8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934

Date of Report (Date of earliest event reported):  June 12, 2008

Power-One, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	000-29454	77-0420182
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
740 Calle Plano Camarillo, California		93012
(Address of Principal Executive Offices)		(Zip Code)

(805) 987-8741

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into a Material Definitive Agreement.

Purchase Agreement

On June 12, 2008, Power-One, Inc. (the “Company”), entered into a purchase agreement (the “Purchase Agreement”) under which the Company agreed to sell $75 million aggregate principal amount of its 8% Senior Secured Convertible Notes due 2013 (the “Notes”) to Lehman Brothers Inc., as initial purchaser (the “Initial Purchaser”) for resale to certain qualified institutional buyers in compliance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).  The Company granted the Initial Purchaser a 30-day option to purchase up to an additional $5 million aggregate principal amount of the Notes.  On June 17, 2008, the Company issued $75 million of the Notes.

Indenture and the Notes

The Notes are governed by an indenture, dated as of June 17, 2008 (the “Indenture”) between the Company and The Bank of New York Trust Company, N.A., as trustee.  The Notes bear interest at a rate of 8% per annum, payable in cash in arrears on March 31, June 30, September 30 and December 31 of each year, beginning September 30, 2008.  The Notes will mature on June 17, 2013.  The Notes will rank equal in right of payment with all of the Company’s existing and future senior unsecured indebtedness that is not subordinated by its terms.

The Notes are convertible, at any time prior to the close of business on the business day immediately preceding the maturity date, into shares of common stock of the Company, $0.001 par value per share (the “Common Stock”), at an initial conversion rate of 304.8780 shares of Common Stock per $1,000 in principal amount of the Notes (which is equivalent to an initial conversion price of approximately $3.28 per share), subject to certain adjustments set forth therein, including a potential reset to the conversion rate on June 18, 2009 if the average Common Stock price is lower than the initial conversion price during the five trading days preceding the reset date, subject to a conversion price floor and limitations on conversion under the rules of The Nasdaq Global Market.  In certain circumstances if the conversion price is reset, the Indenture may require us to a make a cash payment upon conversion in lieu of issuing certain shares of Common Stock if that is permissible under the rules of The Nasdaq Global Market.  The Company has agreed to seek stockholder approval so that the rules of The Nasdaq Global Market will not restrict its ability to make in full the conversion rate adjustments otherwise contemplated by the terms of the Notes.

The Company will have the right to redeem for cash (i) some or all of the outstanding Notes, if on or after June 17, 2010, the closing price of the Common Stock as reported on The Nasdaq Global Market exceeds for twenty (20) or more trading days out of a thirty (30) consecutive trading day period, 175% of the then current conversion price of the Notes, or (ii) all the outstanding Notes if at any time less than 10% of the aggregate principal amount of the Notes initially issued remain outstanding.  The redemption price will be equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the redemption date, and the present value of all remaining interest on the Notes through and including the maturity date.

In addition, on or after June 17, 2011, holders may require the Company to repurchase all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest if the Company’s ratio of total net debt to last twelve months’ EBITDA exceeds 3.0x, measured as of the end of the preceding fiscal quarter.  Holders may also require the Company to repurchase all or a portion of the Notes upon a fundamental change (as described therein) at a repurchase price equal to 100% of the principal amount plus accrued and unpaid interest to, but not including, the repurchase date.

The Notes contain customary representations and warranties, events of default and affirmative and restrictive covenants.  Specifically, the Notes contain covenants that, in general, limit, the repayment of certain indebtedness, the payment of dividends on, or repurchase of Common Stock, the granting of liens and the incurrence of indebtedness.  Under the terms of the Indenture, the Company must also maintain certain financial ratios related to debt, cash and cash equivalents, and tangible net worth.  The Notes provide for events of default that would permit the trustee, or the holders of at least 25% in aggregate principal amount of the Notes then outstanding and the trustee to accelerate the maturity of the Notes upon, in general, failure to make payments thereon, failure to comply with conversion obligations, failure to timely comply with the covenants and agreements contained therein for a period of time after notice has been provided, certain events of insolvency or dissolution, the occurrence of certain legal judgments against the Company, or the suspension from trading of the Common Stock for a certain period of time.

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The Company estimates that the net proceeds from the offering, after deducting the Initial Purchaser’s discount and estimated offering expenses are approximately $70.5 million (or $75.3 million if the Initial Purchaser’s option is exercised in full).  Upon completion of the offering, the Company (i) used the net proceeds to retire approximately $50.2 million of previously incurred acquisition indebtedness (including interest) provided by PWER Bridge, LLC and (ii) intends to use the balance for working capital and general corporate purposes.

Security Agreement

In connection with the offering, on June 17, 2008, the Company and certain of its subsidiaries entered into a pledge and security agreement (the “Security Agreement”) with The Bank of New York Trust Company, N.A., as collateral agent, pursuant to which the Notes will be secured by a first-priority pledge of all of the Company’s equity interests in its first tier domestic subsidiaries and up to 66% of the Company’s equity interests in certain of its foreign subsidiaries, and, subject to certain exceptions, all of the inventory, accounts receivable and other property and assets (other than capital stock) of the Company and its first tier domestic subsidiaries.

This announcement is not an offer to sell or a solicitation of an offer to buy either the Notes or the Common Stock issuable upon conversion of the Notes, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.  Neither the Notes nor the shares of Common Stock issuable upon conversion of the Notes have been registered under the Securities Act or any state securities laws, and the foregoing may not be offered or sold in the United States absent registration or availability of an applicable exemption from registration under the Securities Act or any applicable state securities laws.

The foregoing description of the Indenture, the Notes, the Purchase Agreement and the Security Agreement (together, the “Transaction Documents”) does not purport to be complete and is qualified in its entirety by reference to the Indenture, Form of Note, Purchase Agreement and Security Agreement, which are incorporated by reference herein and which are filed herewith as Exhibits 4.1, 4.2, 10.1 and 10.2 respectively.  The Transaction Documents have been included to provide investors and security holders with information regarding the terms of the transaction. The Transaction Documents are not intended to provide any other factual information about the Company.  The Transaction Documents contain representations and warranties the parties thereto made to and solely for the benefit of each other.  Accordingly, investors and security holders should not rely on the representations and warranties as characterizations of the actual state of facts, since they were only made as of the date of the Transaction Documents and information concerning the subject matter of the representations and warranties may change after the date of the Transaction Documents, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

Item 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information in Item 1.01 above is incorporated by reference herein.

Item 3.02Unregistered Sales of Equity Securities.

On June 17, 2008, the Company issued $75 million aggregate principal amount of the Notes.  The Initial Purchaser of the Notes received an aggregate discount of $3 million (or will receive $3.2 million if the Initial Purchaser’s option is exercised in full).  The offer and sale of the Notes to the Initial Purchaser was not registered under the Securities Act in reliance upon the exemption from registration under Section 4(2) of the Securities Act as such transaction did not involve a public offering of securities.  The Initial Purchaser then sold the Notes to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act.  Additional information is provided in Item 1.01 above and is incorporated by reference herein.

Item 9.01Financial Statements and Exhibits.

(d)Exhibits

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Exhibit
Number	Description
Exhibit 4.1	Indenture dated as of June 17, 2008 among Power-One, Inc. and The Bank of New York Trust Company, N.A. as trustee.
Exhibit 4.2	Form of 8% Senior Secured Convertible Note due 2013.
Exhibit 10.1	Purchase Agreement dated as of June 12, 2008 among Power-One, Inc. and Lehman Brothers Inc., as initial purchaser.
Exhibit 10.2	Pledge and Security Agreement dated as of June 17, 2008 among Power-One, Inc. and its subsidiaries named therein and The Bank of New York Trust Company, N.A., as collateral agent.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		POWER-ONE, INC.
		(Registrant)
		By:	/s/JEFFREY J. KYLE
Date:	June 18, 2008		Jeffrey J. Kyle
		Vice President – Finance, Treasurer and Chief Financial Officer

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EX-4.1

Exhibit 4.1

EXECUTION VERSION

POWER-ONE, INC.
as Issuer

AND

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

Indenture

Dated as of June 17, 2008

8% SENIOR SECURED CONVERTIBLE NOTES DUE 2013

TABLE OF CONTENTS

		Page
I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION		1
1.01	Definitions	1
1.02	Rules of Construction	16
1.03	Compliance Certificates and Opinions	16
1.04	Form of Documents Delivered to Trustee	17
1.05	Acts of Holders; Record Dates	17
1.06	Notices, Etc., to Trustee and Company	18
1.07	Notice to Holders; Waiver	18
1.08	Effect of Headings and Table of Contents	19
1.09	Severability Clause	19
1.10	Benefits of Indenture	19
1.11	Governing Law	19
1.12	No Recourse Against Others	19
II. THE SECURITIES		19
2.01	Designation, Amount and Issuance of Securities	19
2.02	Form of the Securities	20
2.03	Date and Denomination of Securities and Interest	21
2.04	Payments on the Securities	21
2.05	Execution and Authentication	22
2.06	Security Registrar, Paying Agent and Conversion Agent	22
2.07	Paying Agent to Hold Money in Trust	23
2.08	Exchange and Registration of Transfer of Securities	24
2.09	Global Securities	25
2.10	Transfer Restrictions	26
2.11	Responsibilities and Obligations Relating to the Depositary	28
2.12	Replacement Securities	28
2.13	Outstanding Securities	29
2.14	Temporary Securities	30
2.15	Cancellation	30
2.16	CUSIP and ISIN Numbers	31
2.17	Additional Securities	31
2.18	Ranking	31
III. PARTICULAR COVENANTS OF THE COMPANY		32
3.01	Payment of Principal and Interest	32
3.02	Maintenance of Office or Agency	32
3.03	Resale of Certain Securities	32
3.04	Notice of Event of Default	32
3.05	Late Filing Additional Interest	33

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		Page
3.06	Corporate Existence	33
3.07	Ownership of Subsidiaries	33
3.08	Restricted Payments	34
3.09	Redemption and Dividends	34
3.10	Liens	34
3.11	Indebtedness	34
3.12	Financial Covenants	34
3.13	Preservation of Repurchase Rights	35
3.14	Share Cap Proposal	35
3.15	Further Assurances	35
3.16	Annual Compliance Certificate	35
IV. REPURCHASE AND REDEMPTION OF SECURITIES		36
4.01	Fundamental Change Repurchase Right Notice	36
4.02	Right to Require Repurchase Upon Fundamental Change	37
4.03	Settlement of Fundamental Change Repurchases	38
4.04	Restrictions On Repurchases	39
4.05	Ratio Event Repurchase Right Notice	39
4.06	Right to Require Repurchase Upon Ratio Event	40
4.07	Settlement of Ratio Event Repurchases	42
4.08	Redemption Rights	43
4.09	Redemption Price	45
4.10	Selection of Securities to Be Redeemed	45
4.11	Redemption Notice	45
4.12	Payment of Securities Called for Redemption	46
4.13	Restrictions on Redemption	47
4.14	Officers’ Certificate to Trustee	47
V. CONVERSION		47
5.01	Conversion Rights	47
5.02	Limitation on Beneficial Ownership	48
5.03	Make-Whole Fundamental Changes	48
5.04	Exercise of Conversion Privilege	49
5.05	Settlement of Conversion Obligation	50
5.06	Fractions of Shares	52
5.07	Adjustment of Conversion Rate	52
5.08	Notice of Adjustments of Conversion Rate	62
5.09	Company to Reserve Common Stock	62
5.10	Certain Covenants	63
5.11	Cancellation of Converted Securities	63
5.12	Effect of Reclassification, Consolidation, Merger or Sale	63
5.13	Responsibility of Trustee for Conversion Provisions	64
5.14	Stockholder Rights Plan	65
5.15	Company Determination Final	65

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		Page
5.16	Compliance with Listing Rules	65
VI. RIGHTS OF PARTICIPATION IN FUTURE EQUITY ISSUANCES		66
6.01	Offer Notices	66
6.02	Acceptance of Offers	66
6.03	Settlement of Participation in Equity Issuances	67
6.04	Participation Rights Not Applicable	68
VII. EVENTS OF DEFAULT; REMEDIES		69
7.01	Events of Default	69
7.02	Acceleration of Maturity; Rescission and Annulment	71
7.03	Default Additional Interest	71
7.04	Collection of Indebtedness and Enforcement by Trustee	72
7.05	Trustee May File Proofs of Claim	73
7.06	Application of Money Collected	73
7.07	Limitation on Suits	73
7.08	Unconditional Right of Holders to Receive Payment	74
7.09	Restoration of Rights and Remedies	74
7.10	Rights and Remedies Cumulative	75
7.11	Delay or Omission Not Waiver	75
7.12	Control by Holders	75
7.13	Waiver of Past Defaults	75
7.14	Undertaking for Costs	76
7.15	Waiver of Stay or Extension Laws	76
7.16	Violations of Certain Covenants	76
VIII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE		76
8.01	Company May Consolidate, Etc., Only on Certain Terms	76
8.02	Effectiveness of Consolidation, Merger or Transfer	77
IX. THE TRUSTEE		77
9.01	Duties and Responsibilities of Trustee	77
9.02	Notice of Defaults	79
9.03	Reliance on Documents, Opinions, Etc	79
9.04	No Responsibility for Recitals, Etc	81
9.05	Trustee, Security Registrar and Agents May Own Securities	81
9.06	Monies To Be Held in Trust	81
9.07	Compensation and Expenses of Trustee	81
9.08	Officers’ Certificate as Evidence	82
9.09	Conflicting Interests of Trustee	82
9.10	Eligibility of Trustee	82
9.11	Resignation or Removal of Trustee	83

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		Page
9.12	Acceptance by Successor Trustee	84
9.13	Succession by Merger, Etc	84
9.14	Preferential Collection of Claims	85
9.15	Trustee’s Application for Instructions From the Company	85
X. HOLDERS’ LISTS AND REPORTS		85
10.01	Company to Furnish Names and Addresses of Holders	85
10.02	Preservation of Information; Communications to Holders	86
10.03	Reports by Company; Rule 144A Information	86
XI. SATISFACTION AND DISCHARGE		87
11.01	Discharge of Indenture	87
11.02	Deposited Monies to Be Held in Trust by Trustee	88
11.03	Paying Agent to Repay Monies Held	88
11.04	Return of Unclaimed Monies	88
11.05	Reinstatement	88
XII. MODIFICATIONS AND AMENDMENTS		88
12.01	Consent Requirements for Modifications and Amendments	88
12.02	Amendments Without Consent of Holders	89
12.03	Amendments Requiring Consent of Holders	90
12.04	Execution of Supplemental Indentures	90
12.05	Effect of Supplemental Indentures	91
12.06	Reference in Securities to Supplemental Indentures	91
12.07	Notice to Holders of Supplemental Indentures	91
XIII. COLLATERAL AND SECURITY DOCUMENTS		91
13.01	Security Documents	91
13.02	Suits to Protect the Collateral	94
13.03	Release of Collateral	94
13.04	Sufficiency of Release	95
13.05	Actions by the Trustee	95
XIV. MISCELLANEOUS		96
14.01	Rules by Trustee, Paying Agent and Security Registrar	96
14.02	Successors	96
14.03	Multiple Originals	96
14.04	Calculations	96
14.05	Waiver of Jury Trial	96
14.06	Force Majeure	96

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Schedule A	-	Make-Whole Table
Exhibit A	-	Form of Security
Exhibit B	-	Form of Restrictive Legend for Common Stock Issued Upon Conversion or Redemption

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INDENTURE, dated as of June 17, 2008, between POWER-ONE, INC., a corporation duly organized and existing under the laws of the State of Delaware, as Issuer (the “Company”), having its principal office at 740 Calle Plano, Camarillo, California, and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association, as Trustee (the “Trustee”).

RECITALS OF THE COMPANY

WHEREAS, the Company has duly authorized the creation of an issue of 8% Senior Secured Convertible Notes due 2013 (each a “Security” and collectively, the “Securities”) of the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture; and

WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid and legally binding obligations of the Company, and to make this Indenture a valid and legally binding agreement of the Company, in accordance with the terms of the Securities and the Indenture, have been done;

NOW, THEREFORE, THIS INDENTURE WITNESSETH, for and in consideration of the premises and the purchases of the Securities by the Holders thereof, it is mutually agreed, for the benefit of the Company and the equal and proportionate benefit of all Holders of the Securities, as follows:

I.  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

1.01DEFINITIONS.

“Act,” when used with respect to any Holder, has the meaning specified in Section 1.05(a).

“Additional Interest” means Default Additional Interest and Late Filing Additional Interest.

“Additional Securities” has the meaning specified in Section 2.17.

“Additional Shares” has the meaning specified in Section 5.03(a).

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent Members” has the meaning specified in Section 2.09(f).

“Applicable Price” has the meaning specified in Section 5.07(n).

“Averaging Period” has the meaning specified in Section 5.07(f).

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

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

“Beneficial Owner” means a “beneficial owner” as determined in accordance with Rule 13d-3 under the Exchange Act.

“Board of Directors” means, with respect to any Person, either the board of directors of such Person or any duly authorized committee of that board.

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

“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock and limited liability company interests and, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership.

“Cap Price” has the meaning set forth in Section 5.07(m).

“Cash Equivalents” means:

(i)United States dollars;

(ii)securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition;

(iii)certificates of deposit and eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any domestic commercial bank having combined capital and surplus in excess of $500 million and a Thomson BankWatch Rating at the time of acquisition of “B” or better;

(iv)repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above;

(v)commercial paper having one of the two highest ratings obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and in each case maturing within six months after the date of acquisition; and

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(vi)money market or mutual funds at least 90% of the assets of which constitute cash equivalents of the kinds described in clauses (i) through (v) of this definition.

“Collateral” means the assets of the Company and its domestic, first tier, Wholly Owned Subsidiaries and any other property or assets that fall within the definition of “Pledged Collateral” under the Pledge Agreement that from time to time secure the Securities, and the payment and performance of all other obligations of the Company to the Holders or the Trustee hereunder.

“Collateral Agent” means The Bank of New York Trust Company, N.A. or such successors appointed under the Security Documents.

“Commission” means the United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act.

“Common Stock” means the shares of common stock, par value $0.001 per share, of the Company as they exist on the date of this Indenture or any other Reference Property into which the Common Stock shall be reclassified, changed, converted into or exchanged for in accordance with to Section 5.12.

“Company” means the Person named as the “Company” in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

“Company Notice” has the meaning specified in Section 13.03.

“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that person with respect to any Indebtedness, lease or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; provided, that indemnification provisions not otherwise constituting a guarantee shall not be deemed to be a “contingent obligation.”

“Continuing Directors” means (i) individuals who on the Issue Date were members of the Board of Directors of the Company and (ii) any new directors whose election or appointment to the Board of Directors of the Company or nomination for election by the Company’s stockholders was approved by at least a majority of the Company’s directors then still in office (or a duly constituted committee thereof), either who were directors on the Issue Date or whose election, appointment or nomination for election was previously so approved.

“Conversion Agent” has the meaning specified in Section 2.06(a) and shall include any additional conversion agents appointed pursuant to Section 2.06(a).

“Conversion Date” has the meaning specified in Section 5.04(b).

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“Conversion Notice” has the meaning specified in Section 5.04(a).

“Conversion Obligation” has the meaning specified in Section 5.05(a).

“Conversion Price” means, at any time, $1,000 divided by the Conversion Rate as at that time.

“Conversion Rate” means the Initial Conversion Rate, as it may be adjusted pursuant to Section 5.03 or Section 5.07.

“Corporate Trust Office” means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, as of the date of this Indenture, located at The Bank of New York Trust Company, N.A., 700 South Flower Street, Suite 500, Los Angeles, California, 90017, Attention:  Corporate Unit, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).

“Custodian” means the Trustee, as custodian with respect to the Global Securities, or any successor entity.

“Default” means any event that is or, with the passage of time or the giving of notice or both, would become an Event of Default.

“Default Additional Interest” has the meaning specified in Section 7.03(a).

“Delegending Date” has the meaning specified in Section 2.10(d).

“Depositary” means The Depository Trust Company until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Depositary” shall mean such successor Depositary.

“Dilutive Issuance” has the meaning specified in Section 5.07(n).

“Distributed Property” has the meaning specified in Section 5.07(d).

“Effective Date” has the meaning specified in Section 5.03(c).

“Event of Default” has the meaning specified in Section 7.01.

“Ex-Date” means, with respect to any issuance or distribution to holders of the Common Stock, the first date on which the shares of the Common Stock trade on the Relevant Exchange, regular way, without the right to receive such issuance or distribution.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Securities” means any Common Stock issued or issuable: (i) in connection with any employee benefit plan or agreement which has been, as of the date of determination,

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approved by the Company’s Board of Directors, pursuant to which the Company’s securities may be issued in the ordinary course of business to any consultant, employee, officer or director for services provided to the Company or any of its subsidiaries; (ii) upon conversion of the Securities; (iii) pursuant to any bona fide firm commitment underwritten public offering with a nationally recognized underwriter, which generates gross proceeds to the Company in excess of $50,000,000 (other than an “at-the-market offering” as defined in Rule 415(a)(4) under the 1933 Act and “equity lines”); (iv) upon exercise or conversion of any options (including the warrants held by PWER Bridge LLC) or convertible securities which are outstanding on June 11, 2008, provided that the terms of such options or convertible securities are not materially amended, modified or changed on or after June 12, 2008 in a manner adverse to the holders; (v) pursuant to rights under the Rights Agreement, dated as of July 27, 2000, between the Company and the rights agent named therein or any similar successor agreement (the “Rights Plan”) and (vi) directly on an arm’s-length basis to an unrelated third party in connection with bona fide, strategic transactions, joint ventures, collaborations, licenses of products or technology, or similar transactions approved by the Company’s Board of Directors; provided that the primary purpose of such issuance is not to raise equity capital.

“Fundamental Change” means the occurrence of any one of the following events at any time after the Issue Date:

(a)any Person other than the Company, its Subsidiaries or its or their employee benefit plans, files a Schedule TO or any similar schedule, form or report under the Exchange Act disclosing that such Person has become the direct or indirect ultimate Beneficial Owner of the Company’s Capital Stock representing more than 50% of the total voting power of all shares of the Capital Stock of the Company entitled to vote generally in elections of directors;

(b)the Company (1) merges or consolidates with or into any other Person, another Person merges with or into the Company, or the Company conveys, sells, transfers or leases all or substantially all of its assets to another Person (excluding a pledge of securities issued by the Company or any of its Subsidiaries) or (2) engages in any recapitalization, reclassification or other acquisition transaction or series of transactions in which all or substantially all the Common Stock is exchanged for or converted into cash, securities or other property, in each case, other than any merger or consolidation:

(i)pursuant to which the holders of the Common Stock immediately prior to the transaction have the entitlement to exercise, directly or indirectly, 50% or more of the voting power of all shares of Capital Stock entitled to vote generally in the election of directors of either (A) the continuing or surviving corporation immediately after the transaction or (B) the corporation that directly or indirectly owns 100% of the Capital Stock of such continuing or surviving corporation;

(ii)that does not result in a reclassification, conversion, exchange or cancellation of the outstanding Common Stock; or

(iii)that is effected solely to change the Company’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding shares of the Common Stock solely into shares of common stock of the surviving entity;

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(c)at any time the Continuing Directors do not constitute a majority of Board of Directors of the Company (or, if applicable, of a successor person to the Company); or

(d)if shares of the Common Stock, or shares of any other Capital Stock into which the Securities are convertible pursuant to the terms of this Indenture, are not listed for trading on any United States national or regional securities exchange.

Notwithstanding the foregoing, any transaction or event described above shall not constitute a Fundamental Change if, in connection with such transaction or event, or as a result therefrom, a transaction described in clause (b) above occurs (without regard to any exclusion to such clause described in the paragraphs (i), (ii) or (iii) thereunder) and at least 90% of the consideration paid for the Common Stock (excluding cash payments for fractional shares, cash payments made pursuant to dissenters’ appraisal rights and cash dividends) consists of shares of common stock (or depositary receipts in respect thereof) traded on any Relevant Exchange (or will be so traded or quoted immediately following the completion of the merger or consolidation or such other transaction) and, as a result of such transaction, the Securities become convertible into such Common Stock (or depositary receipts in respect thereof) pursuant to Section 5.12.

For the purposes of this definition, the term “Person” has the meaning specified in Section 1.01 and also includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

“Fundamental Change Expiration Time” has the meaning specified in Section 4.02(b).

“Fundamental Change Repurchase Date” has the meaning specified in Section 4.02(a).

“Fundamental Change Repurchase Notice” has the meaning specified in Section 4.02(b).

“Fundamental Change Repurchase Price” has the meaning specified in Section 4.02(a).

“Fundamental Change Repurchase Right Notice” has the meaning specified in Section 4.01(a).

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Public Company Accounting Oversight Board and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, in each case, as in effect in the United States from time to time.

“Global Security” means a Security in global form registered in the Security Register in the name of a Depositary or a nominee thereof.

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

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“Indebtedness” of a Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) capital leases in accordance with GAAP (other than trade payables entered into in the ordinary course of business and any liabilities relating to the application of FASB 133 or any other related accounting literature under GAAP or in connection with embedded or standalone derivatives related to indebtedness), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement that would be classified as a capital lease in accordance with GAAP, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, Lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above; and provided, however, that neither the accrual of interest nor the accretion of original issue discount (in each case, whether as the issuance of pay-in-kind securities or otherwise) nor imputed interest, cost or premiums shall be deemed to be Indebtedness for purposes of this definition.

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

“Indenture Documents” means, collectively, this instrument, the Pledge Agreement and the Security Documents, in each case, as amended from time to time in accordance with the terms thereof.

“Initial Conversion Rate” means 304.8780 shares of Common Stock per $1,000 principal amount of Securities.

“Initial Purchaser” means the initial purchaser of the securities under the Purchase Agreement.

“interest” means, when used with reference to the Securities, any interest payable under the terms of the Securities, including any Additional Interest payable under the terms of the Securities.

“Interest Payment Date” means each March 31, June 30, September 30 and December 31 of each year, commencing September 30, 2008.

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“Issue Date” means June 17, 2008, being the date the Securities are originally issued.

“Last Reported Sale Price” means, with respect to the Common Stock or any other security for which a Last Reported Sale Price must be determined, on any date, the closing sale price per share of Common Stock or unit of such other security (or, if no closing sale price is reported, the average of the last bid and last ask prices or, if more than one in either case, the average of the average last bid and the average last ask prices) on such date as reported in composite transactions for the Relevant Exchange, if any.  If the Common Stock or such other security is not listed for trading on a United States national or regional securities exchange on such date, the “Last Reported Sale Price” shall be the average of the last quoted bid and ask prices per share of Common Stock or unit of such other security in the over-the-counter market on such date, as reported by Pink Sheets LLC or similar organization.  If the Common Stock or such other security is not so quoted, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices for the Common Stock or such other security on such date from each of at least three nationally recognized independent investment banking firms, selected from time to time by the Company for that purpose.  The Last Reported Sale Price shall be determined without reference to extended or after hours trading.  Any such determination shall be conclusive absent manifest error.

“Late Filing Additional Interest” has the meaning specified in Section 3.05(a).

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

“LTM EBITDA” shall mean, with respect to the Company and its Subsidiaries on a consolidated basis for the most recent twelve-month period for which financial statements are, or are made, publicly available, the consolidated net income of the Company and its Subsidiaries for such period (treated as a single period), plus for such period, to the extent such amount was deducted in calculating such consolidated net income,

(a)the sum of (in each case without duplication):

(i)provision for taxes based on income, profits or capital of the Company and its Subsidiaries for such period, including, without limitation, state, franchise and similar taxes, and taxes paid by the Company and its Subsidiaries during such period,

(ii)interest expense of the Company and its Subsidiaries for such period plus the amount of dividends and accretion on preferred capital stock, and accretion of discounts on the Company’s debt, for such period,

(iii)depreciation and amortization expenses of the Company and its Subsidiaries for such period,

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(iv)business optimization expenses and restructuring charges and reserves, in each case based on the good faith determination of the audit committee of the Company’s Board of Directors (which, for the avoidance of doubt, shall include retention, severance, systems establishment cost, excess pension charges, contract termination costs (including future lease commitments) and costs to consolidate facilities and relocate employees),

(v)any other non-cash charges or other non-cash items (including, without limitation, non-cash charges or other non-cash items relating to the application of FASB 133 or any other related accounting literature under GAAP or in connection with embedded or standalone derivatives related to indebtedness, or the write-off of goodwill or other intangibles in accordance with SFAS 142 or SFAS 144, or any non-cash compensation charges in accordance with SFAS 123(R)); provided that, for purposes of this subclause (v), any non-cash charges, other non-cash items or losses shall be treated as cash charges, other non-cash items or losses in any subsequent period during which cash disbursements attributable thereto are made, and

(vi)Transaction Costs,

minus for such period

(b)the sum of (in each case without duplication), non-cash gains from:

(i)the disposition of assets,

(ii)the change of estimates, and

(iii)change of actuarial assumptions.

“Make-Whole Fundamental Change” means any transaction or event that constitutes a Fundamental Change pursuant to clauses (a) or (b) of the definition thereof other than, for the avoidance of doubt, any such transaction or event that is not a Fundamental Change as a result of the paragraph following clause (d) thereof.

“Market Disruption Event” means the occurrence or existence on any Scheduled Trading Day for the Common Stock of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the Relevant Exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock on the Relevant Exchange, and such suspension or limitation occurs or exists at any time within the 30 minutes prior to the closing time of the Relevant Exchange on such day.

“Maturity” means, in respect of any Security, the date on which the principal, Fundamental Change Repurchase Price or Redemption Price of such Security becomes due and payable pursuant to this Indenture, whether at the Stated Maturity Date, Fundamental Change Repurchase Date or Redemption Date, by declaration of acceleration or otherwise.

“New Issuance Price” has the meaning specified in Section 5.07(n).

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“Officer” means each of the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer and the Secretary, of the Company.

“Officers’ Certificate” means a certificate signed by two Officers, or by one Officer and any Senior Vice President of the Company, and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel for the Company, who may be external or in-house counsel.

“Outstanding” means, in respect of a Security, that such Security is outstanding pursuant to the terms of Section 2.13.

“PAI” means PAI Capital LLC, a limited liability company established under the laws of the State of Delaware.

“Paying Agent” has the meaning specified in Section 2.06(a) and shall include any additional paying agents appointed pursuant to Section 2.06(a).

“Permitted Indebtedness” means (i) the Indebtedness evidenced by the Securities, (ii) unsecured Indebtedness incurred by the Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by the Securities, provided that such Indebtedness does not provide for (A) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the maturity date of the Securities or later and (B) total interest and fees at a rate in excess of eight percent (8%) per annum, (iii) Indebtedness of the Company and its Subsidiaries outstanding as of the date of this Indenture (which, for the avoidance of doubt, shall include the maximum principal amount that may be borrowed under any outstanding revolving credit facility), (iv) Indebtedness secured by Permitted Liens, (v)  unsecured obligations or Indebtedness to trade creditors of the Company or any of its Subsidiaries incurred in the ordinary course of business, (vi) extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that (W) the principal amount is not increased, (X) the stated maturity date is not made earlier, (Y) if the Indebtedness being extended, refinanced or renewed is subordinate in right of payment to the Indebtedness evidenced by the Securities, such extended, refinanced or renewed Indebtedness is subordinated in right of payment to the Securities on terms at least as favorable in the aggregate to the Holders of the Securities as those contained in the documentation governing the Indebtedness being extended, refinanced or renewed and (Z) such Indebtedness is incurred either by (1) the Subsidiary who is the obligor on the Indebtedness being extended, refinanced or renewed or (2) the Company, (vii) Indebtedness in the form of a bond or other obligation in favor of a foreign tax authority to secure actual or potential tax obligations to it and (viii) any Indebtedness not otherwise set forth in clauses (i) through (vii) above, provided that the aggregate amount of such Indebtedness shall not exceed $10 million.

“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, arising in the ordinary course of business with respect to a

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liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) easements, rights-of-way, municipal and zoning and building ordinances and similar charges, encumbrances, title defects or other irregularities, governmental restrictions on the use of property or conduct of business, and Liens in favor of governmental authorities and public utilities, that do not materially interfere with the ordinary course of business of the Company and its Subsidiaries, taken as a whole, (v) Liens securing obligations under indebtedness included in clauses (i) and (iii) of the definition of Permitted Indebtedness, (vi) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment, (vii) Liens on property of, or on shares of stock or Indebtedness of, any corporation existing at the time such corporation becomes, or becomes a part of, any Subsidiary; provided that such Liens do not extend to or cover any property or assets of the Company or any Subsidiary other than the property or assets acquired and the proceeds and products thereof and were not incurred in anticipation of such Person becoming a Subsidiary; (viii) Liens incurred in connection with the extension, renewal or refinancing of any Indebtedness secured by Liens of the type described in clauses (v) and (vi) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien, (ix) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Subsidiaries, (x) any option or other agreement to purchase any asset of the Company or any Subsidiary the purchase, sale or other disposition of which is not prohibited by any provision of the Securities, (xi) leases or subleases and licenses and sublicenses granted to others in the ordinary course of the Company’s business, not interfering in any material respect with the business of the Company and its Subsidiaries taken as a whole, (xii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods and (xiii) Liens arising from judgments, decrees or attachments other than orders or decrees constituting a bankruptcy-related event of default.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Physical Securities” means permanent certificated Securities in registered form issued in denominations of $1,000 principal amount and integral multiples thereof.

“Pledge Agreement” means that certain Pledge and Security Agreement, dated as of even date herewith, by the Company and certain of its Subsidiaries in favor of the Trustee, as such agreement may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.

“Pledged Equity Co-Collateral Agents” has the meaning specified in Section 13.01(b).

“Pledged Subsidiaries” means each first tier Subsidiary of the Company, Capital Stock in which constitutes “Pledged Collateral” under and as defined in the Pledge Agreement.

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“PowerOne UK” means Power-One Limited, a UK company incorporated in England and Wales with registration number 3103043.

“Protected Purchaser” has the meaning specified in Section 2.12(a).

“Purchase Agreement” means the Purchase Agreement between the Company and Lehman Brothers Inc., dated June 12, 2008, relating to the Securities,

“Ratio Event” has the meaning specified in Section 4.05(a).

“Ratio Event Expiration Time” has the meaning specified in Section 4.06(b).

“Ratio Event Repurchase Date” has the meaning specified in Section 4.06(a).

“Ratio Event Repurchase Notice” has the meaning specified in Section 4.06(b).

“Ratio Event Repurchase Period” has the meaning specified in Section 4.06(a).

“Ratio Event Repurchase Price” has the meaning specified in Section 4.06(a).

“Ratio Event Repurchase Right Notice” has the meaning specified in Section 4.05(a).

“Record Date” means, with respect to any Interest Payment Date, the March 15, June 15, September 15 or December 15 immediately preceding such Interest Payment Date (whether or not a Business Day).

“Redemption Date” means, with respect to any Security to be redeemed, the date fixed for redemption of such Security by the Company.

“Redemption Notice” has the meaning specified in Section 4.11(a).

“Redemption Price” has the meaning specified in Section 4.09(a).

“Reference Property” has the meaning specified in Section 5.12(a).

“Released Collateral” has the meaning specified in Section 13.03.

“Relevant Exchange” means, at any time, the principal United States national or regional securities exchange or market on which the Common Stock is listed or admitted for trading at such time.

“Reorganization Event” has the meaning specified in Section 5.12(a).

“Resale Restriction Termination Date” has the meaning specified in Section 2.10(a).

“Responsible Officer” means any officer of the Trustee within the corporate trust department of the Trustee including any vice president, assistant vice president, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively,

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with direct responsibility for the administration of this Indenture and also, with respect to a particular matter, any other officer of the Trustee to whom such matter is referred because of such officer’s knowledge and familiarity with the particular subject.

“Restricted Security” has the meaning specified in Section 2.10(b).

“Restricted Security Legend” has the meaning specified in Section 2.10(a).

“Rule 144” means Rule 144 under the Securities Act (including any successor rule thereto), as the same may be amended from time to time.

“Rule 144A” means Rule 144A under the Securities Act (including any successor rule thereto), as the same may be amended from time to time.

“Scheduled Trading Day” means a day during which trading in the Common Stock is scheduled to occur on the Relevant Exchange.  If the Common Stock is not then listed or admitted for trading on a United States national or regional securities exchange or market, “Scheduled Trading Day” shall mean a Business Day.

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

“Security” has the meaning specified in the first paragraph of the Recitals of the Company.

