on such registration statement and the
required information has been timely provided to the Company in accordance
herewith and is appropriately reflected therein, such broker-dealer or other
financial institution may resell pursuant to the applicable registration
statement.  Each Holder may, to the
extent permitted by applicable law, enter into derivative transactions with
third parties, or sell securities not covered by an applicable registration
statement to third parties in privately negotiated transactions.  To the extent they may be included on such
registration statement and the required information has been timely provided to
the Company in accordance herewith and is appropriately reflected therein, in
connection with those derivatives, such third parties may sell securities
covered by the applicable registration statement, including in short sale
transactions.  If the foregoing applies,
the third party may use securities pledged by the Holder or borrowed from the
Holder or others to settle those sales or to close out any related open
borrowings of securities, and may use securities received from the Holders in
settlement of those derivatives to close out any related open borrowings of
securities.  In each of the foregoing
cases, the third party in the transactions described in this Section 2.2(g) will
be an underwriter subject to the provisions of Section 2.2(d), and the
Holders seeking to include such transactions 
in the applicable registration statement and the Company will comply
with the same procedures as are applicable to a Shelf Take-Down in preparing
the necessary amendment or supplement to such registration statement.  In addition, for avoidance of doubt, the
Holders of Hedging Common Stock will be subject to the provisions of Section 2.11

 

SECTION 2.3.        Exceptions
to the Company’s Obligations.

 

(a)                                  Notwithstanding
anything in Section 2.1 to the contrary:

 

(i)                                     if,
at any time after giving a Piggyback Offering Notice, the Company shall
determine for any reason not to proceed with the proposed registration of the
securities to be sold by it, the Company may, at its election, give written
notice of such determination to the Holders and, thereupon, shall be relieved
of its obligation to register any Registrable Securities in connection

 

6

 

with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith); and

 

(ii)                                  if
a registration pursuant to Section 2.1 involves an underwritten offering
and the managing underwriter advises the Company in writing that, in its
opinion, the number of Equity Securities (including Registrable Securities
requested to be included in such registration) to be included in such
registration as contemplated by the Company and the Holders would be likely to
exceed the Maximum Offering Size, then the Company shall include in such
registration (a) first, 100% of the securities the Company proposes
to sell, and (b) second, to the extent of the amount of Registrable
Securities requested to be included in such registration which, in the opinion
of such managing underwriter can be sold without exceeding the Maximum Offering
Size, the amount of Registrable Securities which the Holders have requested to
be included in such registration, such amount to be allocated pro rata among
all requesting Holders and all other Persons entitled to registration rights,
on the basis of the relative amount of Registrable Securities then held by each
such Person (provided that any such amount thereby allocated to any such
Person that exceeds such Person’s request shall be reallocated among the
remaining requesting Persons in a like manner to the extent practicable).

 

(b)                                 Notwithstanding
anything in Section 2.2 to the contrary:

 

(i)            in
no event shall the Company be required to effect more than (x) six (6) registrations
pursuant to Section 2.2(a) or (y) four (4) Marketed
Underwritten Offerings;

 

(ii)           in
no event shall the Company be obligated to prepare and file (x) any such
registration statement or (y) any prospectus supplement thereto relating to a Marketed Underwritten Offering,
in each case with respect to Registrable Securities with a market value (based
on then current trading prices) of less than $25 million, provided
that this Section 2.2(b)(ii) shall not apply to any request to file a
Shelf Registration Statement pursuant to Section 2.2(a) that includes
the registration of all Conversion Shares;

 

(iii)      the
Company shall not be obligated to (x) file a registration statement under Section 2.2(a) within
a period of 90 days after the effective date of any other registration statement,
(1) for which the Holders exercised their rights pursuant Section 2.1
to include Registrable Securities, provided that the Company and the
underwriters did not substantially limit the number of Registrable Securities
that such Holder was permitted to include in such registration statement or (2) which
the Company filed or effected pursuant to Section 2.2(a) or (y) effect
more than one Marketed Underwritten Offering pursuant to Section 2.2 in
any 180-day period;

 

(iv)          if the
Company receives a request for registration pursuant to Section 2.2, at a
time when (A) the Company has commenced, or has a bona fide intention to
commence, a public securities offering transaction, (B) registration of
the Registrable Securities would, in the good faith judgment of the executive
officers of the Company (after consultation with counsel), impede, delay or
otherwise interfere with any pending or
contemplated material acquisition, corporate reorganization or similar material
transaction, or (C) non-public material information not otherwise then
required by Law to be publicly disclosed regarding the Company exists, the
immediate disclosure of which would in the good faith judgment of the Chief
Executive Officer, Chief Financial Officer or General Counsel of the Company be
disadvantageous in any material

 

7

 

respect to the Company (clauses (A), (B) and
(C), a “Material Pending Event”), then the Company may postpone the
filing (but not the preparation) of a registration statement requested pursuant
to Section 2.2 for a period not to exceed 60 consecutive calendar days
(or, if longer, the period of the applicable market standoff agreement pursuant
to Section 2.11) from the date of a Demand Notice upon providing the
Demand Party with written notice of such postponement (which notice need not
include a statement of the reason for such postponement); provided that
the Company shall at all times in good faith use reasonable best efforts to
cause any registration statement required by Section 2.2 to be filed as
soon as reasonably practicable thereafter; provided, further,
that the Company shall postpone the filing of a registration statement pursuant
to this Section 2.3(b)(iv) for no more than 90 days in the
aggregate in any twelve-month period in respect of all requested registrations;
provided, however, that in the event that the Company exercises
its right to redeem the Notes pursuant to Section 3.04 of the Indenture or
to require conversion of the Series A Preferred Stock pursuant to Section 5(c) of
the Certificate of Designation of the Preferred Stock, then the Company may not
postpone (or continue any postponement of) (including any deemed postponement
pursuant to Section 2.11(a)) the filing of a registration statement at any
time during the period commencing on the delivery of the notice of redemption
or mandatory conversions as applicable, and ending 120 days thereafter
unless and to the extent Section 2.11(b) is applicable; and provided, further, that the Company shall make prompt and adequate
disclosure of any material information required to be disclosed from time to
time in accordance with Law and Nasdaq rules.  Each Holder shall keep confidential any
communications received by it from the Company regarding the postponement pursuant
to this Section 2.3(b)(iv) (including the fact of the postponement),
except as required by Law.  In the event
that the Company gives the Holders the notice specified in this Section 2.3(b)(iv),
the Demand Party shall have the right, within 15 days after receipt thereof, to
withdraw its request under Section 2.2, in which case such request shall
not be counted as a demand for purposes of Section 2.2 or for purposes of
the limitations set forth in Section 2.3(b)(i);

 

(v)                                 if
the Company receives a request for registration pursuant to Section 2.2,
at a time when there is a Material Pending Event, then the Company may suspend
sales under a shelf registration statement, or a registration statement
pursuant to which Registrable Securities are not immediately sold after the
effectiveness thereof, for a period not to exceed 60 days (or, if longer, the
period of the applicable market standoff agreement pursuant to Section 2.11)
in any 90-day period upon providing the Holders with written notice of such
suspension (which notice shall include a statement of the reason for such
suspension); provided, that the Company shall suspend the filing of a
registration statement pursuant to this Section 2.3(b)(v) for no more
than 90 days in the aggregate in any twelve-month period and three (3) times
in any twelve-month period respect of all requested registrations; provided,
however, that in the event that the Company exercises its right to
redeem the Notes pursuant to Section 3.04 of the Indenture or to require
conversion of the Series A Preferred Stock pursuant to Section 5(c) of
the Certificate of Designation of the Preferred Stock, then the Company may not
postpone (or continue any postponement of) (including any deemed postponement
pursuant to Section 2.11(a)) the filing of a registration statement at any
time during the period commencing on the delivery of the notice of redemption
or mandatory conversions as applicable, and ending 120 days thereafter
unless and to the extent Section 2.11(b) is applicable; and provided  further that the Company shall make prompt and adequate
disclosure of any material information required to be disclosed from time to
time in accordance with Law and Nasdaq rules.  Upon receipt of a notice from the Company in
accordance with the terms of this Section 2.3(b)(v), each Holder agrees
not to sell or offer to sell any Registrable Securities pursuant to such shelf
registration statement until the Company notifies such Holder that the shelf
registration statement

 

8

 

may be used (which notice the Company shall promptly
provide following the termination of the event or circumstance giving rise to
such suspension).  Each Holder shall keep
confidential any communications received by it from the Company regarding the
suspension of sales pursuant to this Section 2.3(b)(v) (including the
fact of the suspension), except as required by Law; and

 

(vi)                              in
no event shall the Company be obligated to prepare and file in connection with
any Shelf Take-Down any post-effective amendment to a Shelf Registration or any prospectus supplement with respect to such
Shelf Take-Down unless the Holders requesting such filing expect in good faith
to sell Registrable Securities in connection therewith for an aggregate gross
sales price of at least $10 million.

 

(c)                                  Notwithstanding
anything in Section 2.1 or Section 2.2 to the contrary:

 

(i)                                     At
such time as all of the Registrable Securities (or such securities that would
be Registrable Securities but for the proviso immediately following clause (C) of
the definition thereof) beneficially owned by a Holder (together with those of
its Affiliates) constitute less than 5% of the outstanding Common Stock and can
be sold without restriction under Rule 144 under the Securities Act, the
Company shall not be required to effect any registrations, Shelf Take-Downs or
Underwritten Shelf Take-Downs of any kind for such Holder pursuant to Section 2.1
or Section 2.2 (but the Company shall be required to maintain the
effectiveness of any shelf registration statement that is in effect at such
time as required by Section 2.4(b) for six additional months
following such date); and

 

(ii)                                  if
any registration involves an underwritten offering, all Holders requesting to
participate in any registration in connection with an underwritten offering
hereunder must sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled to approve such
arrangements (with such differences, including any with respect to indemnification
and liability insurance, as may be customary or appropriate in combined primary
and secondary offerings) and completes and executes all reasonable
questionnaires, powers of attorney, underwriting agreements, hold-back
agreement letters (also customarily referred to as lock-up letters) and other
documents customarily required under the terms of such underwriting
arrangements; provided, however,
that to the extent such Holder is obligated under the terms of the underwriting
arrangements to (i) make representations and warranties other than
generally as to his, her or its respective (A) execution, delivery and
performance of such underwriting agreement and the agreements contemplated
thereby, (B) individual ownership of the Registrable Securities being sold
pursuant to such underwriting agreement and (C) information provided by
such Holder in writing specifically for inclusion in the Prospectus and (ii) agree
to provide indemnification for any liability arising out of a breach of any
such representations or warranties of such Holder that would exceed the total
proceeds received by such Holder for the sale of such Registrable Securities
pursuant to such underwriting agreement, then such Holder, to the extent he,
she or it determined not to enter into such underwriting agreement, shall not
be obligated to enter into a lock-up agreement contemplated by Section 2.11.

 

SECTION 2.4.        Registration
Procedures.  If and whenever the Company is required to effect a
registration of any Registrable Securities as provided in this Agreement,
subject to the limitations set forth in Section 2.3, the Company will:

 

9

 

(a)           promptly prepare and file with the
SEC a registration statement with respect to such Registrable Securities and
use  reasonable best efforts to cause a
registration statement with respect to a demand registration pursuant to Section 2.2
to be filed (in the case of a registration pursuant to Form S-3ASR), or
become effective (in the case of any registration other than pursuant to Form S-3ASR)
as promptly as practicable;

 

(b)           prepare and file with the SEC such
amendments and supplements to such registration statement (including Exchange
Act documents incorporated by reference into the registration statement) and
the Prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period not in excess of 90 days (or such
longer period as may be requested by the Holders in the event of a shelf
registration statement) and to comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all securities covered
by such registration statement during such period in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement; provided that before filing a registration
statement or prospectus or any amendments or supplements thereto in accordance
with Section 2.4(a) or this Section 2.4(b) to
the extent that doing so will not materially interfere with the timing of the
offering:  (i) the
Company will furnish to counsel selected
pursuant to Section 2.10 copies of all documents
proposed to be filed, and (ii) such documents will be subject to the
review of such counsel reasonably in advance of any filing to permit a
reasonable opportunity to review and comment in light of the circumstances;

 

(c)           use 
reasonable best efforts to comply with all applicable securities laws in
the United States and register or qualify such Registrable Securities covered
by such registration in such jurisdictions in the United States as each seller
shall reasonably request, and do any and all other acts and things which may be
reasonably necessary to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller, except
that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction where,
but for the requirements of this Section 2.4(c), it would not be obligated
to, subject itself to taxation in any such jurisdiction or to consent to
general service of process in any such jurisdiction;

 

(d)           promptly furnish to each seller of
such Registrable Securities such number of copies of such registration
statement and of each amendment and supplement thereto (in each case including
all exhibits filed therewith, including any documents incorporated by
reference), such number of copies of the Prospectus included in such
registration statement (including each preliminary prospectus and summary
prospectus), in conformity with the requirements of the Securities Act, and
such other similar documents as such seller may reasonably request necessary to
facilitate the disposition of the Registrable Securities by such seller;

 

(e)           notify each seller of any such
Registrable Securities covered by such registration statement promptly if the
Company becomes aware that the Prospectus included in such registration
statement, as then in effect, or the registration statement includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing and, prepare and furnish to such
seller a reasonable number of copies of an amended or supplemental prospectus
as may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an untrue statement
of a material fact or omit to state a material 

 

10

 

fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;

 

(f)            otherwise use commercially
reasonable efforts to comply with all applicable rules and regulations of
the SEC, and make available to its security holders, as soon as reasonably
practicable (but not more than 18 months) after the effective date of the
registration statement, an earnings statement which shall satisfy the
provisions of Section 11(a) of the Securities Act;

 

(g)           (i) use  reasonable best efforts to list such
Registrable Securities on the Exchange on which the Common Stock is then listed
(if such Registrable Securities are not already so listed and if such listing
is then permitted under the rules of such Exchange) to the extent
required; and (ii) use  reasonable
best efforts to provide for a transfer agent and registrar for such Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;

 

(h)           in connection with an underwritten
offering pursuant to a demand registration pursuant to Section 2.2,
promptly enter into an underwriting agreement in customary form, which may
include indemnification provisions in favor of underwriters and other Persons
in addition to, or in substitution for, the provisions of Section 2.8, and
take such other actions as the managing underwriters reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities;

 

(i)            in connection with an underwritten offering
pursuant to a demand registration pursuant to Section 2.2,
promptly obtain a “cold comfort” letter or letters from the Company’s
independent public accounts in customary form and covering matters of the type
customarily covered by “cold comfort” letters provided to sellers of securities
as the seller or sellers of a majority of shares of such Registrable Securities
shall reasonably request;

 

(j)            promptly make available for
inspection by any seller of such Registrable Securities covered by such
registration statement, by any underwriter participating in any disposition to
be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such underwriter,
all pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company’s officers, directors
and employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with the “due
diligence” of such seller or such underwriter with respect to such registration
statement, subject to the execution of a mutually acceptable confidentiality
agreement;

 

(k)           promptly notify counsel (selected
pursuant to Section 2.10) for the Holders of Registrable Securities
included in such registration statement and the managing underwriter or agent
and confirm such notice in writing (i) when the registration statement, or
any post-effective amendment to the registration statement, shall have become
effective, or any supplement to the Prospectus and any amendments to the
Prospectus shall have been filed (other than in the case of a registration
pursuant to Form S-3ASR), (ii) of the receipt of any comments from
the SEC, (iii) of any request by the SEC to amend the registration
statement or amend or supplement the Prospectus or for additional information,
and (iv) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or of any order preventing or
suspending the use of any 

 

11

 

Prospectus, or of the
suspension of the qualification of the registration statement for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceedings for any of such purposes;

 

(l)            use 
reasonable best efforts to prevent the issuance of any stop order
suspending the effectiveness of the registration statement or of any order
preventing or suspending the use of any Prospectus and, if any such order is
issued, to obtain the withdrawal of any such order as soon as practicable;

 

(m)          (i) if requested by the managing
underwriter or agent or any Holder of Registrable Securities covered by the
registration statement, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or agent
or such Holder reasonably requests to be included therein, including, with
respect to the number of Registrable Securities being sold by such Holder to
such underwriter or agent, the purchase price being paid therefor by such
underwriter or agent; and (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
being notified of the matters incorporated in such prospectus supplement or
post-effective amendment;

 

(n)           cooperate with the Holders of
Registrable Securities covered by the registration statement and the managing
underwriter or agent, if any, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing securities
to be sold under the registration statement, and enable such securities to be
in such denominations and registered in such names as the managing underwriter
or agent, if any, or such Holders may reasonably request;

 

(o)           in connection with an underwritten
offering pursuant to a demand registration pursuant to Section 2.2,
promptly obtain for delivery to the Holders of Registrable Securities being
registered and to the underwriter or agent an opinion or opinions from counsel
for the Company in customary form and scope for sellers of securities;

 

(p)           cooperate with each seller of
Registrable Securities and each underwriter or agent participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD;

 

(q)           use 
reasonable best efforts to make available certain of the executive
officers of the Company (which in any event shall include the Company’s chief
executive officer) for a five (5) Business Day period to participate and
to cooperate with the Holders of Registrable Securities and any underwriters in
any “road shows” or other selling efforts, in each case in the United States,
that may be reasonably be requested upon reasonable notice thereof by the
Holders in connection with a firm commitment underwritten offering for the
Registrable Securities with a minimum sales price of $25 million with
respect to a registration statement effected pursuant to Section 2.2 (an
underwritten offering contemplated by this Section 2.4(q), a “Marketed
Underwritten Offering”); provided that to the extent such Marketed
Underwritten Offering is for Registrable Securities having a minimum sales
price of not less than $50 million, such five (5) Business Day period
may be extended to eight (8) Business Days, solely in the case of such
Marketed Underwritten Offering, upon reasonable request of the Holders of such
Registrable Securities.

 

12

 

SECTION 2.5.        Information
Supplied.  It shall be a condition precedent to the obligations of the
Company to take any action to register the Registrable Securities held by any
Holder as to which any registration is being effected that such Holder shall
furnish the Company with such information regarding such Holder that is
pertinent to the disclosure requirements relating to the registration and the
distribution of such securities as the Company may from time to time reasonably
request.  Each Holder agrees to promptly
furnish to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
misleading.

 

SECTION 2.6.        Expenses.  Except as provided herein, the Company will
pay all Registration Expenses in connection with registrations of Registrable
Securities requested pursuant to Section 2.1 or Section 2.2;
provided, however, that the Company shall not be obligated to pay the
Registration Expenses in more than eight (8) Underwritten Offerings (which
shall in no event include more than four (4) Marketed Underwritten
Offerings).  To the extent the Holders
engage in more than eight (8) Underwritten Offerings, the Holders shall
pay all Registration Expenses with respect to such Underwritten Offerings and
the Company will have no obligation to pay any such Registration Expenses.  Each Holder shall pay all underwriting
discounts and commissions, broker fees and commissions, and transfer taxes, if
any, relating to the sale or disposition of such Holder’s Registrable
Securities pursuant to any registration statement.

 

SECTION 2.7.        Restrictions
on Disposition.  Each Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section 2.4(e),
Section 2.4(k)(iii) or Section 2.4(k)(iv), such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such Holder’s
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 2.4(e) or written notice from the Company
that the registration statement is again effective and no amendment or
supplement is needed.  In the event that
the Company shall give any such notice, the period referred to in Section 2.4(b) shall
be extended by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 2.4(e) and to and
including the date when each seller of Registrable Securities covered by such
registration statement shall have receive the copies of the supplemented and
amended Prospectus contemplated by Section 2.4(e).

 

SECTION 2.8.        Indemnification.

 

(a)           Indemnification by the Company.   In the event of any registration of any
securities of the Company under the Securities Act pursuant to Section 2.1
or Section 2.2, to the fullest extent permitted by law, the Company will
indemnify and hold harmless each Holder, each Affiliate of such Holder and
their respective directors and officers, members or general and limited
partners (and the directors, officers, employees, affiliates and each Person
who controls such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (hereinafter referred to
as a “Controlling Person”) of any of the foregoing), and each
underwriter, if any, and each person who controls within the meaning of Section 15
of the Securities Act any underwriter (collectively, the “Seller Indemnified
Parties”), against all claims, losses, damages and liabilities, joint or
several, actions or proceedings (whether commenced or threatened in writing) in
respect thereof (“Claims”) and expenses arising out of or based on: (i) 
any untrue statement or alleged untrue statement of a material fact contained
in a registration statement (or any amendment 

 

13

 

or supplement thereto),
including all documents incorporated therein by reference, or any omission or
alleged omission therefrom of a material fact, in each case, necessary in order
to make the statements therein not misleading, in light of the circumstances
under which they were made, (ii) any untrue statement or alleged untrue
statement of a material fact contained in a Prospectus (or any amendment or
supplement thereto), including all documents incorporated therein by reference,
or any omission or alleged omission therefrom of a material fact, in each case,
necessary in order to make the statements therein not misleading, in light of
the circumstances under which they were made, or (iii) any untrue
statement or alleged untrue statement of a material fact contained in any
Issuer Free Writing Prospectus prepared by it or authorized by it in writing
for use by such Holder (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or any omission or alleged
omission therefrom of a material fact, in each case, necessary in order to make
the statements therein not misleading, in light of the circumstances under
which they were made, and the Company will reimburse each such Seller
Indemnified Party for any reasonable fees and disbursements of counsel and any
other reasonable out-of-pocket expenses incurred in connection with
investigating and defending or settling any such Claim; provided that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability, or action arises out of or is based on any
untrue statement or alleged untrue statement or omission or alleged omission by
such Holder or underwriter but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is made in such
registration statement, Prospectus, or Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder and stated to be specifically for use
therein; and provided, further that, the indemnity agreement
contained in this Section 2.8(a) shall not apply to amounts paid in
settlement of any such Claim if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld or delayed);
and provided, further, that the Company will not be liable to any
Seller Indemnified Parties pursuant to this Section 2.8(a) to the
extent that any Claims for which such Seller Indemnified Party seeking
indemnification relates to a sale of Registrable Securities in violation of Section 2.3(b)(v).

