Document:

Exhibit
10.1

 

Execution
Version

 

Venoco, Inc.

 

11.50% Senior Notes due 2017

 

unconditionally guaranteed as to the

payment of principal, premium,

if any, and interest by the entities listed

on Schedule 1

 

 

Exchange and Registration Rights Agreement

 

October 7, 2009

 

UBS Securities LLC

BMO Capital Markets Corp.

Credit Suisse Securities
(USA) LLC

RBS Securities Inc.,

As
representatives of the several Purchasers

named
in Schedule I to the Purchase Agreement

 

c/o UBS Securities LLC

299 Park Avenue

New York, New York
10171-0026

 

Ladies and Gentlemen:

 

Venoco, Inc.,
a Delaware corporation (the “Company”),
proposes to issue and sell to the Purchasers (as defined herein) upon the terms
set forth in the Purchase Agreement (as defined herein) $150,000,000 in
aggregate principal amount of its 11.50% Senior Notes due 2017, which are
unconditionally guaranteed by the entities listed on Schedule 1 hereto
(the “Guarantors”).  As an inducement to the Purchasers to enter
into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Purchasers thereunder, the Company and the Guarantors agree
with the Purchasers for the benefit of holders (as defined herein) from time to
time of the Registrable Securities (as defined herein) as follows:

 

1.     Certain Definitions.  For purposes of this Exchange and
Registration Rights Agreement (this “Agreement”),
the following terms shall have the following respective meanings:

 

“Additional Interest” shall have the
meaning assigned thereto in Section 2(c).

 

“Base Interest” shall mean the
interest that would otherwise accrue on the Securities under the terms thereof
and the Indenture, without giving effect to the provisions of this Agreement.

 

The term “broker-dealer”
shall mean any broker or dealer registered with the Commission under the
Exchange Act.

 

1

 

“Business Day” shall have the
meaning set forth in Rule 13e-4(a)(3) promulgated by the Commission
under the Exchange Act, as the same may be amended or succeeded from time to
time.

 

“Closing Date” shall mean the
date on which the Securities are initially issued.

 

“Commission” shall mean the
United States Securities and Exchange Commission, or any other federal agency
at the time administering the Exchange Act or the Securities Act, whichever is
the relevant statute for the particular purpose.

 

“EDGAR System” means the EDGAR
filing system of the Commission and the rules and regulations pertaining
thereto promulgated by the Commission in Regulation S-T under the Securities
Act and the Exchange Act, in each case as the same may be amended or succeeded
from time to time (and without regard to format).

 

“Effective Time,” in the case of (i) an
Exchange Registration, shall mean the time and date as of which the Commission
declares the Exchange Registration Statement effective or as of which the
Exchange Registration Statement otherwise becomes effective and (ii) a
Shelf Registration, shall mean the time and date as of which the Commission
declares the Shelf Registration Statement effective or as of which the Shelf
Registration Statement otherwise becomes effective.

 

“Electing Holder” shall mean any
holder of Registrable Securities that has returned a completed and signed
Notice and Questionnaire to the Company in accordance with Section 3(d)(ii) or
Section 3(d)(iii) and the instructions set forth in the Notice and
Questionnaire.

 

“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the Commission thereunder, as the same may be amended or
succeeded from time to time.

 

“Exchange Offer” shall have the
meaning assigned thereto in Section 2(a).

 

“Exchange Registration” shall have the
meaning assigned thereto in Section 3(c).

 

“Exchange Registration Statement” shall have the meaning
assigned thereto in Section 2(a).

 

“Exchange Securities” shall have the
meaning assigned thereto in Section 2(a).

 

“Guarantor” shall have the
meaning assigned thereto in the introductory paragraph.

 

The term “holder”
shall mean each of the Purchasers and other persons who acquire Securities from
time to time (including any successors or assigns), in each case for so long as
such person owns any Securities.

 

“Indenture” shall mean the
indenture, dated as of October 7, 2009, among the Company, the Guarantors
and U.S. Bank National Association, as trustee, as the same may be amended from
time to time.

 

“Notice and Questionnaire” means a Notice of
Registration Statement and Selling Securityholder Questionnaire substantially
in the form of Exhibit A hereto.

 

2

 

The term “person”
shall mean a corporation, limited liability company, association, partnership,
organization, business, individual, government or political subdivision thereof
or governmental agency.

 

“Purchase Agreement” shall mean the
Purchase Agreement, dated as of October 2, 2009, among the Purchasers, the
Company and the Guarantors relating to the Securities.

 

“Purchasers” shall mean the
Purchasers named in Schedule I to the Purchase Agreement.

 

“Registrable Securities” shall mean the
Securities; provided, however, that a Security shall
cease to be a Registrable Security upon the earliest to occur of the following:
(i) in the circumstances contemplated by Section 2(a), the Security
has been exchanged for an Exchange Security in an Exchange Offer as
contemplated in Section 2(a) (provided that
any Exchange Security that, pursuant to the last two sentences of Section 2(a),
is included in a prospectus for use in connection with resales by
broker-dealers shall be deemed to be a Registrable Security with respect to
Sections 5, 6 and 9 until resale of such Registrable Security has been effected
within the Resale Period); (ii) in the circumstances contemplated by Section 2(b),
a Shelf Registration Statement registering such Security under the Securities
Act has been declared or becomes effective and such Security has been sold or
otherwise transferred by the holder thereof pursuant to and in a manner
contemplated by such effective Shelf Registration Statement; (iii) subject
to Section 8(b), such Security is actually sold by the holder thereof
pursuant to Rule 144 under circumstances in which any legend borne by such
Security relating to restrictions on transferability thereof, under the
Securities Act or otherwise, is removed by the Company or pursuant to the
Indenture; or (iv) such Security shall cease to be outstanding.

 

“Registration Default” shall have the
meaning assigned thereto in Section 2(c).

 

“Registration Default Period” shall have the
meaning assigned thereto in Section 2(c).

 

“Registration Expenses” shall have the
meaning assigned thereto in Section 4.

 

“Resale Period” shall have the
meaning assigned thereto in Section 2(a).

 

“Restricted Holder” shall mean (i) a
holder that is an affiliate of the Company within the meaning of Rule 405,
(ii) a holder who acquires Exchange Securities outside the ordinary course
of such holder’s business, (iii) a holder who has arrangements or
understandings with any person to participate in the Exchange Offer for the purpose
of distributing Exchange Securities and (iv) a holder that is a
broker-dealer, but only with respect to Exchange Securities received by such
broker-dealer pursuant to an Exchange Offer in exchange for Registrable
Securities acquired by the broker-dealer directly from the Company.

 

“Rule 144,” “Rule 405”,
“Rule 415”, “Rule 424”, “Rule 430B” and “Rule 433” shall mean, in each case, such rule promulgated
by the Commission under the Securities Act (or any successor provision), as the
same may be amended or succeeded from time to time.

 

“Securities” shall mean,
collectively, the  $150,000,000 in aggregate
principal amount of the Company’s 11.50% Senior Notes due 2017 to be issued and
sold to the Purchasers, and securities issued in exchange therefor or in lieu
thereof pursuant to the Indenture.  Each Security
is entitled to the benefit of the guarantees provided by the Guarantors in the
Indenture (the “Guarantees”) and, unless the
context otherwise requires, any reference

 

3

 

herein to a “Security,” an “Exchange Security” or a “Registrable
Security” shall include a reference to the related Guarantees.

 

“Securities Act” shall mean the
Securities Act of 1933, as amended, and the rules and regulations
promulgated by the Commission thereunder, as the same may be amended or
succeeded from time to time.

 

“Shelf Registration” shall have the
meaning assigned thereto in Section 2(b).

 

“Shelf Registration Statement” shall have the
meaning assigned thereto in Section 2(b).

 

“Trust Indenture Act” shall mean the
Trust Indenture Act of 1939, as amended, and the rules and regulations
promulgated by the Commission thereunder, as the same may be amended or
succeeded from time to time.

 

“Trustee” shall mean U.S.
Bank National Association, as trustee under the Indenture, together with any
successors thereto in such capacity.

 

Unless the context otherwise requires, any reference herein to a “Section”
or “clause” refers to a Section or clause, as the case may be, of this
Agreement, and the words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular Section or
other subdivision.

 

2.     Registration Under the Securities
Act.

 

(a)  Except as set
forth in Section 2(b) below, the Company and the Guarantors agree to
file under the Securities Act no later than 180 days after the Closing Date, or
if the 180th day is not a Business Day, the first Business Day thereafter, a
registration statement relating to an offer to exchange (such registration
statement, the “Exchange Registration Statement”,
and such offer, the “Exchange Offer”)
any and all of the Securities for a like aggregate principal amount of debt
securities issued by the Company  and guaranteed
by the Guarantors, which debt securities and guarantees  are
substantially identical to the Securities  and the
related Guarantees, respectively (and are entitled to the benefits of the
Indenture), except that they have been registered pursuant to an effective
registration statement under the Securities Act and do not contain provisions
for Additional Interest contemplated in Section 2(c) below (such new
debt securities hereinafter called “Exchange Securities”).  The Company and the Guarantors agree to use
all commercially reasonable efforts to cause the Exchange Registration
Statement to become effective under the Securities Act no later than 270 days
after the Closing Date or, if the 270th day is not a Business Day, the first
Business Day thereafter.  The Exchange
Offer will be registered under the Securities Act on the appropriate form and
will comply with all applicable tender offer rules and regulations under
the Exchange Act.  Unless the Exchange
Offer would not be permitted by applicable law or Commission policy, the
Company further agrees to use all commercially reasonable efforts to (i) commence
the Exchange Offer promptly (but no later than 10 Business Days) following the
Effective Time of such Exchange Registration Statement, (ii) hold the
Exchange Offer open for at least 20 Business Days in accordance with Regulation
14E promulgated by the Commission under the Exchange Act and (iii) exchange
Exchange Securities for all Registrable Securities that have been validly
tendered and not properly withdrawn promptly following the expiration of the
Exchange Offer.  The Exchange Offer will
be deemed to have been “completed” only upon the Company having exchanged,
pursuant to the Exchange Offer, Exchange Securities for all Registrable Securities
that have been validly tendered and not properly withdrawn before the
expiration of the Exchange Offer, which shall be on a date that is at least 20
and not more than 30

 

4

 

Business Days following the commencement of the
Exchange Offer.  The Company and the
Guarantors agree (x) to include in the Exchange Registration Statement a
prospectus for use in any resales by any holder of Exchange Securities that is
a broker-dealer and (y) to keep such Exchange Registration Statement
effective for a period (the “Resale Period”)
beginning when Exchange Securities are first issued in the Exchange Offer and
ending upon the earlier of the expiration of the 180th day after the Exchange
Offer has been completed or such time as such broker-dealers no longer own any Registrable
Securities.  With respect to such
Exchange Registration Statement, such holders shall have the benefit of the
rights of indemnification and contribution set forth in Subsections 6(a),
(c), (d) and (e).

 

(b)  If (i) on
or prior to the time the Exchange Offer is completed existing law or Commission
interpretations are changed such that the debt securities or the related
guarantees received by holders other than Restricted Holders in the Exchange
Offer for Registrable Securities are not or would not be, upon receipt,
transferable by each such holder without restriction under the Securities Act, (ii) the
Effective Time of the Exchange Registration Statement is not within 270 days
following the Closing Date and the Exchange Offer has not been completed within
30 Business Days of such Effective Time or (iii) any holder of Registrable
Securities notifies the Company prior to the 20th Business Day following the completion of the
Exchange Offer that: (A) it is prohibited by law or Commission policy from
participating in the Exchange Offer, (B) it may not resell the Exchange
Securities to the public without delivering a prospectus and the prospectus
contained in the Exchange Registration Statement is not appropriate or
available for such resales or (C) it is a broker-dealer and owns
Securities acquired directly from the Company or an affiliate of the Company,
then the Company and the Guarantors shall, in lieu of (or, in the case of
clause (iii), in addition to) conducting the Exchange Offer contemplated by Section 2(a),
file under the Securities Act no later than 90 days after the time such
obligation to file arises (but no earlier than 180 days after the Closing
Date), a “shelf” registration statement providing for the registration of, and
the sale on a continuous or delayed basis by the holders of, all of the
Registrable Securities, pursuant to Rule 415 or any similar rule that
may be adopted by the Commission (such filing, the “Shelf
Registration” and such registration statement, the “Shelf Registration Statement”).  The Company and the Guarantors agree to use
all commercially reasonable efforts to cause the Shelf Registration Statement
to become or be declared effective no later than 180 days after such Shelf
Registration Statement filing obligation arises (but no earlier than 270 days
after the Closing Date); provided, that
if at any time the Company is or becomes a “well-known seasoned issuer” (as
defined in Rule 405) and is eligible to file an “automatic shelf
registration statement” (as defined in Rule 405), then the Company and the
Guarantors shall file the Shelf Registration Statement in the form of an
automatic shelf registration statement as provided in Rule 405.  The Company and the Guarantors agree to use
all commercially reasonable efforts to keep such Shelf Registration Statement
continuously effective for a period ending on the earlier of the second
anniversary of the Effective Time or such time as there are no longer any
Registrable Securities outstanding.  No
holder shall be entitled to be named as a selling securityholder in the Shelf
Registration Statement or to use the prospectus forming a part thereof for
resales of Registrable Securities unless such holder is an Electing
Holder.  The Company and the Guarantors
agree, after the Effective Time of the Shelf Registration Statement and
promptly upon the request of any holder of Registrable Securities that is not
then an Electing Holder, to use all commercially reasonable efforts to enable
such holder to use the prospectus forming a part thereof for resales of
Registrable Securities, including, without limitation, any action necessary to
identify such holder as a selling securityholder in the Shelf Registration
Statement (whether by post-effective amendment thereto or by filing a
prospectus pursuant to Rules 430B and 424(b) under the Securities Act
identifying such holder), provided, however,
that nothing in this sentence shall relieve any such holder of the obligation
to return

 

5

 

a completed and signed Notice and Questionnaire to the
Company in accordance with Section 3(d)(iii).

 

(c)  In the event
that (i) the Company and the Guarantors have not filed the Exchange
Registration Statement or the Shelf Registration Statement on or before the
date on which such registration statement is required to be filed pursuant to Section 2(a) or
Section 2(b), respectively, or (ii) such Exchange Registration
Statement or Shelf Registration Statement has not become effective or been
declared effective by the Commission on or before the date on which such
registration statement is required to become or be declared effective pursuant
to Section 2(a) or Section 2(b), respectively, or (iii) the
Exchange Offer has not been completed within 30 Business Days after the
Effective Time of the Exchange Registration Statement relating to the Exchange
Offer (if the Exchange Offer is then required to be made) or (iv) any
Exchange Registration Statement or Shelf Registration Statement required by Section 2(a) or
Section 2(b) is filed and declared effective but shall thereafter
either be withdrawn by the Company or shall become subject to an effective stop
order issued pursuant to Section 8(d) of the Securities Act
suspending the effectiveness of such registration statement (except as specifically
permitted herein without being succeeded immediately by an additional
registration statement filed and declared effective (each such event referred
to in clauses (i) through (iv), a “Registration Default”
and each period during which a Registration Default has occurred and is
continuing, a “Registration Default Period”),
then, as liquidated damages for such Registration Default, subject to the
provisions of Section 9(b), additional interest (“Additional
Interest”), in addition to the Base
Interest, shall accrue on the outstanding principal amount of the Registrable
Securities then outstanding at a per annum rate of 0.25% for the first 90 days
of the Registration Default Period, at a per annum rate of 0.50% for the second
90 days of the Registration Default Period, at a per annum rate of 0.75% for
the third 90 days of the Registration Default Period and at a per annum rate of
1.0% thereafter for the remaining portion of the Registration Default
Period.  Additional Interest shall accrue
and be payable only with respect to a single Registration Default at any given
time, notwithstanding the fact that multiple Registration Defaults may exist at
such time.

 

(d)  The Company
shall take, and shall cause the Guarantors to take,  all
actions necessary or advisable to be taken by it to ensure that the
transactions contemplated herein are effected as so contemplated, including all
actions necessary or desirable to register the Guarantees under any Exchange
Registration Statement or Shelf 
Registration Statement, as applicable.

 

(e)  Any reference
herein to a registration statement or prospectus as of any time shall be deemed
to include any document incorporated, or deemed to be incorporated, therein by
reference as of such time; and any reference herein to any post-effective
amendment to a registration statement or to any prospectus supplement as of any
time shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time.

 

3.     Registration Procedures.

 

If the Company and the
Guarantors file a registration statement pursuant to Section 2(a) or Section 2(b),
the following provisions shall apply:

 

(a)  At or before the
Effective Time of the Exchange Registration or any Shelf Registration,
whichever may occur first, the Company shall qualify the Indenture under the Trust
Indenture Act.

 

6

 

(b)  In the event
that such qualification would require the appointment of a new trustee under
the Indenture, the Company shall appoint a new trustee thereunder pursuant to
the applicable provisions of the Indenture.

 

(c)  In connection
with the Company’s and the Guarantors’ obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
“Exchange Registration”), if applicable,
the Company and the Guarantors shall:

 

(i)        prepare and file with the
Commission, no later than 180 days after the Closing Date, or if the 180th day
is not a Business Day, the first Business Day thereafter, an Exchange Registration
Statement on any form which may be utilized by the Company and the Guarantors
and which shall permit the Exchange Offer and resales of Exchange Securities by
broker-dealers during the Resale Period to be effected as contemplated by Section 2(a),
and use all commercially reasonable efforts to cause such Exchange Registration
Statement to become effective no later than 270 days after the Closing Date or,
if the 270th day is not a Business Day, the first Business Day thereafter;

 

(ii)       as soon as practicable prepare
and file with the Commission such amendments and supplements to such Exchange
Registration Statement and the prospectus included therein as may be necessary
to effect and maintain the effectiveness of such Exchange Registration
Statement for the periods and purposes contemplated in Section 2(a) and
as may be required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of such Exchange
Registration Statement, and promptly provide each broker-dealer holding
Exchange Securities with such number of copies of the prospectus included
therein (as then amended or supplemented), in conformity in all material
respects with the requirements of the Securities Act and the Trust Indenture
Act, as such broker-dealer reasonably may request prior to the expiration of
the Resale Period, for use in connection with resales of Exchange Securities;

 

(iii)      promptly notify each
broker-dealer that has requested or received copies of the prospectus included
in such Exchange Registration Statement, and confirm such advice in writing, (A) when
such Exchange Registration Statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been filed,
and, with respect to such Exchange Registration Statement or any post-effective
amendment, when the same has become effective, (B) of the receipt of any
comments by the Commission and by the blue sky or securities commissioner or
regulator of any state with respect thereto or any request by the Commission
for amendments or supplements to such Exchange Registration Statement or
prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of such Exchange
Registration Statement or the initiation or threatening of any proceedings for
that purpose, (D) if at any time the representations and warranties of the
Company contemplated by Section 5 cease to be true and correct in all
material respects, (E) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Exchange Securities
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, (F) of the occurrence of any event that causes the
Company to become an “ineligible issuer” as defined in Rule 405, or (G) if
at any time during the Resale Period when a prospectus is required to be
delivered under the Securities Act, that such Exchange Registration Statement,
prospectus, prospectus amendment or supplement or post-effective

 

7

 

amendment does not conform in
all material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act or contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing;

 

(iv)     in the event that the Company
and the Guarantors would be required, pursuant to Section 3(c)(iii)(G), to
notify any broker-dealers holding Exchange Securities, promptly prepare and
furnish to each such holder a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of such
Exchange Securities during the Resale Period, such prospectus shall conform in
all material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;

 

(v)      use all commercially reasonable
efforts to obtain the withdrawal of any order suspending the effectiveness of
such Exchange Registration Statement or any post-effective amendment thereto at
the earliest practicable date;

 

(vi)     use all commercially reasonable
efforts to (A) register or qualify the Exchange Securities under the
securities laws or blue sky laws of such jurisdictions no later than the
commencement of the Exchange Offer, to the extent required by such laws, (B) keep
such registrations or qualifications in effect and comply with such laws so as
to permit the continuance of offers, sales and dealings therein in such
jurisdictions until the expiration of the Resale Period, (C) take any and
all other actions as may be reasonably necessary or advisable to enable each
broker-dealer holding Exchange Securities to consummate the disposition thereof
in such jurisdictions and (D) obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which may be
required to effect the Exchange Registration, the Exchange Offer and the
offering and sale of Exchange Securities by broker-dealers during the Resale
Period; provided, however, that neither the
Company nor the Guarantors shall be required for any such purpose to (1) qualify
as a foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(c)(vi), (2) consent
to general service of process in any such jurisdiction or become subject to
taxation in any such jurisdiction or (3) make any changes to its
certificate of incorporation or by-laws or other governing documents or any
agreement between it and its stockholders;

 

(vii)    obtain a CUSIP number for all
Exchange Securities, not later than the applicable Effective Time; and

 

(viii)   comply with all applicable rules and
regulations of the Commission, and make generally available to its
securityholders no later than eighteen months after the Effective Time of such
Exchange Registration Statement, an “earning statement” of the Company and its
subsidiaries complying with Section 11(a) of the Securities Act
(including, at the option of the Company, Rule 158 thereunder).

