Document:

Exhibit 4.1

SCHOOL SPECIALTY, INC.

3.75% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2026

INDENTURE

_________________________________________________

Dated as of March 1, 2011

__________________________________________________

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

TABLE OF CONTENTS

Page

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

1

Section 1.01

Definitions.

1

Section 1.02

Other Definitions

10

Section 1.03

[Omitted.]

11

Section 1.04

Rules of Construction

11

Section 1.05

Acts of Holders

11

ARTICLE 2

THE SECURITIES

13

Section 2.01

Form and Dating.

13

Section 2.02

Execution and Authentication.

14

Section 2.03

Registrar, Paying Agent and Conversion Agent.

14

Section 2.04

Paying Agent to Hold Money and Securities in Trust.

15

Section 2.05

Securityholder Lists.

15

Section 2.06

Transfer and Exchange.

15

Section 2.07

Replacement Securities.

17

Section 2.08

Outstanding Securities; Determinations of Holders’ Action.

18

Section 2.09

Temporary Securities.

18

Section 2.10

Cancellation.

19

Section 2.11

Persons Deemed Owners.

19

Section 2.12

Transfer Restriction Legend; Global Securities.

19

Section 2.13

CUSIP Numbers.

24

Section 2.14

Accretion

24

Section 2.15

Calculation of Original Issue Discount

24

Section 2.16

Additional Securities

25

ARTICLE 3

REDEMPTION AND REPURCHASES

25

Section 3.01

Company’s Right to Redeem; Notices to Trustee

25

Section 3.02

Selection of Securities to Be Redeemed

26

Section 3.03

Notice of Redemption

26

Section 3.04

Effect of Notice of Redemption

27

Section 3.05

Deposit of Redemption Price

28

Section 3.06

Securities Redeemed in Part

28

Section 3.07

Repurchase of Securities by the Company at Option of the 

Holder

28

Section 3.08

Repurchase of Securities at Option of the Holder Upon a 

Fundamental Change

30

Section 3.09

Effect of Repurchase Notice or Fundamental Change 

Repurchase Notice

33

Section 3.10

Deposit of Repurchase Price or Fundamental Change Repurchase Price

34

Section 3.11

Securities Purchased in Part

35

i

Section 3.12

Covenant to Comply with Securities Laws upon Purchase of 

Securities

35

Section 3.13

Repayment to the Company

35

ARTICLE 4

COVENANTS

35

Section 4.01

Payment of Securities

35

Section 4.02

SEC and Other Reports

36

Section 4.03

Compliance Certificate

36

Section 4.04

Further Instruments and Acts

36

Section 4.05

Delivery of Certain Information

36

Section 4.06

[Omitted.]

37

Section 4.07

Maintenance of Office or Agency.

37

ARTICLE 5

SUCCESSOR PERSON

37

Section 5.01

When Company May Merge or Transfer Assets

37

ARTICLE 6

DEFAULTS AND REMEDIES

38

Section 6.01

Events of Default

38

Section 6.02

Acceleration

41

Section 6.03

Other Remedies

41

Section 6.04

Waiver of Past Defaults

42

Section 6.05

Control by Majority

42

Section 6.06

Limitation on Suits

42

Section 6.07

Rights of Holders to Receive Payment

43

Section 6.08

Collection Suit by Trustee

43

Section 6.09

Trustee May File Proofs of Claim

43

Section 6.10

Priorities

44

Section 6.11

Undertaking for Costs

44

Section 6.12

Waiver of Stay, Extension or Usury Laws

44

ARTICLE 7

TRUSTEE

45

Section 7.01

Duties of Trustee.

45

Section 7.02

Rights of Trustee.

46

Section 7.03

Individual Rights of Trustee.

48

Section 7.04

Trustee’s Disclaimer

48

Section 7.05

Notice of Defaults

48

Section 7.06

Reports by Trustee to Holder

48

Section 7.07

Compensation and Indemnity.

49

Section 7.08

Replacement of Trustee

50

Section 7.09

Successor Trustee by Merger

51

Section 7.10

Eligibility; Disqualification

51

Section 7.11

Preferential Collection of Claims Against Company.

51

ARTICLE 8

DISCHARGE OF INDENTURE

51

Section 8.01

Discharge of Liability on Securities

51

Section 8.02

Repayment to the Company

52

Section 8.03

Application of Trust Money

52

ii

ARTICLE 9

AMENDMENTS

52

Section 9.01

Without Consent of Holders

52

Section 9.02

With Consent of Holders

53

Section 9.03

[Omitted.]

55

Section 9.04

Revocation and Effect of Consents, Waivers and Actions

55

Section 9.05

Notice of Amendments, Notation on or Exchange of Securities

55

Section 9.06

Trustee to Sign Supplemental Indenture

55

Section 9.07

Effect of Supplemental Indentures

55

ARTICLE 10

CONVERSIONS

55

Section 10.01

Conversion Privilege

55

Section 10.02

Conversion Procedure; Conversion Rate; Fractional Shares

61

Section 10.03

Payment Upon Conversion

62

Section 10.04

Adjustment of Conversion Rate

64

Section 10.05

Effect of Reclassification, Consolidation, Merger or Sale

72

Section 10.06

Taxes on Shares Issued

74

Section 10.07

Reservation of Shares, Shares to Be Fully Paid; Compliance 

with Governmental Requirements

74

Section 10.08

Responsibility of Trustee

75

Section 10.09

Notice to Holders Prior to Certain Actions

75

Section 10.10

Shareholder Rights Plan

76

Section 10.11

Unconditional Right of Holders to Convert

76

Section 10.12

Limitation on Adjustments

76

Section 10.13

Limitation on Issuance of Common Stock

77

ARTICLE 11

SUBORDINATION

78

Section 11.01

Agreement to Subordinate

78

Section 11.02

Liquidation; Dissolution; Bankruptcy

78

Section 11.03

Default on Senior Debt and/or Designated Senior Debt

78

Section 11.04

Acceleration of Convertible Subordinated Notes

79

Section 11.05

When Distribution Must Be Paid Over

80

Section 11.06

Notice to Trustee

80

Section 11.07

Subrogation

81

Section 11.08

Relative Rights

81

Section 11.09

Subordination May Not Be Impaired by Company.

81

Section 11.10

Distribution or Notice to Representative

81

Section 11.11

Rights of Trustee and Paying Agent

82

Section 11.12

Authorization to Effect Subordination

82

Section 11.13

Article Applicable to Paying Agents

82

Section 11.14

Senior Debt Entitled to Rely

83

Section 11.15

Permitted Payments

83

Section 11.16

Trustee Not Fiduciary for Holders of Senior Indebtedness

83

ARTICLE 12

OMITTED

83

ARTICLE 13

MISCELLANEOUS

83

Section 13.01

[Omitted.]

83

iii

Section 13.02

Notices

83

Section 13.03

Communication by Holders with Other Holders

85

Section 13.04

Certificate and Opinion as to Conditions Precedent

85

Section 13.05

Statements Required in Certificate or Opinion

85

Section 13.06

Separability Clause

86

Section 13.07

Rules by Trustee, Paying Agent, Conversion Agent and Registrar

86

Section 13.08

Legal Holidays

86

Section 13.09

Governing Law

86

Section 13.10

No Recourse Against Others

86

Section 13.11

Successors

86

Section 13.12

Multiple Originals

86

Section 13.13

Force Majeure

86

Section 13.14

Waiver of Jury Trial.

87

EXHIBIT A

Form of Global Security

EXHIBIT B

Form of Certificated Security

EXHIBIT C

Form of Notice of Redemption

EXHIBIT D

Form of Notice of Repurchase

EXHIBIT E

Notice of Occurrence of Fundamental Change

SCHEDULE I

Number of Additional Shares

SCHEDULE II

Accreted Principal

iv

INDENTURE dated as of March 1, 2011 between School Specialty, Inc., a Wisconsin corporation (“Company”), and The Bank of New York Mellon Trust Company, N.A., a national banking association (“Trustee”).

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company’s 3.75% Convertible Subordinated Debentures due 2026:

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01

Definitions.

“Accreted Principal Amount” means the principal amount of any Security (including the Original Principal Amount) including the principal accreted thereon pursuant to Section 2.14.

“Affiliate” of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person.  For the purposes of this definition, “control” when used with respect to any specified person means the power to direct or cause the direction of 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,” “controlled” and “under common control with” have meanings correlative to the foregoing.

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

“Bid Solicitation Agent” means the agent of the Company appointed to obtain quotations for the Securities as set forth under the definition of Trading Price, which agent shall at no time be an Affiliate of the Company.  The Company may, from time to time, appoint or change the Bid Solicitation Agent.

“Board of Directors” means either the board of directors of the Company or any duly authorized committee of such board.

“Board Resolution” means a resolution of the Board of Directors.

“Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in The City of New York.

“Capital Stock” for any corporation means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that corporation.

1

“Certificated Securities” means Securities that are in the form of the Securities attached hereto as Exhibit B.

“Change of Control” means the occurrence at such time after the original issuance of the Securities when any of the following has occurred:

(i)

a “person” or “group” within the meaning of Section 13(d)(3) of the Exchange Act files a Schedule 13D, a Schedule TO or any schedule, form or report under the Exchange Act disclosing, or the Company otherwise becomes aware, that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of shares of Common Stock representing more than 50% of the Voting Stock; or

 (ii) 

a consolidation, merger or binding share exchange, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the Company’s properties and assets to another Person, other than:

(a)

any transaction (i) that does not result in any reclassification, conversion, exchange or cancellation of Capital Stock and (ii) pursuant to which holders of the Company’s Capital Stock immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total Voting Stock of the continuing or surviving or successor Person immediately after giving effect to such issuance; or

(b)

any merger, share exchange, transfer of assets or similar transaction solely for the purpose of changing the Company’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock, if at all, solely into shares of common stock, ordinary shares or American Depositary Shares of the surviving entity or a direct or indirect parent of the surviving entity; or

(c)

any merger, consolidation, conveyance, transfer, sale, lease or other disposition with or into a Subsidiary, so long as such merger, consolidation, conveyance, transfer, sale, lease or other disposition is not part of a plan or a series of transactions designed to or having the effect of merging, consolidating with or conveying, transferring, selling, leasing or otherwise disposing of all or substantially all the Company’s properties and assets to, any other Person.

The term “person” for this definition of “Change of Control” includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

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

“Closing Date” means March 1, 2011.

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

2

“Common Stock” means the common stock, par value $0.001 per share, of the Company existing on the date of this Indenture or any other shares of Capital Stock of the Company into which such Common Stock shall be reclassified or changed, including, subject to Section 10.05 below, in the event of a merger, consolidation or other similar transaction involving the Company that is otherwise permitted hereunder in which the Company is not the surviving Person, the common stock of such surviving corporation.

“Company” means the party named as the “Company” in the preamble of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor.  The foregoing sentence shall likewise apply to any subsequent such successor or successors.

“Company Notice” means a notice to Holders delivered pursuant to Section 3.07 or Section 3.08.

“Company Request” or “Company Order” means a written request or order signed in the name of the Company by any Officer.

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

“Conversion Settlement Date” means (A) with respect to the Conversion Settlement Distribution (other than any Additional Shares which may be issuable pursuant to Section 10.01(c)), the third Business Day immediately following the last day of the Cash Settlement Averaging Period, and (B) with respect to any Additional Shares which may be issuable, the later of (i) the fifth Business Day following the effective date of any Change of Control transaction and (ii) the third Business Day immediately following the Cash Settlement Averaging Period.

“Corporate Trust Office” means the designated office of the Trustee at which at any time its corporate trust business shall be principally administered, which office at the date hereof is located at 2 N. LaSalle Street, Suite 1020, Chicago, Illinois 60602, Attention:  Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as a successor Trustee may designate from time to time by notice to the Holders and the Company).

“Current Market Price” of the Common Stock on any day means the average of the Last Reported Sale Price per share of the Common Stock for each of the ten consecutive Trading Days ending on the earlier of the day in question and the Trading Day before the “Ex-Dividend Date” with respect to the issuance or distribution requiring such computation, subject to adjustment by the Board of Directors if another transaction requiring an adjustment to the Conversion Rate pursuant to Section 10.04 occurs during such ten day period.

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

“Designated Senior Debt” means (i) the Senior Bank Credit Facility and (ii) any particular Senior Debt which has at the time of the giving of the Payment Blockage Notice an 

3

aggregate outstanding principal amount in excess of $25 million, if the instrument creating or evidencing the same or the assumption or guarantee thereof (or related agreements or documents to which the Company is a party) expressly provides that such indebtedness shall be “Designated Senior Debt” for purposes of the Indenture (provided that such instrument, agreement or other document may place limitations and conditions on the right of such Senior Debt to exercise the rights of Designated Senior Debt).

“DTC” means The Depository Trust Company.

“Ex-Dividend Date” means 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, regular way on the relevant exchange or in the relevant market for the Common Stock, to its buyer.

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

“Fair Market Value” or “fair market value” means the amount which a willing buyer would pay a willing seller in an arm’s-length transaction.

“Fundamental Change” means either a Change of Control or a Termination of Trading.

“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, which are in effect from time to time.

“Global Securities” means Securities that are in the form of the Securities attached hereto as Exhibit A, and that are registered in the register of Securities in the name of a Depositary or a nominee thereof.

“Holder” or “Securityholder” means a person in whose name a Security is registered on the Registrar’s books.

“Indebtedness” means, with respect to any person, all obligations, whether or not contingent, of such person:

(i)

(a)

for borrowed money (including, but not limited to, any indebtedness secured by a security interest, mortgage or other lien on its assets that is given to secure all or part of the purchase price of property subject thereto, whether given to the vendor of such property or to another, or existing on property at the time of acquisition thereof),

(b)

evidenced by a note, debenture, bond or other written instrument,

4

(c)

under a lease required to be capitalized on the balance sheet of the lessee under GAAP or under any lease or related document (including a purchase agreement) that provides that the Company is contractually obligated to purchase or cause a third party to purchase and thereby guarantee a minimum residual value of the lease property to the lessor and its obligations under such lease or related document to purchase or to cause a third party to purchase such leased property,

(d)

in respect of letters of credit, bank guarantees or bankers’ acceptances (including reimbursement obligations with respect to any of the foregoing),

(e)

with respect to indebtedness secured by a mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or resulting in an encumbrance to which the property or assets of such Person are subject, whether or not the obligation secured thereby shall have been assumed by or shall otherwise be such Person’s legal liability,

(f)

in respect of the balance of deferred and unpaid purchase price of any property or assets,

(g)

under interest rate or currency swap agreements, cap, floor and collar agreements, spot and forward contracts and similar agreements and arrangements;

(ii)

with respect to any obligation of others of the type described in the preceding clause (i) or under clause (iii) below assumed by or guaranteed in any manner by such person or in effect guaranteed by such Person through an agreement to purchase (including, without limitation, “take or pay” and similar arrangements), contingent or otherwise (and the obligations of such Person under any such assumptions, guarantees or other such arrangements); and

(iii)

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

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Interest” means interest payable on the Original Principal Amount of Securities pursuant to Section 1 of the Securities.

“Interest Payment Date” means May 30 and November 30 of each year, commencing May 30, 2011.

“Interest Record Date” means May 15 and November 15 of each year.

“Issue Date” of any Security means the date on which the Security was originally issued or deemed issued as set forth on the face of the Security.

5

“Last Reported Sale Price” means, with respect to any security on any date, the closing sale price (or if no closing sale price is reported, the average of the bid and asked prices or, if more than one in either case, the average of the average bid and the average asked prices) on that date as reported by the Nasdaq Global Select Market or, if such security is not reported by the Nasdaq Global Select Market, in composite transactions for the principal U.S. national or regional securities exchange on which such security is traded.  The closing sale price will be determined without reference to after-hours or extended market trading. If the such security is not listed for trading on a U.S. national or regional securities exchange and not reported by the Nasdaq Global Select Market on the relevant date, the “Last Reported Sale Price” shall be the last quoted bid price for such security in the over-the-counter market on the relevant date as reported by the National Quotation Bureau Incorporated or similar organization.  If such security is not so quoted, the “Last Reported Sale Price” shall be the average of the midpoint of the last bid and ask prices for such security on the relevant date from each of at least three independent nationally recognized investment banking firms selected by the Company for this purpose (or if prices are not available from three such firms, from two such firms or, if prices are not available from two such firms, from one such firm).

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

“Officer’s Certificate” means a written certificate containing the information specified in Sections 13.04 and 13.05, signed in the name of the Company by any Officer, and delivered to the Trustee.  An Officer’s Certificate given pursuant to Section 4.03 shall be signed by the principal executive officer, principal financial officer or principal accounting officer of the Company but need not contain the information specified in Sections 13.04 and 13.05.

“Opinion of Counsel” means a written opinion reasonably acceptable to the Trustee from legal counsel; provided, that in the case of an opinion delivered on behalf of the Company, such written opinion shall contain the information specified in Sections 13.04 and 13.05.  The counsel may be an employee of, or counsel to, the Company.

“Original Issue Discount” means the amount of ordinary interest income on a Security that must be accrued as original issue discount for U.S. federal income tax purposes pursuant to Treasury regulations Section 1.1275-4.

“Original Principal Amount” means (a) with respect to the Securities issued on the Closing Date, $100,000,000 and (b) with respect to Additional Securities, if any, the principal amount of such Additional Securities on their date of issuance.

“Participant” means, with respect to the Depositary, a Person who has an account with the Depositary.

“Person” means any individual, corporation, partnership, joint venture, trust, estate, unincorporated organization, limited liability company or government or any agency or political subdivision thereof.  The term “Person” includes any syndicate or group that would be deemed to be a “Person” under Section 13(d)(3) of the Exchange Act.

6

“Redemption Date” means the date specified in a notice of redemption on which the Securities may be redeemed in accordance with the terms of the Securities and this Indenture.

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

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

“Restricted Certificated Security” means a Certificated Security that is subject to resale restrictions pursuant to the Securities Act.

“Restricted Global Security” means a Global Security that is subject to resale restrictions pursuant to the Securities Act.

“Restricted Security” means a Restricted Certificated Security and a Restricted Global Security.

“SEC” means the Securities and Exchange Commission.

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

“Security” means any of the Company’s 3.75% Convertible Subordinated Debentures Due 2026, as amended or supplemented from time to time, issued under this Indenture (including pursuant to Section 2.16).

“Securityholder” or “Holder” means a person in whose name a Security is registered on the Registrar’s books.

“Senior Bank Credit Facility” means the Credit Agreement dated as of April 23, 2010 and as amended among the Company, as borrower, certain of its subsidiaries, as guarantors, the lenders identified therein, and Bank of America, N.A., as administrative agent, including any deferrals, renewals, extensions, replacements, refinancings or refundings thereof, or amendments, modifications or supplements thereto and any agreement providing therefor whether by or with the same or any other lender, creditor, group of lenders or group of creditors and including the related notes, guarantee agreements and other instruments and agreements executed in connection therewith.

7

“Senior Debt” means the principal of, premium, if any, and interest on, rent under, and any other amounts payable on or in or in respect of any of the Company’s Indebtedness (including, without limitation, any obligations in respect of such Indebtedness and any interest accruing after the filing of a petition by or against the Company under any bankruptcy law, whether or not allowed as a claim after such filing in any proceeding under such bankruptcy law), whether outstanding on the date of this Indenture or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company (including all deferrals, renewals, extensions, refinancings or refundings of, or amendments, modifications or supplements to the foregoing). However, Senior Debt does not include:

(1)

Indebtedness evidenced by the Securities,

(2)

the Company’s 3.75% Convertible Subordinated Debentures due 2026 issued under the Indenture dated as of November 22, 2006, between the Company and The Bank of New York Mellon Trust Company, N.A.,

(3)

any liability for federal, state, local or other taxes owed or owing by the Company,

(4)

the Company’s Indebtedness to any of its subsidiaries except to the extent such Indebtedness is a type described in clause (ii) of the definition of Indebtedness,

(5)

the Company’s trade payables for goods, services or materials purchased in the ordinary course of business (other than, to the extent they may otherwise constitute such trade payables, any obligations of the type described in clause (ii) of the definition of Indebtedness), and

(6)

any particular Indebtedness in which the instrument creating or evidencing the same expressly provides that such Indebtedness shall not be senior in right of payment to, or is pari passu with, or is subordinated or junior to, the Securities.

“Significant Subsidiary” means any subsidiary of the Company that is a significant subsidiary at any determination date pursuant to Regulation S-X, Rule 1-02(w)(1) or (2).

“Stated Maturity” when used with respect to any Security, means November 30, 2026.

“Stock Price” means the price per share of Common Stock paid in connection with a Change of Control transaction pursuant to which Additional Shares are issuable as set forth in Section 10.01(c) hereof, which shall be equal to (i) if Holders of Common Stock receive only cash in such Change of Control 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 the Common Stock on the five Trading Days prior to, but not including, the effective date of such Change of Control transaction.

“Subsidiary” means any person of which at least a majority of the outstanding Voting Stock shall at the time directly or indirectly be owned or controlled by the Company or by one or more Subsidiaries or by the Company and one or more Subsidiaries.

8

“Termination of Trading” means the occurrence, at any time, of the Common Stock of the Company (or other common stock into which the Securities are then convertible) being neither listed for trading on a U.S. national securities exchange nor approved for trading on The Nasdaq Global Select Market.

“TIA” means the Trust Indenture Act of 1939 as in effect on the date of this Indenture, provided, however, that in the event the TIA is amended after such date, TIA means, to the extent required by any such amendment, the TIA as so amended.

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

“Trading Price” of the Securities on any date of determination means the average of the secondary market bid quotations per $1,000 Original Principal Amount of the Securities obtained by the Bid Solicitation Agent for $5,000,000 aggregate Original Principal Amount of the Securities at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers the Company selects, provided that if three such bids cannot reasonably be obtained by the Bid Solicitation Agent, but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used.  If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5,000,000 aggregate Original Principal Amount of the Securities from a nationally recognized securities dealer, or in the Company’s reasonable judgment, the bid quotations are not indicative of the secondary market value of $1,000 Original Principal Amount of the Securities, then for purposes of determining whether the condition to conversion of the Securities set forth in Section 10.01(a)(2) has been satisfied, the Trading Price of the Securities will be deemed to be less than 98% of the product of the Closing Price of the Common Stock and the Conversion Rate on such date.

“Treasury regulations” means the U.S. federal income tax regulations, including temporary regulations, promulgated under the Code, as those regulations may be amended from time to time.  Any reference herein to a specific Section of the Treasury regulations shall include any corresponding provisions of succeeding, similar, substitute, proposed or final Treasury regulations.

“Trustee” means the party named as the “Trustee” in the preamble of this Indenture unless and until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor.  The foregoing sentence shall likewise apply to any subsequent such successor or successors.

9

“Unrestricted Certificated Security” means a Certificated Security that is not subject to resale restrictions pursuant to the Securities Act .

“Unrestricted Global Security” means a Global Security that is not subject to resale restrictions pursuant to the Securities Act.

“Unrestricted Security” means an Unrestricted Certificated Security or an Unrestricted Global Security.

“Voting Stock” of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

Section 1.02

Other Definitions.