 

(b)           Indemnification by the Holders.  To the fullest extent permitted by law, each
Holder will, if Registrable Securities held by such Holder are included in the
registration statement or Prospectus, indemnify and hold harmless the Company,
all other Holders or any prospective underwriter, as the case may be, and any
of their respective Affiliates, directors, officers and Controlling Persons
(collectively, the “Company Indemnified Parties”), against all Claims
and expenses arising out of or based on: 
(i) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (or any amendment or supplement
thereto), including all documents incorporated therein by reference, or any
omission or alleged omission therefrom of a material fact, in each case,
necessary in order to make the statements therein not misleading, in light of
the circumstances under which they were made, (ii)  any untrue statement
or alleged untrue statement of a material fact contained in a Prospectus (or
any amendment or supplement thereto), including all documents incorporated
therein by reference, or any omission or alleged omission therefrom of a
material fact, in each case, necessary in order to make the statements therein
not misleading, in light of the circumstances under which they were made, or (iii) any
untrue statement or alleged untrue statement of a material fact contained in
any Issuer Free Writing Prospectus (or any amendment or supplement thereto),
including all documents incorporated therein by reference, or any omission or
alleged omission therefrom of a material fact, in each case, necessary in order
to make the statements therein not misleading, in light of the circumstances
under which they were made, and the Holder will reimburse each such Company
Indemnified Party for any

 

14

 

reasonable fees and
disbursements of counsel and any other reasonable expenses incurred in
connection with investigating and defending or settling any such Claim, in each
case to the extent, but only to the extent that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, Prospectus, or Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder and stated to be specifically for use
therein; and provided that the indemnity agreement contained in this Section 2.8(b) shall
not apply to amounts paid in settlement of any such Claim if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld or delayed); and provided, further, that in
the absence of fraud by such Holder, the liability of each selling Holder of
Registrable Securities hereunder shall be limited to the net proceeds received
by such selling Holder from the sale of Registrable Securities covered by such
registration statement.

 

(c)           Notification of Claims.  Promptly after receipt by a Person entitled
to indemnification pursuant to Section 2.8 (an “Indemnified Party”)
hereunder of written notice of the commencement of any action or proceeding
with respect to which a claim for indemnification may be made pursuant to this Section 2.8,
such Indemnified Party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action or proceeding; provided that the failure of
the Indemnified Party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 2.8, except to
the extent that the indemnifying party is prejudiced in any material respect by
such failure to give notice.  In case any
such action or proceeding is brought against an Indemnified Party, unless in such
Indemnified Party’s reasonable judgment, based upon advice of counsel, a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such action or proceeding (in which case the Indemnified
Party shall have the right to assume or continue its own defense and the
indemnifying party shall be liable for any reasonable expenses therefor (but in
no event will bear the expenses for more than one firm of counsel for all
Indemnified Parties in each jurisdiction who shall, with respect to Seller
Indemnified Parties, be approved by the majority of the participating Holders
in the registration in respect of which such indemnification is sought), the
indemnifying party will be entitled to participate in and to assume the defense
thereof (at its expense), jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory
to such Indemnified Party, and after notice from the indemnifying party to such
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation and shall have no
liability for any settlement made by the Indemnified Party without the consent
of the indemnifying party, such consent not to be unreasonably withheld.  No indemnifying party will settle any action
or proceeding or consent to the entry of any judgment without the prior written
consent of the Indemnified Party, unless such settlement or judgment (i) includes
as an unconditional term thereof the giving by the claimant or plaintiff of a
release to such Indemnified Party from all liability in respect of such action
or proceeding and (ii) does not involve the imposition of equitable
remedies or the imposition of any obligations on such Indemnified Party and
does not otherwise adversely affect such Indemnified Party, other than as a
result of the imposition of financial obligations for which such Indemnified
Party will be indemnified hereunder.  An
Indemnified Party may not settle any action or proceeding or the entry of any
judgment without the prior written consent of the indemnifying party.

 

15

 

(d)           Contribution.  (i) If the indemnification provided for
in this Section 2.8 from the indemnifying party is unavailable to an
Indemnified Party hereunder in respect of any Claim or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Claim or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and Indemnified Party in
connection with the actions which resulted in such Claim or expenses, as well
as any other relevant equitable considerations. 
The relative fault of such indemnifying party and Indemnified Party
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action. 
The amount paid or payable by a party under this Section 2.8(d) as
a result of the Claim and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any action or proceeding; and (ii) the parties hereto
agree that it would not be just and equitable if contribution pursuant to this Section 2.8(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in Section 2.8(d)(i).  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

 

(e)           Non-Exclusive Remedy.  The obligations of the parties under this Section 2.8
shall be in addition to any liability which any party may otherwise have to any
other party.

 

SECTION 2.9.        Required
Reports.For so long as the Company is subject to the reporting requirements
of Section 13 or 15 of the Exchange Act, the Company covenants that it
will use  reasonable best efforts to file
the reports required to be filed by it under the Securities Act and the
Exchange Act, and it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144,
or (ii) any similar rule or regulation hereafter adopted by the
SEC.  Upon the request of any Holder
pursuant to the immediately preceding sentence, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.

 

SECTION 2.10.      Selection
of Counsel.  In connection with any registration of Registrable
Securities pursuant to Section 2.1 and Section 2.2, the Holders of a
majority of the Registrable Securities covered by any such registration may
select one counsel to represent all Holders of Registrable Securities covered
by such registration; provided, however, that in the event that
the counsel selected as provided above is also acting as counsel to the Company
in connection with such registration, a majority of the remaining Holders shall
be entitled to select one additional counsel to represent all such remaining
Holders.

 

SECTION 2.11.      Market
Standoff Agreement.

 

(a)           Subject to the proviso in Section 2.3(c)(ii),
in connection with any underwritten public offering, each Holder who holds
Registrable Securities and who was offered or waived the opportunity to include
Registrable Securities in such offering pursuant to Section 2.1 or 

 

16

 

Section 2.2 will
agree upon the request of the managing underwriter with respect to such
offering not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Equity Security of
the Company during the 14-day period prior to, and for the 90 days after (plus
any Booster Period), the effective date of the registration statement for such
offering (or such lesser period as the managing underwriters may require or
permit), except for such Equity Securities to be included in such offering; provided
that all of the Company’s executive officers and all of the members of the
Company’s Board (other than the Appointed Directors and Nominated Directors, as
each term is defined in the Purchase Agreement) are restricted in the same
manner and for the same duration; provided, further, that such
agreement by a Holder hereunder in any offering pursuant to Section 2.1 in
which such Holder did not participate shall be treated as a postponement and a
suspension for purposes of Sections 2.3(b)(iv) and 2.3(b)(v),
respectively, if at any time during the 12-month period ending on the date such
restrictions commenced such Holder was already subject to any restrictions due
to execution of an agreement in accordance with this Section 11(a) with
respect to an offering pursuant to Section 2.1 in which such Holder did
not participate; and provided, further, that the obligations set
forth in this Section 2.11 shall not apply to any Holder who was
substantially limited in the number of Registrable Securities that such Holder
could sell in the offering pursuant to Section 2.2(e) or Section 2.3(a)(ii) and
did not otherwise sell Registrable Securities in such offering.  This Section 2.11(a) will not apply
to any Contingent Underwriting.

 

(b)           If the Company exercises its right to
redeem the Notes pursuant to Section 3.04(a) of the Indenture (a “Section 3.04(a) Redemption”)
at a time when no shares of Series A Preferred Stock are outstanding then,
if the Company enters into a Contingent Underwriting, each Holder will agree
upon the request of the managing underwriter with respect to such offering not
to effect any public sale or distribution, including any sale pursuant to Rule 144
under the Securities Act, of any Equity Security of the Company requested by
such underwriter (but in no event more than 5 Business Days prior delivery to
the Holders of a notice of redemption for such Section 3.04(a) Redemption)
and ending on the earlier of 90 days after (plus any Booster Period) the
effective date of the registration statement for such offering (or such lesser
period as the managing underwriter may require or permit); provided that no
such request may only be made (i) if the aggregate principal amount of
Notes to be called in a Section 3.04(a) Redemption is less than $5
million or (ii) to the extent that the limitations on a Holder’s ability
to effect a public sale or distribution described above would commence no
sooner than 120 days of the Company delivering a notice of conversion pursuant
to Section 5(c) of the Certificate of Designation of the Preferred
Stock, and may only  be requested if all
of the Company’s executive officers and members of the Company’s Board (other
than the Appointed Directors and Nominated Directors, as each term is defined
in the Purchase Agreement) are restricted in the same manner and for the same
duration; and, provided, further, that the Company may exercise
its right pursuant to this Section 2.11(b) in connection with only
one Contingent Underwriting.

 

SECTION 2.12.      No
Inconsistent Agreements.  The Company
represents and warrants that it is not a party to a Contract which conflicts
with the exercise of the rights granted to the Holders of Registrable
Securities in this ARTICLE II.

 

SECTION 2.13.      Termination
of Registration Rights.  The rights and obligations of any Holder
under this ARTICLE II shall terminate (other than Section 2.6, Section 2.8
and Section 2.13) at such time as such Holder ceases to hold any
Registrable Securities

 

17

 

ARTICLE
III

MISCELLANEOUS

 

SECTION 3.1.        Expenses. 
Except as otherwise provided herein (and except as provided in the Purchase
Agreement), all expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.

 

SECTION 3.2.        Successors
and Assigns; Assignment.  Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, permitted assigns, heirs, executors and administrators of
the parties hereto.  This Agreement may
not be assigned without the prior written consent of the other parties, except
that this Agreement (i) may be assigned by a Holder so long as the Person
to whom it is being assigned agrees to be bound under this Agreement as a
Holder hereunder and delivers a counterpart signature page to this
Agreement to the Company and (ii) shall be assigned by the Company in the
event of any merger, consolidation or other transaction upon consummation of
which the issuer of the Common Stock is an entity other than the Company (such
entity, the “Survivor”) to such Survivor, and the Company shall not
enter into any such transaction unless and until the Survivor assumes all
rights and obligations of the Company hereunder pursuant to a written agreement
for the benefit of the Holders (it being understood that if the Survivor is the
issuer of the Common Stock and such assumption of the rights and obligations of
the Company hereunder occurs by operation of law, that such Survivor shall not
be required to execute a written agreement for the benefit of the Holders).

 

SECTION 3.3.        No Third
Party Beneficiaries.  Except as specifically provided in Section 2.8
(with respect to which the Indemnified Parties named therein shall be express,
intended third party beneficiaries of such provision), this Agreement is not
intended, and shall not be deemed, to confer any rights or remedies upon any
Person other than the parties hereto or otherwise create any third party
beneficiary hereto.

 

SECTION 3.4.        Entire
Agreement.  This Agreement and the other agreements or documents
referred to herein, constitute the full and entire understanding and agreement
among the parties with respect to the subject matter hereof and supersede any
prior understandings, agreements or representations by or among the parties,
written or oral, that may have related to the subject matter hereof in any way.

 

SECTION 3.5.        Severability. 
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

SECTION 3.6.        Amendment
and Waiver.  No amendment, waiver or other modification of, or consent
under, any provision of this Agreement shall be effective against the Company,
unless it is approved in writing by the Company, and no amendment, waiver or
other modification of, or consent under, any provision of this Agreement shall
be effective against any Holder, unless it is approved in writing by Holders
holding a majority of the Registrable Securities.  No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof nor of any other agreement or provision herein
contained.

 

18

 

SECTION 3.7.        Delays
or Omissions.  It is agreed that no
delay or omission to exercise any right, power or remedy accruing to any party,
upon any breach, default or noncompliance by another party under this
Agreement, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring.  It is further
agreed that any waiver, permit, consent or approval of any kind or character on
an Holder’s part of any breach, default or noncompliance under this Agreement
or any waiver on such party’s part of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing.  All remedies, either under this
Agreement, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.

 

SECTION 3.8.        Notices. 
Except as otherwise provided herein, all notices required or permitted
hereunder shall be in writing and shall be deemed effectively given and
received: (a) upon personal delivery to the party to be notified; (b) when
sent by confirmed facsimile or e-mail if sent during normal business hours of
the recipient, if not, then on the next business day; or (c) one (1) business
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt.  All notices to a Holder shall be delivered to
the address of such Holder set forth on the signature page of such Holder
hereto (or such other address as such Holder may designate by like notice to
the Company hereunder).  All notices to
the Company shall be delivered to:

 

Power-One, Inc.

740
Calle Plano

Camarillo,
California

Attention:  Tina Mcknight, Esq.

Facsimile:  (805) 383-5898

 

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

 

Gibson,
Dunn & Crutcher LLP

333
South Grand Avenue

Los
Angeles, CA  90071-3197

Attn:  Jennifer Bellah Maguire, Esq.

Facsimile:  (213) 229-6986

 

SECTION 3.9.        Interpretation. 
The words “hereof”, “herein” and “hereunder” and words of like import used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. 
When reference is made in this Agreement to an Article or a Section,
such reference shall be to an Article or Section of this Agreement,
unless otherwise indicated.  The table of
contents, table of defined terms and headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.  The
language used in this Agreement shall be deemed to be the language chosen by
the parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.  Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural, and vice versa.  Any
reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated 

 

19

 

thereunder, unless the context requires otherwise, and
shall include all amendments of the same and any successor or replacement
statutes and regulations as of the Closing Date.  All references to agreements shall mean such
agreement as may be amended or otherwise modified from time to time.  Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without
limitation.”

 

SECTION 3.10.      Governing
Law; Jurisdiction; Waiver of Jury Trial. 
(a) This Agreement shall be governed in all respects by the Laws of
the State of New York. Any disagreement, issue, dispute, claim, demand or
controversy arising out of or relating to this Agreement (each, a “Dispute”)
shall be brought in the United States District Court for the Southern District
of New York in New York, New York or any New York State court sitting in New
York, New York, so long as one of such courts shall have subject matter
jurisdiction over such Dispute.  Each of
the parties hereby irrevocably consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such Dispute and
irrevocably waives, to the fullest extent permitted by Law, any objection that
it may now or hereafter have to the laying of the venue of any such Dispute in
any such court and that any such Dispute which is brought in any such court has
been brought in an inconvenient forum. Process in any such Dispute may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 3.8
shall be deemed effective service of process on such party.

 

(b)           EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

SECTION 3.11.      Specific
Performance.  The parties hereto agree that the obligations imposed on
them in this Agreement are special, unique and of an extraordinary character,
and that, in the event of breach by any party, damages would not be an adequate
remedy and each of the other parties shall be entitled to specific performance
and injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity; and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.

 

SECTION 3.12.      Counterparts. 
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one
instrument.

 

 [Remainder of Page Intentionally Left
Blank.]

 

20

 

IN WITNESS WHEREOF, the
parties hereto have executed this Registration Rights Agreement as of the date
first set forth above.

 

POWER-ONE, INC.

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Registration
Rights Agreement]

 

 

IN WITNESS WHEREOF, the
parties hereto have executed this Registration Rights Agreement as of the date
first set forth above.

 

	
   

  	
  SILVER LAKE SUMERU
  FUND, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE
  TECHNOLOGY

  
	
   

  	
   

  	
  ASSOCIATES SUMERU,
  L.P., its

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SLTA SUMERU (GP),
  L.L.C., its

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE GROUP,
  L.L.C.,

  
	
   

  	
   

  	
  managing member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Registration Rights Agreement]

 

 

 

	
   

  	
  SILVER LAKE
  TECHNOLOGY INVESTORS 

  SUMERU, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE
  TECHNOLOGY

  
	
   

  	
   

  	
  ASSOCIATES SUMERU,
  L.P., its general

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SLTA SUMERU (GP),
  L.L.C., its

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SILVER LAKE GROUP,
  L.L.C.,

  
	
   

  	
   

  	
  managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Registration
Rights Agreement]

 

 

By executing this
Registration Rights Agreement, the undersigned is agreeing to the rights and
obligations of a “Holder” hereunder.

 

	
   

  	
  HOLDER

  
	
   

  	
   

  
	
   

  	
  Name of Holder:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
							

 

 

EXHIBIT A

 

“Affiliate” means, with respect to any Person,
any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with,
such specified Person.

 

 “Booster Period” means such additional
period as may be requested by the Company or an underwriter to accommodate
regulatory restrictions on (i) the publication or other distribution of
research reports and (ii) analyst recommendations and opinions, including
the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4),
or any successor provisions or amendments thereto.

 

“Business Day” means any day that is not a
Saturday, a Sunday or other day on which banks are required or authorized by
law to be closed in New York.

 

“Capital Stock” means any and all shares of
capital stock of the Company, including without limitation, any and all shares
of Common Stock, Series A Preferred Stock and Junior Convertible Preferred
Stock.

 

“Certificate of Designation” means the
Certificate of Designation with respect to the Series A Preferred Stock,
as the same may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.

 

“Common Stock” means the Common Stock, par
value $0.001 per share, of the Company and any securities issued in respect
thereof, or in substitution therefor, in connection with any stock split,
dividend or combination, or any reclassification, recapitalization, merger,
consolidation, exchange or other similar reorganization.

 

“Contingent Underwriting” means a standby
underwriting arrangement entered into by the Company in connection with and as
to which the sole use of proceeds is to provide net proceeds potentially equal
to at least $5 million in order to finance the Company’s redemption of Notes
pursuant to Section 3.04(a) of the Indenture.

 

“control” or “controlled by” have the
meaning set forth in Rule 12b-2 of the Exchange Act.

 

“Conversion Shares” means the Series A
Preferred Stock Conversion Shares, the Junior Convertible Preferred Stock
Conversion Shares and the Notes Conversion Shares.

 

“Equity Securities” means any and all shares of
Capital Stock of the Company, securities of the Company convertible into, or
exchangeable or exercisable for, such shares, and options, warrants or other
rights to acquire such shares (including the Notes, shares of Series A
Preferred Stock, shares of Junior Convertible Preferred Stock, the Conversion
Shares, Warrants and the Warrant Shares).

 

“Exchange” means Nasdaq or the New York
Stock Exchange, as the case may be.

 

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

 

A-1

 

“FINRA” means the Financial Industry Regulatory
Authority.

 

“Form S-1” means a registration statement
on Form S-1 under the Securities Act, or any successor form thereto.

 

“Form S-3” means a registration statement
on Form S-3 (other than on Form S-3ASR) under the Securities Act, or
any successor form thereto.

 

“Form S-3ASR” means an “automatic shelf”
registration statement on Form S-3 filed by a Well-Known Seasoned Issuer.

 

“Form S-4” means a registration statement
on Form S-4 under the Securities Act, or any successor form thereto.

 

“Form S-8” means a registration statement
on Form S-8 under the Securities Act, or any successor form thereto.

 

“Hedging Contract” means a derivative contract of a type
described in the incoming letter referred to in Securities Exchange Commission
no-action interpretive letter dated October 9, 2003 issued to Goldman,
Sachs & Co. (the “Interpretive Letter”), entered into
between a Holder and a financial intermediary (a “Hedging Contract Counterparty”)
and referencing the Series A Preferred Stock, Junior Convertible Preferred
Stock or the Common Stock.

 

“Holder” means any Investor Stockholder that
beneficially owns any Registrable Securities and any of their respective
assignees pursuant to the terms hereof.

 

“incur” means, directly or indirectly, to
incur, refinance, create, assume, guarantee or otherwise become liable.

 

“Indenture” means the Indenture, dated as of [           ],
2009, between the Company and [Name of Trustee], as trustee, as amended and supplemented from time to time in
accordance with its terms.

 

“Issuer Free Writing Prospectus” shall have the
meaning set forth in Rule 433 of the Securities Act.

 

“Junior Convertible Preferred Stock” means the
shares of junior convertible preferred stock, par value $.001 per share, of the
Company designated Series B Junior Convertible Preferred Stock and Series C
Junior Convertible Preferred Stock and any securities issued in respect
thereof, or in substitution therefor, in connection with any stock split,
dividend or combination, or any reclassification, recapitalization, merger,
consolidation, exchange or other similar reorganization, (other than the
Conversion Shares issuable upon conversion thereof as contemplated by the
Junior Convertible Preferred Stock Certificate of Designation).

 

“Junior Convertible Preferred Stock Certificate of
Designation” means the Certificates of Designation with respect to the
Junior Convertible Preferred Stock, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.

 

A-2

 

“Nasdaq” means the
NASDAQ Global Market, or any successor thereto.

 

“NASD” means the
National Association of Securities Dealers, Inc.

 

“Notes” means the
Convertible Senior Notes due 2019 of the Company issued pursuant to the
Indenture and any securities issued upon conversion or in respect thereof, or
in substitution therefor, in connection with any stock split, dividend or
combination, or any reclassification, recapitalization, merger, consolidation,
exchange or other similar reorganization (other than the Notes Conversion
Shares issued upon conversion thereof as contemplated by the Indenture).

 

“Notes Conversion
Shares” means the shares of Common Stock that may be issued upon the
conversion of the Notes as provided for in the Indenture.

 

“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, governmental authority or other entity.

 

“Preferred Stock
Conversion Shares” means the shares of Common Stock that may be issued upon
the conversion of the Series A Preferred Stock as provided for in the
Certificate of Designation.

 

“Prospectus” means
the prospectus included in any registration statement, including any
preliminary prospectus, any final prospectus and any such prospectus as amended
or supplemented by any prospectus supplement, including any such prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a registration statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all materials incorporated by reference
therein.