 

(d)  In connection
with the Company’s and the Guarantors’ obligations with respect to the Shelf
Registration, if applicable, the Company and the Guarantors shall:

 

8

 

(i)        prepare and file with the
Commission, within the time periods specified in Section 2(b), a Shelf
Registration Statement on any form which may be utilized by the Company and
which shall register all of the Registrable Securities for resale by the holders
thereof in accordance with such method or methods of disposition as may be
specified by the holders of Registrable Securities as, from time to time, may
be Electing Holders and use all commercially reasonable efforts to cause such
Shelf Registration Statement to become effective within the time periods
specified in Section 2(b);

 

(ii)       mail the Notice and
Questionnaire to the holders of Registrable Securities (A) not less than
30 days prior to the anticipated Effective Time of the Shelf Registration Statement
or (B) in the case of an “automatic shelf registration statement” (as
defined in Rule 405), mail the Notice and Questionnaire to the holders of
Registrable Securities not later than the Effective Time of such Shelf
Registration Statement, and in any such case no holder shall be entitled to be
named as a selling securityholder in the Shelf Registration Statement, and no
holder shall be entitled to use the prospectus forming a part thereof for
resales of Registrable Securities at any time, unless and until such holder has
returned a completed and signed Notice and Questionnaire to the Company;

 

(iii)      after the Effective Time of the
Shelf Registration Statement, upon the request of any holder of Registrable
Securities that is not then an Electing Holder, promptly send a Notice and
Questionnaire to such holder; provided that
the Company shall not be required to take any action to name such holder as a
selling securityholder in the Shelf Registration Statement or to enable such
holder to use the prospectus forming a part thereof for resales of Registrable
Securities until such holder has returned a completed and signed Notice and
Questionnaire to the Company;

 

(iv)     as soon as practicable prepare
and file with the Commission such amendments and supplements to such Shelf
Registration Statement and the prospectus included therein as may be necessary
to effect and maintain the effectiveness of such Shelf Registration Statement
for the period specified in Section 2(b) and as may be required by
the applicable rules and regulations of the Commission and the
instructions applicable to the form of such Shelf Registration Statement, and
furnish to the Electing Holders copies of any such supplement or amendment
simultaneously with or prior to its being used or filed with the Commission to
the extent such documents are not publicly available on the Commission’s EDGAR
System;

 

(v)      comply with the provisions of
the Securities Act with respect to the disposition of all of the Registrable
Securities covered by such Shelf Registration Statement in accordance with the
intended methods of disposition by the Electing Holders provided for in such
Shelf Registration Statement;

 

(vi)     provide the Electing Holders
and not more than one counsel for all the Electing Holders the reasonable opportunity
to participate in the preparation of such Shelf Registration Statement, each
prospectus included therein or filed with the Commission and each amendment or
supplement thereto (excluding any document that is to be incorporated by
reference into a Shelf Registration Statement);

 

(vii)    for a reasonable period prior
to the filing of such Shelf Registration Statement, and throughout the period
specified in Section 2(b), make available at 

 

9

 

reasonable times at the Company’s principal place of
business or such other reasonable place for inspection of such financial and
other information and books and records of the Company by the Inspector (as
defined below) on behalf of the persons referred to in Section 3(d)(vi) who
shall certify to the Company that they have a current intention to sell the
Registrable Securities pursuant to the Shelf Registration, and cause the
officers, employees, counsel and independent certified public accountants of
the Company to respond to such inquiries, as shall be reasonably necessary (and
in the case of counsel, not violate an attorney-client privilege, in such
counsel’s reasonable belief), in the judgment of the respective counsel
referred to in Section 3(d)(vi), to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and
information gathering on behalf of the Electing Holders shall be conducted by
one counsel designated by the holders of at least a majority in aggregate
principal amount of the Registrable Securities held by the Electing Holders at
the time outstanding (the “Inspector”) and
provided further that each such party
shall be required to maintain in confidence and not to disclose to any other
person any information or records reasonably designated by the Company as being
confidential, until such time as (A) such information becomes a matter of
public record (whether by virtue of its inclusion in such Shelf Registration
Statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter (subject to the
requirements of such order, and only after such person shall have given the
Company prompt prior written notice of such requirement), or (C) such
information is required to be set forth in such Shelf Registration Statement or
the prospectus included therein or in an amendment to such Shelf Registration
Statement or an amendment or supplement to such prospectus in order that such
Shelf Registration Statement, prospectus, amendment or supplement, as the case
may be, complies with applicable requirements of the federal securities laws
and the rules and regulations of the Commission and does not contain an
untrue statement of a material fact or omit to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;

 

(viii)   promptly notify each of the
Electing Holders and confirm such advice in writing, (A) when such Shelf
Registration Statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such Shelf Registration Statement or any post-effective amendment,
when the same has become effective, (B) the receipt of any comments by the
Commission and by the blue sky or securities commissioner or regulator of any
state with respect thereto or any request by the Commission for amendments or
supplements to such Shelf Registration Statement or prospectus or for
additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of such Shelf Registration Statement or the
initiation or threatening of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Company set forth in Section 5
cease to be true and correct in all material respects, (E) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (F) the
occurrence of any event that causes the Company to become an “ineligible issuer”
as defined in Rule 405, or (G) if at any time when a prospectus is
required to be delivered under the Securities Act, that such Shelf Registration
Statement, prospectus, prospectus amendment or supplement or 

 

10

 

post-effective amendment does not conform in all
material respects to the applicable requirements of the Securities Act and the
Trust Indenture Act or contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;

 

(ix)      use all commercially reasonable
efforts to obtain the withdrawal of any order suspending the effectiveness of
such Shelf Registration Statement or any post-effective amendment thereto at
the earliest practicable date;

 

(x)       if requested by any Electing
Holder, promptly incorporate in a prospectus supplement or post-effective
amendment such information as is required by the applicable rules and
regulations of the Commission and as such Electing Holder specifies should be
included therein relating to the terms of the sale of such Registrable
Securities, including information with respect to the principal amount of
Registrable Securities being sold by such Electing Holder, the name and
description of such Electing Holder, the offering price of such Registrable
Securities and any discount, commission or other compensation payable in
respect thereof and with respect to any other terms of the offering of the
Registrable Securities to be sold by such Electing Holder; and make all
required filings of such prospectus supplement or post-effective amendment
promptly after notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment;

 

(xi)      furnish to each Electing Holder
and the counsel referred to in Section 3(d)(vi) an executed copy (or
a conformed copy) of such Shelf Registration Statement, each such amendment and
supplement thereto (in each case including all exhibits thereto (in the case of
an Electing Holder of Registrable Securities, upon request) and documents
incorporated by reference therein) and such number of copies of such Shelf Registration
Statement (excluding exhibits thereto and documents incorporated by reference
therein unless specifically so requested by such Electing Holder) and of the
prospectus included in such Shelf Registration Statement (including each
preliminary prospectus and any summary prospectus), in conformity in all
material respects with the applicable requirements of the Securities Act and
the Trust Indenture Act to the extent such documents are not available through
the Commission’s EDGAR System, and such other documents, as such Electing
Holder may reasonably request in order to facilitate the offering and
disposition of the Registrable Securities owned by such Electing Holder and to
permit such Electing Holder to satisfy the prospectus delivery requirements of
the Securities Act; and subject to Section 3(e), the Company hereby
consents to the use of such prospectus (including such preliminary and summary
prospectus) and any amendment or supplement thereto by each such Electing
Holder, in each case in the form most recently provided to such person by the
Company, in connection with the offering and sale of the Registrable Securities
covered by the prospectus (including such preliminary and summary prospectus)
or any supplement or amendment thereto;

 

(xii)     use all commercially reasonable
efforts to (A) register or qualify the Registrable Securities to be
included in such Shelf Registration Statement under such securities laws or
blue sky laws of such jurisdictions as any Electing Holder shall reasonably
request, (B) keep such registrations or qualifications in effect and
comply with such laws so as to permit the continuance of offers, sales and
dealings therein in such jurisdictions during the period the Shelf Registration
Statement is 

 

11

 

required to remain effective under Section 2(b) and
for so long as may be necessary to enable any such Electing Holder to complete
its distribution of Registrable Securities pursuant to such Shelf Registration
Statement, (C) take any and all other actions as may be reasonably
necessary or advisable to enable each such Electing Holder to consummate the
disposition in such jurisdictions of such Registrable Securities and (D) obtain
the consent or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the Shelf Registration
or the offering or sale in connection therewith or to enable the selling holder
or holders to offer, or to consummate the disposition of, their Registrable Securities;
provided, however, that neither  the Company nor the Guarantors shall be required for any
such purpose to (1) qualify as a foreign corporation in any jurisdiction
wherein it would not otherwise be required to qualify but for the requirements
of this Section 3(d)(xii), (2) consent to general service of process
in any such jurisdiction or become subject to taxation in any such jurisdiction
or (3) make any changes to its certificate of incorporation or by-laws or
other governing documents or any agreement between it and its stockholders;

 

(xiii)    unless any Registrable
Securities shall be in book-entry only form, cooperate with the Electing
Holders to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates, if so
required by any securities exchange upon which any Registrable Securities are
listed, shall be printed, penned, lithographed, engraved or otherwise produced
by any combination of such methods, on steel engraved borders, and which
certificates shall not bear any restrictive legends;

 

(xiv)    obtain a CUSIP number for all
Securities that have been registered under the Securities Act, not later than
the applicable Effective Time;

 

(xv)     notify in writing each holder
of Registrable Securities of any proposal by the Company to amend or waive any
provision of this Agreement pursuant to Section 9(h) and of any
amendment or waiver effected pursuant thereto, each of which notices shall
contain the text of the amendment or waiver proposed or effected, as the case
may be; and

 

(xvi)    comply with all applicable rules and
regulations of the Commission, and make generally available to its
securityholders no later than eighteen months after the Effective Time of such
Shelf Registration Statement an “earning statement” of the Company and its
subsidiaries complying with Section 11(a) of the Securities Act
(including, at the option of the Company, Rule 158 thereunder).

 

(e)  In the event
that the Company would be required, pursuant to Section 3(d)(viii)(G), to
notify the Electing Holders, the Company shall promptly prepare and furnish to
each of the Electing Holders a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of
Registrable Securities, such prospectus shall conform in all material respects
to the applicable requirements of the Securities Act and the Trust Indenture
Act and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.  Each Electing Holder agrees
that upon receipt of any notice from the Company pursuant to Section 3(d)(viii)(G),
such Electing Holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the Shelf Registration Statement applicable to such
Registrable Securities until such Electing Holder shall have received copies of
such amended or supplemented prospectus, and if so directed by the Company,
such Electing 

 

12

 

Holder shall deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies, of the prospectus
covering such Registrable Securities in such Electing Holder’s possession at
the time of receipt of such notice.

 

(f)  In the event of
a Shelf Registration, in addition to the information required to be provided by
each Electing Holder in its Notice and Questionnaire, the Company may require
such Electing Holder to furnish to the Company such additional information
regarding such Electing Holder and such Electing Holder’s intended method of
distribution of Registrable Securities as may be required in order to comply
with the Securities Act.  Each such
Electing Holder agrees to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by such Electing
Holder to the Company or of the occurrence of any event in either case as a
result of which any prospectus relating to such Shelf Registration contains or
would contain an untrue statement of a material fact regarding such Electing
Holder or such Electing Holder’s intended method of disposition of such
Registrable Securities or omits to state any material fact regarding such
Electing Holder or such Electing Holder’s intended method of disposition of
such Registrable Securities required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing, and promptly to furnish to the Company any additional information
required to correct and update any previously furnished information or required
so that such prospectus shall not contain, with respect to such Electing Holder
or the disposition of such Registrable Securities, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.

 

(g)  Until the
expiration of one year after the Closing Date, the Company will not, and will
not permit any of its “affiliates” (as defined in Rule 144) to, resell any
of the Securities that have been reacquired by any of them except pursuant to
an effective registration statement, or a valid exemption from the registration
requirements, under the Securities Act.

 

(h)  As a condition
to its participation in the Exchange Offer, each holder of Registrable
Securities shall furnish, upon the request of the Company, a written
representation to the Company (which may be contained in the letter of
transmittal or “agent’s message” transmitted via The Depository Trust Company’s
Automated Tender Offer Procedures, in either case contemplated by the Exchange
Registration Statement) to the effect that (A) it is not an “affiliate” of
the Company, as defined in Rule 405 of the Securities Act, or if it is
such an “affiliate”, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (B) it
is not engaged in and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the Exchange
Securities to be issued in the Exchange Offer, (C) it is acquiring the
Exchange Securities in its ordinary course of business, (D) if it is a
broker-dealer that holds Securities that were acquired for its own account as a
result of market-making activities or other trading activities (other than
Securities acquired directly from the Company or any of its affiliates), it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of the Exchange Securities received by it in the
Exchange Offer, (E) if it is a broker-dealer, that it did not purchase the
Securities to be exchanged in the Exchange Offer from the Company or any of its
affiliates, and (F) it is not acting on behalf of any person who could not
truthfully and completely make the representations contained in the foregoing
subclauses (A) through (E).

 

4.     Registration Expenses.

 

The Company agrees to bear and
to pay or cause to be paid promptly all expenses incident to the Company’s
performance of or compliance with this Agreement, including (a) all

 

13

 

Commission and any FINRA registration, filing
and review fees and expenses including reasonable fees and disbursements of not
more than one counsel for the Eligible Holders in connection with such
registration, filing and review, (b) all fees and expenses in connection
with the qualification of the Registrable Securities and the Exchange
Securities, as applicable, for offering and sale under the State securities and
blue sky laws referred to in Section 3(d)(xii) and determination of their
eligibility for investment under the laws of such jurisdictions as the Electing
Holders may designate, including any reasonable fees and disbursements of not
more than one counsel for the Electing Holders in connection with such
qualification and determination, (c) all expenses relating to the
preparation, printing, production, distribution and reproduction of each
registration statement required to be filed hereunder, each prospectus included
therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the expenses of preparing the Securities or
Exchange Securities, as applicable, for delivery and the expenses of printing
or producing any selling agreements and blue sky or legal investment memoranda
and all other documents in connection with the offering, sale or delivery of
Securities or Exchange Securities, as applicable, to be disposed of (including
certificates representing the Securities or Exchange Securities, as
applicable), (d) messenger, telephone and delivery expenses relating to
the offering, sale or delivery of Securities or Exchange Securities, as
applicable, and the preparation of documents referred in clause (c) above,
(e) fees and expenses of the Trustee under the Indenture, any agent of the
Trustee and any counsel for the Trustee and of any collateral agent or
custodian, (f) internal expenses (including all salaries and expenses of
the Company’s officers and employees performing legal or accounting duties), (g) reasonable
fees, disbursements and expenses of counsel and independent certified public
accountants of the Company, (h) reasonable fees, disbursements and
expenses of one counsel for the Electing Holders retained in connection with a
Shelf Registration, as selected by the Electing Holders of at least a majority
in aggregate principal amount of the Registrable Securities held by Electing
Holders (which counsel shall be reasonably satisfactory to the Company), (i) any
fees charged by securities rating services for rating the Registrable
Securities or the Exchange Securities, as applicable, and (j) fees,
expenses and disbursements of any other persons, including special experts,
retained by the Company in connection with such registration (collectively, the
“Registration Expenses”).  To the extent that any Registration Expenses
are incurred, assumed or paid by any holder of Registrable
Securities, Securities or Exchange Securities, as applicable,  the Company shall reimburse such person for the full
amount of the Registration Expenses so incurred, assumed or paid promptly after
receipt of a request therefor. 
Notwithstanding the foregoing, the holders of the Registrable Securities
being registered shall pay all agency fees and commissions and underwriting
discounts and commissions, if any, and transfer taxes, if any, attributable to
the sale of such Registrable Securities and Exchange Securities, as applicable,
and the fees and disbursements of any counsel or other advisors or experts
retained by such holders (severally or jointly), other than the counsel and experts
specifically referred to above.

 

5.     Representations and Warranties.

 

Each of the Company and the
Guarantors, jointly and severally, represents and warrants to, and agrees with,
each Purchaser and each of the holders from time to time of Registrable Securities
that:

 

(a)  Each
registration statement covering Registrable Securities, Securities or Exchange
Securities, as applicable, and each prospectus (including any preliminary or
summary prospectus) contained therein or furnished pursuant to Section 3(c) or
Section 3(d) and any further amendments or supplements to any such
registration statement or prospectus, when it becomes effective or is filed
with the Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act and the Trust Indenture Act and 

 

14

 

will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing; and at all times subsequent to the Effective Time when a prospectus
would be required to be delivered under the Securities Act, other than from (i) such
time as a notice has been given to holders of Registrable Securities pursuant
to Section 3(c)(iii)(G) or Section 3(d)(viii)(G) until (ii) such
time as the Company furnishes an amended or supplemented prospectus pursuant to
Section 3(c)(iv) or Section 3(e), each such registration
statement, and each prospectus (including any summary prospectus) contained
therein or furnished pursuant to Section 3(c) or Section 3(d),
as then amended or supplemented, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and will not
contain an untrue statement of a material fact or omit 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; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by a holder of
Registrable Securities expressly for use therein.

 

(b)  Any documents
incorporated by reference in any prospectus referred to in Section 5(a),
when they become or became effective or are or were filed with the Commission,
as the case may be, will conform or conformed in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and none
of such documents will contain or contained an untrue statement of a material
fact or will omit or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for use
therein.

 

(c)  The compliance
by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not (i) conflict
in any material respect with or result in a material breach or violation of any
of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, (ii) result in any
violation of the provisions of the certificate of incorporation, as amended, or
the by-laws or other governing documents, as applicable, of the Company  or the Guarantors or (iii)  result in any violation of
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their respective properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Company and the
Guarantors of the transactions contemplated by this Agreement, except (x) the
registration under the Securities Act of the Registrable Securities and the
Exchange Securities, as applicable, and qualification of the Indenture under
the Trust Indenture Act, (y) such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
blue sky laws in connection with the offering and distribution of the
Registrable Securities and the Exchange Securities, as applicable, and (z) such
consents, approvals, authorizations, registrations or qualifications that have
been obtained and are in full force and effect as of the date hereof.

 

(d)  This Agreement
has been duly authorized, executed and delivered by the Company and by the
Guarantors.

 

15

 

6.     Indemnification and Contribution.

 

(a)  Indemnification by the Company and the Guarantors.  The Company and the Guarantors,
jointly and severally, will indemnify and hold harmless each of the holders of
Registrable Securities included in an Exchange Registration Statement and each
of the Electing Holders as holders of Registrable Securities included in a
Shelf Registration Statement against any losses, claims, damages or
liabilities, joint or several, to which such holder or such Electing Holder may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any Exchange Registration Statement or any Shelf Registration
Statement, as the case may be, under which such Registrable Securities or
Exchange Securities were registered under the Securities Act, or any
preliminary, final or summary prospectus (including, without limitation, any “issuer
free writing prospectus” as defined in Rule 433) contained therein or
furnished by the Company to any such holder or any such Electing Holder, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each such holder and each such Electing Holder for any and all legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such action or claim as such expenses are incurred; provided, however, that neither the Company nor the
Guarantors shall be liable to any such person in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, or preliminary, final or summary
prospectus (including, without limitation, any “issuer free writing prospectus”
as defined in Rule 433), or amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company by
such person expressly for use therein.

 

(b)  Indemnification by the Electing Holders.  Each Electing Holder shall agree severally
and not jointly, to (i) indemnify and hold harmless the Company, the
Guarantors and all other Electing Holders of Registrable Securities included in
such Shelf Registration Statement, against any losses, claims, damages or
liabilities to which the Company, the Guarantors or such other Electing Holders
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in such registration statement, or any preliminary,
final or summary prospectus (including, without limitation, any “issuer free
writing prospectus” as defined in Rule 433) contained therein or furnished
by the Company to any Electing Holder, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Electing Holder expressly for use
therein, and (ii) reimburse the Company and the Guarantors for any legal
or other expenses reasonably incurred by the Company and the Guarantors in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however,
that no such Electing Holder shall be required to undertake liability to any
person under this Section 6(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such Electing Holder from the
sale of such Electing Holder’s Registrable Securities pursuant to such
registration.

 

16

 

(c)  Notices of Claims, Etc.  Promptly
after receipt by an indemnified party under subsection (a) or (b) above
of written notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party pursuant to the indemnification provisions of or contemplated by this Section 6,
notify such indemnifying party in writing of the commencement of such action;
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than under
the indemnification provisions of or contemplated by Section 6(a) or Section 6(b).  In case any such action shall be brought
against any indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. 
No indemnifying party shall, without the prior written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act by or on behalf of
any indemnified party.

 

(d)  Contribution.  If for
any reason the indemnification provisions contemplated by Section 6(a) or
Section 6(b) are unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and the indemnified party in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), 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 the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified
party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.  The parties hereto agree that it would not be
just and equitable if contributions pursuant to this Section 6(d) were
determined by pro rata allocation (even if the holders were treated as one
entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 6(d).  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 6(d),
no Electing Holder shall be required to contribute any amount in excess of the
amount by which the dollar amount of the proceeds received by such holder from
the sale of any Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) exceeds 

 

17

 

the amount of any damages which such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.  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 holders’ obligations in this Section 6(d) to contribute
shall be several in proportion to the principal amount of Registrable
Securities registered by them and not joint.