		
	Terms:

	Defined in Section

	“Act”

	1.05(a)

	“Acquisition Value”

	10.01(d)

	“Additional Securities”

	2.16

	“Additional Shares

	10.01(c)

	“Adjustment Event”

	10.04(j)

	“Agent Members”

	2.12(v)

	“Bankruptcy Law”

	6.01(i)

	“cash”

	3.01

	“Cash Settlement Averaging Period”

	10.03(a)

	“Cash Percentage”

	10.03(a)

	“Conversion Agent”

	2.03

	“Conversion Date”

	10.02(c)

	“Conversion Notice”

	10.02(b)

	“Conversion Obligation”

	10.01(a)

	“Conversion Rate”

	10.02(a)

	“Conversion Settlement Distribution”

	10.03(a)

	“Daily Accreted Amount”

	10.03(a)

	“Daily Conversion Value”

	10.03(a)

	“Daily Settlement Amount”

	10.03(a)

	“Daily Share Amount”

	10.03(a)

	“daily VWAP”

	10.03(a)

	“Depositary”

	2.01(b)

	“Determination Date”

	10.04(j)

	“Distributed Assets”

	10.04(d)

	“effective date”

	10.01(c)

	“Event of Default”

	6.01

	“Exchange Property”

	10.01(b)(2)

	“Expiration Time”

	10.04(f)

	“Extraordinary Cash Dividend”

	10.04(e)

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	“Fiscal Quarter”

	10.01(a)(1)

	“Fundamental Change Repurchase Date”

	3.08(a)

	“Fundamental Change Repurchase Notice”

	3.08(c)

	“Fundamental Change Repurchase Price”

	3.08(a)

	“Holder Excess Shares”

	10.13(a)

	“Indenture Shares”

	10.13(a)

	“legal holiday”

	13.08

	“Maximum Shares”

	10.13.(a)

	“Measurement Period”

	10.01(a)(2)

	“Notice of Default”

	6.01(i)

	“Paying Agent”

	2.03

	“Payment Blockage Notice”

	11.03(b)

	“Payment Blockage Period”

	11.03(b)

	“Public Acquirer Change of Control

	10.01(d)

	“Public Acquirer Common Stock”

	10.01(d)

	“Purchased Shares”

	10.04(f)(i)

	“Redemption Price”

	3.01

	“Registrar”

	2.03

	“Repurchase Date”

	3.07(a)

	“Repurchase Notice”

	3.07(b)

	“Repurchase Price”

	3.07(a)

	“Residual Amount”

	10.03(a)(ii)

	“successor Person”

	5.01(a)

	“Transfer Restriction Legend”

	2.12

	“Trigger Event”

	10.04(d)

Section 1.03

[Omitted.]

Section 1.04

Rules of Construction.

Unless the context otherwise requires:

(i)

a term has the meaning assigned to it;

(ii)

an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time;

(iii)

“including” means including, without limitation;

(iv)

words in the singular include the plural, and words in the plural include the singular; and

(v)

references to Sections and Articles are to references to Sections and Articles of this Indenture.

Section 1.05

Acts of Holders.

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(a)

Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company, as described in Section 13.02.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.05.

(b)

The fact and date of the execution by any person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such officer the execution thereof.  Where such execution is by a signer acting in a capacity other than such signer’s individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer’s authority.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

(c)

The principal amount and serial number of any Security and the ownership of Securities shall be proved by the register for the Securities.

(d)

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

(e)

If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so.  If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed

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effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.

ARTICLE 2

THE SECURITIES

Section 2.01

Form and Dating.

(a)

The Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibits A and B, which are a part of this Indenture.  The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage (provided that any such notation, legend or endorsement required by usage is in a form acceptable to the Company).  The Company shall provide any such notations, legends or endorsements to the Trustee in writing.  Each Security shall be dated the date of its authentication.  The Securities may, but need not, have the corporate seal of the Company or a facsimile thereof affixed thereto or imprinted thereon.

(b)

Global Securities.  All of the Securities issued on the Closing Date are being offered and sold in reliance on Section 4(2) of the Securities Act and such Securities shall be issued in the form of an Unrestricted Global Security, which shall be deposited with the Trustee at its Corporate Trust Office, as custodian for the Depositary (as defined below), and registered in the name of The Depository Trust Company (“DTC”) or the nominee thereof (DTC, or any successor thereto, and any such nominee being hereinafter referred to as the “Depositary”), duly executed by the Company and authenticated by the Trustee as hereinafter provided.  The aggregate Original Principal Amount of the Global Securities shall be increased or decreased by adjustments made on the records of the Trustee and the Depositary as hereinafter provided.  In addition, principal shall accrete on the principal amount of the Global Securities (including the Original Principal Amount) pursuant to Section 2.14.

(c)

Global Securities in General.  Each Global Security shall represent such of the outstanding Securities as shall be specified therein and each shall provide that (i) it shall represent the aggregate Original Principal Amount of outstanding Securities from time to time endorsed thereon and that the aggregate Original Principal Amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions, repurchases and conversions and (ii) principal shall accrete on the principal amount of such Global Security pursuant to Section 2.14.

Any adjustment of the aggregate principal amount of a Global Security (except in respect of accretions to the principal amount pursuant to Section 2.14) to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof, and shall be made on the records of the Trustee and the Depositary.

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(d)

Book-Entry Provisions.  This Section 2.01(d) shall apply only to Global Securities deposited with or on behalf of the Depositary.

The Company shall execute and the Trustee shall, in accordance with this Section 2.01(d), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary or a nominee thereof, (b) shall be delivered by the Trustee to the Depositary or held by the Trustee pursuant to the Depositary’s instructions and (c) shall be substantially in the form of Exhibit A attached hereto.

(e)

Certificated Securities.  Securities not issued as interests in the Global Securities shall be issued in certificated form substantially in the form of Exhibit B attached hereto.

Section 2.02

Execution and Authentication.  The Securities shall be executed on behalf of the Company by one Officer.  The signature of such Officer on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of an individual who was, at the time of the execution of the Securities, an Officer shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of authentication of such Securities.

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

On the Closing Date, the Trustee shall authenticate and deliver Securities for original issue in an aggregate Original Principal Amount of up to $100.0 million upon one or more Company Orders without any further action by the Company (other than as contemplated in Section 13.03, Section 13.04 and Section 13.05 hereof).  After the Closing Date, the Company may issue, and the Trustee shall authenticate and deliver for issuance, Additional Securities in compliance with Section 2.16.  

The Securities shall be issued only in registered form without coupons and only in denominations of $1,000 Original Principal Amount and any integral multiple of $1,000 Original Principal Amount.

Section 2.03

Registrar, Paying Agent and Conversion Agent.

The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (“Registrar”), an office or agency where Securities may be presented for purchase or payment (“Paying Agent”) and an office or agency where Securities may be presented for conversion (“Conversion Agent”).  The Registrar shall keep a register of the Securities and of their transfer and exchange.  The Company may have one or more co-registrars, one or more additional paying agents and one or more additional conversion agents.

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The term Paying Agent includes any additional paying agent, including any named pursuant to Section 4.07.  The term Conversion Agent includes any additional conversion agent, including any named pursuant to Section 4.07.

The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar (in each case, if such Registrar, agent or co-registrar is a Person other than the Trustee).  The agreement shall implement the provisions of this Indenture that relate to such agent.  The Company shall promptly notify the Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07.  The Company or any Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar, Conversion Agent or co-registrar.

The Company initially appoints the Trustee as Registrar, Conversion Agent and Paying Agent in connection with the Securities.

Section 2.04

Paying Agent to Hold Money and Securities in Trust.

Except as otherwise provided herein, on or prior to each due date of payments in respect of any Security, the Company shall deposit with the Paying Agent a sum of money (in immediately available funds if deposited on the due date) or shares of Common Stock sufficient to make such payments when so becoming due.  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 Securityholders or the Trustee all money and shares of Common Stock held by the Paying Agent for the making of payments in respect of the Securities and shall promptly notify the Trustee of any Default by the Company in making any such payment.  At any time during the continuance of any such Default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and shares of Common Stock so held in trust.  If the Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall segregate the money and shares of Common Stock 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 pay all money and shares of Common Stock held by it to the Trustee and to account for any funds and Common Stock disbursed by it.  Upon doing so, the Paying Agent shall have no further liability for the money or shares of Common Stock.

Section 2.05

Securityholder Lists.

The Trustee shall preserve the most recent list available to it of the names and addresses of Securityholders.  If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee at least semiannually on May 15 and November 15 a listing of Securityholders dated within 15 days of the date on which the list is furnished 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.

Section 2.06

Transfer and Exchange.

(a)

Subject to Section 2.12 hereof, upon surrender for registration of transfer of any Security, together with a written instrument of transfer satisfactory to

15

 the Registrar duly executed by the Securityholder or such Securityholder’s attorney duly authorized in writing, at the office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.03, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denomination or denominations, of a like aggregate Original Principal Amount.  The Company shall not charge a service charge for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges that may be imposed in connection with the transfer or exchange of the Securities from the Securityholder requesting such transfer or exchange.

At the option of the Holder, subject to Section 2.12 hereof and the other provisions of this Section 2.06, Securities may be exchanged for other Securities of any authorized denomination or denominations, of a like aggregate Original Principal Amount upon surrender of the Securities to be exchanged, together with a written instrument of transfer satisfactory to the Registrar duly executed by the Securityholder or such Securityholder’s attorney duly authorized in writing, at such office or agency.  Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or any Securities in respect of which a Repurchase Notice or Fundamental Change Repurchase Notice has been given and not withdrawn by the Holder thereof in accordance with the terms of this Indenture (except, in the case of Securities to be purchased in part, the portion thereof not to be purchased) or any Securities for a period of 15 days before the mailing of a notice of redemption of Securities to be redeemed or the Repurchase Date or Fundamental Change Repurchase Date.

(b)

Transfers of a Global Security shall, except as set forth in Section 2.12, be limited to transfers of such Global Security in whole or in part, to the Depositary, to nominees of the Depositary or to a successor of the Depositary or such successor’s nominee.

(c)

Successive registrations and registrations of transfers and exchanges as aforesaid may be made from time to time as desired, and each such registration shall be noted on the register for the Securities.

(d)

Except as otherwise set forth in this Indenture, any such action taken by a Holder shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor, irrespective of whether any notation in regard thereto is made upon such Security or any Security issued in exchange or substitution therefor.

(e)

Any Registrar appointed pursuant to Section 2.03 hereof shall provide to the Trustee such information as the Trustee may reasonably require in 

16

connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities.

(f)

No Registrar shall be required to make registrations of transfer or exchange of Securities during any periods designated in the text of the Securities or in this Indenture as periods during which such registration of transfers and exchanges need not be made.

(g)

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 or among the DTC’s participants or beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation as is expressly required by, and to do so if and when expressly required by, the terms of this Indenture and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.07

Replacement Securities.

If (a) any mutilated Security is surrendered to the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, 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 Original Principal Amount, bearing a certificate number not contemporaneously outstanding.

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

Upon the issuance of any new Securities under this Section 2.07, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original contractual obligation of the Company, whether or not the 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 proportionately with any and all other Securities duly issued hereunder.

The provisions of this Section 2.07 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.

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Section 2.08

Outstanding Securities; Determinations of Holders’ Action.

Securities outstanding at any time are all the Securities authenticated by the Trustee except for those cancelled by it, those redeemed or purchased pursuant to Section 2.07, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding.  A Security does not cease to be outstanding because the Company or an Affiliate thereof holds the Security; provided, however, that in determining whether the Holders of the requisite Accreted Principal Amount of Securities have given or concurred in any request, demand, authorization, direction, notice, consent, waiver, or other Act hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other act, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.  Subject to the foregoing, only Securities outstanding at the time of such determination shall be considered in any such determination (including, without limitation, determinations pursuant to Article 6 and Article 9).

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

If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, or on the Business Day immediately following a Repurchase Date or a Fundamental Change Repurchase Date, or on Stated Maturity, money or securities, if permitted hereunder, sufficient to pay Securities payable on that date, then from and after such Redemption Date, Repurchase Date, Fundamental Change Repurchase Date or Stated Maturity, as the case may be, such Securities shall cease to be outstanding and Interest on such Securities shall cease to accrue and the rights of the Holders therein shall terminate whether or not the Securities are surrendered to the Paying Agent (by effecting book entry transfer of the Securities or delivering Certificated Securities), other than the right to receive such payment upon such surrender; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made.

If a Security is converted in accordance with Article 10, then from and after the time of conversion on the date of conversion, such Security shall cease to be outstanding and Interest shall cease to accrue and the rights of the Holders therein shall terminate (other than the right to receive the Conversion Settlement Distribution).

Section 2.09

Temporary Securities.

Pending the preparation of Certificated Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Certificated Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities.

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If temporary Securities are issued, the Company shall cause Certificated Securities to be prepared without unreasonable delay.  After the preparation of Certificated Securities, the temporary Securities shall be exchangeable for Certificated Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 2.03, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like Original Principal Amount of Certificated Securities of authorized denominations.  Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as Certificated Securities.

Section 2.10

Cancellation.

All Securities surrendered for payment, purchase by the Company pursuant to Article 3, conversion, redemption or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it.  The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee.  The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation other than in connection with registrations of transfer or exchange or that any Holder has converted pursuant to Article 10.  No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section 2.10, except as expressly permitted by this Indenture.  All cancelled Securities held by the Trustee shall be disposed of by the Trustee in accordance with the Trustee’s customary procedure.

Section 2.11

Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of the Accreted Principal Amount of the Security or any portion thereof, or the payment of any Redemption Price, Repurchase Price or Fundamental Change Repurchase Price in respect thereof, and Interest thereon, for the purpose of conversion and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

Section 2.12

Transfer Restriction Legend; Global Securities.

(a)

Restricted Securities shall bear the restricted legend set forth on, as applicable, the forms of Securities attached hereto as Exhibit A and Exhibit B (collectively, the “Transfer Restriction Legend”).  If Securities are issued upon the transfer, exchange or replacement of Restricted Securities, or if a request is made to remove the Transfer Restriction Legend on a Security, the Securities so issued shall bear the Transfer Restriction Legend, or the Transfer Restriction Legend shall not be removed, as the case may be, unless there is delivered to the Company and the Registrar such satisfactory evidence, which shall include an Opinion of Counsel if requested by the Company or such Registrar, as may be reasonably required by the Company or the 

19

Registrar, that neither the Transfer Restriction Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 of the Securities Act or that such Securities are not “restricted” within the meaning of Rule 144 of the Securities Act; provided that no such evidence need be supplied in connection with the sale of such Security pursuant to a registration statement that is effective at the time of such sale.  Upon (i) provision of such satisfactory evidence if requested, or (ii) notification by the Company to the Trustee and Registrar of the sale of such Security pursuant to a registration statement that is effective at the time of such sale, the Trustee, at the written direction of the Company, shall authenticate and deliver a Security that does not bear the Transfer Restriction Legend.  If the Transfer Restriction Legend is removed from the face of a Security and the Security is subsequently held by an Affiliate of the Company, the Transfer Restriction Legend shall be reinstated.

(b)

The transfer and exchange of beneficial interests in the Global Securities shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.  

(i)

Beneficial interests in any Restricted Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Security in accordance with the transfer restrictions set forth in the Transfer Restriction Legend.  Beneficial interests in any Unrestricted Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same or any other Unrestricted Global Security.  No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.12(b)(i).

(ii)

In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.12(b)(i), the transferor of such beneficial interest must deliver to the Registrar an order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Security in an amount equal to the beneficial interest to be transferred or exchanged and instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase. 

(iii)

A beneficial interest in any Restricted Global Security may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Security if the transfer complies with the requirements of Section 2.12(b)(ii) and the Registrar receives an Opinion of Counsel reasonably acceptable to the Registrar to the effect that such transfer does not require registration under the Securities Act. 

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(iv)

A beneficial interest in any Restricted Global Security may be exchanged for a beneficial interest in an Unrestricted Global Security or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security if (1) the exchange or transfer complies with the requirements of Section 2.12(b)(ii) and (2) if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Transfer Restriction Legend are no longer required in order to maintain compliance with the Securities Act. 

(c)

 The restrictions imposed by the Transfer Restriction Legend upon the transferability of any Security shall cease and terminate when such Security has been sold pursuant to an effective registration statement under the Securities Act or transferred in compliance with Rule 144 of the Securities Act (together with any successor provision thereto, “Rule 144”) or, if earlier, upon the expiration of the holding period applicable to sales thereof under Rule 144(d) under the Securities Act (or any successor provision).  Any Security as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon a surrender of such Security for exchange to the Registrar in accordance with the provisions of this Section 2.12 (accompanied, in the event that such restrictions on transfer have terminated by reason of a transfer in compliance with Rule 144, by, if requested, an Opinion of Counsel reasonably acceptable to the Company and to the Trustee, addressed to the Company and to the Trustee and in form acceptable to the Company and to the Trustee, to the effect that the transfer of such Security has been made in compliance with Rule 144), be exchanged for a new Security, of like tenor and aggregate Original Principal Amount, which shall not bear the Transfer Restriction Legend.  The Company shall inform the Trustee of the effective date of any registration statement registering the Securities under the Securities Act.  The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned Opinion of Counsel or registration statement.

(d)

(i)

Notwithstanding any other provisions of this Indenture or the Securities, a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any Person other than the Depositary or one or more nominees thereof, provided that a Global Security may be exchanged for Securities registered in the names of any Person designated by the Depositary in the event that (1) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or such Depositary has ceased to be a “clearing agency” registered under Exchange Act, and a successor Depositary is not appointed by the Company within 90 days, (2) the Company determines at any time that the Securities shall no longer be represented by Global Securities and shall inform such Depositary of such 

21

determination in writing and participants in such Depositary elect to withdraw their beneficial interests in the Global Securities from such Depositary, following notification by the Depositary of their right to do so or (3) an Event of Default has occurred and is continuing.  Any Global Security exchanged pursuant to clause (1) above shall be so exchanged in whole and not in part, and any Global Security exchanged pursuant to clauses (2) or (3) above may be exchanged in whole or from time to time in part as directed by the Depositary.  Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a person other than the Depositary or a nominee thereof or any successor of either of the foregoing pursuant to this paragraph shall not be a Global Security.

(ii)

Securities issued in exchange for a Global Security or any portion thereof shall be issued in definitive, fully registered form, shall have an aggregate Original Principal Amount equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein.  Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Registrar.  With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the Original Principal Amount thereof shall be reduced by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee.  Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof.

(iii)

Subject to the provisions of clause (v) below, the registered Holder may grant proxies and otherwise authorize any person, including Agent Members (as defined below) 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.

(iv)

In the event of the occurrence of any of the events specified in clause (i) above, the Company shall promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, fully registered form.

(v)

Neither any members of the Depositary, nor any Participant or Indirect Participant (collectively, the “Agent Members”) nor any other persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Security registered in the 

22

name of the Depositary or any nominee thereof, or under any such Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a Holder of any Security.

(vi)

Except as expressly set forth in this Indenture, none of the Trustee, any Paying Agent, Conversion Agent, the Company or the Registrar shall have any responsibility or obligation to any beneficial owner in the Global Securities, a member of, or a participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Global Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Global Securities.  All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be, in the case of a Global Security, the Depositary or its nominee).  The rights of beneficial owners in the Global Securities shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary.  Other than as set forth in this Indenture, the Trustee, any Paying Agent, the Conversion Agent, the Company and the Registrar may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.  Except as expressly set forth in this Indenture, the Trustee, each Paying Agent, the Conversion Agent, the Company and the Registrar shall be entitled to deal with any depositary (including the Depositary), and any nominee thereof, that is the Holder of any Global Securities as a Holder for all purposes of this Indenture relating to such Global Securities (including the payment of principal, Interest and the giving of instructions or directions by or to the owner or Holder of a beneficial ownership interest in such Global Securities) as the sole Holder of such Global Securities and shall have no obligations to the beneficial owners thereof.  None of the Trustee, any Paying Agent, the Conversion Agent, the Company or the Registrar shall have any responsibility or liability for any acts or omissions of any such depositary with respect to such Global Securities, for the records of any such depositary, including records in respect of beneficial ownership interests 

23

in respect of any such Global Securities, for any transactions between such depositary and any participant in such depositary or between or among any such depositary, any such participant and/or any holder or owner of a beneficial interest in such Global Securities or for any transfers of beneficial interests in any such Global Securities.

(e)

The Trustee and the Registrar 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 or among Agent Members or beneficial owners of interests in 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.

The Trustee shall have no responsibility for the actions or omissions of the Depositary, or the accuracy of the books and records of the Depositary.

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

Section 2.13

CUSIP Numbers.

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

Section 2.14

Accretion.

Commencing on the Closing Date, the principal amount of the Securities shall accrete at a rate equal to 3.9755% per annum (compounded semi-annually).  Schedule II hereto sets forth the Accreted Principal Amounts per $1,000 Original Principal Amount of Securities as of specified dates during the period from the Closing Date through the Maturity Date.

Section 2.15

Calculation of Original Issue Discount.

The Company shall file with the Trustee within 30 days after the end of each calendar year (i) a written notice specifying the amount of Original Issue Discount (including daily rates and accrual periods) accrued on outstanding Securities as of the end of such year and (ii) such

24

other specific information relating to such Original Issue Discount as may then be required under the Code or the Treasury regulations promulgated thereunder.

Section 2.16

Additional Securities.

If authorized by a resolution of the Board of Directors, the Company shall be entitled to issue additional Securities under this Indenture (“Additional Securities”) which shall have substantially identical terms as the Securities, other than with respect to (i) the date of issuance, (ii) the issue price, (iii) the amount of Interest payable on the first Interest Payment Date applicable thereto, and (iv) the existence of transfer restrictions under the Securities Act; provided that such issuance shall be made in compliance with this Indenture; provided, further, that no Additional Securities may be issued with the same “CUSIP”, “ISIN” or “Common Code” number as other Securities unless it is so permitted in accordance with applicable law and such Additional Securities are fungible with such other Securities for U.S. federal tax purposes.  The Securities issued on the Closing Date and any Additional Securities shall be treated as a single class for all purposes under this Indenture.

With respect to any Additional Securities, the Company shall set forth in an Officer’s Certificate, a copy of which shall be delivered to the Trustee, or in a supplemental indenture, the following information:

(1)

the aggregate Accreted Principal Amount of Securities outstanding immediately prior to the issuance of such Additional Securities;

(2)

the aggregate Original Principal Amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture;

(3)

the issue price, if any, and the issue date of such Additional Securities and the amount of Interest payable on the first Interest Payment Date applicable thereto;

(4)

the “CUSIP”, “ISIN” or “Common Code” number, as applicable, of such Additional Securities; and

(5)

whether such Additional Securities shall be Restricted Securities or Unrestricted Securities.

ARTICLE 3

REDEMPTION AND REPURCHASES

Section 3.01

Company’s Right to Redeem; Notices to Trustee.

Prior to May 30, 2014, the Securities shall not be redeemable at the Company’s option.  On or after May 30, 2014, the Company, at its option, may redeem the Securities for U.S. legal tender (“cash”) at any time, in whole or in part, at a redemption price (the “Redemption Price”) equal to 100% of the Accreted Principal Amount of the Securities redeemed, plus any accrued and unpaid Interest on the Original Principal Amount of Securities redeemed up to, but not including, the Redemption Date; provided, that if the Redemption Date is on a date that is after an Interest 

25

Record Date and on or prior to the corresponding Interest Payment Date, the Redemption Price shall be 100% of the Accreted Principal Amount of the Securities redeemed but shall not include accrued and unpaid Interest on the Original Principal Amount of Securities redeemed.  Instead, the Company shall pay such Interest on the Interest Payment Date to the Holder of record on the corresponding Interest Record Date.  If the Company elects to redeem Securities pursuant to this Section 3.01, it shall notify the Trustee in writing of such election together with the Redemption Date, the Conversion Rate, the Original Principal Amount and Accreted Principal Amount of Securities to be redeemed and the Redemption Price per $1,000 Original Principal Amount.  Notwithstanding the foregoing, the Company may not redeem the Securities if it has failed to pay any Interest on the Securities when due and such failure is continuing.

The Company shall give the notice to the Trustee provided for in this Section 3.01 by a Company Order, at least 45 days but not more than 75 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee).

Section 3.02

Selection of Securities to Be Redeemed.

If less than all of the Securities are to be redeemed, unless the procedures of the Depositary provide otherwise, the Trustee shall select the Securities to be redeemed by lot, on a pro rata basis or by another method the Trustee considers appropriate (so long as such method is not prohibited by the rules of any stock exchange or quotation association on which the Securities are then traded or quoted).  