 

“Registrable
Securities” means (i) the Notes, the Series A Preferred Stock,
and the Junior Convertible Preferred Stock, (ii) the Conversion Shares
held by any Holder or issuable upon the conversion of Series A Preferred
Stock, Junior Convertible Preferred Stock or Notes held by the Holders, (iii) the
Warrant Shares held by any Holder or issuable upon the exercise of Warrants
held by the Holders, (iv) additional shares of Common Stock held by any
Holder that were acquired pursuant to Section 5.7 of the Purchase
Agreement or upon the conversion, exchange or exercise of any Equity Securities
acquired pursuant to Section 5.7 of the Purchase Agreement, (v) the
Common Stock being sold short (the “Hedging Common Stock”) to hedge the
exposure of a Hedging Contract Counterparty (as defined in “Hedging Contract”
above) to the Hedging Contract to which such Hedging Contract Counterparty is a
party, as contemplated in the Interpretive Letter (as defined in “Hedging
Contract” above) and (vi) any Common Stock or other securities which may
be issued, converted, exchanged or distributed in respect thereof, or in
substitution therefor, in connection with any stock split, dividend or
combination, or any recapitalization, reclassification, merger, consolidation,
exchange or other similar reorganization with respect to the Registrable
Securities described in clauses (i), (ii), (iii) and (iv). As to any particular
Registrable Securities, once issued, such Registrable Securities shall cease to
be Registrable Securities when (A) a registration statement with respect
to the sale by the Holder of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (B) such securities shall
have been distributed to the public pursuant to Rule 144, or 

 

A-3

 

(C) such securities
shall have ceased to be outstanding,; provided that Securities will
cease to be Registrable Securities at such time as  a Holder and its Affiliates beneficially own
less than 10% of the outstanding Common Stock, neither such Holder nor any of
its Affiliates is or has in the prior 6 months been an Affiliate of the Company
(as reasonably determined in good faith by such Holder; provided that
for this purpose a Holder or its Affiliate will conclusively be deemed an
Affiliate of the Company if it is entitled to nominate or designate a member of
the Company’s Board of Directors) and all of the Registrable Securities
beneficially owned by such Holder (together with those of its Affiliates) can
be sold without restriction under Rule 144 under the Securities Act.  For purposes of this Agreement, any required
calculation of the amount of, or percentage of, Registrable Securities shall be
based on the number of shares of Common Stock which are Registrable Securities,
including shares issuable upon the conversion, exchange or exercise of any
security convertible, exchangeable or exercisable into Common Stock (including
the Series A Preferred Stock, the Junior Convertible Preferred Stock, the
Warrants and the Notes).

 

“Registration Expenses” means any and all
reasonable, documented expenses incident to performance of or compliance with
ARTICLE II, including (i) all SEC and securities exchange, FINRA or NASD
registration and filing fees (including, if applicable, the fees and expenses
of any “qualified independent underwriter,” as such term is defined in Section 2720
of the bylaws of the NASD, and of its counsel), (ii) all reasonable,
documented fees and expenses of complying with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities and any escrow
fees), (iii) all printing, messenger and delivery expenses, (iv) all
reasonable, documented fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange, (v) the
fees and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or “cold comfort”
letters required by or incident to such performance and compliance, (vi) the
reasonable, documented fees and disbursements of counsel selected pursuant to Section 2.10
not to exceed $50,000 in connection with any registered offering, (vii) any
fees and disbursements of underwriters customarily paid by the issuers,
including liability insurance if the Company so desires, and (viii) the
reasonable expenses incurred by the Company or any underwriters in connection
with any “road show” undertaken pursuant to Section 2.1 or Section 2.4(q).

 

“Restricted Period” shall mean the period of
time from the Closing Date on the Restricted Period Termination Date (as
defined in the Purchase Agreement).

 

“Rule 144” means Rule 144 under the
Securities Act (or any successor rule).

 

“SEC” means the U.S. Securities and Exchange
Commission or any other federal agency then administering the Securities Act or
the Exchange Act and other federal securities laws.

 

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

 

“Series A Preferred Stock” means the
shares of preferred stock, par value $.001 per share, of the Company designated
Series A Convertible Preferred Stock, 
and any securities issued in respect thereof, or in substitution
therefor, in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar 

 

A-4

 

reorganization, (other
than the Junior Convertible Preferred Stock and Conversion Shares issued upon
conversion thereof as contemplated by the Certificate of Designation).

 

“Transfer” means, directly or indirectly, to
sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of,
either voluntarily or involuntarily, or to enter into any contract, option or
other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition of, any
shares of Equity Securities beneficially owned by a Person or any interest in
any shares of Equity Securities Beneficially Owned by a Person.  For purposes of clarity, a conversion of the
shares of Series A Preferred Stock, Junior Convertible Preferred Stock or
Notes into Conversion Shares is not a Transfer.

 

“Underwritten Offering” means any Marketed
Underwritten Offering, Underwritten Shelf Take-Down or other underwritten
offering pursuant to Section 2.2.

 

“Warrants” means the warrants issued by the
Company pursuant to the Purchase Agreement and any securities issued in respect
thereof, or in substitution therefor, in connection with any stock split,
dividend or combination, or any reclassification, recapitalization, merger,
consolidation, exchange or other similar reorganization (other than the Warrant
Shares upon exercise thereof).

 

“Warrant Shares” means the shares of Common
Stock that may be issued upon the exercise of the Warrants.

 

“Well-Known Seasoned Issuer” has the meaning
set forth in Rule 405 under the Securities Act.

 

A-5

 

Exhibit E

 

FORM OF
SUPPLEMENTAL INDENTURE

 

 

POWER-ONE, INC.

as Issuer

 

AND

 

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

as Trustee

 

 

SUPPLEMENTAL INDENTURE

 

Dated as of [    ], 2009

 

 

Supplementing the Indenture

Dated as of June 17, 2008

with respect to the

8% Senior Secured Convertible Notes Due 2013

 

 

 

THIS
SUPPLEMENTAL INDENTURE dated as of [    ], 2009 (the “Supplemental Indenture”)
among POWER-ONE, INC., a Delaware corporation (the “Company”),
and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking
association, as Trustee (the “Trustee”) under
the Indenture dated as of June 17, 2008 (the “Indenture”)
between the Company and the Trustee, pursuant to which the Company issued its
8% Senior Secured Convertible Notes due 2013 (the “Notes”).

 

WHEREAS,
the Company issued Notes in an aggregate principal amount of $80,000,000 under
the Indenture, of which $63,000,000 are outstanding.

 

WHEREAS,
Section 12.01 of the Indenture provides that the Indenture or the
Notes may be amended with the consent of Holders of at least a majority of the
principal amount of the Notes then outstanding (including consents obtained in
connection with a purchase of the Notes).

 

WHEREAS,
the Company has obtained the written consent to the proposed amendments to the
Indenture from the Holders of at least a majority in aggregate outstanding
principal amount of the Notes.

 

NOW, THEREFORE, for and in consideration of the foregoing
premises, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:

 

ARTICLE ONE

 

Section 1.1.           Amendments
to the Indenture.

 

(a)           The following
sections of the Indenture are deleted in their entirety and, in the case of
each such section, replaced with the phrase “[Intentionally Omitted.]”, and any
and all references to such sections, whether direct or indirect, in any term,
condition, limitation or other provision in the Indenture, are deleted, and
such sections and references shall be of no further force or effect:

 

	
  ·

  	
   

  	
  Section 3.07

  	
   

  	
  Ownership
  of Subsidiaries.

  
	
  ·

  	
   

  	
  Section 3.09

  	
   

  	
  Redemption
  and Dividends

  
	
  ·

  	
   

  	
  Section 3.12(a)

  	
   

  	
  Total
  Debt.

  
	
  ·

  	
   

  	
  Section 3.12(c)

  	
   

  	
  Tangible
  Net Worth.

  
	
  ·

  	
   

  	
  Article VI

  	
   

  	
  Rights
  of Participation in Future Equity Issuances.

  

 

All
corresponding provisions of the Notes are deleted in their entirety and such
provisions shall be of no further force or effect.

 

(b)           Section 3.08 of the
Indenture shall be amended and restated in its entirety to read as follows:

 

1

 

“Section 3.08       RESTRICTED
PAYMENTS.

 

The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, redeem, defease, repurchase, repay or make any payments
in respect of, by the payment of cash or Cash Equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or
otherwise), all or any portion of any unsecured Subordinated Indebtedness (or
any extension, refinancing or renewal thereof), whether by way of payment in
respect of principal of (or premium, if any) or interest on such Indebtedness
if at the time such payment is due or otherwise made or, after giving effect to
such payment, an Event of Default pursuant to Sections 7.01(a), (b),
(c), (d) or (h) has occurred and is continuing.

 

(c)           Section 3.10 of the
Indenture shall be amended and restated in its entirety to read as follows:

 

“Section 3.10       LIENS.

 

The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, allow or suffer to exist any Lien upon or in any
property or assets (including accounts and contract rights) owned by the
Company or any of its Subsidiaries other than (i) Permitted Liens and (ii) Liens
securing Indebtedness permitted under Section 3.11.”

 

(d)           Section 3.11 of the
Indenture shall be amended and restated in its entirety to read as follows:

 

“Section 3.11       INDEBTEDNESS.

 

The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise (collectively, “incurrence”;
provided that accretion or amortization of original issue discount shall not
constitute an incurrence), with respect to any Indebtedness unless, in each
case, (x) no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of such incurrence of
Indebtedness, and (y) at the time of the incurrence of such Indebtedness
the aggregate principal amount of all outstanding Indebtedness of the Company
and its Subsidiaries (taking into account such incurrence of additional
Indebtedness) shall not exceed the Permitted Indebtedness Amount.

 

(e)           Section 3.12(b) of the
Indenture shall be amended and restated in its entirety to read as follows:

 

“At the end of each fiscal quarter, cash and Cash Equivalents shall not
be less than the lesser of (i) $20 million and (ii) 50% of the
aggregate principal amount of the Outstanding Securities.”

 

(f)            The following
is hereby added as a new Section 4.15 of the Indenture:

 

“Section 4.15       ASSET
SALES.

 

(a)          (i)           If the
Company or a Pledged Subsidiary sells a material portion of the property and
assets (other than a sale that constitutes a Permitted Disposition) of the
Company and its Subsidiaries, taken as a whole, and such sale does not
constitute a Fundamental Change (an “Asset Sale”),
then within 360 calendar days after the receipt of the consideration therefor,
the 

 

2

 

Company or a Subsidiary, at its option, may apply the net cash and Cash
Equivalents received in respect of such Asset Sale (the “Net Proceeds”)
(x) to make capital expenditures in the ordinary course of business of the
Company and its Subsidiaries, (y) otherwise to acquire capital assets that
are used or useful in the business of the Company or any of its Subsidiaries or
(z) to make a Permitted Investment; provided that a binding commitment to
make such expenditure or investment that is made not later than such 360th day
shall be treated as such a permitted application of the Net Proceeds as of the
date of such commitment so long as the Company or a Subsidiary enters into such
commitment with the good faith expectation that such Net Proceeds will be
applied to satisfy such commitment within 180 calendar days after the date such
commitment is made and, in the event any such Net Proceeds are not actually so
invested in accordance with this subsection (a)(i) by such 180th day, then
such remaining Net Proceeds shall be applied in accordance with subsection (a)(ii) below.

 

(ii)          Any Net
Proceeds that are not applied as provided in subsection (a)(i) above shall
constitute “Excess Proceeds”.  When the aggregate amount of Excess Proceeds
exceeds $1.0 million, the Company shall make an offer to all Holders of
Securities (an “Asset Sale Repurchase Offer”) and,
if required by the terms of any other Indebtedness that ranks equally with the
Notes in right of payment (“Pari Passu Indebtedness”),
to all holders of Pari Passu Indebtedness, to purchase the maximum principal
amount of Securities and such other Pari Passu Indebtedness that can be
purchased with the Excess Proceeds, pro rata in proportion to the respective
outstanding principal amounts (together with premium, if any) of the Securities
and such other Pari Passu Indebtedness. 
The offer price in respect of Securities in any Asset Sale Repurchase
Offer shall be 100% of the aggregate principal amount of such Securities plus
accrued and unpaid interest to the date of purchase, subject to the right of
the Holders of record on a Record Date to receive interest on the relevant
Interest Payment Date in accordance with the procedures set forth in this
Indenture and the Notes.

 

(b)          (i)           If the
Company makes an Asset Sale Repurchase Offer pursuant to subsection (a) above,
the Company shall provide to all Holders and the Trustee a notice (the “Asset Sale Notice”) with the following information (if
applicable):

 

(A)          the
occurrence of an Asset Sale;

 

(B)          that an
Asset Sale Repurchase Offer is being made pursuant to this Section 4.15
and the maximum principal amount of the Securities that may be purchased by the
Company pursuant to the Asset Sale Repurchase Offer;

 

(C)          the
purchase price and the purchase date with respect to Securities purchased by
the Company pursuant to the Asset Sale Repurchase Offer, which will be no
earlier than 20 Business Days nor later than 35 calendar days from the date
such notice is mailed (the “Asset Sale Payment Date”);
provided that the Asset Sale Payment Date may be extended in accordance with
applicable law;

 

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

 

(E)          the
then current Conversion Rate;

 

(F)          that
the Holder shall have the right to withdraw any tendered Securities and the
Holder’s election to require the Company to purchase such Securities; provided 

 

3

 

that the Paying Agent receives, not later than the close of business on
the expiration date of the Asset Sale Repurchase Offer, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Securities tendered for purchase, and a statement that such Holder is
withdrawing its tendered Securities and its election to have such Securities
purchased;

 

(G)          that
unless the Company defaults in the payment of the purchase price therefor, all
Securities accepted for payment pursuant to the Asset Sale Repurchase Offer
will cease to accrue interest on the Asset Sale Payment Date;

 

(H)          if the
Securities to be repurchased are certificated, that the Holders electing to
have any Securities purchased pursuant to the Asset Sale Repurchase Offer will
be required to surrender such Securities to the Paying Agent at the address
specified in the notice prior to the close of business on the third Business Day
preceding the Asset Sale Payment Date;

 

(I)           if the
Securities to be repurchased are represented by a Global Security, that the
Holders electing to have any Securities purchased pursuant to the Asset Sale
Repurchase Offer will be required to comply with the appropriate procedures of
the Depositary; and

 

(J)           any
other instructions, as determined by the Company, consistent with the
provisions of this Section 4.15, that a Holder must follow.

 

(ii)          The
Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the
repurchase of Securities pursuant to a Asset Sale Repurchase Offer.  To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Indenture,
the Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in this
Indenture by virtue thereof.

 

(iii)         On the
Asset Sale Payment Date, the Company shall

 

(A)          accept for payment such principal
amount of the Securities required to be purchased under the Asset Sale
Repurchase Offer or portions thereof properly tendered pursuant to the Asset
Sale Repurchase Offer,

 

(B)          at or prior to 11:00 a.m.,
New York City time, deposit with the Paying Agent an amount equal to the
aggregate Asset Sale Payment in respect of all Securities accepted for payment
in the Asset Sale Repurchase Offer, and

 

(C)          deliver, or cause to be
delivered, to the Trustee for cancellation the Securities so accepted together
with an Officer’s Certificate to the Trustee consistent with Section 4.14.

 

(iv)         If the
aggregate principal amount of Securities surrendered by the Holders in respect
of an Asset Sale Repurchase Offer exceeds the amount of Net Proceeds or the pro
rata portion thereof available for the Asset Sale Repurchase Offer, as the case
may be, the Trustee shall select the Securities to be purchased on a pro rata
basis for all tendered Securities.

 

4

 

(c)           Any Net
Proceeds remaining after application as set forth in Section 4.15(a) may
be used by the Company or any of its Subsidiaries for general corporate
purposes subject to the terms of this Indenture.”

 

(g)           Section 7.01(i) of the
Indenture shall be amended and restated in its entirety to read as follows:

 

“the suspension from trading or failure of the Common Stock to be listed
on The Nasdaq Global Market or on an Eligible Market for a period of five
consecutive days or for more than an aggregate of 15 days in any 365-day
period; provided, however, that an Event of Default shall not occur as a result
of a suspension from trading or the failure to be listed on The Nasdaq Global
Market as a result of (x) a failure to comply with Nasdaq Marketplace Rule 4310(c)(4) (requiring
a minimum bid price of $1 per share) or (y) a failure to file any required
information, documents or reports with the Commission.”

 

(h)           The first
sentence of Section 10.03(a) of the Indenture shall be amended
and restated in its entirety to read as follows:

 

“The Company shall file with the Trustee any information, documents or
reports that the Company is required to file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act as and when filed with the Commission and, in
any event, within nine (9) months after
the same are required under Section 13 or 15(d) of the Exchange Act
to be filed with the Commission (giving effect to any grace period provided by Rule 12b-25
under the Exchange Act).”

 

(i)            The following
sentence shall be added to the end of Section 13.01(b) of the
Indenture:

 

“Holders of a majority principal amount or more of the Outstanding
Securities shall have the power to direct the Collateral Agent to amend, modify
or supplement the Pledge Agreement in any manner expressly directed by such
Holders and to direct the Collateral Agent to release Pledged Collateral from
the lien of the Pledge Agreement, and the Collateral Agent shall execute any
such amendment, modification or supplement (as long as such amendment,
modification or supplement does not adversely affect the rights of the
Collateral Agent acting in such capacity) or appropriate instruments of
release; provided that that Collateral Agent shall not release all or
substantially all of the Pledged Collateral without the consent of Holders of
all of the Outstanding Securities.”

 

Section 1.2.           Definitions
Amendment.

 

(a)           Any definitions
used exclusively in the deleted provisions of the Indenture set forth in Section 1.1(a) above,
and all references to such deleted provisions, are hereby deleted in their
entirety from the Indenture and shall be of no further force or effect.

 

(b)           The following
definitions shall either be amended in Section 1.01 of the Indenture as
provided herein or added to Section 1.01 of the Indenture, as applicable.

 

5

 

“Domestic Subsidiary” means any direct or indirect Subsidiary
of the Company that is incorporated or organized under the laws of the United
States of America, any state thereof or in the District of Columbia.

 

“Equity Interests” shall mean with respect to any Person,
shares of capital stock of (or other ownership or profit interests in) such
Person, warrants, options or other rights for the purchase or other acquisition
from such Person of shares of capital stock of (or other ownership or profit
interests in) such Person, securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or other acquisition
from such Person of such shares (or such other interests), and other ownership
or profit interests in such Person (including, without limitation, partnership,
member or trust interests therein), whether voting or nonvoting.

 

“Foreign Subsidiary” shall mean any direct or indirect
Subsidiary of Company that is not a Domestic Subsidiary.

 

“Fundamental Change” shall be amended by inserting the following
proviso at the end of clause (d) of said definition after the word “exchange”:

 

“;
provided, however, that a Fundamental Change shall not include suspension from
trading or the failure of the Common Stock to be listed for trading on any
United States national or regional exchange following delisting from The Nasdaq
Global Market as a result of (x) a failure to comply with Nasdaq
Marketplace Rule 4310(c)(4) (requiring a minimum bid price of $1 per
share) or (y) a failure to file any required information, documents or
reports with the Commission.

 

“Guarantee Obligation” means as to any Person, any
obligation, contingent or otherwise of such Person guaranteeing any
Indebtedness of any other third Person (the “primary obligor”) in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of the guaranteeing Person (i) to purchase any such
Indebtedness or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (a) for the purchase or payment of
any such Indebtedness or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor so as to enable such primary obligor to pay such
Indebtedness, (iii) to purchase property, securities or services for the
purpose of assuring the owner of any such Indebtedness of the ability of the
primary obligor to make payment of such Indebtedness or (iv) otherwise to
protect the owner of any such Indebtedness against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include (x) any
liability by endorsement of instruments for deposit or collection or similar
transactions in the ordinary course of business, (y) indemnification
obligations of the Company or any of its Subsidiaries entered into in the
ordinary course of business or (z) obligations of the Company or any of
its Subsidiaries under arrangements entered into in the ordinary course of
business whereby the Company or such Subsidiary sells goods or inventory to
other Persons under agreements obligating the Company or such Subsidiary to
repurchase such goods or inventory, at a price not exceeding the original sale
price, upon the occurrence of certain specified events.  The amount of any Guarantee Obligation of any
guaranteeing Person at any time shall be deemed to be the lower of (1) an
amount equal to the stated or determinable amount of the Indebtedness in
respect of which such Guarantee Obligation is made at such time and (2) the
maximum amount for which such guaranteeing Person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation at such time,
unless such Indebtedness and such maximum amount for which such guaranteeing
Person may be liable are not stated or determinable, in which case the amount
of 

 

6

 

such
Guarantee Obligation shall be such guaranteeing Person’s maximum reasonably
anticipated liability in respect thereof as determined by the Company in good
faith at such time; provided, however, that for purposes of this definition the
liability of the guaranteeing Person with respect to any obligation as to which
a third Person or Persons are jointly or jointly and severally liable as a
guarantor or otherwise as contemplated hereby and have not defaulted on its or
their portions thereof shall be only as to its pro rata portion of such
obligation.

 

“Indebtedness” shall be amended and restated to read in its
entirety as follows:

 

“Indebtedness” means 
of any Person at any date, without duplication, all indebtedness of such
Person for borrowed money or evidenced by a note, bond or debenture (other than
current trade liabilities and indemnification obligations incurred in the
ordinary course of business), as reflected on a balance sheet of such Person
prepared in accordance with GAAP, and all Guarantee Obligations of such Person.

 

“Investment” shall mean with respect to any Person, (a) any
purchase or other acquisition by such Person of (i) any Equity Interest
issued by, (ii) a beneficial interest in any Equity Interest issued by, or
(iii) any other equity ownership interest in, any other Person, (b) any
purchase by such Person of all or substantially all of the assets of a business
or product line conducted by another Person or all or substantially all of the
assets constituting the business or product line of a division, branch or other
unit operation of any other Person, (c) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand,
prepaid expenses, accounts receivable and similar items made or incurred in the
ordinary course of business as presently conducted), or capital contribution by
such Person to any other Person, including all Indebtedness of any other Person
to such Person arising from a sale of property by such Person other than in the
ordinary course of its business, (d) any guarantee obligation incurred by
such Person in respect of any obligation of another and (e) any purchase,
or entry into, of any derivative instrument or other contract by such Person
providing for the economic or risk equivalent of all or any part of any
investment in another Person of the type referred to in clause (a), (b), (c) or
(d) above.