 

(e)  The obligations
of the Company and the Guarantors under this Section 6 shall be in
addition to any liability which the Company or the Guarantors may otherwise
have and shall extend, upon the same terms and conditions, to each officer,
director and partner of each holder, each Electing Holder, and each person, if
any, who controls any of the foregoing within the meaning of the Securities
Act; and the obligations of the holders and the Electing Holders contemplated
by this Section 6 shall be in addition to any liability which the
respective holder or Electing Holder may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company or
the Guarantors and to each person, if any, who controls the Company within the
meaning of the Securities Act, as well as to each officer and director of the
other holders and to each person, if any, who controls such other holders
within the meaning of the Securities Act.

 

7.     Underwritten Offerings.

 

Each holder of Registrable
Securities hereby agrees with the Company and each other such holder that no
holder of Registrable Securities may participate in any underwritten offering
hereunder unless (a) the Company gives its prior written consent to such
underwritten offering, (b) the managing underwriter or underwriters
thereof shall be designated by Electing Holders holding at least a majority in
aggregate principal amount of the Registrable Securities to be included in such
offering, provided that such designated managing underwriter or underwriters is
or are reasonably acceptable to the Company, (c) each holder of
Registrable Securities participating in such underwritten offering agrees to
sell such holder’s Registrable Securities on the basis provided in any
underwriting arrangements approved by the persons entitled selecting the
managing underwriter or underwriters hereunder and (d) each holder of
Registrable Securities participating in such underwritten offering completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.  The Company
hereby agrees with each holder of Registrable Securities that, to the extent it
consents to an underwritten offering hereunder, it will negotiate in good faith
and execute all indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements,
including using all commercially reasonable efforts to procure customary legal
opinions and auditor “comfort” letters.

 

8.     Rule 144.

 

(a)  Facilitation of Sales Pursuant to Rule 144.  The Company covenants to the holders of
Registrable Securities that to the extent it shall be required to do so under
the Exchange Act, the Company shall timely file the reports required to be
filed by it under the Exchange Act or the Securities Act (including the reports
under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144), and shall take such further action
as any holder of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemption provided by Rule 144. 
Upon the request of any holder of Registrable Securities in connection
with that holder’s sale pursuant to Rule 144, the Company shall deliver to
such holder a written statement as to whether it 

 

18

 

has complied with such requirements.

 

(b)  Availability of Rule 144 Not Excuse for Obligations under Section 2.  The fact that holders of Registrable Securities
may become eligible to sell such Registrable Securities pursuant to Rule 144
shall not (1) cause such Securities to cease to be Registrable Securities
or (2) excuse the Company’s and the Guarantors’ obligations set forth in Section 2
of this Agreement, including without limitation the obligations in respect of
an Exchange Offer, Shelf Registration and Additional Interest.

 

9.     Miscellaneous.

 

(a)  No Inconsistent Agreements.  The Company represents, warrants, covenants
and agrees that it has not granted, and shall not grant, registration rights
with respect to Registrable Securities, Exchange Securities or Securities, as
applicable, or any other securities which would be inconsistent with the terms
contained in this Agreement.

 

(b)  Specific Performance. 
The parties hereto acknowledge that there would be no adequate remedy at
law if the Company fails to perform any of its obligations hereunder and that
the Purchasers and the holders from time to time of the Registrable Securities
may be irreparably harmed by any such failure, and accordingly agree that the
Purchasers and such holders, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of the Company under this Agreement in
accordance with the terms and conditions of this Agreement, in any court of the
United States or any State thereof having jurisdiction.  Time shall be of the essence in this
Agreement.

 

(c)  Notices.  All notices,
requests, claims, demands, waivers and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered by hand,
if delivered personally, by facsimile or by courier, or three days after being
deposited in the mail (registered or certified mail, postage prepaid, return
receipt requested) as follows: If to the Company, to it at 370 17th Street, Suite 3900,
Denver, Colorado 80202, and if to a holder, to the address of such holder set
forth in the security register or other records of the Company, or to such
other address as the Company or any such holder may have furnished to the other
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

 

(d)  Parties in Interest. 
All the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the parties hereto,
the holders from time to time of the Registrable Securities and the respective
successors and assigns of the foregoing. 
In the event that any transferee of any holder of Registrable Securities
shall acquire Registrable Securities, in any manner, whether by gift, bequest,
purchase, operation of law or otherwise, such transferee shall, without any
further writing or action of any kind, be deemed a beneficiary hereof for all
purposes and such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities
such transferee shall be entitled to receive the benefits of, and be
conclusively deemed to have agreed to be bound by all of the applicable terms
and provisions of this Agreement.  If the
Company shall so request, any such successor, assign or transferee shall agree
in writing to acquire and hold the Registrable Securities subject to all of the
applicable terms hereof.

 

(e)  Survival.  The
respective indemnities, agreements, representations, warranties and each other
provision set forth in this Agreement or made pursuant hereto shall remain in
full force and effect regardless of any investigation (or statement as to the
results thereof) made 

 

19

 

by or on behalf of any holder of Registrable
Securities, any director, officer or partner of such holder, or any controlling
person of any of the foregoing, and shall survive delivery of and payment for
the Registrable Securities pursuant to the Purchase Agreement, the transfer and
registration of Registrable Securities by such holder and the consummation of
an Exchange Offer.

 

(f)  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

 

(g)  Headings.  The
descriptive headings of the several Sections and paragraphs of this Agreement
are inserted for convenience only, do not constitute a part of this Agreement
and shall not affect in any way the meaning or interpretation of this
Agreement.

 

(h)  Entire Agreement; Amendments.  This Agreement and the other writings
referred to herein (including the Indenture and the form of Securities) or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter.  This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter.  This Agreement may be amended
and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a written instrument duly executed by the Company and the holders of at
least a majority in aggregate principal amount of the Registrable Securities at
the time outstanding.  Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any amendment or waiver effected pursuant to this Section 9(h), whether or
not any notice, writing or marking indicating such amendment or waiver appears
on such Registrable Securities or is delivered to such holder.

 

(i)  Inspection.  For so
long as this Agreement shall be in effect, this Agreement and a complete list
of the names and addresses of all the record holders of Registrable Securities
shall be made available for inspection and copying on any Business Day by any
holder of Registrable Securities for proper purposes only (which shall include
any purpose related to the rights of the holders of Registrable Securities
under the Securities, the Indenture and this Agreement) at the offices of the
Company at the address thereof set forth in Section 9(c) and at the
office of the Trustee under the Indenture.

 

(j)  Counterparts.  This
Agreement may be executed by the parties in counterparts, each of which shall
be deemed to be an original, but all such respective counterparts shall
together constitute one and the same instrument.

 

(k)  Severability.  If any
provision of this Agreement, or the application thereof in any circumstance, is
held to be invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of such provision in every other respect
and of the remaining provisions contained in this Agreement shall not be
affected or impaired thereby.

 

20

 

If the foregoing
is in accordance with your understanding, please sign and return to us six
counterparts hereof, and upon the acceptance hereof by you, on behalf of each
of the Purchasers, this letter and such acceptance hereof shall constitute a
binding agreement between each of the Purchasers, the Guarantors and the
Company.  It is understood that your
acceptance of this letter on behalf of each of the Purchasers is pursuant to
the authority set forth in a form of Agreement among Purchasers, the form of
which shall be submitted to the Company for examination upon request, but without
warranty on your part as to the authority of the signers thereof.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  Venoco, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  

  
	
   

  	
   

  	
  Name: Timothy M.
  Marquez

  
	
   

  	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Whittier
  Pipeline Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  

  
	
   

  	
   

  	
  Name: Timothy M.
  Marquez

  
	
   

  	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TexCal
  Energy (LP) LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  Venoco, Inc.,
  its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  

  
	
   

  	
   

  	
  Name: Timothy M.
  Marquez

  
	
   

  	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TexCal
  Energy (GP) LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  Venoco, Inc.,
  its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  

  
	
   

  	
   

  	
  Name: Timothy M.
  Marquez

  
	
   

  	
   

  	
  Title: Chief
  Executive Officer

  

 

21

 

	
   

  	
  TexCal
  Energy South Texas L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TexCal Energy
  (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Venoco, Inc.,
  its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  

  
	
   

  	
   

  	
  Name: Timothy M.
  Marquez

  
	
   

  	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Catco
  Energy LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Venoco, Inc.,
  its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  

  
	
   

  	
   

  	
  Name: Timothy M.
  Marquez

  
	
   

  	
   

  	
  Title: Chief
  Executive Officer

  

 

22

 

	
  Accepted as of
  the date hereof:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  UBS
  Securities LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
   

  
	
  Name: James
  Boland

  	
   

  	
   

  
	
  Title: Managing
  Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
   

  
	
  Name: Francisco
  Pinto-Leite

  	
   

  	
   

  
	
  Title: Executive
  Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BMO
  Capital Markets Corp.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
   

  
	
  Name: Thomas D.
  Dale

  	
   

  	
   

  
	
  Title: Managing
  Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Credit Suisse Securities (USA) LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
   

  
	
  Name: David S.
  Antelman

  	
   

  	
   

  
	
  Title: Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RBS
  Securities Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
   

  
	
  Name: Scott
  Stearns

  	
   

  	
   

  
	
  Title: Managing
  Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  On behalf of
  each of the Purchasers

  	
   

  	
   

  

 

23

 

Schedule 1

 

Whittier Pipeline Corporation

 

TexCal Energy (LP) LLC

 

TexCal Energy (GP) LLC

 

TexCal Energy South Texas L.P.

 

Catco Energy LLC

 

1Exhibit 4.1

 

EXECUTION COPY

 

PIER 1 IMPORTS, INC.,

 

THE SUBSIDIARY GUARANTORS PARTIES HERETO,

 

AND

 

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

 

AS TRUSTEE

 

9.0% Convertible Senior Notes due 2036

 

 

INDENTURE

 

Dated as of August 4, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.01. Definitions

  	
   

  	
  1

  
	
  Section 1.02. Other Definitions

  	
   

  	
  9

  
	
  Section 1.03. Incorporation by Reference of Trust Indenture Act

  	
   

  	
  9

  
	
  Section 1.04. Rules of Construction

  	
   

  	
  10

  
	
  Section 1.05. Section 382 Interpretive Provisions

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 THE SECURITIES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 2.01. Title; Amount and Issue of Securities; Principal and Interest

  	
   

  	
  10

  
	
  Section 2.02. Form of Securities

  	
   

  	
  12

  
	
  Section 2.03. Legends

  	
   

  	
  12

  
	
  Section 2.04. Execution and Authentication

  	
   

  	
  13

  
	
  Section 2.05. Registrar and Paying Agent

  	
   

  	
  14

  
	
  Section 2.06. Paying Agent to Hold Money in Trust

  	
   

  	
  15

  
	
  Section 2.07. Securityholder Lists

  	
   

  	
  15

  
	
  Section 2.08. General Provisions Relating to Transfer and Exchange

  	
   

  	
  16

  
	
  Section 2.09. Book-Entry Provisions for the Global Securities

  	
   

  	
  16

  
	
  Section 2.10. New Securities Upon Partial Conversion or After the Conversion Rights
  Termination Date

  	
   

  	
  18

  
	
  Section 2.11. Mutilated, Destroyed, Lost or Stolen Securities

  	
   

  	
  18

  
	
  Section 2.12. Outstanding Securities

  	
   

  	
  19

  
	
  Section 2.13. Temporary Securities

  	
   

  	
  19

  
	
  Section 2.14. Cancellation

  	
   

  	
  20

  
	
  Section 2.15. Payment of Interest; Defaulted Interest

  	
   

  	
  20

  
	
  Section 2.16. Computation of Interest and Make-Whole Payment

  	
   

  	
  21

  
	
  Section 2.17. Cusip and ISIN Numbers

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 COVENANTS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 3.01. Payment of
  Securities

  	
   

  	
  21

  
	
  Section 3.02. Financial Statements

  	
   

  	
  22

  
	
  Section 3.03. Maintenance of Office or Agency

  	
   

  	
  22

  
	
  Section 3.04. Corporate Existence

  	
   

  	
  23

  
	
  Section 3.05. Payment of Taxes and Other Claims

  	
   

  	
  23

  
	
  Section 3.06. Compliance Certificate

  	
   

  	
  23

  
	
  Section 3.07. Further Instruments and Acts

  	
   

  	
  23

  
	
  Section 3.08. Statement by Officers as to Default

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 SUCCESSOR COMPANY

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 4.01. Consolidation, Merger and Sale of Assets

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 REDEMPTION OF SECURITIES

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.01. Optional Redemption

  	
   

  	
  25

  

 

i

 

	
  Section 5.02. Election to Redeem; Notice to Trustee

  	
   

  	
  25

  
	
  Section 5.03. Selection by Trustee of Securities to be Redeemed

  	
   

  	
  25

  
	
  Section 5.04. Notice of Redemption

  	
   

  	
  26

  
	
  Section 5.05. Deposit of Redemption Price

  	
   

  	
  27

  
	
  Section 5.06. Securities Payable on Redemption Date

  	
   

  	
  27

  
	
  Section 5.07. Securities Redeemed in Part

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 DEFAULTS AND REMEDIES

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 6.01. Events of Default

  	
   

  	
  27

  
	
  Section 6.02. Acceleration

  	
   

  	
  29

  
	
  Section 6.03. Other Remedies

  	
   

  	
  30

  
	
  Section 6.04. Waiver of Past Defaults

  	
   

  	
  30

  
	
  Section 6.05. Control by Majority

  	
   

  	
  30

  
	
  Section 6.06. Limitation on Suits

  	
   

  	
  30

  
	
  Section 6.07. Rights of Holders to Receive Payment

  	
   

  	
  31

  
	
  Section 6.08. Collection Suit by Trustee

  	
   

  	
  31

  
	
  Section 6.09. Trustee May File Proofs of Claim

  	
   

  	
  31

  
	
  Section 6.10. Priorities

  	
   

  	
  32

  
	
  Section 6.11. Restoration of Rights and Remedies

  	
   

  	
  32

  
	
  Section 6.12. Undertaking of Costs

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 TRUSTEE

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 7.01. Duties of Trustee

  	
   

  	
  32

  
	
  Section 7.02. Rights of Trustee

  	
   

  	
  34

  
	
  Section 7.03. Individual Rights of Trustee

  	
   

  	
  34

  
	
  Section 7.04. Trustee’s Disclaimer

  	
   

  	
  35

  
	
  Section 7.05. Notice of Defaults

  	
   

  	
  35

  
	
  Section 7.06. Reports by Trustee to Holders

  	
   

  	
  35

  
	
  Section 7.07. Compensation and Indemnity

  	
   

  	
  35

  
	
  Section 7.08. Replacement of Trustee

  	
   

  	
  36

  
	
  Section 7.09. Successor Trustee by Merger

  	
   

  	
  37

  
	
  Section 7.10. Eligibility; Disqualification

  	
   

  	
  37

  
	
  Section 7.11. Preferential Collection of Claims Against Company

  	
   

  	
  37

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

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 DISCHARGE OF INDENTURE

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 8.01. Discharge of Liability on Securities

  	
   

  	
  38

  
	
  Section 8.02. Reinstatement

  	
   

  	
  39

  
	
  Section 8.03. Officers’ Certificate; Opinion of Counsel

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 AMENDMENTS

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 9.01. Without Consent of Holders

  	
   

  	
  39

  
	
  Section 9.02. With Consent of Holders

  	
   

  	
  40

  
	
  Section 9.03. Compliance with Trust Indenture Act

  	
   

  	
  41

  
	
  Section 9.04. Revocation and Effect of Consents and Waivers

  	
   

  	
  41

  
	
  Section 9.05. Notation on or Exchange of Securities

  	
   

  	
  42

  
	
  Section 9.06. Trustee to Sign Amendments

  	
   

  	
  42

  

 

ii

 

	
  ARTICLE 10 SUBSIDIARY GUARANTEE

  	
   

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 10.01. Subsidiary Guarantee

  	
   

  	
  42

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

  	
   

  	
  44

  
	
  Section 10.03. Right of Contribution

  	
   

  	
  45

  
	
  Section 10.04. No Subrogation

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 PURCHASE AT OPTION OF
  HOLDER UPON A FUNDAMENTAL CHANGE; PURCHASE AT THE OPTION OF HOLDERS

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 11.01. Purchase at the Option of the Holder Upon a Fundamental Change

  	
   

  	
  45

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

  	
   

  	
  47

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

  	
   

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 CONVERSION

  	
   

  	
  52

  
	
   

  	
   

  	
   

  
	
  Section 12.01. Conversion of Securities

  	
   

  	
  52

  
	
  Section 12.02. Adjustments to Conversion Rate

  	
   

  	
  55

  
	
  Section 12.03. [Reserved]

  	
   

  	
  61

  
	
  Section 12.04. [Reserved]

  	
   

  	
  61

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

  	
   

  	
  61

  
	
  Section 12.06. Responsibility of Trustee

  	
   

  	
  63

  
	
  Section 12.07. Notice to Holders Prior to Certain Actions

  	
   

  	
  63

  
	
  Section 12.08. Stockholder Rights Plan

  	
   

  	
  64

  
	
  Section 12.09. Additional Conversion Provisions

  	
   

  	
  64

  
	
  Section 12.10. Termination of Conversion and Additional Post-Termination Conversion
  Provisions

  	
   

  	
  65

  
	
  Section 12.11. 5% Shareholder Limitations

  	
   

  	
  68

  
	
  Section 12.12. Waiver of 5% Shareholder Provisions

  	
   

  	
  69

  
	
  Section 12.13. Limitation on Issuances of Common Stock

  	
   

  	
  70

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 MISCELLANEOUS

  	
   

  	
  71

  
	
   

  	
   

  	
   

  
	
  Section 13.01. Trust Indenture Act Controls

  	
   

  	
  71

  
	
  Section 13.02. Notices

  	
   

  	
  71

  
	
  Section 13.03. Communication by Holders with other Holders

  	
   

  	
  72

  
	
  Section 13.04. Certificate and Opinion as to Conditions Precedent

  	
   

  	
  72

  
	
  Section 13.05. Statements Required in Certificate or Opinion

  	
   

  	
  72

  
	
  Section 13.06. When Securities Disregarded

  	
   

  	
  72

  
	
  Section 13.07. Rules by Trustee, Paying Agent and Registrar

  	
   

  	
  73

  
	
  Section 13.08. Legal Holidays

  	
   

  	
  73

  
	
  Section 13.09. Governing Law; Waiver of Jury Trial

  	
   

  	
  73

  
	
  Section 13.10. No Recourse Against Others

  	
   

  	
  73

  
	
  Section 13.11. Successors

  	
   

  	
  73

  
	
  Section 13.12. Multiple Originals

  	
   

  	
  73

  
	
  Section 13.13. Table of Contents; Headings

  	
   

  	
  73

  
	
  Section 13.14. Severability Clause

  	
   

  	
  74

  

 

iii

 

	
  Section 13.15. Force Majeure

  	
   

  	
  74

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  A  Form of the Security

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  B  Form of Indenture Supplement to
  Add Subsidiary Guarantors

  	
   

  	
   

  

 

iv

 

INDENTURE
dated as of August 4, 2009, among PIER 1 IMPORTS, INC., a Delaware
corporation (the “Company”), THE
SUBSIDIARY GUARANTORS (as defined herein) and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee (the “Trustee”).

 

Each
party agrees as follows for the benefit of the other parties and for the equal
and ratable benefit of the Holders of the Company’s 9.0% Convertible Senior
Notes due 2036 (the “Securities”) on
the date hereof and the guarantees thereof by the Subsidiary Guarantors.

 

ARTICLE 1 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01. 
Definitions.

 

“5% Shareholder” has the meaning ascribed to “5-percent
shareholder” in Section 382.

 

“Additional Voluntary Conversion Interest Payment” means,
upon a conversion pursuant to Section 12.01(a)(i) of the Indenture,
in respect of the Securities to be converted pursuant to such Section, a
payment in an amount equal to the lesser of (i) the remaining scheduled
interest payments at the interest rate specified herein attributable to such Securities
from the last day through which interest has been paid on such Securities
through and including the date that is two and one-half years after the
Conversion Date and (ii) the remaining scheduled interest payments at the
interest rate specified herein attributable to such Securities from the last
day through which interest has been paid on such Securities through and
including February 15, 2013.  The
Company may, at its option, make the Additional Voluntary Conversion Interest
Payment in cash, Common Stock, or a combination thereof; provided that all
interest accrued from the last date through which interest was paid on the
converted Securities through and including the Conversion Date shall be paid in
cash.   In the event that the Company
elects to make any portion of the Additional Voluntary Conversion Interest
Payment in Common Stock, such Common Stock shall be valued at the higher of (i) $1.50
per share and (ii) the Make-Whole Five Day VWAP.

 

“Additional Post-Termination Interest Payment” means, upon a
conversion pursuant to Section 12.01(a)(ii) of the Indenture, in
respect of the Securities to be converted pursuant to such Section, a payment
in an amount equal to the lesser of (i) the remaining scheduled interest
payments at the interest rate specified herein attributable to such Securities
from the last day through which interest has been paid on such Securities
through and including the date that is one and one-half years after the
Conversion Date and (ii) the remaining scheduled interest payments at the
interest rate specified herein attributable to such Securities from the last
day through which interest has been paid on such Securities through and
including February 15, 2013.  The
Company may, at its option, make the Additional Post-Termination Interest
Payment in cash, Common Stock, or a combination thereof; provided that all
interest accrued from the last date through which interest was paid on the
converted Securities through and including the Conversion Date shall be paid in
cash.  In the event that the Company
elects to make any portion of the Additional Post-Termination Interest Payment
in Common Stock, the Common Stock will be valued at 90% of the Termination
Conversion Price in effect at that time.