“Security Documents” means, collectively, the Pledge Agreement and all other security agreements, mortgages, deeds of trust, pledges, collateral assignments and other agreements or instruments evidencing or creating any security in favor of the Trustee and any Holders in any or all of the Collateral, (including, without limitation, (a) the pledge agreement dated on or about the Closing Date and entered into between the Company, as chargor and The Bank of New York Trust Company (Cayman) Limited, as chargee in its own name and behalf and in the name of and on behalf of the other secured creditors referred to therein (the “Cayman Pledge Agreement”), relating to the shares representing 66% of the corporate capital, as issued from time to time and paid up, of Power-One Limited, a company incorporated in the Cayman Islands, (b) the pledge agreement dated on or about the Closing Date and entered into between PAI, as pledgor and The Bank of New York, as pledgee in its own name and behalf and in the name of and on behalf of the other secured creditors referred to therein (the “Chinese Pledge Agreement”), relating to the shares representing 66% of the corporate capital, as issued from time to time and paid up, of Shenzhen, a wholly foreign owned limited liability company established under the laws of the People’s Republic of China, (c) the pledge agreement dated on or about the Closing Date and entered into between the Company, as pledgor and The Bank of New York (Luxembourg) S.A., as collateral agent in its own name and behalf and in the name of and on behalf of the other secured creditors referred to therein (the “Italian Pledge Agreement”), relating to the shares representing 66% of the corporate capital, as issued from time to time and paid up, of Power-One Italy Holdings, S.p.A., an Italian corporation with, as of the Closing Date, corporate capital of Eur. 120,000.00, and with its principal place of business at via Birmania 81, Rome, Italy, fiscal code 09159521005 and (d) the pledge agreement dated on or about the Closing Date and entered into between the Company, as pledgor and BNY Corporate

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Trust Services Limited, as collateral agent in its own name and behalf and in the name of and on behalf of the other secured creditors referred to therein (the “UK Pledge Agreement”), relating to the shares representing 60.1% of 66% of the corporate capital, as issued from time to time and paid up, of PowerOne UK) in each case, as amended from time to time in accordance with the terms thereof.

“Security Register” has the meaning specified in Section 2.06(b).

“Security Registrar” has the meaning specified in Section 2.06(a) and shall include any co-registrars appointed pursuant to Section 2.06(a).

“Shenzhen” means Power-One Asia Pacific Electronics (Shenzhen) Co., Ltd., a wholly foreign owned limited liability company established under the laws of the People’s Republic of China.

“Significant Subsidiary” means any subsidiary, or group of subsidiaries, that would constitute a “significant subsidiary” under Regulation S-X under the Securities Act.

“Spin-Off” has the meaning specified in Section 5.07(d).

“Stated Maturity Date” means, for any Security, June 17, 2013.

“Stock Price” means, for a Make-Whole Fundamental Change (a) if holders of the Common Stock receive only cash consideration for their shares of Common Stock in connection with such Make-Whole Fundamental Change, the cash amount paid per share of Common Stock and (b) in all other cases, the average of the Last Reported Sale Prices of the Common Stock over the ten consecutive Trading Day period ending on the Trading Day immediately preceding the Effective Date of such Make-Whole Fundamental Change.

“Subordinated Indebtedness” means any Indebtedness of the Company or its Subsidiaries (whether outstanding on the Issue Date or thereafter incurred) that is subordinate or junior in right of payment to the Securities pursuant to a written agreement.

“Subsidiary” means a corporation, association, company, limited partnership, joint-stock company or business trust more than 50% of the outstanding voting stock or other voting interests of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries.  For the purposes of this definition, “voting stock or other voting interests” means stock or other voting interests which ordinarily have voting power for the election of directors or comparable governing body, whether at all times or only so long as no senior class of stock or other interests has such voting power by reason of any contingency.

“Successor Company” has the meaning specified in Section 8.01(a)(i).

“Tangible Net Worth” means, with respect to any Person at any date of determination, its consolidated stockholders’ equity, as determined on a consolidated basis, excluding the impact of non-cash charges or other non-cash items relating to the application of FASB 133 or any other related accounting literature under GAAP or in connection with embedded or standalone

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derivatives related to Indebtedness, minus the aggregate intangible assets of such Person, as determined on a consolidated basis.

“Total Debt” means, as of any date of determination, the total amount of Indebtedness that would appear as such on the balance sheet of a Person as of such date, prepared in accordance with GAAP.

“Total Net Debt” means, as of any date of determination and in respect of any Person, the total amount of Indebtedness that would appear as such on the balance sheet of such Person, minus the total amount of cash and Cash Equivalents that would appear as such on such balance sheet of such Person, in each case as of the same date and as prepared in accordance with GAAP.

“Trading Day” means a day during which (a) trading in the Common Stock generally occurs on the Relevant Exchange and (b) there is no Market Disruption Event.  If the Common Stock is not then listed or admitted for trading on a United States national or regional securities exchange or market, then “Trading Day” means a Business Day.

“Transaction Costs” means all fees, costs and expenses incurred by the Company in connection with the offering of the Securities and the application of the net proceeds thereof, including all fees, costs and expenses relating to this Indenture, the Security Documents, the Purchase Agreement relating to the Securities, and any other document prepared in connection therewith and the application of the proceeds thereof relating to the payoff of outstanding Indebtedness and the release of related Liens and all costs, fees and expenses associated with any amendment or waiver under any such document, together with all fees, costs and expenses of financial, legal and accounting advisors related thereto.

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

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.

“United States” means the United States of America.

“Valuation Period” has the meaning specified in Section 5.07(d).

“VWAP” means the volume weighted average price and refers to such price as reported by the Bloomberg Professional Service provided by Bloomberg L.P. or, if such service is no longer providing such information, such other comparable service as the Company shall reasonably specify. To the extent that Common Stock is listed on The Nasdaq Global Market, the VWAP on The Nasdaq Global Market will be determined based on the Bloomberg function: “TICKER [PWER] EQUITY AQR” or a successor function on such service.  If for whatever reason the VWAP is unavailable for a Trading Day, then the Last Reported Sale Price of Common Stock on that Trading Day shall be used in lieu of the VWAP.

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“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person, all the Capital Stock of which (other than directors’ qualifying shares) is owned by such Person or another Wholly Owned Subsidiary of such Person.

1.02RULES OF CONSTRUCTION.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a)the terms defined in Section 1.01 have the meanings assigned to them in Section 1.01 and include the plural as well as the singular;

(b)all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; and

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

1.03COMPLIANCE CERTIFICATES AND OPINIONS.

(a)Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required hereunder.  Each such certificate or opinion shall be given in the form of an Officers’ Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with any other requirement set forth in this Indenture.

(b)Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i)a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

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

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

(iv)a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

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1.04FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

(a)In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(b)Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous.  Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.

(c)Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

1.05ACTS OF HOLDERS; RECORD DATES.

(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 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.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as an “Act” of the 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 (subject to Section 9.01) 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 him the execution thereof.  Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority.  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 reasonably deems sufficient.

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(c)The Company may fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders.  If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 10.01) prior to such first solicitation or vote, as the case may be.  With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action.

(d)The ownership of the Securities shall be proved by the Security Register.

(e)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.

1.06NOTICES, ETC., TO TRUSTEE AND COMPANY.

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(i)the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its applicable Corporate Trust Office provided that such notice shall be effective only upon actual receipt by the Trustee; or

(ii)the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company, Attention:  General Counsel.

1.07NOTICE TO HOLDERS; WAIVER.

(a)Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder’s address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.  In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.  Notices will be deemed to have been given on the date of mailing.  Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such

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filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

(b)In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

(c)Whenever under this Indenture the Trustee is required to provide any notice by mail, in all cases the Trustee may alternatively provide notice by overnight courier or by telefacsimile, with confirmation of transmission.

1.08EFFECT OF HEADINGS AND TABLE OF CONTENTS.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof, and all Article and Section references are to Articles and Sections, respectively, of this Indenture unless otherwise expressly stated.

1.09SEVERABILITY 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.

1.10BENEFITS OF INDENTURE.

Except as provided in Article 13 hereof, nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their respective successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture.

1.11GOVERNING LAW.

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

1.12NO RECOURSE AGAINST OTHERS.

No director, officer, employee, stockholder or Affiliate of the Company from time to time shall have any liability for any obligations of the Company under the Securities or this Indenture.  Each Holder by accepting a Security waives and releases such liability.

II.  THE SECURITIES

2.01DESIGNATION, AMOUNT AND ISSUANCE OF SECURITIES.

The Securities shall be designated as “8% Senior Secured Convertible Notes due 2013.”  The Securities shall be limited to an aggregate principal amount of up to $80,000,000, subject to

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Section 2.17.  Upon the execution of this Indenture, or from time to time thereafter, Securities may be executed by the Company and delivered to the Trustee for authentication in accordance with Section 2.05.

2.02FORM OF THE SECURITIES.

(a)The Securities and the Trustee’s certificate of authentication to be borne by such Securities shall be substantially in the form set forth in Exhibit A hereto.  The terms and provisions contained in the form of Securities attached as Exhibit A hereto shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

(b)Any of the Securities may have such letters, numbers or other marks of identification and such notations, legends, endorsements or changes as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required by the custodian for the Global Securities, the Depositary or by The Nasdaq Stock Market, Inc. in order for the Securities to be tradable on The PORTAL Market or as may be required for the Securities to be tradable on any other market developed for trading of securities pursuant to Rule 144A or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Securities may be listed, or to conform to usage, or to indicate any special limitations or restrictions to which any particular Securities are subject.

(c)So long as the Securities are eligible for book-entry settlement with the Depositary, or unless otherwise required by law, subject to Section 2.09, all of the Securities will be represented by one or more Global Securities.  The transfer and exchange of beneficial interests in any such Global Securities shall be effected through the Depositary in accordance with this Indenture and the applicable procedures of the Depositary.  Except as provided in Section 2.09, beneficial owners of a Global Security shall not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered Holders of such Global Security.

(d)Any Global Security shall represent such of the outstanding Securities as shall be specified therein and shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be increased or reduced to reflect issuances, repurchases, conversions, transfers or exchanges permitted hereby.  Any endorsement of a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Trustee or the custodian for the Global Security, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Securities in accordance with this Indenture.

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2.03DATE AND DENOMINATION OF SECURITIES AND INTEREST.

The Securities shall be issuable in fully registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof.  Each Security shall be dated the date of its authentication and shall bear interest from the date specified on the face of the form of Securities attached as Exhibit A hereto.  Interest on the Securities shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

2.04PAYMENTS ON THE SECURITIES.

(a)On the Stated Maturity Date, each Holder shall be entitled to receive on such date the principal amount of the Securities held, plus accrued and unpaid interest to, but not including, the Stated Maturity Date.

(b)On each Interest Payment Date, the Person in whose name a Security is registered on the Register at the close of business on the Record Date for such Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date, except that the interest payable upon Maturity shall be payable to the Person to whom principal is payable upon Maturity.

(c)If any Interest Payment Date or any date on which principal or any other amount is payable in respect of the Securities falls on a day that is not a Business Day, such payment of interest or principal, as the case may be, shall be postponed to the next succeeding Business Day and no interest or other amount shall be paid as a result of such postponement.

(d)The Company shall pay any amount of principal when due:

(i)with respect to Global Securities, to the Depositary or its nominee in immediately available funds; and

(ii)with respect to Physical Securities, at the office of the Paying Agent, which initially shall be the Corporate Trust Office.

(e)The Company shall pay interest on each Interest Payment Date:

(i)with respect to any Global Securities by wire transfer of immediately available funds to the account of the Depositary or its nominee;

(ii)with respect to any Physical Securities having a principal amount of $2,000,000 or less, by check mailed to the address of the Person entitled thereto as it appears in the Security Register; provided that at Maturity, interest will be payable at the office of the Company maintained by the Company for such purposes, which shall initially be the Corporate Trust Office; and

(iii)with respect to any Physical Securities having a principal amount of more than $2,000,000, either (A) by check mailed to the address of the Person entitled thereto as it appears in the Security Register or (B) at the election of the Person entitled thereto, by wire transfer in immediately available funds to an account within the United States of

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such Person if such Person has duly delivered notice of such election and applicable wire instructions to the Registrar not later than the Record Date for such Interest Payment Date and has not delivered notice to the Registrar revoking such election prior to such Record Date; provided that at Maturity, interest will be payable at the office of the Company maintained by the Company for such purposes, which shall initially be the Corporate Trust Office.

(f)If the Company is required to pay any Additional Interest under this Indenture, the Company shall pay such Additional Interest to Holders on the same dates and in the same manner as regular interest is paid to Holders, except as set forth in Section 3.05 and Section 7.03.

2.05EXECUTION AND AUTHENTICATION.

(a)One or more Officers shall sign the Securities for the Company by manual or facsimile signature.  If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.

(b)The Company shall deliver the Securities executed by the Company to the Trustee for authentication together with an authentication order executed by the Chief Executive Officer of the Company ordering the authentication and delivery of such Securities, which authentication order shall set forth the number of separate Securities certificates, the principal amount of each of the Securities to be authenticated, the date on which the original issue of Securities is to be authenticated, the Holder of each such Security and delivery instructions.  Upon receipt of such executed Securities and such authentication order, the Trustee shall authenticate and deliver such Securities in accordance with such authentication order.

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

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

2.06SECURITY REGISTRAR, PAYING AGENT AND CONVERSION AGENT.

(a)The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the “Security Registrar”), an office or agency where Securities may be presented for payment (the “Paying Agent”) and an office or agency where Securities may be presented for conversion (the “Conversion Agent”), in each case, in the Borough of Manhattan, The City of New York.  The Company initially appoints the Trustee as Security Registrar, Conversion Agent and Paying Agent in connection with the Securities.  The Bank of New York, an Affiliate of the Trustee, located at 101 Barclay Street,

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8W, New York, New York 10286, Attn: Corporate Trust Administration, shall be considered as one such office or agency of the Company for each of the aforesaid purposes.  The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent, Conversion Agent or Security Registrar.  The Company may from time to time appoint one or more additional Conversion Agents, Paying Agents and co-registrars and may from time to time rescind such designations.

(b)The Security Registrar shall keep a register of the Securities (the “Security Register”) and of their transfer and exchange.

(c)The Company shall enter into an appropriate agency agreement with any Security Registrar, Paying Agent or Conversion Agent not a party to this Indenture.  Each such agreement shall implement the provisions of this Indenture that relate to such agent.

(d)The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of each such office or agency, if not the Trustee, or if not designated or appointed by the Trustee.

(e)If at any time the Company fails to maintain a Security Registrar, Paying Agent or Conversion Agent or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

(f)The Company may remove any Security Registrar, Paying Agent or Conversion Agent at any time and without prior notice to Holders by written notice to such Security Registrar, Paying Agent or Conversion Agent and to the Trustee; provided that no such removal shall become effective until (i) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Security Registrar, Paying Agent or Conversion Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Security Registrar, Paying Agent or Conversion Agent until the appointment of a successor in accordance with clause (i) above.  The Security Registrar, Paying Agent or Conversion Agent may resign at any time upon written notice; provided that the Trustee may resign as Paying Agent, Conversion Agent or Security Registrar only if the Trustee also resigns as Trustee in accordance with Section 9.11.

2.07PAYING AGENT TO HOLD MONEY IN TRUST.

(a)On or prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due.  If the Company or a Wholly Owned Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund for the benefit of the Persons entitled thereto.  If such deposit is made, or such segregation is effected, on a due date for such principal or interest, such deposit shall be received, or such segregation shall be effected, by 11:00 a.m., New York City time, on such due date.

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(b)The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment.

(c)The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent.  Upon complying with this Section 2.07, the Paying Agent shall have no further liability for the money delivered to the Trustee.

2.08EXCHANGE AND REGISTRATION OF TRANSFER OF SECURITIES.

(a)The Company shall cause to be kept at the Corporate Trust Office the Security Register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities.  The Security Register shall be in written form or in any form capable of being converted into written form within a reasonably prompt period of time.

(b)Upon surrender for registration of transfer of any Securities to the Security Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.08 and in Section 2.10, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture.

(c)Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture, upon surrender of the Securities to be exchanged at the office of the Security Registrar.  Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive bearing registration numbers not contemporaneously outstanding.

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

(e)All Securities presented or surrendered for registration of transfer or for exchange, repurchase, redemption or conversion shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, duly executed by the Holder thereof or his attorney duly authorized in writing.

(f)No service charge shall be made to any Holder for any registration of, transfer or exchange of Securities, but the Company may require payment by the Holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities.

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(g)Neither the Company nor the Trustee nor any Security Registrar shall be required to exchange, issue or register a transfer of any Securities or portions thereof (i) tendered for repurchase (and not withdrawn) pursuant to Article 4, (ii) surrendered for conversion pursuant to Article 5, or (iii) selected for redemption pursuant to Article 4.

2.09GLOBAL SECURITIES.

(a)Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary or a nominee thereof and delivered to the Depositary or a nominee thereof or custodian for the Global Securities therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b)Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless:

(i)the Depositary (A) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (B) has ceased to be a clearing agency registered under the Exchange Act, and in each case, a successor depositary has not been appointed by the Company within 90 calendar days; or

(ii)in accordance with clause (c) below.

Any Global Securities exchanged pursuant to this Section 2.09(b) shall be so exchanged in whole and not in part.

(c)In addition, Physical Securities shall be issued in exchange for beneficial interests in a Global Security upon request by or on behalf of the Depositary in accordance with customary procedures following the request of a beneficial owner seeking to enforce its rights under the Securities or this Indenture upon the occurrence and during the continuance of an Event of Default.

(d)Securities issued in exchange for a Global Security or any portion thereof pursuant to Section 2.09(b) or Section 2.09(c) shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Securities 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 any legends required hereunder.  Any Global Securities to be exchanged shall be surrendered by the Depositary to the Trustee, as Security Registrar, provided that pending completion of the exchange of a Global Security, the Trustee acting as custodian for the Global Securities for the Depositary or its nominee with respect to such Global Securities, shall reduce the principal amount thereof, 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 make available for delivery the Securities issuable on such exchange to or upon the written order of the Depositary or an authorized representative thereof.

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(e)In the event of the occurrence of any of the events specified in Section 2.09(b) above or upon any request described in Section 2.09(c), the Company will promptly make available to the Trustee a sufficient supply of Physical Securities in definitive, fully registered form, without interest coupons.

(f)Neither any members of, or participants in, the Depositary (“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 Securities registered in the name of the Depositary or any nominee thereof, 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 Securities 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 Securities.

(g)At such time as all interests in a Global Security have been redeemed, repurchased, converted, cancelled or exchanged for Physical Securities, such Global Security shall, upon receipt thereof, be canceled by the Trustee in accordance with standing procedures and instructions existing between the Depositary and the custodian for the Global Security.  At any time prior to such cancellation, if any interest in a Global Security is redeemed, repurchased, converted, cancelled or exchanged for Physical Securities, the principal amount of such Global Security shall, in accordance with the standing procedures and instructions existing between the Depositary and the custodian for the Global Security, be appropriately reduced, and an endorsement shall be made on such Global Security, by the Trustee or the custodian for the Global Security, at the direction of the Trustee, to reflect such reduction.

2.10TRANSFER RESTRICTIONS.

(a)Until the date (the “Resale Restriction Termination Date”) that is the later of (1) one year after the Issue Date or such shorter period of time as permitted under Rule 144, and (2) such later date, if any, as may be required by applicable law:

(i)any certificate evidencing a Security shall bear a legend in substantially the form identified as “Form of Restricted Security Legend” in the form of Security set forth in Exhibit A; and

(ii)any certificate representing Common Stock issued upon conversion or redemption of a Security shall bear a legend substantially in the form identified as “Form of Restricted Security Legend for Common Stock Issued Upon Conversion or Redemption” in Exhibit B,

(each a “Restricted Security Legend”), in each case, unless (A) such Security or such Common Stock, as the case may be, has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of

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such transfer) or sold without transfer restrictions pursuant to Rule 144, (B) such Restricted Security Legend has been removed pursuant to Section 2.10(d), or (C) otherwise agreed by the Company in writing with written notice thereof to the Trustee.

(b)Every Security (and all securities issued in exchange therefor or in substitution thereof) and any Common Stock issued upon conversion or redemption of any Security that bears or is required under Section 2.10(a) to bear a Restricted Security Legend (each a “Restricted Security”) shall be subject to the restrictions on transfer set forth in this Section 2.10 and in the Restricted Security Legend for such Restricted Security, unless such restrictions on transfer shall be waived by written consent of the Company following receipt of legal advice supporting the permissibility of the waiver of such transfer restrictions, and the Holder of any Restricted Securities, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer.

(c)In connection with any transfer of a Physical Security that is a Restricted Security, the Holder must complete and deliver the form of assignment set forth on the certificate representing the Securities with the appropriate box checked to the Trustee.  If the proposed transfer is pursuant to clause (2)(D) of the Restricted Security Legend (other than a transfer pursuant to Rule 144), the Holder must, prior to such transfer, furnish to the Trustee, such certifications, legal opinions or other information as the Company may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

(d)The Company shall cause the Restricted Securities Legend to be removed from any Restricted Security on the date (the “Delegending Date”) that is earlier of (1) the date that is one year after the Issue Date for any Security Outstanding, (2) the transfer of such Restricted Security pursuant to an effective registration statement or (3) on any transfer of such Restricted Security without transfer restrictions under Rule 144, in each case as follows:

(i)with respect to any Restricted Security that is a Physical Security, upon surrender of such Restricted Security by the Holder thereof to the Security Registrar for exchange, such Restricted Security shall be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the Restricted Security Legend; and

(ii)with respect to any Restricted Security represented by a Global Security, the Company shall, on or promptly after the Delegending Date direct the Depositary to remove the Restricted Securities Legend from the Global Security; provided that if such a direction is not permitted under the applicable rules, regulations, policies and procedures of the Depositary as at the Delegending Date, the Company shall, upon surrender of such Restricted Security by the Holder thereof, reduce the principal amount of such Global Security by the principal amount of such Restricted Security and increase the principal amount of a Global Security without the Restricted Security Legend by an equal principal amount.  If a Global Security without the Restricted Security Legend is not then outstanding, the Company shall execute, and the Trustee shall authenticate and deliver to the Depositary, a Global Security without the Restricted Security Legend.

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2.11RESPONSIBILITIES AND OBLIGATIONS RELATING TO THE DEPOSITARY.

(a)Neither the Company nor the Trustee shall have any responsibility or obligation to any Agent Members or any other Person with respect to the accuracy of the books or records, or the acts or omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any Agent Member or other Person (other than the Depositary) of any notice or the payment of any amount under or with respect to such Securities.

(b)All notices and communications to be given to the Holders of Securities and all payments to be made to Holders of Securities under the Securities shall be given or made only to or upon the order of the registered Holders of Securities (which shall be the Depositary or its nominee in the case of a Global Security).

(c)The rights of beneficial owners in any Global Securities shall be exercised only through the Depositary subject to the customary procedures of the Depositary.

(d)The Company and the Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its Agent Members.

(e)The Company and 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 Securities (including any transfers between or among Agent Members) 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.

2.12REPLACEMENT SECURITIES.

(a)If a mutilated Security is surrendered to the Security Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder:

(i)notifies the Company or the Trustee within a reasonable time after he has notice of such loss, destruction or wrongful taking and the Security Registrar does not register a transfer prior to receiving such notification;

(ii)makes such request to the Company or the Trustee prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “Protected Purchaser”); and

(iii)satisfies any other reasonable requirements of the Trustee and the Company.  Such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee to protect the Company, the Trustee, the Paying Agent, the Conversion Agent and the Security Registrar from any loss or liability that any of them may suffer if a Security is replaced and subsequently presented or claimed for payment.

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(b)The Company and the Trustee may charge the Holder for their expenses in replacing a Security.

(c)In case any Security which (i) has matured or is about to mature, (ii) has been properly tendered for repurchase on a Fundamental Change Repurchase Date (and not withdrawn), (iii) is to be converted into shares of Common Stock or redeemed or repurchased for cash, shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, convert or authorize the conversion of, or redeem or repurchase or authorize redemption or repurchase of, the same (without surrender thereof except in the case of a mutilated Securities), as the case may be, if the applicant for such conversion or redemption or repurchase shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or in connection with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent evidence to their satisfaction of the destruction, loss or theft of such Securities and of the ownership thereof.

(d)The provisions of this Section 2.12 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Securities.

2.13OUTSTANDING SECURITIES.

(a)At any time, the Securities outstanding at that time are all Securities that have been authenticated by the Trustee and delivered under this Indenture as at that time, other than:

(i)Securities cancelled by the Trustee or accepted by the Trustee for cancellation as at that time;

(ii)Securities replaced pursuant to Section 2.12 as at that time, unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a Protected Purchaser;

(iii)Securities repurchased pursuant to Article 4 which are no longer outstanding as at that time pursuant to Section 4.03(d) or Section 4.07(d);

(iv)Securities redeemed pursuant to Article 4 which are no longer outstanding as at that time pursuant to Section 4.12(c);

(v)Securities converted pursuant to Article 5 which are no longer outstanding as at that time pursuant to Section 5.05(g); and

(vi)Securities that have matured at the Stated Maturity in respect of which the Paying Agent segregates and holds in trust, in accordance with this Indenture, as of the Stated Maturity Date, sufficient funds to pay all amounts due on the Stated Maturity Date with respect to such Securities maturing and the Paying Agent is not prohibited from paying such money to the Holders on such date pursuant to the terms of this Indenture.

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(b)Subject to Section 2.13(c), a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.

(c)Notwithstanding anything else in this Section 2.13, in determining whether the Holders of the requisite principal amount of Securities outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of 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 or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.  Securities so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

(d)The Company may from time to time repurchase outstanding Securities on the open market or in negotiated or other transactions without prior notice to the Holders.

2.14TEMPORARY SECURITIES.

(a)Pending the preparation of Securities in certificated form, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon the written request of the Company, authenticate and deliver temporary Securities (printed or lithographed).  Temporary Securities shall be issuable in any authorized denomination, and substantially in the form of the Securities in certificated form, but with such omissions, insertions and variations as may be appropriate for temporary Security, all as may be determined by the Company.  Every such temporary Security shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Securities in certificated form.

(b)Without unreasonable delay, the Company will execute and deliver to the Trustee or such authenticating agent Securities in certificated form and thereupon any or all temporary Securities may be surrendered in exchange therefor, at the office of the Security Registrar and the Trustee or such authenticating agent shall authenticate and make available for delivery in exchange for such temporary Securities an equal aggregate principal amount of Securities in certificated form.  Such exchange shall be made by the Company at its own expense and without any charge therefor.  Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Securities in certificated form authenticated and delivered hereunder.

2.15CANCELLATION.

(a)The Company may, at any time, deliver Securities to the Trustee for cancellation.  The Security Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or

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cancellation and deliver canceled Securities to the Company pursuant to written direction by an Officer.

(b)The Company may not issue new Securities to replace Securities it has redeemed, repurchased, converted, paid or delivered to the Trustee for cancellation.  The Trustee shall not authenticate Securities in place of canceled Securities other than pursuant to the terms of this Indenture.

2.16CUSIP AND ISIN NUMBERS.

The Company in issuing the Securities may use “CUSIP” and/or “ISIN” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP” and/or “ISIN” numbers in notices of redemption or otherwise 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 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.

2.17ADDITIONAL SECURITIES.

The Company may, from time to time without the consent of the Holders of Outstanding Securities, increase the aggregate principal amount of the Securities by issuing additional Securities in the future pursuant to this Indenture (“Additional Securities”) having terms and conditions identical to those of the other Outstanding Securities, except that Additional Securities may have a different initial date from which interest begins to accrue thereon so that the Additional Securities are fungible with Outstanding Securities; provided that the Additional Securities may have the same CUSIP number as the Securities issued on the Issue Date, only if:

(a)such issuance of Additional Securities is permissible as a “qualified reopening” for United States federal income tax purposes;

(b)the resale of such Additional Securities by non-affiliates of the Company would not require registration under the Securities Act; and

(c)at the time of, and after giving effect to, such transaction, no Default or Event of Default shall have occurred and be continuing.

2.18RANKING.

The indebtedness of the Company arising under or in connection with this Indenture and every outstanding Security issued under this Indenture from time to time constitutes and will constitute a senior secured obligation of the Company, ranking equally in right of payment to all of the Company’s existing and future unsecured obligations that are not subordinated by their terms and ranking senior in right of payment to any existing or future indebtedness of the Company that is expressly subordinated in right of payment to the Securities.

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III.  PARTICULAR COVENANTS OF THE COMPANY

3.01PAYMENT OF PRINCIPAL AND INTEREST.

The Company covenants and agrees that it shall duly and punctually pay or cause to be paid the principal of, and interest on, each of the Securities at the places, at the respective times and in the manner provided herein and in the Securities.

3.02MAINTENANCE OF OFFICE OR AGENCY.

The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Securities may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Company may also from time to time designate one or more other offices or agencies where the 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 will in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes.  The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Company hereby designates The Bank of New York, located at 101 Barclay Street, 8W, New York, New York 10286, Attn: Corporate Trust Administration, as one such office or agency of the Company in accordance with Section 2.06 hereof.

3.03RESALE OF CERTAIN SECURITIES.

Except as in accordance with Section 2.17, the Company shall not, and shall not permit any of its “affiliates” (as defined under Rule 144 or any successor provision thereto) to, resell any Securities that have been reacquired by any of them.  The Trustee shall have no responsibility in respect of the Company’s performance of its agreement in the preceding sentence.

3.04NOTICE OF EVENT OF DEFAULT.

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

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given under this Section 3.04 shall be delivered to a Responsible Officer of the Trustee at its Corporate Trust Office.

3.05LATE FILING ADDITIONAL INTEREST.

(a)If, at any time during the six-month period beginning on, and including, December 17, 2008, the Company fails to timely file any document or report that it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act), as applicable (other than reports on Form 8-K), the Company shall pay additional interest (the “Late Filing Additional Interest”) in accordance with this Section 3.05.

(b)Late Filing Additional interest shall accrue on all Restricted Securities then Outstanding at an annual rate of 0.50% per annum of the principal amount of such Restricted Securities during such six-month period for which the Company’s failure to file occurs until June 17, 2009.

(c)Late Filing Additional Interest shall be payable in arrears on each of up to two Interest Payment Dates following the late filing in the same manner as regular interest on the Securities.

(d)No Late Filing Additional Interest shall accrue after the end of such six-month period, regardless of whether any such failure has occurred or is continuing.  No Late Filing Additional Interest or other amounts shall be payable in respect of any Common Stock delivered upon conversion or redemption of the Securities.

(e)If the Company becomes obligated to pay any such Late Filing Additional Interest, it shall provide an Officers’ Certificate to the Trustee setting forth the amount thereof, and referencing Section 3.05(e) of the Indenture.

3.06CORPORATE EXISTENCE.

Except as otherwise permitted in this Indenture or the Security Documents, the Company shall, and shall cause each of its Pledged Subsidiaries to, do or cause to be done all things necessary to preserve and keep in full force and effect its respective corporate existence in accordance with its organizational documents (as the same may be amended from time to time).

3.07OWNERSHIP OF SUBSIDIARIES.

The Company shall maintain direct ownership of all of, and shall not transfer or dispose of any of, and shall not permit to be issued to any Person other than the Company any of, the Capital Stock in the Pledged Subsidiaries; provided that, in the case of Shenzhen, PAI shall maintain direct ownership of all of, and shall not transfer or dispose of any of, and shall not permit to be issued to any Person other than PAI any of, the Capital Stock in Shenzhen; and provided further that, in the case of PowerOne UK, the Company shall maintain direct ownership of no less than 60.5% of, and shall not transfer or dispose of any of, and shall not permit to be issued (if after such issuance the Company shall have less than 60.5% of the Capital

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Stock in PowerOne UK) to any Person other than the Company any of, the Capital Stock in PowerOne UK.

3.08RESTRICTED PAYMENTS.

The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any unsecured Subordinated Indebtedness (or any extension, refinancing or renewal thereof), whether by way of payment in respect of principal of (or premium, if any) or interest on such Indebtedness if at the time such payment is due or otherwise made or, after giving effect to such payment, an Event of Default has occurred and is continuing.

3.09REDEMPTION AND DIVIDENDS.

The Company shall not directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on the Company’s Capital Stock without the prior written consent of the Holders of the majority of the aggregate principal amount of the Securities outstanding, except for repurchases of securities pursuant to, and in accordance with, the Company’s equity compensation plans.

3.10LIENS.

The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any Lien upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries other than Permitted Liens.

3.11INDEBTEDNESS

The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any Indebtedness unless, in each case, (x) no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of such incurrence of Indebtedness, and (y) such Indebtedness is Permitted Indebtedness.

3.12FINANCIAL COVENANTS

(a)Until the first anniversary of the Issue Date, the Company’s Total Debt as of the end of any fiscal quarter shall not exceed $110 million, plus the principal amount of any additional Securities issued as a result of the Initial Purchaser’s exercise of its option to acquire up to $5 million of additional Securities pursuant to the Purchase Agreement, but in no event greater than $115 million; thereafter, as of the end of any fiscal quarter the Company’s Total Debt shall not exceed the greater of (i) $125 million and (ii) the product of (x) three and (y) LTM EBITDA, in each case determined on a pro forma basis, including a pro forma sale of assets, incurrence of indebtedness and/or application of the net proceeds therefrom, in each case as of

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such date of determination, as if such transaction had occurred at the beginning of the relevant twelve-month period;

(b)Until the first anniversary of the Issue Date, cash and Cash Equivalents shall not be less than $20 million at the end of each fiscal quarter; thereafter cash and Cash Equivalents shall not be less than $25 million at the end of each fiscal quarter; and

(c)Until the first anniversary of the Issue Date, the Company’s Tangible Net Worth at the end of each fiscal quarter shall not be less than $90 million; thereafter, the Company’s Tangible Net Worth shall not be less than $100 million at the end of each fiscal quarter.

3.13PRESERVATION OF REPURCHASE RIGHTS.

The Company will not enter into any contract or financing arrangement that would restrict its ability to repurchase the Securities upon exercise of the Holders’ repurchase rights pursuant to Article 4.

3.14SHARE CAP PROPOSAL

No later than 90 days after the Issue Date, the Company will submit for approval by its stockholders a proposal (the “Share Cap Proposal”) that, if approved, will permit the Company to issue Common Stock at a conversion price that is lower than the Cap Price so that the conversion of the Securities pursuant to this Indenture will not be limited by the rules and regulations of The Nasdaq Global Market or any other securities exchange on which the Common Stock may be traded or listed that may otherwise limit such issuance without such shareholder approval.  To the extent that the Share Cap Proposal is not approved by the Company’s stockholders, the Company will resubmit the Share Cap Proposal for approval by its stockholders at the next regular annual meeting of stockholders (which shall be held within no more than 230 days after the initial vote) and, if not then approved, within successive 180 day intervals thereafter over the term of the Securities until the Share Cap Proposal is either approved or the Securities are no longer outstanding.

3.15FURTHER ASSURANCES.

Upon request of the Trustee, 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.

3.16ANNUAL COMPLIANCE CERTIFICATE.

The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture in all material respects, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, in his or her capacity as such, the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture in all material respects and is not in Default in the

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performance or observance of any of the terms, provisions and conditions of this Indenture (and, if a Default or an Event of Default shall have occurred, describing all such Defaults or Events of Default) of which he or she may have knowledge, in his or her capacity as such, and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which, payments on account of the principal of or interest, if any, on the Securities is prohibited or if such event has occurred, a description of the event.

IV.  REPURCHASE AND REDEMPTION OF SECURITIES

4.01FUNDAMENTAL CHANGE REPURCHASE RIGHT NOTICE.

(a)On or before the 10th Business Day following the occurrence of a Fundamental Change, the Company shall provide to all Holders and the Trustee and Paying Agent a notice (the “Fundamental Change Repurchase Right Notice”) of the occurrence of such Fundamental Change and of the repurchase right, if any, at the option of the Holders arising as a result thereof.

(b)A Fundamental Change Repurchase Right Notice shall specify (if applicable):

(i)the events causing a Fundamental Change;

(ii)the date of the Fundamental Change;

(iii)the Fundamental Change Repurchase Date and the last date on which a Holder may exercise the repurchase right;

(iv)the Fundamental Change Repurchase Price;

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

(vi)the Conversion Rate and any adjustments to the Conversion Rate;

(vii)that the Securities with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Fundamental Change Repurchase Notice in accordance with the terms of this Indenture;

(viii)that the Holder must exercise the repurchase right on or prior to the Fundamental Change Expiration Time;

(ix)that the Holder shall have the right to withdraw any Securities surrendered for repurchase prior to the Fundamental Change Expiration Time; and

(x)the procedures that Holders must follow to require the Company to repurchase their Securities.