Securities and portions of Securities that the Trustee selects shall be in Original Principal Amounts of $1,000 or an integral multiple of $1,000 Original Principal Amount.  Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption.  The Trustee shall notify the Company promptly (but in any case within seven days of the Company Order referred to in Section 3.01) of the Securities or portions of the Securities selected to be redeemed and, in the case of any Securities selected for partial redemption, the method it has chosen for the selection of the Security.

Following a notice of redemption, Securities and portions of Securities are convertible, pursuant to Section 10.01(a)(2), by the Holder until the close of business on the Business Day prior to the Redemption Date.  If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption.  Securities that have been converted during a selection of Securities to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection.

Section 3.03

Notice of Redemption.

At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption (substantially in the form of Exhibit C) by first-class mail, postage prepaid, to each Holder of Securities to be redeemed.

The notice shall identify the Securities to be redeemed and shall state (along with any other information the Company wishes to include):

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(i)

the Redemption Date;

(ii)

the Redemption Price per $1,000 Original Principal Amount;

(iii)

the Conversion Rate;

(iv)

the name and address of the Paying Agent and Conversion Agent;

(v)

that Securities may be converted at any time before the close of business on the Business Day prior to the Redemption Date;

(vi)

that Securities called for redemption and not converted shall be redeemed on the Redemption Date;

(vii)

that Holders who want to convert their Securities must satisfy the requirements set forth in the Securities;

(viii)

that Securities called for redemption must be surrendered to the Paying Agent (by effecting book entry transfer of the Securities or delivering Certificated Securities, together with necessary endorsements, as the case may be) to collect the Redemption Price;

(ix)

if fewer than all of the outstanding Securities are to be redeemed, the certificate numbers, if any, and the Original Principal Amount and Accreted Principal Amounts of the particular Securities to be redeemed;

(x)

that, unless the Company defaults in making payment of such Redemption Price, Interest on the Securities called for redemption shall cease to accrue and the Accreted Principal Amount on such Securities shall cease to accrete in each case from and after the Redemption Date; and

(xi)

the CUSIP, “ISIN” or other similar number(s), as the case may be, of the Securities being redeemed.

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense, provided that the Company makes such request at least seven Business Days (or such shorter period as may be satisfactory to the Trustee) prior to the date by which such notice of redemption must be given to Holders in accordance with this Section 3.03.

Section 3.04

Effect of Notice of Redemption.

Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price stated in the notice except for Securities that are converted in accordance with the terms of this Indenture.  Upon surrender to the Paying Agent, such Securities shall be paid at the Redemption Price stated in the notice and
from and after the Redemption Date (unless the Company shall default in the payment of the Redemption Price) such Securities shall cease to bear Interest and the rights of the Holders therein shall terminate (other than the right to receive the Redemption Price).

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Section 3.05

Deposit of Redemption Price.

Prior to 10:00 a.m. (New York City time), on the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price of all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which on or prior thereto have been delivered by the Company to the Trustee for cancellation or have been converted.  The Paying Agent shall as promptly as practicable return to the Company any money not required for that purpose because of conversion of Securities pursuant to Article 10.  If such money is then held by the Company or a Subsidiary or an Affiliate of either in trust and is not required for such purpose it shall be discharged from such trust.

Section 3.06

Securities Redeemed in Part.

Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall, without charge, authenticate and deliver to the Holder a new Security in an authorized denomination equal in Original Principal Amount to the unredeemed portion of the Security surrendered.

Section 3.07

Repurchase of Securities by the Company at Option of the Holder.

(a)

On each of November 30, 2014, November 30, 2018 and November 30, 2022 (each, a “Repurchase Date”), each Holder shall have the option to require the Company to repurchase for cash all of such Holder’s Securities not previously called for redemption by the Company, or any portion thereof that is equal to or an integral multiple of $1,000 Original Principal Amount for which that Holder has properly delivered and not withdrawn a written Repurchase Notice (as defined below) at a repurchase price equal to 100% of the Accreted Principal Amount of those Securities, plus accrued and unpaid Interest on the Original Principal Amount of those Securities up to, but not including, such Repurchase Date (the “Repurchase Price”); provided, that if the Repurchase Date is on a date that is after an Interest Record Date and on or prior to the corresponding Interest Payment Date, the Repurchase Price shall be 100% of the Accreted Principal Amount of the Securities repurchased but shall not include such accrued and unpaid Interest.  Instead, the Company shall pay such accrued and unpaid Interest on the Interest Payment Date, to the Holder of Record on the corresponding Interest Record Date.  Not later than 20 Business Days prior to any Repurchase Date, the Company shall mail a Company Notice (substantially in the form of Exhibit D) by first class mail to the Trustee and to each Holder (and to beneficial owners if required by applicable law).  The Company Notice shall include a form of Repurchase Notice to be completed by a Holder and shall state:

(i)

the Repurchase Date, the Repurchase Price per $1,000 Original Principal Amount and the Conversion Rate;

(ii)

the name and address of the Paying Agent and the Conversion Agent;

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(iii)

that Securities as to which a Repurchase Notice has been given may be converted if they are otherwise convertible only in accordance with Article 10 hereof and the terms of the Securities if the applicable Repurchase Notice has been withdrawn in accordance with the terms of this Indenture;

(iv)

that Securities must be surrendered to the Paying Agent (by effecting book entry transfer of the Securities or delivering Certificated Securities, together with necessary endorsements, as the case may be) to collect payment;

(v)

that the Repurchase Price for any Security as to which a Repurchase Notice has been given and not withdrawn shall be paid promptly following the later of the Business Day immediately following the Repurchase Date and the time of surrender of such Security as described in clause (iv) above;

(vi)

the procedures the Holder must follow to exercise its right to require the Company to repurchase such Holder’s Securities under this Section 3.07 and a brief description of that right;

(vii)

briefly, the conversion rights, if any, that exist at the date of the Company Notice or as a result of the Company Notice with respect to the Securities;

(viii)

the procedures for withdrawing a Repurchase Notice;

(ix)

that, unless the Company defaults in making payment on Securities for which a Repurchase Notice has been submitted, Interest on such Securities shall cease to accrue and the Accreted Principal Amount on such Securities shall cease to accrete in each case from and after the Repurchase Date; and

(x)

the CUSIP, “ISIN” or other similar number(s), as the case may be, of the Securities.

At the Company’s request, the Trustee shall give such Company Notice to each Holder in the Company’s name and at the Company’s expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company.

(b)

A Holder may exercise its rights specified in Section 3.07(a) upon delivery to the Paying Agent of a written notice of repurchase (a “Repurchase Notice”)
during the period beginning at any time from the opening of business on the date that is 20 Business Days prior to the relevant Repurchase Date until the close of business on the Business Day immediately preceding such Repurchase Date, stating:

(i)

if Certificated Securities have been issued, the certificate number(s) of the Securities which the Holder shall deliver to be

29

repurchased or, if Certificated Securities have not been issued for such Security, the Repurchase Notice shall comply with the appropriate Depositary procedures for book-entry transfer,

(ii)

that all of the Holder’s Securities shall be delivered to be repurchased, or if less than all, the portion of the Original Principal Amount of the Security which the Holder shall deliver to be repurchased, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000, and

(iii)

that such Security shall be repurchased by the Company as of the Repurchase Date pursuant to the terms and conditions specified in Section 5 of the Securities and in this Indenture.

The delivery of such Security (together with all necessary endorsements) to the Paying Agent at any time after delivery of the Repurchase Notice at the offices of the Paying Agent shall be a condition to receipt by the Holder of the Repurchase Price therefor; provided, however, that such Repurchase Price shall be so paid pursuant to this Section 3.07 only if the Security (together with all necessary endorsements) so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Repurchase Notice.

The Company shall repurchase from the Holder thereof, pursuant to this Section 3.07, a portion of a Security, if the Original Principal Amount of such portion is $1,000 or an integral multiple of $1,000.  Provisions of this Indenture that apply to the repurchase of all of a Security also apply to the repurchase of such portion of such Security.

Any repurchase by the Company contemplated pursuant to the provisions of this Section 3.07 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Business Day immediately following the Repurchase Date and the time of delivery of the Security (together with all necessary endorsements or notifications of book-entry transfer).

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Repurchase Notice contemplated by this Section 3.07 shall have the right to withdraw such Repurchase Notice by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.09 at any time prior to the close of business on the Business Day immediately preceding the Repurchase Date.

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

Section 3.08

Repurchase of Securities at Option of the Holder Upon a 

Fundamental Change.

(a)

If a Fundamental Change occurs, each Holder shall have the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Securities not previously called for redemption by the Company, or any portion thereof that is equal to or an integral multiple of $1,000 Original Principal Amount, at a repurchase price equal 

30

to 100% of the Accreted Principal Amount of those Securities, plus accrued and unpaid Interest on the Original Principal Amount of those Securities up to, but not including, the date (the “Fundamental Change Repurchase Date”) that is 20 Business Days following the date of the notice of a Fundamental Change mailed by the Company pursuant to Section 3.08(b) (the “Fundamental Change Repurchase Price”), subject to satisfaction by or on behalf of the Holder of the requirements set forth in Section 3.08(c); provided that if the Fundamental Change Repurchase Date is on a date that is after an Interest Record Date and on or prior to the corresponding Interest Payment Date, the Fundamental Change Repurchase Price shall be 100% of the Accreted Principal Amount of the Securities repurchased but shall not include accrued and unpaid Interest.  Instead, the Company shall pay such Interest on the Interest Payment Date to the Holder of Record on the corresponding Interest Record Date.

(b)

No later than 15 days after the occurrence of a Fundamental Change, the Company shall mail a Company Notice of the Fundamental Change (substantially in the form of Exhibit E) by first class mail to the Trustee and to each Holder (and to beneficial owners if required by applicable law).  The Company Notice shall include a form of Fundamental Change Repurchase Notice to be completed by the Holder and shall state:

(i)

briefly, the events causing a Fundamental Change and the date of such Fundamental Change;

(ii)

the date by which the Fundamental Change Repurchase Notice pursuant to this Section 3.08 must be delivered to the Paying Agent in order for a Holder to exercise the repurchase rights;

(iii)

the Fundamental Change Repurchase Date;

(iv)

the Fundamental Change Repurchase Price per $1,000 Original Principal Amount of Securities;

(v)

the name and address of the Paying Agent and the Conversion Agent;

(vi)

the Conversion Rate;

(vii)

that the Securities as to which a Fundamental Change Repurchase Notice has been given may be converted if they are otherwise convertible pursuant to Article 10 hereof only if the Fundamental Change Repurchase Notice has been withdrawn in accordance with the terms of this Indenture;

(viii)

that the Securities must be surrendered to the Paying Agent (by effecting book entry transfer of the Securities or delivering Certificated Securities, together with necessary endorsements, as the case may be) to collect payment;

31

(ix)

that the Fundamental Change Repurchase Price for any Security as to which a Fundamental Change Repurchase Notice has been duly given and not withdrawn shall be paid promptly following the later of the Business Day immediately following the Fundamental Change Repurchase Date and the time of surrender of such Security as described in clause (viii);

(x)

briefly, the procedures the Holder must follow to exercise rights under this Section 3.08;

(xi)

briefly, the conversion rights, if any, that exist on the Securities at the date of the Company Notice and as a result of such Fundamental Change;

(xii)

the procedures for withdrawing a Fundamental Change Repurchase Notice;

(xiii)

that, unless the Company defaults in making payment of such Fundamental Change Repurchase Price on Securities for which a Fundamental Change Repurchase Notice is submitted, Interest on Securities surrendered for purchase by the Company shall cease to accrue and the Accreted Principal Amount on such Securities shall cease to accrete in each case from and after the Fundamental Change Repurchase Date; and

(xiv)

the CUSIP, “ISIN” or other similar number(s), as the case may be, of the Securities.

At the Company’s request, the Trustee shall give such Company Notice to each Holder in the Company’s name and at the Company’s expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company.

(c)

A Holder may exercise its rights specified in this Section 3.08 upon delivery of a written notice of repurchase (a “Fundamental Change Repurchase Notice”) to the Paying Agent at any time on or prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, stating:

(i)

If Certificated Securities have been issued, the certificate number(s) of the Securities which the Holder shall deliver to be repurchased or, if Certificated Securities have not been issued, the Fundamental Change Repurchase Notice shall comply with the appropriate Depositary procedures for book-entry transfer;

(ii)

that all of the Holder’s Securities shall be delivered to be repurchased, or if less than all, the portion of the Original Principal Amount of the Security which the Holder shall deliver to be repurchased, which portion must be $1,000 or an integral multiple of $1,000; and

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(iii)

that such Security shall be repurchased pursuant to the terms and conditions specified in Section 5 of the Securities and in this Indenture.

The delivery of such Security (together with all necessary endorsements) to the Paying Agent with the Fundamental Change Repurchase Notice at the offices of the Paying Agent shall be a condition to the receipt by the Holder of the Fundamental Change Repurchase Price therefor; provided, however, that such Fundamental Change Repurchase Price shall be so paid pursuant to this Section 3.08 only if the Security (together with all necessary endorsements) so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Fundamental Change Repurchase Notice.

The Company shall repurchase from the Holder thereof, pursuant to this Section 3.08, a portion of a Security if the Original Principal Amount of such portion is $1,000 or an integral multiple of $1,000.  Provisions of this Indenture that apply to the repurchase of all of a Security also apply to the repurchase of such portion of such Security.

Any repurchase by the Company contemplated pursuant to the provisions of this Section 3.08 shall be consummated by the delivery of the Fundamental Change Repurchase Price promptly following the later of the Business Day following the Fundamental Change Repurchase Date or the time of delivery of such Security (together with all necessary endorsements or notifications of book-entry transfer).

Notwithstanding the foregoing, Holders shall not have the right to require the Company to repurchase the Securities upon a Change of Control described in clause (ii) of the definition thereof if 90% or more than of the consideration in the transaction or transactions constituting such Change of Control consists of shares of common stock traded or to be traded immediately following such Change of Control on a U.S. national securities exchange or The Nasdaq Global Select Market, and, as a result of such transaction or transactions, the Securities become convertible into such common stock (and any rights attached thereto).

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Fundamental Change Repurchase Notice contemplated by this Section 3.08(c) shall have the right to withdraw such Fundamental Change Repurchase Notice by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.09 at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date.

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

Section 3.09

Effect of Repurchase Notice or Fundamental Change Repurchase 

Notice.

(a)

Upon receipt by the Paying Agent of the Repurchase Notice or Fundamental Change Repurchase Notice specified in Section 3.07 or Section 3.08, as applicable, the Holder of the Security in respect of which such Repurchase Notice or 

33

Fundamental Change Repurchase Notice, as the case may be, was given shall (unless such Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, is withdrawn as specified in Section 3.09(b)) thereafter be entitled solely to receive the Repurchase Price or Fundamental Change Repurchase Price, as the case may be, with respect to such Security whether or not the Security is, in fact, properly delivered.  Such Repurchase Price or Fundamental Change Repurchase Price shall be paid to such Holder, subject to receipt of funds and/or securities by the Paying Agent, promptly following the later of (x) the Business Day following the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, with respect to such Security (provided the conditions in Section 3.07 or Section 3.08, as applicable, have been satisfied) and (y) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.07 or Section 3.08, as applicable.  Securities in respect of which a Repurchase Notice or Fundamental Change Repurchase Notice has been given by the Holder thereof may not be converted pursuant to and to the extent permitted by Article 10 hereof on or after the date of the delivery of such Repurchase Notice or Fundamental Change Repurchase Notice unless such Repurchase Notice or Fundamental Change Repurchase Notice has first been validly withdrawn as specified in Section 3.09(b).

(b)

A Repurchase Notice or Fundamental Change Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, at any time (i) in the case of the Repurchase Notice, if received by the Paying Agent prior to the close of business on the Repurchase Date or (ii) in the case of the Fundamental Change Repurchase Notice, if received by the Paying Agent prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, as the case may be, specifying:

(i)

the Original Principal Amount, if any, of such Security which remains subject to the original Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, and which has been or shall be delivered for purchase by the Company,

(ii)

if Certificated Securities have been issued, the certificate number, if any, of the Security in respect of which such notice of withdrawal is being submitted (or, if Certificated Securities have not been issued, that such withdrawal notice shall comply with the appropriate Depositary procedures), and

(iii)

the Original Principal Amount of the Security with respect to which such notice of withdrawal is being submitted.

Section 3.10

Deposit of Repurchase Price or Fundamental Change Repurchase 

Price.

Prior to 10:00 a.m. (local time in The City of New York) on the Business Day following the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, the 

34

Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an amount of cash in immediately available funds sufficient to pay the aggregate Repurchase Price or Fundamental Change Repurchase Price, as the case may be, of all the Securities or portions thereof which are to be purchased as of the Repurchase Date or Fundamental Change Repurchase Date, as the case may be.

Section 3.11

Securities Purchased in Part.

Any Certificated Security which is 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 shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate Original Principal Amount equal to, and in exchange for, the portion of the Original Principal Amount of the Security so surrendered which is not purchased.

Section 3.12

Covenant to Comply with Securities Laws upon Purchase of Securities.

When complying with the provisions of Section 3.07 or Section 3.08 hereof (provided that such offer or purchase constitutes an “issuer tender offer” for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), and subject to any exemptions available under applicable law, the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 (or any successor provision) and any other applicable tender offer rules under the Exchange Act, and (ii) otherwise comply with all Federal and state securities laws so as to permit the rights and obligations under Sections 3.07 and 3.08 to be exercised in the time and in the manner specified in Sections 3.07 and 3.08.

Section 3.13

Repayment to the Company.

The Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed as provided in Section 12 of the Securities, together with interest, if any, thereon (subject to the provisions of Section 7.01(f)), held by them for the payment of the Repurchase Price or Fundamental Change Repurchase Price, as the case may be.

ARTICLE 4

COVENANTS

Section 4.01

Payment of Securities.

The Company shall make all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture.  Any amounts of cash in
immediately available funds or shares of Common Stock to be given to the Trustee or Paying 

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Agent shall be deposited with the Trustee or Paying Agent by 10:00 a.m., New York City time, by the Company.  The Accreted Principal Amount of, and Interest on, the Securities, and the Redemption Price, Repurchase Price and the Fundamental Change Repurchase Price shall be considered paid on the applicable date due if on such date (which, in the case of a Repurchase Price or a Fundamental Change Repurchase Price, shall be on the Business Day immediately following the applicable Repurchase Date or Fundamental Change Repurchase Date, as the case may be) the Trustee or the Paying Agent holds, in accordance with this Indenture, cash or securities, if permitted hereunder, sufficient to pay all such amounts then due.

Section 4.02

SEC and Other Reports.

The Company shall deliver to the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) whether or not the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.  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 conclusively on Officer’s Certificates).

Section 4.03

Compliance Certificate.

The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending April 30, 2011) an Officer’s Certificate, stating whether or not to the knowledge of the signer thereof, the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which such Officer may have knowledge.

The Company shall, so long as any of the Securities are outstanding, deliver to the Trustee, within 30 days of any executive officer of the Company becoming aware of any Default or Event of Default, an Officer’s Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

Section 4.04

Further Instruments and Acts.

The Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.

Section 4.05

Delivery of Certain Information.

At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act and there are Securities outstanding that were initially issued in reliance on Rule 144A under the
Securities Act, upon the request of a Holder or 

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any beneficial owner of Securities or holder or beneficial owner of shares of Common Stock issued upon conversion thereof, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below), if any, to such Holder or any beneficial owner of Securities or holder or beneficial owner of shares of Common Stock issued upon conversion thereof, or to a prospective purchaser of any such security designated by any such holder, as the case may be, until the second anniversary of the last issuance of any Securities issued in reliance on Rule 144A under the Securities Act, to the extent required to permit compliance by such Holder or holder with Rule 144A under the Securities Act in connection with the resale of any such security. “Rule 144A Information” shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act.  Whether a person is a beneficial owner shall be determined by the Company to the Company’s reasonable satisfaction.

Section 4.06

[Omitted.]

Section 4.07

Maintenance of Office or Agency.

The Company shall maintain in the United States of America an office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, purchase, redemption or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served.  The Corporate Trust Office of the Trustee, as listed in Section 13.02, shall initially be such office or agency for all of the aforesaid purposes.  The Company shall give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency (other than a change in the location of the office of the Trustee).  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 13.02.

The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; 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 United States of America for such purposes.

ARTICLE 5

SUCCESSOR PERSON

Section 5.01

When Company May Merge or Transfer Assets.

The Company shall not consolidate with or merge with or into any other Person or convey, transfer, sell, lease or otherwise dispose of all or substantially all of its assets to any Person, unless:

(a)

Either

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(i)

the Company is the surviving Person in the case of a merger, or

(ii)

the resulting, surviving or transferee Person (the “successor Person”) will be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the successor Person (if not the Company) will expressly assume, by indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all of 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; and

(c)

the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer, sale or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 5 and that all conditions precedent herein provided relating to such transaction have been satisfied.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more Subsidiaries (other than to the Company or another Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially all of the properties and assets of the Company and its Subsidiaries, taken as a whole, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

The successor Person formed by such consolidation or into which the Company is merged or the successor Person to which such conveyance, transfer, sale, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of a lease and obligations the Company may have under a supplemental indenture, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities.  Subject to Section 9.06, the Company, the Trustee and the successor Person shall enter into a supplemental indenture to evidence the succession and substitution of such successor Person and such discharge and release of the Company.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01

Events of Default.

So long as any Securities are outstanding, each of the following shall be an “Event of Default”:

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(a)

following the exercise by the Holder of the right to convert a Security in accordance with Article 10 hereof, the Company fails to comply with its obligations to deliver the cash or shares of Common Stock, if any, required to be delivered as part of the applicable Conversion Settlement Distribution on the applicable Conversion Settlement Date and such failure continues for a period of 5 days or more;

(b)

the Company defaults in its obligation to provide timely notice of a Fundamental Change to the Trustee and each Holder as required under Section 3.08(b);

(c)

the Company defaults in its obligation to redeem any Security, or any portion thereof, called for redemption by the Company pursuant to and in accordance with Section 3.01 hereof;

(d)

the Company defaults in the payment of the Accreted Principal Amount of any Security when due at maturity, redemption, upon repurchase or otherwise (including, without limitation, upon the exercise by a Holder of its right to require the Company to repurchase such Securities pursuant to and in accordance with Section 3.07 or Section 3.08 hereof), whether or not prohibited by Article 11;

(e)

the Company defaults in the payment of any Interest when due and payable, and continuance of such default for a period of 30 days, whether or not prohibited by Article 11;

(f)

the Company fails to perform or observe any term, covenant or warranty or agreement in the Securities or this Indenture (other than those referred to in clause (a) through clause (e) above) and such failure continues for 60 days after receipt by the Company of a Notice of Default;

(g)

default under any credit agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of the Company’s Significant Subsidiaries (or the payment of which is guarantee by the Company or any of its Significant Subsidiaries), which default:

(i)

is caused by a failure to pay when due any principal of or interest on such Indebtedness within the grace period provided for in such Indebtedness, which failure continues beyond any applicable grace period, or

(ii)

results in the acceleration of such Indebtedness prior to its express maturity, without such acceleration being rescinded or annulled,

and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there is a payment default or the maturity of which has been so accelerated, aggregates $15,000,000 or more and such payment default is not cured or such acceleration is not annulled within 30 days after notice;

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(h)

failure by the Company or any of its Significant Subsidiaries to pay final, non-appealable judgments (other than any judgment as to which a reputable insurance company has accepted full liability) aggregating in excess of $15,000,000, which judgments are not stayed, bonded or discharged within 60 days after their entry;

(i)

the entry by a court having jurisdiction in the premise of (i) a decree or order for relief in respect of the Company or any of its Significant Subsidiaries, in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law (any “Bankruptcy Law”) or (ii) a decree or order adjudging the Company or any Significant Subsidiary, a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Significant Subsidiary, under any applicable Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Significant Subsidiary or of any substantial part of any of their property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order described in clause (i) or (ii) above is unstayed and in effect for a period of 60 consecutive days; and

(j)

(i) the commencement by the Company or any Significant Subsidiary of a voluntary case or proceeding under any applicable Bankruptcy Law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or (ii) the consent by the Company or any Significant Subsidiary, to the entry of a decree or order for relief in respect of the Company or any Significant Subsidiary, in an involuntary case or proceeding under any applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company or any Significant Subsidiary, or (iii) the filing by the Company or any Significant Subsidiary, of a petition or answer or consent seeking reorganization or relief under any applicable Bankruptcy Law, or (iv) the consent by the Company or any Significant Subsidiary to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Significant Subsidiary or of any substantial part of any of their property, or (v) the making by the Company or any Significant Subsidiary, of a general assignment for the benefit of creditors, or the admission by the Company or any Significant Subsidiary, in writing of its inability to pay its debts generally as they become due.