 

 

“Affiliate” of any specified Person means any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. 
For the purposes of this definition, “control”
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled”
have meanings correlative to the foregoing; provided, however, that the
existence of a management contract by the Company or an Affiliate of the
Company to manage another entity shall not be deemed to be control.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Common Stock” means the Company’s common stock, par value
$0.001 per share.

 

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

 

“Company Stock” means Common Stock and, to the extent
specified in a notice from the Company to any Holder prior to any conversion,
any other interest in the Company that the Company determines will be treated
as stock of the Company for purposes of applying Section 382 to the
Company.

 

2

 

“Continuing Director” means a director who either was a
member of the Company’s board of directors on August 4, 2009, or who
becomes a director of the Company subsequent to that date and whose election,
appointment or nomination for election by stockholders of the Company, is duly
approved by a majority of the Continuing Directors on the board of directors of
the Company at the time of such approval, either by a specific vote or by
approval of the proxy statement issued by the Company on behalf of the entire
board of directors of the Company in which such individual is named as nominee
for director.

 

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

 

“Conversion Notice” means the form of conversion notice
attached to the back of the Securities.

 

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

 

“Conversion Rate” means, in respect of each $1,000 principal
amount of Securities, initially 399.2016 shares of Common Stock, subject to
adjustments as set forth herein.

 

“Conversion
Shares” means the Common Stock issuable upon conversion of the Securities in
accordance with Section 12.01(c).

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

“Excess of Specified Percentage Certifications” means the
certifications, set forth in Item 2 or Item 3 of the Conversion Notice, that,
for purposes of applying Section 382 to the Company, the Holder or any of
its Related Persons (i) is or was a 5% Shareholder with respect to the
Company at any time during the Section 382 Testing Period ending on the
applicable Conversion Date or (ii) would as a result of the conversion of
the Securities the subject of such Conversion Notice become a 5% Shareholder
with respect to the Company.

 

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

 

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

 

“Five Day VWAP” means the arithmetic average of the Daily
VWAP for the five consecutive Trading Days ending two Trading Days prior to the
applicable Conversion Date.

 

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

 

(1)                                  any “person” or
“group” within the meaning of Section 13(d) of the Exchange Act,
other than the Company, any Subsidiary of the Company or any employee benefit
plan of the Company or any such Subsidiary, files a Schedule TO or any other
schedule, form or report under the Exchange Act disclosing that such person or
group has become the direct or indirect Beneficial Owner of Common Equity of
the Company representing more than 50% of the voting power of the Company’s
Common Equity;

 

(2)                                  consummation of
any share exchange, consolidation or merger of the Company pursuant to which
the Common Stock will be converted into cash, securities or other property or
any sale, lease or other transfer (in one transaction or a series of
transactions) of all or substantially all of the consolidated assets of the Company
and its Subsidiaries, taken as a whole, to any Person other than one of the
Company’s Subsidiaries; provided, however, that a transaction where the holders
of more than 50% of all classes of the Company’s Common Equity immediately
prior to such transaction own, directly or indirectly, more than 50% of all
classes of Common Equity of the continuing or surviving corporation or
transferee immediately after such event shall not be a Fundamental Change;

 

(3)                                  Continuing
Directors cease to constitute at least a majority of the Company’s board of
directors;

 

(4)                                  the
stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or

 

(5)                                  the Company’s
Common Stock is neither listed on a national securities exchange nor quoted on
an established electronic over-the-counter trading market in the United States;

 

4

 

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

 

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

 

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

 

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

 

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

 

“Issue Date” means August 4, 2009.

 

“Last Reported Sale Price” of the Common Stock on any date
means the closing per-share sale price (or if no closing per-share sale price
is reported, the average of the last bid and ask prices or, if more than one in
either case, the average of the average last bid and the average last ask
prices) on that date as reported on the New York Stock Exchange or, if the
Common Stock is not listed on the New York Stock Exchange, then as reported by
the NASDAQ Stock Market or the principal other national or regional securities
exchange on which the shares of the Common Stock are then traded or, if the
Common Stock is not listed or approved for trading on the NASDAQ Stock Market
or another national or regional securities exchange, on the principal market
(including any established electronic over-the-counter trading market in the
United States) on which shares of the Common Stock are then traded. If the
Common Stock is not so traded, the “Last Reported Sale Price” of the Common
Stock will be the average of the midpoint of the last bid and ask prices for
shares of the Common Stock on the relevant date from each of at least three
nationally recognized independent investment banking firms selected by the
Company for this purpose.

 

“Make-Whole Five Day VWAP” means the arithmetic average of
the Daily VWAP for the five consecutive Trading Days ending on the sixth
Trading Day after the applicable Conversion Date.

 

“Make-Whole Payment” means the Additional Voluntary
Conversion Interest Payment and the Additional Post-Termination Interest
Payment, as applicable.

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Related
Person” means, with respect to any Holder, any Person that would be
treated as owning shares of Company Stock owned by such Holder at any time
during the Section 382 Testing Period ending on the Conversion Date,
applying the attribution rules in Section 382, but

6

 

such term shall not include a “public group” as defined in Treasury
Regulation Section 1.382-2T(f)(13).

 

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

 

“Section 382” means Section 382 of the Code and the
Treasury Regulations promulgated thereunder.

 

“Section 382 Testing Period” has the meaning ascribed to
“testing period” in Section 382, as applied to the Company.

 

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

 

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

 

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

 

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

 

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

 

“Specified Percentage Certifications” means the
certifications, set forth in Item 1 of the Conversion Notice, that, for
purposes of applying Section 382 to the Company, the Holder and each of
its Related Persons, (i) is not and was not a 5% Shareholder with respect
to the Company at any time during the Section 382 Testing Period ending on
the applicable Conversion Date and (ii) would not as a result of the
conversion of the Securities the subject of such Conversion Notice become a 5%
Shareholder with respect to the Company.

 

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

 

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

 

7

 

Common Stock over the five Trading-Day period ending on the Trading Day
preceding the effective date of such Fundamental Change.

 

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

 

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

 

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

 

“Termination Conversion Price” means, in respect of each
$1,000 of Securities, 125% of the Conversion Price.

 

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

 

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

 

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

 

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

 

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

 

8

 

Section 1.02. 
Other Definitions.

 

	
  Term

  	
   

  	
  Defined in Section

  
	
   

  	
   

  	
   

  
	
  “5%
  Shareholder Provision Waiver Notice”

  	
   

  	
  12.12

  
	
  “Adjustment
  Event”

  	
   

  	
  12.02(l)

  
	
  “Agent”

  	
   

  	
  3.03

  
	
  “Agent
  Members”

  	
   

  	
  2.09

  
	
  “Authenticating
  Agent”

  	
   

  	
  2.04

  
	
  “Certificate
  of Destruction”

  	
   

  	
  2.14

  
	
  “Company
  Notice”

  	
   

  	
  11.03(a)

  
	
  “Company
  Notice Date”

  	
   

  	
  11.03(a)

  
	
  “Company
  Order”

  	
   

  	
  2.04

  
	
  “Conversion
  Date”

  	
   

  	
  12.01(b)

  
	
  “Conversion
  Rights Termination Date”

  	
   

  	
  12.10

  
	
  “Conversion
  Termination Notice”

  	
   

  	
  12.10(a)

  
	
  “cross
  acceleration provision”

  	
   

  	
  6.01

  
	
  “Defaulted
  Interest”

  	
   

  	
  2.15

  
	
  “Determination
  Date”

  	
   

  	
  12.02(l)

  
	
  “Event
  of Default”

  	
   

  	
  6.01

  
	
  “Expiration
  Time”

  	
   

  	
  12.02(e)

  
	
  “Fundamental
  Change Purchase Date”

  	
   

  	
  11.01

  
	
  “Fundamental
  Change Purchase Notice”

  	
   

  	
  11.01(b)

  
	
  “Fundamental
  Change Purchase Price”

  	
   

  	
  11.01

  
	
  “Global
  Security Legend”

  	
   

  	
  2.03

  
	
  “Indenture
  Shares”

  	
   

  	
  12.13(a)

  
	
  “Initial
  Dividend Rate”

  	
   

  	
  12.02(d)

  
	
  “judgment
  default provision”

  	
   

  	
  6.01

  
	
  “Legal
  Holiday”

  	
   

  	
  13.08

  
	
  “Maximum
  Shares”

  	
   

  	
  12.13(a)

  
	
  “Obligations”

  	
   

  	
  10.01

  
	
  “Old
  Notes”

  	
   

  	
  12.13(a)

  
	
  “Paying
  Agent”

  	
   

  	
  2.05

  
	
  “Post-Termination
  Preservation of Conversion Rights Legend”

  	
   

  	
  2.03

  
	
  “Purchase
  Date”

  	
   

  	
  11.02(a)

  
	
  “Purchase
  Notice”

  	
   

  	
  11.02(a)(i)

  
	
  “Purchase
  Price”

  	
   

  	
  11.02(a)

  
	
  “Reorganization
  Event”

  	
   

  	
  12.05(a)

  
	
  “Reference
  Property”

  	
   

  	
  12.05(a)

  
	
  “Registrar”

  	
   

  	
  2.05

  
	
  “Redemption
  Price”

  	
   

  	
  5.01

  
	
  “Settlement
  Amount”

  	
   

  	
  12.01(c)

  
	
  “Special
  Interest Payment Date”

  	
   

  	
  2.15(a)

  
	
  “Special
  Record Date”

  	
   

  	
  2.15(a)

  
	
  “Spin-Off”

  	
   

  	
  12.02(c)

  
	
  “Successor
  Company”

  	
   

  	
  4.01(a)

  

 

Section 1.03.  Incorporation by Reference
of Trust Indenture Act.  Whenever this Indenture incorporates a
provision of the TIA, the provision is incorporated by reference in and made a
part of this Indenture. To the extent applicable, the following TIA terms used
in this Indenture have the following meanings:

 

“Commission” means the SEC.

 

9

 

“indenture securities” means the Securities.

 

“indenture security holder” means a Securityholder.

 

“indenture to be qualified” means this Indenture.

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  “or” is not
exclusive;

 

(d)                                 “including”
means including without limitation; and

 

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

 

Section 1.05.  Section 382
Interpretive Provisions.  For purposes of this Indenture:

 

(a)                                  ownership of
Company Stock shall be determined using the rules applicable to the
Company under Section 382;

 

(b)                                 the Securities
shall not be treated as having been converted for purposes of Section 382
prior to the actual conversion thereof; and

 

(c)                                  Article 12
shall be interpreted and applied in a manner consistent with the intent of
eliminating increases in the ownership of Company Stock by 5% Shareholders
other than public groups as determined for purposes of applying Section 382
to the Company.

 

ARTICLE 2 

THE SECURITIES

 

Section 2.01.  Title; Amount and Issue of
Securities; Principal and Interest.  (a) The Securities shall be known and
designated as the “9.0% Convertible Senior Notes due 2036” of the Company.  The aggregate principal amount of Securities
which may be authenticated and delivered under this Indenture is initially
limited to $86.059 million, except for Securities authenticated and delivered
upon registration of, transfer of, or in exchange for, or in lieu of

 

10

 

other Securities pursuant
to Section 2.04, Section 2.08, 2.09, 2.10, 2.11, 2.13, 5.07, 9.05,
11.03, 12.01, 12.09 or 12.10; provided that additional Securities may be issued
in an unlimited aggregate principal amount from time to time thereafter as set
forth pursuant to Section 2.04.  The
Securities shall be issuable in denominations of $1,000 or integral multiples
thereof.

 

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

 

(c)           Interest on the Securities shall accrue from and
including the date specified on the face of such Securities until the principal
thereof is paid or made available for payment. 
Interest shall be payable semi-annually in arrears on February 15
and August 15 in each year, commencing February 15, 2010.

 

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

 

(e)           Principal of (and any portion of the Make-Whole
Payment and Settlement Amount payable in cash, if any) and interest on, Global
Securities shall be payable to DTC in immediately available funds.

 

(f)            Principal on Definitive Securities shall be payable at
the office or agency of the Company maintained for such purpose in the Borough
of Manhattan, The City of New York, and the Company initially designates as
such office the office of the Trustee acting through The Bank of New York
Mellon at 101 Barclay Street, 7 East, New York, NY 10286, Attention: Corporate
Trust.  Interest (and any portion of the
Make-Whole Payment and Settlement Amount payable in cash, if any) on Definitive
Securities will be payable (i) to Holders having an aggregate principal
amount of $5,000,000 or less, by check mailed to the Holders of these
Securities and (ii) to Holders having an aggregate principal amount of
more than $5,000,000, either by check mailed to each Holder or, upon
application by a Holder to the Registrar not later than the relevant Regular
Record Date, by wire transfer in immediately available funds to that Holder’s
account 

 

11

 

within the United States,
which application shall remain in effect until the Holder notifies, in writing,
the Registrar to the contrary.

 

Section 2.02.  Form of Securities.

 

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

 

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

 

Section 2.03.  Legends.

 

(a)           Global Security Legend

 

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

 

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

 

12

 

PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. 

 

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

 

(b)           Legend for Definitive Securities

 

Definitive Securities
shall bear a legend substantially in the following form:

 

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

 

(c)           Post-Termination Preservation of
Conversion Rights Legend

 

In the event that after
the date of delivery of the Conversion Termination Notice and prior to the
Conversion Rights Termination Date, a Holder submits a Conversion Notice in
respect of which such Holder provides the Excess of Specified Percentage
Certifications, any Securities that such Holder consequently cannot convert
shall bear a legend in substantially the following form:

 

“THE HOLDER OF THIS
SECURITY CONTINUES TO POSSESS THE RIGHT TO CONVERT THIS SECURITY INTO COMMON
STOCK ON AND AFTER THE CONVERSION RIGHTS TERMINATION DATE IN ACCORDANCE WITH
THE TERMS OF ARTICLE 12 OF THE INDENTURE.”

 

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

 

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

 

At any time and from time
to time after the execution and delivery of this Indenture, the Company may
deliver Securities executed by the Company in an unlimited aggregate principal
amount to the Trustee for authentication, together with a written order of the
Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company (the “Company
Order”) for the authentication and delivery of such Securities, and
the Trustee in accordance with such Company Order shall authenticate and
deliver such Securities as in this Indenture provided and not otherwise.  All Securities issued on the Issue 

 

13

 

Date shall be identical
in all respects with any such Securities authenticated and delivered
thereafter, other than issue dates, the date from which interest accrues,
appropriate CUSIP numbers or other identifying notations and any changes
relating thereto.  Notwithstanding
anything to the contrary contained in this Indenture, subject to Section 2.12,
all Securities issued under this Indenture shall vote and consent together on
all matters as one class and no series of Securities will have the right to
vote or consent as a separate class on any matter.

 

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

 

In case the Company or
any Subsidiary Guarantor, pursuant to Article 4 or Section 10.02,
shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to any Person, and the successor Person resulting from such consolidation,
or surviving such merger, or into which the Company or any Subsidiary Guarantor
shall have been merged, or the Person which shall have received a conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an
indenture supplemental hereto with the Trustee pursuant to Article 4, any
of the Securities authenticated or delivered prior to such consolidation,
merger, conveyance, transfer, lease or other disposition may, from time to
time, at the request of the successor Person, be exchanged for other Securities
executed in the name of the successor Person with such changes in phraseology
and form as may be appropriate, but otherwise in substance of like tenor as the
Securities surrendered for such exchange and of like principal amount; and the
Trustee, upon Company Order of the successor Person, shall authenticate and
deliver Securities as specified in such order for the purpose of such
exchange.  If Securities shall at any
time be authenticated and delivered in any new name of a successor Person
pursuant to this Section 2.04 in exchange or substitution for or upon
registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time outstanding for Securities authenticated
and delivered in such new name.

 

Section 2.05. 
Registrar and Paying Agent.  The
Company shall maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (the “Registrar”)
and an office or agency where Securities may be presented for payment (the “Paying Agent”).  The
Company shall cause each of the Registrar and the Paying Agent to maintain an
office or agency in the Borough of Manhattan, The City of New York, and the
Company initially designates as Registrar and Paying Agent the Trustee acting
through The Bank of New York Mellon at 101 Barclay Street, 7 East, New York, NY
10286, Attention: Corporate Trust.  The Registrar
shall keep a register of the Securities and of their transfer and exchange (the
“Securities Register”).  The Company may have one or more
co-registrars and one or more additional paying agents.  The term “Paying Agent”
includes any additional paying agent and the term “Registrar”
includes any co-registrar.

 

14

 

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

 

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

 

Section 2.06. 
Paying Agent to Hold Money in Trust.  By
no later than 11:00 a.m., New York City time, on the date on which
any principal of or interest on any Security or any Additional Voluntary
Conversion Interest Payment or Additional Post-Termination Interest Payment
thereon is due and payable, the Company shall deposit with the Paying Agent a
sum sufficient in immediately available funds to pay such principal or
interest, Additional Voluntary Conversion Interest Payment or Additional
Post-Termination Interest Payment when due. 
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that such Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest on, or Additional Voluntary Conversion
Interest Payment or Additional Post-Termination Interest Payment in respect of,
the Securities and shall notify the Trustee in writing of any default by the
Company or any Subsidiary Guarantor in making any such payment.  If the Company or a Subsidiary acts as Paying
Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund.  The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent.  Upon complying with this Section 2.06,
the Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money delivered to the Trustee.  Upon any bankruptcy, reorganization or
similar proceeding with respect to the Company, the Trustee shall serve as
Paying Agent for the Securities.

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           If at any time:

 

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

 

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

 

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

 

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

 

DTC shall surrender such
Global Security or Global Securities to the Trustee for cancellation and the
Company shall execute, and the Trustee, upon receipt of an Officers’
Certificate and Company Order for the authentication and delivery of
Securities, shall authenticate and deliver in exchange for such Global Security
or Global Securities, Definitive Securities in an aggregate 

 

17

 

principal amount equal to
the aggregate principal amount of such Global Security or Global
Securities.  Such Definitive Securities
shall be registered in such names as DTC shall identify in writing as the
beneficial owners of the Securities represented by such Global Security or
Global Securities (or any nominee thereof).

 

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

 

Section 2.10. 
New Securities Upon Partial Conversion or After the
Conversion Rights Termination Date.  In the event that a Holder delivers Securities for conversion
but is only able to convert a portion of such Securities pursuant the terms of
this Indenture, the Company shall execute and the Trustee or the Authenticating
Agent shall authenticate new Securities as set forth in Section 12.09(c) and
Section 12.10(f).  In addition, the
Company shall also execute and the Trustee or the Authenticating Agent shall
also authenticate new Securities in the event that a Holder preserves its
conversion rights in respect of its Securities on and after the Conversion
Rights Termination Date in accordance with Section 12.10(h).

 

Section 2.11.  Mutilated, Destroyed, Lost
or Stolen Securities.  If a mutilated Security is surrendered to the
Registrar or if the Holder of a Security claims that the Security has been
lost, destroyed or wrongfully taken, the Company shall issue and the Trustee
shall authenticate a replacement Security if the requirements of Section 8-405
of the UCC are met, such that the Securityholder (a) satisfies the Company
or the Trustee within a reasonable time after such Securityholder has notice of
such loss, destruction or wrongful taking and the Registrar has not registered
a transfer prior to receiving such notification, (b) makes such request to
the Company or Trustee prior to the Security being acquired by a protected
purchaser as defined in Section 8-303 of the UCC and (c) satisfies
any other reasonable requirements of the Trustee.  Such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the Company,
the Trustee, the Paying Agent and the Registrar from any loss which any of them
may suffer if a Security is replaced, and, in the absence of notice to the
Company, any Subsidiary Guarantor or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon Company
Order the Trustee shall authenticate and make available for delivery, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount, bearing
a number not contemporaneously outstanding.

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

Section 2.13.  Temporary Securities.  In the event that Definitive Securities are to be
issued under the terms of this Indenture, until such Definitive Securities are
ready for delivery, the Company may prepare and upon receipt of a Company Order
the Trustee shall authenticate temporary Securities.  Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. 
Without unreasonable delay, the Company shall prepare and upon receipt
of a Company Order the Trustee shall authenticate Definitive Securities.  After the preparation of Definitive
Securities, the temporary Securities shall be exchangeable for Definitive
Securities upon surrender of the temporary Securities at any office or agency
maintained by the Company for that purpose and such exchange shall be without
charge to the Holder.  Upon surrender for

 

19

 

cancellation of any one or more temporary Securities, the Company shall
execute, and the Trustee shall authenticate and make available for delivery in
exchange therefor, one or more Definitive Securities representing an equal
principal amount of Securities.  Until so
exchanged, the Holder of temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as a Holder of Definitive Securities.

 

Section 2.14.  Cancellation.  The Company at any time may deliver Securities to the
Trustee for cancellation.  The Registrar
and the Paying Agent shall forward to the Trustee any Securities surrendered to
them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and dispose of such Securities in accordance with its internal
policies and customary procedures including delivery of a certificate (a “Certificate of Destruction”) describing such Securities
disposed (subject to the record retention requirements of the Exchange Act) or
deliver canceled Securities to the Company pursuant to written direction by an
Officer.  The Company may not issue new
Securities to replace Securities it has paid for or delivered to the Trustee
for cancellation for any reason other than in connection with a transfer or
exchange.