 

“Permitted Disposition” shall mean (a) dispositions in
the ordinary course of business of inventory, (b) dispositions of obsolete
or worn out property (including obsolete or valueless intellectual property),
whether now owned or hereafter acquired, in the ordinary course of business,
and dispositions of property (including intellectual property) that are
reasonably determined by the Board of Directors of the disposing Company or
Pledged Subsidiary  (or, in the case of
any disposition or series of related dispositions in an amount not in excess of
$100,000, reasonably determined by the disposing Company or Pledged Subsidiary)
in good faith to be of no practical use to the business of the Company and its
Subsidiaries, which dispositions do not, in the aggregate, materially adversely
affect the value of the Collateral taken as a whole, in an aggregate amount not
in excess of $2,000,000 over the term of this Indenture, (c) dispositions
of cash or Cash Equivalents not otherwise prohibited under the Pledge
Agreement, (d) dispositions to any Subsidiary not otherwise prohibited
herein, (e) dispositions of property to the extent such transaction
constitutes a Permitted Investment, and (f) dispositions of equipment to
the extent that such equipment is exchanged for credit against the purchase
price of similar replacement equipment.

 

“Permitted Indebtedness Amount” shall mean, as of any date,
the greater of (i) $150 million and (ii) an amount equal to 3.0 times
LTM EBITDA for the immediately preceding 4 

 

7

 

consecutive
completed fiscal quarters for which financial statements of the Company
prepared in accordance with GAAP are available.

 

“Permitted Investment” shall mean (i) Investments by the
Company that are not through or in any Subsidiary or other Person and that are (x) reasonably
determined by the Company to be strategic in nature and to have a valid
business purpose or (y) in the ordinary course of business, (ii) Investments
in cash and Cash Equivalents, (iii) Investments in any Pledged Subsidiary
(including, for the avoidance of doubt, any newly formed Domestic or Foreign
Subsidiary (first tier or otherwise) that has become a Domestic or Foreign
Subsidiary Pledgor hereunder), (iv) Investments in any Subsidiary of a
Pledged Subsidiary that are in existence as of the Issue Date, (v) Investments
in the ordinary course of business in any newly formed wholly-owned Foreign
Subsidiary of a newly formed first tier Domestic or Foreign Subsidiary that has
become a Domestic or Foreign Subsidiary Pledgor hereunder where the Company has
in good faith reasonably determined that the creation of the newly formed
wholly-owned Foreign Subsidiary and the Investment each have a valid business
purpose and do not materially impair the value of the Collateral taken as a whole,
(vi) Investments (including debt obligations and Equity Interests)
received in connection with the bankruptcy or reorganization of suppliers and
customers or in settlement of delinquent obligations of, or other disputes
with, customers and suppliers arising in the ordinary course of business or
upon the foreclosure with respect to any secured Investment or other transfer
of title with respect to any secured Investment, and (vii) Investments by
the Company or a Pledged Subsidiary in equipment, fixed assets, real property
or improvements, or replacements or substitutions therefor or additions thereto
(excluding normal replacements and maintenance which are properly charged to
current operations as operating expenses in accordance with GAAP), that have
been or should be, in accordance with GAAP, reflected as additions to property,
plant or equipment on a consolidated balance sheet of the Company or such
Pledged Subsidiary or have a useful life of more than one year, (viii) lease,
utility and other similar deposits in the ordinary course of business, (ix) hedging
or other derivative obligations otherwise permitted to be incurred under the Section 3.09
and incurred in the ordinary course of business for a valid business purpose, (x) receivables
owing to the Company or any Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the Company
or any such Subsidiary deems commercially reasonable under the circumstances,
(xi) Investments that are advances paid to third-party contract manufacturers
in the ordinary course of business to purchase specialized equipment required
to produce specialized products for the Company or its Subsidiaries, (xii)
Investments made by the Company or a Subsidiary for consideration consisting
only of Common Stock of the Company, (xiii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to the Company or any Subsidiary or in satisfaction of judgments, (xiv)
any other Investment where the Company has in good faith reasonably determined
that the Investment has a valid business purpose and does not materially impair
the value of the Collateral taken as a whole if, upon the consummation of the
Investment, the resulting Investment has been pledged for the benefit of the
Trustee, the Collateral Agent and the Holders on a basis consistent with the
Pledge Agreement and (xv) any other Investments not specified above that do not
in the aggregate, since the Issue Date, exceed $1,000,000 (for purposes of
calculating which, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment).

 

8

 

ARTICLE TWO

 

Section 2.1            Effective
Date of This Supplemental Indenture.

 

This
Supplemental Indenture shall be effective as of the date first written above.

 

Section 2.2            Indenture
Ratified.

 

Except
as hereby otherwise expressly provided, the Indenture, as modified by this
Supplemental Indenture, is in all respects ratified and confirmed, and all the
terms, provisions and conditions thereof shall be and remain in full force and
effect.

 

Section 2.3            Counterparts.

 

This
Supplemental Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.

 

Section 2.4            Trustee
Not Responsible.

 

The
recitals contained herein shall be taken as the statements of the Company and
the Trustee assumes no responsibility for their correctness.  The Trustee makes no representation as to the
validity or sufficiency of this Supplemental Indenture.

 

Section 2.5            Definitions
and Terms.

 

Unless
otherwise defined herein, all capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Indenture.

 

Section 2.6            Supplemental
Indenture is an Indenture.

 

This
Supplemental Indenture is an amendment to and implementation of the Indenture,
and the Indenture and this Supplemental Indenture shall be read together from
and after the effectiveness of this Supplemental Indenture.

 

Section 2.7            Governing
Law.

 

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

 

[Remainder of Page Intentionally Left Blank]

 

9

 

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

 

 

	
   

  	
  POWER-ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK
  MELLON TRUST COMPANY, N.A., as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

Exhibit F

 

FORM OF
AMENDED AND RESTATED RIGHTS AGREEMENT

 

[See Exhibit 4.1]

 

 

Exhibit G

 

SERIES B
JUNIOR PREFERRED TERM SHEET

 

Ranking: 
Senior to Company’s Common Stock and each other class of preferred stock
that by its terms ranks junior to the Series B Preferred Stock; pari passu
with the series of preferred stock of the Company that is designated as “Junior
Participating Preferred Stock” and any other class of preferred stock that by
its terms ranks pari passu with the Series B Preferred Stock; and junior
to all classes of capital stock that by their terms rank senior to the Series B
Preferred Stock.

 

Liquidation Preference: 
Greater of (a) $1,000 and (b) an amount that would be received
on an as-converted to common stock basis.

 

Dividends: 
Full participating dividends with Common Stock consistent with Section 2(b) of
the Series A Preferred Stock Certificate of Designations (excluding all
provisions thereof relating to “Regular Dividends”).

 

Voting Rights: 
None, other than a separate class vote on matters set forth in Section 4(c)(i),
(ii) and (iii) of the Series A Preferred  Stock Certificate of Designations
(substituting the “Series B Preferred Stock” for each reference to “Series A
Preferred Stock”).

 

Optional Conversion
Rights:  Convertible at option of holder at any time
into shares of Common Stock, subject to conversion limitations consistent with Section 5(b) of
the Certificate of Designations of the Series A Preferred Stock (the “Conversion
Limitations”).  Initial conversion price
will equal the conversion price of the Series A Preferred Stock/Notes (as
applicable) that were converted into the Series B Preferred Stock on the
date of conversion into Series B Preferred Stock.

 

Automatic Conversion: 
If the Conversion Limitation would not prevent the conversion of one or
more shares of Series B Preferred Stock into Common Stock, then, subject to
expiration of any applicable waiting periods under the HSR Act, the maximum
number of shares of Series B Preferred Stock held by a holder and its
Affiliates that can convert into Common Stock without violating the Conversion
Limitation will convert into Common Stock (allocated pro rata among such holder
and its affiliates), provided that such automatic conversion will only
apply if the number of shares of Series B Preferred Stock that would be
converted is equal to or greater than the lesser of (x) 1,000 shares and (y) all
shares held by such holder and its Affiliates.

 

Anti-Dilution Adjustments: 
Consistent with those contained in Sections 5(f), (g) and (h) of
the Certificate of Designations of the Series A Preferred Stock.

 

Optional and Mandatory
Redemption and Repurchase Rights:  None.

 

 

Exhibit H

 

SERIES C
JUNIOR PREFERRED TERM SHEET

 

Ranking: 
Senior to Company’s Common Stock and each other class of preferred stock
that by its terms ranks junior to the Series C Preferred Stock; pari passu
with the series of preferred stock of the Company that is designated as “Junior
Participating Preferred Stock” and any other class of preferred stock that by
its terms ranks pari passu with the Series C Preferred Stock; and junior
to all classes of capital stock that by their terms rank senior to the Series C
Preferred Stock.

 

Liquidation Preference: 
Greater of (a) $1,000 and (b) an amount that would be received
on an as-converted to common stock basis.

 

Dividends: 
Full participating dividends with Common Stock consistent with Section 2(b) of
the Series A Preferred Stock Certificate of Designations (excluding all
provisions thereof relating to “Regular Dividends”).

 

Voting Rights: 
None, other than a separate class vote on matters set forth in Section 4(c)(i),
(ii) and (iii) of the Series A Preferred  Stock Certificate of Designations
(substituting the “Series C Preferred Stock” for each reference to “Series A
Preferred Stock”).

 

Optional Conversion
Rights:  Convertible at option of holder at any time
into shares of Common Stock, subject to conversion limitations consistent with Section 5(b) of
the Certificate of Designations of the Series A Preferred Stock (the “Conversion
Limitations”).  Initial conversion price
will equal the conversion price of the Series A Preferred Stock/Notes (as
applicable) that were converted into the Series C Preferred Stock on the
date of conversion into Series C Preferred Stock.

 

Automatic Conversion: 
If the Conversion Limitation would not prevent the conversion of one or
more shares of Series C Preferred Stock into Common Stock, then, subject
to expiration of any applicable waiting periods under the HSR Act, the maximum
number of shares of Series C Preferred Stock held by a holder and its
Affiliates that can convert into Common Stock without violating the Conversion
Limitation will convert into Common Stock (allocated pro rata among such holder
and its affiliates), provided that such automatic conversion will only
apply if the number of shares of Series C Preferred Stock that would be
converted is equal to or greater than the lesser of (x) 1,000 shares and (y) all
shares held by such holder and its Affiliates.

 

Anti-Dilution Adjustments: 
Consistent with those contained in Sections 5(f), (g) and (h) of
the Certificate of Designations of the Series A Preferred Stock.

 

Optional and Mandatory
Redemption and Repurchase Rights:  None.

 

 

Exhibit I

 

FORM OF
PLEDGE AGREEMENT AMENDMENT

 

 

FIRST AMENDMENT TO

 

PLEDGE AND SECURITY AGREEMENT

 

made by

 

POWER-ONE, INC.

 

and

 

EACH OTHER PLEDGOR HEREUNDER

 

in favor of

 

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

 

as Collateral Agent

 

 

Dated as of [    ], 2009

 

 

 

THIS
FIRST AMENDMENT TO THE PLEDGE AND SECURITY AGREEMENT dated as of [    ],
2009 (the “Amendment”) among POWER-ONE,
INC., a Delaware corporation (the “Company”), each
of THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of the Company (each, a “Subsidiary Pledgor,” and collectively with the Company, the “Pledgors”), in favor of THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., a national banking association (in such capacity, together with
successors and assigns, the “Collateral Agent”).

 

WHEREAS,
the Company and the Collateral Agent are parties to an Indenture dated as of June 17,
2008 (as amended or supplemented, the “Indenture”),
which evidences and governs the issuance of debt securities (the “Securities”) by the Company in the aggregate principal
amount of $80,000,000, of which $63,000,000 are currently outstanding.

 

WHEREAS,
the Company and the Collateral Agent heretofore executed and delivered a Pledge
and Security Agreement dated as of June 17, 2008 (the “Pledge Agreement”) between the Company and the Collateral
Agent, pursuant to which the Pledgors granted security interests in favor of
the Collateral Agent, for the benefit of the Holders, in the Pledged Collateral.

 

WHEREAS,
Section 13.01(b) of the Indenture provides that the Holders of
at least a majority principal amount of the outstanding Securities may direct
the Collateral Agent to amend, modify or supplement the Pledge Agreement and/or
to release Pledged Collateral from the lien of the Pledge Agreement.

 

WHEREAS,
the Company has obtained the written consent to this Amendment from the Holders
of at least a majority in aggregate outstanding principal amount of the Securities,
and such Holders have directed the Collateral Agent to enter into this
Amendment for their benefit.

 

NOW, THEREFORE, for and in consideration of the foregoing
premises, it is mutually covenanted and agreed as follows:

 

ARTICLE ONE

 

Section 1.1.           Amendments to the Pledge Agreement.

 

(a)           Subsections (i) and
(iii) of Section 6(a) of the Pledge Agreement are each
deleted in their entirety and such subsections shall be replaced with the
phrase “[Intentionally omitted];”, and any and all references to such
subsections, whether direct or indirect, in any term, condition, limitation or
other provision in the Pledge Agreement, are deleted, and such section and
references shall be of no further force or effect.

 

(b)           Subsection (ii) of
Section 6(a) of the Pledge Agreement is deleted in its
entirety and shall be replaced with the following:

 

“create
or suffer to exist any Lien (other than, for the avoidance of doubt, Permitted
Liens) upon or with respect to any of the Pledged Collateral, except for 

 

1

 

the
security interest under this Agreement, any other Indenture Document or in
respect of any Pari Passu Indebtedness that ranks equally and ratably with the
security interest under this Agreement in an aggregate principal amount
exceeding, when aggregated with the aggregate principal amount of outstanding
Notes, $80.0 million (the “Cap”);
provided, however, that, for a single period not to exceed six consecutive
months, the Cap may be increased to $120 million by notice from the Company to
Collateral Agent.”

 

(c)           Section 6(k) of
the Pledge Agreement is deleted in its entirety and shall be replaced with the
following:

 

“not take any action that could, or fail to take any action which
failure could, reasonably be expected to result in any one or more of the
representations and warranties set forth in Section 5 of this Agreement being
incorrect or inaccurate in any material respect when made;”

 

(d)           Section 6(n) of
the Pledge Agreement is deleted in its entirety and such section shall be
replaced with the phrase “[Intentionally omitted];”, and any and all references
to such section, whether direct or indirect, in any term, condition, limitation
or other provision in the Pledge Agreement, are deleted, and such sections and
references shall be of no further force or effect.

 

(e)           Sections 6(y) of
the Pledge Agreement is deleted in its entirety and such section shall be
replaced with the phrase “[Intentionally omitted]; and”, and any and all
references to such sections, whether direct or indirect, in any term,
condition, limitation or other provision in the Pledge Agreement, are deleted,
and such sections and references shall be of no further force or effect.

 

(f)            The following is
hereby added as a new Section 30 to the Pledge Agreement:

 

“SECTION 30.     Releases.  If any of the Pledged Collateral is
sold, transferred or otherwise disposed of by any Pledgor in a transaction that
is not prohibited by the Indenture, then the Lien thereon and security interest
therein (but not in any of the proceeds thereof) arising under Section 2
hereof automatically shall be released without further action by the Collateral
Agent, any Holder or any other Person, and the Collateral Agent, at the request
and sole expense of such Pledgor, shall execute and deliver to such Pledgor all
releases or other documents reasonably necessary or desirable to effect or
evidence such  release of the Liens and
security interests created hereby on or in such Pledged Collateral.”

 

(g)           The following is
hereby added as a new Section 31 to the Pledge Agreement:

 

2

 

“SECTION 31.     Lien
Sharing.  The Collateral Agent hereby
agrees that, to the extent that the Company or any of its Subsidiaries incurs
any Indebtedness that is secured equally and ratably by Liens on the
Collateral, it shall (i) enter into with the holders of such Indebtedness
(or any agent or trustee on behalf of such holders) an intercreditor agreement
on customary terms providing for, among other things, such Indebtedness to be
secured equally and ratably with the Liens of the Collateral Agent on the
Collateral and voting rights with respect to Collateral matters to be
determined on a ratable basis based on the aggregate amount of obligations
owing under the Indenture Documents and to the holders of such Indebtedness (or
any agent or trustee on behalf of such holders) and (ii) agree to such
amendments to this Agreement as are required to provide for the sharing of the
Collateral.”

 

ARTICLE TWO

 

Section 2.1            Effective
Date of This Amendment.

 

This
Amendment shall be effective as of the date first written above.

 

Section 2.2            Pledge
Agreement Ratified.

 

Except
as hereby otherwise expressly provided, the Pledge Agreement, as modified by
this Amendment, is in all respects ratified and confirmed, and all the terms,
provisions and conditions thereof shall be and remain in full force and effect.

 

Section 2.3            Counterparts.

 

This
Amendment may be executed in any number of counterparts, each of which shall be
an original, but such counterparts shall together constitute but one and the
same instrument.

 

Section 2.4            Collateral
Agent Not Responsible.

 

The
recitals contained herein shall be taken as the statements of the Company and
the Collateral Agent assumes no responsibility for their correctness.  The Collateral Agent makes no representation
as to the validity or sufficiency of this Amendment.

 

Section 2.5            Definitions
and Terms.

 

Unless
otherwise defined herein, all capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Pledge Agreement.

 

3

 

Section 2.6            Governing
Law.

 

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

 

[Remainder of Page Intentionally Left Blank]

 

4

 

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

 

	
   

  	
  PLEDGORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  POWER-ONE, INC., a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Richard J. Thompson

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  P-O DELAWARE, INC., a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PAI CAPITAL LLC, a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HC POWER, INC., a
  California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  P-O NEVADA CORP., a Nevada
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  SECURED PARTY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK
  MELLON TRUST COMPANY, N.A., as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Teresa Petta

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ACKNOWLEDGED BY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK
  MELLON

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BNY MELLON CORPORATE
  TRUSTEE SERVICES LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK
  MELLON TRUST COMPANY (CAYMAN) LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  THE BANK OF NEW YORK
  (LUXEMBOURG) S.A. — ITALIAN BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Exhibit J

 

FORM OF CONSENT AND PURCHASE AGREEMENT

 

 

CONSENT  AND PURCHASE AGREEMENT

 

THIS CONSENT  AND PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of April [    ],
2009, by and among Power-One, Inc., a Delaware corporation (the “Company”) and [                    ]
(the “Holder”).

 

RECITALS

 

A.            The
Company has previously issued 8% Senior Secured Convertible Notes due 2013 in
an aggregate principal amount of $80,000,000 (the “Notes”) pursuant to the Indenture (the “Indenture”), dated as of June 17,
2008, between the Company and The Bank of New York Trust Company, N.A., as
trustee (the “Trustee”).

 

B.            The
Holder is, as of the date hereof, the beneficial owners of $[         ]
aggregate principal amount of the Notes, which constitutes [     ]%
of the aggregate outstanding Notes as of the date hereof.

 

C.            In
consideration of the transactions described herein, the Holder desires to
consent to the amendments to certain provisions of the Indenture as described
herein, in the manner set forth in the Supplemental Indenture between the
Company and the Trustee, in the form attached as Exhibit A hereto
(the “Supplemental Indenture”), to
the First Amendment to The Pledge and Security Agreement entered into pursuant
to the Indenture, in the form attached as Exhibit B hereto (the “Pledge Amendment”)
and to agree to have the Repurchase Notes (as defined herein) purchased by the
Company.

 

NOW, THEREFORE,
intending to be legally bound, the parties hereto hereby agree as follows:

 

1.             Certain
Definitions.

 

Unless
otherwise expressly provided herein, capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Indenture.  For all purposes of and under this Agreement,
the following terms shall have the following respective meanings:

 

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

 

“Holder Notes” means
all of the Notes owned, beneficially or of record, by the Holder as of the date
hereof.

 

“Repurchase Notes”
means those Notes owned, beneficially or of record, by the Holder that are set
forth on Schedule 1 attached hereto and which are being sold by the
Holder to the Company pursuant to the terms hereof.

 

“SEC” means the Securities and
Exchange Commission.

 

 

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

 

“Transfer” means, with
respect to any security (including, without limitation, the Securities), the
sale, transfer, tender, exchange, pledge, hypothecation, or the gift, placement
in trust, or other disposition of such security or any right, title or interest
therein (including, but not limited to, any right or power to vote to which the
Holder thereof may be entitled, whether such right or power is granted by proxy
or otherwise), or the record or beneficial ownership thereof, and each
agreement, arrangement or understanding, whether or not in writing, to effect
any of the foregoing.

 

2.             Consent.

 

(a)           Pursuant to Section 12.01 of the
Indenture, the Holder hereby irrevocably consents to the amendments and
supplements as set forth in the Supplemental Indenture.

 

(b)           To the extent that Section 12.01
or any other provision of the Indenture gives the Holder the right to waive
and/or revoke the consent set forth in Section 2(a) hereof or the
amendments and supplements contemplated under the Supplemental Indenture, the
Holder hereby irrevocably waives any such right of waiver and/or revocation.

 

(c)           Pursuant to Section 13.01 of the
Indenture, the Holder hereby irrevocably consents to the amendments set forth
in the Pledge Amendment.

 

(d)           To the extent that Section 13.01
or any other provision of the Indenture gives the Holder the right to waive
and/or revoke the consent set forth in Section 2(c) hereof or the
amendments contemplated under the Pledge Amendment, the Holder hereby
irrevocably waives any such right of waiver and/or revocation.

 

(e)           The Holder hereby agrees, upon
reasonable request by the Company, to direct and instruct any and all other
record owners, agents, representatives, custodians, trustees and other
representatives holding any of the Holder Notes to agree and consent to,
execute and deliver and perform any other actions reasonably necessary to
promptly effect, consummate, confirm or evidence the transactions set forth
herein and consents provided hereunder to give effect to the amendments and
supplements provided under the Supplemental Indenture and the Pledge Amendment,
including, but not limited to, the signature annex hereto.

 

3.             Closing.

 

(a)           Purchase of Holder Notes.  The Company hereby agrees to purchase the
Repurchase Notes at the Closing (as defined below) for a payment of $[            ]
as calculated through [                ],
2009, with a per diem amount of $[           ]
per day for each day thereafter prior to Closing and the Holder agrees to
deliver an executed assignment of the Repurchase Notes in the form of that
attached as Exhibit C (the “Assignment”).  The amount owed the Holder shall be sent by
wire transfer of immediately available funds to the account of the Holder set
forth under the Holder’s name on the signature page hereto.  The closing for such purchase and sale (the “Closing”) shall occur no later than the 8th
day of May, 2009; provided that if the transactions disclosed to the Holder
pursuant to that certain Confidentiality Agreement dated as

 

2

 

of          
are not consummated on or before such date, this Agreement shall terminate and
the parties shall have no further obligation to each other.