The foregoing shall 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.

For the avoidance of doubt, clause (f) above shall not constitute an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate Accreted Principal Amount of the Securities at the time outstanding notify the Company and the Trustee, of such default and the Company does not cure such default (and such default is not waived) within the time specified in clause (f) above after actual receipt of such notice.  Any such notice must specify the default, demand that it be remedied and state that such notice is a “Notice of Default.”

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Section 6.02

Acceleration.

Subject to Section 6.03, if an Event of Default (other than an Event of Default specified in Section 6.01(i) or Section 6.01(j) with respect to the Company) occurs and is continuing (the Event of Default not having been cured or waived), the Trustee by notice to the Company, or the Holders of at least 25% in aggregate Accreted Principal Amount of the Securities at the time outstanding by notice to the Company and the Trustee, may declare the Accreted Principal Amount of the Securities and any accrued and unpaid Interest on all the Securities to be immediately due and payable.  Upon such a declaration, such accelerated amount shall be immediately due and payable.  If an Event of Default specified in Section 6.01(i) or Section 6.01(j) with respect to the Company occurs and is continuing, the Accreted Principal Amount of the Securities and any accrued and unpaid Interest on all the Securities shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders.  The Holders of a majority in aggregate Accreted Principal Amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder) may rescind an acceleration and its consequences, and thereby waive the Events of Default giving rise to such acceleration, if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the principal amount of the Securities and any accrued and unpaid Interest that have become due solely as a result of acceleration.  No such rescission shall affect any subsequent Event of Default or impair any right consequent thereto.

Section 6.03

Other Remedies.

Notwithstanding anything to the contrary in Section 6.02, the sole remedy for any breach by the Company of its obligation to file periodic or other reports pursuant to Section 4.02 and 4.05 shall be the payment of additional interest and a reduction in the default thresholds as described in the last sentence of this paragraph.  Holders may not accelerate the maturity of the Securities as a result of any such breach. If a breach of the Company’s obligation under Section 4.02 occurs and continues for 90 days after notice thereof is given in accordance with this Indenture, the Company shall pay additional interest to all Securityholders at a rate equal to 0.50% per annum of the Securities’ Original Principal Amount from the 90th day following such notice until such breach is cured, and until such breach is cured, the default thresholds in clauses (g) and (h) of Section 6.01 shall be reduced to $5,000,000.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the Accreted Principal Amount of the Securities and any accrued and unpaid Interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if the Trustee does not possess any of the Securities or does not produce any of the Securities 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.

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Section 6.04

Waiver of Past Defaults.

The Holders of a majority in aggregate Accreted Principal Amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder), may waive any existing or past Default and its consequences except (1) an Event of Default described in clauses (a), (b), (c), (d), and (e) of Section 6.01 or (2) an Event of Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected.  When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.  

Section 6.05

Control by Majority.

The Holders of a majority in aggregate Accreted Principal Amount of the Securities at the time outstanding 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 that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; provided, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction or this Indenture.  Prior to taking any action under this Indenture, the Trustee may require indemnity satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

Section 6.06

Limitation on Suits.

A Securityholder may not pursue any remedy with respect to this Indenture or the Securities, except in case of a Default due to the non-payment of the principal amount of the Securities, or any accrued and unpaid Interest, unless:

(i)

the Holder gives to the Trustee written notice stating that a Default is continuing;

(ii)

the Holders of at least 25% in aggregate Accreted Principal Amount of the Securities at the time outstanding make a written request to the Trustee to pursue the remedy and offer the Trustee reasonable security or indemnity;

(iii)

the Trustee does not comply with the request within 60 days after receipt of such notice and offer of security or indemnity; and

(iv)

the Holders of a majority in aggregate Accreted Principal Amount of the Securities at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period.

A Securityholder may not use this Indenture to prejudice the rights of any other Securityholder or to obtain a preference or priority over any other Securityholder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).

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Section 6.07

Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the Accreted Principal Amount of the Securities and any accrued and unpaid Interest in respect of the Securities held by such Holder, on or after the respective due dates expressed in the Securities or any Redemption Date, Repurchase Date or Fundamental Change Repurchase Date, and to convert the Securities in accordance with Article 10, or to bring suit for the enforcement of any such payment or the right to convert on or after such respective dates, shall not be impaired or affected adversely without the consent of such Holder.

Section 6.08

Collection Suit by Trustee.

If an Event of Default described in Section 6.01 clauses (a) through (e) (other than (b)) 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 owing with respect to the Securities and the amounts provided for in Section 7.07.

Section 6.09

Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the Accreted Principal Amount of the Securities, and any accrued and unpaid Interest in respect of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)

to file and prove a claim for the whole Accreted Principal Amount of the Securities and any accrued and unpaid Interest, if any, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel or any other amounts due the Trustee under Section 7.07) and of the Holders allowed in such judicial proceeding, and

(b)

to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07.

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

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The Company agrees not to object to the Trustee participating as a member of any official committee of creditors of the Company as it deems necessary or advisable.

Section 6.10

Priorities.

Any money collected by the Trustee pursuant to this Article 6, and, after an Event of Default, any money or other property distributable in respect of the Company’s obligations under this Indenture, shall be paid out in the following order:

FIRST:  to the Trustee (including any predecessor Trustee) for amounts due under Section 7.07;

SECOND:  to Securityholders for amounts due and unpaid on the Securities for the Accreted Principal Amount of the Securities and any accrued and unpaid Interest, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and

THIRD:  the balance, if any, 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 Trustee shall mail to each Securityholder and the Company a notice that states the record date, the payment date and the amount to be paid.

Section 6.11

Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant (other than the Trustee) 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate Accreted Principal Amount of the Securities at the time outstanding.  

Section 6.12

Waiver of Stay, Extension or Usury Laws.

The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the principal amount of the Securities and any accrued and unpaid Interest, if any, on Securities, as contemplated herein, or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

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ARTICLE 7

TRUSTEE

Section 7.01

Duties of Trustee.

(a)

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

(b)

Except during the continuance of an Event of Default:

(i)

the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied duties, covenants or obligations shall be read into this Indenture against the Trustee; and

(ii)

in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine 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 Section 7.01(c) does not limit the effect of Sections 7.01(b) and 7.01(g);

(ii)

the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer 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 this Section 7.01.

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(e)

The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense.

(f)

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.  The Trustee (acting in any capacity hereunder) shall be under no liability for interest on any money received by it hereunder unless otherwise agreed in writing with the Company (provided that any interest earned on money held by the Trustee in trust hereunder shall be the property of the Company).

(g)

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

Section 7.02

Rights of Trustee.

Subject to the provisions of Section 7.01:

(a)

the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document (whether in original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)

whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officer’s Certificate;

(c)

the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

(d)

the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith which it believes to be authorized or within its rights or powers conferred under this Indenture;

(e)

the Trustee may consult with counsel selected by it and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

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(f)

the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby;

(g)

any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(h)

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

(i)

Except with respect to Section 4.01, the Trustee shall have no duty to inquire as to the performance of the Company with respect to the covenants contained in Article 4.  In addition, the Trustee shall not be deemed to have knowledge of an Event of Default except (i) any Default or Event of Default occurring pursuant to Sections 6.01(a), 6.01(c), 6.01(d) or 6.01(e) or (ii) any Default or Event of Default of which the Trustee shall have received written notification or obtained actual knowledge;

(j)

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 to each agent, custodian and other Person employed to act hereunder;

(k)

the Trustee may request that the Company deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded;

(l)

the permissive rights of the Trustee to take certain actions under this Indenture shall not be construed as a duty unless so specified herein;

(m)

delivery of reports, information and documents to the Trustee under Section 4.02 is for informational purposes only and the Trustee’s receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including compliance with any of their 

47

covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates); and

(n)

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

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, Conversion Agent or co-registrar may do the same with like rights.  However, the Trustee must comply with Section 7.10 and Section 7.11.

Section 7.04

Trustee’s Disclaimer.

The Trustee makes no representation as to, and shall have no responsibility for, the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use or application by the Company of the Securities or of the proceeds from the Securities, it shall not be responsible for the correctness of any statement in any registration statement for any Securities under the Securities Act or in any offering document for any Securities, the Indenture or the Securities (other than its certificate of authentication), or the determination as to which beneficial owners are entitled to receive any notices hereunder.

Section 7.05

Notice of Defaults.

If a Default or Event of Default occurs and if it is known to the Trustee, the Trustee shall give to each Securityholder notice of the Default or Event of Default (and, to the extent applicable, notice if any payment is due with respect to Section 6.03) within 90 days after it is known to the Trustee, unless such Default or Event of Default shall have been cured or waived before the giving of such notice.  Notwithstanding the preceding sentence, except in the case of a Default or Event of Default described in clauses (d) and (e) of Section 6.01, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interest of the Securityholders.  The Trustee shall not be deemed to have knowledge of a Default or Event of Default unless a Responsible Officer of the Trustee has received written notice of such Default or Event of Default, which notice specifically references this Indenture and the Securities.

Section 7.06

Reports by Trustee to Holders.

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Within 60 days after each April 30 beginning with April 30, 2011, the Trustee shall mail to each Securityholder a brief report dated as of such April 30 that complies with TIA Section 313(a).  The Trustee also shall comply with TIA Section 313(b).  Any reports required by this Section 7.06 shall be transmitted by mail to Securityholders in accordance with TIA Section 313(c).

A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each securities exchange, if any, on which the Securities are listed.  The Company agrees to notify the Trustee promptly whenever the Securities become listed on any securities exchange and of any delisting thereof.

Section 7.07

Compensation and Indemnity.

The Company agrees:

(a)

to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited (to the extent permitted by law) by any provision of law in regard to the compensation of a trustee of an express trust);

(b)

to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses, advances and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its own negligence, willful misconduct or bad faith; and

(c)

to indemnify the Trustee or any predecessor Trustee and their agents for, and to hold them harmless against, any loss, damage, claim, liability, cost or expense (including reasonable attorney’s fees and expenses, and taxes (other than taxes based upon, measured by or determined by the income of the Trustee)) incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder.

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, except that held in trust to pay the Accreted Principal Amount of, or the Redemption Price, Repurchase Price, Fundamental Change Repurchase Price or Interest, as the case may be, on particular Securities.

The Company’s payment, reimbursement and indemnity obligations pursuant to this Section 7.07 shall survive the satisfaction and discharge of this Indenture, the resignation or removal of the Trustee and the termination of this Indenture for any reason.  In addition to and without prejudice to its rights hereunder, when the Trustee incurs expenses or renders services in 

49

connection with an Event of Default specified in Section 6.01(i) or Section 6.01(j), the expenses, including the reasonable charges and expenses of its counsel and the compensation for services payable pursuant to Section 7.07(a), are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or similar laws.

For the purposes of this Section 7.07, the “Trustee” shall include any predecessor Trustee; provided, however, that except as may be otherwise agreed among the parties, the negligence, willful misconduct or bad faith of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.

Section 7.08

Replacement of Trustee.

The Trustee may resign at any time by so notifying the Company; provided, however, no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 7.08.  The Holders of a majority in aggregate Accreted Principal Amount of the Securities at the time outstanding may remove the Trustee by so notifying the Trustee and the Company in writing.  The Company shall remove the Trustee if:

(i)

the Trustee fails to comply with Section 7.10;

(ii)

the Trustee is adjudged bankrupt or insolvent;

(iii)

a receiver or public officer takes charge of the Trustee or its property; or

(iv)

the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint, by resolution of its Board of Directors, a successor Trustee.

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

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate Accreted Principal Amount of the Securities at the time outstanding may petition any court of competent jurisdiction at the expense of the Company for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

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So long as no Default or Event of Default shall have occurred and be continuing, if the Company shall have delivered to the Trustee (i) a Board Resolution appointing a successor Trustee, effective as of a date at least 30 days after delivery of such Resolution to the Trustee, and (ii) an instrument of acceptance of such appointment, effective as of such date, by such successor Trustee in accordance with this Indenture, the Trustee shall be deemed to have resigned as contemplated in this Section 7.08, the successor Trustee shall be deemed to have been accepted as contemplated in this Indenture, all as of such date, and all other provisions of this Indenture shall be applicable to such resignation, appointment and acceptance.

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 Person, the resulting, surviving or transferee Person without any further act shall be the successor Trustee, subject to Sections 7.10 and 7.11.

Section 7.10

Eligibility; Disqualification.

The Trustee shall at all times satisfy the requirements of TIA Sections 310(a)(1) and 310(b).  The Trustee (or any parent holding company) shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.  Nothing herein contained shall prevent the Trustee from filing with the Commission the application referred to in the penultimate paragraph of TIA Section 310(b).

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 therein.

Section 7.12

May Hold Securities.

The Trustee, the Conversion Agent, any Authenticating Agent, any Paying Agent, any Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 7.07 and 7.11, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Conversion Agent, Authenticating Agent, Paying Agent, Registrar or such other agent.

ARTICLE 8

DISCHARGE OF INDENTURE

Section 8.01

Discharge of Liability on Securities.

When (i) the Company causes to be delivered to the Trustee all outstanding Securities (other than Securities replaced or repaid pursuant to Section 2.07) for cancellation or (ii) all outstanding Securities have become due and payable and the Company deposits with the Trustee cash sufficient to pay all amounts due and owing on all outstanding Securities (other than Securities replaced pursuant to Section 2.07), and if in either case the Company pays all other 

51

sums payable hereunder by the Company, then this Indenture shall, subject to Section 7.07, cease to be of further effect.  The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officer’s Certificate and Opinion of Counsel and at the cost and expense of the Company.

Section 8.02

Repayment to the Company.

The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, subject to applicable abandoned property law.  After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person and the Trustee and the Paying Agent shall have no further liability to the Securityholders with respect to such money or securities for that period commencing after the return thereof.

Section 8.03

Application of Trust Money.

The Trustee shall hold in trust all money and other consideration deposited with it pursuant to Section 8.01 and shall apply such deposited money and other consideration through the Paying Agent and in accordance with this Indenture to the payment of amounts due on the Securities.  Money and other consideration so held in trust is subject to the Trustee’s rights under Section 7.07.

ARTICLE 9

AMENDMENTS

Section 9.01

Without Consent of Holders.

The Company and the Trustee may modify or amend this Indenture or the Securities without the consent of any Securityholder to:

(a)

add guarantees with respect to the Securities or secure the Securities;

(b)

remove any guarantee added to the Securities pursuant to clause (a) above, unless such guarantee is required pursuant to Section 5.01(a);

(c)

provide for the transfer and exchange of Certificated Securities;

(d)

add to the covenants or Events of Default of the Company for the benefit of the Holders of Securities;

(e)

surrender any right or power herein conferred upon the Company;

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(f)

provide for conversion rights of Holders of Securities if any reclassification or change of the Common Stock or any consolidation, merger or sale of all or substantially all of the Company’s assets occurs;

(g)

evidence the assumption by a successor Person (and the public acquirer, if applicable) of the Company’s obligations to the Holders of Securities in the case of a merger, consolidation, conveyance, transfer, sale, lease or other disposition pursuant to Article 5 hereof (or Section 10.01(d) in the case of a public acquirer) and provide for any provisions described in Section 10.01(d), Section 10.05 and Section 10.13;

(h)

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

(i)

change the Conversion Rate in accordance with this Indenture; provided, however, that any increase in the Conversion Rate other than pursuant to Article 10 shall not adversely affect the interests of the Holders of Securities (after taking into account U.S. federal income tax and other consequences of such increase);

(j)

effect the qualification of this Indenture under the TIA and comply with the requirements of the SEC to effect such qualification;

(k)

cure any ambiguity or to correct or supplement any provision herein which may be inconsistent with any other provision herein or which is otherwise defective;

(l)

add or modify any other provisions herein with respect to matters or questions arising hereunder which the Company and the Trustee may deem necessary or desirable and which, in the good faith opinion of the Board of Directors of the Company (as evidenced by a Board Resolution) and the Trustee, shall not individually or in the aggregate with all other such changes have or subsequently have a material adverse effect on the interests of the Holders of Securities;

(m)

establish the form of Certificated Securities if issued (substantially in the form of Exhibit B); or

(n)

evidence and provide for the acceptance of the appointment under this Indenture of a successor Trustee in accordance with the terms of this Indenture.

Section 9.02

With Consent of Holders.

Except as provided below in this Section 9.02 and in Section 9.01, this Indenture or the Securities may be amended, modified or supplemented, and noncompliance in any particular instance with any provision of this Indenture or the Securities may be waived, in each case with the written consent of the Holders of at least a majority of the Accreted Principal Amount of the Securities at the time outstanding.

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Without the written consent or the affirmative vote of each Holder of Securities affected thereby, an amendment, supplement or waiver under this Section 9.02 may not:

(a)

reduce the Accreted Principal Amount or Original Principal Amount of or change the maturity of any Security, or the payment date of any installment of Interest payable on any Security;

(b)

reduce the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price of, any Security or change the time at which or circumstances under which the Securities may be redeemed or repurchased;

(c)

change the currency of payment of such Securities or Interest, Redemption Price, Fundamental Change Repurchase Price or Repurchase Price thereon;

(d)

alter the manner of calculation or rate of accrual of Interest, or extend the time for payment of any such amount or the Redemption Price, Fundamental Change Repurchase Price or Repurchase Price of any Security;

(e)

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

(f)

adversely affect the repurchase option of the Holders of the Securities as provided in Article 3 or the right of the Holders of the Securities to convert any Security as provided in Article 10 or reduce the number of Common Shares or any other property receivable upon conversion, except as otherwise permitted pursuant to Article 5 or Section 10.05 hereof;

(g)

modify the redemption provisions of Article 3 in a manner adverse to the Holders of the Securities;

(h)

change the Company’s obligation to maintain an office or agency in the places and for the purposes specified in this Indenture; or

(i)

modify any of the provisions of this Section 9.02, or reduce the percentage of the aggregate Accreted Principal Amount of outstanding Securities required to amend, modify or supplement the Indenture or the Securities or waive an Event of Default, except to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby.

In addition, any amendment to the provisions of this Indenture which relate to Article 11 will require the consent of the Holders of at least 75% in Accreted Principal Amount of the Securities then outstanding if such amendment would materially adversely affect the rights of Holders of Securities.

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, but it shall be sufficient if such consent approves the substance thereof.

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After an amendment under this Section 9.02 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment.

Section 9.03

[Omitted.]

Section 9.04

Revocation and Effect of Consents, Waivers and Actions.

Until an amendment, waiver or other action by Holders becomes effective, a consent thereto by a Holder of a Security hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder’s Security, even if notation of the consent, waiver or action is not made on the Security.  However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder’s Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment, waiver or action becomes effective.  After an amendment, waiver or action becomes effective, it shall bind every Securityholder.

Section 9.05

Notice of Amendments, Notation on or Exchange of Securities.

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article 9 may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Securities.

Section 9.06

Trustee to Sign Supplemental Indentures.

The Trustee shall sign any supplemental indenture authorized pursuant to this Article 9 if the amendment contained therein does not affect the rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, but need not, sign such supplemental indenture.  In signing such supplemental indenture the Trustee shall receive, and (subject to the provisions of Section 7.01) shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture.

Section 9.07

Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article 9, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

ARTICLE 10

CONVERSIONS

Section 10.01

Conversion Privilege.

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(a)

Subject to and upon compliance with the provisions of this Article 10, a Holder of a Security shall have the right, at such Holder’s option, to convert all or any portion of such Holder’s Original Principal Amount (if the portion to be converted is $1,000 Original Principal Amount or an integral multiple thereof) of such Security prior to the close of business on the Business Day immediately preceding Stated Maturity into cash and shares of Common Stock, if any, at the Conversion Rate (the “Conversion Obligation”) in effect on the date of conversion only as follows:

(i)

during any fiscal quarter of the Company (a “Fiscal Quarter”) commencing after the fiscal quarter ending January 27, 2011 (and only during such Fiscal Quarter), if the Last Reported Sale Price of the Common Stock for at least 20 Trading Days during the period of 30 consecutive Trading Days ending on the last Trading Day of the immediately preceding Fiscal Quarter is more than 130% of the Conversion Price in effect on such last Trading Day;

(ii)

during the five Business Day period immediately following any five consecutive Trading Day period (the “Measurement Period”) in which the Trading Price per $1,000 Original Principal Amount of the Securities for each day of such Measurement Period was less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on each such date.  The Conversion Agent shall have no obligation to determine the Trading Price of the Securities unless the Company has requested such determination and the Company shall have no obligation to make such request unless requested to do so by a Holder of the Securities.  Upon making any such request, any such requesting Holder shall provide reasonable evidence that (A) such requesting Holder is a Holder of the Securities as of the date of such notice, and (B) the Trading Price per $1,000 Original Principal Amount of Securities would be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate.  At such time, the Company shall instruct the Conversion Agent to determine the Trading Price of the Securities beginning on the next Trading Day and on each successive Trading Day until the Trading Price per $1,000 Original Principal Amount of the Securities is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate;

(iii)

at any time prior to the close of business on the Business Day immediately preceding the Redemption Date, if the Company has called the Securities for redemption pursuant to Article 3 hereof, even if the Securities are not otherwise convertible at that time;

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(iv)

any time on or after November 30, 2025 and prior to the close of business on the Stated Maturity;

(v)

as provided in clause (b) of this Section 10.01.

The Company or, at its option, the Conversion Agent on behalf of the Company, shall determine on a daily basis during the time periods specified in Section 10.01(a)(1) or, following a request by a Holder of Securities in accordance with the procedures specified in Section 10.01(a)(2), whether the Securities shall be convertible as a result of the occurrence of an event specified in such Sections and, if the Securities shall be so convertible, the Company or the Conversion Agent, as applicable, shall promptly deliver to the Trustee and Conversion Agent or the Company, as applicable written notice thereof.  Whenever the Securities shall become convertible pursuant to this Section 10.01 (as determined in accordance with this Section 10.01), the Company or, at the Company’s request, the Trustee in the name and at the expense of the Company, shall promptly notify the Holders of the event triggering such convertibility in the manner provided in Section 13.02, and the Company shall also promptly disseminate a press release through Dow Jones & Company, Inc. or Bloomberg Business News and publish such information on the Company’s Website or through another public medium the Company may use at that time.  Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.