 

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

 

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

 

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

 

(a)           The Company may elect to make payment of
any Defaulted Interest to the Persons in whose names the Securities (or their
respective predecessor Securities) are registered at the close of business on a
Special Record Date (as defined below) for the payment of such Defaulted
Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date (not less than 30 days after such notice) of the proposed
payment (the “Special Interest Payment Date”),
and at the same time the Company shall deposit with the Trustee an amount of

 

20

 

money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. 
Thereupon the Trustee shall fix a record date (the “Special
Record Date”) for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the Special
Interest Payment Date and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. 
The Trustee shall promptly notify the Company of such Special Record
Date, and in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date and
Special Interest Payment Date therefor to be given in the manner provided for
in Section 13.02, not less than 10 days prior to such Special Record
Date.  Notice of the proposed payment of
such Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor having been so given, such Defaulted Interest shall be paid
on the Special Interest Payment Date to the Persons in whose names the
Securities (or their respective predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).

 

(b)           The Company may make payment
of any Defaulted Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the Trustee.

 

Subject
to the foregoing provisions of this Section 2.15, each Security delivered
under this Indenture upon registration of, transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.

 

Section 2.16.  Computation of Interest
and Make-Whole Payment.  Interest and Make-Whole Payment, if
any, on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.

 

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

 

ARTICLE 3 

COVENANTS

 

Section 3.01.  Payment of Securities.  The Company shall promptly make all payments
in respect of the Securities on the dates and in the manner provided in the
Securities and in this 

 

21

 

Indenture.  All payments made or
due pursuant to the Securities and this Indenture shall be considered paid on
the date due if on such date the Trustee or the Paying Agent holds in
accordance with this Indenture immediately available funds sufficient to pay
all such amounts then due and the Trustee or the Paying Agent, as the case may
be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.

 

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

 

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

 

Section 3.02.  Financial Statements.  In the event and for so long as the Company is
not subject to Section 13 or 15(d) of the Exchange Act, it shall file
with the Trustee and cause to be mailed to each Holder at such Holder’s registered
address, upon the request of any Holder or beneficial holder of the Securities
or the Common Stock issued upon conversion thereof, and make available to such
Holder or beneficial holder of such Securities or Common Stock in connection
with any sale thereof and any prospective purchaser of Securities or Common
Stock designated by such Holder or beneficial holder, the information required
pursuant to Rule 144(c)(2) under the Securities Act and it will take
such further action as any Holder or beneficial holder of such Securities or
Common Stock may reasonably request, all to the extent required from time to
time to enable such Holder or beneficial holder to sell its Securities or
Common Stock without registration under the Securities Act within the limitation
of the exemption provided by Rule 144 of the Securities Act, as such Rule may
be amended from time to time.

 

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

 

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

 

22

 

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

 

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

 

Section 3.05.  Payment of Taxes and Other
Claims.  The
Company will pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (ii) all
lawful claims for labor, materials and supplies, which, if unpaid, might by law
become a material liability or lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Company), are being maintained in
accordance with GAAP or where the failure to effect such payment will not be
disadvantageous to the Holders.

 

Section 3.06.  Compliance Certificate.  The Company shall deliver to the Trustee
within 120 days after the end of each fiscal year of the Company an Officers’
Certificate, one of the signers of which shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating that in the course of the performance by the signers of their duties as
Officers of the Company they would normally have knowledge of any Default or
Event of Default and whether or not the signers know of any Default or Event of
Default that occurred during such period. 
If they do, the certificate shall describe the Default or Event of
Default, its status and the action the Company is taking or proposes to take
with respect thereto.  The Company also
shall comply with TIA Section 314(a)(4).

 

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

 

23

 

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

 

ARTICLE 4 

SUCCESSOR COMPANY

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

ARTICLE 5 

REDEMPTION OF SECURITIES

 

Section 5.01.  Optional Redemption.  Prior to February 15, 2012, the
Securities shall not be redeemable.  On
and after February 15, 2012, the Securities may be redeemed, as a whole or
from time to time in part, subject to the conditions set forth herein, at a
price (the “Redemption Price”) equal to 100%
of the principal amount of Securities to be redeemed, plus accrued and unpaid
interest to the Redemption Date; provided that if the Redemption Date occurs
after a Regular Record Date for the payment of interest and on or prior to the
related interest payment date, the Redemption Price for any such Securities to
be redeemed shall be 100% of the principal amount of such Securities and
accrued and unpaid interest shall be paid to the Holder on such Regular Record
Date.

 

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

 

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

 

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

 

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

 

If
any Securities selected for partial redemption are thereafter surrendered for
conversion in part before termination of the conversion right with respect to
the portion of the Securities so selected, the converted portion of such
Securities shall be deemed (so far as may be), solely for purposes of
determining the aggregate principal amount of Securities to be redeemed by the
Company, to be the portion selected for redemption. Securities which have been
converted 

 

25

 

during a selection of Securities to be redeemed may be treated by the
Trustee as outstanding for the purpose of such selection. Nothing in this Section 5.03
shall affect the right of any Holder to convert any Securities pursuant to Article 12
before the termination of the conversion right with respect thereto.

 

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

 

All
notices of redemption shall state:

 

(a)           the Redemption Date,

 

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

 

(c)           the then current Conversion
Rate, and provide a statement that the Securities called for redemption may be
converted prior to the Redemption Date pursuant to the terms of the Indenture,

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

Section 5.06.  Securities Payable on
Redemption Date.  Notice of redemption having been given as
aforesaid, the Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price, and from and after such date
(unless the Company shall default in the payment of the Redemption Price or
accrued and unpaid interest) such Securities shall cease to bear interest.  Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price.

 

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

 

Section 5.07.  Securities Redeemed in
Part.  Any
Security which is to be redeemed only in part (pursuant to the provisions of
this Article 5) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 3.03 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder’s attorney duly authorized in writing),
and the Company shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Security at the expense of the
Company, a new Security or Securities, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered, provided that each such new Security will be in a principal amount
of $1,000 or integral multiple thereof.

 

ARTICLE 6 

DEFAULTS AND REMEDIES

 

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

 

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

 

27

 

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

 

(c)           failure by the Company to
comply with its obligation to convert the Securities into Common Stock (or,
pursuant to Section 12.13, cash or a combination of cash and Common Stock)
and to make the Make-Whole Payment, if any, upon exercise of a Holder’s
conversion right and such failure continues for a period of five days;

 

(d)           failure by the Company to
give a Fundamental Change notice to Holders when due;

 

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

 

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

 

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

 

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

 

(i)            commences a voluntary case
or proceeding;

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

The
foregoing will constitute Events of Default whatever the reason for any such
Event of Default and whether it is voluntary or involuntary or is effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.

 

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

 

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

 

Section 6.02.  Acceleration.  If an Event of Default (other than an Event
of Default specified in Section 6.01(h) or 6.01(i) above) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in outstanding principal amount of the outstanding Securities by
notice to the Company and the Trustee, may, and the Trustee at the request of
such Holders shall, declare the principal of and accrued and unpaid interest,
if any, on (and any 

 

29

 

portion of the Make-Whole Payment and Settlement Amount payable in
cash, if any, with respect to) all the Securities to be due and payable.  Upon such a declaration, such principal,
premium, if any, and accrued and unpaid interest, if any (and any portion of the
Make-Whole Payment and Settlement Amount payable in cash, if any), shall be due
and payable immediately.  If an Event of
Default specified in Section 6.01(h) or 6.01(i) above occurs and
is continuing, the principal of and accrued and unpaid interest, if any, on all
the Securities outstanding shall be immediately due and payable with no further
action by the Trustee or the Holders.

 

Section 6.03.  Other Remedies.  If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on (and any portion of the Make-Whole Payment and
Settlement Amount payable in cash, if any, with respect to) the Securities or
to enforce the performance of any provision of the Securities or this Indenture.

 

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

 

Section 6.04.  Waiver of Past Defaults.  The Holders of a majority in principal amount
of the outstanding Securities by notice to the Trustee may (a) waive, by
their consent (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Securities), an
existing Default or Event of Default and its consequences except (1) a
Default or Event of Default in the payment of the principal of or interest on a
Security or in the payment of any portion of the Make-Whole Payment and
Settlement Amount payable in cash, if any, or (2) a Default or Event of
Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Securityholder affected and (b) rescind
any such acceleration with respect to the Securities and its consequences if (1) rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction and (2) all existing Events of Default, other than the
nonpayment of the principal of and interest on the Securities that have become
due solely by such declaration of acceleration, have been cured or waived.  When a Default or Event of Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any consequent right.

 

Section 6.05.  Control by Majority.  The Holders of a majority in principal amount
of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Sections
7.01 and 7.02, that the Trustee determines is unduly prejudicial to the rights
of other Securityholders or would involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.07.  Rights of Holders to
Receive Payment.  Notwithstanding any other provision of this
Indenture (including, without limitation, Section 6.06), the right of any
Holder to receive payment of principal of or interest on (or any portion of the
Make-Whole Payment and Settlement Amount payable in cash, if any, with respect
to) the Securities held by such Holder, on or after the respective due dates
expressed in the Securities, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.

 

Section 6.08.  Collection Suit by Trustee.  If an Event of Default specified in clauses (a) or
(b) of Section 6.01 occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount then due and owing (together with interest on any unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.

 

Section 6.09.  Trustee May File
Proofs of Claim.  The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Securityholders allowed in any judicial proceedings relative to the
Company, its Subsidiaries or its or their respective creditors or properties
and, unless prohibited by law or applicable regulations, may be entitled and
empowered to participate as a member of any official committee of creditors
appointed in such matter, and may vote on behalf of the Holders in any election
of a trustee in bankruptcy or other Person performing similar functions, and
any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and its counsel, and any other amounts
due to the Trustee under Section 7.07.

 

31

 

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

 

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

 

SECOND:  to Securityholders for amounts due and unpaid
on the Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest (and any portion of the Make-Whole
Payment and Settlement Amount payable in cash, if any), respectively; and

 

THIRD:  to the Company.

 

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

 

Section 6.11.  Restoration of Rights and
Remedies.  If the Trustee or any Holder has instituted a
proceeding to enforce any right or remedy under this Indenture and the
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to the Holder, then, subject to any
determination in the proceeding, the Company, the Subsidiary Guarantors, the
Trustee, any Subsidiaries and the Holders will be restored severally and respectively
to their former positions hereunder and thereafter all rights and remedies of
the Company, any Subsidiary Guarantors, the Trustee, any Subsidiaries and the
Holders will continue as though no such proceeding had been instituted.

 

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

 

ARTICLE 7 

TRUSTEE

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           Every provision of this
Indenture relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section 7.01 and
to the provisions of the TIA.

 

33

 

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

 

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

 

(a)           The Trustee may conclusively
rely on any document (whether in its original or facsimile form) reasonably
believed by it to be genuine and to have been signed or presented by the proper
person.  The Trustee need not investigate
any fact or matter stated in the document. 
The Trustee shall receive and retain financial reports and statements of
the Company as provided herein, but shall have no duty to review or analyze
such reports or statements to determine compliance under covenants or other
obligations of the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

Trustee must comply with Sections 7.10 and 7.11.  In addition, the Trustee shall be permitted
to engage in transactions with the Company; provided, however, that if the
Trustee acquires any conflicting interest the Trustee must (i) eliminate
such conflict within 90 days of acquiring such conflicting interest, (ii) apply
to the SEC for permission to continue acting as Trustee or (iii) resign.

 

Section 7.04.  Trustee’s Disclaimer.  The Trustee shall not be responsible for and
makes no representation as to the validity or adequacy of this Indenture or the
Securities, shall not be accountable for the Company’s use of the proceeds from
the Securities, shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee and shall not be
responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee’s certificate of authentication.

 

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

 

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

 

Section 7.07.  Compensation and Indemnity.  The Company shall pay to the Trustee from
time to time such compensation for its acceptance of this Indenture and
services hereunder as the Company and the Trustee shall from time to time agree
in writing.  The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust.  In addition to the compensation
the Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it. 
Such expenses shall include the reasonable compensation and
out-of-pocket expenses, disbursements and advances of the Trustee’s agents,
counsel, accountants and experts.  The
Company shall indemnify the Trustee against any and all loss, liability,
damages, claims or expense (including reasonable attorneys’ fees and expenses)
incurred by it without negligence or bad faith on its part in connection with
the administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this Section 7.07)
and of defending itself against any claims (whether asserted by any Securityholder,
the Company or otherwise).  The Trustee
shall notify the Company promptly of any claim for which it may seek
indemnity.  Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations

 

35

 

hereunder.  The Company shall
defend the claim and the Trustee shall provide reasonable cooperation at the
Company’s expense in the defense.  The
Trustee may have separate counsel and the Company shall pay the fees and expenses
of such counsel, provided that the Company shall not be required to pay such
fees and expenses if it assumes the Trustee’s defense, and, in the reasonable
judgment of outside counsel to the Trustee, there is no conflict of interest
between the Company and the Trustee in connection with such defense.  The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee’s own willful misconduct, negligence or bad faith.

 

To
secure the Company’s payment obligations in this Section 7.07, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on (and any portion of the Make-Whole Payment and
Settlement Amount payable in cash, if any, with respect to) particular
Securities.  Such lien shall survive the
satisfaction and discharge of this Indenture. 
The Trustee’s right to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other unsecured liability or debt of the
Company.

 

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

 

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

 

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

 

(b)           the Trustee is adjudged
bankrupt or insolvent;

 

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

 

(d)           the Trustee otherwise
becomes incapable of acting.

 

If
the Trustee resigns or is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.

 

A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. 
Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. 
The successor Trustee shall mail a notice of its succession to
Securityholders.  The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided for in Section 7.07.

 

36

 

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

 

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

 

Notwithstanding
the replacement of the Trustee pursuant to this Section 7.08, the Company’s
obligations under Section 7.07 shall continue for the benefit of the
retiring Trustee.

 

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

 

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

 

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

 

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

 

Section 7.12.  Trustee’s Application for
Instruction from the Company.  Any application by the Trustee for written
instructions from the Company may, at the option of the Trustee, set forth in
writing any action proposed to be taken or omitted by the Trustee under this
Indenture and the date on and/or after which such action shall be taken or such
omission shall be effective.  The Trustee
shall not be liable for any action taken by, or omission of, the Trustee in
accordance with a proposal included in such application on or after the date
specified in such

 

37

 

application (which date shall not be less than three Business Days
after the date any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to any earlier date)
unless prior to taking any such action (or the effective date in the case of an
omission), the Trustee shall have received written instructions in response to
such application specifying the action to be taken or omitted.

 

ARTICLE 8 

DISCHARGE OF INDENTURE

 

Section 8.01.  Discharge of Liability on
Securities.  When (1) the Company shall deliver to
the Registrar for cancellation all Securities theretofore authenticated (other
than any Securities which have been destroyed, lost or stolen and in lieu of or
in substitution for which other Securities shall have been authenticated and
delivered) and not theretofore canceled, or (2) all the Securities not
theretofore canceled or delivered to the Registrar for cancellation shall have (a) been
deposited for conversion and the Company shall deliver to the Holders cash and
shares of Common Stock, as applicable, sufficient to pay all amounts owing in
respect of all Securities (other than any Securities which shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Securities shall have been authenticated and delivered) not
theretofore canceled or delivered to the Registrar for cancellation or (b) become
due and payable on the Stated Maturity, Purchase Date, Fundamental Change
Purchase Date or Redemption Date, as applicable, and the Company shall deposit
with the Trustee cash or shares of Common Stock, as applicable, sufficient to
pay all amounts owing in respect of all Securities (other than any Securities
which shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Securities shall have been authenticated and
delivered) not theretofore canceled or delivered to the Registrar for
cancellation, including the principal amount and interest accrued and unpaid to
such Stated Maturity, Purchase Date, Fundamental Change Purchase Date or
Redemption Date, as the case may be, and if in either case (1) or (2) the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company, then this Indenture with respect to the Securities shall cease to
be of further effect (except as to (i) remaining rights of registration of
transfer, substitution and exchange and conversion of Securities; (ii) rights
hereunder of Holders to receive payments of the amounts then due, including
interest with respect to the Securities and the other rights, duties and
obligations of Holders, as beneficiaries hereof with respect to the amounts, if
any, so deposited with the Trustee; and (iii) the rights, obligations and
immunities of the Trustee, Authenticating Agent, Paying Agent, Conversion Agent
and Registrar under this Indenture with respect to the Securities), and the
Trustee, on demand of the Company accompanied by an Officers’ Certificate and
an Opinion of Counsel as required by Section 8.03 and at the cost and
expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture with respect to the Securities;
the Company, however, hereby agrees to reimburse the Trustee, Authenticating
Agent, Paying Agent, Conversion Agent and Registrar for any costs or expenses
thereafter reasonably and properly incurred by the Trustee, Authenticating
Agent, Paying Agent, Conversion Agent and Registrar and to compensate the
Trustee, Authenticating Agent, Paying Agent, Conversion Agent and Registrar for
any services thereafter reasonably and properly rendered by the Trustee,
Authenticating Agent, Paying Agent, Conversion Agent and Registrar in
connection with this Indenture with respect to the Securities.

 

38

 

Section 8.02.  Reinstatement.  If the Trustee or the Paying Agent is unable
to apply any money to the Holders entitled thereto by reason of any order or
judgment of any court of governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company’s obligations under this
Indenture with respect to the Securities and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01
until such time as the Trustee or the Paying Agent is permitted to apply all
such money in accordance with this Indenture and the Securities to the Holders
entitled thereto; provided, however, that if the Company makes any payment of
principal amount of or interest on (or any portion of the Make-Whole Payment
and Settlement Amount payable in cash, if any, with respect to) any Securities
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from
the money held by the Trustee or Paying Agent.

 

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

 

Each
certificate or Opinion of Counsel provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant pursuant
to the previous paragraph shall include: (1) a statement that the Person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such Person, such Person
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and (4) a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been complied with.

 

ARTICLE 9 

AMENDMENTS

 

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

 

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

 

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

 

(c)           to provide for
uncertificated Securities in addition to or in place of certificated
Securities; provided, however, that the uncertificated Securities are issued in
registered form for purposes of Section 163(f) of the Code or in a
manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of
the Code;

 

39

 

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

 

(e)           to secure the Securities;

 

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

 

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

 

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

 

(i)            to terminate the conversion
rights of the Holders pursuant to Section 12.10; or

 

(j)            to waive the provisions
limiting the ability of the Holders to convert Securities pursuant to Section 12.12.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

(g)           impair the right of any
Holder to receive payment of principal of and interest on (and any portion of
the Make-Whole Payment and Settlement Amount payable in cash, if any, with
respect to) such Holder’s Securities on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such
Holder’s Securities; or

 

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

 

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

 

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

 

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

 

Section 9.04.  Revocation and Effect of
Consents and Waivers.  A consent to an amendment or a waiver by a
Holder of a Security shall bind the Holder and every subsequent Holder of that
Security or portion of the Security that evidences the same debt as the
consenting Holder’s Security, even if notation of the consent or waiver is not
made on the Security.  However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective or
otherwise in accordance with any related solicitation documents.  After an amendment or waiver becomes
effective, it shall bind every Securityholder. 
An amendment or waiver shall become effective upon receipt by the Trustee
of the requisite number of written consents under Section 9.01 or 9.02, as
applicable.

 

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

 

41

 

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

 

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

 

ARTICLE 10 

SUBSIDIARY GUARANTEE

 

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

 

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

 

42

 

the failure of any Holder to exercise any right or remedy against any
other Subsidiary Guarantor; or (f) any change in the ownership of the
Company.

 

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

 

The
obligations of each Subsidiary Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than
payment of the Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or
otherwise.  Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be (to the extent permitted by law) discharged or impaired or
otherwise affected by the failure of any Holder to assert any claim or demand
or to enforce any remedy under this Indenture, the Securities or any other
agreement, by any waiver or modification of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Obligations,
or by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of any
Subsidiary Guarantor or would otherwise operate as a discharge of such
Subsidiary Guarantor as a matter of law or equity.

 

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

 

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

 

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

 

43

 

payable) shall forthwith become due and payable by the Subsidiary
Guarantor for the purposes of this Subsidiary Guarantee.

 

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

 

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

 

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

 

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

 

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

 

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

 

Upon
the sale or disposition of a Subsidiary Guarantor (by merger, consolidation,
the sale of its Capital Stock or the sale of all or substantially all of its
assets (other than by lease)), which sale or disposition is otherwise in
compliance with this Indenture, such Subsidiary Guarantor will be

 

44

 

released
from all its obligations under this Indenture and its Subsidiary Guarantee will
terminate.  Each Subsidiary Guarantee
with respect to a Security will automatically terminate immediately prior to
such Security’s conversion.

 

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

 

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

 

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

 

ARTICLE 11 

PURCHASE AT OPTION OF HOLDER UPON A FUNDAMENTAL
CHANGE; PURCHASE AT THE OPTION OF HOLDERS

 

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

 

45

 

be purchased plus accrued and unpaid interest to but excluding the
Fundamental Change Purchase Date, unless the Fundamental Change Purchase Date
is between a Regular Record Date and the interest payment date to which it
relates, in which case the Fundamental Change Purchase Price shall equal 100%
of the principal amount of Securities to be purchased and accrued and unpaid
interest shall be paid to the Holder of record on the Regular Record Date.