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(c)No failure of the Company to give a Fundamental Change Repurchase Right Notice and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Securities pursuant to this Article 4.

4.02RIGHT TO REQUIRE REPURCHASE UPON 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 all of such Holder’s Securities or any portion thereof that is an integral multiple of $1,000 principal amount, for cash on the date (the “Fundamental Change Repurchase Date”) specified by the Company that is not less than 20 days and not more than 35 days after the date of the Fundamental Change Repurchase Right Notice at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”).  However, if such Fundamental Change Repurchase Date falls after a Record Date for the payment of interest and on or prior to the corresponding Interest Payment Date, the Company shall pay the full amount of accrued and unpaid interest payable on such Interest Payment Date to the holder of record at 5:00 p.m., New York City time, on such Record Date and the Fundamental Change Repurchase Price shall not include such accrued and unpaid interest.

(b)In order to exercise the repurchase right, a Holder shall:

(i)deliver to the Trustee (or other Paying Agent appointed by the Company) a duly completed notice (the “Fundamental Change Repurchase Notice”) in the form set forth on the reverse of the Security prior to 5:00 p.m., New York City time, on the Scheduled Trading Day immediately preceding the Fundamental Change Repurchase Date (the “Fundamental Change Expiration Time”); and

(ii)deliver or effect a book-entry transfer of the Securities to the Trustee (or other Paying Agent appointed by the Company) at any time after delivery of the Fundamental Change Repurchase Notice (together with all necessary endorsements) at the office of the Paying Agent, such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor; provided that such Fundamental Change Repurchase Price shall be so paid pursuant to this Section 4.02 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Fundamental Change Repurchase Notice.

(c)A Fundamental Change Repurchase Notice shall state:

(i)if certificated, the certificate numbers of Securities to be delivered for repurchase;

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

(iii)that the Securities are to be repurchased by the Company pursuant to the applicable provisions of the Securities and this Indenture.

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(d)A Fundamental Change Repurchase Notice may be withdrawn by means of a written notice of withdrawal, delivered to the Paying Agent in accordance with the Fundamental Change Repurchase Right Notice at any time prior to the Fundamental Change Expiration Time, specifying:

(i)if certificated Securities have been issued, the certificate numbers of the withdrawn Securities;

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

(iii)the principal amount, if any, of such Securities that remain subject to the original Fundamental Change Repurchase Notice, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000.

(e)If the Securities to be repurchased are represented by a Global Security, any Fundamental Change Repurchase Notice or notice of withdrawal thereof in respect of such Securities must comply, to the extent required by law, with appropriate procedures of the Depositary.

(f)The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Repurchase Notice or notice of withdrawal thereof in accordance with the provisions of this Section 4.02.

4.03SETTLEMENT OF FUNDAMENTAL CHANGE REPURCHASES.

(a)Any repurchase by the Company pursuant to this Article 4 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Fundamental Change Repurchase Date and the time of the book-entry transfer or delivery of the Security.

(b)Any Security that is to be repurchased in part only shall be surrendered to the Trustee (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered.

(c)On or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date, the Company shall deposit with the Paying Agent (or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust) an amount of money sufficient to repurchase on the Fundamental Change Repurchase Date all of the Securities to be repurchased on such date at the Fundamental Change Repurchase Price.  Subject to receipt of funds and/or Securities by the Trustee (or other Paying Agent appointed by the Company), payment for Securities surrendered for repurchase (and not withdrawn) prior to the Fundamental Change Expiration Time shall be made promptly after the later of:

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(i)the Fundamental Change Repurchase Date with respect to such Security; provided that the Holder has satisfied the conditions to the payment of the Fundamental Change Repurchase Price in this Section 4.03; and

(ii)the time of book-entry transfer or the delivery of such Security to the Paying Agent by the Holder thereof in the manner required by this Section 4.03.

The Trustee shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Fundamental Change Repurchase Price.

(d)If the Paying Agent holds money sufficient to repurchase on the Fundamental Change Repurchase Date all the Securities or portions thereof that are to be purchased as of the Business Day following the Fundamental Change Repurchase Date, then on and after the Fundamental Change Repurchase Date (i) such Securities shall cease to be outstanding, (ii) interest shall cease to accrue on such Securities, and (iii) all other rights of the Holders of such Securities shall terminate (other than the right to receive the Fundamental Change Repurchase Price in respect of such Securities), in each case, whether or not book-entry transfer of the Securities has been made or the Securities have been delivered to the Paying Agent.

(e)In connection with any repurchase of Securities pursuant to this Article 4, the Company hereby agrees to:

(i)comply with the provisions of Rule 13e-1, Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may then be applicable; and

(ii)otherwise comply with all applicable federal and state securities laws.

4.04RESTRICTIONS ON REPURCHASES.

No Securities may be repurchased at the option of Holders upon a Fundamental Change if the principal amount of the Securities has been accelerated, and such acceleration has not been rescinded, on or prior to such date.

4.05RATIO EVENT REPURCHASE RIGHT NOTICE.

(a)On or after June 17, 2011, with respect to any fiscal quarter as of the last day of which the ratio of Total Net Debt to LTM EBITDA was greater than 3.0x (the end of such fiscal quarter, a “Ratio Event”), the Company shall, within two (2) Business Days of the date that it is required to file with the Commission a report on Form 10-Q or Form 10-K covering such fiscal quarter (without giving effect to any applicable grace period provided by Rule 12b-25 under the Exchange Act), give notice (the “Ratio Event Repurchase Right Notice”) to the Trustee for delivery to all Holders and the Paying Agent of the occurrence of such Ratio Event and of the repurchase right, if any, at the option of the Holders arising as a result thereof.

(b)A Ratio Event Repurchase Right Notice shall specify (if applicable):

(i)the occurrence of a Ratio Event;

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(ii)the Ratio Event Repurchase Period and the last date on which a Holder may exercise the repurchase right;

(iii)the method for calculating the Ratio Event Repurchase Price;

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

(v)the then current Conversion Rate;

(vi)that the Securities with respect to which a Ratio Event Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Ratio Event Repurchase Notice in accordance with the terms of this Indenture;

(vii)that the Holder must exercise the repurchase right on or prior to the Ratio Event Expiration Time;

(viii)that the Holder shall have the right to withdraw any Securities surrendered for repurchase prior to the Ratio Event Expiration Time; and

(ix)the procedures that Holders must follow to require the Company to repurchase their Securities.

(c)No failure of the Company to give a Ratio Event Repurchase Right Notice and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Securities pursuant to this Article 4.

4.06RIGHT TO REQUIRE REPURCHASE UPON RATIO EVENT.

(a)If a Ratio Event occurs, each Holder shall have the right, at such Holder’s option, to require the Company to repurchase all of such Holder’s Securities or any portion thereof that is an integral multiple of $1,000 principal amount, for cash on any date (such date, a “Ratio Event Repurchase Date”) within the period commencing on the first day of the calendar month following the date the Ratio Event Repurchase Right Notice is provided to the Trustee, and ending three calendar months thereafter (the “Ratio Event Repurchase Period”), at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the Ratio Event Repurchase Date (the “Ratio Event Repurchase Price”).  However, if such Ratio Event Repurchase Date falls after a Record Date for the payment of interest and on or prior to the corresponding Interest Payment Date, the Company shall pay the full amount of accrued and unpaid interest payable on such Interest Payment Date to the holder of record at 5:00 p.m., New York City time, on such Record Date and the Ratio Event Repurchase Price shall not include such accrued and unpaid interest.

(b)In order to exercise the repurchase right, a Holder shall:

(i)deliver to the Trustee (or other Paying Agent appointed by the Company) a duly completed notice (the “Ratio Event Repurchase Notice”) in the form set forth on the reverse of the Security after 9:00 a.m., New York City time, on the date that is 20 Business Days prior to the applicable Ratio Event Repurchase Date and prior to 5:00 p.m.,

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New York City time, on the applicable Ratio Event Repurchase Date elected by such Holder (the “Ratio Event Expiration Time”); and

(ii)deliver or effect a book-entry transfer of the Securities to the Trustee (or other Paying Agent appointed by the Company) at any time after delivery of the Ratio Event Repurchase Notice (together with all necessary endorsements) at the office of the Paying Agent, such delivery being a condition to receipt by the Holder of the Ratio Event Repurchase Price therefor; provided that such Ratio Event Change Repurchase Price shall be so paid pursuant to this Section 4.06 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Ratio Event Repurchase Notice.

(c)A Ratio Event Repurchase Notice shall state:

(i)the applicable Ratio Event Repurchase Date elected by the Holder;

(ii)if certificated, the certificate numbers of Securities to be delivered for repurchase;

(iii)the portion of the principal amount of Securities to be repurchased, which must be $1,000 or an integral multiple thereof; and

(iv)that the Securities are to be repurchased by the Company pursuant to the applicable provisions of the Securities and this Indenture.

(d)A Ratio Event Repurchase Notice may be withdrawn by means of a written notice of withdrawal, delivered to the Paying Agent in accordance with the Ratio Event Repurchase Right Notice at any time prior to the Ratio Event Expiration Time, specifying:

(i)if certificated Securities have been issued, the certificate numbers of the withdrawn Securities;

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

(iii)the principal amount, if any, of such Securities that remain subject to the original Ratio Event Repurchase Notice, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000.

(e)If the Securities to be repurchased are represented by a Global Security, any Ratio Event Repurchase Notice or notice of withdrawal thereof in respect of such Securities must comply with appropriate procedures of the Depositary.

(f)The Paying Agent shall promptly notify the Company of the receipt by it of any Ratio Event Repurchase Notice or notice of withdrawal thereof in accordance with the provisions of this Section 4.06.

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4.07SETTLEMENT OF RATIO EVENT REPURCHASES.

(a)Any repurchase by the Company pursuant to this Article 4 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Ratio Event Repurchase Date and the time of the book-entry transfer or delivery of the Security.

(b)Any Security that is to be repurchased in part only shall be surrendered to the Trustee (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered.

(c)On or prior to 11:00 a.m., New York City time, on the Ratio Event Repurchase Date, the Company shall deposit with the Paying Agent (or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust) an amount of money sufficient to repurchase on the Ratio Event Repurchase Date all of the Securities tendered by Holders as of 5:00 p.m. on the Business Day immediately preceding the Ratio Event Repurchase Date to be repurchased on the Ratio Event Repurchase Date at the Ratio Event Repurchase Price.  On or prior to 11:00 a.m., New York City time, on the Business Day immediately following the Ratio Event Repurchase Date, the Company shall deposit with the Paying Agent (or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust) an amount of additional money sufficient to repurchase on such date all of the Securities tendered by Holders subsequent to 5:00 p.m. on the Business Day immediately preceding the Ratio Event Repurchase Date and at or before 5:00 p.m. on the Ratio Event Repurchase Date to be repurchased at the Ratio Event Repurchase Price.  Subject to receipt of funds and/or Securities by the Trustee (or other Paying Agent appointed by the Company), payment for Securities surrendered for repurchase (and not withdrawn) prior to the Ratio Event Expiration Time shall be made promptly after the later of:

(i)the Ratio Event Repurchase Date with respect to such Security; provided that the Holder has satisfied the conditions to the payment of the Ratio Event Repurchase Price in this Section 4.07; and

(ii)the time of book-entry transfer or the delivery of such Security to the Paying Agent by the Holder thereof in the manner required by this Section 4.07.

The Trustee shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Ratio Event Repurchase Price.

(d)If the Paying Agent holds money sufficient to repurchase on the Ratio Event Repurchase Date all the Securities or portions thereof that are to be purchased as of the Business Day following the Ratio Event Repurchase Date, then on and after the Ratio Event Repurchase Date (i) such Securities shall cease to be outstanding, (ii) interest (including Additional Interest, if any) shall cease to accrue on such Securities, and (iii) all other rights of the Holders of such

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Securities shall terminate (other than the right to receive the Ratio Event Repurchase Price in respect of such Securities), in each case, whether or not book-entry transfer of the Securities has been made or the Securities have been delivered to the Paying Agent.

(e)In connection with any repurchase of Securities pursuant to this Article 4, the Company hereby agrees to:

(i)comply with the applicable provisions of Rule 13e-1, Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may then be applicable; and

(ii)otherwise comply with all applicable federal and state securities laws,

and the provisions of this Indenture are subject to the Company’s compliance, to the extent required by law, with such rules and laws.

4.08REDEMPTION RIGHTS.

(a)The Securities shall be redeemable at the Company’s option in accordance with this Article 4:

(i)in whole or in part, at any time on or after June 17, 2010, if the Last Reported Sale Price of the Common Stock for 20 or more Trading Days in a period of 30 consecutive Trading Days ending on the Trading Day prior to the date the Company provides a Redemption Notice in accordance with this Article 4 exceeds 175% of the Conversion Price in effect on each such Trading Day; and

(ii)in whole but not in part, at any time if less than 10% of the aggregate principal amount of Securities initially issued (including any additional Securities issued in connection with exercise by the Initial Purchaser of its over-allotment option) are then Outstanding.

(b)Notwithstanding the foregoing, the Company may only exercise its redemption rights pursuant to clause (a) of this Section 4.08 if, as evidenced by an Officers’ Certificate, all of the conditions listed below (the “Equity Conditions”) are satisfied on each day during the period (x) commencing ten days prior to the date a Redemption Notice is delivered to the Trustee and (y) ending on the Redemption Date (the “Equity Conditions Measuring Period”). The Equity Conditions are as follows:

(i)all shares of Common Stock issuable upon conversion of the Securities and held by a non-affiliate of the Company shall be eligible for sale without the need for registration under any applicable federal or state securities laws;

(ii)the Company shall have no knowledge of any fact that would cause any shares of Common Stock issuable upon conversion of the Securities not to be eligible for sale without restriction pursuant to Rule 144 and any applicable state securities laws (other than restrictions due to the Holder of such Common Stock being an Affiliate of the Company);

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(iii)during the equity conditions measuring period, the common stock is listed or traded on The Nasdaq Global Market, The Nasdaq Global Select Market, The Nasdaq Capital Market, the New York Stock Exchange or the American Stock Exchange, or any of their respective successors (each an “Eligible Market”) and shall not have been suspended from trading on such exchange or market (other than suspensions of not more than two trading days and occurring prior to the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market;

(iv)during the Equity Conditions Measuring Period, to the extent any Securities have been delivered to the Company for conversion in accordance with the terms of the Securities, the Company shall have delivered shares of Common Stock upon conversion of the Securities to the Holders on a timely basis;

(v)any applicable shares of Common Stock to be issued upon conversion may be issued in full without violating the rules or regulations of The Nasdaq Global Market or any applicable Eligible Market on which the Common Stock delivered upon conversion are then listed or trading;

(vi)during the Equity Conditions Measuring Period, the Company shall not have failed to make any payments within five (5) Business Days of when such payment is due pursuant to the Securities, this Indenture, the Pledge Agreement or the other security documents;

(vii)during the Equity Conditions Measuring Period, there shall not have occurred the public announcement of a pending, proposed or intended transaction or event that will constitute a Fundamental Change, pursuant to clause (a) or (b) of the definition thereof (other than, for the avoidance of doubt, any such transaction or event that is not a Fundamental Change as a result of the second to last paragraph of the definition thereof), which has not been abandoned, terminated or consummated;

(viii)the average daily trading volume of the Common Stock on The Nasdaq Global Market or any other Eligible Market on which the shares of Common Stock delivered upon conversion are then-listed or trading for the Equity Conditions Measuring Period was at least $2.5 million; and

(ix)no Default or Event of Default under the indenture shall have occurred and be continuing.

(c)The Company may elect to redeem any Securities pursuant to this Section 4.08 by providing notice to each Holder of such Securities in accordance with Section 4.11 not less than 25 Scheduled Trading Days nor more than 60 days prior to the Redemption Date for such Securities.

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4.09REDEMPTION PRICE.

(a)The “Redemption Price” (as determined by the Company) for any Securities redeemed pursuant to Section 4.08 shall be an amount in cash equal to 100% of the principal amount of the Securities being redeemed, plus any accrued and unpaid interest to (but excluding) the Redemption Date, plus the present value of all remaining interest payments on such Holder’s Securities (including deferred interest, if any) through and including the Stated Maturity Date.  The present value of the remaining interest payments will be computed using a discount rate of 350 basis points.

(b)If the Redemption Date for any Security falls after a Record Date for the payment of interest and on or prior to the corresponding Interest Payment Date, the Company shall pay the full amount of accrued and unpaid interest payable on such Interest Payment Date to the holder of record at 5:00 p.m., New York City time, on such Record Date and the cash portion of the Redemption Price shall not include such accrued and unpaid interest.

4.10SELECTION OF SECURITIES TO BE REDEEMED.

(a)If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, by lot, on a pro rata basis or in accordance with such other method as the Trustee shall deem fair and appropriate; provided that the unredeemed portion of the principal amount of any Security shall be in a denomination not less than the minimum authorized denomination for such Security.

(b)The Trustee shall promptly notify the Company in writing of the Securities selected for partial redemption and the principal amount thereof to be redeemed.  For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

(c)If the Trustee selects a portion of a Holder’s Security for partial redemption and such Holder converts a portion of the same Security, the converted portion shall be deemed to be from the portion selected for redemption.

4.11REDEMPTION NOTICE.

(a)Notice of redemption (a “Redemption Notice”) shall be given by first-class mail, postage prepaid, to each Holder of Securities to be redeemed, at the address of such Holder as it appears in the Securities Register.

(b)The Redemption Notice for any Securities to be redeemed shall state:

(i)the Redemption Date;

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(ii)the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the Redemption Notice is required to be sent, a statement of how the Redemption Price will be calculated;

(iii)if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;

(iv)that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date;

(v)the place or places where such Securities are to be surrendered for payment of the Redemption Price; and

(vi)the CUSIP number for the Securities redeemed.

(c)A Redemption Notice shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company; provided that the Company shall have delivered to the Trustee, at least five Business Days before the Redemption Notice is required to be mailed (or such shorter period agreed to by the Trustee), an Officers’ Certificate requesting that the Trustee give such notice and setting forth the complete form of such notice and the information to be stated in such notice.

(d)A Redemption Notice shall be irrevocable.

(e)A Redemption Notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, a failure to give such Redemption Notice by mail or any defect in the Redemption Notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

4.12PAYMENT OF SECURITIES CALLED FOR REDEMPTION.

(a)If any Redemption Notice has been given in respect of any Securities in accordance with Section 4.11, such Securities or portion of such Securities shall become due and payable on the Redemption Date at the place or places stated in the Redemption Notice and at the applicable Redemption Price.  On presentation and surrender of such Securities at the place or places stated in the Redemption Notice, such Securities or the portions thereof specified in the Redemption Notice shall be paid and redeemed by the Company at the applicable Redemption Price.

(b)On or prior to 11:00 a.m., New York City time, on the Redemption Date, the Company shall deposit with the Paying Agent (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust) an amount of money and shares of Common Stock, if any, sufficient to pay the Redemption Price of all of the Securities to be redeemed on such Redemption Date.  Subject to receipt of funds and Common Stock, if any, by the Paying Agent, payment for the Securities to be redeemed shall be made promptly after the later of:

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(i)the Redemption Date for such Securities; and

(ii)the time of presentation of such Security to the Trustee (or other Paying Agent appointed by the Company) by the Holder thereof in the manner required by this Section 4.12.

The Paying Agent shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Redemption Price.

(c)Subject to a Holder’s right to receive interest on the related Interest Payment Date where the Redemption Date falls between a Record Date and the Interest Payment Date to which it relates as described in Section 4.09(b) above, if the Paying Agent holds money and, if applicable, shares of Common Stock sufficient to pay the Redemption Price for all the Securities or portions thereof that are to be redeemed as of the Business Day immediately following the Redemption Date, then on and after the Redemption Date (i) such Securities shall cease to be outstanding and interest, if any, will cease to accrue, whether or not book-entry transfer of the Securities is made or whether or not the Security is delivered to the Paying Agent, (ii) all other rights of the Holder will terminate as of the Redemption Date, other than the right to receive the Redemption Price and previously accrued and unpaid interest, if any, upon delivery or transfer of the Securities, and (iii) the Holder will be deemed to be a holder of record of any shares of Common Stock issuable in connection with such redemption as of the date of delivery or transfer of the Securities by such Holder.

(d)Cash amounts due upon redemption in respect of Securities presented for redemption shall be paid by the Company to such Holder, or such Holder’s nominee or nominees.

(e)Upon presentation of any Security redeemed in part only, the Company shall not be required to issue, register the transfer of or exchange any Physical Security.

4.13RESTRICTIONS ON REDEMPTION.

The Company may not redeem any Security on any date if the principal amount of the Securities has been accelerated in accordance with the terms of this Indenture, and such acceleration has not been rescinded on or prior to such date.

4.14OFFICERS’ CERTIFICATE TO TRUSTEE.

In connection with any redemption of Securities effected pursuant to this Article IV, the Company shall deliver to the Trustee an Officers’ Certificate dated as of the Redemption Date to the effect that all conditions precedent to the redemption of such Securities have been satisfied.

V.  CONVERSION

5.01CONVERSION RIGHTS.

At any time prior to the close of business on the Business Day immediately preceding the Maturity of the Securities, a Holder shall have the right, at such Holder’s option, to convert all its

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Securities or any portion thereof that is an integral multiple of $1,000 principal amount at the Conversion Rate.

5.02LIMITATION ON BENEFICIAL OWNERSHIP.

In no event will any Holder will be entitled to receive Common Stock upon conversion to the extent (but only to the extent) that such receipt would cause such converting Holder to become, directly or indirectly, a Beneficial Owner of more than 9.9% of the shares of Common Stock outstanding at such time. Any purported delivery of shares of Common Stock upon conversion of Securities shall be void and have no effect to the extent (but only to the extent) that such delivery would result in the converting Holder becoming the beneficial owner of more than 9.9% of the shares of Common Stock outstanding at such time. If any delivery of shares of Common Stock owed to a Holder upon conversion of Securities is not made, in whole or in part, as a result of this limitation, the Company’s obligation to make such delivery shall not be extinguished and the Company shall deliver such shares as promptly as practicable after any such converting Holder gives notice to the Company that such delivery would not result in such Holder being the Beneficial Owner of more than 9.9% of the shares of Common Stock outstanding at such time.

5.03MAKE-WHOLE FUNDAMENTAL CHANGES.

(a)If a Holder elects to convert Securities in connection with a Make-Whole Fundamental Change that occurs prior to the Stated Maturity Date, the Conversion Rate applicable to each $1,000 principal amount of Securities so converted shall, to the extent applicable, be increased by an additional number of shares of Common Stock (the “Additional Shares”) as described below.  For purposes of this Section 5.03, a conversion shall be deemed to be “in connection with” a Make-Whole Fundamental Change if the Conversion Date for such conversion occurs at any time from, and including, the Effective Date of such Make-Whole Fundamental Change to, and including, the Business Day prior to the related Fundamental Change Repurchase Date.

(b)The Company shall notify Holders and the Trustee of the occurrence of any Make-Whole Fundamental Change on the Effective Date of the Make-Whole Fundamental Change.

(c)The number of Additional Shares shall be determined by the Company by reference to the table set forth in Schedule A, based on the date on which the Make-Whole Fundamental Change becomes effective (the “Effective Date”) and the Stock Price.  If the exact Stock Price and Effective Date are not set forth in such table, then:

(i)if the actual Stock Price is between two Stock Prices in the table or the 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 next higher and next lower Stock Prices and the two nearest Effective Dates, as applicable, based on a 365-day year;

(ii)if the Stock Price is greater than $9.00 per share of Common Stock (subject to adjustment in the same manner and at the same time as the Stock Prices as set

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forth in clause (d) of this Section 5.03), no Additional Shares shall be added to the Conversion Rate; and

(iii)if the Stock Price is less than $2.85 per share (subject to adjustment in the same manner and at the same time as the Stock Prices as set forth in clause (d) of this Section 5.03), no Additional Shares shall be added to the Conversion Rate.

(d)The Stock Prices set forth in the first column of the table in Schedule A shall be adjusted by the Company as of any date on which the Conversion Rate of the Securities is adjusted (other than pursuant to this Section 5.03).  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 in effect 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 within the table shall be adjusted in the same manner as the Conversion Rate is adjusted (other than pursuant to this Section 5.03).

(e)Notwithstanding the foregoing, in no event shall the Conversion Rate exceed 350.6670 per $1,000 principal amount of Securities (subject to adjustment in the same manner as the Conversion Rate is adjusted pursuant to Section 5.07(b), (c), (d), (e) and (f)) as a result of any increase under this Section 5.03, nor will any Additional Shares of Common Stock be issued or issuable to the extent that such issuance would not be in compliance with the rules of The Nasdaq Global Market or other Eligible Market on which the Common Stock is then traded.

5.04EXERCISE OF CONVERSION PRIVILEGE.

(a)Before any Holder shall be entitled to convert its Securities as forth above, such Holder shall:

(i)in the case of a Global Security, comply with the procedures of the Depositary in effect at that time and, if required under Section 5.05(f), pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 5.05(f) and, if required under Section 5.04(g), pay any taxes or duties such Holder is required to pay as set forth in Section 5.04(g); and

(ii)in the case of a Physical Security, (A) complete and manually sign and deliver an irrevocable written notice to the Conversion Agent in the form attached to such Physical Security as set forth in Exhibit A (or a facsimile thereof) (a “Conversion Notice”) at the office of the Conversion Agent and shall state in writing therein the principal amount of Securities to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any shares of Common Stock, if any, to be delivered upon settlement of the Conversion Obligation to be registered, (B) surrender such Securities, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent, (C) if required under Section 5.05(f), pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 5.05(f) and, (D) if required under Section 5.04(g), pay any taxes or duties such Holder is required to pay as set forth in Section 5.04(g).

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(b)The date on which the Holder has complied with the requirements set forth in Section 5.04(a) in respect of a Security shall be deemed to be the “Conversion Date” for such Security.

(c)No Conversion Notice with respect to any Securities may be tendered by a Holder thereof if such Holder has also tendered a Fundamental Change Repurchase Notice or a Ratio Event Repurchase Notice and not validly withdrawn such Fundamental Change Repurchase Notice or Ratio Event Repurchase Notice, as the case may be, in accordance with the applicable provisions of Article 4.

(d)If the Company calls Securities for redemption pursuant to Section 4.08, a Holder may convert its Securities only until the close of business on the Business Day prior to the applicable Redemption Date.

(e)If more than one Security shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Securities, if any, that shall be payable upon conversion shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof to the extent permitted thereby) so surrendered.

(f)In case any Security shall be surrendered for partial conversion, the Company shall execute and the Trustee shall, as provided in an Officers’ Certificate, authenticate and deliver to or upon the written order of the Holder of the Security so surrendered, without charge to such Holder, a new Security or Securities in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Securities.

(g)If a Holder submits a Security for conversion, the Company shall pay all stamp and other duties, if any, which may be imposed by the United States or any political subdivision thereof or taxing authority thereof or therein with respect to the issuance of shares of Common Stock, if any, upon the conversion.  However, the Holder shall pay any such tax which is due because the Holder requests any shares of Common Stock to be issued in a name other than the Holder’s name.  The Company may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder’s name until the Company receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder’s name.  Nothing herein shall preclude any tax withholding required by law or regulations.

(h)Upon the conversion of an interest in a Global Security, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on such Global Security as to the reduction in the principal amount represented thereby.  The Company shall notify the Trustee in writing of any conversion of Securities effected through any Conversion Agent other than the Trustee.

5.05SETTLEMENT OF CONVERSION OBLIGATION.

(a)Subject to clause (d) of this Section 5.05, upon conversion of any Securities in accordance with this Article 5, the Company shall deliver, with respect to each $1,000 principal amount of Securities converted, no later than the third Business Day immediately following the Conversion Date, a number of shares of Common Stock equal to the Conversion Rate in effect

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on the Conversion Date, and, if applicable, cash in lieu of fractional shares (the “Conversion Obligation”).

(b)If applicable, upon conversion the Company will also pay to a converting Holder, subject to Section 5.16, that amount of cash, if any, contemplated to be paid pursuant to Section 5.07(m), in addition to the shares of Common Stock received upon conversion and any cash in lieu of fractional shares.

(c)If the Conversion Price as adjusted pursuant to Section 5.03 above is lower than the Cap Price and, absent the Cap Price, the Conversion Price would have been reduced pursuant to the Make-Whole Fundamental Change to a price that is lower than the Cap Price, then, subject to Section 5.16, upon conversion of a Security, the converting Holder will, in addition to the shares of Common Stock received upon conversion and any cash in lieu of fractional shares, receive an additional cash payment equal to the Last Reported Sale Price on the applicable Conversion Date multiplied by that number of additional shares of Common Stock that would have been issuable upon conversion of the Securities had the Cap Price not been applicable.

If, pursuant to the vote required by Section 3.14, the Company’s stockholders approve the Share Cap Proposal and a Make-Whole Fundamental Change adjustment is triggered, then the Cap Price will no longer apply and the conversion price thereafter applicable shall be reduced to equal the greater of the Floor Price or the Conversion Price as adjusted pursuant to Section 5.03 above.

(d)Notwithstanding clause (a) above, if, following a Make-Whole Fundamental Change, Securities are surrendered for conversion following the related Effective Date and the Reference Property into which the Securities are convertible consists solely of cash as set forth in Section 5.12, then the Company shall satisfy the related Conversion Obligations by delivering, no later than the third Business Day following the Conversion Date, cash in an amount equal to the Stock Price multiplied by the Conversion Rate then in effect.

(e)The Company shall issue, or shall cause to be issued, for any shares of Common Stock due upon conversion to such Holder, or such Holder’s nominee or nominees, certificates or, to the extent permissible, a book-entry transfer through the Depositary (together with any cash in lieu of fractional shares and any cash payable pursuant to Sections 5.05(f) or 5.07(m)).

(f)Upon conversion, a Holder shall not receive any separate cash payment for accrued and unpaid interest except as set forth in this clause (f).  The Company’s settlement of the Conversion Obligation as described above shall be deemed to satisfy its obligation to pay the principal amount of the Security and accrued and unpaid interest to, but not including, the Conversion Date.  As a result, accrued and unpaid interest to, but not including, the Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited.  Notwithstanding the preceding sentence, if Securities are converted after 5:00 p.m., New York City time, on a Record Date for the payment of interest, Holders of such Securities as of 5:00 p.m., New York City time, on the Record Date shall receive the interest payable on such Securities on the corresponding Interest Payment Date notwithstanding the conversion.  Securities surrendered for conversion during the period from 5:00 p.m., New York City time, on any Record Date to 9:00 a.m., New York City time, on the corresponding Interest Payment Date

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must be accompanied by payment of an amount equal to the interest payable on the Securities so converted; provided that no such payment need be made with respect to any Security:

(i)if the Company has specified a Fundamental Change Repurchase Date that is after a Record Date and on or prior to the corresponding Interest Payment Date;

(ii)if the Company has called such Security for redemption and specified a Redemption Date for such Security that is after a Record Date and on or prior to the corresponding Interest Payment Date;

(iii)to the extent of any overdue interest on such Security which remains unpaid at the time of conversion with respect to such Security; or

(iv)if the Conversion Date for such Security occurs after the close of business on the Record Date immediately preceding the Stated Maturity Date.

Except as described above, no payment or adjustment shall be made for accrued interest on converted Securities.

(g)Upon conversion of any Securities pursuant to this Article 5, (i) any such Securities shall be deemed to have been converted and shall cease to be outstanding immediately prior to the close of business on the Conversion Date and, (ii) as of the close of business on the last Trading Day prior to the Conversion Date the Holder of such Securities shall be deemed to be a holder of record of any shares of the Common Stock issuable as a result of the conversion of such Securities.

5.06FRACTIONS OF SHARES.

(a)No fractional shares of Common Stock shall be issued upon conversion of any Security.

(b)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 which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so surrendered.

(c)Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Securities (or specified portions thereof), the Company shall calculate and pay a cash adjustment in respect of such fraction (calculated to the nearest 1/100th of a share) in an amount equal to the Last Reported Sale Price of the Common Stock on the last Trading Day prior to the Conversion Date.

5.07ADJUSTMENT OF CONVERSION RATE.

(a)The Conversion Rate shall be adjusted from time to time by the Company as set forth in this Section 5.07; provided that the Company shall not make any adjustments to the Conversion Rate pursuant to clauses (b) through (f) hereunder if Holders of the Securities participate (as a result of holding the Securities, and at the same time as holders of the Common

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Stock participate) in any of the transactions described below as if such Holders held a number of shares of Common Stock equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Securities held by such Holders, without having to convert their Securities.

(b)In case the Company shall issue shares of Common Stock as a dividend or distribution on shares of Common Stock, or shall effect a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:

CR1 = CR0 x	OS1
	OS0

where,

CR1=the Conversion Rate in effect immediately after the open of business on the Ex-Date for such dividend or distribution or the effective date of such share split or combination, as the case may be;

CR0=the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such dividend or distribution or the effective date of such share split or combination, as the case may be;

OS1=the number of shares of Common Stock outstanding immediately prior to the open of business on the Ex-Date for such dividend or distribution or the effective date of such share split or combination, in each case, after giving effect to such dividend, distribution or share split or combination, as the case may be; and

OS0=the number of shares of Common Stock outstanding immediately prior to the open of business on the Ex-Date for such dividend or distribution or the effective date of such share split or combination, as the case may be.

Such adjustment shall become effective immediately after the open of business on the Ex-Date for such dividend or distribution, or the effective date for such share split or share combination.  If any dividend or distribution of the type described in this Section 5.07(b) is declared but not so paid or made, or the outstanding shares of Common Stock are not split or combined, as the case may be, the Conversion Rate shall be immediately readjusted, effective as of the date the Company determines not to pay such dividend or distribution, or split or combine the outstanding shares of Common Stock, as the case may be, to the Conversion Rate that would then be in effect if such dividend, distribution, share split or share combination had not been declared.

(c)In case the Company shall distribute to all or substantially all holders of its outstanding shares of Common Stock any rights or warrants entitling them for a period of not more than 60 days from the issuance date for such distribution to subscribe for or purchase shares of Common Stock at a price per share less than the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the declaration date of such distribution, the Conversion Rate shall be increased based on the following formula:

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CR1 = CR0 x	OS0+ X
	OS0+ Y

where,

CR1 =the Conversion Rate in effect immediately after the open of business on the Ex-Date for such distribution;

CR0 =the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such distribution;

OS0 =the number of shares of Common Stock outstanding immediately prior to the open of business on the Ex-Date for such distribution;

X =the total number of shares of Common Stock issuable pursuant to such rights or warrants; and

Y =the number of shares of Common Stock equal to the aggregate price payable to exercise such rights or warrants, divided by the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date for such distribution.

Such adjustment shall be successively made whenever any such rights or warrants are distributed and shall become effective immediately after the open of business on the Ex-Date for such distribution.  To the extent such rights or warrants are not exercised prior to their expiration or shares of the Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.  If such rights or warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such Ex-Date for such distribution had not been fixed.

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

If, based on the same event, a Conversion Rate adjustment is triggered pursuant to both this clause (c) and subclause (ii) of clause (n) of this Section 5.07, the Conversion Rate shall be adjusted in accordance with the provisions of the clause that provides the adjustment most favorable to the Holders.

(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, evidences of its indebtedness or other assets or property of the Company, excluding:

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(i)dividends or distributions as to which an adjustment was effected pursuant to Section 5.07(b) or Section 5.07(c);

(ii)dividends or distributions paid exclusively in cash; and

(iii)distributions described below in this clause (d) with respect to Spin-Offs),

(any of such shares of Capital Stock, indebtedness, or other asset or property hereinafter in this clause (d) called the “Distributed Property”), then, in each such case the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 x	SP0
	SP0- FMV

where,

CR1 =the Conversion Rate in effect immediately after the open of business on the Ex-Date for such distribution;

CR0 =the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such distribution;

SP0 =the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date for such distribution; and

FMV =the fair market value as determined by the Board of Directors of the Distributed Property distributed with respect to each outstanding share of Common Stock as of the open of business on the Ex-Date for such distribution.

Such adjustment shall become effective immediately after the open of business on the Ex-Date for such distribution.  If the Board of Directors determines “FMV” for purposes of this Section 5.07(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 Last Reported Sale Prices of the Common Stock over the ten consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date for such distribution.

With respect to an adjustment pursuant to this clause (d) where there has been a payment of a dividend or other distribution on the Common Stock or shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company that are listed on a national or regional securities exchange (a “Spin-Off”), the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 x	FMV + MP0
	MP0

where,

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CR1 =the Conversion Rate in effect immediately after the open of business on the Ex-Date for the Spin-Off;

CR0 =the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for the Spin-Off;

FMV =the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of Common Stock over the first 10 consecutive Trading Day period immediately following, and including, the third Trading Day after the Ex-Date for the Spin-Off (such period, the “Valuation Period”); and

MP0 =the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.