(b)

In the event that:

(1)

(A) the Company distributes to all or substantially all holders of Common Stock rights or warrants entitling them to purchase, for a period expiring within 60 days after the date of such distribution, Common Stock at less than the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the announcement date for such distribution; or (B) the Company distributes to all or substantially all holders of Common Stock assets (including cash), debt securities or rights or warrants to purchase the Company’s securities, which distribution has a per share value as determined by the Board of Directors exceeding 10% of the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the announcement date of such distribution, then, in either case, the Securities may be surrendered for conversion at any time on and after the date that the Company gives notice to the Holders of such distribution, which shall be not less than 20 Business Days prior to the Ex-Dividend Date for such distribution, until the earlier of the close of business on the Business Day immediately preceding the Ex-Dividend Date or the date the Company announces that such distribution shall not take place, even if the Securities are not otherwise convertible at such time; provided that no Holder of a Security shall have the right to convert if the Holder may otherwise participate in such distribution without conversion; or

(2)

a Change of Control occurs pursuant to which the Common Stock is to be converted into cash, securities or other property, then the Securities may be surrendered for conversion at any time from and after the date which is 15 days prior to the anticipated effective date of such transaction until and including the date which is 15 days after the actual effective date of such transaction (or, if such transaction also 

57

constitutes a Change of Control pursuant to which Holders have a right to require the Company to repurchase the Securities pursuant to Section 3.08, until the Business Day immediately preceding the applicable Fundamental Change Repurchase Date).  The Company shall notify Holders at the time the Company publicly announces the Change of Control transaction giving rise to the above conversion right (but in no event less than 15 days prior to the anticipated effective date of such transaction).  Except as provided in Section 10.01(d), if the Company engages in any reclassification of the Common Stock (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 is party to a consolidation, merger, binding share exchange or transfer of all or substantially all of its assets pursuant to which Holders of Common Stock would be entitled to receive cash, securities or other property, then at the effective time of such transaction, to the extent that it constitutes a Change of Control, the Conversion Obligation and the Conversion Settlement Distribution shall be based on the applicable Conversion Rate and the kind and amount of cash, securities or other property that a holder of one share of the Common Stock would have received in such transaction as determined pursuant to Section 10.05(b) (such property, collectively, the “Exchange Property”).  In addition, if a Holder converts Securities following the effective time of any such transaction, any amounts of the Conversion Settlement Distribution to be settled in shares of Common Stock shall be paid in such Exchange Property rather than shares of Common Stock.  Upon a Change of Control, (A) a Holder may also require the Company to repurchase all or a portion of its Securities pursuant to Section 3.08 or (B) if such Holder elects, instead, to convert all or a portion of its Securities, such Holder may receive Additional Shares upon conversion pursuant to Section 10.01(c) or Public Acquirer Common Stock pursuant to Section 10.01(d), in each case, subject to the terms and conditions set forth in each such Section.

(c)

If and only to the extent a Holder timely elects to convert Securities during the period specified in Section 10.01(b)(2) above on or prior to November 30, 2014, and 10% or more of the consideration for the Common Stock in such Change of Control transaction consists of consideration other than common stock traded or scheduled to be traded immediately following such transaction on a U.S. national securities exchange or The Nasdaq Global Select Market, the Conversion Rate shall be increased by an additional number of shares of Common Stock (the “Additional Shares”) as described below; provided that if the Stock Price paid in connection with such transaction is greater than $42.00 or less than $15.08 (subject in each case to adjustment as described below), no Additional Shares shall be added to the Conversion Rate.  Notwithstanding this Section 10.01(c), if the Company elects to adjust the Conversion Rate pursuant to Section 10.01(d), the provisions of Section 10.01(d) shall apply in lieu of the provisions of this Section 10.01(c).  The Company shall notify Holders, at least 15 days prior to the anticipated effective date of such transaction causing any increase of the Conversion Rate pursuant to this Section 10.01(c), whether the Company elects to increase the Conversion Rate as described above or to adjust the Conversion Rate pursuant to Section 10.01(d).

The number of Additional Shares to be added to the Conversion Rate as described in the immediately preceding paragraph shall be determined by reference to the table attached as 

58

Schedule I hereto, based on the effective date of such Change of Control transaction and the Stock Price paid in connection with such transaction; provided that if the Stock Price is between two Stock Price amounts in the table or such effective date is between two effective dates in the table, the number of Additional Shares shall be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 365-day year.  The “effective date” with respect to a Change of Control transaction means the date that a Change of Control becomes effective.

With respect to any Securities tendered for conversion to which Additional Shares apply, any shares of Common Stock to be delivered upon conversion of such Securities pursuant to Section 10.02 shall be delivered to Holders who elect to convert their Securities on the later of (1) the fifth Business Day following the effective date and (2) the third Business Day following the final day of the Cash Settlement Averaging Period.

The Stock Prices set forth in the first row of the table in Schedule I hereto shall be adjusted as of any date on which the Conversion Rate of the Securities is adjusted pursuant to Section 10.04.  The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted.  The number of Additional Shares shall be adjusted in the same manner as the Conversion Rate as set forth in Section 10.04.

Notwithstanding the foregoing, in no event shall the total number of shares of Common Stock issuable upon conversion of the Securities exceed 76.8571 per $1,000 Original Principal Amount of Securities, subject to adjustments in the same manner as the Conversion Rate as set forth in Section 10.04.

(d)

Notwithstanding the provisions of Section 10.01(c), in the case of a Change of Control that would lead to the issuance of Additional Shares as set forth in clause (c) above that is also a Public Acquirer Change of Control, the Company may, at its option and in lieu of increasing the Conversion Rate by Additional Shares as described in Section 10.01(c), elect to adjust the Conversion Rate and the related Conversion Obligation such that from and after the effective date of such Public Acquirer Change of Control, Holders of Securities shall be entitled to convert their Securities (subject to the satisfaction of the conditions to conversion set forth in Sections 10.01(a) and 10.03) into Public Acquirer Common Stock.

The Conversion Rate following the effective date of such transaction will be a number of shares of Public Acquirer Common Stock equal to the product obtained by multiplying the Conversion Rate in effect immediately before the Public Acquirer Change of Control and the average of the quotients obtained by dividing:

(i)

the Acquisition Value of the Company’s Common Stock by

(ii)

the Last Reported Sale Price of the Public Acquirer Common Stock for each such Trading Day
in the 10 consecutive Trading Day period ending on the Trading Day 

59

immediately preceding the effective date of such Public Acquirer Change of Control (the “Valuation Period”).

The “Acquisition Value” of the Common Stock means, for each Trading Day in the Valuation Period, the value of the consideration paid per share of Common Stock in connection with such Public Acquirer Change of Control, as follows:

(i)

For any cash, 100% of the face amount of such cash;

(ii)

for any Public Acquirer Common Stock, 100% of the Last Reported Sale Price of such Public Acquirer Common Stock on such trading day; and

(iii)

for any other securities, assets or property, 102% of the fair market value of such security, asset or property on such Trading Day, as determined by three independent nationally recognized investment banks selected by the Company for this purpose (or if prices are not available from three such firms, from two such firms or, if prices are not available from two such firms, from one such firm).

“Public Acquirer Change of Control” means an event constituting a corporate transaction that would otherwise obligate the Company to increase the Conversion Rate as described in Section 10.01(c) and the acquirer, the Person formed by or surviving the merger or consolidation or any entity that is direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of such Person’s or acquirer’s Voting Stock has a class of common stock traded on a national securities exchange or quoted on The Nasdaq Global Select  Market or which shall be so traded or quoted when issued or exchanged in connection with such Change of Control (the “Public Acquirer Common Stock”); provided, that if there is more than one of such entity, the relevant entity shall be such entity with the most direct beneficial ownership to such acquirer’s or Person’s capital stock.

Upon a Public Acquirer Change of Control, if the Company so elects, Holders may convert their Securities (subject to the satisfaction of the conditions to conversion set forth in Section 10.01(a)) at the adjusted Conversion Rate described above but shall not be entitled to the increased Conversion Rate described in Section 10.01(c).  The Company shall notify Holders of its election in its notice to Holders pursuant to Section 10.01(b)(2) above.  Holders may convert their Securities upon a Public Acquirer Change of Control during the period specified in Section 10.01(b)(2).  In addition, Holders can also, subject to certain conditions, require the Company to repurchase all or a portion of their Securities as described in Section 3.08.

After any adjustment of the Conversion Rate in connection with a Public Acquirer Change of Control, the Conversion Rate shall be subject to further similar adjustments in the event that any of the events described in Section 10.04 occur thereafter.

The Company may only make such election if such public acquirer is a corporation organized under the laws of the United States, any State thereof or the District Columbia and if the Company and such public acquirer execute a supplemental indenture whereby the public acquirer agrees to comply with the obligations of the Company under the Securities and the Indenture applicable to such public acquirer or any securities thereof that may be issuable upon conversion of the Securities.

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Section 10.02

Conversion Procedure; Conversion Rate; Fractional Shares.

Subject to Section 10.01, the Company’s rights under Section 10.03 and the limitation on issuance of Common Stock under Section 10.13, the Original Principal Amount of each Security shall be convertible at the office of the Conversion Agent into a combination of cash and fully paid and nonassessable shares (calculated to the nearest 1/100th of a share) of Common Stock, if any, at a rate (the “Conversion Rate”) equal to, initially, 44.2087 shares of Common Stock for each $1,000 Original Principal Amount of Securities.  The Conversion Rate shall be adjusted in certain instances as provided in Section 10.04 hereof, but shall not be adjusted for any accrued and unpaid Interest unless such Conversion Date occurs between an Interest Record Date and the Interest Payment Date to which that Interest Record Date relates.  Upon conversion, no payment shall be made by the Company with respect to any accrued and unpaid Interest.  Instead, such amount shall be deemed paid by the applicable Conversion Settlement Distribution delivered upon conversion of any Security.  In addition, except as required by Section 10.04, no payment or adjustment shall be made in respect of dividends on the Common Stock with a record date prior to the Conversion Date.  The Company shall not issue any fraction of a share of Common Stock in connection with any conversion of Securities, but instead shall, subject to Section 10.03 hereof, make a cash payment (calculated to the nearest cent) equal to such fraction multiplied by the Last Reported Sale Price of the Common Stock on the Trading Day prior to the Conversion Date.

(a)

Before any Holder of a Security shall be entitled to convert the same into a combination of cash and Common Stock, if any, such Holder shall (1) in the case of Global Securities, comply with the procedures of the Depositary in effect at that time for converting a beneficial interest in a Global Security, and in the case of Certificated Securities, surrender such Securities, duly endorsed to the Company or in blank, at the office of the Conversion Agent, and (2) in the case of Certificated Securities, give written notice to the Conversion Agent in the form on the reverse of such Certificated Security (the “Conversion Notice”) at said office or place that such Holder elects to convert the same and shall state in writing therein the Original Principal Amount of Securities to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for Common Stock included in the Conversion Settlement Distribution, if any, to be registered.

Before any such conversion, a Holder also shall pay all taxes or duties, if any, as provided in Section 10.06 and any amount payable pursuant to Section 10.02(f).

If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares of Common Stock, if any, that shall be deliverable upon conversion as part of the Conversion Settlement Distribution shall be computed on the basis of the aggregate Original Principal Amount of the Securities (or specified portions thereof to the extent permitted thereby) so surrendered.

(b)

A Security shall be deemed to have been converted as of the close of business on the date (the “Conversion Date”) that the Holder has complied with Section 10.02(a).

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(c)

The Company shall, on the Conversion Settlement Date, (i) pay the cash component (including cash in lieu of any fraction of a share to which such Holder would otherwise be entitled or cash in lieu of shares of Common Stock pursuant to Section 10.13) of the Conversion Obligation determined pursuant to Section 10.03 to the Holder of a Security surrendered for conversion, or such Holder’s nominee or nominees, and (ii) subject to the limitation on issuance of Common Stock set forth in Section 10.13, issue, or cause to be issued, and deliver to the Conversion Agent or to such Holder, or such Holder’s nominee or nominees, certificates for the number of full shares of Common Stock, if any, or make a book-entry transfer through DTC with respect to uncertificated Shares, if applicable, to which such Holder shall be entitled as part of such Conversion Obligation.  The Company shall not be required to deliver certificates for shares of Common Stock while the stock transfer books for such stock or the security register are duly closed for any purpose, but certificates for shares of Common Stock shall be issued and delivered as soon as practicable after the opening of such books or security register, and the Person or Persons entitled to receive the Common Stock as part of the applicable Conversion Settlement Distribution upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock, as of the close of business on the applicable Conversion Settlement Date.

(d)

In case any Security shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Security so surrendered, without charge to such Holder (subject to the provisions of Section 10.06 hereof), a new Security or Securities in authorized denominations in an aggregate Original Principal Amount equal to the unconverted portion of the surrendered Securities.

(e)

By delivering the combination of cash and shares of Common Stock, if any, together with a cash payment in lieu of any fractional shares to the Conversion Agent or to the Holder or such Holder’s nominee or nominees, the Company shall have satisfied in full its Conversion Obligation with respect to such Security, and upon such delivery, accrued and unpaid Interest, if any, with respect to such Security shall be deemed to be paid in full rather than canceled, extinguished or forfeited, and such amounts shall no longer accrue.

(f)

If a Securityholder delivers a Conversion Notice after the Interest Record Date for a payment of Interest but prior to the corresponding Interest Payment Date, such Securityholder must pay to the Company, at the time such Securityholder surrenders Securities for conversion, an amount equal to the Interest that has accrued and shall be paid on the related Interest Payment Date.  The preceding sentence shall not apply if (1) the Company has specified a Redemption Date that is after an Interest Record Date but on or prior to the corresponding Interest Payment Date, (2) the Company has specified a Fundamental Change Repurchase Date during such period referred to in clause (1) of this paragraph or (3) to the extent of overdue Interest if any overdue Interest exists at the time of conversion with respect to the Securities converted.

Section 10.03

Payment Upon Conversion.

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(a)

Subject to the limitation on issuance of Common Stock set forth in Section 10.13, upon conversion of Securities, the Company shall deliver to Holders surrendering Securities for conversion, for each $1,000 Original Principal Amount of Securities, a “Conversion Settlement Distribution” equal to the sum of the Daily Settlement Amount (as defined below) for each of the twenty Trading Days during the Cash Settlement Averaging Period (as defined below).  The Company shall deliver the Conversion Settlement Distribution on the Conversion Settlement Date.

The “Daily Settlement Amount,” for each of the twenty Trading Days during the Cash Settlement Averaging Period, shall consist of:

(i)

cash equal to the lesser of  (A) the quotient of the Accreted Principal Amount per $1,000 Original Principal Amount of Securities and 20 (such quotient, the “Daily Accreted Amount”) and (B) the Daily Conversion Value relating to such day; and

(ii)

to the extent the Daily Conversion Value exceeds the Daily Accreted Amount (the “Residual Amount”), (I) a number of shares of the Company’s Common Stock equal to (A) the difference between such Daily Conversion Value, and the Daily Accreted Amount, divided by (B) the daily VWAP of the Company’s Common Stock for such day or (II) the consideration into which the same number of shares Common Stock calculated in clause (I) has been converted as set forth in Section 10.05(b); in each case subject to the Company’s right to deliver cash in lieu of all or a portion of such remaining shares as provided below.

The “Daily Conversion Value” means, for each of the twenty consecutive Trading Days during the Cash Settlement Averaging Period, one-twentieth (1/20th) of (I) the product of (1) the applicable Conversion Rate and (2) the daily VWAP of the Company’s Common Stock on such day or (II) the value of the consideration into which a number of shares of the Company’s Common Stock equal to the applicable Conversion Rate has been converted as set forth in Section 10.05(b).

The “Cash Settlement Averaging Period” with respect to any Securities converted means the twenty consecutive Trading Days beginning on and including the second Trading Day after the Conversion Date for those Securities.

The “daily VWAP” for the Company’s Common Stock means, for each of the twenty consecutive Trading Days during the Cash Settlement Averaging Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “SCHS AQR” 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 the Company’s Common Stock on such Trading Day as the Company’s Board of Directors determines in good faith using a volume-weighted method).

On any day prior to the first Trading Day of the applicable Cash Settlement Averaging Period, the Company may specify a percentage of the Residual Amount that will be settled in cash (the “Cash Percentage”).  If the Company elects to specify a Cash Percentage, the amount of cash that the Company shall deliver in respect of each Trading Day in the applicable Cash Settlement Averaging Period will equal the product of:  (1) the Cash Percentage and (2) the 

63

Residual Amount.  The number of shares deliverable in respect of each Trading Day in the applicable Cash Settlement Averaging Period (the “Daily Share Amount”) will be equal to the product of  (i) 100% minus the Cash Percentage times (ii) the Residual Amount for the Trading Day divided by the daily VWAP for the Company’s Common Stock on such Trading Day.  If the Company does not specify a Cash Percentage by the start of the applicable Cash Settlement Averaging Period, the Company shall settle 100% of the Residual Amount for each Trading Day in the applicable Cash Settlement Averaging Period with shares of the Company’s Common Stock.  This paragraph, and each of the other provisions in this Indenture, is subject to the limitation on issuance of Common Stock set forth in Section 10.13.

The Company shall not issue fractional shares of Common Stock upon conversion of the Securities.  Instead, the Company shall pay the cash value of such fractional shares based upon the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Conversion Date.

(b)

If a Holder tenders Securities for conversion and the Daily Conversion Value is being determined at a time when the Securities are convertible into Exchange Property, the Daily Conversion Value shall be determined based on the kind and amount of such Exchange Property and the value thereof during the Cash Settlement Averaging Period.  Settlement of Securities tendered for conversion after the effective date of any transaction giving rise to Exchange Property shall be as set forth above.  For the purposes of this Section 10.03, the Last Reported Sale Price of the Common Stock shall be deemed to equal the sum of (A) 100% of the value of any Exchange Property consisting of cash received per share of Common Stock, (B) the Last Reported Sale Price of any Exchange Property received per share of Common Stock consisting of securities that are traded on a U.S. national securities exchange or approved for quotation on The Nasdaq Global Select Market and (C) the Fair Market Value of any other Exchange Property received per share, as determined by three independent nationally recognized investment banks selected by the Company for this purpose.

Section 10.04

Adjustment of Conversion Rate.

The Conversion Rate shall be adjusted, without duplication, from time to time by the Company in accordance with this Section 10.04:

(a)

In case the Company shall hereafter pay a dividend or make a distribution to all or substantially all holders of the outstanding Common Stock in shares of Common Stock, the Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying the Conversion Rate in effect at the opening of business on the date following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution by a fraction,

(i)

the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus (B) the total number of shares of Common Stock constituting the dividend or distribution; and

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(ii)

the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination,

such increase to become effective immediately after the opening of business on the day following the date fixed for such determination.  If any dividend or distribution of the type described in this Section 10.04 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)

In case the Company shall issue rights, warrants or options (other than pursuant to any dividend reinvestment or share repurchase plans) to all or substantially all holders of its outstanding shares of Common Stock entitling them (for a period expiring within 60 days after the date of such distribution) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price on the date fixed for determination of shareholders entitled to receive such rights, warrants or options, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the date fixed for determination of shareholders entitled to receive such rights, warrants or options by a fraction,

(i)

the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the date fixed for determination of shareholders entitled to receive such rights or warrants plus (B) the total number of additional shares of Common Stock offered for subscription or purchase, and

(ii)

the denominator of which is the sum of (A) the number of shares of Common Stock outstanding on the date fixed for determination of shareholders entitled to receive such rights or warrants plus (B) the total number of additional shares of Common Stock that the aggregate offering price of the total number of shares of Common Stock offered for subscription or purchase would purchase at the Current Market Price of the Common Stock on such date.

Such adjustment shall be successively made whenever any such rights or warrants are issued, and shall become effective immediately after the opening of business on the day following the date fixed for determination of shareholders entitled to receive such rights or warrants.  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.  In the event that such rights or warrants are not so exercised, 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 shareholders entitled to receive such rights or warrants had not been fixed.  In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price, and in determining 

65

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)

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

(d)

In case the Company shall, by dividend or otherwise, distribute to all or substantially all holders of its Common Stock shares of any class of Capital Stock of the Company or evidences of its indebtedness or other assets (including securities, but excluding any rights, options or warrants referred to in Section 10.04(b) and excluding any dividend or distribution (x) paid exclusively in cash or (y) referred to in Section 10.04(a)) (any of the foregoing hereinafter in this Section 10.04(d) called the “Distributed Assets”), then, in each such case, the Conversion Rate shall be increased so that the same shall be equal to the rate determined by multiplying the Conversion Rate in effect on the Ex-Dividend Date with respect to such distribution by a fraction,

(i)

the numerator of which shall be the Current Market Price per share of the Common Stock on such Ex-Dividend Date; and

(ii)

the denominator of which shall be the Current Market Price per share of the Common Stock less the Fair Market Value (as determined by the Board of Directors and described in a resolution of the Board of Directors) on the Ex-Dividend Date of the portion of the Distributed Assets so distributed in respect of one share of Common Stock,

such adjustment to become effective immediately prior to the opening of business on the day following such Ex-Dividend Date; provided, however, that in the event (1) the then Fair Market Value (as so determined) of the portion of the Distributed Assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on such Ex-Dividend Date or (2) the Current Market Price of Common Stock on the Ex-Dividend Date exceeds the then Fair Market Value (as so determined) of the portion of the Distributed Assets so distributed applicable to one share of Common Stock by less than $1.00, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion the amount of Distributed Assets such Holder would have received had such Holder converted each Security on the Ex-Dividend Date for such distribution.  In the event that such dividend or distribution is not so paid or made, the Conversion Rate shall be adjusted to be the Conversion Rate that would then be in effect if such 

66

dividend or distribution had not been declared.  If the Board of Directors determines the Fair Market Value of any distribution for purposes of this Section 10.04(d) by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock.

Rights or warrants distributed by the Company to all holders of Common Stock entitling the Holders thereof to subscribe for or purchase shares of the Company’s Capital Stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 10.04 (and no adjustment to the Conversion Rate under this Section 10.04 shall be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 10.04.  If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights or warrants with such rights (and a termination or expiration of the existing rights or warrants without exercise by any of the holders thereof).  In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 10.04 was made, (1) in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued.

No adjustment of the Conversion Rate shall be made pursuant to this Section 10.04(d) in respect of rights or warrants distributed or deemed distributed on any Trigger Event to the extent that such rights or warrants are actually distributed, or reserved by the Company for distribution to Holders of Securities upon conversion by such Holders of Securities to Common Stock.

For purposes of this Section 10.04(d) and Section 10.04(a) and (b), any dividend or distribution to which this Section 10.04(d) is applicable that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock (or both), shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, assets or shares of capital stock other than such shares of Common Stock or rights or warrants (and any Conversion Rate adjustment required by this Section 10.04(d) with respect to such dividend or distribution shall then be made) immediately followed by (2) a dividend or distribution of such 

67

shares of Common Stock or such rights or warrants (and any further Conversion Rate adjustment required by Section 10.04(a) and (b) with respect to such dividend or distribution shall then be made), except (A) the Ex-Dividend Date of such dividend or distribution shall be substituted as “the date fixed for the determination of shareholders entitled to receive such dividend or other distribution,” “the date fixed for the determination of shareholders entitled to receive such rights or warrants” and “the date fixed for such determination” within the meaning of Section 10.04(a) and (b), and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed “outstanding at the close of business on the date fixed for such determination” within the meaning of Section 10.04(a).

If any Distributed Assets requiring any adjustment pursuant to this Section 10.04(d) consists of the Capital Stock, or similar equity interests in, a Subsidiary or other business unit of the Company which are or in connection with such distribution will be listed or quoted for trading on a U.S. national or regional securities exchange or The Nasdaq Global Select Market, the Conversion Rate in effect immediately before the close of business on the Ex-Dividend Date fixed for determination of shareholders entitled to receive the distribution shall instead be increased by multiplying the Conversion Rate then in effect by a fraction, (A) the numerator of which is the sum of (1) the average of the Last Reported Sale Prices of such distributed security for the 10 Trading Days commencing on and including the fifth Trading Day after the Ex-Dividend Date on The Nasdaq Global Select Market or such other national or regional exchange or market on which such securities are then listed or quoted plus (2) the average of the Closing Prices of the Common Stock over the same Trading Day period and (B) the denominator of which is such average of the Last Reported Sale Prices of the Common Stock for the 10 Trading Days commencing on and including the fifth Trading Day after the Ex-Dividend Date on The Nasdaq Global Select Market or such other national or regional exchange or market on which the securities are then listed or quoted.