 

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

 

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

 

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

 

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

 

(iii)          that such Securities shall
be purchased as of the Fundamental Change Purchase Date pursuant to the terms
and conditions specified in paragraph 4 of the Securities and in this
Indenture.

 

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

 

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

 

Notwithstanding
anything herein to the contrary, any Holder delivering to the Paying Agent the
Fundamental Change Purchase Notice contemplated by this Section 11.01
shall have the right at any time prior to the close of business on the Business
Day prior to the Fundamental Change Purchase Date to withdraw such Fundamental
Change Purchase Notice (in whole or in

 

46

 

part) by delivery of a written notice of withdrawal to the Paying Agent
in accordance with Section 11.03(b).

 

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

 

On
or before 11:00 a.m. (New York City time) on the Fundamental Change
Purchase Date, the Company shall deposit with the Paying Agent (or if the
Company or an Affiliate of the Company is acting as the Paying Agent, shall
segregate and hold in trust) cash sufficient to pay the aggregate Fundamental
Change Purchase Price of the Securities to be purchased pursuant to this Section 11.01.
Payment by the Paying Agent of the Fundamental Change Purchase Price for such
Securities shall be made promptly following the later of the Fundamental Change
Purchase Date or the time of book-entry transfer or delivery of such
Securities. Subject to Section 12.02 herein, no payment or adjustment
shall be made for dividends on the Common Stock the record date for which
occurred on or prior to the Fundamental Change Purchase Date. If the Paying
Agent holds, in accordance with the terms of this Indenture, cash sufficient to
pay the Fundamental Change Purchase Price of such Securities on the Fundamental
Change Purchase Date, then, on and after such date, such Securities shall cease
to be outstanding and interest, on such Securities shall cease to accrue,
whether or not book-entry transfer of such Securities is made or such
Securities are delivered to the Paying Agent, and all other rights of the
Holder shall terminate (other than the right to receive the Fundamental Change
Purchase Price and previously accrued and unpaid interest, upon delivery or
transfer of the Securities).  Nothing
herein shall preclude any withholding tax required by law.

 

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

 

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

 

(a)           On each of February 15,
2013, February 15, 2016, February 15, 2021, February 15, 2026
and February 15, 2031 (each a “Purchase Date”),
at a price (the “Purchase Price”), which shall be
paid in cash, equal to 100% of the principal amount of the Securities to be
repurchased plus any accrued and unpaid interest to but excluding the Purchase
Date, a Holder shall have the option to require the Company to purchase any
outstanding Securities, upon:

 

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

 

47

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)            On or before 11:00 a.m.
(New York City time) on the Purchase Date, the Company shall deposit with the
Paying Agent (or if the Company or an Affiliate of the Company is acting as the
Paying Agent, shall segregate and hold in trust) cash sufficient to pay the
aggregate Purchase Price of the Securities to be purchased pursuant to this Section 11.02.  Payment by the Paying Agent of the Purchase
Price for such Securities shall be made promptly following the later of the
Purchase Date or the time of book-entry transfer or delivery of such
Securities.  Subject to Section 12.02
herein and paragraph 6 of the Securities, no payment or adjustment shall be
made for dividends on the Common Stock the record date for which occurred on or
prior to the Purchase Date. If the Paying Agent holds, in accordance with the
terms of this Indenture, cash sufficient to pay the Purchase Price of such
Securities on the Purchase Date, then, on and after such date, such Securities
shall cease to be outstanding and interest on such

 

48

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(vii)         that the Purchase Price or
Fundamental Change Purchase Price for any Securities as to which a Purchase
Notice or a Fundamental Change Purchase Notice,

 

49

 

as applicable, has been given and not withdrawn shall be paid by the
Paying Agent promptly following the later of the Purchase Date or Fundamental
Change Purchase Date, as applicable, or the time of book-entry transfer or
delivery of such Securities;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

At
the Company’s request, made at least five Business Days prior to the date upon
which such notice is to be mailed, and at the Company’s expense, the Paying
Agent shall give the Company Notice in the Company’s name; provided, however,
that, in all cases, the text of the Company Notice shall be prepared by the
Company.

 

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

 

50

 

such Purchase Notice or Fundamental Change Purchase Notice, as the case
may be, unless such Purchase Notice or Fundamental Change Purchase Notice, as
the case may be, has first been validly withdrawn as specified in the following
two paragraphs.

 

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

 

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

 

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

 

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

 

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

 

(c)           Securities Purchased in Part. Any
Securities that are to be purchased only in part shall be surrendered at the
office of the Paying Agent (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or such Holder’s
attorney duly authorized in writing) and the Company shall execute and the
Trustee or the Authenticating Agent shall authenticate and deliver to the
Holder of such Securities, without service charge, a new Security or
Securities, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Securities so surrendered which is not purchased or
redeemed.

 

(d)           Covenant to Comply with
Securities Laws Upon Purchase of Securities.  In connection with any offer to purchase
Securities under Section 11.02 or Section 11.01, the Company shall, to
the extent applicable, (a) comply with Rules 13e-4 and 14e-1 (and any
successor provisions thereto) under the Exchange Act, if applicable; (b) file
the related Schedule TO (or any successor schedule, form or report) under the
Exchange Act, if applicable; and (c)

 

51

 

otherwise comply with all applicable federal and state securities laws
so as to permit the rights and obligations under Section 11.02 or Section 11.01
to be exercised in the time and in the manner specified in Section 11.02
or Section 11.01.

 

(e)           Repayment to the Company.  The Trustee and the Paying Agent shall return
to the Company any cash or property that remains unclaimed, as provided in
paragraph 14 of the Securities, together with interest that the Trustee or
Paying Agent, as the case may be, has expressly agreed in writing to pay, if
any, that is held by them for the payment of a Purchase Price or Fundamental
Change Purchase Price, as the case may be; provided, however, that to the extent
that the aggregate amount of cash or property deposited by the Company pursuant
to Section 11.01(c) or Section 11.02(f), as applicable, exceeds
the aggregate Purchase Price or Fundamental Change Purchase Price, as the case
may be, of the Securities or portions thereof which the Company is obligated to
purchase as of the Purchase Date or Fundamental Change Purchase Date, as the
case may be, then promptly on and after the Business Day following the Purchase
Date or Fundamental Change Purchase Date, as the case may be, the Trustee and
the Paying Agent shall return any such excess to the Company together with
interest that the Trustee or Paying Agent, as the case may be, has expressly
agreed in writing to pay, if any.

 

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

 

ARTICLE 12 

CONVERSION

 

Section 12.01.  Conversion of Securities.

 

(a)           Right to Convert.  Subject to the procedures for conversion set
forth in this Article 12, a Holder may convert its Securities into Common
Stock in the following circumstances:

 

(i)            Conversion. Subject to Section 12.09(c),
a Holder may elect to convert all or a portion of its Securities by delivering
upon each such conversion a Conversion Notice to the Conversion Agent at any
time prior to the date on which the earlier of the following occurs (i) Stated
Maturity and (ii) the date the Company (or the Trustee, on behalf of the
Company) first mails to each of the Holders a Conversion Termination Notice;
provided that such Conversion Notice either provides the Specified Percentage
Certifications or provides the Excess of Specified Percentage Certifications
but identifies therein Securities the conversion of which would not result in
such Holder or a Related Person becoming a 5% Shareholder with respect to the
Company.  A Holder that certifies that it
or a Related Person is or was a 5% Shareholder with respect to the Company
during the Section 382 Testing Period ending on the Conversion Date may
not convert any of its Securities pursuant to this Section 12.01(a)(i).

 

(ii)           Conversion After Termination
Notice.  After the mailing of the first
Conversion Termination Notice, a Holder may elect to convert all or a portion
of its Securities by delivering upon each conversion a Conversion Notice to the
Conversion Agent at any time prior to a Conversion Rights Termination Date; provided
that such

 

52

 

Conversion Notice either provides the Specified Percentage
Certifications or provides the Excess of Specified Percentage Certifications
but identifies therein Securities the conversion of which would not result in
such Holder or a Related Person becoming a 5% Shareholder with respect to the
Company; and, provided further, that any such Holder may preserve its
conversion rights under this Section 12.01(a)(ii) after such
Conversion Rights Termination Date pursuant to Section 12.10(h) of
the Indenture.  A Holder that certifies
that it or a Related Person is or was a 5% Shareholder with respect to the
Company during the Section 382 Testing Period ending on the Conversion
Date may not convert any of its Securities pursuant to this Section 12.01(a)(ii).

 

A
Holder may convert a portion of the principal amount of Securities if the
portion is $1,000 or a multiple of $1,000. The number of shares of Common Stock
issuable (and cash in lieu of fractions thereof as provided in Section 12.01(d)),
if any, upon conversion of a Security shall be determined as set forth in Section 12.01(c).

 

The
Company, at its option, may permit a Holder to convert all or a portion of the
Securities of such Holder notwithstanding that such Holder or any of its
Related Persons (i) is or was a 5% Shareholder with respect to the Company
at any time during the Section 382 Testing Period ending on the applicable
Conversion Date or (ii) would as a result of the conversion become a 5%
Shareholder with respect to the Company.

 

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

 

(i)            In respect of a Definitive
Security, a Holder must (1) complete and manually sign the Conversion
Notice attached to the Security, or facsimile of such Conversion Notice; (2) deliver
the Conversion Notice, which is irrevocable, and the Security to the Conversion
Agent at the office maintained by the Conversion Agent for such purpose; (3) to
the extent any shares of Common Stock issuable upon conversion are to be issued
in a name other than the Holder’s, furnish endorsements and transfer documents
as may be required by the Conversion Agent and, if required pursuant to Section 12.01(e) below,
pay all transfer or similar taxes; and (4) if required pursuant to Section 2.01(c) above,
pay funds equal to interest payable on the next interest payment date to which
such Holder is not entitled.

 

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

 

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

 

A
Security shall be deemed to have been converted on the Conversion Date, and at
such time the rights of the Holder of such Security as Holder shall cease,
except the right to receive the shares of Common Stock and cash, if any, to
which they are entitled pursuant to this Article 12, and the Person or
Persons entitled to receive the Common Stock issuable upon conversion

 

53

 

shall be treated for all purposes as the record holder or holders of
such Common Stock as of the Conversion Date.

 

Upon
conversion, interest on the Securities or portion thereof so converted shall
cease to accrue and to be entitled to any benefit or security under this
Indenture.

 

If
a Holder converts more than one Security at the same time, the number of shares
of Common Stock issuable upon the conversion (and cash in lieu of fractions
thereof as provided in Section 12.01(d)), if any, shall be based on the
total principal amount of the Securities converted.

 

(c)           Payment Upon Conversion.  Subject to Section 12.01(d) and
12.13, upon any conversion of any Security, the Company will deliver to
converting Holders, in respect of each $1,000 principal amount of Securities
being converted, the number of shares of Common Stock equal to the Conversion
Rate (such amount of shares, the “Settlement Amount”).

 

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

 

(d)           Cash Payments in Lieu of
Fractional Shares. The Company shall not issue a fractional share of
Common Stock upon conversion of Securities. 
Instead the Company shall deliver cash for the current market value of
the fractional share.  The current market
value of a fractional share shall be the Last Reported Sales Price on the
Trading Day immediately preceding the Conversion Date.

 

(e)           Taxes on Conversion.  If a Holder converts Securities, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock upon the conversion. However, the Holder shall
pay any such tax which is due because the Holder requests the shares to be issued
in a name other than the Holder’s name. The Conversion Agent may refuse to
deliver the certificates representing the Common Stock being issued in a name
other than the Holder’s name until the Conversion Agent receives a sum
sufficient to pay any tax which shall be due because the shares are to be
issued in a name other than the Holder’s name, but the Conversion Agent shall
have no duty to determine if any such tax is due.  Nothing herein shall preclude any withholding
of tax required by law.

 

(f)            Certain Covenants of the Company.

 

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

 

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

 

54

 

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

 

(iv)          Before taking any action
which would cause an adjustment increasing the Conversion Rate to an amount
that would cause the Conversion Price to be reduced below the then par value per
share of the shares of Common Stock issuable upon conversion of the Securities,
the Company will take all corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
shares of such Common Stock at such adjusted Conversion Rate.

 

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

 

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

 

 

	
  where,

  
	
   

  	
   

  	
   

  
	
  CR0

  	
  =

  	
  the
  Conversion Rate in effect immediately prior to such event

  
	
   

  	
   

  	
   

  
	
  CR’

  	
  =

  	
  the
  Conversion Rate in effect immediately after such event

  
	
   

  	
   

  	
   

  
	
  OS0

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  OS’

  	
  =

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

  

 

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

 

(b)           If the Company issues to all
or substantially all holders of its Common Stock any rights or warrants
entitling them for a period of not more than 60 calendar days to subscribe for
or purchase shares of Common Stock at a price per share less than the Last
Reported Sale Price of the Common Stock on the Business Day immediately preceding
the date of announcement of

 

55

 

such issuance, the Conversion Rate will be adjusted based on the
following formula (provided that the Conversion Rate will be readjusted to the
extent that such rights or warrants are not exercised prior to their
expiration):

 

 

	
  where,

  
	
   

  	
   

  	
   

  
	
  CR0

  	
  =

  	
  the
  Conversion Rate in effect immediately prior to such event

  
	
   

  	
   

  	
   

  
	
  CR’

  	
  =

  	
  the
  Conversion Rate in effect immediately after such event

  
	
   

  	
   

  	
   

  
	
  OS0

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  X

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  Y

  	
  =

  	
  the number of shares of
  Common Stock equal to the aggregate price payable to exercise such rights
  divided by the average of the Last Reported Sale Prices of the Common Stock
  over the 10 consecutive Trading-Day period ending on the Business Day
  immediately preceding the Record Date for the issuance of such rights.

  

 

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

 

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

 

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

 

56

 

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

 

(ii)           dividends or distributions
paid exclusively in cash;

 

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

 

 

	
  where,

  
	
   

  	
   

  	
   

  
	
  CR0

  	
  =

  	
  the
  Conversion Rate in effect immediately prior to such distribution

  
	
   

  	
   

  	
   

  
	
  CR’

  	
  =

  	
  the
  Conversion Rate in effect immediately after such distribution

  
	
   

  	
   

  	
   

  
	
  SP0

  	
  =

  	
  the
  average of the Last Reported Sale Prices of the Common Stock over the 10
  consecutive Trading-Day period ending on the Business Day immediately
  preceding the Record Date for such distribution

  
	
   

  	
   

  	
   

  
	
  FMV

  	
  =

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

  

 

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

 

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

 

 

	
  where,

  
	
   

  	
   

  	
   

  
	
  CR0

  	
  =

  	
  the
  Conversion Rate in effect immediately prior to such distribution

  
	
   

  	
   

  	
   

  
	
  CR’

  	
  =

  	
  the
  Conversion Rate in effect immediately after such distribution

  
	
   

  	
   

  	
   

  
	
  FMV0

  	
  =

  	
  the
  average of the Last Reported Sale Prices of the Capital Stock or similar
  equity interest distributed to holders of Common Stock applicable

  

 

57

 

	
   

  	
   

  	
  to
  one share of Common Stock over the first 10 consecutive Trading-Day period
  after the effective date of the Spin-Off

  
	
   

  	
   

  	
   

  
	
  MP0

  	
  =

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

  

 

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

 

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

 

 

	
  where,

  
	
   

  	
   

  	
   

  
	
  CR0

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  CR’

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  SP0

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  C

  	
  =

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

  

 

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

 

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

 

(e)           If the Company or any of its
Subsidiaries makes a payment in respect of a tender or exchange offer for
Common Stock, to the extent that the cash and value of any other consideration
included in the payment per share of Common Stock exceeds the Last Reported
Sale Price of the Common Stock on the Trading Day next succeeding the last date
on which

 

58

 

tenders or exchanges may be made pursuant to such tender or exchange
offer (such last date, the “Expiration Time”),
the Conversion Rate will be increased based on the following formula:

 

 

	
  where,

  
	
   

  	
   

  	
   

  
	
  CR0

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  CR’

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  AC

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  OS0

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  OS’

  	
  =

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

  
	
   

  	
   

  	
   

  
	
  SP’

  	
  =

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

  

 

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

 

If
the application of the foregoing formula set forth in this clause (e) would
result in a decrease to the Conversion Rate, no adjustment to the Conversion
Rate will be made.

 

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

 

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

 

59

 

(h)           To the extent permitted by
applicable law, the Company from time to time may increase the Conversion Rate
by any amount for any period of at least 20 days if the Board of Directors
shall have made a determination that such increase would be in the best
interests of the Company, which determination shall be conclusive.

 

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

 

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

 

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

 

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

 

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

 

(v)           for accrued and unpaid
Interest.

 

To
the extent the Securities become convertible into cash, assets or property
(other than Capital Stock of the Company), no adjustment shall be made
thereafter as to the cash, assets or property. 
Interest shall not accrue on such cash, assets or property.

 

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

 

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

 

60

 

(l)            Any case in which this Section 12.02
provides that an adjustment shall become effective immediately after (i) a
Record Date for an event, (ii) the date fixed for the determination of
stockholders entitled to receive a dividend or distribution pursuant to Section 12.02(a),
(iii) a date fixed for the determination of stockholders entitled to
receive rights or warrants pursuant to Section 12.02(b), or (iv) the
Expiration Time for any tender or exchange offer pursuant to Section 12.02(e),
(each a “Determination Date”), the Company may
elect to defer until the occurrence of the applicable Adjustment Event (as
hereinafter defined) (x) issuing to the holder of any Security converted
after such Determination Date and before the occurrence of such Adjustment Event,
the additional shares of Common Stock or other securities issuable upon such
conversion by reason of the adjustment required by such Adjustment Event over
and above the Common Stock issuable upon such conversion before giving effect
to such adjustment and (y) paying to such holder any amount in cash in
lieu of any fraction pursuant to Section 12.01.  For purposes of this Section 12.02(l),
the term “Adjustment Event” shall mean:

 

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

 

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

 

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

 

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

 

(m)          For purposes of this Section 12.02,
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock.  The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

 

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

 

Section 12.03.  [Reserved].

 

Section 12.04.  [Reserved].

 

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

 

(a)           If any of the following
events occur: (i) any recapitalization, reclassification or change of the
outstanding shares of Common Stock (other than a subdivision or combination to
which Section 12.02(c) applies), (ii) any consolidation, merger,
binding share exchange or

 

61

 

combination of the Company with another Person as a result of which
holders of Common Stock shall be entitled to receive cash, securities or other
property (or any combination thereof) with respect to or in exchange for such
Common Stock, or (iii) any sale or conveyance of all or substantially all
of the properties and assets of the Company to any other Person as a result of
which holders of Common Stock shall be entitled to receive cash, securities or
other property (or any combination thereof) with respect to or in exchange for
such Common Stock (any such event or transaction, a “Reorganization
Event”), then the Company or the successor or purchasing Person, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture to the same extent that this Indenture so
complies) providing that each Security shall be convertible into the kind and
amount of cash, securities or other property (and in the same proportion)
receivable (the “Reference Property”) upon such
Reorganization Event by a holder of a number of shares of Common Stock equal to
the Conversion Rate immediately prior to such Reorganization Event.  For purposes of the foregoing, the type and
amount of consideration that a holder of Common Stock would have been entitled
to receive in the case of any such Reorganization Event that causes the Common
Stock to be converted into the right to receive more than a single type of consideration
(determined based in part upon any form of stockholder election) will be deemed
to be the weighted average of the types and amounts of consideration received
by the holders of Common Stock that affirmatively make such an election. Such
supplemental indenture shall provide for provisions and adjustments which shall
be as nearly equivalent as may be practicable to the provisions and adjustments
provided for in this Article 12, Article 11 and Article 9 and
the definition of Fundamental Change, as appropriate, as determined in good
faith by the Company (which determination shall be conclusive and binding), to
make such provisions apply to such other Person if different from the original
issuer of the Securities.

 

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

 

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

 

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

 

62

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

63

 

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

 

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

 

Section 12.08.  Stockholder Rights Plan.  To the extent that the Company has a rights
plan in effect upon conversion of the Securities into Common Stock, the Holder
will receive, in addition to the Common Stock, the rights under the rights
plan, unless prior to any conversion, the rights have separated from the Common
Stock, in which case the Conversion Rate will be adjusted at the time of
separation as if the Company distributed to all holders of Common Stock shares
of the Company’s capital stock, evidences of indebtedness or assets as
described in Section 12.02(c) above, subject to readjustment in the
event of the expiration, termination or redemption of such rights.  In lieu of any such adjustment, the Company
may amend such applicable stockholder rights agreement to provide that upon
conversion of the Securities the Holders will receive, in addition to the
Common Stock issuable upon such conversion, the rights which would have
attached to such Common Stock if the rights had not become separated from the
Common Stock under such applicable stockholder rights agreement.

 

Section 12.09.  Additional Conversion
Provisions.