 

(b)           Further Deliveries.  The Holder hereby agrees that it shall (a) promptly
deliver the original Repurchase Notes (if they are certificated), together with
a duly executed Assignment or any other duly executed instrument of transfer or
assignment as Company may reasonably request, and, if in registered form, shall
be issued in the name of the Holder or the name of its nominee or nominees, and
(b) promptly upon the prior written request of the Company execute and
deliver, or cause to be executed and delivered, any and all documents,
assignments and other agreements and take or cause to be taken such additional
action as the Company may reasonably deem necessary or desirable to effect,
consummate, confirm or evidence the transactions described herein.  The Holder agrees that the Repurchase Notes
will be transferred to the Company free and clear of any and all pledges,
liens, security interests, mortgage, claims, charges, restrictions, options,
title defects or encumbrances.

 

4.             Transfer
and Other Restrictions.

 

(a)           At all times during the period
commencing with the execution and delivery of this Agreement through Closing,
the Holder agrees that it shall not Transfer any of the Holder Notes, or enter
into an agreement, commitment or other arrangement with respect thereto unless (i) the
Holder gives prior written notice to the Company of the name of the proposed
transferee and (ii) the transferee agrees in writing to be subject to and
bound by the terms of this Agreement and a copy of such written agreement is
provided to the Company within two Business Days after such Transfer is
consummated.

 

(b)           Except as otherwise permitted by this
Agreement or by order of a court of competent jurisdiction, the Holder agrees
that it will not commit any act or enter into any agreement, commitment or
other arrangement that could restrict or affect the Holder’s legal power, or
authority to perform or otherwise prevent or disable the Holder from
performing, any of its obligations under this Agreement.

 

5.             Representations
and Warranties of the Holder.

 

(a)           The Holder hereby represents and
warrants to the Company, as of the date hereof and as of the Closing, as
follows: (i) the Holder is the beneficial owner of the Holder Notes
indicated on Schedule 1 of this Agreement adjacent to the Holder’s name
free and clear of any and all pledges, liens, security interests, mortgage,
claims, charges, restrictions, options, title defects or encumbrances, in each
case, that would impair or adversely affect the Holder’s ability to perform its
obligations under this Agreement, other than those encumbrances which are in
favor of the Company or that exist pursuant to securities laws; (ii) the
Holder has full power and authority to make, enter into and carry out the terms
of this Agreement; and (iii) this Agreement has been duly and validly
executed and delivered by the Holder and constitutes a valid and binding
agreement of the Holder enforceable against the Holder in accordance with its
terms.

 

(b)           The execution and delivery of this
Agreement and the performance by the Holder of the Holder’s agreements and
obligations hereunder will not result in any breach or violation of or be in
conflict with or constitute a default under any term of any agreement,
judgment,

 

3

 

injunction, order, decree, law,
regulation or arrangement to which the Holder is a party or by which the Holder
(or any of the Holder’s assets) is bound, except for any such breach,
violation, conflict or default which, individually or in the aggregate, would
not impair or adversely affect the Holder’s ability to perform its obligations
under this Agreement or render inaccurate any of the representations made by
the Holder herein.

 

(c)           The Holder represents and warrants to
the Company that it is (i) an accredited investor as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act and (ii) a qualified
institutional buyer as defined in Regulation 144A promulgated under the
Securities Act.  The Holder is
experienced in evaluating investments in companies such as the Company.

 

(d)           The Holder has been afforded access to
information about the Company and the financial condition, results of
operations, business, property and management which it has deemed sufficient to
enable it to evaluate its investment in the Holder Notes.  The Holder and its advisors, if any, have
been afforded the opportunity to ask questions of the Company; and the Holder
has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to its sale of the
Repurchase Notes held by the Holder.

 

(e)           The Holder represents and warrants to
the Company that it is a resident of that jurisdiction specified below its
address for notices set forth below the signature of the Holder where it
appears on the signature page of this Agreement.

 

(f)            The Holder represents and warrants to
the Company that it is not, and for the three months immediately preceding the
date hereof, has not been an officer, director or a “beneficial owner” (as
defined for purposes of Rule 13d-3 of the Exchange Act) of more than 10%
of the Company’s Common Stock.

 

(g)           The Holder represents and warrants to
the Company that it is not a registered broker-dealer under Section 15 of
the Exchange Act.

 

(h)           The Holder represents and warrants to
the Company that it has independently evaluated the merits of its decision to
sell the Repurchase Notes held by the Holder pursuant to this Agreement, and
the Holder confirms that it has not relied on the advice of the Company or any
of its representatives in making such decision.

 

6.             Representations,
Warranties and Covenants of the Company.

 

(a)           The Company hereby represents and
warrants to the Holder, as of the date hereof and as of the Closing, as
follows: (i) the Company has full corporate power and authority to make,
enter into and carry out the terms of this Agreement; and (ii) this
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms.

 

(b)           The execution and delivery of this
Agreement and the performance by the Company of its agreements and obligations
hereunder will not result in any breach or violation of or be in conflict with
or constitute a default under any term of any agreement, judgment, injunction,
order, decree, law, regulation or arrangement to which the Company is a party
or by

 

4

 

which the Company (or any of
the Company’s assets) is bound, except for any such breach, violation, conflict
or default which, individually or in the aggregate, would not impair or
adversely affect the Company’s ability to perform its obligations under this
Agreement or render inaccurate any of the representations made by the Company
herein.

 

7.             Termination.  This Agreement shall terminate if the Closing
has not occurred on or prior to April   
, 2009.  No party hereto shall be
relieved from any liability for breach of this Agreement by reason of any
termination of this Agreement.

 

8.             Miscellaneous
Provisions.

 

(a)           Amendments, Modifications and
Waivers.  No amendment, modification
or waiver in respect of this Agreement shall be effective against any party
unless it shall be in writing and signed by the Company and the Holder.

 

(b)           Entire Agreement.  This Agreement constitutes the entire
agreement among the parties to this Agreement with respect to the matters
discussed herein and supersedes all other prior agreements and understandings,
both written and oral, among or between any of the parties with respect to the
subject matter hereof.

 

(c)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof.

 

(d)           Consent to Jurisdiction; Venue.  In any action or proceeding between any of
the parties arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement, each of the parties: (i) irrevocably
and unconditionally consents and submits to the exclusive jurisdiction and
venue of the state and federal courts of the Borough of Manhattan, State of New
York, and (ii) agrees that all claims in respect of such action or
proceeding may be heard and determined exclusively in the state and federal
courts of the Borough of Manhattan, State of New York.

 

(e)           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

(f)            Assignment and Successors.  This Agreement shall be binding upon, and
shall be enforceable by and inure solely to the benefit of, the parties hereto
and their respective successors and assigns; provided,
however, that neither this
Agreement nor any of the rights, interests or obligations of the parties hereto
may be assigned by any of the parties hereto without the prior written consent
of the other party.  Any attempted
assignment of this Agreement in violation of the foregoing shall be void and of
no effect.

 

(g)           No Third Party Rights.  Nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person (other than the parties
hereto), any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.

 

5

 

(h)           Cooperation.  The Company and the Holder agree to cooperate
with the other and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by the other party to evidence or reflect the transactions
contemplated by this Agreement and to carry out the intent and purpose of this
Agreement, including, without limitation, to enable the Company to enter into a
Supplemental Indenture, in form and substance reasonably satisfactory to the
Company and the Trustee that gives effect to the amendments of the Indenture
contemplated in the Supplemental Indenture.

 

(i)            Severability.  If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement, so long as this Agreement as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise
be conferred upon the parties.  The
parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid
or unenforceable provision(s).

 

(j)            Specific Performance; Injunctive
Relief.  The parties hereto
acknowledge that the parties will be irreparably damaged if any of the provisions
of this Agreement are not performed in accordance with their specific terms and
that any breach of this Agreement by the parties could not be adequately
compensated in all cases by monetary damages alone.  Accordingly, in addition to any other right
or remedy to which the non-breaching party may be entitled, at law or in
equity, it shall be entitled to seek to enforce any provision of this Agreement
by a decree of specific performance and temporary, preliminary and permanent
injunctive relief to prevent breaches or threatened breaches of any of the
provisions of this Agreement, without posting any bond or other undertaking.

 

(k)           Notices.  All notices, Consents, waivers and other
communications required or permitted by this Agreement shall be in writing and
shall be deemed given to a party when (i) delivered to the appropriate
address by hand or overnight courier service (cost prepaid); or (ii) sent
by facsimile with confirmation of transmission by the transmitting equipment
confirmed with a copy delivered as provided in clause (i), in each case to the
parties at their respective addresses or facsimile numbers shown below their
signatures on the last page hereof (or to such other address or facsimile
as a party may designate by notice to the other parties).

 

(l)            Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties; it being understood that all parties need not sign the same
counterpart.  The exchange of copies of
this Agreement and of signatures pages by facsimile or electronic
transmission shall constitute effective execution and delivery of this
Agreement as to the parties and may be used in lieu of the original Agreement
for all purposes.  Signatures of the 

 

6

 

parties transmitted by
facsimile or electronic transmission shall be deemed to be their original
signatures for all purposes.

 

(m)          Headings.  The headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

 

(n)           Legal Representation.  This Agreement was negotiated by each party
hereto with the benefit of such party’s legal representation and any rule of
construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation thereof.

 

(o)           Indemnity and Contribution.  The Company agrees to indemnify and hold
harmless the Holder and its directors, officers, employees, members,
representatives and agents and each person, if any, who controls the Holder
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act (each, an “Indemnified Person”), from and
against any and all losses, claims, damages, penalties, fees and liabilities
(collectively, “Losses”), as
incurred, including, without limitation, the reasonable legal fees and other
reasonable expenses of one counsel (in addition to any local counsel) incurred
(irrespective of whether any such Indemnified Person is a party to the action
for which indemnification hereunder is sought) in connection with any suit,
action or proceeding or any claim, as incurred, as a result of, or arising out
of or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the this Agreement, or (b) any
breach of any covenant, agreement or obligation of the Company contained in
this Agreement; provided that the Company shall not be required to indemnify
any of the Indemnified Persons to the extent Losses arise or result from a
misrepresentation or breach of any representation or warranty made by Holder or
such Indemnified Person contained in this Agreement, or a breach of any
covenant, agreement or obligation by Holder or such Indemnified Person
contained in this Agreement.

 

If any suit,
action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any Indemnified Person,
such Indemnified Person shall promptly notify the person against whom such
indemnity may be sought (the “Indemnifying Person”)
in writing, and the Indemnifying Person, upon request of the Indemnified
Person, shall retain one counsel (in addition to any local counsel) reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may designate in such proceeding and shall
pay the reasonable fees and expenses of such counsel related to such
proceeding; provided, however, that failure to so notify the Indemnifying
Person shall not relieve such Indemnifying Person from any liability hereunder
except to the extent the Indemnifying Person is prejudiced as a result
thereof.  In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person, the Indemnifying Person proposes to have the same counsel
represent it and the Indemnified Person, and representation of both parties by
the same counsel would, in the opinion

 

7

 

of counsel, be inappropriate
due to actual or potential differing interests between them.  In no event shall the Indemnifying Person be
liable for the fees and expenses of more than one counsel (in addition to any
local counsel) separate from its own counsel for all Indemnified Persons in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.  It is understood that the
Indemnifying Person shall reimburse all such reasonable fees and expenses
actually incurred upon delivery to the Indemnifying Person of reasonable
documentation therefor setting forth such expenses in reasonable detail unless
a bona fide dispute exists with respect to such expenses.  The Indemnifying Person shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final, non-appealable judgment
for the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any Losses by reason of such settlement or
judgment.  No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is a party, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.

 

Payments made
by any Indemnifying Person under this Section 8(o) shall be limited
to the amount of any liability or damage that remains after deducting therefrom
any insurance proceeds and any indemnity, contribution or other similar payment
recovered by the Indemnified Person from any third party with respect thereto.

 

Notwithstanding
anything to the contrary set forth herein, no Indemnified Person shall be
entitled to be indemnified pursuant to this Section 8(o) for any Loss
to the extent such Loss arises as a result of the Holder’s or Indemnified Person’s
gross negligence or willful misconduct; provided, however, that the
Indemnifying Person shall pay the expenses incurred by any such Indemnified
Person hereunder, as such expenses are incurred, in connection with any
proceeding in advance of the final disposition, so long as the Indemnifying
Person receives an undertaking by such Indemnified Person to repay the full
amount advanced if there is a final determination that such Indemnified Person
failed the standards set forth above or that such Indemnified Person is not
entitled to indemnification as provided herein for other reasons; and provided,
further, that the termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that such Indemnified Person was either
grossly negligent or engaged in willful misconduct.

 

The remedies
provided for in this Section 8(o) are not exclusive and shall not
limit any rights or remedies that may otherwise be available to any Indemnified
Person at law or in equity.

 

In
circumstances in which the indemnity agreement provided for in the preceding
paragraphs of this Section 8(o) is unavailable to, or insufficient to
hold harmless, an Indemnified Person in respect of any Losses, each
Indemnifying Person, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such Losses, including reasonable legal or other expenses incurred,
as incurred, in such proportion as is appropriate to reflect (i) the
relative benefits received by the Indemnifying Person on the one hand and the
Indemnified Person on the other from the transactions set forth in this
Agreement; or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of

 

8

 

the Indemnifying Person on the
one hand and the Indemnified Person on the other in connection with the breach
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof).  The relative fault of
the parties shall be determined by reference to, among other things, any
equitable considerations appropriate in the circumstances.  The Company and the Holder agree that it
would not be equitable if the amount of such contribution were determined by
pro rata or per capita allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
first sentence of this paragraph.  For
purposes of this paragraph, each person, if any, who controls the Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Holder.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

 

The indemnity
agreements and contribution provisions contained in this Section 8(o) and
the representations and warranties of the Company, and the Holder set forth in
this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Holder or any person
controlling the Holder or by or on behalf of the Company, its officers or
directors or any other person controlling the Company and (ii) acceptance
of and payment for any of the Repurchase Notes.

 

[Signature page follows.]

 

9

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  POWER-ONE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Richard J.
  Thompson

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
  Address:

  	
  [                          ]

  
	
   

  	
   

  	
  [                          ]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
  [                          ]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  [                          ]

  
	
   

  	
  Title:

  	
  [                          ]

  
	
   

  	
  Address:

  	
  [                          ]

  
	
   

  	
   

  	
  [                          ]

  
	
   

  	
  Wire:

  	
  [                          ]

  
	
   

  	
   

  
									

 

SIGNATURE PAGE TO CONSENT AND PURCHASE
AGREEMENT

 

 

SIGNATURE ANNEX TO CONSENT FORM

 

POWER-ONE, INC.  —
April [    ], 2009

 

A DTC Participant must execute this Consent Form exactly as its
name appears on DTC’s position listing as of April [     ],
2009.

 

	
  1.

  	
  The
  DTC participant signing this Signature Annex is:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Participant
  Account Number:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Company Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Contact Person:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mailing Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax Identification Number

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E-mail Address:

  	
   

  
	
   

  	
   

  
	
  2.

  	
  The Securities with respect to which this
  Signature Annex relates and with respect to which you consent to the Proposed
  Amendments are:

  
									

 

	
  CUSIP(s)

  	
   

  	
  Principal
  Amount(s)

  
	
  [                          ]

  	
   

  	
   

  

 

	
  3.

  	
  Provide the Unique Reference Identifier for this
  consent as a seven-digit number that starts with your 4-digit participant
  account number and ends with a sequential number that you choose. For
  example, if your participant account number is 902, then you might use
  0902001 for your first consent and 0902002 for your second consent.

  

 

	
  €

  	
  €

  	
  €

  	
  €

  	
  €

  	
  €

  

 

If two or more Signature Annexes have the same Unique Reference
Identifier, they may all be considered defective.

 

	
  4.

  	
  The undersigned hereby makes all acknowledgments,
  representations, warranties, agreements and authorizations described in the
  Consent to which this Signature Annex relates.

  
	
   

  	
   

  
	
  Signature of Authorized Signatory:

  	
   

  	
   

  
	
   

  
	
  Name of Authorized Signatory:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
									

 

 

SCHEDULE 1

 

REPURCHASE NOTES

 

	
  Holder

  	
   

  	
  Aggregate
  Notes Owned

  “Holder Notes”

  	
   

  	
  Aggregate
  Notes Sold

  “Repurchase Notes”

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [                        ]

  	
   

  	
  $[              ]

  	
   

  	
  $[              ]

  	
   

  

 

 

EXHIBIT A

 

SUPPLEMENTAL INDENTURE

 

[See
attached.]

 

 

EXHIBIT B

 

PLEDGE AMENDMENT

 

 

EXHIBIT C

 

ASSIGNMENT FORM

To assign this Security, fill in the form below:

 

I or we assign and transfer this Security to

 

	
   

  
	
   

  	
   

  
	
   

  	
   

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

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

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

  
	
   

  
	
  and irrevocably appoint

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
  agent to transfer this Security on the books of the Company. The
  agent may substitute another to act for him or her.

  
	
   

  	
  Your Signature:

  
	
  Date: _____________

  
	
   

  
	
   

  	
   

  
	
   

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

  Security)

  
	
  *Signature guaranteed by:

  
	
   

  
	
  By:

  	
   

  	
   

  
					

 

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

 

 

Exhibit K

 

FORM OF TRANSACTION FEE AGREEMENT

 

 

This TRANSACTION FEE AGREEMENT (this “Agreement”)
is dated as of [April     ], 2009 and is between
[Puma], Inc., a Delaware corporation (together with its successors, the “Company”), and Silver Lake Management
Company Sumeru, L.L.C., a Delaware limited liability corporation (“SLS”).

 

BACKGROUND

 

1.             The
Company has entered into a Securities Purchase Agreement, dated as of [April     ],
2009, as it may be amended, supplemented or modified (the “SPA”),
by and among the Company, Silver Lake Sumeru Fund, L.P. and Silver Lake
Technology Investors Sumeru, L.P. (collectively, the “Purchasers”).

 

2.             In
accordance with the terms and conditions set forth in the SPA, the Company is
issuing and selling to the Purchasers, and the Purchasers are purchasing from
the Company, the Securities (as defined in the SPA) (the “Transaction”).

 

3.             As
an inducement to the Purchasers to enter into the SPA, the Company agreed to
enter into this Agreement and pay the fees and provide the expense
reimbursement provided in this Agreement.

 

4.             Capitalized
terms used in this Agreement have the meanings ascribed to them in the SPA.

 

In
consideration of the premises and agreements contained herein and of other good
and valuable consideration, the sufficiency of which are hereby acknowledged,
the parties agree as follows:

 

AGREEMENT

 

SECTION 1.           Transaction Fee.  The Company shall pay SLS at the closing of
the Transaction (the “Closing”
and the date of such Closing, the “Closing Date”)
a non-refundable and irrevocable transaction fee of $1,000,000 by wire
transfer of immediately available federal funds to such account or accounts as
specified by SLS to the Company prior to such payment.

 

SECTION 2.           Reimbursements.  In addition to the fees payable pursuant to
this Agreement, the Indemnification provided under Section 3 hereof
and any expense reimbursement provided to any Preferred Directors or Nominated
Directors in accordance with the Company’s customary policies (none of which
shall be subject to this Section 2), the Company will pay, or cause
to be paid, directly, or reimburse SLS and each of its affiliates for, their
respective Out-of-Pocket Expenses (as defined below). For the purposes of this
Agreement, the term “Out-of-Pocket
Expenses” means the reasonable and documented out-of-pocket
costs and expenses incurred by SLS and its affiliates from time to time in
connection with the ownership or subsequent sale or transfer by SLS or its
affiliates of securities of the Company or its successor, including, without
limitation, (a) fees and disbursements of any professionals and
organizations, including accountants, outside legal counsel or consultants,
retained by SLS or any of its affiliates, (b) costs of any outside
services or independent contractors such as financial 

 

 

printers, couriers, business publications, on-line
financial services or similar services, retained or used by SLS or any of its
affiliates, and (c) transportation, per diem costs, word processing
expenses or any similar expense not associated with SLS or its affiliates’
ordinary operations.  In no event will
Out-of-Pocket Expenses (x) include any Transaction Expenses (as defined in
the SPA) or Registration Expenses (as defined in the Registration Rights
Agreement) or (y) exceed $50,000 in respect of any calendar year (or the
prorated portion of any partial calendar year this Agreement is in effect)
excluding, in the case of clause (y), any Out-of-Pocket Expenses incurred in
connection with any acquisition, disposition, restructuring, debt or equity
financing or other extraordinary transaction of the Company as to the extent
such Out-of-Pocket Expenses are approved by the Company (such approval not to
be unreasonably withheld).  All payments
or reimbursements for Out-of-Pocket Expenses will be made within thirty (30)
days of receipt of the reasonably detailed request for payment or reimbursement
in accordance with this Agreement, to the account or accounts indicated to the
Company by the relevant payee.

 

SECTION 3.           Indemnification.