Such adjustment to the Conversion Rate under the foregoing provisions of this clause (d) shall be made immediately after the open of business on the day after the last Trading Day of the Valuation Period, but shall be given effect as of the open of business on the Ex-Date for the Spin-Off.

(e)In case the Company shall pay cash dividends or make cash distributions to all or substantially all holders of the Common Stock, the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 x	SP0
	SP0 – C

where,

CR1=the Conversion Rate in effect immediately after the open of business on the Ex-Date for such distribution;

CR0=the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such distribution;

SP0=the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date for such distribution; and

C=the amount in cash per share the Company distributes to holders of Common Stock in such distribution.

Such adjustment shall become effective immediately after the open of business on the Ex-Date for such dividend or distribution.  If the portion of the cash so distributed applicable to one share of the Common Stock is equal to or greater than “SP₀” as set forth above, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Securities shall receive on the date on which such cash dividend is distributed to holders of Common Stock, for

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each $1,000 principal amount of Securities, the amount of cash such holder would have received had such Holder owned a number of shares equal to the Conversion Rate on the Ex-Date for such distribution, without being required to convert the Securities.  If such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(f)In case the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for all or any portion of the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Last Reported Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended), the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 x	AC + (SP1 x OS1)
	OS0 x SP1

where,

CR₁ =the Conversion Rate in effect immediately after the open of business on the Trading Day next succeeding the date such tender or exchange offer expires;

CR0 =the Conversion Rate in effect immediately prior to the open of business on the Trading Day next succeeding the date such tender or exchange offer expires;

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

SP1 =the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires (the “Averaging Period”);

OS1 =the number of shares of Common Stock outstanding immediately after the close of business on the date such tender or exchange offer expires (after giving effect to such tender offer or exchange offer); and

OS0 =the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to such tender offer or exchange offer).

Such adjustment shall be made immediately prior to the open of business on the day following the last day of the Averaging Period, but shall be given effect as of the open of business on the Trading Day next succeeding the date such tender or exchange offer expires.

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If the Company or any of its Subsidiaries is obligated to purchase shares of Common Stock pursuant to any such tender or exchange offer, but the Company or such Subsidiary is permanently prevented by applicable law from effecting all or any such purchases or all or any portion of 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 or had only been made in respect of the purchases that had been effected.

(g)For purposes of this Section 5.07 the term “record date” shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of shareholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

(h)For the avoidance of doubt, for purposes of clauses (b), (c), (d), (e) and (f) of this Section 5.07 in the event of any reclassification of the Common Stock, as a result of which the Securities become convertible into more than one class of Common Stock, if an adjustment to the Conversion Rate is required pursuant to any of clauses (b), (c), (d), (e) and (f), references in those clauses to one share of Common Stock or Last Reported Sale Price of one share of Common Stock shall be deemed to refer to a unit or to the price of a unit consisting of the number of shares of each class of Common Stock into which the Securities are then convertible equal to the numbers of shares of such class issued in respect of one share of Common Stock in such reclassification.  The above provisions of this paragraph shall similarly apply to successive reclassifications.

(i)In addition to those required by clauses (b), (c), (d), (e) and (f) of this Section 5.07, and to the extent permitted by applicable law and the rules of The Nasdaq Global Market or any other securities exchange or market on which the Common Stock is then listed, the Company from time to time may, in its sole discretion, increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Company’s Board of Directors determines that such increase would be in the Company’s best interest.  Whenever the Conversion Rate is increased pursuant to the preceding sentence, the Company shall mail to the Holder of each Security at his last address appearing on the Register provided for in Section 1.07 an irrevocable notice of the increase at least 20 Business Days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.  In addition, the Company may also (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with any dividend or distribution of shares (or rights to acquire shares) or similar event.

(j)Without limiting the foregoing, no adjustment to the Conversion Rate need be made

(i)except as provided under clause (c) above or clauses (n) through (q) below, upon the issuance of any shares of Common Stock or any options, warrants, rights or any exchangeable or convertible security;

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

(iii)for accrued and unpaid interest (including any Additional Interest).

(k)The Company shall not make any adjustment to the Conversion Rate under clauses (b), (c), (d), (e), (f) or (n) of this Section 5.07 unless the adjustments would result in a change of at least 1% in the Conversion Rate.  However, the Company will carry forward any adjustment that it would otherwise have to make and take that adjustment into account in any subsequent adjustment.  In addition, regardless of whether the aggregate adjustment is less than 1%, the Company will make such carried-forward adjustments not otherwise effected with respect to any Security on the earlier of (i) the date of the conversion of such Security, and (ii) the one-year anniversary of the first date upon which an adjustment would otherwise have been made, except to the extent such adjustment has already been made.

(l)All calculations and other determinations under this Article 5 shall be made by the Company and shall be made to the nearest cent or to the nearest 1/10,000th of a share, as the case may be.

(m)If the arithmetic average of the daily VWAP per share of Common Stock for the five consecutive Trading Days immediately preceding, but not including, June 18, 2009 (the “366 Day Price”) is less than the $3.28, then the Conversion Price shall be reduced (the “Reset”) to equal the greater of (i) the 366 Day Price or (ii) $2.76 (the “Cap Price”) (and the Conversion Rate shall be accordingly and proportionally increased).  If the 366 Day Price is lower than the Cap Price and, absent the Cap Price, the Conversion Price would have been reduced pursuant to the Reset to the 366 Day Price, then, subject to Section 5.16, upon conversion of a Security, the converting Holder will, in addition to the shares of Common Stock received upon conversion and any cash in lieu of fractional shares, receive an additional cash payment equal to the Last Reported Sale Price on the applicable Conversion Date multiplied by that number of additional shares of Common Stock that would have been issuable upon conversion of the Securities had the Cap Price not been applicable and the conversion price had been reset to the greater of $2.00 (the “Floor Price”) or the 366 Day Price.

If, pursuant to the vote required by Section 3.14, the Company’s stockholders approve the Share Cap Proposal and the Reset is triggered, then the Cap Price will no longer apply and the conversion price thereafter applicable shall be reduced to equal the greater of the Floor Price or the 366 Day Price.

If the 366 Day Price equals or exceeds the $3.28, no adjustment shall be made pursuant to the Reset provisions described above.  The foregoing $3.28 price, the Floor Price and the Cap Price are prior to any adjustment and shall be adjusted in accordance with adjustments to the Conversion Rate described clauses (b), (c), (d), (e) and (f) of this Section 5.07 but they shall not be adjusted as a result of adjustments to the Conversion Rate described under Section 5.12.  The Conversion Rate pursuant to this clause (m) shall be determined without giving effect to any increase in the Conversion Rate pursuant to clause (i) of this Section 5.07.

(n)(i)If and whenever the Company issues or sells, or is deemed to have issued or sold, any shares of common stock, options, rights, warrants, convertible or other securities

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(including the issuance or sale of shares of common stock, options, rights, warrants, convertible or other securities owned or held by or for the account of the Company, but excluding Excluded Securities or securities that are deemed to have been issued or sold by the Company in connection with any Excluded Security) for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”) equal to the conversion price in effect immediately prior to such issue or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Conversion Rate then in effect shall be increased to an amount equal to the product of (A) the Conversion Rate in effect immediately prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the product derived by multiplying (I) the Applicable Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of Common Stock deemed outstanding immediately after such Dilutive Issuance, by (2) the sum of (I) the product derived by multiplying the Applicable Price by the number of shares of Common Stock deemed outstanding immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance.

(ii)If the Company in any manner grants or sells any options, rights, warrants or convertible securities (collectively, “Options,” as used in this clause (o)) and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any convertible securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this paragraph, the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any convertible securities issuable upon exercise of such option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the option, upon exercise of the Option and upon conversion or exchange or exercise of any convertible security issuable upon exercise of such Option. No further adjustment of the Conversion Rate shall be made upon the actual issuance of such share of Common Stock or of such convertible securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such convertible securities.  If, based on the same event, a Conversion Rate adjustment is triggered pursuant to both this subclause (ii) and clause (c) of this Section 5.07, the Conversion Rate shall be adjusted in accordance with the provisions of the clause that provides the adjustment most favorable to the Holders.

(iii)If the Company in any manner issues or sells any convertible securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such convertible securities for such price per share. For the purposes of this paragraph, the “lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the convertible security and upon the conversion or exchange

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or exercise of such convertible security. No further adjustment of the Conversion Rate shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such convertible securities, and if any such issue or sale of such convertible securities is made upon exercise of any options for which adjustment of the Conversion Rate had been or are to be made pursuant to this clause (n), no further adjustment of the Conversion Rate shall be made by reason of such issue or sale.

(iv)If the purchase price provided for in any options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any convertible securities, or the rate at which any convertible securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Rate in effect at the time of such change shall be adjusted to the Conversion Rate which would have been in effect at such time had such options or convertible securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this paragraph, if the terms of any option or convertible security that was outstanding as of the date of this offering memorandum are changed in the manner described in the immediately preceding sentence, then such option or convertible security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in a reduction of the Conversion Rate then in effect.

(v)In case any option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such options by the parties thereto, such options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such options and other securities issued or sold in such integrated transaction, less, (y) the fair market value of the securities other than such option, issued or sold in such transaction, and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, options or convertible securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any Common Stock, options or convertible securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Last Reported Sale Price of such securities on the date of receipt. The fair value of any consideration other than cash or securities will be determined, at the Company’s expense, within five Business Days after the tenth day following the valuation event by an independent, nationally-recognized appraiser appointed by the Company. The determination of such appraiser shall be binding absent manifest error.

(vi)Unless approval of the stockholders permitting such issuance has been obtained in advance, the Company will not take any action that would cause the provisions of this clause (n) to be triggered to the extent the resulting adjustment would

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not be in compliance with the applicable regulations of The Nasdaq Global Market or any other exchange or market on which the Company’s Common Stock is then traded.

(o)If the Company takes a record of the holders of Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock, options or in convertible securities or (ii) to subscribe for or purchase Common Stock, options or convertible securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(p)For purposes of this Section 5.07, 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.

5.08NOTICE OF ADJUSTMENTS OF CONVERSION RATE.

(a)Whenever the Conversion Rate is adjusted as herein provided:

(i)the Company shall compute the adjusted Conversion Rate in accordance with Section 5.07 and shall prepare a certificate signed by an Officer setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall promptly be filed with the Trustee and with each Conversion Agent (if other than the Trustee); and

(ii)as soon as reasonably practicable after each such adjustment, the Company shall provide a notice to all Holders stating that the Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate.

(b)Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate or the information and calculations contained therein, except to exhibit the same to any Holder of Securities desiring inspection thereof at its office during normal business hours.

5.09COMPANY TO RESERVE COMMON STOCK.

The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock per $1,000 principal amount of Securities equal to 130% of the Initial Conversion Rate.  So long as any Securities are outstanding, the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Securities, 130% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Securities then outstanding; provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved by the previous sentence (without regard to any limitations on conversions) (the “Required Reserve Amount”).

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If at any time while any of the Securities remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Securities at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Securities then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than 60 days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock and the Company shall be required to increase the number of authorized shares no later than 90 days after the occurrence of the Authorized Share Failure (the “Authorized Share Failure Deadline”). In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its Board of Directors to recommend to the stockholders that they approve such proposal.

5.10CERTAIN COVENANTS.

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

5.11CANCELLATION OF CONVERTED SECURITIES.

All Securities delivered for conversion shall be delivered to the Trustee or its agent and canceled by the Trustee as provided in Section 2.15.

5.12EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.

(a)If there shall be:

(i)any reclassification or change of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a split, subdivision or combination);

(ii)a consolidation, binding share exchange, recapitalization, reclassification, merger, combination or other similar event; or

(iii)any sale or conveyance to another Person of all or substantially all of the property and assets of the Company (excluding a pledge of securities issued by any of the Company’s subsidiaries),

in any case as a result of which holders of Common Stock shall be entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock (any such event described in clauses (i) through (iii), a “Reorganization Event”), then at the

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effective time of such Reorganization Event, the right to convert each $1,000 principal amount of Securities shall be changed to a right to convert such Securities by reference to the kind and amount of cash, securities or other property or assets that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such transaction would have owned or been entitled to receive (the “Reference Property”).

(b)From and after the effective time of a Reorganization Event, upon conversion of a Security, the Last Reported Sale Price shall be calculated with respect to a unit of Reference Property corresponding to the amount of Reference Property that a holder of one share of the Common Stock would have received in the Reorganization Event.

(c)For purposes of determining the constitution of Reference Property, the type and amount of consideration that a holder of Common Stock would have been entitled to in the case of reclassifications, consolidations, mergers, sales or conveyance of assets or other transactions that cause the Common Stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election) shall be deemed to be the (i) weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election or (ii) if no holders of Common Stock affirmatively make such election, the types and amounts of consideration actually received by such holders.

(d)The Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under Section 12.01 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 5 and the Trustee may conclusively rely on the determination by the Company of the equivalency of such adjustments.

(e)In the event a supplemental indenture is executed pursuant to this Section 5.12, the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or assets that will constitute the Reference Property after any such Reorganization Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with, and shall promptly mail notice thereof to all Holders.  Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

(f)The Company shall not become a party to any such transaction unless its terms are consistent with this Section 5.12.  None of the foregoing provisions shall affect the right of a holder of Securities to convert its Securities in accordance with the provisions of this Article 5 prior to the effective date of a Reorganization Event.

(g)The provisions of this Section 5.12 shall similarly apply to successive Reorganization Events.

5.13RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.

(a)The Trustee, subject to the provisions of Article 9, and any Conversion Agent, shall not at any time be under any duty or responsibility to any Holder of Securities or to the

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Company to determine whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, herein or in any supplemental indenture provided to be employed, in making the same, or whether a supplemental indenture need be entered into.

(b)Neither the Trustee, subject to the provisions of Article 9, nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind or amount) of any Common Stock, or of any other securities or property or cash, which may at any time be issued or delivered upon the conversion of any Securities, and it or they do not make any representation with respect thereto nor shall the Trustee or any Conversion Agent be responsible for monitoring the price of any Common Stock.  Neither the Trustee, subject to the provisions of Article 9, nor any Conversion Agent shall be responsible for making calculations under this Article 5, nor any failure of the Company to make or calculate any cash payment or to issue, transfer or deliver any shares of Common Stock or share certificates or other securities or property or cash upon the surrender of any Security for the purpose of conversion; and the Trustee, subject to the provisions of Article 9, and any Conversion Agent shall not be responsible for any failure of the Company to comply with any of the covenants of the Company contained in this Article 5.

5.14STOCKHOLDER RIGHTS PLAN.

To the extent shares of Common Stock traded on the Relevant Exchange trade with rights, if any, as may be provided by the terms of any stockholder rights plan adopted by the Company, as the same may be amended from time to time, each share of Common Stock issued upon conversion of Securities pursuant to this Article 5 shall be entitled to receive the appropriate number of such rights and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan adopted by the Company, as the same may be amended from time to time.  If prior to any conversion, however, such rights have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights agreement, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all holders of the Common Stock, shares of the Company’s Capital Stock, evidences of indebtedness, assets, property, rights or warrants as described in Section 5.07(d), subject to readjustment in the event of the expiration, termination or redemption of such rights.

5.15COMPANY DETERMINATION FINAL.

Any determination that the Company or the Board of Directors must make pursuant to this Article 5 shall be conclusive if made in good faith, absent manifest error.

5.16COMPLIANCE WITH LISTING RULES.

Notwithstanding any of the conversion provisions described in this Article 5, including without limitation the right to receive an additional cash payment if the Cap Price conditions described above under Sections 5.05(b), (c) and 5.07(m) are met, there shall be an overriding limit on the conversion provisions with respect to the Securities such that to the extent that the operation of any conversion provision would cause the Company to breach the applicable rules and regulations of The Nasdaq Global Market or any applicable eligible securities exchange or

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market on which the Common Stock to be delivered upon conversion is then listed or trading, such conversion provision shall be null and void and of no force or effect to such extent.

VI.  RIGHTS OF PARTICIPATION IN FUTURE EQUITY ISSUANCES

6.01OFFER NOTICES.

Prior to June 17, 2010, the Company will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of, or announce any offer, sale, grant of any option to purchase or other disposition of, any of its or its Subsidiaries’ Capital Stock or equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for shares of Common Stock, unless it first shall have delivered to the Trustee for delivery to each Holder an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance, sale or exchange of the securities being offered which (a) identifies and describes the securities being offered, (b) describes the price and other terms upon which the securities are to be issued, sold or exchanged, (c) sets forth the number or amount of securities being issued, sold or exchanged, (d) identifies the persons or entities (if known) to which the securities are to be offered, issued, sold or exchanged and (e) offers to issue, sell or exchange to the Holders up to 35% of the securities, allocating among the Holders (x) based on each Holder’s pro rata portion of the aggregate principal amount of Securities purchased on the Issue Date (such pro rata portion of such Holder being such Holder’s “Basic Amount”), and (y) with respect to each Holder that elects to purchase its Basic Amount, any additional portion of the securities being issued, sold or exchanged attributable to the Basic Amounts of other Holders as such Holder indicates it will purchase or acquire in the event the other Holders subscribe for less than their Basic Amounts (the “Undersubscription Amount”), which process shall be repeated until the Holders have an opportunity to subscribe for any remaining Undersubscription Amount.

6.02ACCEPTANCE OF OFFERS.

To accept an offer to purchase or acquire the securities being issued, sold or exchanged, in whole or in part, a Holder must deliver a written notice to the Company prior to the end of the fifth Business Day after such Holder’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of the Holder’s Basic Amount that the Holder elects to purchase and, if the Holder elects to purchase all of its Basic Amount, the Undersubscription Amount, if any, that the Holder elects to purchase (the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all Holders are less than the total of all of the Basic Amounts, then each Holder who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if (a) the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), then (b) the Available Undersubscription Amount shall be allocated among the Holders who have subscribed for Undersubscription Amounts based on each Holder’s pro rata portion of all of the Basic Amounts of the Holders who have subscribed for Undersubscription Amounts (subject to rounding by the Company to the extent it deems necessary).

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Notwithstanding this Section 6.02 and Section 6.01 above, if, prior to five Business Days after delivery of the Offer Notice, the Company chooses to modify or amend the terms and conditions upon which the securities are being offered, issued, sold or exchanged, then the Company may deliver to the Holders a new Offer Notice and the Holders shall have three Business Days after receipt of such new Offer Notice to deliver a Notice of Acceptance.

6.03SETTLEMENT OF PARTICIPATION IN EQUITY ISSUANCES.

(a)The Company shall have 20 Business Days from the expiration of the Offer Period above:

(i)to offer, issue, sell or exchange, pursuant to a definitive agreement(s), all or any part of the securities as to which a Notice of Acceptance was not given by the Holders, but only to the persons or entities described in the Offer Notice (if any persons or entities were described in the Offer Notice) or their affiliates and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring person or persons or less favorable to the Company than those set forth in the Offer Notice, and

(ii)to publicly announce (i) the execution of such definitive agreement(s), and either (ii) the consummation of the transactions contemplated by such agreement(s) or (iii) the termination of such agreement(s); all of (i), (ii) and (iii) which shall be filed with the SEC on a Current Report on Form 8-K, (and if the filing is disclosing the consummation of such transactions, the definitive agreement(s) and any applicable transaction documents shall be filed as exhibits thereto).

(b)In the event the Company proposes to offer, issue, sell or exchange less than all of the securities not subscribed by the Holders pursuant to a Notice of Acceptance, then each Holder may, at its sole option and in its sole discretion, reduce the number or amount of the securities specified in its Notice of Acceptance to an amount that is greater than or equal to the number or amount the Holder initially subscribed to in its Notice of Acceptance multiplied by the ratio of the number of securities that the Company proposes to sell to the number of securities the Company originally proposed to offer, issue, sell or exchange.  In the event that, pursuant to this paragraph, any Holder elects to reduce the number or amount of securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the securities unless and until the Company re-offers such securities to the Holders pursuant to an Offer Notice (except that, in that case, the Offer Period for such re-offer shall be reduced to five Business Days).

(c)Upon the closing of the issuance, sale or exchange of all or less than all of the securities not subscribed by the Holders pursuant to a Notice of Acceptance, the Holders shall acquire from the Company, and the Company shall issue to the Holders, the number or amount of securities specified in the Notices of Acceptance (as reduced pursuant to clause (b) above, if applicable), upon the terms and conditions specified in the Offer Notice. The purchase by the Holders of any of the securities is subject in all cases to the preparation, execution and delivery by the Company and the Holders of a definitive agreement, reasonably satisfactory in form and substance to the Holders and their respective counsel.

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(d)Any securities not acquired by the Holders or other persons in accordance with clause (a) above may not be issued, sold or exchanged until they are again offered to the Holders under the procedures specified in Sections 6.01 and 6.02 and clauses (a) through (c) above.

(e)the Company and the Holders agree that if any Holder elects to purchase or acquire securities pursuant to the procedures in Sections 6.01 and 6.02 and clauses (a) through (d) above, neither the subsequent definitive agreement nor any other related transaction documents shall include any term or provisions requiring the Holder to agree to any trading restrictions with respect to any securities of the Company held by the Holder prior to such purchase or acquisition.

(f)Notwithstanding anything to the contrary in Sections 6.01 and 6.02 and clauses (a) through (e) above and unless otherwise agreed to by the Holders,

(i)The Company shall either (x) confirm in writing to the Holders that the transaction with respect to the issuance, sale or exchange of the securities has been abandoned or (y) shall publicly disclose its intention to issue, sell or exchange the securities, in either case in such a manner such that the Holders will not be in possession of material non-public information, by the 20th Business Day following delivery of the Offer Notice;

(ii)if by the 20th Business Day following delivery of the Offer Notice no public disclosure regarding the transaction with respect to the issuance, sale or exchange of the securities has been made, and no notice regarding the abandonment of such transaction has been received by the Holders, the transaction shall be deemed to have been abandoned and the Holders shall not be deemed to be in possession of any material, non-public information with respect to the Company; and

(iii)should the Company decide to pursue the transaction with respect to the issuance, sale or exchange of the securities, the Company shall provide each Holder with another Offer Notice and each Holder will again have the right of participation set forth in these Sections 6.01 through 6.03.  The Company shall not be permitted to deliver more than one such Offer Notice to the Holders in any 60 day period.

6.04PARTICIPATION RIGHTS NOT APPLICABLE

The rights of the Holders contained in Sections 6.01 through 6.03 above shall not apply in connection with the issuance of any Common Stock or securities convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock equivalents issued or issuable pursuant to any issued convertible securities: (a) directly on an arm’s-length basis to an unrelated third party that is a counterparty, such counterparty’s affiliates or their respective stockholders, in connection with bona fide, strategic transactions approved by the Company’s Board of Directors (provided that the primary purpose of such issuance is not to raise equity capital); (b) pursuant to any bona fide firm commitment underwritten public offering with a nationally recognized underwriter, which generates gross proceeds to the Company in excess of $50,000,000; (c) that are Excluded Securities; or (d) in connection with any issuances of any securities related to the exercise, exchange, adjustment or conversion of the Securities.

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VII.  EVENTS OF DEFAULT; REMEDIES

7.01EVENTS OF DEFAULT.

An “Event of Default” means any one of the following events with respect to the Securities (whatever the reason for such event or whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)The Company’s (A) failure to comply with its obligation to convert the Securities into shares of Common Stock and, if applicable, cash  upon exercise of a Holder’s conversion right and that failure continues for five days; or (B) written notice to any Holder of the Securities, including by way of public announcement or through any of its agents, at any time, of its intention not to comply with a request for conversion of any Securities that are tendered in accordance with the provisions of the Securities;

(b)The Company’s failure to pay to any amount of principal or interest or other amounts when and as due under the Securities (including, without limitation, failure to pay any redemption or repurchase payments or amounts hereunder), except, in the case of a failure to pay interest when and as due, in which case only if such failure continues for a period of at least five Business Days;

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

(i)commences a voluntary case; or

(ii)consents to the entry of an order for relief against the Company or such Significant Subsidiary in an involuntary case, as the case may be; or

(iii)consents to the appointment of a Bankruptcy Custodian of the Company or such Significant Subsidiary, or of all or substantially all of the property of the Company or such Significant Subsidiary, as the case may be; or

(iv)makes a general assignment for the benefit of creditors of the Company or such Significant Subsidiary, as the case may be; or admits in writing that it is generally unable to pay its debts as they become due; or

(v)commences a voluntary liquidation, dissolution or winding up;

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

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

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(ii)appoints a Bankruptcy Custodian of the Company or a Significant Subsidiary of the Company, or of all or substantially all of the property of the Company or a Significant Subsidiary of the Company; or

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

(e)any default in the payment when due, after the expiration of any applicable grace period, of principal of, or premium, if any, or interest on, indebtedness, in the aggregate principal amount then outstanding of $10,000,000 or more, or any other defaults or other events on any Indebtedness of the Company or any of its Subsidiaries in an aggregate principal amount of $10,000,000 or more and which has resulted in the acceleration of the maturity date thereof and the principal amount of which having been declared due and payable or otherwise been caused to come due prior to its stated maturity;

(f)except as otherwise set forth in this section, the Company or any of its Subsidiaries party thereto fails to comply with any covenant or agreement contained in this Indenture, the Securities, the Pledge Agreement or the other Security Documents, and such failure continues for a period of at least ten consecutive Business Days after the Company receives written notice of such failure from the Holders of Securities representing at least 25% of the aggregate principal amount of the Securities then Outstanding;

(g)a final judgment or judgments for the payment of money aggregating in excess of $10,000,000 are rendered against the Company or any of its Significant Subsidiaries and which judgments are not, within 90 days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 90 days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $10,000,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within 30 days of the issuance of such judgment;

(h)at any time following an Authorized Share Failure Deadline if there has been an Authorized Share Failure;

(i)the suspension from trading or failure of the Common Stock to be listed on The Nasdaq Global Market or on an Eligible Market for a period of five consecutive days or for more than an aggregate of 15 days in any 365-day period; or

(j)any breach or failure in any respect to comply with any covenant of this Indenture relating to these Securities and such breach or failure continues for a period of at least ten consecutive Business Days after the Company receives written notice of such breach or failure from the Holders of Securities representing at least 25% of the aggregate principal amount of the Securities then outstanding.

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7.02ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

(a)If an Event of Default (other than an Event of Default specified in Section 7.01(c) or Section 7.01(d)) occurs and is continuing, then in every such case (except as provided in Section 7.03) the Holders of not less than 25% in principal amount of the Outstanding Securities may, and the Trustee at the written request of such Holders shall, declare the principal of all such Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal shall become immediately due and payable.

(b)If an Event of Default specified in Section 7.01(c) or Section 7.01(d) occurs, the principal of, and accrued and unpaid interest on, all of the Securities shall become immediately due and payable without any declaration or other Act of the Holders or any act on the part of the Trustee.

(c)At any time following an Event of Default and after such a declaration of acceleration has been made, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Company and the Trustee and without notice to any other Holder, may rescind and annul such declaration and its consequences if:

(i)such rescission and annulment will not conflict with any judgment or decree of a court of competent jurisdiction;

(ii)all Events of Default, other than the non-payment of the principal amount plus accrued and unpaid interest on Securities that have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 7.13;

(iii)the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances; and

(iv)in the event of the cure or waiver of an Event of Default of the type described in clause (c) or (d) of Section 7.01, the Trustee shall have received an Officers’ Certificate and an Opinion of Counsel stating that such Event of Default has been cured or waived.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

7.03DEFAULT ADDITIONAL INTEREST.

(a)Notwithstanding Section 7.02, if the Company so elects, the sole remedy of Holders for an Event of Default specified in Section 7.01(f) relating to the failure by the Company to comply with its obligations under Section 10.03 shall, for the first 90 days after the occurrence of such an Event of Default (which shall be the 10th Business Day after written notice is provided to the Company in accordance with Section 7.01(f)) consist exclusively of the right to receive additional interest (“Default Additional Interest”) at an annual rate equal to 0.25% per annum of the principal amount of the Outstanding Securities for each day of such 90-day period during which time such Event of Default continues.  The Company may elect to pay

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Default Additional Interest as the sole remedy under this Section 7.03(a) by giving notice to the Holders, the Trustee and Paying Agent of such election on or before the close of business on the date on which such Event of Default occurs.  If the Company fails to timely give such notice or pay Default Additional Interest, the Securities will be immediately subject to acceleration as provided in Section 7.02.  If such Event of Default has not been cured or waived prior to the 91st day after its occurrence, then the Securities shall be subject to acceleration in accordance with Section 7.02.

(b)Default Additional Interest shall be payable in arrears on each Interest Payment Date following the occurrence of such Event of Default in the same manner as regular interest on the Securities.

(c)If Default Additional Interest is payable under this Section 7.03, the Company shall deliver to the Trustee an Officers’ Certificate to that effect stating that Default Additional Interest is payable and the date upon which such Default Additional Interest shall begin to accrue.  Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a certificate, the Trustee may assume without inquiry that Default Additional Interest is not payable.  If Default Additional Interest has been paid by the Company directly to the Persons entitled to it, the Company shall deliver to the Trustee an Officers’ Certificate setting forth the particulars of such payment.

(d)The provisions of this Section 7.03 with respect to an Event of Default of the type described in clause (a) above shall not affect the rights of the Holders in the event of the occurrence of any other Event of Default.

7.04COLLECTION OF INDEBTEDNESS AND ENFORCEMENT BY TRUSTEE.

(a)The Company covenants that if a Default is made in the payment of the principal amount and accrued and unpaid interest at the Maturity thereof or in the payment of the Fundamental Change Repurchase Price in respect of any Security, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities, and, in addition thereto, such further amounts required pursuant to Section 7.08, together with amounts owed to the Trustee, its agents and counsel hereunder.

(b)Subject to the provisions of this Indenture relating to the duties of the Trustee, the Trustee may exercise any of the rights or powers under this Indenture, but will be under no obligation to do so at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense.

(c)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, and any recovery or judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities.  A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or

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constitute a waiver of, or acquiescence in, the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.

7.05TRUSTEE MAY FILE PROOFS OF CLAIM.

(a)In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding.  In particular, the Trustee shall be authorized 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 other 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 to 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 9.07.

(b)No provision of this Indenture 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.

7.06APPLICATION OF MONEY COLLECTED.

Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money to Holders, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST:  To the payment of all amounts due the Trustee and the Collateral Agent hereunder and under the Security Documents;

SECOND:  To the payment of the amounts then due and unpaid on the Securities for the principal amount, Fundamental Change Repurchase Price, Redemption Price or interest, as the case may be, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities; and

THIRD:  To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto.

7.07LIMITATION ON SUITS.

No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for

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any other remedy hereunder (other than in the case of an Event of Default specified in Section 7.01(a) or Section 7.01(b)), unless:

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

(b)the Holders of at least 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to pursue such remedy in its own name as Trustee hereunder;

(c)such Holder or Holders have provided to the Trustee security or indemnity reasonably satisfactory to the Trustee against the expenses, losses and liabilities to be incurred in compliance with such request;

(d)the Trustee, for 60 days after its receipt of such notice, request and provision of adequate security or indemnity, has failed to institute any such proceeding; and

(e)no direction, in the opinion of the Trustee, inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities,

it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders.

7.08UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal amount, Fundamental Change Repurchase Price, Ratio Event Repurchase Price, Redemption Price or 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 Fundamental Change Repurchase Date or Ratio Event Repurchase Date, as applicable, and to convert the Securities in accordance with Article 5, or to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, shall not be impaired or affected adversely without the consent of such Holder.

7.09RESTORATION OF RIGHTS AND REMEDIES.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

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7.10RIGHTS AND REMEDIES CUMULATIVE.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 2.12, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

7.11DELAY OR OMISSION NOT WAIVER.

No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

7.12CONTROL BY HOLDERS.

The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that:

(i)such direction shall not be in conflict with any rule of law or with this Indenture; and

(ii)the Trustee may refuse to follow any such direction that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability;

(iii)it being understood that the Trustee shall be entitled to the protections provided to it under Sections 9.01(b)(iii) and 9.01(c) in connection with such direction.

7.13WAIVER OF PAST DEFAULTS.

(a)The Holders of a majority or more in aggregate principal amount of the Securities may waive any existing Default under this Indenture, and its consequences, except a default in the payment of the principal of or interest or Additional Interest, if any, on any Securities.  Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

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7.14UNDERTAKING 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, in either case in respect of the Securities, a court may require any party litigant in such suit to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorney’s 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; but the provisions of this Section 7.14 shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal amount on any Security on or after Maturity of such Security or the Fundamental Change Repurchase Price.

7.15WAIVER OF STAY OR EXTENSION LAWS.

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

7.16VIOLATIONS OF CERTAIN COVENANTS.

A violation of any covenant or agreement in this Indenture that expressly provides that a violation of such covenant or agreement shall not constitute an Event of Default may only be enforced by the Trustee by instituting a legal proceeding against the Company for enforcement of such covenant or agreement.

VIII.  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

8.01COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

(a)The Company shall not consolidate with or merge with or into any other Person or, transfer all or substantially all its assets to another Person (excluding a pledge of securities issued by the Company or any of the Company’s Subsidiaries), unless:

(i)the resulting, surviving or transferee person (the “Successor Company”) assumes by supplemental indenture all of the Company’s obligations under the Securities and this Indenture;

(ii)the Successor Company shall be a corporation organized and existing under the laws of the United States of America, and a state thereof or the District of Columbia;

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

(iv)if the Securities become convertible into Common Stock or other securities issued by a Person other than the Successor Company as a result of such transaction, such Person shall fully and unconditionally guarantee all obligations of the Successor Company under the Securities and this Indenture;

(v)the Trustee shall have received an Opinion of Counsel to the effect that the merger, consolidation or transfer complies with the Indenture; and

(vi)the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 8.

(b)Upon satisfaction of the conditions described above, all of the Company’s obligations in respect of the Securities shall be terminated, and the Successor Company shall succeed to, and may exercise, all of the Company’s rights and powers under this Indenture.

8.02EFFECTIVENESS OF CONSOLIDATION, MERGER OR TRANSFER.

(a)Upon satisfaction of all applicable conditions in Section 8.01, all such obligations of the Company or such other predecessor corporation shall be terminated.

(b)The Successor Company formed by such consolidation or into which the Company is merged or the Successor Company to which such conveyance, transfer, 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 conveyance, transfer or lease of all or substantially all the Company’s assets (in which case the Company will not be discharged from the obligation to pay the principal amount of the Securities and interest, including any Additional Interest) and except for obligations, if any, that 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 12.04, the Company, the Trustee and the Successor Company shall enter into a supplemental indenture to evidence the succession and substitution of such Successor Company and such discharge and release of the Company.

IX.  THE TRUSTEE

9.01DUTIES AND RESPONSIBILITIES OF TRUSTEE.

(a)The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee.  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,

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and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

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

(i)prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred:

(A)the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(B)in the absence of bad faith and willful misconduct on the part of the Trustee, the Trustee may conclusively rely as to the truth and accuracy of the statements and the correctness of the opinions expressed therein, upon any 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 provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate, and shall not be responsible for, the accuracy of any mathematical calculations or other facts stated therein);

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

(iii)the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the written direction of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding in accordance with Section 1.05 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;

(iv)whether or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section 9.01;

(v)the Trustee shall not be liable in respect of any payment (as to the correctness of amount, entitlement to receive or any other matters relating to payment) or notice effected by the Company or any other Paying Agent or any records maintained by the Security Registrar with respect to the Securities; and

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(vi)if any party fails to deliver a notice relating to an event the fact of which, pursuant to this Indenture, requires notice to be sent to the Trustee, the Trustee may conclusively rely on its failure to receive such notice as reason to act as if no such event occurred.

(c)None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

9.02NOTICE OF DEFAULTS.

(a)If a Default occurs and is continuing and is actually known to a Responsible Officer of the Trustee, the Trustee shall give the Holders notice of thereof within 90 days after it obtains such knowledge, unless such Default has been cured or waived.

(b)Notwithstanding Section 9.02(a), the Trustee shall be protected in withholding notice of a Default, except in the case of any Default in the payment of principal amount or interest on any of the Securities or Fundamental Change Repurchase Price, or in the performance of Conversion Obligations, if and so long as the Board of Directors or a committee of Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Securities.

9.03RELIANCE ON DOCUMENTS, OPINIONS, ETC.