 

(a)           Concurrently with the
delivery of the Settlement Amount in respect of a conversion pursuant to Section 12.01(a)(i),
the Company shall make an Additional Voluntary Conversion Interest Payment, if
any, to the converting Holder.  Within
two Business Days after delivery by such Holder of such Conversion Notice, the
Company shall send such Holder a written calculation of the amount of the
Additional Voluntary Conversion Interest Payment and notice whether such
Additional Voluntary Conversion Interest Payment shall be paid by the Company
in Common Stock, cash or a combination thereof.

 

(b)           The Company shall (i) (x) within
three Business Days after the Conversion Date specified in the applicable
Conversion Notice issue and deliver to the converting Holder a certificate or
certificates for Common Stock equal to the Settlement Amount and (y) within
eight Business Days after the Conversion Date specified in the applicable
Conversion Notice issue and deliver to the converting Holder a certificate or
certificates for Common Stock equal to any portion of the applicable Additional
Voluntary Conversion Interest Payment elected by the

 

64

 

Company to be made in shares of Common Stock, in each case as permitted
by Section 12.13, and (ii) within three Business Days after the
Conversion Date specified in the applicable Conversion Notice pay to the
converting Holder cash (x) for any portion of the applicable Additional
Voluntary Conversion Interest Payment made and elected by the Company to be
made in cash, (y) in lieu of any fractional shares of Common Stock into
which such Holder’s Securities are being converted pursuant to Section 12.01(d),
and (z) in lieu of any shares of Common Stock not able to be issued upon
conversion pursuant to Section 12.13.

 

(c)           In the event that a Holder
that is eligible to convert Securities pursuant to Section 12.01(a)(i) sends
to the Conversion Agent a Conversion Notice to convert all or a portion of its Securities
under such Section but provides the Excess of Specified Percentage
Certification in Item 3 of the Conversion Notice, such Holder may convert only
such portion of its Securities as would not result in such Holder or any of its
Related Persons becoming a 5% Shareholder with respect to the Company.  Any portion of a Holder’s Securities that may
not be converted as set forth in the previous sentence shall be returned to
such Holder and the Company shall execute and the Trustee or the Authenticating
Agent shall authenticate and deliver to the Holder, new Securities in
authorized denominations equal in principal amount to the unconverted portion
of the Securities surrendered for conversion (subject to the applicable
procedures of the Depositary in the case of Global Securities).

 

Section 12.10.  Termination of Conversion
and Additional Post-Termination Conversion Provisions.

 

(a)           If the Last Reported Sale
Price of the Common Stock has exceeded the Termination Conversion Price then in
effect for at least 20 Trading Days in any 30 Trading Day period, the Company
may terminate the right of Holders to convert Securities pursuant to Section 12.01(a)(i) or
Section 12.01(a)(ii) upon the mailing of, or otherwise on the terms
set forth in, a notice mailed to the Holders pursuant to Section 12.10(b) (each
such notice, a “Conversion Termination Notice”),
in each case as applicable.  Any such
Conversion Termination Notice shall be mailed to the Holders within five (5) days
of the last Trading Day of any such 30 Trading Day period satisfying the
requirement set forth in the immediately preceding sentence.  The Company may mail no more than one
Conversion Termination Notice per fiscal quarter of the Company.

 

(b)           Each Conversion Termination
Notice shall be mailed to each Holder by the Company or, at the written request
and expense of the Company, the Trustee. 
If the Company mails such Conversion Termination Notice, it shall also
deliver a copy of such Conversion Termination Notice to the Trustee. If such
Conversion Termination Notice is to be mailed by the Trustee, the Company shall
prepare and provide the form and content of such Conversion Termination Notice
to the Trustee. Such mailing shall be by first class mail or overnight courier.
A Conversion Termination Notice, if mailed in the manner herein provided, shall
be conclusively presumed to have been duly mailed, whether or not any Holder
receives such notice.

 

(c)           Each Conversion Termination
Notice shall state:

 

(1)           the date of the mailing of
such Conversion Termination Notice,

 

65

 

(2)           in the case of the first
Conversion Termination Notice mailed by the Company that as of the mailing of
such Conversion Termination Notice the ability of the Holders to convert their
Securities pursuant to Section 12.01(a)(i) has been terminated,

 

(3)           that such Holders retain the
ability to convert their Securities pursuant to Section 12.01(a)(ii) until
the Conversion Rights Termination Date (as defined below),

 

(4)           that on and after any
Conversion Date interest on the Securities to be converted will cease to
accrue,

 

(5)           that, in connection with a
conversion of Securities pursuant to Section 12.01(a)(ii), the Company
shall, concurrently with the delivery of the applicable Conversion Shares, make
an Additional Post-Termination Interest Payment,

 

(6)           the place or places where
such Securities are to be surrendered for conversion,

 

(7)           the Conversion Price then in
effect,

 

(8)           the Termination Conversion
Price then in effect, and

 

(9)           that the Company shall
irrevocably terminate the rights of the Holders to convert their Securities to
Common Stock pursuant to Section 12.01(a)(ii) (subject to a Holder
preserving such conversion rights pursuant to Section 12.10(h)), effective
on a date at least 30 days after the date of mailing of such Conversion
Termination Notice (each such effective date, a “Conversion
Rights Termination Date”).

 

(d)           Concurrently with the
delivery of the Settlement Amount in respect of the Securities converted
pursuant to Section 12.01(a)(ii), the Company shall make an Additional
Post-Termination Interest Payment, if any, to the converting Holder.  Within two Business Days after delivery by
such Holder of such Conversion Notice, the Company shall send such Holder a
written calculation of the amount of the Additional Post-Termination Interest
Payment and notice whether such Additional Post-Termination Interest Payment
shall be paid by the Company in Common Stock, cash or a combination thereof.

 

(e)           Within three Business Days
after the Conversion Date specified in the applicable Conversion Notice, the
Company shall (i) issue and deliver to the converting Holder a certificate
or certificates for Common Stock equal to the Settlement Amount and any portion
of the applicable Additional Post-Termination Interest Payment elected by the
Company to be made in shares of Common Stock, in each case as permitted by Section 12.13,
and (ii) pay to the converting Holder cash (x) for any portion of the
applicable Additional Post-Termination Interest Payment made or elected by the
Company to be made in cash, (y) in lieu of any fractional shares of Common
Stock into which such Holder’s Securities are being converted pursuant to Section 12.01(d),
and (z) in lieu of any shares of Common Stock not able to be issued upon
conversion pursuant to Section 12.13.

 

(f)            In the event that a Holder
that is eligible to convert Securities pursuant to Section 12.01(a)(ii) sends
to the Conversion Agent a Conversion Notice to convert all or a portion of its

 

66

 

Securities under such Section but provides the Excess of Specified
Percentage Certification in Item 3 of such Conversion Notice, such Holder may
convert only such portion of its Securities as would not result in such Holder
or a Related Person becoming a 5% Shareholder with respect to the Company.  Any portion of a Holder’s Securities that may
not be converted as set forth in the previous sentence shall be returned to
such Holder and the Company shall execute and the Trustee or the Authenticating
Agent shall authenticate and deliver to the Holder, new Securities in
authorized denominations equal in principal amount to the unconverted portion
of the Securities surrendered for conversion (subject to the applicable
procedures of the Depositary in the case of Global Securities).

 

The
rights of a Holder under Section 12.01(a)(ii) to convert Securities
in respect of which it has provided the Excess of Specified Percentage
Certifications but which it may not convert under the terms of this Section 12.10(f) shall
be preserved after a Conversion Rights Termination Date in accordance with Section 12.10(h) below.

 

(g)           If a Holder fails to
preserve its conversion rights under Section 12.10(h), the conversion rights
of a Holder under Section 12.01(a)(ii) shall terminate on the
applicable  Conversion Rights Termination
Date, and thereafter such Holder shall have no rights to convert its Securities
into Common Stock under such Securities or this Indenture.

 

(h)           The foregoing
notwithstanding, in the event that prior to any Conversion Rights Termination
Date a Holder whose conversion rights under Section 12.01(a)(ii) have
not previously been terminated submits a Conversion Notice to the Conversion
Agent in respect of its Securities but is unable to convert all or a portion of
such Securities because such Holder or any of its Related Persons (i) is
or was a 5% Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion of such Securities become a 5% Shareholder with
respect to the Company, such Holder shall retain the conversion rights set
forth in Section 12.01(a)(ii) with respect to such Securities.  If the Company (or the Trustee, on behalf of
the Company) thereafter mails a subsequent Conversion Termination Notice, the
conversion rights with respect to such Securities will terminate on the
Conversion Rights Termination Date set forth in such subsequent Conversion
Termination Notice unless prior to such Conversion Rights Termination Date the
Holder submits a new Conversion Notice to the Conversion Agent in respect of
its Securities but is unable to convert all or a portion of such Securities
because such Holder or any of its Related Persons (i) is or was a 5%
Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion of such Securities become a 5% Shareholder with
respect to the Company.  Such Holder
shall continue to retain the conversion rights with respect to those of its
Securities which it cannot convert after submission of such new Conversion
Notice.

 

(i)            Unless such Securities have
been previously executed, authenticated and delivered, after any Conversion
Rights Termination Date, any Securities in respect of which conversion rights
are preserved pursuant to Section 12.10(h) above shall be represented
by new Securities bearing the Post-Termination Preservation of Conversion
Rights Legend, and the Company shall execute and the Trustee shall authenticate
and make available for delivery to the Holders thereof new Securities in
authorized denominations in like principal amount (subject to the applicable
procedures of the Depositary in the case of Global Securities).

 

67

 

The
Company, at its own expense, shall as promptly as practicable obtain new CUSIP
and ISIN numbers for any such new Securities that bear the Post-Termination
Preservation of Conversion Rights Legend, and shall promptly notify the Trustee
and the applicable Holders in writing of such new CUSIP and ISIN numbers.

 

In
the event that on or after the Conversion Rights Termination Date all
Securities bearing the Post-Termination Preservation of Conversion Rights
Legend are converted, redeemed or otherwise retired, the Company may at its
option prepare, and the Trustee shall execute, a supplemental indenture to this
Indenture that eliminates any provisions of the Indenture dealing with
conversion of the Securities.

 

(j)            Whenever in the Securities
or in this Indenture there is a reference, in any context, to any conversion
obligation of the Company, such reference shall be qualified by the conversion
termination provisions of this Section 12.10, and the Company, other than
as provided for in Section 12.10(h) above, shall not be required to
comply with any of the conversion provisions of the Securities and this
Indenture (including, without limitation, Article 12 (other than this Section 12.10))
on or after the Conversion Rights Termination Date, and any express mention of
the conversion termination provisions of this Section 12.10 in any
provision of this Indenture shall not be construed as excluding the conversion
termination provisions of this Section 12.10 in those provisions of this
Indenture when such express mention is not made.

 

(k)           During the period beginning
five (5) days prior to the date of mailing of any Conversion Termination
Notice and ending on the date thirty (30) days after the Conversion Rights
Termination Date specified therein, the Company shall not publicly offer to
sell any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than the Common Stock and shares offered pursuant to
present or future employee, director or consultant stock purchase plans,
dividend reinvestment and stock purchase plans, employee or director benefit
plans, stock option plans or other employee or director equity compensation
arrangements or contracts or pursuant to then outstanding options, warrants or
rights), or publicly offer to sell or grant options, rights or warrants with
respect to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the grant of options pursuant to
employee or director benefit plans, stock option plans or other employee or
director equity compensation arrangements or contracts).

 

Section 12.11.  5% Shareholder Limitations.  Notwithstanding anything to the contrary in
this Article 12, no Holder shall be entitled to acquire shares of Common
Stock delivered upon conversion to the extent (but only to the extent) that
such Holder or a Related Person (i) is or was a 5% Shareholder with
respect to the Company at any time during the Section 382 Testing Period
ending on the applicable Conversion Date or (ii) would as a result of the
conversion become a 5% Shareholder with respect to the Company.  Any purported delivery of shares of Common
Stock upon conversion by a Holder of Securities shall be void and have no
effect to the extent (but only to the extent) that such Holder or a Related
Person (i) is or was a 5% Shareholder with respect to the Company at any
time during the Section 382 Testing Period ending on the applicable
Conversion Date or (ii) would as a result of the conversion become a 5%
Shareholder with respect to the Company. 
If any delivery of shares of Common Stock owed to any Holder upon
conversion is not made, in whole or in part, as a result of these limitations,
such Holder may either (i) certify to the Company that such Holder or any
Related Person (x) is not or was

 

68

 

not a 5% Shareholder with respect to the Company at any time during the
Section 382 Testing Period ending on the applicable Conversion Date and (y) would
not as a result of the conversion become a 5% Shareholder with respect to the
Company, after which the Company shall deliver such shares of Common Stock to
such Holder within two Trading Days after receipt of such certification or (ii) request
the return of the Securities surrendered by it for conversion, after which the
Company shall deliver such Securities to such Holder within two Trading Days
after receipt of such request.

 

Section 12.12.  Waiver of 5% Shareholder
Provisions.

 

The
Company may, at its option, waive (as to a particular Holder or as to all
Holders) any restrictions that limit a Holder from converting its Securities in
the event that such Holder or a Related Person (i) is or was a 5%
Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion of such Securities become a 5% Shareholder with respect
to the Company.  In the event that the
Company exercises its rights pursuant to this Section 12.12 to waive any
such restrictions as to all Holders, the Company or, at the written request and
expense of the Company, the Trustee, shall mail or cause to be mailed to each
Holder 30 days prior to the effective waiver date an irrevocable notice stating
that as of an effective date specified therein, the Company waives any
restrictions that limit a Holder from converting its Securities in the event
that such Holder or a Related Person (i) is or was a 5% Shareholder with
respect to the Company at any time during the Section 382 Testing Period
ending on the applicable Conversion Date or (ii) would as a result of the
conversion of such Securities become a 5% Shareholder with respect to the
Company (such notice, the “5% Shareholder Provision
Waiver Notice”).

 

After
the date of the mailing of such 5% Shareholder Provision Waiver Notice,
whenever in the Securities or in this Indenture there is a reference, in any
context, to any limitation on the ability of a Holder to convert its Securities
to the extent that such Holder or a Related Person (i) is or was a 5%
Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion of such Securities become a 5% Shareholder with
respect to the Company, such limitation shall be deemed waived, and such
reference shall be qualified by the optional waiver provisions of this Section 12.12.  Any express mention of such limitation on the
ability of a Holder to convert its Securities shall not be construed as
excluding the optional waiver provisions of this Section 12.12 in those
provisions of this Indenture when such express mention is not made.

 

After
the date of the mailing of the 5% Shareholder Provision Waiver Notice, the
Company may at its option prepare, and the Trustee shall execute, a
supplemental indenture to this Indenture that eliminates any provisions of the
Indenture in respect of any limitation on the ability of a Holder to convert
its Securities to the extent that such Holder or a Related Person (i) is
or was a 5% Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion of such Securities become a 5% Shareholder with
respect to the Company.

 

69

 

Section 12.13.  Limitation on Issuances of
Common Stock.

 

(a)           Notwithstanding anything to
the contrary in this Indenture, unless the Company shall have received the
shareholder approval described in Section 12.13(c) (which the Company
shall have no obligation to seek), the Company shall not issue any shares of Common
Stock pursuant to this Indenture (including, without limitation, Conversion
Shares and shares issuable as part of Additional Voluntary Conversion Interest
Payments and Additional Post-Termination Interest Payments) (such shares, “Indenture Shares”) if, after giving effect to such issuance,
the aggregate number of Indenture Shares issued pursuant to this Indenture
(after adjusting any previous issuances for any subsequent events that would
give rise to an adjustment to the Conversion Rate pursuant to this Article 12)
would exceed the “Maximum Shares”
as calculated at the time of the proposed issuance by the following formula:

 

MS = (0.1999 x OS) + (PON x ONCR)

 

	
  where,

  
	
   

  	
   

  	
   

  
	
  MS

  	
  =

  	
  the
  Maximum Shares

  
	
   

  	
   

  	
   

  
	
  OS

  	
  =

  	
  The
  number of shares of Common Stock outstanding at July 13, 2009
  (90,487,123), as appropriately adjusted for any subsequent event that would
  give rise to a change in the Conversion Rate pursuant to this Article 12

  
	
   

  	
   

  	
   

  
	
  PON

  	
  =

  	
  the
  principal amount of the Company’s 6.375% Convertible Senior Notes due February 15,
  2036 (the “Old Notes”) that has been
  tendered to the Company through the date of calculation for cancellation as
  consideration for issuances of Securities

  
	
   

  	
   

  	
   

  
	
  ONCR

  	
  =

  	
  92.1659 shares of Common
  Stock per $1,000 principal amount of Old Notes, which amount represents the
  maximum conversion rate per $1,000 principal amount of Old Notes, as such
  amount may be adjusted pursuant to the terms of the Indenture dated as of
  February 14, 2006, among the Company, the subsidiary guarantors party
  thereto, and The Bank of New York Mellon Trust Company, N.A., as trustee

  

 

(b)           If the number of Indenture
Shares otherwise issuable under this Indenture upon a conversion of Securities
would, when aggregated with all prior issuances of Indenture Shares, exceed the
Maximum Shares, the Company shall, in lieu of the shares of Common Stock that
it cannot issue pursuant to Section 12.13(a), satisfy its obligation by a
cash payment in an amount equal to the product of (i) the number of shares
of Common Stock that the Company is unable to issue pursuant to Section 12.13(a) multiplied
by (ii) the Five Day VWAP multiplied by (iii) 1.025.

 

(c)           The restrictions of Section 12.13(a) shall
automatically terminate if and when the stockholders of the Company duly
approve the issuance of shares of Common Stock under this Indenture in excess
of the Maximum Shares and without any limitation under Rule 312.03 of the

 

70

 

New York Stock Exchange Listed Company Manual
or any rule of any other principal exchange on which the Common Stock is
then traded.

 

ARTICLE 13 

MISCELLANEOUS

 

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

 

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

 

if to the Company:

 

Pier 1 Imports, Inc.

100 Pier 1 Place

Fort Worth, Texas 76102

Attention:  Charles H. Turner

Telecopy: (817) 334-0191

 

With a copy to:

 

Bracewell & Giuliani LLP

1445 Ross Avenue

Suite 3800

Dallas, Texas 75202

Attention: Bruce A. Cheatham, Esq.

Telecopy: (214) 758-8317

 

if to the Trustee:

 

The Bank of New York Mellon Trust Company, N.A. 

601 Travis Street

16th Floor

Houston, Texas 77002

Attention: Corporate Trust Administration

Telecopy: (713) 483-6954

 

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

 

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

 

71

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 13.06.  When Securities Disregarded.  In determining whether the Holders of the
required principal amount of Securities have concurred in any direction, waiver
or consent, Securities owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be protected
in relying on any such direction, waiver or consent, only Securities

 

72

 

which a Trust Officer of the Trustee actually
knows are so owned shall be so disregarded. 
Also, subject to the foregoing, only Securities outstanding at the time
shall be considered in any such determination.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 13.13.  Table of Contents; Headings.  The table of contents, cross-reference sheet
and headings of the Articles and Sections of this Indenture have been inserted
for 

 

73

 

convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

 

Section 13.14.  Severability Clause.  In case any provision in this Indenture shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby and such provision shall be ineffective only to the extent of such
invalidity, illegality or unenforceability.

 

Section 13.15.  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 that are consistent
with accepted practices in the banking industry to resume performance as soon
as practicable under the circumstances.

 

[Remainder of the page intentionally left blank]

 

74

 

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

 

	
   

  	
   

  	
  THE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PIER 1 IMPORTS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Charles H. Turner

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial Officer 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE SUBSIDIARY GUARANTORS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PIER 1 ASSETS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Charles H. Turner

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PIER 1 LICENSING, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Charles H. Turner

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: 

  	
  Charles H. Turner

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial Officer

  

 

[Signature Page to the Indenture]

 

 

	
   

  	
   

  	
   

  	
  PIER 1 VALUE SERVICES, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  	
   

  	
  its sole member and manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Charles H. Turner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PIER 1 HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Charles H. Turner

  
	
   

  	
   

  	
   

  	
   

  	
  Title: 

  	
  Executive Vice President and Chief Financial Officer 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PIER 1 SERVICES COMPANY,

  
	
   

  	
   

  	
   

  	
  a Delaware statutory trust

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Pier 1 Holdings, Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  its managing trustee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Charles H. Turner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Executive Vice President and Chief Financial Officer

  
								

 

[Signature Page to the Indenture]

 

 

	
   

  	
   

  	
  THE TRUSTEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

[Signature Page to the Indenture]

 

 

SCHEDULE A

 

SUBSIDIARY GUARANTORS

 

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

 

Pier 1 Assets, Inc., a Delaware corporation

 

Pier 1 Licensing, Inc., a Delaware corporation

 

Pier 1 Holdings, Inc., a Delaware corporation

 

Pier 1 Services Company, a Delaware statutory trust

 

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

 

 

EXHIBIT A

 

[FORM OF
FACE OF SECURITY]

 

[Global
Security Legend, if applicable]

 

[Definitive
Security Legend, if applicable]

 

[Post-Termination
Preservation of Conversion Rights Legend, if applicable]

 

	
  No. [      ]

  	
   

  	
  Principal Amount
  $[                    ],
  as

  
	
  revised
  by the Schedule of Increases and Decreases in Global Security attached
  hereto.