 

(a)           The Company shall defend, indemnify, exonerate and hold
free and harmless SLS, its affiliates and their respective partners (both
general and limited), members (both managing and otherwise), managers,
employees, agents and representatives (each such person being an “Indemnified Party”) from and against any and all losses,
damages, penalties, judgments, expenses, amounts paid in settlement and costs
(collectively “Liabilities”) directly or
indirectly arising out of, based upon or resulting from any actual or threatened
actions, causes of action, suits, claims by third parties and investigations by
governmental authorities (collectively “Claims”)
arising out of, resulting from, or relating to the Transaction, any of the
transactions contemplated by this Agreement, and the other Transaction
Agreements, or such Indemnified Party’s actual, alleged or deemed control or
ability to influence the Company or any of its Subsidiaries, whether or not
resulting in any Liability and whether or not such Claim is initiated by the
Company, provided that the Company shall not be liable under the
foregoing indemnification provision with respect to any Liability of an
Indemnified Party that is determined by a court, in a final judgment from which
no further appeal may be taken, to have resulted solely from the gross
negligence or willful misconduct of such Indemnified Party or from its breach
of any material provision of any of the agreements entered into in connection
with the Transaction.  The Company will
reimburse any Indemnified Party for all reasonable and documented costs and
expenses (including reasonable attorneys’ fees and expenses and any other
litigation-related expenses) as they are incurred in connection with
investigating, preparing, pursuing, defending or assisting in the defense of
any Claim for which the Indemnified Party would be entitled to indemnification
under the terms of the previous sentence, whether or not such Indemnified Party
is a party thereto.  The Company agrees
that it will not, without the prior written consent of the Indemnified Party,
settle, compromise or consent to the entry of any judgment in any Claim
relating to the matters contemplated hereby (if any Indemnified Party is a
party thereto or has been threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
Indemnified Party from all liability, without future obligation or prohibition
on the part of the Indemnified Party, arising or that may arise out of such
Claim, and does not contain an admission of guilt or liability on the part of
the Indemnified Party.

 

2

 

(b)           The rights of an Indemnified Party to
indemnification hereunder will be cumulative and in addition to any other
rights and remedies any such person may have under any other agreement or
instrument to which each Indemnified Party is or becomes a party or is or
otherwise becomes a beneficiary or under any law or regulation.  The indemnification provided in this
Agreement will inure to the benefit of the heirs, successors, assignees and
administrators of each of the Indemnified Parties.

 

(c)           If the indemnification provided for
in this Section 3 is unavailable in respect of any Liabilities,
then, in lieu of indemnifying an Indemnified Party, the Company agrees to
contribute to the amount paid or payable by such Indemnified Party in such
proportion as is appropriate to reflect the relative fault of the Company or
any parent company or subsidiary thereof (or any of them), on the one hand, and
such Indemnified Party, on the other hand, in connection with the actions which
resulted in such Liabilities, as well as any other equitable considerations.

 

SECTION 4.           Term.   This
Agreement will become effective as of the Closing Date.  In the event that the SPA is terminated
pursuant to Section 9  thereof, this
Agreement shall be void ab initio.

 

SECTION 5.           Freedom
to Pursue Opportunities.  In recognition of the fact that SLS and its
affiliates, currently engage in, and may in the future engage in, the same or
similar activities or lines of business and have an interest in the same areas
and types of corporate opportunities, and in recognition of the benefits to be
derived by the Company through its continued contractual, corporate and business
relations with SLS (including possible service of directors, officers and
employees of SLS as directors, officers and employees of the Company), the
Company renounces any interest or expectancy in, or in being offered the
opportunity to participate in, any corporate opportunity not allocated to it
pursuant to this Section 5 to the fullest extent permitted by Section 122(17)
of the General Corporation Law of the State of Delaware (or any successor
provision).  To the fullest extent
permitted by applicable law, the Company acknowledges and agrees that
SLS and its affiliates (including, without limitation, each Investor
Securityholder, Appointed Director and Nominated Director (other than any
Independent Directors)) currently have, and will in the future have or will
consider acquiring, investments in numerous companies with respect to which SLS
or its affiliates may serve as an advisor, a director or in some other
capacity, in recognition that SLS and its affiliates have myriad duties to
various investors and partners, in anticipation that the Company, on the one
hand, and SLS (or one or more affiliates, associated investment funds or
portfolio companies), on the other hand, may engage in the same or similar
activities or lines of business and have an interest in the same areas of
corporate opportunities, and in recognition of the benefits to be derived by
the Company from the consummation of the Transaction, the Company acknowledges
and agrees that:

 

(a)           SLS and its affiliates (including one
or more associated investments funds or portfolio companies and each Investor
Securityholder and each Appointed Director and Nominated Director (other than
any Independent Directors)) shall have the right:  (A) to directly or indirectly engage in
any business (including, without limitation, any business activities or lines
of business that are the same as or similar to those pursued by, or competitive
with, the 

 

3

 

Company and
its subsidiaries); (B) to directly or indirectly do business with any
client or customer of the Company and its subsidiaries; (C) to take any
other action that SLS or any such person believes in good faith is necessary to
or appropriate to fulfill its obligations as described in the first sentence of
this Section 5; and (D) not to present potential transactions,
matters or business opportunities to the Company or any of its subsidiaries,
and to pursue, directly or indirectly, any such opportunity for themselves, and
to direct any such opportunity to another person.

 

(b)           SLS and its affiliates (including its
associated investments funds and portfolio companies) and the Appointed
Directors and Nominated Directors (other than any Independent Directors)  shall have no duty (contractual or otherwise)
to communicate or present any corporate opportunities to the Company or any of
its affiliates or to refrain from any actions specified in this Section 5,
and the Company, on its own behalf and on behalf of its affiliates, hereby
irrevocably waives any right to require SLS or any of its affiliates (including
its associated investments funds and portfolio companies) and the Appointed
Directors and Nominated Directors (other than any Independent Directors) to act
in a manner inconsistent with the provisions of this Section 5.

 

(c)           Neither SLS nor any of its affiliates
(including its associated investments funds and portfolio companies) and the
Appointed Directors and Nominated Directors (other than any Independent
Directors) shall be liable to the Company or any of its affiliates for breach
of any duty (contractual or otherwise) by reason of any activities or omissions
of the types referred to in this Section 5 or of any such person’s
participation therein.

 

SECTION 6.           Miscellaneous.

 

(a)           No amendment or waiver of any provision
of this Agreement, or consent to any departure by any party hereto from any
such provision, will be effective unless it is in writing and signed by each of
the parties hereto. Any amendment, waiver or consent will be effective only in
the specific instance and for the specific purpose for which given. The waiver
by any party of any breach of this Agreement will not operate as or be
construed to be a waiver by such party of any subsequent breach.

 

(b)           Any notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to be given when delivered in person or by private courier with receipt,
if telefaxed when verbal or email confirmation from the recipient is received,
or three (3) days after being deposited in the United States mail,
first-class, registered or certified, return receipt requested, with postage
paid and,

 

if to SLS, to:

 

Silver Lake Management Company Sumeru, L.L.C.

2775 Sand Hill
Road, Suite 100

Menlo Park,
California  94025

Attention: Karen
King

Facsimile: (650) 234—2502

 

4

 

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

 

Simpson Thacher &
Bartlett LLP

2550 Hanover Street

Palo Alto, California 95014

Attention: Richard Capelouto

Facsimile: (650) 251-5002

 

if to the
Company, to:

 

Power-One, Inc.

740 Calle Plano

Camarillo, California 93012

Attention:  [General Counsel]

Facsimile:  [(805) 383-5898]

 

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

 

Gibson, Dunn &
Crutcher LLP

333 South Grand Avenue

Los Angeles, California 90071

Attention: 
Jennifer Bellah Maguire

Facsimile: 
(213) 229-6986

 

Any party may
change the address to which notices and communications to it are to be
addressed by notification as provided for herein.

 

(c)           This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating hereto.

 

(d)           This Agreement will be governed by,
and construed in accordance with, the laws of the State of Delaware.

 

(e)           Each party to this Agreement, by its
execution hereof, (i) hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Delaware for the
purpose of any action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation arising out of or based upon
this Agreement or relating to the subject matter hereof, (ii) hereby
waives to the extent not prohibited by applicable law, and agrees not to
assert, and agrees not to allow any of its subsidiaries to assert, by way of
motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper, or that this
Agreement or the subject matter hereof or thereof may not be enforced in or by
such court and (iii) hereby agrees not to commence or maintain any action,
claim, cause of 

 

5

 

action or suit
(in contract, tort or otherwise), inquiry, proceeding or investigation arising
out of or based upon this Agreement or relating to the subject matter hereof or
thereof other than before one of the above-named courts nor to make any motion
or take any other action seeking or intending to cause the transfer or removal
of any such action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation to any court other than one of
the above-named courts whether on the grounds of inconvenient forum or
otherwise.  Notwithstanding the foregoing,
to the extent that any party hereto is or becomes a party in any litigation in
connection with which it may assert indemnification rights set forth in this
Agreement, the court in which such litigation is being heard shall be deemed to
be included in clause (i) above. 
Notwithstanding the foregoing, any party to this Agreement may commence
and maintain an action to enforce a judgment of any of the above-named courts
in any court of competent jurisdiction. 
Each party hereto hereby consents to service of process in any such
proceeding in any manner permitted by Delaware law, and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 6(b) hereof is
reasonably calculated to give actual notice.

 

(f)            Neither this Agreement nor any of
the rights or obligations hereunder may be assigned by the Company without the
prior written consent of SLS, provided that it may be so assigned by the
Company without such consent in connection with a Company Change in Control
Event; provided that such assignment will not relieve the Company of any
of its obligations hereunder; and provided, further, that SLS may
assign or delegate its duties or interests hereunder to any successor or
assignee entity performing substantially the same functions vis-à-vis the
Purchasers (or their Permitted Transferees) as SLS performs on the date hereof
and which is an Affiliate of SLS at the sole discretion of SLS. Subject to the
foregoing, the provisions of this Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Subject to the next sentence, no person or party other than the parties hereto
and their respective successors or permitted assigns is intended to be a
beneficiary of this Agreement. The parties acknowledge and agree that (i) the
Indemnified Parties are intended to be third-party beneficiaries under Section 3
hereof and (ii) the Affiliates of SLS and its associated investment funds
and portfolio companies and each Appointed Director and Nominated Director
(other than any Independent Director) are intended to be third-party
beneficiaries under Section 5.

 

(g)           This Agreement may be executed by one
or more parties to this Agreement on any number of separate counterparts
(including by facsimile), and all of said counterparts taken together will be
deemed to constitute one and the same instrument.

 

(h)           Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction will, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction will not invalidate or
render unenforceable such provision in any other jurisdiction.

 

[signature page follows]

 

6

 

IN WITNESS
WHEREOF, the undersigned have executed, or have caused to be executed, this
Transaction Fee Agreement as of the date first written above.

 

	
   

  	
  SILVER LAKE MANAGEMENT COMPANY SUMERU,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  POWER-ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard J. Thompson

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  

 

[Signature
Page to Transaction Fee Agreement]

 

 

Exhibit L

 

FORM OF LEGAL OPINION

 

 

Exhibit M

 

FORM OF
INDEMNIFICATION AGREEMENT

 

 

INDEMNIFICATION
AGREEMENT

BETWEEN

POWER-ONE,
INC.

AND

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  1.

  	
   

  	
  Definitions

  	
   

  	
  3

  
	
  2.

  	
   

  	
  Indemnification

  	
   

  	
  4

  
	
   

  	
   

  	
  2.1

  	
  Indemnification in Third-Party Actions

  	
   

  	
  4

  
	
   

  	
   

  	
  2.2

  	
  Indemnification in Proceedings By or In the Name of
  the Company

  	
   

  	
  5

  
	
   

  	
   

  	
  2.3

  	
  Contribution/Jointly Indemnifiable Claims

  	
   

  	
  5

  
	
   

  	
   

  	
  2.4

  	
  Partial Indemnification

  	
   

  	
  5

  
	
   

  	
   

  	
  2.5

  	
  Indemnification Hereunder Not Exclusive

  	
   

  	
  6

  
	
   

  	
   

  	
  2.6

  	
  Indemnification of Indemnified Costs of Successful
  Party

  	
   

  	
  6

  
	
   

  	
   

  	
  2.7

  	
  Indemnified Costs Advanced

  	
   

  	
  6

  
	
   

  	
   

  	
  2.8

  	
  Limitations on Indemnification

  	
   

  	
  6

  
	
  3.

  	
   

  	
  Presumptions

  	
   

  	
  7

  
	
   

  	
   

  	
  3.1

  	
  Presumption Regarding Standard of Conduct

  	
   

  	
  7

  
	
   

  	
   

  	
  3.2

  	
  Determination of Right to Indemnification

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
  3.2.1

  	
  Burden

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
  3.2.2

  	
  Standard

  	
   

  	
  7

  
	
  4.

  	
   

  	
  Other Agreements

  	
   

  	
  8

  
	
   

  	
   

  	
  4.1

  	
  Change in Control Event

  	
   

  	
  8

  
	
   

  	
   

  	
  4.2

  	
  Maintenance of Liability Insurance

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
  4.2.1

  	
  Affirmative
  Covenant of the Company

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
  4.2.2

  	
  Indemnitee
  Named as Insured

  	
   

  	
  8

  
	
   

  	
   

  	
  4.3

  	
  Agreement to Serve

  	
   

  	
  8

  
	
   

  	
   

  	
  4.4

  	
  Effect of this Agreement on Employment Agreement

  	
   

  	
  8

  
	
   

  	
   

  	
  4.5

  	
  Nature of Rights; Separability

  	
   

  	
  9

  
	
   

  	
   

  	
  4.6

  	
  Savings Clause

  	
   

  	
  9

  
	
   

  	
   

  	
  4.7

  	
  Repayment of Indemnified Costs

  	
   

  	
  9

  
	
   

  	
   

  	
  4.8

  	
  Repayment

  	
   

  	
  9

  
	
   

  	
   

  	
  4.9

  	
  Mutual Acknowledgment

  	
   

  	
  9

  
	
  5.

  	
   

  	
  Indemnification Procedure

  	
   

  	
  9

  
	
   

  	
   

  	
  5.1

  	
  Notice

  	
   

  	
  9

  
	
   

  	
   

  	
  5.2

  	
  Company Participation

  	
   

  	
  10

  
								

 

i

 

	
   

  	
   

  	
  5.3

  	
  Settlement

  	
   

  	
  10

  
	
   

  	
   

  	
  5.4

  	
  Subrogation

  	
   

  	
  10

  
	
  6.

  	
   

  	
  Miscellaneous Provisions

  	
   

  	
  10

  
	
   

  	
   

  	
  6.1

  	
  Amendments; Waivers

  	
   

  	
  10

  
	
   

  	
   

  	
  6.2

  	
  Interpretation; Governing Law

  	
   

  	
  10

  
	
   

  	
   

  	
  6.3

  	
  Headings

  	
   

  	
  10

  
	
   

  	
   

  	
  6.4

  	
  Consent to Jurisdiction

  	
   

  	
  11

  
	
   

  	
   

  	
  6.5

  	
  Counterparts

  	
   

  	
  11

  
	
   

  	
   

  	
  6.6

  	
  Successors and Assigns

  	
   

  	
  11

  
	
   

  	
   

  	
  6.7

  	
  Expenses; Legal Fees

  	
   

  	
  11

  
	
   

  	
   

  	
  6.8

  	
  Representation by Counsel; Interpretation

  	
   

  	
  11

  
	
   

  	
   

  	
  6.9

  	
  Specific Performance

  	
   

  	
  11

  
	
   

  	
   

  	
  6.10

  	
  Time is of the Essence

  	
   

  	
  11

  
	
   

  	
   

  	
  6.11

  	
  Notices

  	
   

  	
  11

  

 

ii

 

POWER-ONE,
INC.

INDEMNIFICATION
AGREEMENT

 

This Indemnification Agreement (this “Agreement”) is made as of
                              ,
        , by and between Power-One, Inc.,
a Delaware corporation (the “Company”), and
the individual whose name appears below the word “Indemnitee” on the signature page of
this Agreement (the “Indemnitee”).  In consideration of the services of the
Indemnitee to the Company, and to induce the Indemnitee to provide services as
a director and/or officer of the Company or any of its subsidiaries, the
Company and the Indemnitee agree as follows:

 

RECITALS

 

A.                                    The Indemnitee has
agreed to serve, or as applicable, to continue to provide service, as a
director and/or officer of the Company or any of its subsidiaries, and in such
capacity will render valuable services to the Company.

 

B.                                    The Company has
concluded that insurance and statutory indemnity provisions may provide
inadequate protection to individuals requested to serve as its directors and
officers.

 

C.                                    To induce and encourage
the Indemnitee to serve as a director and/or officer of the Company or any of
its subsidiaries, the Company’s Board of Directors has decided that this
Agreement is not only reasonable and prudent, but necessary, to promote and
ensure the best interests of the Company and its stockholders.

 

AGREEMENT

 

1.                                      Definitions

 

As used in this
Agreement:

 

“Agent”
means a director, officer, employee or agent of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise that the Indemnitee served in any of such capacities at the request
of the Company.

 

“Change in
Control Event” has the same meaning as a “Change in Control Event”
as defined in the Company’s 2004 Stock Incentive Plan (as it may be amended from
time to time).

 

“Expenses”
includes, but is not limited to, attorneys’ fees, disbursements and retainers,
accounting and witness fees, travel and deposition costs, expenses of
investigations judicial or administrative proceedings or appeals and amounts
paid in settlement by or on behalf of the Indemnitee, and any expenses of
establishing a right to indemnification pursuant to this Agreement, to the
extent actually and reasonably incurred by the Indemnitee in connection with
any Proceeding.  “Expenses”
does not include the amount of judgments, fines, penalties or ERISA excise
taxes actually levied against the Indemnitee.

 

 

“Indemnified
Costs” means all Expenses, judgments, fines, penalties and ERISA
excise taxes actually and reasonably incurred by the Indemnitee in connection
with the investigation, defense, appeal, or settlement of any Proceeding.

 

“Indemnitee-Related
Entities” means any corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise
(other than the Company or any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise
for which the Indemnitee has agreed, on behalf of the Company or at the Company’s
request, to serve as a director, officer, employee, consultant, fiduciary or
agent and which service is covered by the indemnity described in this
Agreement) from whom the Indemnitee may be entitled to indemnification or
advancement of expenses with respect to which, in whole or in part, the Company
may also have an indemnification or advancement obligation (other than as a
result of obligations under an insurance policy).

 

“Jointly
Indemnifiable Claims” shall be broadly construed and shall include,
without limitation, any action, suit or proceeding for which the Indemnitee
shall be entitled to indemnification or advancement of expenses from both the
Indemnitee-Related Entities and the Company pursuant to applicable law, any
agreement or the certificate of incorporation, bylaws, partnership agreement,
operating agreement, certificate of formation, certificate of limited
partnership or comparable organizational documents of the Company, or any
parent or subsidiary of the Company, or the Indemnitee-Related Entities, as
applicable.

 

A “Potential
Change in Control Event” will be deemed to have occurred if:

 

a.                                       the
Company enters into an agreement or arrangement that would constitute a Change
in Control Event if consummated;

 

b.                                      any
person (including the Company) publicly announces an intention to take or to
consider taking actions that would constitute a Change in Control Event if
consummated; or

 

c.                                       the
Board of Directors adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control Event has occurred.

 

“Proceeding”
means any threatened, pending or completed action, suit or proceeding
(including appeals thereof), whether brought by or in the name of the Company
or otherwise and whether of a civil, criminal or administrative or
investigative nature, in which the Indemnitee is or will be a party, witness or
other participant in, because the Indemnitee is or was an Agent, whether or not
the Indemnitee is serving in such capacity at the time any liability or Expense
is incurred for which indemnification or reimbursement is to be provided under
this Agreement.

 

2.                                      Indemnification

 

2.1                               Indemnification
in Third-Party Actions.  The
Company will indemnify the Indemnitee if the Indemnitee becomes a party to, is
threatened to be made a party to, is a witness or other participant in, or is
otherwise involved in any Proceeding (other than a Proceeding by or in the name
of the Company to procure a judgment in its favor), because the Indemnitee is
or was an Agent, against all Indemnified Costs, to the fullest extent permitted
by applicable law.

 

4

 

2.2                               Indemnification
in Proceedings By or In the Name of the Company.  The Company will indemnify the Indemnitee if
the Indemnitee is a party to, is threatened to be made a party to, is a witness
or other participant in, or is otherwise involved in any Proceeding by or in
the name of the Company to procure a judgment in its favor because the
Indemnitee was or is an Agent of the Company against all Indemnified Costs in connection
with the defense or settlement of the Proceeding, to the fullest extent
permitted by applicable law.

 

2.3                               Contribution/Jointly
Indemnifiable Claims

 

a.                                       In
order to provide for just and equitable contribution in circumstances in which
the indemnification provided for herein is held by a court of competent
jurisdiction to be unavailable to the Indemnitee in whole or in part, it is
agreed that, in such event, the Company shall, to the fullest extent permitted
by law, contribute to the payment of all of the Indemnitee’s Indemnified Costs,
in an amount that is just and equitable in the circumstances; provided, that,
without limiting the generality of the foregoing, such contribution shall not
be required where such holding by the court is due to any limitation on
indemnification set forth in Section 2.7 or 5.3 hereof.

 

b.                                      Given
that certain Jointly Indemnifiable Claims may arise due to the service of the
Indemnitee as an Agent of the Company at the request of the Indemnitee-Related
Entities, the Company acknowledges and agrees that the Company shall be fully
and primarily responsible for the payment to the Indemnitee in respect of
indemnification or advancement of expenses in connection with any such Jointly
Indemnifiable Claim, pursuant to and in accordance with the terms of this
Agreement, irrespective of any right of recovery the Indemnitee may have from
the Indemnitee-Related Entities.  Under
no circumstance shall the Company be entitled to any right of subrogation or
contribution by the Indemnitee-Related Entities and no right of advancement or
recovery the Indemnitee may have from the Indemnitee-Related Entities shall
reduce or otherwise alter the rights of the Indemnitee or the obligations of
the Company hereunder.  In the event that
any of the Indemnitee-Related Entities shall make any payment to the Indemnitee
in respect of indemnification or advancement of expenses with respect to any
Jointly Indemnifiable Claim, the Indemnitee-related entity making such payment
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Indemnitee against the Company, and the Indemnitee shall
execute all papers reasonably required and shall do all things that may be
reasonably necessary to secure such rights, including the execution of such
documents as may be necessary to enable the Indemnitee-Related Entities
effectively to bring suit to enforce such rights.  The Company and the Indemnitee agree that
each of the Indemnitee-Related Entities shall be third-party beneficiaries with
respect to this Section 2.3(b) entitled to enforce this Section 2.3(b) as
though each such Indemnitee-related entity were a party to this Agreement.

 

2.4                               Partial
Indemnification.  If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of, but not the total amount

 

5

 

of, the Indemnified Costs, the Company will nevertheless indemnify the
Indemnitee for the portion of the Indemnified Costs to which the Indemnitee is
entitled.