Except as otherwise provided in Section 9.01:

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

(b)any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers’ Certificate (unless other evidence in respect thereof be herein specifically prescribed), and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;

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

(d)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 provided to the Trustee security

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or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred therein or thereby;

(e)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 or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney (at the reasonable expense of the Company and the Trustee shall incur no liability of any kind by reason of such inquiry or investigation);

(f)the Trustee shall be under no obligation to review, ascertain or confirm the Company’s compliance with, or breach of, any representation, warranty or covenant made in this Indenture;

(g)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 by it with due care hereunder;

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

(i)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;

(j)the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and the Indenture;

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

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

(m)the Trustee shall not be required to give any bond or surety in respect of performance of its powers and duties under this Indenture;

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(n)the permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as duties; and

(o)the Trustee agrees to accept and act upon facsimile and electronic transmission of written instructions and/or directions pursuant to this Indenture given by the Company, provided, however that: (i) the Company, subsequent to such facsimile or electronic transmission of written instructions and/or directions, shall provide the originally executed instructions and/or directions to the Trustee in a timely manner and (ii) such originally executed instructions and/or directions shall be signed by an authorized officer of the Company.

9.04NO RESPONSIBILITY FOR RECITALS, ETC.

The recitals contained herein and in the Securities (except in the Trustee’s certificate of authentication) shall be taken as the statements of the Company, and the Trustee or any authenticating agent assumes no responsibility for the correctness of the same.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.  The Trustee or any authenticating agent shall not be accountable for the use or application by the Company of any Securities or the proceeds of any Securities authenticated and delivered by the Trustee or any authenticating agent in conformity with the provisions of this Indenture.

9.05TRUSTEE, SECURITY REGISTRAR AND AGENTS MAY OWN SECURITIES.

The Trustee, any Paying Agent, any Conversion Agent or Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, Paying Agent, Conversion Agent or Security Registrar.

9.06MONIES TO BE HELD IN TRUST.

Subject to the provisions of Section 11.04, all monies and properties received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received.  Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.  The Trustee shall have no liability for interest on any money received by it hereunder except as may be agreed in writing from time to time by the Company and the Trustee.

9.07COMPENSATION AND EXPENSES OF TRUSTEE.

(a)The Company shall pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as mutually agreed to from time to time in writing between the Company and the Trustee, and the Company will pay or reimburse the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its gross negligence, willful misconduct or bad faith.

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(b)The Company shall indemnify the Trustee or any predecessor Trustee (and all officers, directors and employees of the Trustee or any predecessor Trustee), in any capacity under this Indenture and its agents and any authenticating agent for, and to hold each of them harmless against, any and all loss, damage, liability, claim or expense, including 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 the part of the Trustee or such officer(s), director(s), employee(s) and agent(s) or authenticating agent, as the case may be, and arising out of or in connection with the acceptance or administration of this trust or in any other capacity hereunder, including the costs and expenses of defending themselves against any claim of liability in the premises.

(c)The obligations of the Company under this Section 9.07 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall be secured by a Lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities.  The obligation of the Company under this Section 9.07 shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.

(d)When the Trustee and its agents and any authenticating agent incur expenses or render services after an Event of Default specified in Section 7.01(c) or Section 7.01(d) with respect to the Company occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

9.08OFFICERS’ CERTIFICATE AS EVIDENCE.

Except as otherwise provided in Section 9.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee.

9.09CONFLICTING INTERESTS OF TRUSTEE.

If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

9.10ELIGIBILITY OF TRUSTEE.

There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000 (or if such Person is a member of a bank holding company system, its bank holding company shall have a combined capital and surplus of at least $50,000,000).  If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section 9.10 the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to

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be eligible in accordance with the provisions of this Section 9.10, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

9.11RESIGNATION OR REMOVAL OF TRUSTEE.

(a)The Trustee may at any time resign by giving written notice of such resignation to the Company and to the Holders of Securities.  Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee.  If no successor trustee shall have been so appointed and have accepted appointment 60 days after the mailing of such notice of resignation to the Holders:

(i)the resigning Trustee may, upon ten business days’ notice to the Company and the Holders, appoint a successor identified in such notice or may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor trustee; or

(ii)any Holder who has been a bona fide Holder of a Security or Securities for at least 6 months may, subject to the provisions of Section 7.14, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee.

(b)In case at any time any of the following shall occur:

(i)the Trustee shall fail to comply with Section 9.09 within 90 days after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security or Securities for at least 6 months; or

(ii)the Trustee shall cease to be eligible in accordance with the provisions of Section 9.10 and shall fail to resign after written request therefor by the Company or by any such Holder; or

(iii)the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.14, any Holder who has been a bona fide Holder of a Security or Securities for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee; provided, however, that if no successor Trustee shall have been appointed and have accepted appointment 60 days after either the Company or the Holders has removed the Trustee, the Trustee so removed may petition at the Company’s expense any court of competent jurisdiction for an appointment of a successor trustee.  Such court may

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thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

(c)The Holders of a majority in aggregate principal amount of the Securities at the time Outstanding may at any time remove the Trustee and nominate a successor trustee which shall be deemed appointed as successor trustee unless, within ten days after notice to the Company of such nomination, the Company objects thereto, in which case the Trustee so removed or any Holder, or if such Trustee so removed or any Holder fails to act, the Company, upon the terms and conditions and otherwise as in Section 9.11(a) provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.

(d)Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 9.11 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 9.12.

9.12ACCEPTANCE BY SUCCESSOR TRUSTEE.

(a)Any successor trustee appointed as provided in Section 9.11 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, the trustee ceasing to act shall, upon payment of any amount then due it pursuant to the provisions of Section 9.07, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act.  Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers.  Any trustee ceasing to act shall, nevertheless, retain a Lien upon all property and funds held or collected by such trustee as such, except for funds held in trust for the benefit of Holders of particular Securities, to secure any amounts then due it pursuant to the provisions of Section 9.07.

(b)No successor trustee shall accept appointment as provided in this Section 9.12 unless, at the time of such acceptance, such successor trustee shall be qualified under the provisions of Section 9.09 and be eligible under the provisions of Section 9.10.

(c)Upon acceptance of appointment by a successor trustee as provided in this Section 9.12, the Company (or the former trustee, at the written direction of the Company) shall mail or cause to be mailed notice of the succession of such trustee hereunder to the Holders of Securities at their addresses as they shall appear on the Security Register.  If the Company fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company.

9.13SUCCESSION BY MERGER, ETC.

(a)Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or

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consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee (including any trust created by this Indenture), shall be the successor to the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that in the case of any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, such corporation shall be qualified under the provisions of Section 9.09 and eligible under the provisions of Section 9.10.

(b)In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee or authenticating agent appointed by such predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee or any authenticating agent appointed by such successor trustee may authenticate such Securities in the name of the successor trustee; and in all such cases such certificates shall have the full force that is provided in the Securities or in this Indenture; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

9.14PREFERENTIAL COLLECTION OF CLAIMS.

If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of the claims against the Company (or any such other obligor).

9.15TRUSTEE’S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY.

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

X.  HOLDERS’ LISTS AND REPORTS

10.01COMPANY TO FURNISH NAMES AND ADDRESSES OF HOLDERS.

Upon request from the Trustee in writing, the Company shall furnish or cause to be furnished to the Trustee, within 30 days after the receipt by the Company of any such request, a list of the names and addresses of the Holders as of a date not more than 15 days prior to the time

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such list is furnished, in such form as the Trustee may reasonably require; provided that no such list need be furnished so long as the Trustee is acting as Security Registrar.

10.02PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

(a)The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 10.01 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar.  The Trustee may destroy any list furnished to it as provided in Section 10.01 upon receipt of a new list so furnished.

(b)The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act.

(c)Every Holder, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.

10.03REPORTS BY COMPANY; RULE 144A INFORMATION.

(a)The Company shall file with the Trustee any information, documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act within 15 days after the same are required to be filed with the Commission (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act).  To the extent any such information, documents and reports are filed by the Company with the Commission electronically via the Commission’s Electronic Data Gathering and Retrieval System (or any successor system), such information, documents and reports shall be deemed filed with the Trustee as at such time they are filed by the Company electronically.

(b)The Company covenants and agrees that it shall, during any period in which it is not required to file with the Commission reports pursuant to Section 13 or 15(d) under the Exchange Act, furnish to any Holder or beneficial owner of any Restricted Securities which continue to be Restricted Securities in connection with any sale thereof, and any prospective purchaser of Restricted Securities designated by such Holder or beneficial owner, the information, if any, required pursuant to Rule 144A(d)(4) under the Securities Act upon the request of such Holder or beneficial owner, including all information required from time to time to enable such Holder or beneficial owner to sell its Restricted Securities without registration under the Securities Act pursuant to the exemption provided by Rule 144A.

(c)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 conclusively rely exclusively on an Officers’ Certificate).  It is expressly understood that materials transmitted electronically by the Company to the Trustee shall be deemed filed with the Trustee for purposes of this Section 10.03.

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XI.  SATISFACTION AND DISCHARGE

11.01DISCHARGE OF INDENTURE.

(a)Subject to Section 11.01(b), this Indenture shall cease to be of further effect if at any time:

(i)either:

(A)the Company shall have delivered to the Trustee for cancellation all Securities theretofore authenticated (other than any Securities that have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) and not theretofore canceled; or

(B)all the Securities not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable (whether at the Stated Maturity Date, or on any Fundamental Change Repurchase Date or upon conversion or otherwise) and the Company shall deposit with the Trustee, in trust, cash funds sufficient to pay all amounts due on all of such Securities (other than any Securities that shall have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore canceled or delivered to the Trustee for cancellation, including principal and interest due, accompanied, except in the event the Securities are due and payable solely in cash upon a Fundamental Change Repurchase Date, by a verification report as to the sufficiency of the deposited amount from an independent certified accountant or other financial professional reasonably satisfactory to the Trustee;

(ii)the Company has paid all other sums payable by the Company under this Indenture; and

(iii)the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.

(b)Notwithstanding Section 11.01(a), the following rights, obligations and immunities shall survive any satisfaction or discharge of this indenture under this Section 11.01:

(i)remaining rights of substitution and exchange of Securities;

(ii)rights hereunder of Holders to receive payments of principal of and interest on, the Securities, the Fundamental Change Repurchase Price, the Ratio Event Repurchase Price, the Redemption Price or the Conversion Obligation, as the case may be, and the other rights, duties and obligations of Holders, as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee; and

(iii)the rights and immunities of the Trustee hereunder.

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(c)If the Indenture is discharged in accordance with the foregoing, the Trustee shall execute proper instruments acknowledging the satisfaction and discharge of the Indenture.

11.02DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE.

Subject to Section 11.04, all monies deposited with the Trustee pursuant to Section 11.01 shall be held in trust for the sole benefit of the Holders, and such monies shall be applied by the Trustee to the payment, either directly or through any paying agent (including the Company if acting as its own paying agent), to the Holders of the particular Securities for the payment of which such monies have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest.

11.03PAYING AGENT TO REPAY MONIES HELD.

Upon the satisfaction and discharge of this Indenture, all monies then held by any paying agent of the Securities (other than the Trustee) shall, upon written request of the Company, be repaid to it or paid to the Trustee, and thereupon such paying agent shall be released from all further liability with respect to such monies.

11.04RETURN OF UNCLAIMED MONIES.

Subject to the requirements of applicable law, any monies deposited with or paid to the Trustee for payment of the principal of or interest on Securities and not applied but remaining unclaimed by the Holders of Securities for two years after the date upon which the principal of or interest on such Securities, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee on demand and all liability of the Trustee shall thereupon cease with respect to such monies; and the Holder of any of the Securities shall thereafter look only to the Company for any payment that such Holder may be entitled to collect unless an applicable abandoned property law designates another Person.

11.05REINSTATEMENT.

If the Trustee or the Paying Agent is unable to apply any money in accordance with Section 11.02 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 until such time as the Trustee or the paying agent is permitted to apply all such money in accordance with Section 11.02; provided, however, that if the Company makes any payment of interest on or principal of any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

XII.  MODIFICATIONS AND AMENDMENTS

12.01CONSENT REQUIREMENTS FOR MODIFICATIONS AND AMENDMENTS.

Except as provided in Section 12.02 and Section 12.03, this Indenture or the Securities may be amended with the consent of the Holders of at least a majority principal amount of the

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Outstanding Securities, including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities, and, subject to certain exceptions as set forth in this Indenture, any past Default or compliance with any provisions (except a default in the payment of the principal of or interest or Additional Interest, if any, on any Securities) may be waived with the consent of the Holders of a majority principal amount of the Outstanding Securities, including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities.

12.02AMENDMENTS WITHOUT CONSENT OF HOLDERS.

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

(i)cure any ambiguity, error, defect, omission or inconsistency; provided that the rights of the Holders are not adversely affected in any material respect;

(ii)provide for the assumption by one or more Successor Companies of the Company’s obligations under this Indenture;

(iii)add guarantees with respect to the Securities;

(iv)enter into additional or supplemental security documents consistent with the terms of the Security Documents and in a manner that does not adversely affect the rights of any Holder, or add to the Collateral securing the obligations of the Company in respect of the Securities;

(v)add to the Company’s covenants for the benefit of the Holders or surrender any right or power conferred upon the Company;

(vi)provide for the conversion of the Securities into cash and Reference Property in accordance with the terms of this Indenture;

(vii)provide for the conversion rights of Holders of Securities and the Company’s repurchase obligation in connection with a Fundamental Change in accordance with the terms of this Indenture in the event of any reclassification of the Common Stock, merger or consolidation, or sale, conveyance, transfer or lease of the Company’s property and assets substantially as an entirety; or

(viii)make any change that does not adversely affect the rights of any Holder in any material respect; provided that any amendment to conform the terms of this Indenture or the Securities to the section entitled “Description of Notes” as set forth in the final offering memorandum related to the Securities dated June 12, 2008 shall be deemed not to be adverse to any Holder.

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12.03AMENDMENTS REQUIRING CONSENT OF HOLDERS.

(a)Without the written consent or the affirmative vote of each Holder of Outstanding Securities affected thereby, an amendment, supplement or waiver under this Section 12.03 may not:

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

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

(iii)reduce the principal, or extend the Stated Maturity Date, of any Security;

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

(v)reduce the Fundamental Change Repurchase Price of any Security or amend or modify in any manner adverse to the Holders the Company’s obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

(vi)change the place or currency of payment of principal or interest in respect of any Security;

(vii)impair the right of any Holder to receive payment of principal of and interest on such Holder’s Securities on or after the due dates therefore, or to institute suit for the enforcement of any payment on or with respect to such Holder’s Securities;

(viii)modify the redemption provisions of the Securities in any manner adverse to the Holders;

(ix)adversely affect the ranking of the Securities as the Company’s senior secured Indebtedness; or

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

(b)It shall not be necessary for any Act of Holders under this Section 12.03 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

12.04EXECUTION OF SUPPLEMENTAL INDENTURES.

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article 12 or the modifications thereby of the trusts created by this Indenture, the Trustee shall be provided with, and (subject to Section 9.01) shall be fully protected and indemnified by the Company in relying upon, in addition to the documents required by

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Section 1.03, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture.  Subject to the preceding sentence, the Trustee shall sign such supplemental indenture if the same does not adversely affect the Trustee’s own rights, duties or immunities under this Indenture or otherwise or adversely affect the rights, duties or immunities of the Holders under this Indenture or otherwise.  The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that adversely affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

12.05EFFECT OF SUPPLEMENTAL INDENTURES.

Upon the execution of any supplemental indenture under this Article 12, 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 theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

12.06REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article 12 shall bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, 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.

12.07NOTICE TO HOLDERS OF SUPPLEMENTAL INDENTURES.

The Company shall cause notice of the execution of any supplemental indenture to be mailed promptly to each Holder, at such Holder’s address appearing on the Security Register, briefly describing such supplemental indenture.  Failure to deliver such notice, or any defect in such notes, shall not affect the legality or validity of such supplemental indenture.

XIII.  COLLATERAL AND SECURITY DOCUMENTS

13.01SECURITY DOCUMENTS.

(a)The due and punctual payment of the principal of and interest and Additional Interest, if any, on the Securities when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest and Additional Interest (to the extent permitted by law), if any, on the Securities and performance of all other obligations of the Company to the Holders of Securities or the Trustee under this Indenture and the Securities, according to the terms hereunder or thereunder, are secured as provided in the Security Documents;

(b)Under the Security Documents, the Company has appointed The Bank of New York Trust Company, N.A. to act as Collateral Agent, and has further authorized the Collateral Agent to appoint co-collateral agents (the “Pledged Equity Co-Collateral Agents”) and direct such Pledged Equity Co-Collateral Agents in accordance with the terms of the Security Documents.  Each Holder of Securities, by its acceptance of such Securities consents and agrees

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to the terms of the Security Documents (including, without limitation, the provisions providing for foreclosure and release of Collateral) as the same may be in effect or may be amended, modified or waived from time to time in accordance with their terms and the terms of this Indenture, and authorizes and directs the Trustee, the Collateral Agent and all Pledged Equity Co-Collateral Agents to enter into the Security Documents to which they are a party, bind the Holders to the terms set forth in such Security Documents and to perform and observe their respective obligations and exercise their respective rights thereunder in accordance therewith.

(c)All of the rights, protections and privileges granted to the Trustee under Article 9, Section 14.05, and this Article shall inure to the benefit of the Collateral Agent acting under this Indenture and under all of the Security Documents, and shall inure also to the benefit of the Pledged Equity Co-Collateral Agents acting under the Security Documents.  The Collateral Agent and the Co-Collateral Agents are third-party beneficiaries hereof, and may enforce their rights herein as if they were parties hereto.

(d)In addition to the foregoing, the Trustee, Collateral Agent and Pledged Equity Co-Collateral Agents (as used solely for purposes of this clause (d), collectively, the “Collateral Agents”) shall have the following protections:

(i)the Trustee and the Collateral Agents may each accept without investigation such right and title as the Company may have to any of the Collateral pursuant to the Security Documents and shall not be bound or concerned to examine or inquire into or be liable for any defect or failure in the right or title of the Company;

(ii)neither the Trustee nor the Collateral Agents shall be liable for any failure, omission or defect in perfecting, protecting or further assuring any security interest including:

(A)any failure, omission or defect in registering or filing or procuring registration or filing of, or otherwise protecting or perfecting any security interest or the priority thereof or the right or title of any person in or to the assets and other interests secured pursuant to the Security Documents; and

(B)any failure or omission to require any further assurances in relation to any security interest;

(iii)neither the Trustee nor the Collateral Agents shall be responsible for any unsuitability, inadequacy or unfitness of any security interest created pursuant to any Security Document and neither shall they be obliged to make any investigation into, and shall be entitled to assume, the suitability, adequacy and fitness of such security interests;

(iv)neither the Trustee nor the Collateral Agent shall be responsible for investigating, monitoring or supervising the observance or performance by any person in respect of the Security Documents or otherwise;

(v)until the occurrence of an Event of Default which is continuing, the moneys standing to the credit of any account secured pursuant to the Security Documents

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shall be dealt with in accordance with the provisions of the Security Documents and neither the Trustee nor the Collateral Agents shall be responsible for any liability suffered by any person, whether by reason of depreciation in value or by fluctuation in exchange rates or otherwise;

(vi)neither the Trustee nor the Collateral Agent will be liable for any decline in the value nor any loss realised upon any sale or other disposition pursuant to the Security Documents of any of the assets and other interests secured pursuant to the Security Documents;

(vii)beyond the exercise of reasonable care in the custody thereof, the Trustee and the Collateral Agents shall have no duty as to any Collateral in their possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto, and none of them shall be responsible for preparing or filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral;

(viii)neither the Trustee nor the Collateral Agents shall be responsible for the execution, legality, effectiveness, adequacy, genuineness, validity, enforceability or suitability of any of the Security Documents, nor for other documents entered into in connection therewith, nor shall either of them be responsible or liable to any person because of any invalidity of any provisions of such documents or the unenforceability thereof, whether arising from statute, law or decision of any court. Neither the Trustee nor the Collateral Agent shall have any responsibility for, or have any duty to make any investigation in respect of or in any way be liable whatsoever for:

(A)the nature, status, creditworthiness or solvency of the Company or any other person or entity who has at any time provided any security or support whether by way of guarantee, charge or otherwise in respect of any obligation of the Company;

(B)the execution, legality, validity, adequacy, admissibility in evidence or enforceability of any Security Document or any other document entered into in connection therewith;

(C)the scope or accuracy of any representations, warranties or statements made by or on behalf of the Company in any application for any advance or any document entered into in connection therewith;

(D)the performance or observance by any person of any provisions of any Security Documents (except as set forth therein) or in any document entered into in connection therewith or the fulfilment or satisfaction of any conditions contained therein or relating thereto;

(E)the existence, accuracy or sufficiency of any legal or other opinions, searches, reports, certificates, valuations or investigations delivered or

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obtained or required to be delivered or obtained at any time in connection herewith; or

(F)the failure by the Company to comply with the Security Documents.

(e)The Company will execute and comply with, and cause each of its Subsidiaries to execute and comply with, the terms of each Security Document to which the Company is, or is required to be, a party.  The Company shall take, and shall cause each of its Subsidiaries to take, at their sole expense, upon request of the Trustee, any and all actions reasonably required to cause the Security Documents to create and maintain, as security for the obligations of the Company hereunder, a valid and enforceable perfected Lien in and on all the Collateral, in favor of the Trustee on behalf of itself and the Holders and subject to no other Liens.

13.02SUITS TO PROTECT THE COLLATERAL.

The Trustee shall have power to institute in its name and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of this Indenture or any of the Security Documents, and such suits and proceedings as necessary to preserve or protect its interests and the interests of the Holders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or other-wise invalid, if the enforcement of, or compliance with, such enactment, rule or order would impair the security hereunder or under any of the Security Documents, or be prejudicial to the interests of the Holders or the Trustee.

13.03RELEASE OF COLLATERAL.

(a)The Trustee and the Collateral Agent shall not at any time release Collateral from the Liens created by this Indenture and the Security Documents unless such release is in accordance with the provisions of this Indenture and the Security Documents.

(b)In the event that any Collateral is released in accordance with the provisions of Article 12, the Liens on such Collateral securing the Securities will be automatically released and terminated.  In addition, in the event of this Indenture ceasing to be in effect pursuant to the terms of Section 11.01 (subject to the terms of Section 11.05), the Liens on all Collateral securing the Securities will be automatically released and terminated.

(c)To evidence any such release and termination, the Company shall be entitled to such releases, terminations and other documents and instruments as the Company or any third party entitled to rely thereon may request, and the Trustee and the Collateral Agent shall, at the Company’s expense, execute and deliver such requested releases, terminations and other documents and instruments, with respect to items of Collateral subject to release pursuant to clauses (a) and (b) above (the “Released Collateral”) upon compliance with the conditions precedent that the Company shall have delivered to the Trustee and the Collateral Agent the following:

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(i)a notice from the Company requesting release of Released Collateral (a “Company Notice”) and specifically describing the proposed Released Collateral;

(ii)an Officers’ Certificate certifying that (x) the release of such Released Collateral complies with the terms and conditions of this Indenture, (y) all conditions precedent in this Indenture and the Security Documents to such release have been complied with, and (z) no Default or Event of Default pursuant to clause (a) or (b) of Section 7.01 hereof is in effect or continuing on the date thereof or would result therefrom, and

(iii)an Opinion of Counsel substantially to the effect that all conditions precedent herein and under any of the Security Documents relating to the release of such Collateral have been complied with.

(d)The release of any Collateral from the Liens of the Security Documents or the release, in whole or in part, of the Liens created by the Security Documents shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Collateral is released pursuant to this Indenture or the applicable Security Documents.

13.04SUFFICIENCY OF RELEASE.

All purchasers and grantees of any property or rights purporting to be released shall be entitled to rely upon any release executed by the Trustee hereunder as sufficient for the purpose of this Indenture and as constituting a good and valid release of the property therein described from the Lien of this Indenture and of the Security Documents.

13.05ACTIONS BY THE TRUSTEE.

Subject to the provisions of the Security Documents and this Indenture, the Trustee may in its sole discretion and without the consent of the Holders take all actions that are deemed necessary or appropriate in order to (i) enforce any of the terms of the Security Documents and (ii) collect and receive all amounts payable in respect of the obligations of the Company under the Security Documents and this Indenture.  The Trustee shall have the power to institute and maintain such suits and proceedings as it may deem expedient in order to prevent any impairment of the Collateral by any act that may be unlawful or in violation of this Indenture or the Security Documents, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and those of the Holders in the Collateral.  No duty beyond that set forth in Section 9.01 is imposed on the Trustee pursuant to this Section 13.05.  Nothing herein shall imply or be deemed to imply that any action by the Company or the Trustee need comply with, or comply with the statutes under, the Trust Indenture Act.  For the avoidance of doubt, in connection with a release of Collateral, each of the Trustee and Collateral Agent shall be fully protected in conclusively relying upon the Officers’ Certificate and Opinion of Counsel to be provided to them pursuant to Section 13.02(c).

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XIV.  MISCELLANEOUS

14.01RULES BY TRUSTEE, PAYING AGENT AND SECURITY REGISTRAR.

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

14.02SUCCESSORS.

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

14.03MULTIPLE 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.

14.04CALCULATIONS.

Except as otherwise provided herein, the Company will be responsible for making all calculations called for under the Indenture and the Securities.  These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of Common Stock, accrued interest payable on the Securities, any make-whole calculations and the Conversion Rate of the Securities.  The Company will make all such calculations in good faith and, absent manifest error, its calculations will be final and binding on the Holders.  The Company will provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and the Conversion Agent is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification.  The Trustee will deliver a copy of such schedule to any Holder upon the request of such Holder.

14.05WAIVER OF JURY TRIAL.

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

14.06FORCE MAJEURE.

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

96

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

[Remainder of the page intentionally left blank]

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

POWER-ONE, INC.
By:	/ s / Richard J. Thompson
Name:	Richard J. Thompson
Title:	Chief Executive Officer of Power-One, Inc.
THE BANK OF NEW YORK TRUST
COMPANY, N.A.,
as Trustee
By:	/ s / Teresa Petta
Name:	Teresa Petta
Title:	Vice President

SCHEDULE A

Make-Whole Table

The following table sets forth the number of Additional Shares to be added to the Conversion Rate, per $1,000 principal amount of Securities, pursuant to Section 5.03 of this Indenture:

Additional Make-Whole Shares Per $1,000 Bond

	$2.85	$3.00	$3.50	$4.00	$4.50	$5.00	$5.50	$6.00	$6.50	$7.00	$7.50	$8.00	$8.50	$9.00
06/17/08	45.7890	45.7890	45.7890	45.7890	42.9355	38.6706	34.8122	31.4588	28.6223	26.1919	24.0853	22.2430	20.6171	19.1719
06/17/09	45.7890	45.7890	45.7890	41.4171	36.6654	32.9101	29.5303	26.7163	24.3365	22.2970	20.5300	18.9841	17.6204	16.4090
06/17/10	45.7890	45.7890	38.2078	32.9358	29.0957	25.9373	23.2974	21.1021	19.2464	17.6560	16.2782	15.0729	14.0100	13.0646
06/17/11	45.7890	33.8167	26.4344	22.3345	19.5645	17.3857	15.6300	14.1737	12.9430	11.8890	10.9757	10.1766	9.4716	8.8453
06/17/12	45.7890	21.6497	11.7127	8.6576	7.3677	6.5346	5.8812	5.3400	4.8825	4.4905	4.1507	3.8534	3.5911	3.3582
06/17/13	45.7890	27.9190	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

EXHIBIT A

[FACE OF SECURITY]

[GLOBAL SECURITY LEGEND]

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

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

[RESTRICTED SECURITY LEGEND]

THIS SECURITY (OR ITS PREDECESSOR) 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 ACCORDINGLY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH BELOW.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1)REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) (“QIB”) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT;

(2)AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS THE LATER OF (X) ONE YEAR AFTER THE ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT (A) TO POWER-ONE, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES OR AFFILIATES, (B) PURSUANT TO AN

EFFECTIVE REGISTRATION STATEMENT, (C) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IN WHICH CASE THE COMPANY MAY REQUIRE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY REASONABLY BE REQUIRED TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT) AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND

(3)AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS.

THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE SECURITIES IS SUBJECT TO CERTAIN RESTRICTIONS ON OWNERSHIP AND TRANSFER.  THE COMPANY WILL FURNISH A FULL STATEMENT ABOUT THE RESTRICTIONS ON TRANSFERABILITY AND OWNERSHIP OF THE COMMON STOCK TO ANY HOLDER ON REQUEST AND WITHOUT CHARGE.  SUCH REQUEST MAY BE MADE TO THE COMPANY’S CORPORATE SECRETARY AT ITS PRINCIPAL OFFICE.

POWER-ONE, INC.

8.0% Senior Secured Convertible Note due 2013

No. 1		$75,000,000
	CUSIP No.:	739308 AA2
	ISIN Number:	US739308AA26

Power-One, Inc., a Delaware corporation, promises to pay to Cede & Co., or its registered assigns, the principal sum of $75,000,000, as revised by the Schedule of Increases or Decreases in Global Security attached hereto, on June 17, 2013.

Interest Payment Dates:   March 31, June 30, September 30 and December 31, commencing September 30, 2008.

Interest Record Dates:      March 15, June 15, September 15 and December 15.

Reference is made to the further provisions of this Security set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Security the right to convert this Security into Common Stock, on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture.

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

POWER-ONE, INC.
By:
	Name:
	Title:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee,
certifies that this Security is one of the Securities described
in the within-named Indenture.

Dated:
By:
	Authorized Signatory

Signature Page to

Rule 144A Global Note

[REVERSE OF SECURITY]

POWER-ONE, INC.

8.0% Senior Secured Convertible Note due 2013

1.Interest

POWER-ONE, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate of 8.0% per annum.

The Company will pay interest quarterly on March 31, June 30, September 30 and December 31 of each year commencing on September 30, 2008.  Interest on the Security will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 17, 2008.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

If a payment date is not a Business Day, payment will be made on the next succeeding Business Day, and no additional interest will accrue in respect of such payment by virtue of the payment being made on such later date.

The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time as provided in the Indenture; and it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time as provided in the Indenture.

2.Paying Agent, Registrar and Conversion Agent

Initially, The Bank of New York Trust Company, N.A., a national banking association (the “Trustee”), will act as Paying Agent, Security Registrar and Conversion Agent.  The Company may appoint and change any Paying Agent, Security Registrar or co-registrar or Conversion Agent without notice.  The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent, Security Registrar or co-registrar, or Conversion Agent.

3.Indenture

The Company issued the Securities under an Indenture dated as of June 17, 2008 (the “Indenture”), between the Company and the Trustee.  Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and Holders are referred to the Indenture for a statement of those terms.

This Security is one of the Securities referred to in the Indenture issued in an initial aggregate principal amount of $75,000,000.  Additional Securities may be issued in accordance with the Indenture.  The Indenture also imposes limitations on the ability of the Company to

A-1

consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Company.

4.Conversion

In compliance with the provisions of the Indenture, at any time prior to 5:00 p.m., New York City time, on the Business Day immediately preceding the Stated Maturity Date of this Security, the Holder hereof has the right, at its option, to convert each $1,000 principal amount of this Security into shares of Common Stock, determined as set forth in the Indenture, based on an initial Conversion Rate of 304.8780 shares of Common Stock per $1,000 principal amount of Securities, as the same may be adjusted pursuant to the terms of the Indenture.

5.Denominations, Transfer, Exchange

The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000.  A Holder may transfer or exchange Securities in accordance with the Indenture.  Upon any transfer or exchange, the Security Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture.

6.Persons Deemed Owners

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

7.Defaults and Remedies

If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable.  If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Securities will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

Notwithstanding the foregoing, at the election of the Company, the sole remedy for an Event of Default relating to a failure to file certain reports with the Commission and the Trustee shall, for the first 90 calendar days after the occurrence of such Event of Default (which will be the 10^th Business Day after written notice is provided to the Company in accordance with the Indenture), consist exclusively of the right to receive Default Additional Interest at an annual rate of 0.25% per annum on the principal amount of Restricted Securities then Outstanding for each day of such 90-day period during which such Event of Default continues.

8.No Recourse Against Others

A director, officer, employee or stockholder, 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

A-2

Security, each Holder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

9.Authentication

This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.

10.Abbreviations

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

11.GOVERNING LAW

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

12.CUSIP and ISIN Numbers

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

The Company will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

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SCHEDULE OF INCREASES AND DECREASES IN GLOBAL SECURITY

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

Date of
Exchange Amount of
decrease in
principal amount
of this Global
Security Amount of
increase in
principal amount
of this Global
Security Principal amount
of this Global
Security
following such
decrease or
increase Signature of
authorized
signatory of
Trustee or
Custodian

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[FORM OF CONVERSION NOTICE]

To:POWER-ONE, INC.

The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion thereof (which is $1,000 or a multiple thereof) below designated, into, shares of Common Stock of Power-One, Inc., in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, any cash in lieu of fractional shares or otherwise payable upon conversion hereof and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below.  Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.  If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will provide the appropriate information below and pay all transfer taxes payable with respect thereto.  Any amount required to be paid by the undersigned on account of interest accompanies this Security.

Dated:
	Signature(s)
	Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
	Signature Guarantee

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Fill in the registration of shares of Common Stock to be issued, and Securities, if any, to be delivered, and the person to whom payment for fractional shares or any other cash payment, if any, is to be made, if, other than to and in the name of the registered Holder:

Please print name and address

(Name)

(Street Address)

(City, State and Zip Code)

Principal amount to be converted

(if less than all, must be $1,000 or

whole multiples thereof):

$

Social Security or Other

Taxpayer Identification Number:

NOTICE:  The signature on this Conversion Notice must correspond with the name as written upon the face of the Securities in every particular without alteration or enlargement or any change whatever.

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[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

To:POWER-ONE, INC.

The undersigned registered owner of this Security hereby acknowledges receipt of a notice from Power-One, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to repay to the registered holder hereof in accordance with the applicable provisions of the Indenture referred to in this Security (1) the entire principal amount of this Security, or the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Fundamental Change Repurchase Date.

In the case of Physical Securities, the certificate numbers of the Securities to be repurchased are as set forth below:

Dated:
	Signature(s)
	Social Security or Other
	Taxpayer Identification Number
	Principal amount to be repaid (if less than all):
	$          ,000
	NOTICE: The signature on the Fundamental Change Repurchase Notice must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

A-7

[FORM OF RATIO EVENT REPURCHASE NOTICE]

To:POWER-ONE, INC.

The undersigned registered owner of this Security hereby acknowledges receipt of a notice from Power-One, Inc. (the “Company”) as to the occurrence of a Ratio Event with respect to the Company and requests and instructs the Company to repay to the registered holder hereof in accordance with the applicable provisions of the Indenture referred to in this Security on [              ], 20[    ] (the applicable “Ratio Event Repurchase Date”) (1) the entire principal amount of this Security, or the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Ratio Event Repurchase Date does not fall during the period after a Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Ratio Event Repurchase Date.

In the case of Physical Securities, the certificate numbers of the Securities to be repurchased are as set forth below:

Dated:
	Signature(s)
	Social Security or Other
	Taxpayer Identification Number
	Principal amount to be repaid (if less than all):
	$          ,000
	NOTICE: The signature on the Ratio Event Repurchase Notice must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

A-8

[FORM OF ASSIGNMENT AND TRANSFER]

For value received                                                          hereby sell(s), assign(s) and transfer(s) unto                                    (Please insert social security or Taxpayer Identification Number of assignee) the within Security, and hereby irrevocably constitutes and appoints                                            attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

In connection with any transfer of Securities bearing a legend setting out restrictions on the offer, sale, pledge or other transfer of such Securities, the undersigned confirms that such Securities are being transferred:

·To Power-One, Inc. or any subsidiary or affiliate thereof; or

·Pursuant to a registration statement which has been declared effective under the Securities Act of 1933, as amended (the “Securities Act”), and which continues to be effective at the time of transfer; or

·If the Securities are eligible for resale pursuant to Rule 144A under the Securities Act, to a “qualified institutional buyer” in compliance with Rule 144A under the Securities Act, that purchases for its own account or for the account of a “qualified institutional buyer” to whom notice is given that the transfer is being made in reliance on Rule 144A under the Securities Act; or

·Pursuant to an exemption from registration under Rule 144 under the Securities Act; or

·Pursuant to another available exemption from the registration requirements of the Securities Act, subject to the Company’s and the Trustee’s right prior to any such offer, sale or transfer to require the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them.

Unless one of the boxes is checked, the Securities Registrar will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof.