  

 

CUSIP NO.:
[                  ]

 

ISIN:
[                      ]

 

9.0%
Convertible Senior Notes due 2036

 

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

 

Interest
Payment Dates:  February 15 and August 15

Regular
Record Dates:  February 1 and August 1

 

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

 

	
  Dated:
  [                    ]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PIER
  1 IMPORTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-1

 

	
  TRUSTEE’S
  CERTIFICATE OF

  
	
    AUTHENTICATION

  
	
   

  
	
  THE
  BANK OF NEW YORK MELLON TRUST

  
	
  COMPANY,
  N.A.

  
	
  as
  Trustee, certifies that this is one of the

  
	
  Securities
  referred to in the Indenture.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  

 

TERMS OF SECURITIES

 

9.0%
Convertible Senior Notes due 2036

 

The
Company issued these Securities under an Indenture dated as of August 4,
2009 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the “Indenture”), among the Company, the Subsidiary
Guarantors and the Trustee, to which reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company, the Subsidiary Guarantors and the
Holders.  Additional Securities may be
issued under the Indenture in an unlimited aggregate principal amount subject
to certain conditions specified in the Indenture.

 

1)                                      Interest

 

Pier
1 Imports, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being
herein called the “Company”), promises to pay interest on the principal amount
of this Security at the rate of 9.0% per annum.

 

The
Company will pay interest semiannually on February 15 and August 15
of each year commencing [            ],
20[   ]. 
Interest on the Securities will accrue from the most recent date to
which interest has been paid on the Securities or, if no interest has been
paid, from August 4, 2009.  Interest
will be computed on the basis of a 360-day year of twelve 30-day months.

 

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

 

A-2

 

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

 

2)                                      Method of
Payment

 

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

 

3)                                      Redemption

 

No
sinking fund is provided for the Securities. 
Subject to certain conditions specified in the Indenture, the Securities
will be redeemable, at the option of the Company, in whole at any time or in
part from time to time, at any time on or after February 15, 2012 at a
Redemption Price specified in the Indenture.

 

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

 

a)                                      Subject to the
terms and conditions of the Indenture, a Holder shall have the option to
require the Company to purchase all or a portion of its Securities held by such
Holder on February 15, 2013, February 15, 2016, February 15,
2021, February 15, 2026, and February 15, 2031 at a Purchase Price
specified in the Indenture.

 

b)                                     If a
Fundamental Change shall occur at any time, each Holder shall have the right,
at such Holder’s option and subject to the terms and conditions of the
Indenture, 

 

A-3

 

to require the Company to purchase all or a portion of its Securities
at a Fundamental Change Purchase Price specified in the Indenture.

 

5)                                      Conversion

 

Subject
to Section 12.09(c) of the Indenture, a Holder may elect to convert
all or a portion of its Securities pursuant to Section 12.01(a)(i) of
the Indenture by delivering upon each conversion a Conversion Notice to the
Conversion Agent at any time prior to the date on which the earlier of the
following occurs (i) Stated Maturity and (ii) the date the Company
(or the Trustee, on behalf of the Company) first mails to each of the Holders a
Conversion Termination Notice; provided that such Conversion Notice either
provides the Specified Percentage Certifications or provides the Excess of
Specified Percentage Certifications but identifies therein Securities the
conversion of which would not result in such Holder or a Related Person
becoming a 5% Shareholder with respect to the Company.  A Holder that certifies that it or a Related
Person is or was a 5% Shareholder with respect to the Company during the Section 382
Testing Period ending on the Conversion Date may not convert any of its
Securities pursuant to Section 12.01(a)(i) of the Indenture.

 

After
the mailing of the first Conversion Termination Notice, a Holder may elect to
convert all or a portion of its Securities pursuant to Section 12.01(a)(ii) of
the Indenture by delivering upon each conversion a Conversion Notice to the
Conversion Agent at any time prior to a Conversion Rights Termination Date;
provided that such Conversion Notice either provides the Specified Percentage
Certifications or provides the Excess of Specified Percentage Certifications
but identifies therein Securities the conversion of which would not result in
such Holder or a Related Person becoming a 5% Shareholder with respect to the
Company; and, provided further, that any such Holder may preserve its
conversion rights under Section 12.01(a)(ii) of the Indenture after
such Conversion Rights Termination Date pursuant to Section 12.10(h) of
the Indenture.  A Holder that certifies
that it or a Related Person is or was a 5% Shareholder with respect to the
Company during the Section 382 Testing Period ending on the Conversion
Date may not convert any of its Securities pursuant to Section 12.01(a)(ii) of
the Indenture.

 

The
Company, at its option, may permit a Holder to convert all or a portion of the
Securities of such Holder notwithstanding that such Holder or any of its
Related Persons (i) is or was a 5% Shareholder with respect to the Company
at any time during the Section 382 Testing Period ending on the applicable
Conversion Date or (ii) would as a result of the conversion become a 5%
Shareholder with respect to the Company.

 

The
initial Conversion Rate is 399.2016 shares of Common Stock per $1,000 principal
amount of Securities, subject to adjustment in certain events described in the
Indenture.  Subject to Section 12.01(d) and
Section 12.13 of the Indenture, upon conversion, the Company will deliver
to converting Holders a Settlement Amount consisting of the number of shares of
Common Stock equal to the Conversion Rate. 
The Company shall deliver cash in lieu of any fractional share of Common
Stock.

 

A-4

 

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

 

6)                                      Additional
Conversion Provisions

 

The
Company shall make an Additional Voluntary Conversion Interest Payment, if any,
to a Holder converting its Securities pursuant to Section 12.01(a)(i) of
the Indenture.  Within two Business Days
after delivery by such Holder of such Conversion Notice, the Company shall send
such Holder a written calculation of the amount of the Additional Voluntary
Conversion Interest Payment and notice whether such Additional Voluntary
Conversion Interest Payment shall be paid by the Company in Common Stock, cash
or a combination thereof.

 

In
the event that a Holder that is eligible to convert Securities pursuant to Section 12.01(a)(i) of
the Indenture sends to the Conversion Agent a Conversion Notice to convert all
or a portion of its Securities under such Section but provides the Excess
of Specified Percentage Certification in Item 3 of the Conversion Notice, such
Holder may convert only such portion of its Securities as would not result in
such Holder or a Related Person becoming a 5% Shareholder with respect to the
Company.

 

7)                                      Termination of
Conversion and Additional Post-Termination Conversion Provisions

 

If
the Last Reported Sale Price of the Common Stock has exceeded the Termination
Conversion Price then in effect for at least 20 Trading Days in any 30 Trading
Day period, the Company may terminate the right of Holders to convert
Securities pursuant to Section 12.01(a)(i) or Section 12.01(a)(ii) upon
the mailing of, or otherwise on the terms set forth in, a Conversion
Termination Notice mailed to the Holders pursuant to Section 12.10(b) of
the Indenture, in each case as applicable. 
Any such Conversion Termination Notice shall be mailed to the Holders
within five days of the last Trading Day of any such 30 Trading Day period
satisfying the requirement set forth in the immediately preceding
sentence.  The Company may mail no more
than one Conversion Termination Notice per fiscal quarter of the Company.

 

The
Company shall make an Additional Post-Termination Interest Payment, if
any,  to a Holder converting its
Securities pursuant to Section 12.01(a)(ii) of the Indenture.  Within two Business Days after delivery by
such Holder of such Conversion Notice, the Company shall send such Holder a
written calculation of the amount of the Additional Post-Termination Interest
Payment and notice whether such Additional Post-Termination Interest Payment
shall be paid by the Company in Common Stock, cash or a combination thereof.

 

In
the event that a Holder eligible to convert Securities pursuant to Section 12.01(a)(ii) of
the Indenture sends to the Conversion Agent a Conversion Notice to convert all
or a portion of its Securities under such Section but provides the Excess
of Specified Percentage Certification in Item 3 of the Conversion Notice, such
Holder may convert only such portion of its Securities as would not result in
such Holder or a Related Person becoming a 5% Shareholder with respect to the
Company.

 

The
rights of a Holder under Section 12.01(a)(ii) of the Indenture to
convert Securities in respect of which it has provided the Excess of Specified
Percentage Certifications but which it 

 

A-5

 

may not convert under the terms of Section 12.10(f) of the
Indenture shall be preserved after the Conversion Rights Termination Date in
accordance with Section 12.10(h) of the Indenture.

 

8)                                      Preservation of
Conversion Rights by a Holder

 

In
the event that prior to any Conversion Rights Termination Date a Holder whose
conversion rights have not previously been terminated under Section 12.01(a)(ii) of
the Indenture submits a Conversion Notice to the Conversion Agent in respect of
its Securities but is unable to convert all or a portion of such Securities
because such Holder or any of its Related Persons (i) is or was a 5%
Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion of such Securities become a 5% Shareholder with
respect to the Company, such Holder shall retain the conversion rights set
forth in Section 12.01(a)(ii) of the Indenture with respect to such
Securities.

 

If
the Company (or the Trustee, on behalf of the Company) thereafter mails a
subsequent Conversion Termination Notice, the conversion rights with respect to
such Securities will terminate on the Conversion Rights Termination Date set
forth in such subsequent Conversion Termination Notice unless prior to such
Conversion Rights Termination Date the Holder submits a new Conversion Notice
to the Conversion Agent in respect of its Securities but is unable to convert
all or a portion of such Securities because such Holder or any of its Related
Persons (i) is or was a 5% Shareholder with respect to the Company at any
time during the Section 382 Testing Period ending on the applicable
Conversion Date or (ii) would as a result of the conversion of such
Securities become a 5% Shareholder with respect to the Company.  Such Holder shall continue to retain the
conversion rights with respect to those of its Securities which it cannot
convert after submission of such new Conversion Notice.

 

9)                                      5% Shareholder
Limitations

 

Notwithstanding
anything to the contrary in Article 12 of the Indenture, no Holder shall
be entitled to acquire shares of Common Stock delivered upon conversion to the
extent (but only to the extent) that such Holder or a Related Person (i) is
or was a 5% Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion become a 5% Shareholder with respect to the
Company.  Any purported delivery of
shares of Common Stock upon conversion of Securities a Holder shall be void and
have no effect to the extent (but only to the extent) that such Holder or a Related
Person (i) is or was a 5% Shareholder with respect to the Company at any
time during the Section 382 Testing Period ending on the applicable
Conversion Date or (ii) would as a result of the conversion become a 5%
Shareholder with respect to the Company.

 

10)                                Waiver of 5%
Shareholder Provisions

 

The
Company may, at its option, waive (as to a particular Holder or as to all
Holders) any restrictions that limit a Holder from converting its Securities in
the event that such Holder or a Related Person (i) is or was a 5%
Shareholder with respect to the Company at any time during the Section 382
Testing Period ending on the applicable Conversion Date or (ii) would as a
result of the conversion of such Securities become a 5% Shareholder with
respect to the Company.

 

A-6

 

11)                                Limitation on
Issuances of Common Stock

 

Unless
the Company shall have received the shareholder approval described in Section 12.13(c) of
the Indenture (which the Company shall have no obligation to seek), the Company
shall not issue any Indenture Shares if, after giving effect to such issuance,
the aggregate number of Indenture Shares issued pursuant to the Indenture
(after adjusting any previous issuances for any subsequent events that would
give rise to an adjustment to the Conversion Rate pursuant to Article 12
of the Indenture) would exceed the Maximum Shares calculated pursuant to Section 12.13.

 

If
the number of Indenture Shares otherwise issuable under the Indenture upon a
conversion of Securities would, when aggregated with all prior issuances of
Indenture Shares, exceed the Maximum Shares, the Company shall, in lieu of the
shares of Common Stock that it cannot issue pursuant to Section 12.13(a) of
the Indenture, satisfy its obligation by a cash payment in an amount equal to
the product of (i) the number of shares of Common Stock that the Company
is unable to issue pursuant to Section 12.13(a) of the Indenture
multiplied by (ii) the Five Day VWAP multiplied by (iii) 1.025.

 

12)                                Denominations;
Transfer; Exchange

 

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

 

13)                                Persons Deemed
Owners

 

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

 

14)                                Unclaimed Money

 

If
money for the payment of principal or interest (and any portion of the
Make-Whole Payment and Settlement Amount payable in cash, if any) remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company.  After any such payment,
Holders entitled to the money must look only to the Company and not to the
Trustee for payment.

 

15)                                Amendment,
Waiver

 

The
Indenture contains provisions permitting an amendment of the Indenture or the
Securities with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Securities and the waiver of any Event
of Default (other than with respect to 

 

A-7

 

nonpayment or in respect of a provision that cannot be amended without
the written consent of each Securityholder affected) or noncompliance with any
provision with the written consent of the Holders of a majority in principal
amount of the then outstanding Securities.

 

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

 

16)                                Defaults and
Remedies

 

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

 

Securityholders
may not enforce the Indenture or the Securities except as provided in the
Indenture.  The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security.  Subject to certain
limitations, Holders of a majority in principal amount of the Securities may
direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders
notice of any continuing Default or Event of Default (except a Default or Event
of Default in payment of principal or interest or of any portion of the
Make-Whole Payment and Settlement Amount payable in cash, if any) if it
determines that withholding notice is in their interest.

 

17)                                Trustee
Dealings with the Company

 

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

 

18)                                No Recourse
Against Others

 

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

 

19)                                Authentication

 

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

 

A-8

 

20)                                Abbreviations

 

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

 

21)                                CUSIP Numbers

 

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

 

22)                                Governing Law

 

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

 

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

 

Pier
1 Imports, Inc.

100 Pier 1 Place

Fort Worth, Texas 76102

Attention:  Charles H. Turner

 

A-9

 

[TO
BE ATTACHED TO GLOBAL SECURITIES]

 

ASSIGNMENT FORM

 

To
assign this Security, fill in the form below:

I or we assign and transfer this Security to

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  and
  irrevocably appoint
                        
  agent to transfer this Security on the

  	
   

  
	
   

  	
  books
  of the Company. The agent may substitute another to act for him.

  	
   

  

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  
	
  Signature
  Guarantee:

  	
   

  
	
  (Signature must be guaranteed)

  
	
   

  
	
   

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

  
						

 

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

 

A-10

 

SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY

 

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

 

	
  Date

  	
   

  	
  Amount of

  decrease in

  Principal Amount

  of this Global

  Security

  	
   

  	
  Amount of increase

  in Principal

  Amount of this

  Global Security

  	
   

  	
  Principal Amount

  of this Global

  Security following

  such decrease or

  increase

  	
   

  	
  Signature of

  authorized

  signatory of

  Trustee or

  Securities

  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-11

 

FORM OF CONVERSION NOTICE

 

To:                                Pier 1 Imports, Inc.

 

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

 

This
notice shall be deemed to be an irrevocable exercise of the option to convert
this Security or the portions thereof that may be converted pursuant to the
terms of the Indenture.  The Conversion
Date shall be                       .

 

In
connection with any conversion of Securities pursuant to Section 12.01(a)(i) and
12.01(a)(ii) of the Indenture, the undersigned confirms and certifies as
to the statements checked below:

 

CHECK
ONLY ONE BOX BELOW (AND, IF NECESSARY,
INSERT RELEVANT INFORMATION):

 

	
  £

  	
  1

  	
  For purposes of applying
  Section 382 to the Company, the Holder and each of its Related Persons
  (i) is not and was not a 5% Shareholder with respect to the Company at
  any time during the Section 382 Testing Period ending on the Conversion Date
  and (ii) would not as a result of the conversion of the Securities that
  are the subject of this Conversion Notice become a 5% Shareholder with
  respect to the Company.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  £

  	
  2

  	
  For purposes of applying
  Section 382 to the Company, the Holder or any of its Related Persons is
  or was a 5% Shareholder with respect to the Company during the
  Section 382 Testing Period ending on the Conversion Date.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The principal amount of
  the Securities held by the Holder is $

  	
   

  	
  . 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Holder requests a waiver from the Company
  pursuant to Section 12.12 of the Indenture to convert the following
  principal amount of Securities:

  	
  $      

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If this Conversion Notice
  is being sent after the mailing of a Conversion Termination Notice, the
  Holder requests the preservation of conversion rights under
  Section 12.01(a)(ii) of the Indenture for any of the Holder’s
  Securities that are the subject of this Conversion Notice that are not 

  	
   

  	
   

  	
   

  

 

A-12

 

	
   

  	
   

  	
  converted.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  3

  	
  For purposes of applying Section 382
  to the Company, the Holder and each of its Related Persons (i) is not
  and was not a 5% Shareholder with respect to the Company at any time during
  the Section 382 Testing Period ending on the Conversion Date and (ii) the
  conversion of the Securities subject to this Conversion Notice will result in
  the Holder or any of its Related Persons becoming a 5% Shareholder with
  respect to the Company.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The principal amount of
  the Securities held by the Holder is $

  	
   

  	
   .

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The conversion of the
  following principal amount of the Holder’s Securities will not result in the
  Holder or any of its Related Persons becoming a 5% Shareholder with respect
  to the Company:

  	
  $

  	
   

  	
  (1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Holder requests a waiver from the Company pursuant to
  Section 12.12 of the Indenture to convert the following principal amount
  of Securities:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If this Conversion Notice is being sent after the mailing of a
  Conversion Termination Notice, the Holder requests the preservation of
  conversion rights under Section 12.01(a)(ii) of the Indenture for
  any of the Holder’s Securities that are the subject of this Conversion Notice
  that are not converted.

  	
   

  	
   

  	
   

  

 

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

  	
  The
  signature(s) should be guaranteed by an eligible guarantor institution
  (banks, stockbrokers, savings and loan associations and credit unions) with

  

 

(1)                                  Pursuant to the
terms of the Indenture, absent a waiver from the Company, no Securities may be
converted pursuant to Section 12.01(a)(i) or Section 12.01(a)(ii) of
the Indenture to the extent that the converting Holder or any of its Related
Persons (i) is or was a 5% Shareholder with respect to the Company at any
time during the Section 382 Testing Period ending on the Conversion Date
or (ii) would as a result of the conversion of the Securities the subject
of a Conversion Notice become a 5% Shareholder with respect to the Company.

 

A-13

 

	
   

  	
  membership
  in an approved signature guarantee medallion program, pursuant to S.E.C. Rule 17Ad-15.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee

  
	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
  Principal
  amount requested for conversion (if less than all): $                    ,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Street
  Address)

  	
   

  	
  CUSIP
  number of Securities to be converted: 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (City
  state and zip code)

  	
   

  	
  Social
  Security or Other Taxpayer Number

  
	
  Please
  print name and address

  	
   

  	
   

  

 

A-14

 

FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE

 

To:                              Pier 1 Imports, Inc.

 

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

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee

  

 

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

 

	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  Principal
  amount to be purchased

  
	
   

  	
   

  	
  (if
  less than all):   $                    ,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Street
  Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (City
  state and zip code)

  	
   

  	
  Social
  Security or Other Taxpayer Number

  
	
  Please
  print name and address

  	
   

  	
   

  

 

A-15

 

FORM OF PURCHASE NOTICE

 

To:                              Pier 1 Imports, Inc.

 

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

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee

  

 

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

 

	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  Principal
  amount to be purchased

  
	
   

  	
   

  	
  (if
  less than all):   $                    ,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Street
  Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (City
  state and zip code)

  	
   

  	
  Social
  Security or Other Taxpayer Number

  
	
  Please
  print name and address

  	
   

  	
   

  

 

A-16

 

EXHIBIT B

 

FORM OF INDENTURE SUPPLEMENT TO ADD 

SUBSIDIARY GUARANTORS

 

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

 

W
I T N E S S E T H:

 

WHEREAS,
the Company, the Subsidiary Guarantors and the Trustee have heretofore executed
and delivered an Indenture, dated as of August 4, 2009 (as amended,
supplemented, waived or otherwise modified, the “Indenture”),
providing for the issuance of 9.0% Convertible Senior Notes due 2036 of the
Company (the “Securities”);

 

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

 

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

 

ARTICLE
I

DEFINITIONS

 

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

 

ARTICLE
II

AGREEMENT TO BE BOUND; GUARANTEE

 

Section 2.01.  Agreement to be Bound.  The Guarantor hereby becomes a party to the
Indenture as a Subsidiary Guarantor and as such will have all of the rights and
be subject to all of the obligations and agreements of a Subsidiary Guarantor
under the Indenture.  The Guarantor
agrees to be bound by all of the provisions of the Indenture applicable to a
Subsidiary Guarantor and to perform all of the obligations and agreements of a
Subsidiary Guarantor under the Indenture.

 

B-1

 

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

 

ARTICLE
III

MISCELLANEOUS

 

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

 

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

 

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

 

Section 3.04.  Severability Clause.  In case any provision in this Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and such provision shall be ineffective only to the extent
of such invalidity, illegality or unenforceability.

 

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

 

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

 

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

 

B-2

 

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

 

	
   

  	
  THE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
  PIER
  1 IMPORTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  THE
  SUBSIDIARY GUARANTORS

  
	
   

  	
   

  
	
   

  	
   

  	
  PIER
  1 ASSETS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  PIER
  1 LICENSING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  PIER
  1 VALUE SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  	
   

  	
  its
  sole member and manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

B-3

 

	
   

  	
   

  	
  PIER
  1 HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  PIER
  1 SERVICES COMPANY,

  
	
   

  	
   

  	
  a
  Delaware statutory trust

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Pier
  1 Holdings, Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
  its
  managing trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  [INSERT
  OTHER SUBSIDIARY GUARANTORS]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  TRUSTEE

  
	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

B-4

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