 

2.5                               Indemnification
Hereunder Not Exclusive.  The
indemnification provided by this Agreement is not exclusive of any other rights
to which the Indemnitee may be entitled under the Company’s Certificate of
Incorporation, the Bylaws, any agreement, any vote of stockholders or
disinterested directors, applicable law, or otherwise, both as to action in the
Indemnitee’s official capacity and as to action in another capacity on behalf
of the Company.

 

2.6                               Indemnification
of Indemnified Costs of Successful Party.  Notwithstanding any other provisions of this
Agreement, to the extent that the Indemnitee has been successful in defense of
any Proceeding or in defense of any claim, issue or matter in the Proceeding,
on the merits or otherwise, including, but not limited to, the dismissal of a
Proceeding without prejudice (unless such dismissal is based upon a settlement
that would not be covered under this Agreement), the Indemnitee will be
indemnified against all Indemnified Costs incurred in connection therewith to
the fullest extent permitted by applicable law.

 

2.7                               Indemnified
Costs Advanced.  The Indemnified
Costs incurred by the Indemnitee in any Proceeding will be paid promptly by the
Company in advance of the final disposition of the Proceeding at the written
request of the Indemnitee to the fullest extent permitted by applicable
law.  The advances to be made will be
paid, or caused to be paid, by the Company to the Indemnitee within 30 days
following delivery of the written request by Indemnitee to the Company,
accompanied by substantiating documentation.

 

2.8                               Limitations
on Indemnification. 
Notwithstanding anything to the contrary in this Agreement, the Company
is not required to make payments to:

 

a.                                       indemnify
or advance Indemnified Costs with respect to Proceedings initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with respect to
Proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
applicable law;

 

b.                                      subject
to Section 2.3(b) hereof, indemnify the Indemnitee for any
Indemnified Costs for which payment is actually made to the Indemnitee under an
insurance policy, except for any excess beyond the amount of payment under the
policy;

 

c.                                       indemnify
the Indemnitee for any Indemnified Costs sustained in any Proceeding for an
accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to Section 16(b) of the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder and amendments thereto or similar provisions of any federal, state
or local law;

 

d.                                      indemnify
the Indemnitee for any Indemnified Costs resulting from Indemnitee’s conduct
that is finally adjudged by a court of competent jurisdiction

 

6

 

to have been willful misconduct, knowingly fraudulent
or deliberately dishonest; or

 

e.                                       indemnify
the Indemnitee if a court of competent jurisdiction finally determines that
such payment is unlawful.

 

3.                                      Presumptions

 

3.1                               Presumption
Regarding Standard of Conduct. 
The Indemnitee will be conclusively presumed to have met the relevant
standards of conduct as defined by applicable law for indemnification pursuant
to this Agreement unless a determination that the Indemnitee has not met the
relevant standards is made by (a) the Board of Directors of the Company by
a majority vote of a quorum consisting of directors who are not parties to the
Proceeding, (b) the stockholders of the Company by majority vote, or (c) in
a written opinion by independent legal counsel, selection of whom has been made
by the Company’s Board of Directors and approved by the Indemnitee.

 

3.2                               Determination
of Right to Indemnification.

 

3.2.1                     Burden.  If a claim under this Agreement is not paid,
or caused to be paid, by the Company within 30 days of receipt of written
notice, the right to indemnification as provided by this Agreement will be
enforceable by the Indemnitee in any court of competent jurisdiction, and all
reasonable costs and expenses incurred by the Indemnitee in connection with
such enforcement will be paid promptly by the Company in advance of the final
disposition by such court at the written request of the Indemnitee to the
fullest extent permitted by applicable law; provided that Indemnitee
will reimburse the Company for all such costs and expenses paid by the Company
or any of its subsidiaries if and only to the extent that a court of competent
jurisdiction finally decides (and all appeals have been exhausted or the time
to file any such appeal has lapsed) that the Indemnitee is not entitled to be
indemnified by the Company for such costs and expenses under the provisions of
applicable law, the Company’s Bylaws, Certificate of Incorporation, this
Agreement, or otherwise.  The burden of
proving by clear and convincing evidence that indemnification or advances are
not appropriate will be on the Company. 
Neither the failure of the directors, stockholders, or independent legal
counsel to have made a determination prior to the commencement of the action
that indemnification or advances are proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the directors, stockholders or independent legal counsel that
the Indemnitee has not met the applicable standard of conduct, will be a
defense to the action or create a presumption that the Indemnitee has not met
the applicable standard of conduct.

 

3.2.2                     Standard.  The Indemnitee’s Expenses incurred in
connection with any Proceeding concerning the Indemnitee’s right to
indemnification or advances in whole or in part pursuant to this Agreement will
be indemnified by the Company regardless of the outcome of the Proceeding,
unless a court of competent jurisdiction determines that each of the material
assertions made by the Indemnitee in the Proceeding was not made in good faith
or was frivolous.

 

7

 

4.                                      Other
Agreements

 

4.1                               Change
in Control Event.  If there is a
Change in Control Event or a Potential Change in Control Event of the Company
(other than a Change in Control Event or Potential Change in Control Event that
has been approved by a majority of the Company’s Board of Directors who were
directors immediately prior to the Change in Control Event or Potential Change
in Control Event), then with respect to all matters thereafter arising
concerning the rights of the Indemnitee to be indemnified for Indemnified Costs,
the Company will seek legal advice only from independent counsel selected by
the Indemnitee, and reasonably satisfactory to the Company, and who has not
otherwise performed other services for the Company or the Indemnitee within the
last three years (“Special Independent
Counsel”).  The Special
Independent Counsel, among other things, will render its written opinion to the
Company and the Indemnitee as to whether and to what extent the Indemnitee
would be permitted to be indemnified under applicable law.  The Company will pay, or cause to be paid,
the reasonable fees and expenses of the Special Independent Counsel.

 

4.2                               Maintenance
of Liability Insurance.

 

4.2.1                     Affirmative
Covenant of the Company.  While
the Indemnitee continues to serve as a director or officer of the Company or
any of its subsidiaries, and thereafter while the Indemnitee is subject to any
possible Proceeding, the Company will maintain in full force and effect
directors’ and officers’ liability insurance (“D&O
Insurance”) in reasonable amounts from reputable insurers.  The Company has no obligation, however, to
obtain or maintain D&O Insurance if it determines in good faith that
insurance is not reasonably available, the premium costs for insurance are
disproportionate to the amount of coverage provided, the coverage provided by
insurance is so limited by exclusions that it provides an insufficient benefit,
or the Indemnitee is covered by similar insurance maintained by a subsidiary of
the Company.  The Company will notify
promptly the Indemnitee upon termination of all D&O Insurance.  If the Company has D&O Insurance at the
time it receives a notice that a Proceeding has commenced, the Company will
give prompt notice of such commencement to the insurers as required by the
respective policies.  The Company will
thereafter take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.

 

4.2.2                     Indemnitee
Named as Insured.  In all D&O
Insurance policies, the Indemnitee will be named as an insured in a manner that
provides the Indemnitee the same rights and benefits accorded to the most
favorably insured of the Company’s directors and officers.

 

4.3                               Agreement
to Serve.  Indemnitee will serve
or continue to serve as an Agent of the Company or any of its subsidiaries for
so long as the Indemnitee is duly elected or appointed or until the Indemnitee
voluntarily resigns.  Indemnitee will
give written notice to the Company at least thirty (30) days prior to
voluntarily resigning.

 

4.4                               Effect
of this Agreement on Employment Agreement.  Any present or future employment agreement
between the Indemnitee and the Company is not modified by the terms of this
Agreement.  Nothing contained in this
Agreement creates in the Indemnitee any right of continued employment.

 

8

 

4.5                               Nature
of Rights; Separability.  The
rights afforded to the Indemnitee by this Agreement are contract rights and may
not be diminished, eliminated or otherwise affected by amendments to the
Company’s Certificate of Incorporation, Bylaws, any applicable subsidiary’s
charter documents, or agreements, including D&O Insurance policies.  Each provision of this Agreement, to the
extent practicable, is a separate and distinct agreement and independent of the
others, so that if any provision of this Agreement is held to be invalid or
unenforceable for any reason, the invalidity or unenforceability will not
affect the validity or enforceability of the other provisions.  To the extent required, any provision of this
Agreement may be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable law.

 

4.6                               Savings
Clause.  If this Agreement or any
portion of it is invalidated on any ground by any court of competent
jurisdiction, then the Company will nevertheless indemnify the Indemnitee as to
Indemnified Costs with respect to any Proceeding to the full extent permitted
by any applicable portion of this Agreement that is not invalidated, or by any
applicable law.

 

4.7                               Repayment
of Indemnified Costs.  The
Indemnitee will reimburse the Company for all Indemnified Costs paid by the
Company or any of its subsidiaries in defending any Proceeding against the
Indemnitee if and only to the extent that a court of competent jurisdiction
finally decides (and all appeals have been exhausted or the time to file any
such appeal has lapsed) that the Indemnitee is not entitled to be indemnified
by the Company for such Indemnified Costs under the provisions of applicable
law, the Company’s Bylaws, Certificate of Incorporation, this Agreement, or
otherwise.  The Indemnitee will repay
such amounts advanced only if, and to the extent that, it is ultimately
determined that Indemnitee is not entitled to be indemnified for such
Indemnified Costs by the Company pursuant to this Agreement.

 

4.8                               Repayment.  The Indemnitee will promptly repay to the Company
any amounts paid to the Indemnitee pursuant to other rights of indemnification
or under any insurance policy, to the extent those payments are duplicative of
payments under this Agreement.

 

4.9                               Mutual
Acknowledgment.  Both the Company
and the Indemnitee acknowledge that in certain cases Federal law or applicable
public policy may prohibit the Company from indemnifying its directors and
officers under this Agreement or otherwise. 
The Indemnitee understands and acknowledges that the Company has undertaken
or may be required in the future to undertake with the Securities and Exchange
Commission to submit the question of indemnification to a court in certain
circumstances for a determination of the Company’s right under public policy to
indemnify the Indemnitee.

 

5.                                      Indemnification
Procedure

 

5.1                               Notice.  Promptly after receipt of notice that a
Proceeding has commenced, the Indemnitee will, if a claim is to be made under
this Agreement, notify the Company of that fact.  The failure to notify the Company will not
relieve it from any liability that it may have to the Indemnitee except to the
extent of the Company’s material damage resulting from such failure.

 

9

 

5.2                               Company
Participation.  The Company will
be entitled to participate in any Proceeding at its own expense and, except as
otherwise provided below, to the extent that it may wish, the Company may
assume the defense of any Proceeding for which indemnification is sought
hereunder, with counsel reasonably satisfactory to the Indemnitee.  After the Company notifies the Indemnitee of
the Company’s election to assume the defense of a Proceeding, during the
Company’s good faith defense the Company will not be liable to the Indemnitee
under this Agreement for any Expenses subsequently incurred by the Indemnitee
in connection with the defense of the Proceeding, other than reasonable costs
of investigation or as otherwise provided below.  The Indemnitee will have the right to employ
the Indemnitee’s counsel in any Proceeding, but the fees and expenses of the
counsel incurred after the Company assumes the defense of the Proceeding will
be at the expense of the Indemnitee, unless (a) the employment of counsel
by the Indemnitee has been authorized by the Company, (b) the Indemnitee
has reasonably concluded that there is be a conflict of interest between the
Company and the Indemnitee in the conduct of the defense of a Proceeding, or (c) the
Company has not in fact employed counsel to assume the defense of a Proceeding.  In each of the foregoing cases the fees and
expenses of the Indemnitee’s counsel will be at the expense of the
Company.  The Company will not be
entitled to assume the defense of any Proceeding brought by or on behalf of the
Company or any of its subsidiaries or as to which the Indemnitee has made the
conclusion that there may be a conflict of interest between the Company and the
Indemnitee.

 

5.3                               Settlement.  The Company will not settle or compromise any
Proceeding in any manner that would impose any penalty or limitation on the
Indemnitee, constitute an admission or acknowledgement of wrongdoing,
negligence or liability in such Proceeding or any future Proceeding regarding
the same or a related subject matter without the Indemnitee’s consent.  The Indemnitee will not settle or compromise
any Proceeding without the Company’s consent. 
Neither the Company nor the Indemnitee will unreasonably withhold their
consent or approval under this Agreement.

 

5.4                               Subrogation.  If the Company pays, or causes to be paid,
Indemnified Costs, the Company will be subrogated to the extent of such payment
to all of the rights of recovery of the Indemnitee against third parties.  The Indemnitee will do all things reasonably
necessary to secure such rights, including the execution of documents necessary
to enable the Company effectively to bring suit to enforce such rights.

 

6.                                      Miscellaneous
Provisions

 

6.1                               Amendments;
Waivers.  Amendments, waivers,
consents and approvals under this Agreement must be in writing and designated
as such.  No failure or delay in
exercising any right will be deemed a waiver of such right.

 

6.2                               Interpretation;
Governing Law.  This Agreement is
to be construed as a whole and in accordance with its fair meaning.  This Agreement is to be interpreted in accordance
with the laws of the State of Delaware relating to indemnification of Agents.

 

6.3                               Headings.  Headings of Sections and subsections are
for convenience only and are not a part of this Agreement.

 

10

 

6.4                               Consent
to Jurisdiction.  The Company and the Indemnitee irrevocably
consent to the jurisdiction of the courts of the State of Delaware for all
purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and agree that any action instituted under this
Agreement will be brought only in the state courts of the State of Delaware.

 

6.5                               Counterparts.  This Agreement may be signed in one or more
counterparts and by facsimile, and when so signed and delivered will have the
same effect as if all signatures appeared on the same document.

 

6.6                               Successors
and Assigns.  This Agreement is
binding upon and inures to the benefit of each party and such party’s
respective heirs, personal representatives, successors and assigns.  Nothing in this Agreement, express or
implied, is intended to confer any rights or remedies upon any other person.

 

6.7                               Expenses;
Legal Fees.  Each party will pay
its own expenses in the negotiation, preparation and performance of this
Agreement.  Subject to Section 3.2.2,
the prevailing party in any action relating to this Agreement will be entitled
to reasonable legal fees, costs and expenses incurred in such action.

 

6.8                               Representation
by Counsel; Interpretation.  Each
party acknowledges that it has been given an opportunity to be represented by
counsel in connection with this Agreement. 
Any rule of law, including, but not limited to, Section 1654
of the California Civil Code, or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it, has no application and is expressly waived.

 

6.9                               Specific
Performance.  The Company
acknowledges that in view of the uniqueness of the matters contemplated by this
Agreement, the Indemnitee would not have an adequate remedy at law for money
damages if this Agreement is not being performed in accordance with its
terms.  The Company therefore agrees that
the Indemnitee will be entitled to specific enforcement of the terms hereof in
addition to any other remedy to which the Indemnitee may be entitled.

 

6.10                        Time is
of the Essence.  Time is of the
essence in the performance of each provision of this Agreement.

 

6.11                        Notices.  Any notice to be given hereunder must be in
writing and will be deemed effective upon personal delivery, upon delivery by
confirmed facsimile or electronic transmission (in either case with duplicate
original sent by United States mail) or, if sent by United States mail, three (3) business
days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed as follows (or to another address
designated in writing by a party):

 

	
  If to
  the Company:

   

  Power-One, Inc.

  740 Calle Plano

  Camarillo, California 93012-8583

  Attention:  President

  	
   

  	
  If to the
  Indemnitee:

   

  At the Indemnitee’s
  most recent address on the books and records of the Company or at such other
  address as Indemnitee indicates to the Company

  

 

11

 

The parties have signed this Agreement as of the date
first written above.

 

	
   

  	
  INDEMNITEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  POWER-ONE, INC.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  

 

12Exhibit 10.1

 

	
   

  	
   

  	
  Hospira, Inc.

  
	
  Notice
  of Grant of

  	
   

  	
  ID: 20-0504497

  
	
  Award
  and Award Agreement

  	
   

  	
  275
  N. Field Drive

  
	
   

  	
   

  	
  Lake
  Forest, IL 60045

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Award
  Number:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Plan: Hospira 2004 Long-Term Stock Incentive
  Plan

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ID:

  

 

Effective
March 5, 2009, you have been granted Restricted Stock Units with respect
to      shares of Hospira, Inc. (the
Company) stock.

 

The
Restricted Stock Units are subject to the attainment of performance goals
described in the attached Term Sheet and will become fully vested on the date
shown.

 

	
  Units

  	
   

  	
  Vest Type

  	
   

  	
  Full Vest

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On Vest Date

  	
   

  	
  December 31, 2011

  

 

	
  By
  your signature and the Company’s signature below, you and the Company agree
  that these Restricted Stock Units are granted under and governed by the terms
  and conditions of the Hospira 2004 Long-Term Stock Incentive Plan, the
  Restricted Stock Unit Award Agreement and the administrative rules governing
  the Restricted Stock Agreement, all of which are attached and made a part of
  this document.

  

 

	
  

  	
   

  	
  March 2009

  
	
   

  	
   

  	
   

  
	
  Hospira, Inc.

  	
   

  	
  Date

  
	
  Name:
  Christopher B. Begley

  	
   

  	
   

  
	
  Title:
  Chairman & Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Employee
  Name

  	
   

  	
  Date

  

 

 

RESTRICTED
STOCK UNIT AWARD AGREEMENT

 

 

You have been selected to be a Participant in the
Hospira, Inc. 2004 Long-Term Stock Incentive Plan (the “Plan”), as
specified in the attached Notice of Grant of Award and Award Agreement (the “Notice”):

 

THIS AGREEMENT (“Agreement”),
effective as of the date set forth in the attached Notice, is between Hospira, Inc.,
a Delaware corporation (the “Company”) and the Grantee named in the Notice,
pursuant to the provisions of the Plan. Except where the context clearly
implies to the contrary, any capitalized term not defined in this Agreement
shall have the meaning ascribed to that term under the Plan.

 

The parties hereto agree as follows:

 

1.   Award of
Restricted Stock Units.  The Company
hereby grants to Grantee the number of restricted stock units (the “Units”) set
forth in the attached Notice subject to the terms and conditions set forth below
and in the attached Term Sheet.  The term
“Units” shall include “Earned Units” as defined in Section 2(a) below.

 

2.             Restrictions. 
The Units are being awarded to Grantee subject to the forfeiture
conditions set forth below (the “Restrictions”) which shall, unless otherwise
stated, lapse, if at all, as set forth in the attached Term Sheet.

 

(a)           The
Units are subject to the attainment of performance goals during the performance
period, as described in the attached Term Sheet.  The number of Units earned upon the
attainment of the performance goals (the “Earned Units”) shall be determined by
the Compensation Committee of the Board of Directors (the “Committee”) upon
completion of the performance period.

 

(b)           Any
Units subject to the Restrictions shall be automatically forfeited upon the
earliest to occur of the following: (i) except as provided in Section 6,
the date of the Grantee’s termination of employment with the Company or a
subsidiary for any reason other than death, Disability or Retirement; or (ii) subject
to the provisions of Section 3, the date the Grantee engages in conduct
which constitutes Restricted Activity.

 

3.             Restricted Activity.

 

(a)              Without
the prior written consent of the Committee, the Grantee shall not, while
employed by the Company and for a period of one year following the termination
of employment for any reason:

 

(i)       directly
or indirectly engage or assist any person engaging in any Competitive Business,
individually, or as an officer, director, employee, agent, consultant, owner,
partner, lender, manager, member, principal, or in any other capacity, or
render any services to any entity that is engaged in any Competitive Business;
provided, however, that the Grantee’s ownership of 1% of any class of equity
security of any entity engaged in any Competitive Business shall not be deemed
a breach of this paragraph 3(a) provided such securities are listed on a
national securities exchange or quotation system or have been registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended;

 

(ii)       directly
or indirectly divert, take away, solicit, or assist others in soliciting any
current or prospective customer, supplier, independent contractor or service
provider 

 

 

of the Company or any affiliate or otherwise interfere with the
relationship between the Company or any affiliate and any current or
prospective customer, service provider, supplier, independent contractor or
stockholder;

 

(iii)      directly
or indirectly induce any person to leave employment with the Company, or
solicit for employment other than on behalf of the Company, offer employment
to, or employ, any person who was an employee of the Company, in each case
within six months of such inducement, solicitation, or offer; or

 

(iv)      engage
in conduct which constitutes Cause.

 

(b)         If
the Grantee engages in any activity described in paragraph 3(a) above
without the written consent of the Committee, the Company, as determined by the
Committee in its sole discretion, may terminate the Agreement as of the date on
which the Grantee engaged in such Restricted Activity, and (i) the Grantee
shall pay to the Company in cash any Financial Gain the Grantee realized from
the vesting of the Units, provided that such vesting occurred within one year
from the date that the Grantee engaged in such Restricted Activity, and (ii) if
the Restricted Activity occurs prior to the delivery of the Earned Units, the
Grantee shall forfeit the Units and this Agreement shall terminate as of the
date on which the Grantee first engaged in such Restricted Activity.

 

4.             Death, Disability or Retirement.  In the event of the death, Disability or
Retirement of the Grantee at any time during the performance period, the a
number of shares of Common Stock equal to the number of Earned Units (or cash
equal to the value of the shares) will be delivered to the Grantee or the
Grantee’s personal representative, upon the determination of the number of
Earned Units after the end of the performance period, but no later than 90 days
following the end of such performance period.

 

5.             Change in Control.  In the event of a Change in Control of the
Company during the performance period, the Grantee will be deemed to have
earned an award based on the target performance goal established by the Committee
and a number of shares of Common Stock equal to the number of deemed Earned
Units (or cash equal to the value of the shares) will be delivered to the
Grantee no later than 90 days following such Change in Control.

 

6.             Termination of
Employment.  In the event of the Grantee’s Involuntary
Termination of Employment during the performance period, the number of shares
of Common Stock equal to the number of Earned Units as of the date of such
Involuntary Termination of Employment will be delivered to the Grantee, upon
the determination of the number of Earned Units after the end of the
performance period, but no later than 90 days following the end of such
performance period. If Grantee’s termination of employment during the
performance period for reasons other than death, Disability or Retirement does
not constitute an Involuntary Termination of Employment, all Units shall be
forfeited.  The Company will not be
obligated to pay Grantee any consideration whatsoever for forfeited Units
(whether or not earned).