(e)

In case the Company shall, by dividend or otherwise, distribute to all or substantially all holders of its Common Stock cash (an “Extraordinary Cash Dividend”) (excluding any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary), then, in such case, the Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the Ex-Dividend Date for such Extraordinary Cash Dividend by a fraction,

(i)

the numerator of which shall be the Current Market Price of the Common Stock on such Ex-Dividend Date, and

(ii)

the denominator of which shall be such Current Market Price of the Common Stock minus the amount per share of such dividend or the amount of cash so distributed applicable to one share of Common Stock,

such adjustment to be effective immediately prior to the opening of business on the day following such Ex-Dividend Date; provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on such Record Date, in lieu of the foregoing adjustment, 

68

adequate provision shall be made so that each Holder shall have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted each Security on such Ex-Dividend Date.  In the event that such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(f)

In case a tender (other than an odd-lot offer) or exchange offer made by the Company or any Subsidiary for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to shareholders of consideration per share of Common Stock having a Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors) that as of the last time (the “Expiration Time”) tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended) exceeds the Last Reported Sale Price of the Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the Expiration Time by a fraction,

(i)

the numerator of which shall be the sum of (x) the Fair Market Value (determined as aforesaid) of the aggregate consideration payable to shareholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted up to any such maximum, being referred to as the “Purchased Shares”) and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the Last Reported Sale Price of the Common Stock on the first Trading Day after the Expiration Time, and

(ii)

the denominator of which shall be the product of the number of shares of Common Stock outstanding (including any Purchased Shares) at the Expiration Time multiplied by the Last Reported Sale Price of the Common Stock on the first Trading Day after the Expiration Time,

such adjustment to become effective immediately prior to the opening of business on the day following the Expiration Time.  In the event that the Company is obligated to purchase shares pursuant to any such tender 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.

(g)

The Company may make such increases in the Conversion Rate, in addition to those required by this Section 10.04, as the Board of Directors considers to be advisable to avoid or diminish any U.S. federal income tax to holders of Common Stock resulting from any stock dividend or distribution (or rights to acquire capital stock) or from any event treated as such for income tax purposes; provided, however, that such 

69

increase in the Conversion Rate shall not adversely affect the interests of the Holders of Securities (after taking into account U.S. federal income tax and other consequences of such increase).

To the extent permitted by applicable law and the listing requirements of The Nasdaq Global Select Market or any national securities exchange on which the Common Stock is then listed, the Company from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least 20 days, the increase is irrevocable during the period and the Board of Directors shall have made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive.  Whenever the Conversion Rate is increased pursuant to the preceding sentence or the first paragraph of this Section 10.04(g), the Company shall mail to Holders of record of the Securities a notice of the increase at least 15 days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it shall be in effect.

(h)

All calculations under this Article 10 shall be made by the Company and shall be made to the nearest cent or to the nearest one-ten thousandth of a share, as the case may be, with one half-cent and 0.005 of a share, respectively, being rounded upward.  Notwithstanding the foregoing, no adjustment need be made for:

(i)

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 the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan,

(ii)

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

(iii)

the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date the Securities were first issued,

(iv)

a change in the par value of the Common Stock, or

(v)

accrued and unpaid Interest.

(i)

Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee and any Conversion Agent (if other than the Trustee) an Officer’s 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 Responsible Officer of the Trustee shall have received such Officer’s 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 

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such notice of such adjustment of the Conversion Rate to the Holder of each Security at his last address appearing on the Security register provided for in Section 2.03 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.

(j)

In any case in which this Section 10.04 provides that an adjustment shall become effective immediately after (1) a record date or Ex-Dividend Date for an event, (2) the date fixed for the determination of shareholders entitled to receive a dividend or distribution pursuant to Section 10.04(a), (3) a date fixed for the determination of shareholders entitled to receive rights or warrants pursuant to Section 10.04(b), (4) the effective date of any subdivision or combination of Common Stock, or (5) the Expiration Time for any tender or exchange offer pursuant to Section 10.04(f), (each a “Determination Date”), the Company may elect to defer until the occurrence of the relevant 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 10.04(a).  For purposes of this Section 10.04(j), the term “Adjustment Event” shall mean:

(i)

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

(ii)

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

(iii)

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

(iv)

in any case referred to in clause (4) hereof, the date of such subdivision or combination, and

(v)

in any case referred to in clause (5) hereof, the date a sale or exchange of Common Stock pursuant to such tender or exchange offer is consummated and becomes irrevocable.

For purposes of this Section 10.04, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.  The Company shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company.

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The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities.  The Trustee shall not be responsible for the Company’s failure to comply with this Article 10.  Each Conversion Agent (other than the Company or an Affiliate of the Company) shall have the same protection under this Section 10.04(i) as the Trustee.

Section 10.05

Effect of Reclassification, Consolidation, Merger or Sale.

(a)

If any of the following events occur, namely (i) any reclassification or change of the outstanding shares of Common Stock (other than a subdivision or combination to which Section 10.04(c) applies or a change in par value or from par value to no par value, or from no par value to par value) as a result of which holders of Common Stock shall be entitled to receive Exchange Property with respect to or in exchange for such Common Stock, (ii) any consolidation, merger, binding share exchange or combination of the Company with another Person as a result of which holders of Common Stock shall be entitled to receive Exchange Property with respect to or in exchange for such Common Stock, or (iii) any sale or conveyance of all or substantially all 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 Exchange Property with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture providing for the conversion and settlement of the Securities as set forth in this Indenture.  Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 10.  If, in the case of any such reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance, the Exchange Property receivable thereupon by a holder of Common Stock includes shares of stock or other securities and assets of a corporation other than the successor or purchasing corporation, as the case may be, in such reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing.

(b)

The Conversion Obligation with respect to each $1,000 Original Principal Amount of Securities converted following the effective date of any such transaction, shall be calculated (as provided in clause (c) below) based on the Exchange Property.  In the event holders of the Common Stock have the opportunity to elect the form of consideration to be received in such transaction (subject to the ability of the Company to settle the Conversion Obligation in cash pursuant to Section 10.03), the Company shall make adequate provision whereby the Holders of the Securities shall have a reasonable opportunity to determine the form of consideration, consistent with the election rights and restrictions applicable to holders of Common Stock, into which all of the Securities, treated as a single class, shall be convertible from and after the effective date of such transaction.  Such determination shall be made pursuant to Section 1.05 and shall be subject to any limitations to which all of the holders of the Common Stock are subject, such as pro-rata reductions applicable to any portion of the consideration payable 

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in such event and shall be conducted in such a manner as to be completed by the date which is the earliest of (a) the deadline for elections to be made by holders of the Common Stock in connection with such transaction, and (b) two Trading Days prior to the anticipated effective date of such event.  The Company shall provide notice of the opportunity to determine the form of such consideration, as well as notice of the determination made by Holders of the Securities by issuing a press release and providing a copy of such notice to the Trustee.  The Company shall not become a party to any such transaction unless its terms are consistent with the preceding.

(c)

The Conversion Obligation in respect of any Securities converted following the effective date of any such transaction shall be computed in the same manner as set forth in Section 10.03(a) except that (1) the Cash Settlement Averaging Period shall be the 10 Trading Day period beginning on the second Trading Day after the Conversion Date (or, in the event the Conversion Date is on the Business Day prior to the Stated Maturity, the 10 Trading Day period beginning on the second Trading Day after the Stated Maturity), and (2) if the Securities become convertible into Exchange Property, the Last Reported Sale Price of the Common Stock shall be deemed to equal the sum of (A) 100% of the value of any Exchange Property consisting of cash received per share of Common Stock, (B) the Last Reported Sale Price of any Exchange Property received per share of Common Stock consisting of securities that are traded on a U.S. national securities exchange or approved for quotation on The Nasdaq Global Select Market and (C) the Fair Market Value of any other Exchange Property received per share, as determined by three independent nationally recognized investment banks selected by the Company for this purpose.  Settlement (in cash and/or shares) shall occur on the third Business Day following the final day of such Cash Settlement Averaging Period, provided, that any amount of the Conversion Settlement Distribution to be delivered in shares of Common Stock shall be paid in Exchange Property rather than shares of Common Stock.  If the Exchange Property includes more than one kind of property, the amount of Exchange Property of each kind to be delivered shall be in the proportion that the value of the Exchange Property (as calculated pursuant to Section 10.03) of such kind bears to the value of all such Exchange Property.  If the foregoing calculations would require the Company to deliver a fractional share or unit of Exchange Property to a Holder of Securities being converted, the Company shall deliver cash in lieu of such fractional share or unit based on the value of the Exchange Property.

(d)

The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder of Securities, at its address appearing on the Security register provided for in Section 2.03 of this Indenture, within 20 days after execution thereof.  Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

(e)

The above provisions of this Section 10.05 shall similarly apply to successive reclassifications, changes, consolidations, mergers, statutory share exchanges, combinations, sales and conveyances.

If this Section 10.05 applies to any event or occurrence, Section 10.04 shall not apply.  Notwithstanding this Section 10.05, if a Public Acquirer Change of Control occurs and the 

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Company elects to adjust the Conversion Price and its conversion obligation pursuant to Section 10.01(d), the provisions of Section 10.01(d) shall apply to the conversion instead of this Section 10.05.

Section 10.06

Taxes on Shares Issued.

The issue of stock certificates on conversions of Securities shall be made without charge to the converting Holder for any tax in respect of the issue thereof, except for applicable withholding, if any.  The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the Holder of any Securities converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

Section 10.07

Reservation of Shares, Shares to Be Fully Paid; Compliance with 

Governmental Requirements.

(a)

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

(b)

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, if any, of the shares of Common Stock issuable upon conversion of the Securities, the Company shall take all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Rate.

(c)

(i)

The Company covenants that all shares of Common Stock which may be issued upon conversion of Securities shall upon issue be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.

(ii)

The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Securities hereunder require registration with or approval of any governmental or regulatory authority under any federal or state law, regulation or requirement (including but not limited to, the shareholder approval rules of the Nasdaq Stock Market LLC) before such shares may be validly issued upon conversion, the Company shall in good faith and as expeditiously as possible, to the extent then permitted by the rules and interpretations of the SEC (or any successor thereto), endeavor to secure such registration or approval, as the case may be.

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Section 10.08

Responsibility of Trustee.

The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to 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, or herein or in any supplemental indenture provided to be 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 shares of Common Stock or stock certificates or other securities or property or cash 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 10.  Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine whether a supplemental indenture need be entered into or the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 10.01(d) or 10.05 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 event referred to in such Section 10.05 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 Officer’s 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 10.09

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 10.04; or

(b)

the Company shall authorize the granting to the holders of 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 that would require an adjustment in the Conversion Rate pursuant to Section 10.04(b); 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, merger or statutory share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or

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(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 register provided for in Section 2.03 of this Indenture, as promptly as possible but in any event at least ten (10) 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 of 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, or statutory share exchange, 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, or statutory share exchange, 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, or statutory share exchange, sale, transfer, dissolution, liquidation or winding up.

Section 10.10

Shareholder Rights Plan.

To the extent that the Company has a rights plan in effect upon conversion of the Securities into Common Stock, a Holder who converts securities shall 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 shall 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 10.04(d) 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 shareholder rights plan to provide that upon conversion of the Securities the Holders shall 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 shareholder rights agreement.

Section 10.11

Unconditional Right of Holders to Convert.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to convert its Security in accordance with this Article 10 and to bring an action for the enforcement of any such right to convert, and such rights shall not be impaired or affected without the consent of such Holder.

Section 10.12

Limitation on Adjustments.

The Company shall not take any action that would result in an adjustment pursuant to the foregoing provisions in this Article 10 without complying with the shareholder approval rules of The Nasdaq Global Select Market or any national securities exchange on which the Common Stock is then listed.

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Section 10.13

Limitation on Issuance of Common Stock.

(a)

Notwithstanding anything to the contrary in this Indenture, unless the Company shall have received the shareholder approval described in Section 10.13(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, shares of Common Stock issuable upon a conversion of the Securities and Additional Shares) (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 10) would exceed the “Maximum Shares” as calculated at the time of the proposed issuance by the following formula:

MS = (0.1999 x OS)

where,

MS

=

the Maximum Shares

OS

=

The number of shares of Common Stock outstanding at the Closing Date (             ), as appropriately adjusted for any subsequent event that would give rise to a change in the Conversion Rate pursuant to this Article 10

(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, then upon conversion of each $1,000 Original Principal Amount of Securities, a Holder will receive in lieu of any shares of Common Stock the Company in its sole discretion determines exceeds the Maximum Shares (exclusive of Additional Shares) (the “Holder Excess Shares”) cash for each Trading Day during the Cash Settlement Averaging Period equal to the product of (i) the quotient of (1) the Holder Excess Shares and (2) the amount of shares of Common Stock per $1,000 Original Principal Amount that would have been issued absent the restriction set forth in Section 10.13(a) (exclusive of Additional Shares but inclusive of Holder Excess Shares), multiplied by (ii) the Daily Share Amount, multiplied by (iii) the daily VWAP.  For any Additional Shares issuable per $1,000 Original Principal Amount of Securities that the Company in its sole discretion determines exceeds the Maximum Shares, the Company, in lieu of an issuance of shares of Common Stock, shall pay cash in an amount equal to the product of (i) the  Additional Shares that the Company is unable to issue as a result of Section 10.13(a) multiplied by (ii) the Stock Price.

(c)

The restrictions of Section 10.13(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 for purposes of NASDAQ Listing Rule 5635(d) or any comparable rule of any other principal exchange on which the Common Stock is then traded.

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(d)

In the event that the Securities are convertible into Exchange Property pursuant to Section 10.05 or Public Acquirer Common Stock pursuant to Section 10.01(d), the supplemental indenture executed in connection therewith may without the consent of any Holder remove this Section 10.13 or amend the calculation of Maximum Shares set forth in this Section 10.13 in order to comply with any comparable limitation on the issuance of shares of common stock of the principal exchange on which common stock included in the Exchange Property or Public Acquirer Common Stock is then traded.

ARTICLE 11

SUBORDINATION

Section 11.01

Agreement to Subordinate.

The Company agrees, and each Holder of Securities by accepting a Security agrees, that all principal, Interest, premium and other amounts owing in respect of the indebtedness evidenced by the Security is subordinated in right of payment, to the extent and in the manner provided in this Article 11, to the prior payment in full in cash or other payment satisfactory to holders of Senior Debt of all Senior Debt (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt.

Section 11.02

Liquidation; Dissolution; Bankruptcy.

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

(i)

holders of Senior Debt shall be entitled to receive payment in full of all principal, premium, Interest and other amounts due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt) in cash or other payment satisfactory to the holders of the Senior Debt before Holders of Securities shall be entitled to receive any payment with respect to the Securities; and

(ii)

until all Senior Debt is paid in full in cash or other payment satisfactory to the holders of the Senior Debt, any distribution to which Holders of Securities would be entitled but for this Article 11 shall be made to holders of Senior Debt.

Section 11.03

Default on Senior Debt and/or Designated Senior Debt.

Anything in this Indenture to the contrary notwithstanding, no payment on account of principal of or premium, if any, interest  on or any other amounts due on the Securities (including without limitation the making of a deposit pursuant to Section 3.05 or 3.10), and no 

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redemption, repurchase, conversion for cash or other acquisition of the Securities, shall be made by or on behalf of the Company unless:

(a)

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

(b)

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

In addition, if the Trustee shall receive written notice from the holders of Designated Senior Debt or their Representative (a “Payment Blockage Notice”) that there has occurred and is continuing under such Designated Senior Debt, or any agreement pursuant to which such Designated Senior Debt is issued, any default, which default shall not have been cured or waived, giving the holders of such Designated Senior Debt the right to declare such Designated Senior Debt immediately due and payable, then, anything in this Indenture to the contrary notwithstanding, no payment on account of the principal of or premium, if any, interest, on or any other amounts due on the Securities (including without limitation the making of a deposit pursuant to Section 3.05 or 3.10), and no redemption, repurchase, conversion for cash or other acquisition of the Securities, shall be made by or on behalf of the Company during the period (the “Payment Blockage Period”) commencing on the date of receipt of the Payment Blockage Notice and ending (unless earlier terminated by notice given to the Trustee by the holders or the Representative of the holders of such Designated Senior Debt) on the earlier of (i) the date on which such default shall have been cured or waived and (ii) 180 days from the receipt of the Payment Blockage Notice. Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in Section 11.01 and the first sentence of this Section 11.03), unless the holders of such Designated Senior Debt or the Representative of such holders shall have accelerated the maturity of such Designated Senior Debt, the Company may resume payments on the Securities after the end of such Payment Blockage Period. Not more than one Payment Blockage Notice may be given in any consecutive 365−day period, irrespective of the number of defaults with respect to Designated Senior Debt during such period.  No non-payment default with respect to Designated Senior Debt that existed or was continuing on the date of the commencement of any Payment Blockage Period will be, or can be, made the basis for the commencement of a second Payment Blockage Period, whether or not within a period of 365 consecutive days, unless such default has been cured or waived for a period of not less than 90 consecutive days.

Section 11.04

Acceleration of Convertible Subordinated Notes.

In the event of the acceleration of the Securities because of an Event of Default, the Company may not make any payment or distribution to the Trustee or any Holder of Securities in respect of obligations with respect to the Securities and may not acquire or purchase from the Trustee or any Holder of Securities any Securities until all Senior Debt has been paid in full 

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cash or other payment satisfactory to the holders of Senior Debt or such acceleration is rescinded in accordance with the terms of this Indenture.

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

Section 11.05

When Distribution Must Be Paid Over.

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

Section 11.06

Notice to Trustee.

The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities.  Failure to give such notice shall not affect the subordination of the Securities to Senior Debt.  Notwithstanding the provisions of this or any other provisions of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof at the address specified in Section 13.02 from the Company or a holder of Senior Debt or from any trustee or agent therefore; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 7.01 shall be entitled in all respects to assume that no such facts exist; provided, however, that if a Responsible Officer of the Trustee shall not have received, at least three Business Days prior to the date upon which by the terms hereof any such money may become payable for any purpose (including, without limitation, the payment of principal of or premium, if any, interest  on or any other amounts due on any Security), the notice with respect to such money provided for in this Section 11.06, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date.

Subject to the provisions of Section 7.01, the Trustee shall be entitled to conclusively rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Debt (or a trustee or agent on behalf of such holder) to establish that such notice has been given by a holder of Senior Debt (or a trustee or agent on behalf of any such holder).  In the event that the Trustee determines in good faith that further evidence is required with respect to the right of 

80

any person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article 11, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article 11, and if such evidence is not furnished, the Trustee may defer any payment which it may be required to make for the benefit of such person pursuant to the terms of this Indenture pending judicial determination as to the rights of such person to receive such payment.

Section 11.07

Subrogation.

After all Senior Debt is paid in full and until the Securities are paid in full, Holders of Securities shall be subrogated (equally and ratably with all other indebtedness pari passu with the Securities) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Securities have been applied to the payment of Senior Debt. A distribution made under this Article 11 to holders of Senior Debt that otherwise would have been made to Holders of Securities is not, as between the Company and Holders of Securities, a payment by the Company on the Securities.

Section 11.08

Relative Rights.

This Article 11 defines the relative rights of Holders of Securities and holders of Senior Debt.  Nothing in this Indenture shall:

(i)

impair, as between the Company and Holders of Securities, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium, if any, and interest, on, the Securities in accordance with their terms;

(ii)

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

(iii)

prevent the Trustee or any Holder of Securities from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to Holders of Securities.

If the Company fails because of this Article 11 to pay principal of, or interest, on, a Security on the due date, the failure is still a Default or Event of Default.

Section 11.09

Subordination May Not Be Impaired by Company.

No right of any holder of Senior Debt to enforce the subordination of the indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or any Holder of Securities or by the failure of the Company or any such holder to comply with this Indenture.

Section 11.10

Distribution or Notice to Representative.

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

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

Section 11.11

Rights of Trustee and Paying Agent.

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

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

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

The Trustee, the Conversion Agent or any Authenticating Agent in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee, Conversion Agent or any Authenticating Agent of any of its rights as such holder.

Section 11.12

Authorization to Effect Subordination.

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

Section 11.13

Article Applicable to Paying Agents.

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In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this Article 11 shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article 11 in addition to or in place of the Trustee; provided, however, that the second and third paragraphs of Section 11.11 shall not apply to the Company or any subsidiary of the Company if it or such subsidiary acts as Paying Agent.

Section 11.14

Senior Debt Entitled to Rely.

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

Section 11.15

Permitted Payments.

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

Section 11.16

Trustee Not Fiduciary for Holders of Senior Indebtedness.

The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such Holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article 11 or otherwise.  With respect to the holders Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article 11 and no implied covenants or obligations with respect to holders of Senior Debt shall be read into this Indenture against the Trustee.

ARTICLE 12

OMITTED

ARTICLE 13

MISCELLANEOUS

Section 13.01

[Omitted.]

Section 13.02

Notices.

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Any request, demand, authorization, notice, waiver, consent or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission to the following facsimile numbers:

if to the Company:

School Specialty, Inc.

W6316 Design Drive

Greenville, Wisconsin  54942

Attention: Chief Financial Officer

Facsimile: (920) 882-5863

With a copy to:

Godfrey & Kahn, S.C.

Attorneys at Law

780 North Water Street

Milwaukee, WI 53202

Attention: Dennis Connolly

Facsimile: (414) 273-5198

if to the Trustee:

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

2 North LaSalle Street

Suite 1020

Chicago, Illinois 60602

Attention: Corporate Trust Administration

Facsimile: (312) 827-8542

The Company or the Trustee by notice given to the other in the manner provided above may designate additional or different addresses for subsequent notices or communications.

Any notice or communication given to a Securityholder shall be delivered to the Securityholder, in accordance with the procedures of the Registrar or by first-class mail, postage prepaid, at the Securityholder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee; provided, however, that no notice to the Trustee shall be deemed to be duly given unless and until the Trustee actually receives same at the address given above.

If the Company mails a notice or communication to the Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar.

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In addition to the foregoing, the Trustee agrees to accept and act upon notice, instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods.  If the party elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling.  The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction received after the Trustee’s reliance upon and compliance with such initial instructions.  The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

Section 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, the Paying Agent, the Conversion Agent 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 any action under this Indenture, the Company shall furnish to the Trustee:

(i)

an Officer’s Certificate stating that, in the opinion of the signer, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(ii)

an Opinion of Counsel 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 Officer’s Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(i)

a statement that each person making such Officer’s Certificate or Opinion of Counsel has read such covenant or condition;

(ii)

a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officer’s Certificate or Opinion of Counsel are based;

(iii)

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

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(iv)

a statement that, in the opinion of such person, such covenant or condition has been complied with.

Section 13.06

Separability Clause.

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

Section 13.07

Rules by Trustee, Paying Agent, Conversion Agent and Registrar.

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

Section 13.08

Legal Holidays.

A “legal holiday” is any day other than a Business Day.  If any specified date (including a date for giving notice) is a legal holiday, the action shall be taken on the next succeeding day that is not a legal holiday, and, if the action to be taken on such date is a payment in respect of the Securities, no interest shall accrue with respect to such payment for the intervening period.

Section 13.09

Governing Law.

THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES THEREOF.

Section 13.10

No Recourse Against Others.

A director, officer, employee or shareholders, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture 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 its successor.  All agreements of the Trustee in this Indenture shall bind its successor.

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

Force Majeure.

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In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 13.14

Waiver of Jury Trial.

EACH OF THE COMPANY, THE CONVERSION AGENT AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

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IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written.

		
	 
	SCHOOL SPECIALTY, INC.