Dated:
	Signature(s)

A-9

Signature(s) must be guaranteed by an institution which is a member of one of the following recognized signature Guarantee Programs:
(i)	The Securities Transfer Agent Medallion Program (STAMP);
(ii)	The New York Stock Exchange Medallion Program (MNSP);
(iii)	The Stock Exchange Medallion Program (SEMP) or
(iv)	another guarantee program acceptable to the Trustee.
Signature Guarantee(s)

A-10

EXHIBIT B

[FORM OF RESTRICTIVE LEGEND FOR COMMON STOCK ISSUED UPON CONVERSION]

THIS COMMON STOCK CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH BELOW.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1)REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) (“QIB”) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT;

(2)AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS COMMON STOCK CERTIFICATE PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE ORIGINAL ISSUE DATE OF THE PREDECESSOR SECURITY HERETO OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT (A) TO POWER-ONE, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES OR AFFILIATES, (B) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IN WHICH CASE THE COMPANY MAY REQUIRE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY REASONABLY BE REQUIRED TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT) AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND

(3)AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON STOCK CERTIFICATE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS.

B-1

EX-4.2

Exhibit 4.2

[FACE OF SECURITY]

[GLOBAL SECURITY LEGEND]

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

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

[RESTRICTED SECURITY LEGEND]

THIS SECURITY (OR ITS PREDECESSOR) 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 ACCORDINGLY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH BELOW.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1)REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) (“QIB”) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT;

(2)AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS THE LATER OF (X) ONE YEAR AFTER THE ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT (A) TO POWER-ONE, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES OR AFFILIATES, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, (C) TO A PERSON WHO THE

TRANSFEROR REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IN WHICH CASE THE COMPANY MAY REQUIRE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY REASONABLY BE REQUIRED TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT) AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND

(3)AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS.

THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE SECURITIES IS SUBJECT TO CERTAIN RESTRICTIONS ON OWNERSHIP AND TRANSFER.  THE COMPANY WILL FURNISH A FULL STATEMENT ABOUT THE RESTRICTIONS ON TRANSFERABILITY AND OWNERSHIP OF THE COMMON STOCK TO ANY HOLDER ON REQUEST AND WITHOUT CHARGE.  SUCH REQUEST MAY BE MADE TO THE COMPANY’S CORPORATE SECRETARY AT ITS PRINCIPAL OFFICE.

POWER-ONE, INC.

8.0% Senior Secured Convertible Note due 2013

No. 1			$75,000,000
	CUSIP No.:		739308 AA2
	ISIN Number:	US739308AA26

Power-One, Inc., a Delaware corporation, promises to pay to Cede & Co., or its registered assigns, the principal sum of $75,000,000, as revised by the Schedule of Increases or Decreases in Global Security attached hereto, on June 17, 2013.

Interest Payment Dates:   March 31, June 30, September 30 and December 31, commencing September 30, 2008.

Interest Record Dates:      March 15, June 15, September 15 and December 15.

Reference is made to the further provisions of this Security set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Security the right to convert this Security into Common Stock, on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture.

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

POWER-ONE, INC.
By:	/ s / Richard J. Thompson
	Name: Richard J. Thompson
	Title:    Chief Executive Officer of POWER- ONE, INC.

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee,
certifies that this Security is one of the Securities described
in the within-named Indenture.

Dated:	6/17/08
By:	/ s / Teresa Pettta
	Authorized Signatory

Signature Page to

Rule 144A Global Note

[REVERSE OF SECURITY]

POWER-ONE, INC.

8.0% Senior Secured Convertible Note due 2013

1.Interest

POWER-ONE, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate of 8.0% per annum.

The Company will pay interest quarterly on March 31, June 30, September 30 and December 31 of each year commencing on September 30, 2008.  Interest on the Security will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 17, 2008.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

If a payment date is not a Business Day, payment will be made on the next succeeding Business Day, and no additional interest will accrue in respect of such payment by virtue of the payment being made on such later date.

The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time as provided in the Indenture; and it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) as provided in the Indenture.

2.Paying Agent, Registrar and Conversion Agent

Initially, The Bank of New York Trust Company, N.A., a national banking association (the “Trustee”), will act as Paying Agent, Security Registrar and Conversion Agent.  The Company may appoint and change any Paying Agent, Security Registrar or co-registrar or Conversion Agent without notice.  The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent, Security Registrar or co-registrar, or Conversion Agent.

3.Indenture

The Company issued the Securities under an Indenture dated as of June 17, 2008 (the “Indenture”), between the Company and the Trustee.  Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and Holders are referred to the Indenture for a statement of those terms.

This Security is one of the Securities referred to in the Indenture issued in an initial aggregate principal amount of $75,000,000.  Additional Securities may be issued in accordance with the Indenture.  The Indenture also imposes limitations on the ability of the Company to

consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Company.

4.Conversion

In compliance with the provisions of the Indenture, at any time prior to 5:00 p.m., New York City time, on the Business Day immediately preceding the Stated Maturity Date of this Security, the Holder hereof has the right, at its option, to convert each $1,000 principal amount of this Security into shares of Common Stock, determined as set forth in the Indenture, based on an initial Conversion Rate of 304.8780 shares of Common Stock per $1,000 principal amount of Securities, as the same may be adjusted pursuant to the terms of the Indenture.

5.Denominations, Transfer, Exchange

The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000.  A Holder may transfer or exchange Securities in accordance with the Indenture.  Upon any transfer or exchange, the Security Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture.

6.Persons Deemed Owners

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

7.Defaults and Remedies

If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable.  If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Securities will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

Notwithstanding the foregoing, at the election of the Company, the sole remedy for an Event of Default relating to a failure to file certain reports with the Commission and the Trustee shall, for the first 90 calendar days after the occurrence of such Event of Default (which will be the 10^th Business Day after written notice is provided to the Company in accordance with the Indenture), consist exclusively of the right to receive Default Additional Interest at an annual rate of 0.25% per annum on the principal amount of Restricted Securities then Outstanding for each day of such 90-day period during which such Event of Default continues.

8.No Recourse Against Others

A director, officer, employee or stockholder, 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 Holder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

9.Authentication

This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.

10.Abbreviations

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

11.GOVERNING LAW

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

12.CUSIP and ISIN Numbers

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

The Company will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL SECURITY

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

Date of
Exchange Amount of
decrease in
principal amount
of this Global
Security Amount of
increase in
principal amount
of this Global
Security Principal amount
of this Global
Security
following such
decrease or
increase Signature of
authorized
signatory of
Trustee or
Custodian

[FORM OF CONVERSION NOTICE]

To:POWER-ONE, INC.

The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion thereof (which is $1,000 or a multiple thereof) below designated, into, shares of Common Stock of Power-One, Inc. in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, any cash in lieu of fractional shares or otherwise payable upon conversion hereof and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below.  Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.  If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will provide the appropriate information below and pay all transfer taxes payable with respect thereto.  Any amount required to be paid by the undersigned on account of interest accompanies this Security.

Dated:
	Signature(s)
	Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
	Signature Guarantee

Fill in the registration of shares of Common Stock to be issued, and Securities, if any, to be delivered, and the person to whom payment for fractional shares or any other cash payment, if any, is to be made, if, other than to and in the name of the registered Holder:

Please print name and address

(Name)

(Street Address)

(City, State and Zip Code)

Principal amount to be converted

(if less than all, must be $1,000 or

whole multiples thereof):

$

Social Security or Other

Taxpayer Identification Number:

NOTICE:  The signature on this Conversion Notice must correspond with the name as written upon the face of the Securities in every particular without alteration or enlargement or any change whatever.

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

To:POWER-ONE, INC.

The undersigned registered owner of this Security hereby acknowledges receipt of a notice from Power-One, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to repay to the registered holder hereof in accordance with the applicable provisions of the Indenture referred to in this Security (1) the entire principal amount of this Security, or the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Fundamental Change Repurchase Date.

In the case of Physical Securities, the certificate numbers of the Securities to be repurchased are as set forth below:

Dated:
	Signature(s)
	Social Security or Other
	Taxpayer Identification Number
	Principal amount to be repaid (if less than all):
	$          ,000
	NOTICE: The signature on the Fundamental Change Repurchase Notice must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

[FORM OF RATIO EVENT REPURCHASE NOTICE]

To:POWER-ONE, INC.

The undersigned registered owner of this Security hereby acknowledges receipt of a notice from Power-One, Inc. (the “Company”) as to the occurrence of a Ratio Event with respect to the Company and requests and instructs the Company to repay to the registered holder hereof in accordance with the applicable provisions of the Indenture referred to in this Security on [              ], 20[    ] (the applicable “Ratio Event Repurchase Date”) (1) the entire principal amount of this Security, or the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Ratio Event Repurchase Date does not fall during the period after a Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Ratio Event Repurchase Date.

In the case of Physical Securities, the certificate numbers of the Securities to be repurchased are as set forth below:

Dated:
	Signature(s)
	Social Security or Other
	Taxpayer Identification Number
	Principal amount to be repaid (if less than all):
	$          ,000
	NOTICE: The signature on the Ratio Event Repurchase Notice must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

[FORM OF ASSIGNMENT AND TRANSFER]

For value received                                                          hereby sell(s), assign(s) and transfer(s) unto                                    (Please insert social security or Taxpayer Identification Number of assignee) the within Security, and hereby irrevocably constitutes and appoints                                             attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

In connection with any transfer of Securities bearing a legend setting out restrictions on the offer, sale, pledge or other transfer of such Securities, the undersigned confirms that such Securities are being transferred:

·To Power-One, Inc. or any subsidiary or affiliate thereof; or

·Pursuant to a registration statement which has been declared effective under the Securities Act of 1933, as amended (the “Securities Act”), and which continues to be effective at the time of transfer; or

·If the Securities are eligible for resale pursuant to Rule 144A under the Securities Act, to a “qualified institutional buyer” in compliance with Rule 144A under the Securities Act, that purchases for its own account or for the account of a “qualified institutional buyer” to whom notice is given that the transfer is being made in reliance on Rule 144A under the Securities Act; or

·Pursuant to an exemption from registration under Rule 144 under the Securities Act; or

·Pursuant to another available exemption from the registration requirements of the Securities Act, subject to the Company’s and the Trustee’s right prior to any such offer, sale or transfer to require the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them.

Unless one of the boxes is checked, the Securities Registrar will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof.

Dated:
	Signature(s)

Signature(s) must be guaranteed by an institution which is a member of one of the following recognized signature Guarantee Programs:
(i)	The Securities Transfer Agent Medallion Program (STAMP);
(ii)	The New York Stock Exchange Medallion Program (MNSP);
(iii)	The Stock Exchange Medallion Program (SEMP) or
(iv)	another guarantee program acceptable to the Trustee.
Signature Guarantee(s)

EX-10.1

Exhibit 10.1

EXECUTION COPY

$75,000,000

Power-One, Inc.

Senior Secured Convertible Notes due 2013

PURCHASE AGREEMENT

June 12, 2008

LEHMAN BROTHERS INC.,

As Representative of the several

Initial Purchasers named in Schedule I attached hereto,

c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Ladies and Gentlemen:

Power-One, Inc., a Delaware corporation (the “Company”), proposes, upon the terms and conditions set forth in this agreement (this “Agreement”), to issue and sell to you, as the initial purchasers (the “Initial Purchasers”), $75,000,000 in aggregate principal amount of its Senior Secured Convertible Notes due 2013 (the “Firm Securities”).  The Firm Securities will (i) have terms and provisions that are summarized in the Pricing Disclosure Package (as defined below) and Offering Memorandum (as defined below) and (ii) are to be issued pursuant to an Indenture (the “Indenture”) to be entered into between the Company and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”).  The Company also proposes to issue and sell to the Initial Purchasers not more than an additional $5,000,000 principal amount of Senior Secured Convertible Notes due 2013 (the “Option Securities”) if and to the extent that you, as Representative of the Initial Purchasers, shall have determined to exercise, on behalf of the Initial Purchasers, the right to purchase such Senior Secured Convertible Notes due 2013 granted to the Initial Purchasers in Section 3(a) hereof.  The Firm Securities and the Option Securities are hereinafter collectively referred to as the “Securities”.  The Securities will be convertible into shares of common stock, par value $0.001 per share (“Common Stock”) of the Company (the shares of Common Stock into which the Securities are convertible, the “Conversion Shares”).  This is to confirm the agreement concerning the purchase of the Securities from the Company by the Initial Purchasers.

The Securities will be secured on a first priority basis by the security documents listed in Schedule V hereto (collectively, the “Security Documents”).

1.             Purchase and Resale of the Securities.  The Securities will be offered and sold to the Initial Purchasers without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on an exemption therefrom.  The Company has prepared a

preliminary offering memorandum, dated June 11, 2008 (the “Preliminary Offering Memorandum”), a pricing term sheet substantially in the form attached hereto as Schedule II (the “Pricing Term Sheet”) setting forth the terms of the Securities omitted from the Preliminary Offering Memorandum and an offering memorandum, dated June 12, 2008 (the “Offering Memorandum”), setting forth information regarding the Company and the Securities. The Preliminary Offering Memorandum, as supplemented and amended as of the Applicable Time (as defined below), together with the Pricing Term Sheet and any of the documents listed or information presented on Schedule III hereto are collectively referred to as the “Pricing Disclosure Package.” The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum in connection with the offering and resale of the Securities by the Initial Purchasers. “Applicable Time” means 8:30 a.m. (New York City time) on the date of this Agreement.

Any reference to the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum shall be deemed to refer to and include the Company’s most recent Annual Report on Form 10-K and all other documents filed with the United States Securities and Exchange Commission (the “Commission”) pursuant to Section 13(a) or 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), subsequent to the end of the Company’s most recently completed fiscal year and on or prior to the date of the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, as the case may be.  Any reference to the Preliminary Offering Memorandum, Pricing Disclosure Package or the Offering Memorandum, as the case may be, as amended or supplemented, as of any specified date, shall be deemed to include (i) any documents filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the date of the Preliminary Offering Memorandum, Pricing Disclosure Package or the Offering Memorandum, as the case may be, and prior to such specified date.  All documents filed under the Exchange Act and so deemed to be included in the Preliminary Offering Memorandum, Pricing Disclosure Package or the Offering Memorandum, as the case may be, or any amendment or supplement thereto are hereinafter called the “Exchange Act Reports.”  The Exchange Act Reports, when they were or are filed with the Commission, conformed or will conform in all material respects to the applicable requirements of the Exchange Act and the applicable rules and regulations of the Commission thereunder.

It is understood and acknowledged that upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Securities (and all securities issued in exchange therefor or in substitution thereof) shall bear the following legend (along with such other legends as the Initial Purchasers and their counsel deem necessary):

‘‘THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT

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FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT),  (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS ONE YEAR (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(d)(i) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALE RESTRICTION TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (D)  PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

You have advised the Company that you will make offers (the “Exempt Resales”) of the Securities purchased by you hereunder on the terms set forth in each of the Pricing Disclosure Package and the Offering Memorandum, as amended or supplemented, solely to persons (the “Eligible Purchasers”) whom you reasonably believe to be “qualified institutional buyers” as defined in Rule 144A under the Securities Act (“QIBs”).  You have advised the Company that you will offer the Securities to Eligible Purchasers initially at a price equal to 100% of the

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principal amount thereof plus accrued interest, if any.  Such price may be changed at any time without notice.

2.Representations, Warranties and Agreements of the Company.  The Company represents, warrants and agrees as follows:

(a)           When the Securities are issued and delivered pursuant to this Agreement, the Securities will not be of the same class (within the meaning of Rule 144A under the Securities Act) as securities of the Company that are listed on a United States national securities exchange registered or that are quoted in a United States automated inter-dealer quotation system.

(b)           Neither the Company nor any subsidiary is, nor after giving effect to the offer and sale of the Securities and the application of the proceeds therefrom as described under “Use of Proceeds” in each of the Pricing Disclosure Package and the Offering Memorandum will be required to register as an “investment company” under the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.

(c)           Assuming that your representations and warranties in Section 3(b) are true, the purchase and resale of the Securities pursuant hereto (including pursuant to the Exempt Resales), and the conversion of the Securities into the Conversion Shares in the manner contemplated by this Agreement, the Indenture, the Pricing Disclosure Package and the Offering Memorandum, is exempt from the registration requirements of the Securities Act.  No form of general solicitation or general advertising within the meaning of Regulation D (including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising) was used by the Company or any of its representatives (other than you, as to whom the Company makes no representation) in connection with the offer and sale of the Securities.

(d)           Each of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum, each as of its respective date, contains all the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

(e)           The Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum have been prepared by the Company for use by the Initial Purchasers in connection with the Exempt Resales.  No order or decree preventing the use of the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or any order asserting that the transactions contemplated by this Agreement are subject to the registration requirements of the Securities Act has been issued, and no proceeding for that purpose has commenced or is pending or, to the knowledge of the Company is contemplated.

(f)            The Pricing Disclosure Package did not, as of the Applicable Time, and will not, as of the Closing Date, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the

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circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Pricing Disclosure Package in reliance upon and in conformity with written information furnished to the Company through the Representative by or on behalf of any Initial Purchaser specifically for inclusion therein, which information is specified in Section 8(e).

(g)           The Offering Memorandum will not, as of its date and as of the Closing Date, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Offering Memorandum in reliance upon and in conformity with written information furnished to the Company through the Representative by or on behalf of any Initial Purchaser specifically for inclusion therein, which information is specified in Section 8(e).

(h)           The Company has not made any offer to sell or solicitation of an offer to buy the Securities that would constitute a “free writing prospectus” (if the offering of the Securities was made pursuant to a registered offering under the Securities Act), as defined in Rule 405 under the Securities Act (a “Free Writing Offering Document”) without the prior consent of the Representative; any such Free Writing Offering Document the use of which has been previously consented to by the Initial Purchasers is set forth substantially in form and substance as attached hereto on Schedule III.

(i)            The Exchange Act Reports did not, when filed with the Commission, contain an untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(j)            The statistical and market-related data included in the Pricing Disclosure Package are based on or derived from sources that the Company believes to be reliable and accurate in all material respects.

(k)           Each of the Company and its subsidiaries has been duly organized and is validly existing and in good standing as a corporation or other business entity under the laws of its jurisdiction of organization and is duly qualified to do business and in good standing as a foreign corporation or other business entity in each jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such qualification, except where the failure to be so qualified or in good standing would not, in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), results of operations, stockholders’ equity, properties, business or prospects of the Company and its subsidiaries taken as a whole or a material adverse effect on the performance by the Company of the performance of this Agreement, the Indenture, the Securities, or the Security Documents or the consummation of any of the transactions contemplated hereby or thereby (a “Material Adverse Effect”); each of the Company and its subsidiaries has all power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged. The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in the Company’s Annual Report on Form 10-K for the most recent fiscal

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year. None of the subsidiaries of the Company (other than PAI Capital LLC (Delaware LLC), HC Power Inc. (California corporation), Power One Limited (Cayman Islands), Power-One Italy S.p.A. (Italy), Power-One AG (Swiss) (collectively, the “Significant Subsidiaries”)) is a “significant subsidiary” (as defined in Rule 405 under the Securities Act).

(l)            The Company has an authorized capitalization as set forth in each of the Pricing Disclosure Package and the Offering Memorandum, and all of the issued shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; and all of the issued shares of capital stock of each subsidiary of the Company have been duly authorized and validly issued, are fully paid and non-assessable and (except for directors’ qualifying shares for foreign subsidiaries and except as set forth in each of the Pricing Disclosure Package and the Offering Memorandum) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for such liens, encumbrances, equities or claims as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

(m)          The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under the Indenture.  The Indenture has been duly and validly authorized by the Company, and upon its execution and delivery and, assuming due authorization, execution and delivery by the Trustee, will constitute the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law); no qualification of the Indenture under the Trust Indenture Act of 1939 (the “1939 Act”) is required in connection with the offer and sale of the Securities contemplated hereby or in connection with the Exempt Resales.  The Indenture will conform in all material respects to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

(n)           The Company has all requisite corporate power and authority to execute, issue, sell and perform its obligations under the Securities.  The Securities have been duly authorized by the Company and, when duly executed by the Company in accordance with the terms of the Indenture, assuming due authentication of the Securities by the Trustee, upon delivery to the Initial Purchasers against payment therefor in accordance with the terms hereof, will be validly issued and delivered and will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).  The Securities will conform in all material respects to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

(o)           The Company has all the requisite corporate power and authority to issue and deliver the Conversion Shares issuable upon conversion of the Securities.  The Conversion Shares have been duly and validly authorized by the Company and, and when issued upon

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conversion of the Securities in accordance with the terms of the Indenture and Securities, will be validly issued, fully paid and non-assessable, and the issuance of the Conversion Shares will not be subject to any preemptive or similar rights under the Company’s certificate of incorporation, by-laws or the Delaware General Corporation Law, or under any agreement or instrument to which the Company or any of its subsidiaries is a party, or of which the Company is otherwise aware.  The Conversion Shares will conform in all material respects to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

(p)           The Company and each of its subsidiaries party thereto has all requisite corporate power to execute, deliver and perform its obligations under this Agreement.  This Agreement has been duly and validly authorized, executed and delivered by the Company.

(q)           The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under the Security Documents.  The Security Documents have each been duly and validly authorized by the Company and each of the Subsidiaries party thereto, and, when duly executed and delivered in accordance with its terms by each of the other parties thereto, will constitute the valid and binding agreements of the Company and each such subsidiary, enforceable against the Company and each such subsidiary, respectively, in accordance with their terms, except as may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).  The Security Documents will conform in all material respects to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

(r)            Each applicable pledging entity under each Security Document owns the relevant collateral covered by such Security Document (collectively, the “Collateral”), free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim (other than Permitted Liens (as defined in the Indenture) and, pending release of such liens on the Closing Date, the liens of PWER Bridge LLC).  All filings and other actions necessary or desirable to perfect (to the extent such concept is applicable under the relevant laws) and protect the security interest in the Collateral to be created under the Security Documents that are required to be made by the Company or its subsidiaries under the Security Documents have been or will be at or prior to the Closing Date duly made or taken and are or will be at or prior to the Closing Date in full force and effect and, together with the execution and delivery of the Security Documents by the Company (assuming due execution and delivery by the other parties thereto), will on the Closing Date create a valid and perfected (to the extent such concept is applicable under the relevant laws) first-priority security interest in the Collateral (subject to customary permitted liens) securing the obligations of the Company (except to the extent under applicable foreign law such filings cannot be made until after the Closing Date, in which case such filings shall be made as promptly as practicable thereafter).

(s)           The issue and sale of the Securities, the issuance and delivery of any Conversion Shares, the execution, delivery and performance by the Company of the Securities, the Indenture, the Security Documents and this Agreement, the application of the proceeds from the sale of the Securities as described under “Use of Proceeds” in each of the Pricing Disclosure Package and the Offering Memorandum and the consummation of the transactions contemplated

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hereby and thereby, will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, impose any lien, charge or encumbrance upon any property or assets of the Company or its subsidiaries, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, license, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject (except that this representation shall apply only with respect to the PWER Bridge Term Loan Agreement as of the consummation of closing), (ii) result in any violation of the provisions of the charter or by-laws or similar organizational document of the Company or any of its subsidiaries, (iii) result in any violation of any rule or regulation of the NASDAQ Global Market or (iv) result in any violation of any statute or any judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets, except, with respect to clauses (i) and (iv), conflicts or violations that would not reasonably be expected to have a Material Adverse Effect.

(t)            No consent, approval, authorization or order of, or filing, registration or qualification with any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries is required for the issue and sale of the Securities, the execution, delivery and performance by the Company of the Securities, including the issuance and delivery of the Conversion Shares, the Indenture, the Security Documents and this Agreement, the application of the proceeds from the sale of the Securities as described under “Use of Proceeds” in each of the Pricing Disclosure Package and the Offering Memorandum and the consummation of the transactions contemplated hereby and thereby, except for such consents, approvals, authorizations, orders, filings, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Initial Purchasers, and such filings that may be required pursuant to the Security Documents.

(u)           Except as identified in the Pricing Disclosure Package and the Offering Memorandum, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to any other registration statement filed by the Company under the Securities Act.

(v)           Neither the Company nor any other person acting on behalf of the Company has sold or issued any securities that would be integrated with the offering of the Securities contemplated by this Agreement pursuant to the Securities Act, the rules and regulations thereunder or the interpretations thereof by the Commission. The Company will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Securities Act), of any Securities or any substantially similar security issued by the Company, within six months subsequent to the date on which the distribution of the Securities has been completed (as notified to the Company by the Initial Purchasers), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration

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provisions of the Securities Act, including any sales pursuant to Rule 144A under the Securities Act.

(w)          Except as described in the each of the Pricing Disclosure Package and the Offering Memorandum, neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements included in the Pricing Disclosure Package, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, and, since such date, there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any adverse change, or any development involving a prospective adverse change, in or affecting the condition (financial or otherwise), results of operations, stockholders’ equity, properties, management, business or prospects of the Company and its subsidiaries, taken as a whole, in each case except as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

(x)            The historical financial statements (including the related notes and supporting schedules) included in the Pricing Disclosure Package and the Offering Memorandum present fairly in all material respects the financial condition, results of operations and cash flows of the entities purported to be shown thereby, at the dates and for the periods indicated, and have been prepared in conformity with accounting principles generally accepted in the United States applied on a consistent basis throughout the periods involved.  The other financial data included in the Offering Memorandum is, in all material respects, accurately presented and has been prepared on a basis consistent with such financial statements and the books and records of the Company.

(y)           Deloitte & Touche LLP, who have certified certain financial statements of the Company, whose report appears in the Pricing Disclosure Package and who have delivered the initial letter referred to in Section 7(e) hereof, are independent public accountants as required by the Securities Act and the rules and regulations thereunder.

(z)            The Company and each of its subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects, except such as are described in the Pricing Disclosure Package and the Offering Memorandum and such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company or any of its subsidiaries; and all assets held under lease by the Company or any of its subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as do not materially interfere with the use made and proposed to be made of such assets by the Company or any of its subsidiaries.

(aa)         The Company and each of its subsidiaries carry, or are covered by, insurance from insurers of recognized financial responsibility in such amounts and covering such risks as is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries.  All policies of insurance of the Company and its subsidiaries are in full force and effect; the Company and its subsidiaries are in compliance with the terms of such policies in all material respects; and neither the Company nor any of its subsidiaries has received notice from any

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insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance; there are no claims by the Company or any of its subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; and neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not reasonably be expected to have a Material Adverse Effect.

(bb)         The Company and each of its subsidiaries have such permits, licenses, patents, franchises, certificates of need and other approvals or authorizations of governmental or regulatory authorities (“Permits”) as are necessary under applicable law to own their properties and conduct their businesses in the manner described in the Pricing Disclosure Package and the Offering Memorandum, except for any of the foregoing that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect or except as described in the Pricing Disclosure Package and the Offering Memorandum; each of the Company and its subsidiaries has fulfilled and performed all of its obligations with respect to the Permits, and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the holder or any such Permits, except for any of the foregoing that would not reasonably be expected to have a Material Adverse Effect or except as described in the Pricing Disclosure Package.

(cc)         The Company and each of its subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, know-how, software, systems and technology (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, the “Intellectual Property Rights”) necessary for the conduct of their respective businesses and have no reason to believe that the conduct of their respective businesses will conflict with, and other than as disclosed in the Exchange Act Reports or as would have a material adverse effect, have not received any notice of any claim of conflict with, any such rights of others.

(dd)Except as disclosed in the Pricing Disclosure Package and the Offering Memorandum:

(i)To the best of the Company’s knowledge, none of the products manufactured, marketed, used, sold or licensed by the Company and/or as anticipated to be manufactured, marketed, used, sold or licensed by the Company or any subsidiary, and none of the Intellectual Property Rights used by the Company or any subsidiary in the conduct of the Company’s business as described in the Pricing Disclosure Package and the Offering Memorandum, infringes upon, violates or constitutes the unauthorized use of any valid and enforceable rights owned or controlled by any third party.

(ii)No litigation to which the Company or any subsidiary is a party is now pending and no notice or other claim in writing has been received by the Company (A) alleging that the Company or any subsidiary has engaged in any activity or conduct that infringes upon, violates or constitutes the unauthorized use of the Intellectual Property Rights of any third

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party or (ii) challenging the ownership, use, validity or enforceability of any Intellectual Property Rights owned by or exclusively licensed to or by the Company or any subsidiary. No Intellectual Property Rights, used or is likely to be used in the business of the Company as described in the Pricing Disclosure Package and the Offering Memorandum (x) that is owned by the Company or a subsidiary is subject to any outstanding order, judgment, decree, stipulation or agreement materially restricting the use, sale, transfer, assignment or licensing thereof by the Company or such subsidiary, except as may be specifically provided in any license agreement, or (y) that is the subject of an inbound license agreement is subject to any outstanding judgment, decree, stipulation or agreement materially restricting the use, sale, transfer, assignment or licensing thereof by the Company or any subsidiary, except as provided in the inbound license agreements or other licenses or agreements.

(iii)          To the Company’s knowledge, no third party is misappropriating, infringing, diluting or violating any Intellectual Property Rights of the Company or any subsidiary, that is used or is likely to be used in the business of the Company as described in the Pricing Disclosure Package and the Offering Memorandum, and no such claims have been brought against any third party by the Company or any subsidiary.

(iv)          The Company and its subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.

(ee)         Except as described in the Pricing Disclosure Package and the Offering Memorandum, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject that would, in the aggregate, reasonably be expected to have a Material Adverse Effect or to have a material adverse effect on the performance by the Company of the performance of this Agreement, the Indenture, the Securities, or the Security Agreement or the consummation of any of the transactions contemplated hereby; and to the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or others.

(ff)           There are no legal or governmental proceedings or contracts or other documents that would be required to be described in a registration statement filed under the Securities Act or, in the case of documents, would be required to be filed as exhibits to a registration statement of the Company pursuant to Item 601(b)(10) of Regulation S-K that have not been described in the Pricing Disclosure Package and the Offering Memorandum.  Neither the Company nor any of its subsidiaries has knowledge that any other party to any such contract, agreement or arrangement has any intention not to render full performance as contemplated by the terms thereof; and that statements made in the Pricing Disclosure Package and the Offering Memorandum, insofar as they purport to constitute summaries of the terms of statutes, rules or regulations, legal or governmental proceedings or contracts and other documents, constitute accurate summaries of the terms of such statutes, rules and regulations, legal and governmental proceedings and contracts and other documents in all material respects.

(gg)         No relationship, direct or indirect, that would be required to be described in a registration statement of the Company pursuant to Item 404 of Regulation S-K, exists between or among the Company, on the one hand, and the directors, officers, stockholders,

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customers, suppliers or affiliates of the Company, on the other hand, that has not been described in the Pricing Disclosure Package and the Offering Memorandum.

(hh)         Except as described in the Pricing Disclosure Package and the Offering Memorandum, no labor disturbance by the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent that would reasonably be expected to have a Material Adverse Effect.

(ii)           (i) Each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Security Act of 1974, as amended (“ERISA”)) for which the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been maintained in compliance with its terms and with the requirements of all applicable statutes, rules and regulations including ERISA and the Code; (ii) with respect to each Plan subject to Title IV of ERISA (a) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur, (b) no “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not waived, has occurred or is reasonably expected to occur, (c) the fair market value of the assets under each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan) and (d) neither the Company or any member of its Controlled Group has incurred, or reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan”, within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

(jj)           The Company and each of its subsidiaries has filed all federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof, subject to permitted extensions, and has paid all taxes due thereon, and no tax deficiency has been determined adversely to the Company or any of its subsidiaries, nor does the Company have any knowledge of any tax deficiencies except, in each case, as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

(kk)         There are no transfer taxes or other similar fees or charges under Federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement or the issuance by the Company or sale by the Company of the Securities.

(ll)           Since the date as of which information is given in the Pricing Disclosure Package and except as otherwise described in the Pricing Disclosure Package and the Offering Memorandum, the Company has not (i) issued or granted any securities other than issuances of common stock pursuant to exercises of employee stock options disclosed as being outstanding in the Pricing Disclosure Package and the Offering Memorandum, (ii) incurred any liability or obligation, direct or contingent, other than liabilities and obligations that were incurred in the

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ordinary course of business, (iii) entered into any material transaction not in the ordinary course of business or (iv) declared or paid any dividend on its capital stock.

(mm)       The Company and each of its subsidiaries (i) makes and keeps accurate books and records and (ii) maintains and has maintained effective internal control over financial reporting as defined in Rule 13a-5 under the Exchange Act and a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorization, (B) transactions are recorded as necessary to permit preparation of its financial statements in conformity with accounting principles generally accepted in the United States and to maintain accountability for its assets, (C) access to its assets is permitted only in accordance with management’s general or specific authorization and (D) the reported accountability for its assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(nn)         Neither the Company nor any of its subsidiaries (i) is in violation of its charter or by-laws (or similar organizational documents), (ii) is in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant, condition or other obligation contained in any indenture, mortgage, deed of trust, loan agreement, license or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over it or its property or assets or has failed to obtain any license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business, except in the case of clauses (ii) and (iii), to the extent any such conflict, breach, violation or default would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

(oo)         Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

(pp)         The Company and each of its subsidiaries (i) are, and at all times prior hereto were, in compliance with all laws, regulations, ordinances, rules, orders, judgments, decrees, permits or other legal requirements of any governmental authority, including without limitation any international, national, state, provincial, regional, or local authority, relating to the protection of human health or safety, the environment, or natural resources, or to hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”) applicable to such entity, which compliance includes, without limitation, obtaining, maintaining and complying with all permits and authorizations and approvals required by Environmental Laws to conduct their respective businesses, and (ii) have not received notice of any actual or alleged violation of Environmental Laws, or of any potential liability for or other obligation concerning the presence, disposal or release of hazardous or toxic substances or wastes, pollutants or

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contaminants, except in the case of clause (i) or (ii) where such non-compliance, violation, liability, or other obligation would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.  Except as described in the Pricing Disclosure Package and the Offering Memorandum, (A) there are no proceedings that are pending, or known to be contemplated, against the Company or any of its subsidiaries under Environmental Laws in which a governmental authority is also a party, other than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed, (B) the Company and its subsidiaries are not aware of any issues regarding compliance with Environmental Laws, or liabilities or other obligations under Environmental Laws or concerning hazardous or toxic substances or wastes, pollutants or contaminants, that would reasonably be expected to have a material effect on the capital expenditures, earnings or competitive position of the Company and its subsidiaries, and (C) none of the Company and its subsidiaries anticipates material capital expenditures relating to Environmental Laws.

(qq)         None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities), will violate or result in a violation on the part of the Company or any of its subsidiaries of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System.

(rr)           The statements set forth in each of the Pricing Disclosure Package and the Offering Memorandum under the caption “Description of the Notes,” insofar as they purport to constitute a summary of the terms of the Indenture, the Securities and the Security Documents, under the caption “Description of Capital Stock,” insofar as they purport to constitute summaries of the terms of the common stock of the Company, and under the caption “Certain Material U.S. Federal Income Tax Consequences,” insofar as they purport to describe the constitute summaries of matters of United States federal tax law and regulations or legal conclusions with respect thereto, are accurate in all material respects.

(ss)         The Company and its affiliates have not taken, directly or indirectly, any action designed to or that has constituted or that reasonably can be expected to cause or result in the stabilization or manipulation of the price of any security of the Company in connection with the offering of the Securities.

(tt)           (i) The Company and each of its subsidiaries have established and maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act), (ii) such disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company in the reports they file or submit under the Exchange Act is accumulated and communicated to management of the Company and its subsidiaries, including their respective principal executive officers and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure to be made; and (iii) such disclosure controls and procedures are effective in all material respects to perform the functions for which they were established.

(uu)         Since the date of the most recent balance sheet of the Company and its consolidated subsidiaries reviewed or audited by Deloitte & Touche LLP and the audit committee of the board of directors of the Company, (i) the Company has not been advised of

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(A) any significant deficiencies or material weaknesses in the design or operation of internal controls that would adversely affect the ability of the Company or any of its subsidiaries to record, process, summarize and report financial data, or any material weaknesses in internal controls or (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls of the Company and each of its subsidiaries, and (ii) since that date, there have been no significant changes in internal controls or in other factors that would significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

(vv)         No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company, except as described in the Pricing Disclosure Package.

(ww)       There is and has been no failure on the part of the Company and any of the Company’s directors or officers, in their capacities as such, to comply with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith.

(xx)          The section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in the Company’s Annual Report on Form 10-K for the year ended December 30, 2007 and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2008 contained in the Pricing Disclosure Package accurately and fully describes (A) the accounting policies that the Company believes are the most important in the portrayal of the Company’s financial condition and results of operations and that require management’s most difficult, subjective or complex judgments; (B) the judgments and uncertainties affecting the application of critical accounting policies; and (C) the likelihood that materially different amounts would be reported under different conditions or using different assumptions and an explanation thereof.