 

7.             Dividend Equivalents.  Neither dividends nor Dividend Equivalents
will be paid or accrued on unvested Units.

 

8.             Adjustments.  If the number of outstanding shares of Common
Stock is changed as a result of stock dividend, stock split or the like without
additional consideration to the Company, the number of Units subject to this
Award shall be adjusted in accordance with the applicable provisions of the
Plan pertaining to such adjustments.

 

9.             Delivery of Certificate.  Subject to withholding of taxes as provided
in Section 10 below, the Company shall deliver to the Grantee a
certificate representing a number of shares of Common Stock 

 

 

equal to the number of
Earned Units on which Restrictions have lapsed plus a cash payment equal to the
value of any fractional Earned Unit then credited to the Grantee’s account,
upon the lapse of Restrictions, or at a later date specified by the Grantee in
a Notice of Deferral Election filed with the Committee within rules established
to comply with section 409A of the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder (“Section 409A”) and in
conformance with such deferral option forms under the Notice of Deferral
Election provided by the Company.

 

10.           Withholding Taxes. 
The Company is entitled to withhold an amount equal to the Company’s
required statutory withholding taxes for the respective tax jurisdiction
attributable to any share of Common Stock or property deliverable in connection
with the Earned Units.  Subject to such
limitations as the Company may establish from time to time, Grantee may satisfy
any withholding obligation in whole or in part by making a cash payment equal
to the amount required to be withheld.

 

11.           Nontransferability. 
Grantee may not directly or indirectly, by operation of law or
otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge
or otherwise transfer any of the Units subject to this Award.

 

12.           Voting and Other Rights.

 

(a)                                  Grantee shall have no rights
as a stockholder of the Company in respect of the Earned Units, including the
right to vote and to receive dividends and other distributions, until delivery
of certificates representing shares of Common Stock in satisfaction of the
Earned Units.

 

(b)                                 The grant of Units does not
confer upon Grantee any right to continue in the employ of the Company or a
subsidiary or to limit or interfere with the right of the Company or a
subsidiary, to terminate Grantee’s employment at any time.

 

(c)                                  The grant of an award under
the Plan is a one-time benefit and does not create any contractual or other
right to receive an award in the future. 
Future grants, if any, will be at the sole discretion of the Company,
including, but not limited to, the timing of any grant, the amount of the award
and vesting provisions.

 

(d)                                 The Committee retains the
right to reduce the number of Units subject to this Award at any time prior to
payment or delivery based on the performance of the Grantee.

 

13.           Funding.  No
assets or shares of Common Stock shall be segregated or earmarked by the
Company in respect of any Units awarded hereunder.  The grant of Units hereunder shall not
constitute a trust and shall be solely for the purpose of recording an
unsecured contractual obligation of the Company.

 

14.           Definitions. 
For purposes of this Agreement, the following words shall have the
meaning provided below:

 

(a)                            Cause.  The term “Cause” shall mean, in the sole
opinion and discretion of the Committee, the Grantee has (i) engaged in a
material breach of the Company’s code of business conduct, (ii) committed
an act of fraud, embezzlement or theft in connection with the Grantee’s duties
or in the course of employment, or (iii) wrongfully disclosed secret
processes or confidential information of the Company or its subsidiaries.

 

(b)                           Competitive
Business.  The term “Competitive
Business” means any business activity in which the Company or any subsidiary is
actively engaged at the time the Grantee’s employment terminates.  For these purposes, entities deemed to be 

 

 

engaged in Competitive Business include, by way of example and not
limitation, Abraxis BioScience, Inc., Baxter International Inc., Teva
Pharmaceuticals, Becton, Dickinson and Company, B. Braun Melsungen AG, Cardinal
Healthcare Inc., Fresenius Medical Care AG, Terumo Medical Corporation,
Patheon, Inc., and Edwards Lifesciences Corporation.

 

(c)                            Date of
Termination.  The term “Date
of Termination” means the first day occurring on or after grant of the award
under this Agreement on which the Grantee is not employed by the Company or any
subsidiary, regardless of the reason for the termination of employment;
provided that a termination of employment shall not be deemed to occur by
reason of a transfer of the Grantee between the Company and a subsidiary or
between two subsidiaries; and further provided that the Grantee’s employment
shall not be considered terminated while the Grantee is on a leave of absence
from the Company or a subsidiary approved by the Grantee’s employer.  If, as a result of a sale or other
transaction, the Grantee’s employer ceases to be a subsidiary (and the Grantee’s
employer is or becomes an entity that is separate from the Company), and the
Grantee is not, at the end of the 30-day period following the transaction,
employed by the Company or an entity that is then a subsidiary, then  the occurrence of such transaction shall
be treated as the Grantee’s Date of Termination caused by the Grantee being
discharged by the employer.

 

(d)                           Disability.  The term “Disability” means the Grantee
either is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months;  or by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, the Grantee is receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Company or a subsidiary.

 

(e)                            Dividend Equivalent. “Dividend
Equivalent” means, with respect to any shares of Hospira common stock that are
to be issued pursuant to an award at the end of the performance period, an
amount equal to cash dividends that are payable to stockholders of record
during the performance period on a like number of shares of Hospira common
stock.

 

(f)                                    Financial Gain.  “Financial Gain” means the Fair Market Value
of the Common Stock on the date the Unit is deemed vested, multiplied by the
number of Units actually distributed pursuant to this Agreement, reduced by any
taxes paid in countries other than the United States, to the extent that such
taxes are not otherwise eligible for refund from the taxing authorities.

 

(g)                                 Involuntary Termination of
Employment.  “Involuntary
Termination of Employment” means the Grantee’s position with the Company and
its affiliates is eliminated due to a reduction in force or other restructuring
or the Grantee’s employment is otherwise terminated for reasons not related to
performance, illegal activity, failure to abide by the Company’s Code of
Conduct, or other good cause as determined by the Committee and is otherwise
considered to be involuntary.

 

 

(h)                                 Retirement.  “Retirement” of the Grantee means, the
occurrence of the Grantee’s Date of Termination on or after the date that the
Grantee reaches the age of 55 and has 10 years of combined service with the
Company or its subsidiaries (or with Abbott Laboratories and its affiliates,
provided that the Grantee transitioned employment from Abbott to the Company in
conjunction with the distribution of the Company’s common stock to the Abbott
shareholders) (as determined by the Committee).

 

15.           Notices.  Any
written notice under this Award shall be deemed given on the date that is two
business days after it is sent in writing, delivered either in hand, by
certified mail, return receipt requested, postage prepaid, or by Federal
Express or other recognized delivery service, which provides proof of delivery,
all delivery charges prepaid, and addressed as follows:

 

	
  To the Company:

  	
   

  	
  Hospira, Inc.

  
	
   

  	
   

  	
  275 N. Field Drive

  
	
   

  	
   

  	
  Lake Forest, IL 60045

  
	
   

  	
   

  	
  Attention: Corporate
  Secretary

  

 

To the Grantee or his or her representative at the address of the
Grantee at the time appearing in the employment records of the Company,
currently as shown in the attached Notice or

 

At such other address as either party may designate by notice given to
the other in accordance with these provisions.

 

16.           Governing Law. 
All questions concerning the construction, validity and interpretation
of this Award shall be governed by and construed according to the internal law
and not the law of conflicts of the State of Illinois.

 

17.           Amendment. 
This Agreement may be amended in accordance with the provisions of the
Plan, and may otherwise be amended by written agreement of the Grantee and the
Company without the consent of any other person; provided that the Committee
may amend by the Company as it shall deem necessary and appropriate in its sole
discretion to comply with the requirements of Section 409A.

 

18.           Plan Documents. 
The Plan and the Prospectus for the Hospira, Inc. 2004 Long Term
Incentive Plan are available at:

 

http://www.UBS.com/

 

or from:

 

 

Mr. Doug Owens

 

Corporate Compensation,
Hospira, Inc.

 

Mail Stop  H1 South, 275 N. Field Drive, Lake Forest,
IL  60045

 

phone:  224-212-2962; fax:  224-212-3358; e-mail:  doug.owens@Hospira.com

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GRANTEE’S INITIALS

  	
   

  	
  INITIALS OF HOSPIRA,
  INC.’S

  
	
   

  	
   

  	
  General Counsel and
  Secretary

  

 

 

2009 — 2011
Total Shareholder Return (TSR) TERM SHEET

 

	
  PERFORMANCE
  PERIOD:

  	
   

  	
  Beginning
  January 1, 2009, and ending December 31, 2011.

  
	
   

  	
   

  	
   

  
	
  PERFORMANCE
  GOAL:

  	
   

  	
  ·

  	
  Relative
  Total Shareholder Return (“RTSR”) compared to peer companies (identified in
  Appendix I) is the FY09-11 performance measure. Relative Total Shareholder
  Return is defined as the percentile rank of Hospira’s Total Shareholder
  Return compared to the Total Shareholder Return of Hospira’s peer companies
  over the Performance Period. Total Shareholder Return is the total rate of
  return on a share of common stock, reflecting stock price appreciation plus
  reinvestment of dividends and the compounding effect of dividends, adjusted
  appropriately to reflect stock splits, spin-offs and similar transactions.

  

 

The
Base Price of Hospira’s common stock, and each peer company’s common stock, is
the average of the closing prices for the last 30 trading days before the start
of Performance Period. The average closing price for the last 30 trading days
of FY08 preceding the FY09-11 Performance Period is $     and serves as the base for relative
comparisons over the Performance Period.

 

The
payment levels at various percentile rankings against the peer companies are
shown in the following table:

 

	
  HOSPIRA

  %Percentile Rank

  	
   

  	
  % of Units

  Earned

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  75th

  	
   

  	
  200

  	
  %

  
	
  70th

  	
   

  	
  180

  	
  %

  
	
  65th

  	
   

  	
  160

  	
  %

  
	
  60th

  	
   

  	
  140

  	
  %

  
	
  55th

  	
   

  	
  120

  	
  %

  
	
  50th

  	
   

  	
  100

  	
  %

  
	
  45th

  	
   

  	
  85

  	
  %

  
	
  40th

  	
   

  	
  70

  	
  %

  
	
  35th

  	
   

  	
  55

  	
  %

  
	
  30th

  	
   

  	
  40

  	
  %

  
	
  25th

  	
   

  	
  25

  	
  %

  
	
  <25th

  	
   

  	
  0

  	
  %

  

 

	
  ·  With linear interpolation between percentiles

  
	
  ·  Percentile rank includes HOSPIRA

  

 

 

Earnout
Opportunities During the Performance Period:

 

·                  The Program provides the opportunity for the
interim earnout of up to one-quarter of the Units originally granted both at
the end of FY09 and again at the end of the FY 09-10 period (in this case
cumulative TSR for a two-year period) based upon the individual percentile
ranking for these two distinct measurement periods.  The maximum interim earnout during the
Performance Period is capped at one-quarter of Units originally granted for
each of the two interim measurement periods, even if the interim measurement
period’s performance results are above the 50th percentile.

·                  Any Units earned during the interim
measurement periods are effectively converted to service-based restricted stock
units (RSUs) and are then subject to the Grantee’s continued employment with
Hospira until end of the 3-year Performance Period.

·                  The Program also provides the opportunity for
the cumulative earnout of up to 200% of the original Units granted, with the
maximum payout level for the entire Performance Period, at end of the full
3-year Performance Period, being the greater of (i) the maximum payout
level for the entire 3-year Performance Period or (ii) the total of any
Units earned during the interim measurement periods.

 

The
following examples show how the interim measurement feature works:

 

Example 1:

Assumptions:

·                  1,500 Units originally
granted

·                  Year 1 performance (FY08) =
25th %ile

·                  Years 1 & 2
(FY08-09) cumulative performance = 55th%ile

·                  Years 1 through 3 (FY08-10)
cumulative performance = 50th%ile

 

	
   

  	
   

  	
  Earned

  	
   

  
	
  Earnout:

  	
   

  	
   

  	
   

  
	
  ·

  	
  Year 1: 25thpercentile results = 25% interim earnout level based
  upon actual results during the interim measurement period

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  25% X (1/4 of original PSU grant of 1,500 Units)

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  25% X 375 = 94 Units earned and converted to RSUs

  	
   

  	
  94

  	
   

  
	
  ·

  	
  Years
  1 & 2: 55tht percentile
  results = 120% earnout level based upon actual results but earnout is capped
  at 100% during interim measurement period

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  100% X (1/4 of original PSU grant of 1,500 Units)

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  100% (1) X 375 = 375 Units earned and converted
  to RSUs

  	
   

  	
  375

  	
   

  
	
  Cumulative Subtotal
  of Interim Earnout

  	
   

  	
  469

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Years 1 - 3: 50tht percentile
  results = 100% earnout level based upon actual results for full 3-year
  Performance Period

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  100% X 1,500 original PSU grant = 1,500 Units earned

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  1,500

  	
  (2)

  

 

(1)   Interim earnout potential is capped at 100%

(2) 
The 469 Units earned over the first two years of the Performance Period are
included in this 1,500 PSU Total, i.e., an additional 1,031 Units are earned
for the full three-year Performance Period results.

 

 

	
  VESTING:

  	
   

  	
  Subject
  to the terms of the Restricted Stock Unit Award Agreement, restrictions on
  the restricted stock units earned during the performance period, as
  determined above, will lapse on December 31, 2011, if the Grantee is a
  full-time active employee of the Company on that date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Final
  determination and distribution of the number of restricted stock units earned
  will be made after the actual TSR growth during the performance period has
  been certified by Hospira, Inc.’s independent auditor and the Audit
  Committee of the Company’s Board of Directors.

  

 

Example 2:

Assumptions:

·                  1,500 Units originally
granted

·                  Year 1 performance = 25th %ile

·                  Years 1& 2 cumulative
performance = 100th%ile

·                  Years 1-3 cumulative
performance = 10th%ile

 

	
   

  	
   

  	
  Earned

  	
   

  
	
  Earnout:

  	
   

  	
   

  	
   

  
	
  ·

  	
  Year 1:  25thpercentile results = 25%
  earnout level based upon actual results during the interim measurement period

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  25% X (1/4 of original PSU
  grant of 1,500 Units)

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  25% X 375 = 94 Units
  earned and converted to RSUs

  	
   

  	
  94

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Years 1 & 2:  100thpercentile results = 100%
  earnout level based upon actual results during interim measurement period

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  100% X (1/4 of original
  PSU grant of 1,500 Units)

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  100% X 375 = 375 Units
  earned and converted to RSUs

  	
   

  	
  375

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1,000

  	
   

  
	
  Cumulative
  Subtotal 

  	
   

  	
  469

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Years 1-3 :  10thtpercentile results = 0%
  earnout level based upon actual results for full 3-year Performance Period

  	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  0% X 1,500 original PSU
  grant = 0 Units earned

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  469

  	
  (2)

  

 

(2)  Even though the final
performance earns a cumulative 0% payout, the Grantee had an interim earnout of
469 Units for year 1 and years 1&2

 

 

Appendix I

 

Peer Companies for Relative TSR Comparison

 

	
  Ticker

  	
   

  	
  Company
  Name

  	
   

  	
  Sector

  
	
  ABT

  	
   

  	
  Abbott Labs

  	
   

  	
  Health Care

  
	
  AGN

  	
   

  	
  Allergan Inc.

  	
   

  	
  Health Care

  
	
  ABC

  	
   

  	
  AmerisourceBergen Corp.

  	
   

  	
  Health Care

  
	
  AMGN

  	
   

  	
  Amgen

  	
   

  	
  Health Care

  
	
  BCR

  	
   

  	
  Bard (C.R.) Inc.

  	
   

  	
  Health Care

  
	
  BAX

  	
   

  	
  Baxter International Inc.

  	
   

  	
  Health Care

  
	
  BDX

  	
   

  	
  Becton Dickinson

  	
   

  	
  Health Care

  
	
  BIIB

  	
   

  	
  BIOGEN IDEC Inc.

  	
   

  	
  Health Care

  
	
  BSX

  	
   

  	
  Boston Scientific

  	
   

  	
  Health Care

  
	
  BMY

  	
   

  	
  Bristol-Myers Squibb

  	
   

  	
  Health Care

  
	
  CAH

  	
   

  	
  Cardinal Health Inc.

  	
   

  	
  Health Care

  
	
  CELG

  	
   

  	
  Celgene Corp.

  	
   

  	
  Health Care

  
	
  CEPH

  	
   

  	
  Cephalon Inc

  	
   

  	
  Health Care

  
	
  COV

  	
   

  	
  Covidien Ltd.

  	
   

  	
  Health Care

  
	
  XRAY

  	
   

  	
  Dentsply International

  	
   

  	
  Health Care

  
	
  FRX

  	
   

  	
  Forest Laboratories

  	
   

  	
  Health Care

  
	
  GENZ

  	
   

  	
  Genzyme Corp.

  	
   

  	
  Health Care

  
	
  GILD

  	
   

  	
  Gilead Sciences

  	
   

  	
  Health Care

  
	
  HSP

  	
   

  	
  Hospira Inc.

  	
   

  	
  Health Care

  
	
  RX

  	
   

  	
  IMS Health Inc.

  	
   

  	
  Health Care

  
	
  ISRG

  	
   

  	
  Intuitive Surgical Inc.

  	
   

  	
  Health Care

  
	
  JNJ

  	
   

  	
  Johnson & Johnson

  	
   

  	
  Health Care

  
	
  KG

  	
   

  	
  King Pharmaceuticals

  	
   

  	
  Health Care

  
	
  LIFE

  	
   

  	
  Life Technologies Corp.

  	
   

  	
  Health Care

  
	
  LLY

  	
   

  	
  Lilly (Eli) & Co.

  	
   

  	
  Health Care

  
	
  MCK

  	
   

  	
  McKesson Corp. (New)

  	
   

  	
  Health Care

  
	
  MDT

  	
   

  	
  Medtronic Inc.

  	
   

  	
  Health Care

  
	
  MRK

  	
   

  	
  Merck & Co.

  	
   

  	
  Health Care

  
	
  MIL

  	
   

  	
  Millipore Corp.

  	
   

  	
  Health Care

  
	
  MYL

  	
   

  	
  Mylan Inc.

  	
   

  	
  Health Care

  
	
  PDCO

  	
   

  	
  Patterson Cos. Inc.

  	
   

  	
  Health Care

  
	
  PKI

  	
   

  	
  PerkinElmer

  	
   

  	
  Health Care

  
	
  PFE

  	
   

  	
  Pfizer Inc.

  	
   

  	
  Health Care

  
	
  SGP

  	
   

  	
  Schering-Plough

  	
   

  	
  Health Care

  
	
  STJ

  	
   

  	
  St Jude Medical

  	
   

  	
  Health Care

  
	
  SYK

  	
   

  	
  Stryker Corp.

  	
   

  	
  Health Care

  
	
  TMO

  	
   

  	
  Thermo Fisher Scientific

  	
   

  	
  Health Care

  
	
  VAR

  	
   

  	
  Varian Medical Systems

  	
   

  	
  Health Care

  
	
  WAT

  	
   

  	
  Waters Corporation

  	
   

  	
  Health Care

  
	
  WPI

  	
   

  	
  Watson Pharmaceuticals

  	
   

  	
  Health Care

  
	
  WYE

  	
   

  	
  Wyeth

  	
   

  	
  Health Care

  
	
  ZMH

  	
   

  	
  Zimmer Holdings

  	
   

  	
  Health Care

  

 

 

HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN

 

NOTICE OF DEFERRAL ELECTION
FORM

 

Subject
to the provisions of the Hospira 2004 Long-Term Stock Incentive Plan (the “Plan”),
the Notice of Grant of Award and Award Agreement (“Notice”) and the Restricted
Stock Unit Award Agreement (“Agreement”),  I hereby elect to defer the receipt of the Earned
Units, that would otherwise be issued as specified in the Agreement,  in accordance with the election below (“Election”).
All capitalized terms are as defined herein or as defined in the Plan, the
Notice or the Agreement.

 

I.              DISTRIBUTION
COMMENCEMENT DATE

 

I
hereby acknowledge and agree that the distribution of my Earned Units shall
begin after the end of the performance period identified in the Agreement (“Performance
Period”) but no later than 90 days following the end of such Performance Period
(“Distribution Commencement Date”).

 

II.            EARNED
UNITS DEFERRAL

 

Pursuant to Section 9 of the Agreement, I hereby elect to defer
the receipt of           % of
the Earned Units (“Deferred Units”).

 

III.           DISTRIBUTION
METHOD

 

The Deferred Units shall be distributed in accordance with the deferred
distribution date (“Deferred Distribution Date”) as follows:

 

(   )          On the January 1 that
next follows the date that is                 
(not to exceed 10 years) year(s) after the Distribution Commencement Date.

 

(   )          In annual installments for [          ]
year(s) (not to exceed 10 years) beginning on the Distribution
Commencement Date and each anniversary thereof.

 

Notwithstanding
the foregoing, I understand that, distribution of the Earned Units in
connection with my death, Involuntary Termination of Employment, Disability,
Retirement or upon a Change in Control during the Performance Period shall be
made in accordance with the applicable provisions of the Agreement.

 

ALL DISTRIBUTIONS WILL BE IN THE FORM OF
COMPANY STOCK
(any fractional shares and Dividend Equivalents, if any, will be paid in cash).

 

 

IV.           EFFECTIVE
DATE AND DEFERRAL CHANGES

 

This Election shall first become effective as
of the date submitted to the Company and shall remain in effect for all
subsequent years until modified or revoked by filing a new Election form.

 

I understand that the deferral specified above may be changed only by
an election completed and filed with the secretary of the Company at least 12
months prior to my Distribution Commencement Date, which will delay
commencement of my distribution by 5 years. 
Any change to my distribution method will be void if my Distribution
Commencement Date actually occurs within 12 months after the date my change is
filed with the Company.

 

	
  Name:

  	
   

  	
   

  
	
   

  	
  (Please
  Print)

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]