	 
	 

	 
	By:

	 
	Name:

	 
	Title:

	 
	 

	 
	 

	 
	 

	 
	THE BANK OF NEW YORK MELLON TRUST 

COMPANY, N.A.,

	 
	 

	 
	as Trustee

	 
	 

	 
	By:

	 
	Name:

	 
	Title:  

88

EXHIBIT A

[FORM OF FACE OF GLOBAL SECURITY]

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

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, 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 ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.  THE ISSUE PRICE OF THIS SECURITY IS $1000 PER $1000 OF ORIGINAL PRINCIPAL AMOUNT, AND THE ISSUE DATE OF THIS SECURITY IS MARCH 1, 2011.  

[THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR 

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THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.]  [RESTRICTED LEGEND TO BE INCLUDED SO LONG AS RESTRICTED GLOBAL SECURITY]

SCHOOL SPECIALTY, INC.

3.75% Convertible Subordinated Debentures Due 2026

CUSIP:  

ISSUE DATE: March 1, 2011   Original Principal Amount: $

No.

SCHOOL SPECIALTY, INC., a Wisconsin corporation, promises to pay to Cede & Co. or registered assigns, the Accreted Principal Amount on November 30, 2026.

Interest Rate: 3.75% per year of the Original Principal Amount.

Interest Payment Dates: May 30 and November 30 of each year, commencing May 30, 2011.

Interest Record Date: May 15 and November 15 of each year.

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

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

Dated: March 1, 2011

SCHOOL SPECIALTY, INC.

90

By:                                           

Name:

Title:

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

within-mentioned Indenture.

By:                                                           

             Authorized Officer

Dated:                                                      

             March 1, 2011

91

[FORM OF REVERSE OF GLOBAL SECURITY]

3.75% Convertible Subordinated Debentures Due 2026

This Security is one of a duly authorized issue of 3.75% Convertible Subordinated Debentures Due 2026 (the “Securities”) of School Specialty, Inc., a Wisconsin corporation (including any successor corporation under the Indenture hereinafter referred to, the “Company”), issued under an Indenture, dated as of March 1, 2011 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).  The terms of the Security include those stated in the Indenture and those set forth in this Security.  This Security is subject to all such terms, and Holders are referred to the Indenture for a statement of all such terms.  To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Security and the terms of the Indenture, the terms of the Indenture shall control.  Capitalized terms used but not defined herein have the meanings assigned to them in the Indenture unless otherwise indicated.

1.

Accretion and Interest.

Pursuant to Section 2.14 of the Indenture, principal shall accrete on the principal amount of this Security (including the Original Principal Amount) at a rate equal to 3.9755% per annum (compounded semi-annually).  The Accreted Principal Amount per $1,000 Original Principal Amount is set forth on Annex I attached hereto.

The Securities shall bear interest on the Original Principal Amount thereof at a rate of 3.75% per year (“Interest”).  The Company shall pay Interest as set forth in the Indenture.

Interest shall be payable in cash semi-annually in arrears on each Interest Payment Date in respect of the Original Principal Amount to Holders at the close of business on the preceding Interest Record Date.  Interest shall be computed on the basis of a 360-day year comprised of twelve 30 day months.

The Company shall pay Interest in respect of the Original Principal Amount to the Securityholder of record on the Interest Record Date even if the Company elects to redeem, or Securityholders elect to require the Company to repurchase, the Securities on a date that is after an Interest Record Date but on or prior to the corresponding Interest Payment Date.  In that instance, the Company shall pay accrued and unpaid Interest on the Securities in respect of the Original Principal Amount being redeemed to, but not including, the Redemption Date, the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, in cash to the Securityholder of record on the Interest Record Date.

If the Accreted Principal Amount of any Security, or any accrued and unpaid Interest, are not paid when due (whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the date set for payment of the Redemption Price pursuant to Section 5 hereof, upon the date set for payment of the Repurchase Price or Fundamental Change Repurchase Price pursuant to Section 6 hereof, upon the Stated Maturity of the Securities or upon the Interest Payment Dates), then in each such case the overdue amount shall, to the extent permitted by law, bear cash interest at the rate of 3.75% per annum, compounded semi-annually, which interest shall accrue from the date such overdue amount was originally due to the date payment of such amount, 

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including interest thereon, has been made or duly provided for.  All such interest shall be payable in cash on demand but if not so demanded shall be paid quarterly to the Holders on the last day of each quarter.

2.

Method of Payment.

Except as provided below, the Company shall pay Interest in respect of the Original Principal Amount on (i) Global Securities, to DTC in immediately available funds, (ii) any Certificated Security having an aggregate principal amount of $2,000,000 or less, by check mailed to the Holder of such Security and (iii) any Certificated Security having an aggregate principal amount of more than $2,000,000, by wire transfer in immediately available funds if requested by the Holder of any such Security as least five business days prior to the relevant Interest Payment Date.

At Stated Maturity, the Company shall pay Interest in respect of the Original Principal Amount on Certificated Securities at the Company’s office or agency maintained for that purpose, which initially shall be the office or agency of the Trustee located at 2 N. LaSalle Street, Suite 1020, Chicago, Illinois 60602.

Subject to the terms and conditions of the Indenture, the Company shall make payments in cash in respect of Redemption Prices, Repurchase Prices, Fundamental Change Repurchase Prices and at Stated Maturity to Holders who surrender Securities to a Paying Agent to collect such payments in respect of the Securities.  The Company shall pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.  However, the Company may make such cash payments by check payable in such money.

3.

Indenture.

The Securities are general unsecured obligations of the Company.  Additional Securities may be issued after the Closing Date pursuant to the terms of the Indenture.  The Indenture does not limit other indebtedness of the Company, secured or unsecured.

4.

Redemption at the Option of the Company.

No sinking fund is provided for the Securities.  The Securities are not redeemable by the Company prior to May 30, 2014.  The Securities are redeemable for cash at the option of the Company, in whole or in part, at any time or from time to time on or after May 30, 2014 upon not less than 30 nor more than 60 days’ notice by mail for a redemption price (the “Redemption Price”) equal to 100% of the Accreted Principal Amount of the Securities redeemed plus accrued and unpaid Interest on the Original Principal Amount of Securities redeemed up to, but not including, the Redemption Date.

5.

Purchase By the Company at the Option of the Holder.

Subject to the terms and conditions of the Indenture, the Company shall become obligated to repurchase for cash, at the option of the Holder, all of such Holder’s Securities not previously called for redemption by the Company, or any portion thereof that is equal to or an integral multiple of $1,000 Original Principal Amount on November 30, 2014, November 30, 2018, and November 30, 2022 at a Repurchase Price equal to 100% of the Accreted Principal 

93

Amount of those Securities, plus accrued and unpaid Interest on the Original Principal Amount of those Securities up to, but not including, the Repurchase Date.  To exercise such right, a Holder shall deliver to the Paying Agent a Repurchase Notice containing the information set forth in the Indenture, at any time from the opening of business on the date that is 20 Business Days prior to such Repurchase Date until the close of business on the Business Day immediately preceding the Repurchase Date, and shall deliver the Securities to the Paying Agent as set forth in the Indenture.

Subject to the terms and conditions of the Indenture, the Company shall become obligated to repurchase for cash, at the option of the Holder, all of such Holder’s Securities not previously called for redemption by the Company, or any portion thereof that is equal to or an integral multiple of $1,000 Original Principal Amount, after the occurrence of a Fundamental Change for a Fundamental Change Repurchase Price equal to 100% of the Accreted Principal Amount of those Securities plus accrued and unpaid Interest on the Original Principal Amount of those Securities up to, but not including, the Fundamental Change Repurchase Date.  To exercise such right, a Holder shall deliver to the Paying Agent a Fundamental Change Repurchase Notice containing the information set forth in the Indenture at any time on or prior to the close of business on the Business Day immediately prior to the Fundamental Change Repurchase Date and shall deliver the Securities to the Paying Agent as set forth in the Indenture.

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

If cash sufficient to pay the Repurchase Price or Fundamental Change Repurchase Price, as the case may be, of all Securities or portions thereof to be purchased as of the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, is deposited with the Paying Agent prior to or on the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, Interest shall cease to accrue on such Securities (or portions thereof) and the Accreted Principal Amount on such Securities shall cease to accrete in each case on and following such Repurchase Date or Fundamental Change Repurchase Date, and the Holder thereof shall have no other rights as such other than the right to receive the Repurchase Price or Fundamental Change Repurchase Price upon surrender of such Security.

6.

Notice of Redemption.

Notice of redemption pursuant to Section 4 of this Security shall be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at the Holder’s registered address.  If money sufficient to pay the Redemption Price of all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, Interest shall cease to accrue on such Securities or portions thereof and the Accreted Principal Amount on such Securities shall cease to accrete on and following such Redemption Date, and the Holder thereof shall have no other rights as such other than the right to receive the Redemption Price upon surrender of such Security.  Securities in denominations larger than $1,000 Original Principal Amount may be redeemed in part but only in integral multiples of $1,000 Original Principal Amount.

94

7.

Conversion.

Subject to the occurrence of certain events and in compliance with the provisions of the Indenture (including, without limitation, the conditions to conversion of this Security set forth in Section 10.01 thereof), a Holder is entitled, at such Holder’s option, to convert all or any portion of such Holder’s Original Principal Amount of a Security (if the portion to be converted is $1,000 Original Principal Amount or an integral multiple thereof), into cash or a combination of cash and fully paid and nonassessable shares of Common Stock at the Conversion Rate in effect at the time of conversion.

The Company shall notify Holders of any event triggering the right to convert the Original Principal Amount of Securities as specified in the Indenture.

A Security in respect of which a Holder has delivered a Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, exercising the option of such Holder to require the Company to purchase such Security, may be converted only if such Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, is withdrawn in accordance with the terms of the Indenture.

The initial Conversion Rate is 44.2087 shares of Common Stock per $1,000 principal amount, subject to adjustment in certain events described in the Indenture.  The Conversion Rate shall not be adjusted for any accrued and unpaid Interest.  Upon conversion, no payment shall be made by the Company with respect to accrued and unpaid Interest.  Instead, such amount shall be deemed paid by the cash and shares of Common Stock, if any, delivered upon conversion of any Security.  In addition, no payment or adjustment shall be made in respect of dividends on the Common Stock, except as set forth in the Indenture.

In addition, following certain corporate transactions as set forth in Section 10.01(b) of the Indenture that occur on or prior to November 30, 2014 and that also constitute a Change of Control, a Holder who elects to convert its Securities in connection with such corporate transaction shall be entitled to receive Additional Shares of Common Stock upon conversion.  Notwithstanding the previous sentence, in the case of a Public Acquirer Change of Control, the Company may, in lieu of increasing the Conversion Rate by Additional Shares, elect to adjust the Conversion Rate and Conversion Obligation such that from and after the effective date of such Public Acquirer Change of Control, Holders of the Securities shall be entitled to convert their Securities into a number of shares of Public Acquirer Common Stock, as determined pursuant to Section 10.01(d) of the Indenture.

To surrender a Security for conversion, a Holder must (1) in the case of Global Securities, comply with the procedures of the Depositary in effect at that time for converting a beneficial interest in a Global Security, and in the case of Certificated Securities, surrender such Securities, duly endorsed to the Company or in blank, at the office of the Conversion Agent, (2) in the case of a Certificated Security, complete and manually sign the Conversion Notice attached hereto (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (3) in the case of a Certificated Security, surrender the Security to the Conversion Agent, (4) if required, furnish appropriate endorsements and transfer 

95

documents, (5) if required by Section 10.02(f) of the Indenture, pay Interest and (6) pay any transfer or similar tax, if required.

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

If the Company engages in any reclassification of the Common Stock (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 is party to a consolidation, merger, binding share exchange or transfer of all or substantially all of its assets, and as a result of any such event the Holders of Common Stock would be entitled to receive Exchange Property for their Common Stock, upon conversion of the Securities after the effective date of such event, the Conversion Obligation and the Conversion Settlement Distribution shall be based on the applicable Conversion Rate and the Exchange Property, in each case in accordance with the Indenture.

Unless the Company shall have received the shareholder approval described in Section 10.13(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 10 of the Indenture) would exceed the Maximum Shares calculated pursuant to Section 10.13.

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 satisfy its obligation to deliver shares in excess of the Maximum Shares in accordance with Section 10.13 of the Indenture.

8.

Subordination.

To the extent provided in the Indenture, the Securities are subordinated to Senior Debt, as defined in the Indenture, of the Company.  The Company agrees, and each Holder of Securities by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.

9.

Paying Agent, Conversion Agent and Registrar.

Initially, the Trustee shall act as Paying Agent, Conversion Agent and Registrar.  The Company may appoint and change any Paying Agent, Conversion Agent or Registrar without notice, other than notice to the Trustee.  The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent or Registrar.

10.

Denominations; Transfer; Exchange.

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

11.

Persons Deemed Owners.

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

12.

Unclaimed Money or Securities.

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

13.

Amendment; Waiver.

Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate Accreted Principal Amount of the outstanding Securities and (ii) certain Events of Defaults may be waived with the written consent of the Holders of a majority in aggregate Accreted Principal Amount of the outstanding Securities.  Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities (i) to add guarantees with respect to the Securities or secure the Securities, (ii) to remove any guarantee added to the Securities pursuant to clause (i), unless such guarantee is required pursuant to Section 5.01(a) of the Indenture, (iii) to provide for the transfer and exchange of Certificated Securities, (iv) to add to the covenants or Events of Defaults of the Company for the benefit of the Holders of Securities, (v) to surrender any right or power conferred upon the Company in the Indenture, (vi) to provide for conversion rights of Holders of Securities if any reclassification or change of the Company’s Common Stock or any consolidation, merger or sale of all or substantially all of the Company’s assets occurs, (vii) to provide for the assumption by a successor Person (and the public acquirer, if applicable) of the Company’s obligations to the Holders of Securities in the case of a merger, consolidation, conveyance, transfer, sale, lease or other disposition as provided under the Indenture and any provisions described in Section 10.01(d), Section 10.05 and Section 10.13, (viii) to provide for uncertificated Securities in addition to or in place of Certificated Securities; provided, however, 

97

that uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that uncertificated Securities are described in Section 163(f)(2)(B) of the Code, (ix) to change the Conversion Rate in accordance with the Indenture; provided, however, that any increase in the Conversion Rate other than pursuant to Article 10 shall not adversely affect the interests of the Holders of Securities (after taking into account U.S. federal income tax and other consequences of such increase), (x) to effect the qualification of this Indenture under the TIA and to comply with the requirements of the SEC to effect such qualification, (xi) to cure any ambiguity or to correct or supplement any provision in the Indenture which may be inconsistent with any other provision in the Indenture or which is otherwise defective (xii) to add or modify any other provisions of the Indenture with respect to matters or questions arising under the Indenture which the Company and the Trustee may deem necessary or desirable and which, in the good faith opinion of the Board of Directors of the Company (as evidenced by a Board Resolution) and the Trustee, shall not individually or in the aggregate with all other such changes have or will have a material adverse effect on the interests of the Holders of Securities, (xiii) to establish the form of Certificated Securities if issued and (xiv) to evidence and provide for the acceptance of the appointment under the Indenture of a successor Trustee.

14.

Defaults and Remedies.

If any Event of Default with respect to Securities shall occur and be continuing, the Accreted Principal Amount of the Securities and any accrued and unpaid Interest on all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture.

15.

Trustee Dealings with the Company.

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.

16.

Calculations in Respect of Securities.

The Company or its agents shall be responsible for making all calculations called for under the Securities including, but not limited to, determination of the market prices for the Securities and of the Common Stock accrued on the Securities.  Any calculations made in good faith and without manifest error shall be final and binding on Holders of the Securities.  The Company or its agents shall be required to deliver to the Trustee a schedule of its calculations and the Trustee shall be entitled to conclusively rely upon the accuracy of such calculations without independent verification.

17.

U.S. Federal Income Tax Treatment.

For purposes of Sections 1272, 1273 and 1275 of the Code, this Security is being issued with Original Issue Discount and the issue date of this Security is March 1, 2011.  

18.

No Recourse Against Others.

98

A director, officer, employee or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture 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 signs the Trustee’s Certificate of Authentication on the other side of this Security.

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 entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

21.

Governing Law.

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS SECURITY, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES THEREOF.

22.

Copy of Indenture.

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

School Specialty, Inc.

W6316 Design Drive

Greenville, Wisconsin 54942

Attention: Assistant Secretary

Facsimile No.: 920-882-5863

99

				
	 
	 
	 
	 

	ASSIGNMENT FORM

	 
	CONVERSION NOTICE

	To assign this Security, fill in the form below:

	 
	To convert this Security, check the box  ̈

	I or we assign and transfer this Security to

	 
	To convert only part of this Security, state the Original Principal Amount to be converted (which must be $1,000 or an integral multiple of $1,000):

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

	 
	If you want the stock certificate made out in another person’s name fill in the form below:

	 
	 
	 

	 
	 
	(Insert the other person’s soc. sec. Tax ID no.)

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

	 
	 

	and irrevocably appoint

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

	 
	 

	 

	 

	 

	 

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

	

Date:  

	

Your Signature:

	

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

	

Signature Guaranteed

	 

100

				
	Participant in a Recognized Signature

	 

	Guarantee Medallion Program

	 

	By:

Authorized Signatory

	 

101

SCHEDULE OF INCREASES AND DECREASES

OF GLOBAL SECURITY

					
	 
	 
	 
	 
	 

	Initial Original Principal Amount of Global Security:  Million Dollars ($       ,000,000).

	 

	Date

	Amount of

Increase in

Original Principal Amount

of Global Security

	Amount of

Decrease in

Original Principal Amount

of Global Security

	Original Principal Amount

of Global Security

After Increase

or Decrease

	Notation by Registrar or Security Custodian

	 

	 

	 

	 

	 

	 

	 

	 

	 

102

Annex I

The following table sets forth the Accreted Principal Amount per $1,000 Original Principal Amount of Securities as of the specified dates during the period from the Closing Date through the Maturity Date.

		
	Date

	Accreted Principal Amount

	March 1, 2011

	$1,000.00

	May 30, 2011

	1,009.83

	November 30, 2011

	1,029.90

	May 30, 2012

	1,050.37

	November 30, 2012

	1,071.25

	May 30, 2013

	1,092.55

	November 30, 2013

	1,114.26

	May 30, 2014

	1,136.41

	November 30, 2014

	1,159.00

	May 30, 2015

	1,182.04

	November 30, 2015

	1,205.53

	May 30, 2016

	1,229.50

	November 30, 2016

	1,253.94

	May 30, 2017

	1,278.86

	November 30, 2017

	1,304.28

	May 30, 2018

	1,330.21

	November 30, 2018

	1,356.65

	May 30, 2019

	1,383.61

	November 30, 2019

	1,411.12

	May 30, 2020

	1,439.17

	November 30, 2020

	1,467.77

	May 30, 2021

	1,496.95

	November 30, 2021

	1,526.70

	May 30, 2022

	1,557.05

	November 30, 2022

	1,588.00

	May 30, 2023

	1,619.57

	November 30, 2023

	1,651.76

	May 30, 2024

	1,684.59

	November 30, 2024

	1,718.08

	May 30, 2025

	1,752.23

	November 30, 2025

	1,787.06

	May 30, 2026

	1,822.58

	November 30, 2026

	1,858.81

The Accreted Principal Amount for a Security between the dates listed above will include an amount reflecting the principal that has accreted as of such date since the immediately preceding date in the table at an accretion rate of 3.9755% per annum.

103

EXHIBIT B

[FORM OF FACE OF CERTIFICATED SECURITY]

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.  THE ISSUE PRICE OF THIS SECURITY IS $1000 PER $1000 OF ORIGINAL PRINCIPAL AMOUNT, AND THE ISSUE DATE OF THIS SECURITY IS MARCH 1, 2011.  

 [THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND ANY SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.]  [RESTRICTED LEGEND TO BE INCLUDED SO LONG AS RESTRICTED GLOBAL SECURITY]

104

SCHOOL SPECIALTY, INC.

3.75% Convertible Subordinated Debentures Due 2026

CUSIP: 

ISSUE DATE: March 1, 2011                 Original Principal Amount: $ 

No.

SCHOOL SPECIALTY, INC., a Wisconsin corporation, promises to pay to __________ or registered assigns, the Accreted Principal Amount on November 30, 2026.

Interest Rate: 3.75% per year of the Original Principal Amount.

Interest Payment Dates: May 30 and November 30 of each year, commencing May 30, 2011.

Interest Record Date: May 15 and November 15 of each year.

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

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

Dated: _______________

SCHOOL SPECIALTY, INC.

By: __________________________

Title: _________________________

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

within-mentioned Indenture.

By__________________________________

Authorized Signatory

Dated: ____________

[FORM OF REVERSE OF CERTIFICATED SECURITY IS IDENTICAL TO EXHIBIT A.]

105

EXHIBIT C

SCHOOL SPECIALTY, INC.

NOTICE OF REDEMPTION

[DATE]

To the Holders of the 3.75% Convertible Subordinated Debentures Due 2026 issued by School Specialty, Inc.:

School Specialty, Inc. (the “Issuer”) by this written notice hereby exercises, pursuant to Section 3.01 of that certain Indenture (the “Indenture”), dated as of March 1, 2011, between the Issuer and The Bank of New York Mellon Trust Company, N.A., its right to redeem $[_________] Accreted Principal Amount (in respect of $[_________] Original Principal Amount) of its 3.75% Convertible Subordinated Debentures Due 2026 (the “Securities”).  All capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture.

1.

Redemption Date: [_______ _, ____]

2.

Redemption Price per $1,000 Original Principal Amount: $[______]

3.

Conversion Rate: Each $1,000 Original Principal Amount of the Securities is convertible at your option into cash and common stock, if any, at a rate of [insert number of shares] shares of the Issuer’s common stock, $0.001 par value (the “Common Stock”), subject to adjustment, during the period described below.

4.

Paying Agent and Conversion Agent: [NAME] [ADDRESS]

5.

The Securities called for redemption may be converted at your option at any time from the date of this Notice of Redemption until 5:00 p.m. on the Business Day immediately prior to the Redemption Date set forth above.

6.

The Securities called for redemption and not converted at your election prior to 5:00 p.m. on the Business Day immediately prior to Redemption Date set forth above shall be redeemed on the Redemption Date.

7.

If you elect to convert your Securities, you must satisfy the requirements for conversion set forth in your Securities.

8.

Your Securities called for redemption must be surrendered by you (by effecting book entry transfer of the Securities or delivering Certificated Securities, together with necessary endorsements, as the case may be) to [Name of Paying Agent] at [insert address] in order for you to collect the Redemption Price.

9.

[The Securities bearing the following Certificate Number(s) in the principal amount set forth below opposite such Certificate Number(s) are being redeemed:

106

Certificate Number(s)                  Principal Amount]

10.

Unless the Issuer defaults in making the payment of the Redemption Price owed to you, Interest on your Securities called for redemption shall cease to accrue and the Accreted Principal Amount of such Securities shall cease to accrete on and after the Redemption Date.

11.

Cusip Number: [             ]

SCHOOL SPECIALTY, INC.

107

EXHIBIT D

SCHOOL SPECIALTY, INC.

NOTICE OF REPURCHASE

[DATE]

To the Beneficial Owners of the 3.75% Convertible Subordinated Debentures Due 2026 (the “Securities”) issued by School Specialty, Inc.:

School Specialty, Inc. (the “Issuer”) by this written notice hereby notifies you, pursuant to Section 3.07 of that certain Indenture (the “Indenture”), dated as of March [    ], 2011, between the Issuer and The Bank of New York Mellon Trust Company, N.A., that you may request the Issuer to repurchase your Securities by delivery of a Repurchase Notice.  Included herewith is the form of Repurchase Notice to be completed by you if you wish to have your Securities repurchased by the Issuer.  All capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture.

1.

Repurchase Date: [ ]

2.

Repurchase Price per $1,000 Original Principal Amount: $[______]

3.

Conversion Rate: To the extent described in Item 5 below, each $1,000 Original Principal Amount of the Securities is convertible into [insert number of shares] shares of the Issuer’s common stock, par value $0.001 per share (the “Common Stock”), subject to adjustment.