(yy)         Neither the Company nor any subsidiary is in violation of or has received notice of any violation with respect to any federal or state law relating to discrimination in the hiring, promotion or pay of employees, nor any applicable federal or state wage and hour laws, nor any state law precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which would reasonably be expected to have a Material Adverse Affect.

(zz)          The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is

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pending or, to the knowledge of the Company, threatened, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.

(aaa)       Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

Any certificate signed by any officer of the Company and delivered to the Representative or counsel for the Initial Purchasers in connection with the offering of the Securities shall be deemed a representation and warranty by the Company, as to matters covered thereby, to each Initial Purchaser.

3.             Purchase of the Securities by the Initial Purchasers, Agreements to Sell, Purchase and Resell.  (a)  The Company hereby agrees, on the basis of the representations, warranties and agreements of the Initial Purchasers contained herein and subject to all the terms and conditions set forth herein, to issue and sell to the Initial Purchasers and, upon the basis of the representations, warranties and agreements of the Company herein contained and subject to all the terms and conditions set forth herein, each Initial Purchaser agrees, severally and not jointly, to purchase from the Company, at a purchase price equal to 96% of the principal amount thereof, plus accrued interest, if any, from June 17, 2008, the total principal amount of Securities set forth opposite the name of such Initial Purchaser in Schedule I hereto (it being understood that such amount satisfies the fee payable pursuant to Section 4(a) of the Company’s engagement letter with Lehman Brothers Inc. dated March 27, 2008).  The Company shall not be obligated to deliver any of the Securities to be delivered hereunder except upon payment for all of the securities to be purchased as provided herein.

On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Initial Purchasers the Option Securities, and the Initial Purchasers shall have the right to purchase, severally and not jointly, up to $5,000,000 aggregate principal amount of Option Securities at a purchase price equal to 96% of the principal amount thereof, plus accrued interest, if any, from June 17, 2008. The Representative may exercise this right on behalf of the Initial Purchasers to cover over-allotments in the sale of Firm Securities in whole or from time to time in part by giving written notice not later than 30 days after the date of this Agreement.  Any exercise notice shall specify the principal amount of Option Securities to be purchased by the Initial Purchasers and the date on which such Option Securities are to be purchased.  Each purchase date must be at least one business day after the written notice is given and may not be earlier than the closing date for the Firm Securities nor later than ten business days after the date of such notice.  Option Securities may be purchased as provided in Section 4 solely for the purpose of covering over allotments made in connection with the offering of the Firm Securities.  On each day, if any, that Option Securities are to be purchased (an “Option Closing Date”), each Initial Purchaser agrees, severally and not jointly, to purchase the principal amount of Option Securities (subject to such

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adjustments to eliminate fractional Securities as you may determine) that bears the same proportion to the total principal amount of Option Securities to be purchased on such Option Closing Date as the principal amount of Firm Securities set forth in Schedule I opposite the name of such Initial Purchaser bears to the total principal amount of Firm Securities.

(b)           Each of the Initial Purchasers, severally and not jointly hereby represents and warrants to the Company that it will offer the Securities for sale upon the terms and conditions set forth in this Agreement and in the Pricing Disclosure Package.  Each of the Initial Purchasers, severally and not jointly, hereby represents and warrants to, and agrees with, the Company, on the basis of the representations, warranties and agreements of the Company, that such Initial Purchaser: (i) is a QIB with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Securities; (ii) is purchasing the Securities pursuant to a private sale exempt from registration under the Securities Act; (iii) in connection with the Exempt Resales, will solicit offers to buy the Securities only from, and will offer to sell the Securities only to, the Eligible Purchasers in accordance with this Agreement and on the terms contemplated by the Pricing Disclosure Package; and (iv) will not offer or sell the Securities, nor has it offered or sold the Securities by, or otherwise engaged in, any form of general solicitation or general advertising (within the meaning of Regulation D, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising).

Each of the Initial Purchasers understands that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 7(c) and 7(d) hereof, counsel to the Company and counsel to the Initial Purchasers, will rely upon the accuracy and truth of the foregoing representations, warranties and agreements, and the Initial Purchasers hereby consent to such reliance.

4.             Delivery of the Securities and Payment Therefor.  Delivery to the Initial Purchasers of and payment for the Firm Securities shall be made at the office of Gibson, Dunn & Crutcher, 200 Park Avenue, New York, New York, at 9:00 A.M., New York City time, on June 17, 2008 (the “Firm Closing Date”).  The place of closing for the Securities and the Firm Closing Date may be varied by agreement between the Initial Purchasers and the Company.

Payment for any Option Securities shall be made to the Company against delivery of such Option Securities for the respective accounts of the several Initial Purchasers at 9:00 A.M., New York City time, on the date specified in the corresponding notice described in Section 3(a) or at such other time on the same or on such other date, as may be varied by agreement between the Initial Purchasers and the Company.  The date for delivery of and payment for the Option Securities is herein referred to as an “Option Closing Date,” which may be the Firm Closing Date (the Firm Closing Date and each Option Closing Date, if any, being referred to as a “Closing Date”).

The Securities will be delivered to the Initial Purchasers, or the Trustee as custodian for The Depository Trust Company (“DTC”), against payment by or on behalf of the Initial Purchasers of the purchase price therefor by wire transfer in immediately available funds, by

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causing DTC to credit the applicable Securities to the account of the Initial Purchasers at DTC.  The Securities will be evidenced by one or more global securities in definitive form (the “Global Securities”) or by additional definitive securities, and will be registered, in the case of the Global Securities, in the name of Cede & Co. as nominee of DTC, and in the other cases, in such names and in such denominations as the Initial Purchasers shall request prior to 9:30 A.M., New York City time, on the second business day preceding the Firm Closing Date or the Option Closing Date, as the case may be.  The Securities to be delivered to the Initial Purchasers shall be made available to the Initial Purchasers in New York City for inspection and packaging not later than 9:30 A.M., New York City time, on the business day next preceding the Firm Closing Date or the Option Closing Date, as the case may be.

5.             Agreements of the Company.  The Company agrees with each of the Initial Purchasers as follows:

(a)           The Company will furnish to the Initial Purchasers, without charge, within one business day of the date of the Offering Memorandum, such number of copies of the Offering Memorandum as may then be amended or supplemented as they may reasonably request.

(b)           The Company will not make any amendment or supplement to the Pricing Disclosure Package or to the Offering Memorandum of which the Initial Purchasers shall not previously have been advised or to which they shall reasonably object after being so advised.

(c)           The Company consents to the use of the Pricing Disclosure Package and the Offering Memorandum in accordance with the securities or Blue Sky laws of the jurisdictions in which the Securities are offered by the Initial Purchasers and by all dealers to whom Securities may be sold, in connection with the offering and sale of the Securities.

(d)           If, at any time prior to completion of the distribution of the Securities by the Initial Purchasers to Eligible Purchasers, any event occurs or information becomes known that, in the judgment of the Company or in the opinion of counsel for the Initial Purchasers, should be set forth in the Pricing Disclosure Package or the Offering Memorandum so that the Pricing Disclosure Package or the Offering Memorandum, as then amended or supplemented, does not include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to supplement or amend the Pricing Disclosure Package or the Offering Memorandum in order to comply with any law, the Company will promptly prepare an appropriate supplement or amendment thereto, and will promptly furnish to the Initial Purchasers and dealers a reasonable number of copies thereof.

(e)           The Company will not make any offer to sell or solicitation of an offer to buy the Securities that would constitute a Free Writing Offering Document without the prior consent of the Representative, which consent shall not be unreasonably withheld or delayed; if at any time following issuance of a Free Writing Offering Document any event occurred or occurs as a result of which such Free Writing Offering Document conflicts with the information in the Preliminary Offering

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Memorandum, the Pricing Disclosure Package or the Offering Memorandum or, when taken together with the information in the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, includes an untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, as promptly as practicable after becoming aware thereof, the Company will give notice thereof to the Initial Purchasers through the Representative and, if requested by the Representative, will prepare and furnish without charge to each Initial Purchaser a Free Writing Offering Document or other document which will correct such conflict, statement or omission.

(f)            Promptly from time to time to take such action as the Initial Purchasers may reasonably request to qualify the Securities for offering and sale under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities; provided that in connection therewith the Company shall not be required to (i) qualify as a foreign corporation in any jurisdiction in which it would not otherwise be required to so qualify, (ii) file a general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it would not otherwise be subject.

(g)           For a period commencing on the date hereof and ending on the 90th day after the date of the Offering Memorandum (the “Lock Up Period”), the Company agrees not to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that is designed to, or would be expected to, result in the disposition by any person at any time in the future of) any Common Stock, securities of the Company that are substantially similar to the Securities or securities convertible into or exchangeable for or that represent the right to receive Common Stock, or sell or grant options, rights or warrants with respect to the common stock of the Company or securities convertible into or exchangeable for Common Stock (other than the Securities), (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, (3) file or cause to be filed a registration statement, including any amendments, with respect to the registration of Common Stock or securities convertible, exercisable or exchangeable into shares of Common Stock or (3) publicly announce an offering of any shares of Common Stock or securities convertible or exchangeable into shares of Common Stock, in each case without the prior written consent of Lehman Brothers Inc., on behalf of the Initial Purchasers; and to cause each officer and director of the Company set forth on Schedule IV hereto to furnish to the Initial Purchasers, prior to the Initial Delivery Date, a letter or letters, substantially in the form of Exhibit A (the “Lock Up Letters”); provided that, nothing contained above shall prevent the Company from issuing (i) securities required to be issued pursuant to contractual obligations of the Company in effect as of the date of this Agreement (or the filing of any amendment to the registration statement for the common stock underlying the warrants held by PWER Bridge LLC); (ii) securities issued under the Company’s Rights Plan as in effect as of the date of this Agreement; and (iii) equity securities issued pursuant to employee benefit or purchase plans in effect as of the date of this Agreement.

Notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to

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the Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by the preceding paragraph shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or the occurrence of the material event, unless Lehman Brothers Inc. waives such extension in writing.

(h)           The Company will furnish to the holders of the Securities as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the date of the Offering Memorandum), will make available to its securityholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; provided that so long as the Company files periodic reports pursuant to Section 13 or 15(d) of the Exchange Act for the foregoing periods, the Company shall be deemed to comply with this Section 5(h).

(i)            So long as any of the Securities are outstanding, the Company will furnish to the Initial Purchasers (i) as soon as available, a copy of each report of the Company mailed to stockholders generally or filed with any stock exchange or regulatory body and (ii) from time to time such other information concerning the Company as the Initial Purchasers may reasonably request, provided that such reports and other information need not be furnished to the Initial Purchasers if such report or other information is filed with the Securities and Exchange Commission on EDGAR.

(j)            The Company will apply the net proceeds from the sale of the Securities to be sold by it hereunder substantially in accordance with the description set forth in the Pricing Disclosure Package and the Offering Memorandum under the caption “Use of Proceeds.”

(k)           The Company and its affiliates will not take, directly or indirectly, any action designed to or that has constituted or that reasonably would be expected to cause or result in the stabilization or manipulation of the price of any security of the Company in connection with the offering of the Securities.

(l)            The Company will use its reasonable commercial efforts to permit the Securities to be designated as Private Offerings, Resales and Trading through Automated Linkages (PORTAL) Market^SM (the “PORTAL Market^SM”) securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in the PORTAL Market^SM and to permit the Securities to be eligible for clearance and settlement through DTC.

(m)          The Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Securities that have been acquired by any of them, except for Securities purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act.

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(n)   The Company agrees not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the sale to the Initial Purchasers or the Eligible Purchasers of the Securities.

(o)   The Company agrees to comply in all material respects with the agreements set forth in the representation letters of the Company to DTC relating to the approval of the Securities by DTC for “book entry” transfer.

(p)   The Company will do and perform all things required or necessary to be done and performed under this Agreement by it prior to the Closing Date, and to satisfy all conditions precedent to the Initial Purchasers’ obligations hereunder to purchase the Securities.

(q)   The Company (i) shall complete on or prior to the Closing Date all filings and other similar actions required in connection with the perfection (to the extent such concept is applicable in the relevant jurisdictions) of the security interests as and to the extent required to be made by the Company or its subsidiaries under the Security Documents (except to the extent under applicable foreign law such filings cannot be made until after the closing date, in which case such filings shall be made as promptly as practicable thereafter) and (ii) shall take all actions necessary to maintain such security interests and to create and perfect (to the extent such concept is applicable in the relevant jurisdictions) security interests in any collateral acquired after the Closing Date, in each case as and to the extent required by the Security Documents.

(r)   The Company shall provide each stockholder entitled to vote at either (x) the next annual meeting of stockholders of the Company or (y) a special meeting of stockholder of the Company (the “Stockholder Meeting”), which shall be promptly called and held not later than September 15, 2008 (the “Stockholder Meeting Deadline”), a proxy statement soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for approval of resolutions (“Stockholder Resolutions”) providing for the Company’s issuance of all of the Securities as contemplated in the Indenture and in accordance with and the rules and regulations of The NASDAQ Stock Market (such affirmative approval being referred to herein as the “Stockholder Approval”), and the Company shall use its reasonable best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to the stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall comply with the terms of the Indenture relating thereto until such Stockholder Approval is obtained.

6.    Expenses.  Whether or not the transactions contemplated by this Agreement are consummated or this Agreement becomes effective or is terminated, the Company agrees, to pay all costs, expenses, fees and taxes incident to and in connection with: (i) the preparation, printing, filing and distribution of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum (including, without limitation, financial statements and exhibits) and all amendments and supplements thereto (including the fees, disbursements and expenses of the Company’s accountants and counsel and the reasonable fees, disbursements and expenses of the Initial Purchasers’ counsel incurred in connection therewith); (ii) the preparation,

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printing (including, without limitation, word processing and duplication costs) and delivery of this Agreement, the Indenture, the Security Documents, all Blue Sky memoranda and all other agreements, memoranda, correspondence and other documents printed and delivered in connection therewith and with the Exempt Resales; (iii) the authorization, issuance, sale and delivery by the Company of the Securities and any taxes payable in connection therewith; (iv) the qualification of the Securities for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the reasonable fees and disbursements of the Initial Purchasers’ counsel relating to such registration or qualification, not to exceed $15,000); (v) the furnishing of such copies of the Pricing Disclosure Package and the Offering Memorandum, and all amendments and supplements thereto, as may be reasonably requested for use in connection with the Exempt Resales; (vi) the preparation of certificates for the Securities (including, without limitation, printing and engraving thereof); (vii) the application for quotation of the Securities in the PORTAL MarketSM (including all disbursements and listing fees); (viii) the approval of the Securities by DTC for “book-entry” transfer (including fees and expenses of counsel); (ix) the rating of the Securities, if any; (x) the obligations of the Trustee, any agent of the Trustee and the counsel for the Trustee in connection with the Indenture and the Securities; (xi) the performance by the Company of their other obligations under this Agreement; (xii) all reasonable travel expenses of each Initial Purchaser and all such travel expenses of the Company’s officers and employees and (xiii) any other reasonable expenses of each Initial Purchaser and any expenses of the Company in connection with attending or hosting meetings with prospective purchasers of the Securities, and expenses associated with any electronic road show.

7.    Conditions to Initial Purchasers’ Obligations.  The respective obligations of the Initial Purchasers hereunder are subject to the accuracy, when made and on and as of the Closing Date, of the representations and warranties of the Company contained herein, to the performance by the Company of its obligations hereunder, and to each of the following additional terms and conditions:

(a)   The Initial Purchasers shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Pricing Disclosure Package or the Offering Memorandum, or any amendment or supplement thereto, contains an untrue statement of a fact which, in the opinion of Gibson, Dunn & Crutcher LLP, counsel to the Initial Purchasers, is material or omits to state a fact which, in the opinion of such counsel, is material and is necessary to make the statements therein not misleading.

(b)   All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Securities, the Conversion Shares, the Indenture, the Security Documents, the Pricing Disclosure Package and the Offering Memorandum, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Initial Purchasers, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.

(c)   O’Melveny & Myers LLP shall have furnished to the Initial Purchasers its written opinion, as counsel to the Company, addressed to the Initial Purchasers and dated the Closing Date, substantially in the form of Exhibit B hereto or otherwise in form and substance reasonably satisfactory to the Initial Purchasers, and O’Melveny & Myers LLP, the Company’s

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local Italian, Cayman Islands, and Chinese counsel shall have delivered the respective opinions required to be delivered under the applicable Security Document as to the corporate existence and good standing of the Company’s subsidiary or subsidiaries in such jurisdiction, the validity and perfection (to the extent such concept is applicable under the relevant laws) of the security interest created thereunder, the effectiveness of the agreements, documents and instruments described in Section 7(o), and such other matters as the Initial Purchasers shall reasonably request, in each case in form and substance reasonably satisfactory to the Initial Purchasers.

(d)   The Initial Purchasers shall have received from Gibson, Dunn & Crutcher LLP, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to the issuance and sale of the Securities, the Pricing Disclosure Package, the Offering Memorandum and other related matters as the Initial Purchasers may reasonably require, and the Company shall have furnished to such counsel such documents and information as they reasonably request for the purpose of enabling them to pass upon such matters.

(e)   At the time of execution of this Agreement, the Initial Purchasers shall have received from Deloitte & Touche LLP a letter, in form and substance satisfactory to the Initial Purchasers, addressed to the Initial Purchasers and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Pricing Disclosure Package, as of a date not more than three days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and (iii) covering such other matters as are ordinarily covered by accountants’ “comfort letters” to underwriters in connection with registered public offerings.

(f)   With respect to the letter of Deloitte & Touche LLP referred to in the preceding paragraph and delivered to the Initial Purchasers concurrently with the execution of this Agreement (the “initial letter”), the Company shall have furnished to the Initial Purchasers a letter (the “bring-down letter”) of such accountants, addressed to the Initial Purchasers and dated the Closing Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the Closing Date (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in each of the Pricing Disclosure Package or the Offering Memorandum, as of a date not more than three days prior to the date of the Closing Date), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter.

(g)   Except as described in the Pricing Disclosure Package, (i) neither the Company nor any of its subsidiaries shall have sustained, since the date of the latest audited financial statements included in the Pricing Disclosure Package, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree or (ii) since such date, there shall not have been any change in the capital stock or long-term debt of the Company or

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any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), results of operations, stockholders’ equity, properties, management, business or prospects of the Company and its subsidiaries, taken as a whole, the effect of which, in any such case described in clause (i) or (ii), is, individually or in the aggregate, in the judgment of the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Securities being delivered on the Closing Date on the terms and in the manner contemplated in the Offering Memorandum.

(h)   The Company shall have furnished or caused to be furnished to the Initial Purchasers on the Closing Date the following certificates:

(i)A certificate of the chief executive officer or chief financial officer of the Company to the effect that:

a.The representations, warranties and agreements of the Company in Section 2 are true and correct on and as of the Closing Date (except for representations and warranties that speak as of a specific date which are true and correct as of such specific date), and the Company has complied with all its agreements contained herein and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; and

b.He has carefully examined the Pricing Disclosure Package and the Offering Memorandum, and, in his opinion, (A) the Pricing Disclosure Package, as of the Applicable Time and as of the Closing Date, and the Offering Memorandum, as of its date and as of the Closing Date, did not and do not contain any untrue statement of a material fact and did not and do not omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (B) since the date of the Pricing Disclosure Package and the Offering Memorandum, no event has occurred which should have been set forth in a supplement or amendment to the Pricing Disclosure Package of the Offering Memorandum; and

(ii)A certificate of the secretary of the Company attaching true and correct copies of (x) the Certificate of Incorporation of the Company, (y) the Bylaws of the Company and (z) resolutions of the board of directors of the Company authorizing the transactions contemplated by the Pricing Disclosure Package and the Offering Memorandum.

The Company shall provide any additional certificates of officers of the Company satisfactory to the Initial Purchasers as to any such additional matters as the Representative may reasonably request.

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(i)   The Securities shall have been designated for trading on the PORTAL Market^SM.

(j)   The Company and the Trustee shall have executed and delivered the Indenture, and the Initial Purchasers shall have received an original copy thereof, duly executed by the Company and the Trustee.

(k)   Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following:  (i) trading in securities generally on the New York Stock Exchange, The NASDAQ Global Market or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or materially limited or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions, including, without limitation, as a result of terrorist activities after the date hereof (or the effect of international conditions on the financial markets in the United States shall be such), as to make it, in the judgment of the Representative, impracticable or inadvisable to proceed with the offering or delivery of the Securities being delivered on the Closing Date on the terms and in the manner contemplated in the Offering Memorandum or that, in the judgment of the Representative, would materially and adversely affect the financial markets or the markets for the Securities and other debt securities.

(l)   The Company shall have furnished to the Initial Purchasers a certificate dated the Closing Date, of the Chief Financial Officer of the Company as to the solvency of the Company following the consummation of the transactions.

(m)   The Security Documents shall have been duly executed and delivered by each party thereto, the security interests created pursuant thereto shall be effective promptly following payment in full of the Existing Secured Indebtedness (as defined below) in accordance with subparagraph (o) of this Section 7 and The Bank of New York Trust Company, N.A., as collateral agent, shall hold a valid and perfected (to the extent such concept is applicable in the relevant jurisdiction; and except to the extent under applicable foreign law certain filings necessary for perfection cannot be made until after the Closing Date, in which case arrangements reasonably satisfactory to the Initial Purchasers shall have been made to make such filings as promptly as practicable thereafter) first-priority (after giving effect to the payment in full of the Existing Secured Indebtedness (as defined below) in accordance with subparagraph (o) of this Section 7) security interest in the Collateral (subject to any Permitted Liens (as defined in the Indenture)) securing the obligations of the Company for the benefit of the Trustee and the benefit of holders of the Securities on or prior to, and as of, the Closing Date.

(n)   The Initial Purchasers shall have received the results of a recent lien search in each of the jurisdictions within the United States where assets of the Company or its

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domestic subsidiaries covered by the Security Documents are located and any jurisdictions in which valid filings with respect to such assets of the Company and its domestic subsidiaries may be in effect, and such search shall reveal no liens on any of the assets of the Company (other than Permitted Liens (as defined in the Indenture) and as otherwise agreed in writing by the Initial Purchasers).

(o)   Contemporaneously with the Closing, the collateral agent shall have received (i) a duly executed copy of the payoff letter with respect to the repayment of the promissory note issued by the Company in the principal amount of $50,000,000 pursuant to the Term Loan Agreement, dated as of March 6, 2008, between the Company, PWER Bridge, LLC, a Nevada limited liability company, and, with respect to Section 1.7, Stephens Investment Holdings, LLC, an Arkansas limited liability company (the “Existing Secured Indebtedness”); (ii) any and all related release, cancellation and/or termination documents, duly executed by the Company and PWER Bridge, LLC (the “Existing Secured Lender Agent”), together with the termination statements for all financing statements filed by the Existing Secured Lender Agent, covering any portion of the Collateral and existing as of the Closing Date; and (iii) acknowledgement filings of such termination statements, in each case in form and substance reasonably satisfactory to the Initial Purchasers; or, in the case of clauses (ii) — (iii) hereof arrangements satisfactory to the Initial Purchasers shall have been made providing for the delivery of such items to the collateral agent promptly following repayment in full of the Existing Secured Indebtedness.

All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers.

The several obligations of the Initial Purchasers to purchase Option Securities hereunder are subject to the delivery to the Representative on the applicable Option Closing Date of such documents as the Representative may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Option Securities to be sold on such Option Closing Date and other matters related to the issuance of such Option Securities.

8.    Indemnification and Contribution.

(a)   The Company hereby agrees to indemnify and hold harmless each Initial Purchaser, its directors, officers and employees and each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Securities), to which that Initial Purchaser, director, officer, employee or controlling person may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Free Writing Offering Document, the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum or in any amendment or supplement thereto, (B) in any Blue Sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying

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any or all of the Securities under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a “Blue Sky Application”) or (C) in any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Securities (“Marketing Materials”), including any roadshow or investor presentations made to investors by the Company (whether in person or electronically), or (ii) the omission or alleged omission to state in any Free Writing Offering Document, the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or in any amendment or supplement thereto, or in any Blue Sky Application or in any Marketing Materials, any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) any act or failure to act or any alleged act or failure to act by any Initial Purchaser in connection with, or relating in any manner to, the Securities or the offering contemplated hereby, and that is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Initial Purchaser through its gross negligence or willful misconduct), and shall reimburse each Initial Purchaser and each such director, officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Initial Purchaser, director, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Memorandum, the Pricing Disclosure Package or Offering Memorandum, or in any such amendment or supplement thereto, or in any Blue Sky Application or in any Marketing Materials, in reliance upon and in conformity with written information concerning such Initial Purchaser furnished to the Company through the Representative by or on behalf of any Initial Purchaser specifically for inclusion therein, which information consists solely of the information specified in Section 8(e).  The foregoing indemnity agreement is in addition to any liability that the Company may otherwise have to any Initial Purchaser or to any director, officer, employee or controlling person of that Initial Purchaser.

(b)   Each Initial Purchaser, severally and not jointly, hereby agrees to indemnify and hold harmless the Company, its officers and employees, each of its directors, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such director, officer, employee or controlling person may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Free Writing Offering Document, Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum or in any

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amendment or supplement thereto, (B) in any Blue Sky Application, or (C) in any Marketing Materials or (ii) the omission or alleged omission to state in any Free Writing Offering Document, Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or in any amendment or supplement thereto, or in any Blue Sky Application or in any Marketing Materials any material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Initial Purchaser furnished to the Company through the Representative by or on behalf of that Initial Purchaser specifically for inclusion therein, which information is limited to the information set forth in Section 8(e).  The foregoing indemnity agreement is in addition to any liability that any Initial Purchaser may otherwise have to the Company or any such director, officer, employee or controlling person.

(c)   Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and; provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under this Section 8.  If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party.  After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, that the Initial Purchasers shall have the right to employ counsel to represent jointly the Initial Purchasers and their respective directors, officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Initial Purchasers against the Company under this Section 8, if (i) the Company and the Initial Purchasers shall have so mutually agreed; (ii) the Company has failed within a reasonable time to retain counsel reasonably satisfactory to the Initial Purchasers; (iii) the Initial Purchasers and their respective directors, officers, employees and controlling persons shall have reasonably concluded, based on the advice of counsel, that there may be legal defenses available to them that are different from or in addition to those available to the Company; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Initial Purchasers or their respective directors, officers, employees or controlling persons, on the one hand, and the Company, on the other hand, and representation of both sets of parties by the same counsel would present a conflict due to actual or potential differing interests between them, and in any such event the fees and expenses of such separate counsel shall be paid by the Company.  No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such

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action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.

(d)   If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other, from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Initial Purchasers, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations.  The relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other, with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities purchased under this Agreement (before deducting expenses) received by the Company, on the one hand, and the total underwriting discounts and commissions received by the Initial Purchasers with respect to the Securities purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the Securities under this Agreement as set forth on the cover page of the Offering Memorandum.  The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, or the Initial Purchasers, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission.  The Company and the Initial Purchasers agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take into account the equitable considerations referred to herein.  The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 8(d), no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the net proceeds from the sale to Eligible Purchasers of the Securities initially purchased by it exceeds the amount of any damages that such Initial Purchaser has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The Initial Purchasers’ obligations to contribute as provided in this Section 8(d) are several in proportion to their respective underwriting obligations and not joint.

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(e)The Initial Purchasers severally confirm and the Company acknowledges and agrees that the statements with respect to the offering of the Securities by the Initial Purchasers set forth in the last sentence on the front cover of the Offering Memorandum and in the third paragraph of the section entitled “Plan of Distribution” in the Pricing Disclosure Package and the Offering Memorandum are correct and constitute the only information concerning such Initial Purchasers furnished in writing to the Company by or on behalf of the Initial Purchasers specifically for inclusion in the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum or in any amendment or supplement thereto.

9.Defaulting Initial Purchasers.  If on the Firm Closing Date, or on an Option Closing Date, as the case may be, any Initial Purchaser defaults in the performance of its obligations under this Agreement, the remaining non-defaulting Initial Purchasers shall be obligated to purchase the Securities that the defaulting Initial Purchaser agreed but failed to purchase on the Firm Closing Date or the Option Closing Date, as the case may be, in the respective proportions that the principal amount of Securities set opposite the name of each remaining non-defaulting Initial Purchaser in Schedule I hereto bears to the total principal amount of Securities set opposite the names of all the remaining non-defaulting Initial Purchasers in Schedule I hereto; provided, that the remaining non-defaulting Initial Purchasers shall not be obligated to purchase any of the Securities on the Firm Closing Date or the Option Closing Date, as the case may be, if the aggregate principal amount of Securities that the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase on such date exceeds 9.09% of the aggregate principal amount of Securities to be purchased on the Firm Closing Date, or on the Option Closing Date, as the case may be, and any remaining non-defaulting Initial Purchasers shall not be obligated to purchase more than 110% of the aggregate principal amount of Securities that it agreed to purchase on the Firm Closing Date, or on the Option Closing Date, as the case may be, pursuant to the terms of Section 3.  If the foregoing maximums are exceeded, the remaining non-defaulting Initial Purchasers, or those other Initial Purchasers satisfactory to the Initial Purchasers who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the Securities to be purchased on the Firm Closing Date, or on the Option Closing Date, as the case may be.

If other Initial Purchasers are obligated or agree to purchase the Securities of a defaulting or withdrawing Initial Purchaser, either the remaining Initial Purchasers or the Company may postpone the Firm Closing Date or the Option Closing Date, as the case may be, for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Pricing Disclosure Package, the Offering Memorandum or in any other document or arrangement.

If the remaining Initial Purchasers or other Initial Purchasers satisfactory to the Initial Purchasers do not elect to purchase:  (a) the Securities that the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase on the Closing Date, this Agreement shall terminate without liability on the part of any non-defaulting Initial Purchaser or the Company; or (b) the Option Securities that the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase on the Option Closing Date, the non-defaulting Initial Purchasers shall have, the option to either: (i) terminate their obligation hereunder to purchase the Option Securities to

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be sold on such Option Closing Date; or (ii) purchase not less than the principal amount of Option Securities that such non-defaulting Initial Purchaser would have been obligated to purchase in the absence of such default.

As used in this Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule I hereto that, pursuant to this Section 9, purchases Securities that a defaulting Initial Purchaser agreed but failed to purchase.

Nothing contained herein shall relieve: (a) a defaulting Initial Purchaser of any liability it may have to the Company for damages caused by its default; or (b) the Company of any liability for the payment of expenses to the extent set forth in Sections 8 and 11.

10.Termination.  The obligations of the Initial Purchasers hereunder may be terminated by the Initial Purchasers by notice given to and received by the Company prior to delivery of and payment for the Securities if, prior to that time, any of the events described in Sections 7(g) or (k) shall have occurred or if the Initial Purchasers shall decline to purchase the Securities for any reason permitted under this Agreement.

11.Reimbursement of Initial Purchasers’ Expenses.  The Company shall reimburse the Initial Purchasers for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by the Initial Purchasers in connection with this Agreement and the proposed purchase of the Securities, and upon demand the Company shall pay the full amount thereof to the Initial Purchasers.

12.Notices, etc.  All statements, requests, notices and agreements hereunder shall be in writing, and:

(a)if to any Initial Purchaser, shall be delivered or sent by hand delivery, mail, telex, overnight courier or facsimile transmission to Lehman Brothers Inc., 745 Seventh Avenue, New York, New York 10019, Attention:  Syndicate Registration (Fax:  646-834-8133) with a copy to Gibson, Dunn & Crutcher LLP, Attention:  Glenn Pollner (Fax:  212-351-6333), and with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc., 399 Park Avenue, 10th Floor, New York, New York 10022 (Fax:  212-520-0421);

(b)if to the Company, shall be delivered or sent by mail, telex, overnight courier or facsimile transmission to Power-One, Inc., 740 Calle Plano, Camarillo, CA 93012, Attention:  General Counsel (Fax:  805-383-5898), with a copy to O’Melveny & Myers LLP, 1999 Avenue of the Stars, Floor 7, Los Angeles, CA 90067, Attention:  David J. Johnson, Jr. (Fax:  310-246-6779);

provided, that any notice to an Initial Purchaser pursuant to Section 8(c) shall be delivered or sent by hand delivery, mail, telex or facsimile transmission to such Initial Purchaser at its address set forth in its acceptance telex to Lehman Brothers Inc., which address will be supplied to any other party hereto by Lehman Brothers Inc. upon request.  Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof.  The Company shall be entitled to

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act and rely upon any request, consent, notice or agreement given or made on behalf of the Initial Purchasers by Lehman Brothers Inc.

13.Persons Entitled to Benefit of Agreement.  This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers, the Company, and their respective successors.  This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that the representations, warranties, indemnities and agreements of the Company contained in this Agreement shall also be deemed to be for the benefit of directors, officers and employees of the Initial Purchasers and each person or persons, if any, controlling any Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.  Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.

14.Survival.  The respective indemnities, representations, warranties and agreements of the Company and the Initial Purchasers contained in this Agreement or made by or on behalf on them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them.

15.Definition of the Terms “Business Day,” “Affiliate” and “Subsidiary.”  For purposes of this Agreement, (a) “business day” means any day on which the New York Stock Exchange, Inc. is open for trading and (b) “affiliate” and “subsidiary” have the meanings set forth in Rule 405 under the Securities Act.

16.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of New York.

17.No Fiduciary Duty.  The Company acknowledges and agrees that in connection with this offering, or any other services the Initial Purchasers may be deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations or assurances previously or subsequently made by the Initial Purchasers: (i) no fiduciary or agency relationship between the Company, and any other person, on the one hand, and the Initial Purchasers, on the other, exists; (ii) the Initial Purchasers are not acting as advisors, expert or otherwise, to the Company, including, without limitation, with respect to the determination of the purchase price of the Securities, and such relationship between the Company, and the Initial Purchasers is entirely and solely commercial, based on arms-length negotiations; (iii) any duties and obligations that the Initial Purchasers may have to the Company shall be limited to those duties and obligations specifically stated herein; and (iv) the Initial Purchasers and their respective affiliates may have interests that differ from those of the Company.  The Company hereby waive any claims that the Company may have against the Initial Purchasers with respect to any breach of fiduciary duty in connection with the Securities.

18.Research Independence.  In addition, the Company acknowledges that the Initial Purchasers’ research analysts and research departments are required to be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and that such Initial Purchasers’ research analysts may hold and make statements or

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investment recommendations and/or publish research reports with respect to the offering that differ from the views of its investment bankers.  The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Initial Purchasers with respect to any conflict of interest that may arise from the fact that the views expressed by their independent research analysts and research departments may be different from or inconsistent with the views or advice communicated to the Company by such Initial Purchasers’ investment banking divisions.  The Company acknowledges that each of the Initial Purchasers is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of the companies which may be the subject of the transactions contemplated by this Agreement.

19.Counterparts.  This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument.

20.Amendments.  No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

21.Headings.  The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

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If the foregoing correctly sets forth the agreement between the Company and the Initial Purchasers, please indicate your acceptance in the space provided for that purpose below.

Very truly yours,

POWER-ONE, INC.

By	/s/ Richard J. Thompson
	Name: Richard J. Thompson
	Title: Chief Executive Officer

Accepted:
LEHMAN BROTHERS INC.
By	/s/ Alexis Lasser
	Name: Alexis Lasser
	Title: Managing Director

34

SCHEDULE I

Initial Purchasers	Principal Amount of Firm Securities to be Purchased
Lehman Brothers Inc.	$	75,000,000
Total	$	75,000,000

SCHEDULE II

Power-One, Inc.
8.0% Senior Secured Convertible Notes due 2013
Pricing Term Sheet

This pricing term sheet relates only to the notes described below and should be read together with the preliminary offering memorandum dated June 11, 2008 (including the documents incorporated by reference therein) relating to the notes.