4.

Paying Agent and Conversion Agent: [NAME] [ADDRESS]

5.

The Securities as to which you have delivered a Repurchase Notice to the Paying Agent may be converted if they are otherwise convertible pursuant to Article 10 of the Indenture and the terms of the Securities only if you withdraw such Repurchase Notice pursuant to the terms of the Indenture.  You may be entitled to have your Securities converted into cash or a combination of cash and shares of Common Stock, if any:

(i)

during any fiscal quarter of the Issuer commencing after January 27, 2011 (and only during such quarter, if the last reported sale price (as defined in the Indenture) of the Common Stock for at least 20 trading days in the 30 trading-day period ending on the last trading day of the preceding fiscal quarter was more than 130% of the conversion price (as defined in the Indenture) on such trading day;

(ii)

during the five business days immediately after any five consecutive trading-day period in which the trading price (as defined in the Indenture) per $1,000 Original Principal Amount of the Securities for each day of that period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate (as defined in the Indenture) of the Securities on each such day;

(iii)

if the Issuer has called the Securities for redemption;

108

(iv)

on or after November 30, 2025; or

(v)

upon the occurrence of certain specified corporate transactions described in the Indenture.

6.

The Securities as to which you have delivered a Repurchase Notice must be surrendered by you (by effecting book entry transfer of the Securities or delivering Certificated Securities, together with necessary endorsements, as the case may be) to [Name of Paying Agent] at [insert address] in order for you to collect the Repurchase Price.

7.

The Repurchase Price for the Securities as to which you have delivered a Repurchase Notice and not withdrawn such Repurchase Notice shall be paid promptly following the later of the business day immediately following such Repurchase Date and the date you deliver such Securities to [Name of Paying Agent].

8.

In order to exercise your option to have the Issuer repurchase your Securities, you must deliver the Repurchase Notice, duly completed by you with the information required by such Repurchase Notice (as specified in Section 3.07 of the Indenture) and deliver such Repurchase Notice to the Paying Agent at any time from 9:00 a.m. on [insert day that is 20 Business Days prior to Repurchase Date] until 5:00 p.m. on the [insert Business Day immediately prior to the Repurchase Date].

9.

In order to withdraw any Repurchase Notice previously delivered by you to the Paying Agent, you must deliver to the Paying Agent, by 5:00 p.m. on [insert day that is the Repurchase Date], a written notice of withdrawal specifying (i) the certificate number, if any, of the Securities in respect of which such notice of withdrawal is being submitted, (ii) the principal amount of the Securities in respect of which such notice of withdrawal is being submitted, and (iii) if you are not withdrawing your Repurchase Notice for all of your Securities, the principal amount of the Securities which still remain subject to the original Repurchase Notice.

10.

Unless the Issuer defaults in making the payment of the Repurchase Price owed to you, Interest on your Securities as to which you have delivered a Repurchase Notice shall cease to accrue and Accreted Principal Amount on such Securities shall cease to accrete in each case on and after the Repurchase Date.

11.

Cusip Number: [         ]

SCHOOL SPECIALTY, INC.

109

EXHIBIT E

SCHOOL SPECIALTY, INC.

NOTICE OF OCCURRENCE

OF FUNDAMENTAL CHANGE

[DATE]

To the Holders of the 3.75% Convertible Subordinated Debentures Due 2026 (the “Securities”) issued by School Specialty, Inc.:

School Specialty, Inc. (the “Issuer”) by this written notice hereby notifies you, pursuant to Section 3.08 of that certain Indenture (the “Indenture”), dated as of March [    ], 2011, between the Issuer and The Bank of New York Mellon Trust Company, N.A., that a Fundamental Change (as such term and other capitalized terms used herein and not otherwise defined herein is defined in the Indenture) as described below has occurred.  Included herewith is the form of Fundamental Change Repurchase Notice to be completed by you if you wish to have your Securities repurchased by the Issuer.

1.

Fundamental Change: [Insert brief description of the Fundamental Change and the date of the occurrence thereof].

2.

Date by which Fundamental Change Repurchase Notice must be delivered by you to Paying Agent in order to have your Securities repurchased:

3.

Fundamental Change Repurchase Date:

4.

Fundamental Change Repurchase Price per $1,000 Original Principal Amount:            

5.

Paying Agent and Conversion Agent: [NAME] [ADDRESS]

6.

Conversion Rate: To the extent described in Item 7 below, each $1,000 Original Principal Amount of the Securities is convertible into [insert number of shares] shares of the Issuer’s common stock, par value $0.001 per share (the “Common Stock”), subject to adjustment.

7.

The Securities as to which you have delivered a Fundamental Change Repurchase Notice to the Paying Agent may be converted if they are otherwise convertible pursuant to Article 10 of the Indenture and the terms of the Securities only if you withdraw such Fundamental Change Repurchase Notice pursuant to the terms of the Indenture.  You may be entitled to have your Securities converted into cash or a combination of cash and shares of the Issuer’s common stock:

(i)

during any fiscal quarter of the Issuer commencing after the fiscal quarter ending January 27, 2011 (and only during such fiscal quarter), if the last reported sale price (as defined in the Indenture) of the Issuer’s common stock for at least 20 trading days in the 30 trading-day period ending on the last trading day of the preceding fiscal quarter was more than 130% of the conversion price (as defined in the Indenture) on such last trading day;

110

(ii)

during the five business days immediately after any five consecutive trading-day period in which the trading price (as defined in the Indenture) per $1,000 Original Principal Amount of the Securities for each day of that period was less than 98% of the product of the closing price of the Common Stock and the conversion rate (as defined in the Indenture) of the Securities on each such day;

(iii)

if the Issuer has called the Securities for redemption;

(iv)

on or after November 30, 2025; or

(v)

upon the occurrence of certain specified corporate transactions described in the Indenture.

8.

The Securities as to which you have delivered a Fundamental Change Repurchase Notice must be surrendered by you (by effecting book entry transfer of the Securities or delivering Certificated Securities, together with necessary endorsements, as the case may be) to [Name of Paying Agent] at [insert address] in order for you to collect the Fundamental Change Repurchase Price.

9.

The Fundamental Change Repurchase Price for the Securities as to which you have delivered a Fundamental Change Repurchase Notice and not withdrawn such Notice shall be paid promptly following the later of the Business Day immediately following such Fundamental Change Repurchase Date and the date you deliver such Securities to [Name of Paying Agent].

10.

In order to have the Issuer repurchase your Securities, you must deliver the Fundamental Change Repurchase Notice, duly completed by you with the information required by such Fundamental Change Repurchase Notice (as specified in Section 3.08 of the Indenture) and deliver such Fundamental Change Repurchase Notice to the Paying Agent at any time from 9:00 a.m. on the date of the occurrence of the Change of Control until 5:00 p.m. on the Business Day immediately preceding the Fundamental Change Repurchase Date.

11.

In order to withdraw any Fundamental Change Repurchase Notice previously delivered by you to the Paying Agent, you must deliver to the Paying Agent, by 5:00 p.m. on the Fundamental Change Repurchase Date, a written notice of withdrawal specifying (i) the certificate number, if any, of the Securities in respect of which such notice of withdrawal is being submitted, (ii) the principal amount of the Securities in respect of which such notice of withdrawal is being submitted, and (iii) if you are not withdrawing your Fundamental Change Repurchase Notice for all of your Securities, the principal amount of the Securities which still remain subject to the original Fundamental Change Repurchase Notice.

12.

Unless the Issuer defaults in making the payment of the Fundamental Change Repurchase Price owed to you, Interest on your Securities as to which you have delivered a Fundamental Change Repurchase Notice shall cease to accrue and Accreted Principal Amount on such Securities shall cease to accrete in each case on and after the Fundamental Change Repurchase Date.

13.

Cusip Number: [        ]

SCHOOL SPECIALTY, INC.

111

SCHEDULE I

The following table sets forth the Stock Prices and the number of Additional Shares per $1,000 Original Principal Amount of Securities.

																										
	Effective Date

	 
	$15.080 

	$16.000 

	$17.000 

	$18.000 

	$21.000 

	$24.000 

	$27.000 

	$30.000 

	$33.000 

	$36.000 

	$39.000 

	$42.000 

	March 1, 2011

	  . . . . .  

	22.1043 

	20.8101 

	18.2619 

	16.1024 

	11.0675 

	7.8372 

	5.6580 

	4.2013 

	3.2035 

	2.4663 

	1.9118 

	1.4794 

	November 30, 2011

	  . . . . .  

	24.0871 

	22.2894 

	19.3997 

	16.9156 

	11.0504 

	7.0886 

	4.5298 

	3.3636 

	2.5647 

	1.9745 

	1.5306 

	1.1844 

	November 30, 2012

	  . . . . .  

	26.8324 

	24.2692 

	20.9224 

	18.0038 

	11.0276 

	6.0867 

	3.0198 

	2.2424 

	1.7098 

	1.3164 

	1.0204 

	0.7896 

	November 30, 2013

	  . . . . .  

	29.6839 

	26.2490 

	22.4451 

	19.0920 

	11.0047 

	5.0849 

	1.5099 

	1.1212 

	0.8549 

	0.6582 

	0.5102 

	0.3948 

	November 30, 2014

	  . . . . .  

	32.6481 

	28.2288 

	23.9678 

	20.1802 

	10.9818 

	4.0830 

	0.0000 

	0.0000 

	0.0000 

	0.0000 

	0.0000 

	0.0000 

112

SCHEDULE II

The following table sets forth the Accreted Principal Amount per $1,000 Original Principal Amount of Securities as of the specified dates during the period from the Closing Date through the Maturity Date.

		
	Date

	Accreted Principal Amount

	March 1, 2011

	$1,000.00

	May 30, 2011

	1,009.83

	November 30, 2011

	1,029.90

	May 30, 2012

	1,050.37

	November 30, 2012

	1,071.25

	May 30, 2013

	1,092.55

	November 30, 2013

	1,114.26

	May 30, 2014

	1,136.41

	November 30, 2014

	1,159.00

	May 30, 2015

	1,182.04

	November 30, 2015

	1,205.53

	May 30, 2016

	1,229.50

	November 30, 2016

	1,253.94

	May 30, 2017

	1,278.86

	November 30, 2017

	1,304.28

	May 30, 2018

	1,330.21

	November 30, 2018

	1,356.65

	May 30, 2019

	1,383.61

	November 30, 2019

	1,411.12

	May 30, 2020

	1,439.17

	November 30, 2020

	1,467.77

	May 30, 2021

	1,496.95

	November 30, 2021

	1,526.70

	May 30, 2022

	1,557.05

	November 30, 2022

	1,588.00

	May 30, 2023

	1,619.57

	November 30, 2023

	1,651.76

	May 30, 2024

	1,684.59

	November 30, 2024

	1,718.08

	May 30, 2025

	1,752.23

	November 30, 2025

	1,787.06

	May 30, 2026

	1,822.58

	November 30, 2026

	1,858.81

The Accreted Principal Amount for a Security between the dates listed above will include an amount reflecting the principal that has accreted as of such date since the immediately preceding date in the table at an accretion rate of 3.9755% per annum.

113Exhibit 10.1

EXCHANGE AGREEMENT

___________________ (the “Undersigned”), for itself and on behalf of the beneficial owners listed on Exhibit A hereto (“Accounts”) for whom the Undersigned holds contractual and investment authority (each Account, as well as the Undersigned if it is exchanging Existing Debentures (as defined below) hereunder, a “Holder”), enters into this Exchange Agreement (the “Agreement”) with School Specialty, Inc., a Wisconsin corporation (the “Company”) on February  ___, 2011 whereby the Holder will exchange (the “Exchange”) the Company’s 3.75% Convertible Subordinated Debentures due 2026 (the “Existing Debentures”) for the Company’s new 3.75% Convertible Subordinated Debentures due 2026 (the “New Debentures”) that will be issued pursuant to the provisions of an Indenture to be dated as of March  ___, 2011 (the “Indenture”) between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”). 

On and subject to the terms hereof, the parties hereto agree as follows:

Article I:  Exchange of the Existing Debentures for New Debentures

At the Closing (as defined herein), the Undersigned hereby agrees to cause the Holders to exchange and deliver to the Company the following Existing Debentures, and in exchange therefor the Company hereby agrees to issue to the Holders the principal amount of New Debentures described below and to pay in cash the following accrued but unpaid interest on such Existing Debentures:

	
	Principal Amount of Existing Debentures to be Exchanged:$                                                                           

	(the “Exchanged Debentures”).

	 

	Principal Amount of New Debentures to be Issued in the Exchange: $                                                            

	(the “Holders’ New Debentures”)

	 

	Cash Payment of Accrued but Unpaid Interest on Exchanged Debentures: $                                                   

	(the “Cash Payment”).

The closing of the Exchange (the “Closing”) shall occur on a date (the “Closing Date”) no later than three business days after the date of this Agreement.  At the Closing, (a) each Holder shall deliver or cause to be delivered to the Company all right, title and interest in and to its Exchanged Debentures free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto (collectively, “Liens”), together with any documents of conveyance or transfer that the Company may deem necessary or desirable to transfer to and confirm in the Company all right, title and interest in and to the Exchanged Debentures free and clear of any Liens, and 

(b) the Company shall deliver to each Holder the principal amount of Holders’ New Debentures and Cash Payment specified

on Exhibit A hereto (or, if there are no Accounts, the

Company shall deliver to the Undersigned, as the sole Holder, the Holders’ New Debentures and Cash Payment specified above); provided, however, that the parties acknowledge that the delivery of the Holders’ New Debentures to the Holder may be delayed due to procedures and mechanics within the system of the Depository Trust Company and that such delay will not be a default under this Agreement so long as (i) the Company is using its best efforts to effect the issuance of one or more global debentures representing the New Debentures, (ii) such delay is no longer than three business days, and (iii) interest shall accrue on such New Debentures from the Closing Date.  Simultaneously with or after the Closing, the Company may issue New Debentures to one or more other holders of outstanding Existing Debentures or to other investors, subject to the terms of the Indenture

..

Article II:  Covenants, Representations and Warranties of the Holders

Each Holder (and, where specified below, the Undersigned) hereby covenants (solely as to itself), as follows, and makes the following representations and warranties (solely as to itself), each of which is and shall 

be true and correct on the date hereof and at the Closing, to the Company, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such covenants, representations and warranties shall survive the Closing.

Section 2.1

Power and Authorization.  The Holder is duly organized, validly existing and in good standing, and has the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Exchange contemplated hereby.  If the Undersigned is executing this Agreement on behalf of Accounts, (a) the Undersigned has all requisite discretionary and contractual authority to enter into this Agreement on behalf of, and bind, each Account, and (b) Exhibit A hereto is a true, correct and complete list of (i) the name of each Account, (ii) the principal amount of such Account’s Exchanged Debentures, (iii) the principal amount of Holders’ New Debentures to be issued to such Account in respect of its Exchanged Debentures, and (iv) the portion of the Cash Payment to be made to such Account in respect of the accrued interest on its Exchanged Debentures.

Section 2.2

Valid and Enforceable Agreement; No Violations.  This Agreement has been duly executed and delivered by the Undersigned and the Holder and constitutes a legal, valid and binding obligation of the Undersigned and the Holder, enforceable against the Undersigned and the Holder in accordance with its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general principles of equity, whether such enforceability is considered in a proceeding at law or in equity (the “Enforceability Exceptions”).  This Agreement and consummation of the Exchange will not violate, conflict with or result in a breach of or default under (i) the Undersigned’s or the Holder’s organizational documents, (ii) any agreement or instrument to which the Undersigned or the Holder is a party or by which the Undersigned or the Holder or any of their respective assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to the Undersigned or the Holder.

Section 2.3

Title to the Exchanged Debentures.  The Holder is the sole legal and beneficial owner of the Exchanged Debentures set forth opposite its name on Exhibit A hereto (or, if there are no Accounts, the Undersigned is the sole legal and beneficial owner of all of the Exchanged Debentures).  The Holder has good, valid and marketable title to its Exchanged Debentures, free and clear of any Liens (other than pledges or security interests that the Holder may have created in favor of a prime broker under and in accordance with its prime brokerage agreement with such broker).  The Holder has not, in whole or in part, except as described in the preceding sentence, (a) assigned, transferred, hypothecated, pledged, exchanged or otherwise disposed of any of its Exchanged Debentures or its rights in its Exchanged Debentures, or (b) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to its Exchanged Debentures.  Upon the Holder’s delivery of its Exchanged Debentures to the Company pursuant to the Exchange, such Exchanged Debentures shall be free and clear of all Liens created by the Holder.

Section 2.4

Accredited Investor.  The Holder is either a “qualified institutional buyer” within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended (the “Securities Act”), or an “accredited investor” within the meaning of Rule 501 of Regulation D (“Regulation D”) promulgated under the Securities Act.

Section 2.5

No Affiliate Status.  The Holder is not, and has not been during the consecutive three month period preceding the date hereof, a director, officer or “affiliate” within the meaning of Rule 144 promulgated under the Securities Act (an “Affiliate”) of the Company.  To its knowledge, the Holder did not acquire any of the Exchanged Debentures, directly or indirectly, from an Affiliate of the Company.  

Section 2.6

No Illegal Transactions.  Each of the Undersigned and the Holder has not, directly or indirectly, and no person acting on behalf of or pursuant to any understanding with it has, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving any of the Company’s securities) since the time that the Undersigned was first contacted by either the Company, Lazard Frères & Co. LLC or Lazard Capital Markets LLC or any other person regarding the Exchange, this Agreement or an investment in the New Debentures or the Company.  Each of the Undersigned 

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and the Holder covenants that neither it nor any person acting on its behalf or pursuant to any understanding with it will engage, directly or indirectly, in any transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed.  “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.  Solely for purposes of this Section 2.6, subject to the Undersigned’s and the Holder’s compliance with their respective obligations under the U.S. federal securities laws and the Undersigned’s and the Holder’s respective internal policies, (a) “Undersigned” and “Holder” shall not be deemed to include any employees, subsidiaries or affiliates of the Undersigned or the Holder that are effectively walled off by appropriate “Chinese Wall” information barriers approved by the Undersigned’s or the Holder's respective legal or compliance department (and thus have not been privy to any information concerning the Exchange)

, and (b) the foregoing representations of this Section 2.6 shall not apply to any transaction by

or on behalf of an Account that was effected without the advice or participation of, or such Account’s receipt of information regarding the Exchange provided by, the Undersigned.

Section 2.7

Adequate Information; No Reliance.  The Holder acknowledges and agrees that (a) the Holder has been furnished with all materials it considers relevant to making an investment decision to enter into the Exchange and has had the opportunity to review the Company’s filings and submissions with the Securities and Exchange Commission (the “SEC”), including, without limitation, all information filed or furnished pursuant to the Exchange Act, (b) the Holder has had a full opportunity to ask questions of the Company concerning the Company, its business, operations, financial performance, financial condition and prospects, and the terms and conditions of the Exchange, (c) the Holder has had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks involved in the Exchange and to make an informed investment decision with respect to such Exchange and (d) the Holder is not relying, and has not relied, upon any statement, advice (whether accounting, tax, financial, legal or other), representation or warranty made by the Company or any of its affiliates or representatives including, without limitation, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, except for (A) the publicly available filings and submissions made by the Company with the SEC under the Exchange Act, and (B) the representations and warranties made by the Company in this Agreement.

Section 2.8

No Public Market.  The Holder understands that no public market exists for the New Debentures, and that there is no assurance that a public market will ever develop for the New Debentures.

Article III:  Covenants, Representations and Warranties of the Company

The Company hereby covenants as follows, and makes the following representations and warranties, each of which is and shall be true and correct on the date hereof and at the Closing, to the Holders, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such covenants, representations and warranties shall survive the Closing.

Section 3.1

Power and Authorization.  The Company is duly incorporated, validly existing and in good standing under the laws of its state of incorporation, and has the power, authority and capacity to execute and deliver this Agreement and the Indenture, to perform its obligations hereunder and thereunder, and to consummate the Exchange contemplated hereby.  

Section 3.2

Valid and Enforceable Agreements; No Violations.  This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.  At the Closing, the Indenture, substantially in the form of Exhibit B hereto, will have been duly executed and delivered by the Company and will govern the terms of the New Debentures, and the Indenture will constitute a legal, valid and binding obligation of the Company, enforceable against the 

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Company in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.  This Agreement, the Indenture and consummation of the Exchange will not violate, conflict with or result in a breach of or default under (i) the charter, bylaws or other organizational documents of the Company, (ii) any agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to the Company.

Section 3.3

Validity of the Holders’ New Debentures.  The Holders’ New Debentures have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to the Holder pursuant to the Exchange against delivery of the Exchanged Debentures in accordance with the terms of this Agreement, the Holders’ New Debentures will be valid and binding obligations of the Company, enforceable in accordance with their terms, except that such enforcement may be subject to the Enforceability Exceptions, and the Holders’ New Debentures will not be subject to any preemptive, participation, rights of first refusal or other similar rights.  Assuming the accuracy of each Holder’s representations and warranties hereunder, the Holders’ New Debentures (a) will be issued in the Exchange exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act, (b) will, at the Closing, be free of any restrictions on resale by such Holder pursuant to Rule 144 promulgated under the Securities Act, and (c) will be issued in compliance with all applicable state and federal laws concerning the issuance of the Holders’ New Debentures.  

Section 3.4

Validity of Underlying Common Stock.  The Holders’ New Debentures will at the Closing be convertible into shares of Common Stock, par value $0.001 per share, of the Company (the “Conversion Shares”) in accordance with the terms of the Indenture.  The Conversion Shares have been duly authorized and reserved by the Company for issuance upon conversion of the Holders’ New Debentures and, when issued upon conversion of the Holders’ New Debentures in accordance with the terms of the Holders’ New Debentures and the Indenture, will be validly issued, fully paid and non-assessable, and the issuance of the Conversion Shares will not be subject to any preemptive, participation, rights of first refusal or other similar rights.  

Section 3.5

Listing Approval.  At the Closing, the Conversion Shares shall be listed on the NASDAQ Stock Market. 

Section 3.6

Disclosure.  On or before the first business day following the date of this Agreement, the Company shall issue a publicly available press release or file with the SEC a Current Report on Form 8-K disclosing all material terms of the Exchange and certain other matters concerning the Company (to the extent not previously publicly disclosed).  

Article IV:  Miscellaneous

Section 4.1

Entire Agreement.  This Agreement and the documents and agreements herein referenced embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous oral or written agreements, representations, warranties, contracts, correspondence, conversations, memoranda and understandings between or among the parties or any of their agents, representatives or affiliates relative to such subject matter, including, without limitation, any term sheets, emails or draft documents.  

Section 4.2

Construction.  References in the singular shall include the plural, and vice versa, unless the context otherwise requires.  References in the masculine shall include the feminine and neuter, and vice versa, unless the context otherwise requires.  Headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meanings of the provisions hereof.  Neither party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against either party.

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Section 4.3

Governing Law.  This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of New York, without reference to its choice of law rules.

Section 4.4

Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  Any counterpart or other signature hereon delivered by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement and deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.

[Signature Page Follows]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written.

		
	“UNDERSIGNED”:

	“COMPANY”:

	 
	 

	                                                                              

(in its capacities described in the first paragraph 

hereof)

	SCHOOL SPECIALTY, INC.

	 
	 

	By:                                                                            

	By:                                                                           

	Name:                                                                       

	Name:                                                                       

	Title:                                                                          

	Title:                                                                         

Signature Page to Exchange Agreement for School Specialty, Inc.

3.75% Convertible Subordinated Debentures due 2026 

EXHIBIT A

Exchanging Beneficial Owners

				
	Name of

Beneficial Owner

	Principal Amount of 

Exchanged Debentures

	Principal Amount of 

Holders’ New 

Debentures 

	Cash Interest Payment

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

EXHIBIT B

Form of Indenture

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