Issuer:	Power-One, Inc.
Title of securities:	8.0% Senior Secured Convertible Notes due 2013 (the “notes”)
Issue price:	100%
Aggregate principal amount offered:	$75 million (plus an option to purchase up to $5 million of additional notes)
Net proceeds after discounts, commissions and estimated expenses:	$70.5 million ($75.3 million if the option to purchase up to $5 million of additional notes is exercised in full)
Maturity:	June 17, 2013
Annual interest rate:	8.0% per annum
Interest payment dates:	March 31, June 30, September 30 and December 31, commencing September 30, 2008
Call dates:	Issuer may, at its option, redeem for cash (i) all or a portion of the notes on or after June 17, 2010, if the last reported sale price of the Issuer’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the trading day prior to the date the Issuer provides the relevant notice of redemption exceeds 175% of the conversion price in effect on each such trading day, and the Equity Conditions are in effect, or (ii) all the outstanding notes if at any time less than 10% of the aggregate principal of notes remain outstanding
Put dates:	Holders may require the issuer to repurchase all or a portion of their notes on or after June 17, 2011; such right is only exercisable during any three month period if, as of the last business day of the fiscal quarter preceding such three month period, the ratio of total net debt to LTM EBITDA (each as defined in the Preliminary Offering Memorandum dated June 11, 2008) was greater than 3.0x
Conversion rate:	304.8780 shares of common stock per $1,000 aggregate principal amount of notes (subject to adjustment)
Conversion price:	Approximately $3.28 per share of common stock (subject to adjustment)

II-I

Trade Date:	June 12, 2008
Settlement Date:	June 17, 2008
CUSIP:	739308 AA2
Other Material Terms:	See the Preliminary Offering Memorandum dated June 11, 2008 for a description of other material terms relating to the notes, including without limitation their ranking, the security package, adjustment of the conversion rate (including pursuant to a reset provision and pursuant to anti-dilution provisions, and possible limitations on these adjustments under Nasdaq Global Market Rules), limitations on beneficial ownership, fundamental change repurchase rights of holders, rights to participate in future equity offerings, certain covenants relating to the notes, events of default and circumstances under which additional interest may be paid on the notes
Adjustment to Conversion Rate Upon a Make-Whole Fundamental Change:	The following table sets forth the stock prices and the adjustments to the conversion rate, expressed as a number of additional shares to be received per $1,000 in principal amount of the notes, in the event of a make-whole fundamental change:

	Additional Make-Whole Shares Per $1,000 Bond
	$2.85	$3.00	$3.50	$4.00	$4.50	$5.00	$5.50	$6.00	$6.50	$7.00	$7.50	$8.00	$8.50	$9.00
06/17/08	45.7890	45.7890	45.7890	45.7890	42.9355	38.6706	34.8122	31.4588	28.6223	26.1919	24.0853	22.2430	20.6171	19.1719
06/17/09	45.7890	45.7890	45.7890	41.4171	36.6654	32.9101	29.5303	26.7163	24.3365	22.2970	20.5300	18.9841	17.6204	16.4090
06/17/10	45.7890	45.7890	38.2078	32.9358	29.0957	25.9373	23.2974	21.1021	19.2464	17.6560	16.2782	15.0729	14.0100	13.0646
06/17/11	45.7890	33.8167	26.4344	22.3345	19.5645	17.3857	15.6300	14.1737	12.9430	11.8890	10.9757	10.1766	9.4716	8.8453
06/17/12	45.7890	21.6497	11.7127	8.6576	7.3677	6.5346	5.8812	5.3400	4.8825	4.4905	4.1507	3.8534	3.5911	3.3582
06/17/13	45.7890	27.9190	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

The exact stock prices and effective dates may not be set forth in the table above, in which case:

·If the stock price is between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the two effective dates, as applicable, based on a 365-day year.

·If the stock price is greater than $9.00 per share (subject to adjustment in the same manner and at the same time as the stock prices in the table above), no adjustments will be made in the conversion rate.

·If the stock price is less than $2.85 per share (subject to adjustment in the same manner and at the same time as the stock prices in the table above), no adjustments will be made in the conversion rate.

2

Notwithstanding the foregoing, in no event will the conversion rate exceed 350.6670 shares of common stock (subject to adjustment and possible limitation as described in the Preliminary Offering Memorandum dated June 11, 2008) per $1,000 principal amount of notes as a result of additional shares.

*     *     *     *     *

This communication is intended for the sole use of the person to whom it is provided by the sender.

These securities have not been registered under the Securities Act of 1933, as amended, and may only be sold to qualified institutional buyers pursuant to Rule 144A or pursuant to another applicable exemption.

ANY DISCLAIMER OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED.  SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

3

SCHEDULE III

Term sheet containing the terms of the securities, substantially in the form of Schedule II.

4

SCHEDULE IV

PERSONS DELIVERING LOCK UP AGREEMENTS

Directors

Kendall R. Bishop

Gayla J. Delly

Steven J. Goldman

Jon E.M. Jacoby

Mark Melliar-Smith

Richard J. Thompson

Jay Walters

Officers

Richard J. Thompson

Jeffrey J. Kyle

Brad W. Godfrey

Randall H. Holliday

Alexander Levran

III-1

SCHEDULE V

LIST OF SECURITY DOCUMENTS

U.S. Security Documentation

Security Agreement

Grant of Trademark Security Interest

Grant of Patent Security Interest

Deposit Account Control Agreement

Cayman Islands Documentation

Charge Over Shares in Power-One Limited

Italian Documentation

Pledge Agreement

U.K. Documentation

Share Pledge - Power-One, Inc.

China Documentation

Pledge Agreement

2

Exhibit A

LOCK-UP LETTER AGREEMENT

LEHMAN BROTHERS INC.

As Representative of the several

  Initial Purchasers named in Schedule I,

c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Ladies and Gentlemen:

The undersigned understands that you (the “Initial Purchasers”) propose to enter into a Purchase Agreement (the “Purchase Agreement”) providing for the purchase by the Initial Purchasers of Senior Secured Convertible Notes due 2013 (the “Securities”), of Power-One, Inc., a Delaware corporation (the “Company”), and that the Initial Purchasers propose to reoffer and sell the Securities to “qualified institutional buyers” as defined in Rule 144A under the Securities Act (the “Offering”).

In consideration of the execution of the Purchase Agreement by the Initial Purchasers, and for other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the prior written consent of Lehman Brothers Inc., on behalf of the Initial Purchasers, the undersigned will not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of common stock of the Company (“Common Stock”) (including, without limitation, shares of Common Stock that may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and shares of Common Stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for Common Stock (other than the Securities), (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, (3) make any demand for or exercise any right or cause to be filed a registration statement (other than any registration statement relating solely to the resale of any shares of Common Stock upon conversion of the Securities), including any amendments thereto, with respect to the registration of any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock or any other securities of the Company or (4) publicly disclose the intention to do any of the foregoing, for a period commencing on the date hereof and ending on the 90th day after the date of the Offering Memorandum relating to the Offering (such 90-day period, the “Lock-Up Period”).

Notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by this Lock-Up Letter Agreement shall continue to apply

3

until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or the occurrence of the material event, unless such extension is waived in writing. The undersigned hereby further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this Lock-Up Letter Agreement during the period from the date of this Lock-Up Letter Agreement to and including the 34th day following the expiration of the Lock-Up Period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as such may have been extended pursuant to this paragraph) has expired.

Notwithstanding the foregoing, during the Lock-Up Period the undersigned may, without the prior written consent of the Initial Purchasers, transfer (or enter into any transaction or device which is designed to, or could be expected to, result in the transfer by such person at any time in the future) shares of Common Stock in connection with (i) bona fide gifts, (ii) dispositions to any trust for the direct or indirect benefit of the undersigned and/or the immediate family of the undersigned and/or a charity, (iii) transfers of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock by will or intestate succession, (iv) a bona fide pledge of Common Stock, made in the ordinary course of business, for the sole purpose of obtaining financing for the undersigned, (v) transactions relating to Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock acquired in open market transactions after the Closing Date, provided no filing is required to be made under the Exchange Act related to such transaction, (vi) sales of Common Stock made pursuant to any bona fide pledge existing at the date hereof in satisfaction of a “margin call” related thereto, or (vii) sales of Common Stock made pursuant to any trading plan complying with Rule 10b5-1 under the Exchange Act in existence as of the date hereof; provided that in the case of any gift, disposition, transfer, or pledge pursuant to clause (i), (ii), (iii), (iv) or (v), such donee, trust, distributee, transferee, pledgee or other recipient of such Common Stock or securities convertible into or exchangeable or exercisable for Common Stock agrees in writing to be bound by the terms of this Lock-Up Letter Agreement. For purposes of this paragraph, “immediate family” shall mean the undersigned and the spouse, any lineal descendent, father, mother, brother, sister, father-in-law, mother-in-law, brother-in-law or sister-in-law of the undersigned.

Subject to clauses (i) through (vii), inclusive, above, in furtherance of the foregoing, the Company and its transfer agent are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Lock-Up Letter Agreement.

It is understood that, if the Company notifies the Initial Purchasers that it does not intend to proceed with the Offering, if the Purchase Agreement does not become effective, or if the Purchase Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Common Stock, the undersigned will be released from its obligations under this Lock-Up Letter Agreement.

The undersigned understands that the Company and the Initial Purchasers will proceed with the Offering in reliance on this Lock-Up Letter Agreement.

4

Whether or not the Offering actually occurs depends on a number of factors, including market conditions. Any Offering will only be made pursuant to an Purchase Agreement, the terms of which are subject to negotiation between the Company and the Initial Purchasers.

[Signature page follows]

5

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will execute any additional documents necessary in connection with the enforcement hereof. Any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

	Very truly yours,
	By:
		Name:
		Title:
Dated:

6

Exhibit B

Company Counsel Opinion

June   , 2008

LEHMAN BROTHERS INC.

745 Seventh Avenue

New York, New York 10019

Re: Power-One, Inc. Senior Secured Convertible Notes due 2013

Ladies and Gentlemen:

We have acted as special counsel to Power-One, Inc., a Delaware corporation (the “Company”), in connection with the issuance and sale by the Company of $75,000,000 in aggregate principal amount of Senior Secured Convertible Notes due 2013 (the “Notes”) pursuant to the Purchase Agreement, dated as of June   , 2008 (the “Purchase Agreement”) by and between the Company and Lehman Brothers Inc., as initial purchaser (the “Initial Purchaser”). The Notes are being issued pursuant to an Indenture dated as of June   , 2008 (the “Indenture”) by and between the Company and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”). We are providing this opinion to you at the request of the Company pursuant to Section 7(c) of the Purchase Agreement. Except as otherwise indicated, capitalized terms used in this opinion and defined in the Purchase Agreement will have the meanings given in the Purchase Agreement.

In our capacity as such counsel, we have examined originals or copies of those corporate and other records and documents we considered appropriate, including the following:

1.the Indenture, including the forms of Notes set forth therein;

2.the Purchase Agreement;

3.an officers’ certificate of the Company (the “Company Certificate”);

4.specimen certificate of a share of the Company’s Common Stock;

5.certified copy of the Company’s Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”);

6.certified copy of the Company’s Amended and Restated Bylaws (the “Bylaws”);

7.the preliminary offering memorandum marked “Subject to Completion, dated June     , 2008”, including, without limitation, the documents incorporated by reference therein (the “Incorporated Documents”) as described under the heading

III-1

“Where You Can Find More Information” contained therein (including the Incorporated Documents, the “Preliminary Offering Memorandum”);

8.the Pricing Term Sheet, dated June   , 2008 (the “Pricing Term Sheet”, and together with the Preliminary Offering Memorandum, the “Pricing Disclosure Package”); and

9.the final offering memorandum, dated June   , 2008 (including the Incorporated Documents, the “Offering Memorandum”).

As to relevant factual matters, we have relied upon, among other things, the Company’s factual representations in the Purchase Agreement, including as to the absence of any form of general solicitation or general advertising in connection with the offer and sale of the Notes by any person acting on the Company’s behalf, and the Company Certificate dated as of the date hereof. In addition, we have obtained and relied upon those certificates of public officials we considered appropriate. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with originals of all documents submitted to us as copies.

On the basis of such examination, our reliance upon the assumptions in this opinion and our consideration of those questions of law we considered relevant, and subject to the limitations and qualifications in this opinion, we are of the opinion that:

(i)The Company has been duly incorporated and is validly existing as a corporation under the laws of the State of Delaware, in good standing under the laws of the States of Delaware and California, with corporate power and corporate authority to own its properties and assets, to carry on its business as currently conducted as described in the Offering Memorandum, and to enter into and perform its obligations under the Purchase Agreement, the Indenture and the Notes. Each of the Company Subsidiaries (as defined herein) is validly existing as a corporation or limited liability company, as applicable, and in good standing under the laws of the state of its formation and its principal place of business as set forth in the Company Certificate. For purposes of this opinion, “Company Subsidiaries” shall mean PAI Capital LLC, a Delaware limited liability company, and HC Power, Inc., a California corporation.

(ii)The authorized capital stock of the Company consists of three hundred million (300,000,000) shares of Common Stock, par value $.001 per share, and thirty million (30,000,000) shares of Preferred Stock, par value $.001 per share. The shares of Common Stock issuable upon conversion of the Notes conform in all material respects to the description of the Common Stock in the Offering Memorandum. Holders of the capital stock of the Company are not entitled to any preemptive right to subscribe to any additional shares of the Company’s capital stock under the Company’s Certificate of Incorporation, Bylaws, the Delaware General Corporation Law or any Other Agreement (as defined below), except such as may exist pursuant to the Rights Agreement, dated as of July 27, 2000, between the Company and American Stock Transfer & Trust Company.

(iii)The Indenture has been duly authorized by all necessary corporate action on the part of the Company, executed and delivered by the Company and constitutes a legally valid and

binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally (including, without limitation, fraudulent conveyance laws) and by general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law.

(iv)The Notes have been duly authorized by all necessary corporate action on the part of the Company and, upon payment for and delivery of the Notes in accordance with the Purchase Agreement, the execution of the Notes by the Company, and the authentication of the certificate or certificates representing the Notes by a duly authorized signatory of the Trustee, the Notes will be legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, entitled to the benefits of the Indenture, in each case, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally (including, without limitation, fraudulent conveyance laws) and by general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law.

(v)The Purchase Agreement has been duly authorized by all necessary corporate action on the part of the Company, and executed and delivered by the Company.

(vi)No order, consent, permit, approval or filing, of any California, New York or federal governmental authority that we have, in the exercise of customary professional diligence, recognized as applicable to the Company or to transactions of the type contemplated by the Purchase Agreement and the Indenture, or under the Delaware General Corporation Law (the “DGCL”), is required on the part of the Company for the execution and delivery of the Purchase Agreement, the Indenture or the Notes, the performance by the Company of its obligations thereunder, or the repayment of the PWER Bridge Term Loan from the application of the proceeds from the sale of the Notes as described under “Use of Proceeds” in the Pricing Disclosure Package and the Offering Memorandum, except such as may be required under applicable Blue Sky or state or foreign securities laws.

(vii)The execution and delivery by the Company of the Purchase Agreement, the Indenture and the Notes and the performance by the Company of its obligations thereunder, and the repayment of the PWER Bridge Term Loan from the application of the proceeds from the sale of the Notes as described under “Use of Proceeds” in the Pricing Disclosure Package and the Offering Memorandum (A) does not violate the Company’s Certificate of Incorporation or Bylaws, the DGCL, or any current statute, rule or regulation of any California, New York or federal governmental authority that we have, in the exercise of customary professional diligence, recognized as applicable to the Company or to transactions of the type contemplated by the Purchase Agreement and the Indenture, (B) violate, breach, or result in a default under, or give to any other party thereto any rights of termination, amendment, acceleration or cancellation of, any existing obligation of or restriction on the Company or any of its Subsidiaries under any English language agreement (the “Other Agreements”) identified in the Company Certificate, or

(C) breach or otherwise violate any existing obligation of or restriction on the Company under any order, judgment or decree of any California, New York, Delaware (solely to the extent brought under the DGCL), federal court or governmental authority, binding on the Company identified in the Company Certificate. To the extent any of the Other Agreements is governed by the laws of a jurisdiction other than New York, we have assumed such Other Agreements would be interpreted in accordance with its plain meaning, except that technical terms would mean what lawyers generally understand them to mean for agreements governed by the laws of the State of New York. We express no opinion with respect to any provision of any Other Agreement to the extent an opinion with respect to such provision would require making any financial, accounting or mathematical calculation or determination. We express no opinion regarding any federal securities laws, Blue Sky, state or foreign securities laws, or the indemnification and contribution sections of the Purchase Agreement except as otherwise expressly stated herein.

(viii)The shares of Common Stock issuable upon conversion of the Notes have been duly authorized by all necessary corporate action on the part of the Company, the Board of Directors of the Company has reserved such number of shares of Common Stock as shall be necessary for issuance upon the conversion of the Notes as required by the Indenture as of the date hereof, and, when issued upon such conversion in accordance with the terms of the Indenture, and upon the countersigning of the certificate or certificates representing such shares by a duly authorized signatory of the transfer agent and registrar for the Company’s Common Stock or the book-entry of such shares by such transfer agent and registrar in the name of The Depository Trust Company or its nominee, as applicable, such shares will be validly issued and will be fully paid and non-assessable.

(ix)The statements included in the Offering Memorandum (A) under the caption “Description of the Notes,” insofar as they summarize provisions of the Indenture or the Notes, and (B) under the caption “Description of Capital Stock,” insofar as they summarize provisions of the Certificate of Incorporation and Bylaws of the Company, in each case fairly summarize the matters therein described.

(x)The statements set forth in the Offering Memorandum under the caption “Certain Material U.S. Federal Income Tax Consequences,” insofar as they purport to describe the material tax consequences to a U.S. holder (as defined in the Offering Memorandum) of an investment in the Notes, fairly summarize the matters therein described.

(xi)The Company is not and, after giving effect to the offering and sale of the Notes and the application of the net proceeds thereof as described under “Use of Proceeds” in the Offering Memorandum, will not be an investment company required to register under the Investment Company Act of 1940, as amended.

(xii)Each of the Company’s (a) Annual Report on Form 10-K for the fiscal year ended December 30, 2007, (b) Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2008, and (c) Definitive Proxy Statement on Schedule 14A referring to the 2008 Annual Meeting of Stockholders of the Company, on the date it was filed, appeared on its face to comply in all material respects with the requirements as to form for annual reports on Form 10-K, proxy statements on Schedule 14A and quarterly reports on Form 10-Q, under the Securities Exchange Act of 1934, as amended, and related rules and regulations in effect on the date of filing except

that we express no opinion concerning the financial statements and the other financial data contained or incorporated by reference therein.

(xiii)The outstanding shares of the capital stock of each of the subsidiaries listed on Schedule I to the Pledge Agreement are owned of record by the Company.

(xiv)Assuming the truth and accuracy of the representations of the Initial Purchaser and the Company in the Purchase Agreement, it is not necessary in connection with the offer, sale and delivery of the Notes to the Initial Purchaser nor in connection with the Exempt Resales under the circumstances contemplated by the Purchase Agreement and the Offering Memorandum, to register the Notes under the Securities Act of 1933, as amended, or to qualify the Indenture under the Trust Indenture Act of 1939. We express no opinion as to the securities laws of any state or foreign jurisdiction.

Our opinions in paragraphs (iii) and (iv) as to the enforceability of the Indenture and the Notes are subject to:

(a)public policy considerations, statutes or court decisions that may limit the rights of a party to obtain indemnification against its own gross negligence, willful misconduct or unlawful conduct;

(b)the unenforceability under certain circumstances of broadly or vaguely stated waivers or waivers of rights granted by law where the waivers are against public policy or prohibited by law or terms that provide that assertion or employment of any right or remedy shall not prevent the concurrent assertion or employment of any other right or remedy, or that every right and remedy shall be cumulative and in addition to every other right and remedy or that any delay or omission to exercise any right or remedy shall not impair any other right or remedy or constitute a waiver thereof; and

(c)the unenforceability under certain circumstances of provisions imposing penalties, liquidated damages or other economic remedies.

Our opinions in paragraphs (iii), (iv) and (viii) as to the enforceability of the Indenture and the Notes and the issuance of the shares of Common Stock upon conversion of the Notes are subject to the limitation that we express no opinion as to the effect of subsequent issuances of securities of the Company to the extent that such issuances may result in the Company not having enough authorized but unissued shares of Common Stock for the conversion of the Notes. We also advise you that, as a result of the operation of the antidilution or adjustment provisions of the Notes, the Notes may become convertible into more shares of Common Stock than remain authorized but unissued.

Our opinions in paragraphs (ii) and (vii) are limited to the English language agreements identified in the Company Certificate, and do not address any other agreements or arrangements to which the Company may be a party or bound.

We express no opinion concerning (a) federal or state securities laws or regulations (except for the opinion in paragraph (xiv)), (b) compliance with fiduciary requirements or (c) the Trading with the Enemy Act, as amended, the foreign assets control regulations of the United

States Treasury Department, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001, as amended, Executive Order No. 13,224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, as amended, and any enabling legislation, rules, regulations or executive orders relating thereto.

For purposes of the opinions expressed in paragraphs (vi) and (vii), we have assumed that the Company will not in the future take any discretionary action (including a decision not to act) permitted by the Indenture or the Notes that would cause the performance of the Indenture or the Notes or the consummation of the transactions contemplated in the Indenture to (a) violate the provisions of the Company’s Certificate of Incorporation or Bylaws or any current statute, rule or regulation of any California, New York, Delaware or federal governmental authority, (b) violate, breach or result in a default under, or give to any other party any rights of termination, amendment, acceleration or cancellation of, any existing obligation of or restriction on the Company or any of its Subsidiaries under any Other Agreement identified in the Company Certificate, (c) breach or otherwise violate any order, judgment, or decree of any California, New York, Delaware or federal court or governmental authority binding on the Company identified in the Company Certificate, or (d) require an order, consent, permit or approval to be obtained from a California, New York, Delaware or federal governmental authority.

Except for the matters described in the Offering Memorandum, we have not, since January 1, 2007 given substantive attention on behalf of the Company to, or represented the Company in connection with, any actions, suits or proceedings pending or overly threatened in writing against the Company before any court, arbitrator or governmental agency which seek to affect the enforceability of the Indenture or the Notes. We call to your attention to the fact that our engagement is limited to specific matters as to which we are consulted by the Company.

We have participated in conferences in connection with the preparation of the Offering Memorandum and reviewed the Pricing Disclosure Package and the Offering Memorandum, in each case including the Incorporated Documents, but we have not independently verified the accuracy, completeness or fairness of the statements contained or incorporated therein, and the limitations inherent in the examination made by us and the knowledge available to us are such that we are unable to assume, and we do not assume, any responsibility for such accuracy, completeness or fairness (except for the statements described in paragraphs (ix) and (x) above). However, on the basis of our review of the Offering Memorandum and the Pricing Disclosure Package and our participation in conferences in connection with the preparation thereof, nothing came to our attention that caused us to believe that (A) the Pricing Disclosure Package considered as a whole as of the Applicable Time, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or (B) the Offering Memorandum, considered as a whole, as of the date thereof and the Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. However, we express no opinion or belief as to the financial statements and schedules and other financial data contained or incorporated by reference in or omitted from the Offering Memorandum or the Pricing Disclosure Package, in each case, considered as a whole. As used herein, the “Applicable Time” is the time and date as of which the Pricing Term Sheet

was first delivered to the Initial Purchaser for delivery to investors in connection with the sale of the Notes.

The law covered by this opinion is limited to the federal law of the United States, the law of the States of California and New York, and the Delaware General Corporation Law, each as in effect on the date hereof. We express no opinion as to the laws of any other jurisdiction and no opinion regarding the statutes, administrative decisions, rules, regulations or requirements of any county, municipality, subdivision or local authority of any jurisdiction. For purposes of the opinion set forth in paragraph (i) above as to good standing of the Company and the Company Subsidiaries, we have relied exclusively on the good standing certificates issued by the Secretary of State of the State of Delaware and the Secretary of State of the State of California.

This opinion is furnished by us as counsel for the Company and may be relied upon by you only in connection with the issuance and sale of the Notes. It may not be used or relied upon by you for any other purpose or by any other person, nor may copies be delivered to any other person, without in each instance our prior written consent. This opinion is expressly limited to the matters set forth above, and we render no opinion, whether by implication or otherwise, as to any other matters. We assume no obligation to update or supplement this opinion to reflect any facts or circumstances that arise after the date of this opinion and come to our attention, or any future changes in laws.

Respectfully submitted,

Schedule I

CC1:786349.5

EX-10.2

Exhibit 10.2

EXECUTION COPY

PLEDGE AND SECURITY AGREEMENT

made by

POWER-ONE, INC.

and

EACH OTHER PLEDGOR HEREUNDER

in favor of

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent

Dated as of June 17, 2008

TABLE OF CONTENTS

		Page
SECTION 1.	Certain Definitions	1
SECTION 2.	Pledge of Security	7
SECTION 3.	Security for Obligations	8
SECTION 4.	Delivery of Pledged Equity	9
SECTION 5.	Representations and Warranties	9
SECTION 6.	Covenants	11
SECTION 7.	Further Assurances	14
SECTION 8.	Voting Rights; Dividends; Etc.	15
SECTION 9.	Collateral Agent Appointed Attorney-in-Fact	16
SECTION 10.	Collateral Agent May Perform; No Assumption	17
SECTION 11.	Standard of Care	18
SECTION 12.	Insurance Matters	21
SECTION 13.	Remedies	21
SECTION 14.	Application of Proceeds	23
SECTION 15.	Indemnity and Expenses	23
SECTION 16.	Set-Off	23
SECTION 17.	Continuing Security Interest; Assigns	24
SECTION 18.	Additional Pledgors	24
SECTION 19.	Amendments; Etc.	24
SECTION 20.	Notices	24
SECTION 21.	Failure or Indulgence Not Waiver; Remedies Cumulative	25
SECTION 22.	Severability	25
SECTION 23.	Headings	25

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SECTION 24.	Governing Law; Terms	25
SECTION 25.	Consent to Jurisdiction and Service of Process	25
SECTION 26.	Waiver of Jury Trial	26
SECTION 27.	Acknowledgments	26
SECTION 28.	Counterparts	26
SECTION 29.	Suretyship Waivers by Pledgors, etc.	26

ii

SECURITY AGREEMENT

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is dated as of June 17, 2008 and entered into by and among POWER-ONE, INC., a Delaware corporation (“Company”), each of THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of Company (each of such undersigned Subsidiaries being a “Subsidiary Pledgor” and collectively “Subsidiary Pledgors,”) and each Additional Pledgor that may become a party hereto after the date hereof in accordance with Section 18 hereof (each of Company, Subsidiary Pledgors and each Additional Pledgor being a “Pledgor” and collectively “Pledgors”), in favor of THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association (in such capacity, together with its successors and assigns, herein called “Collateral Agent”).

PRELIMINARY STATEMENTS

A.            Company and Collateral Agent are parties to an Indenture dated the date hereof (said indenture, as it may hereafter be amended, supplemented, amended and restated or otherwise modified from time to time, being the “Indenture”, the terms defined therein and not otherwise defined herein being used herein as therein defined; the Indenture, together with this Agreement and the other Security Documents, being collectively the “Indenture Documents”).  The Indenture Documents evidence and govern the issuance of debt securities (the “Securities”) by the Company in the original principal amount of up to Eighty Million Dollars ($80,000,000).

B.            As a condition to the purchase of the Securities pursuant to the Purchase Agreement, the Company and each other Pledgor party hereto is required to grant the security interests and undertake the obligations  contemplated by this Agreement.

C.            Each Pledgor is the legal and beneficial owner of certain shares of stock, partnership interests, interests in joint ventures, limited liability company interests and other equity interests (“Equity Interests”) in one or more Persons and/or certain other assets and property described herein.

NOW, THEREFORE, in consideration of the agreements set forth herein and for other good and valuable consideration, each Pledgor hereby agrees with Collateral Agent (and acknowledges that such Pledgor’s agreement to fulfill its obligations hereunder is a material and essential part of the consideration and inducement of Collateral Agent and the purchases of the Securities) as follows:

SECTION 1.              Certain Definitions.

(a)           The following terms used in this Agreement shall have the following meanings:

“Account Collateral” means each Pledgor’s right, title and interest, whether now existing or hereafter acquired or arising, in, to and under, each Deposit Account and Securities Account (including any successor accounts to any such accounts) and all amounts, investments

and any other property (including, but not limited to, checks, securities, financial assets, investment property, security entitlements and instruments) at any time deposited in or credited to any such account and all security entitlements with respect thereto, including all income or gain earned thereon and any proceeds thereof.

“Account Control Agreement” means, in respect of a Deposit Account, a Deposit Account Control Agreement, and in respect of a Securities Account, a Securities Account Control Agreement.

“Bankruptcy Code” means Title 11 of the United States Code, as now or hereafter in effect.

“Cash Equivalents” means any of the following, to the extent owned by a Pledgor free and clear of all Liens other than Liens created under the Indenture Documents and having a maturity of not greater than 360 days from the date of acquisition thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) insured certificates of deposit of or time deposits with any commercial bank that is a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000, (c) commercial paper in an aggregate amount of no more than $20,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P or (d) Investments, classified in accordance with GAAP as current assets of any Pledgor, in money market funds that are registered under the Investment Company Act of 1940, as amended, that are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition including, without limitation, any such fund for which any Secured Party or an Affiliate of a Secured Party serves as an investment advisor, administrator, shareholder servicing agent, custodian or sub-custodian, notwithstanding that (A) such Secured Party or Affiliate of a Secured Party charges and collects fees and expenses from such funds for services rendered (provided that such charges, fees and expenses are on terms consistent with terms negotiated at arm’s length) and (B) such Secured Party charges and collects fees and expenses for services rendered, pursuant to this Agreement.

“Contractual Obligation”, as applied to any Person, means any provision of any security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Copyrights” means all items under copyright in various published and unpublished works of authorship including, without limitation, computer programs, computer data bases, other computer software layouts, trade dress, drawings, designs, writings, and formulas.

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“Copyright Registrations” means all copyright registrations issued to any Pledgor and applications for copyright registration that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries.

“Copyright Rights” means all common law and other rights in and to the Copyrights in the United States and any state thereof and in foreign countries including all copyright licenses (but with respect to such copyright licenses, only to the extent permitted by such licensing arrangements), the right (but not the obligation) to renew and extend Copyright Registrations and any such rights and to register works protectable by copyright and the right (but not the obligation) to sue in the name of any Pledgor or in the name of Collateral Agent for past, present and future infringements of the Copyrights and any such rights.

“Counterpart” means a counterpart to this Agreement entered into by the Company or a subsidiary of Company pursuant to Section 18 hereof.

“Deposit Account Control Agreement” means, in respect of a Deposit Account, a Deposit Account Control Agreement, in a form reasonably acceptable to Collateral Agent, by and among the applicable Pledgor, Collateral Agent and a depositary institution, granting Collateral Agent Control over such Deposit Account.

“Designated Italian Merger” means a merger or consolidation of Power-One Italy Holdings S.p.A. with and into Power-One Italy S.p.A., provided that upon the effectiveness of such merger or consolidation, Company shall pledge all of the outstanding Equity Interests of the surviving or resulting Person (subject to the proviso to Section 2(a)), securing the payment of the Secured Obligations, and within five Business Days after such merger or consolidation, such pledge shall constitute a perfected (to the extent such concept or an analogous concept is applicable under the relevant laws) security interest in such Equity Interests prior to all other Liens.

“Domestic Subsidiary” means any direct or indirect Subsidiary of Company that is incorporated or organized under the laws of the United States of America, any state thereof or in the District of Columbia.

“Equity Interests” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting.

“Foreign Subsidiary” means any direct or indirect Subsidiary of Company that is not a Domestic Subsidiary.

“Grant” means a Grant of Trademark Security Interest, substantially in the form of Exhibit I annexed hereto, and a Grant of Patent Security Interest, substantially in the form of

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Exhibit II annexed hereto, and a Grant of Copyright Security Interest, substantially in the form of Exhibit III annexed hereto.

“Intellectual Property Collateral” means, with respect to any Pledgor all right, title and interest (including rights acquired pursuant to a license or otherwise but only to the extent permitted by agreements governing such license or other use) in and to all

(i)            Copyrights, Copyright Registrations and Copyright Rights, including, without limitation, each of the Copyrights, rights, titles and interests in and to the Copyrights, all derivative works and other works protectable by copyright, which are presently, or in the future may be, owned, created (as a work for hire for the benefit of such Pledgor), authored (as a work for hire for the benefit of such Pledgor), or acquired by such Pledgor, in whole or in part, and all Copyright Rights with respect thereto and all Copyright Registrations therefor, heretofore or hereafter granted or applied for, and all renewals and extensions thereof, throughout the world;

(ii)           Patents;

(iii)          Trademarks, Trademark Registrations, the Trademark Rights and goodwill of such Pledgor’s business symbolized by the Trademarks and associated therewith;

(iv)          all trade secrets, trade secret rights, know-how, customer lists, processes of production, ideas, confidential business information, techniques, processes, formulas, and all other proprietary information;

(v)           all proceeds thereof (such as, by way of example and not by limitation, license royalties and proceeds of infringement suits).

“Investment” means, with respect to any Person, (a) any purchase or other acquisition by such Person of (i) any Equity Interest issued by, (ii) a beneficial interest in any Equity Interest issued by, or (iii) any other equity ownership interest in, any other Person, (b) any purchase by such Person of all or substantially all of the assets of a business conducted by another Person or all or substantially all of the assets constituting the business of a division, branch or other unit operation of any other Person, (c) any loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable and similar items made or incurred in the ordinary course of business as presently conducted), or capital contribution by such Person to any other Person, including all Indebtedness of any other Person to such Person arising from a sale of property by such Person other than in the ordinary course of its business, (d) any guarantee obligation incurred by such Person in respect of any obligation of another and (e) any purchase, or entry into, of any derivative instrument or other contract by such Person providing for the economic or risk equivalent of all or any part of any investment in another Person of the type referred to in clause (a), (b), (c) or (d) above.

“IP Filing Office” means either the United States Patent and Trademark Office (USPTO or PTO) or the United States Copyright Office, as applicable.

“IP Supplement” means an IP Supplement, substantially in the form of Exhibit IV annexed hereto.

4

“Lien” means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing.

“Patents” means all patents and patent applications and rights and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned or held by a Pledgor and all patents and patent applications and rights, title and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned by such Pledgor in whole or in part, all rights (but not obligations) corresponding thereto to sue for past, present and future infringements and all re-issues, divisions, continuations, renewals, extensions and continuations-in-part thereof.

“Permitted Dispositions” means (A) dispositions in the ordinary course of business of inventory, (B) dispositions of obsolete or worn out property (including obsolete or valueless intellectual property), whether now owned or hereafter acquired, in the ordinary course of business, and dispositions of property (including intellectual property) that are reasonably determined by the Board of Directors of the disposing Pledgor (or, in the case of any disposition or series of related dispositions in an amount not in excess of $100,000, reasonably determined by the disposing Pledgor) in good faith to be of no practical use to the business of Company and its Subsidiaries, which dispositions do not, in the aggregate, materially adversely affect the value of the Pledged Collateral taken as a whole, in an aggregate amount not in excess of $2,000,000 over the term of this Agreement, (C) dispositions of cash or Cash Equivalents not otherwise prohibited herein,  (D) dispositions to any Pledgor not otherwise prohibited by the Indenture Documents, (E) dispositions of property to the extent such transaction constitutes a Permitted Investment, and (F) dispositions of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment.

“Permitted Investments” means (i)  Investments by Company that are not through or in any Subsidiary or other Person and that are (x) reasonably determined by Company to be strategic in nature and to have a valid business purpose or (y) in the ordinary course of business, (ii) Investments in cash and Cash Equivalents, (iii) Investments in any Pledgor (including, for the avoidance of doubt, any newly formed Domestic or Foreign Subsidiary (first tier or otherwise) that has become a Domestic or Foreign Subsidiary Pledgor hereunder), (iv) Investments in any Subsidiary of a Pledgor that are in existence as of the Issue Date, (v) Investments in the ordinary course of business in any newly formed wholly-owned Foreign Subsidiary of a newly formed first tier Domestic or Foreign Subsidiary that has become a Domestic or Foreign Subsidiary Pledgor hereunder where Company has in good faith reasonably determined that the creation of the newly formed wholly-owned Foreign Subsidiary and the Investment each have a valid business purpose and do not materially impair the value of the Pledged Collateral taken as a whole, (vi) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers arising in the ordinary course of business or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment, and (vii) Investments by a Pledgor in equipment, fixed assets, real property or improvements, or replacements or substitutions therefor or additions thereto (excluding normal replacements and maintenance which are properly charged to current

5

operations as operating expenses in accordance with GAAP), that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Pledgor or have a useful life of more than one year, (viii) lease, utility and other similar deposits in the ordinary course of business, (ix) hedging or other derivative obligations otherwise permitted to be incurred under the Indebtedness covenants under the Indenture and incurred in the ordinary course of business for a valid business purpose, (x) receivables owing to Company or any Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as Company or any such Subsidiary deems commercially reasonable under the circumstances, (xi) Investments that are advances paid to third-party contract manufacturers in the ordinary course of business to purchase specialized equipment required to produce specialized products for Company or its Subsidiaries, (xii) Investments made by Company or a Subsidiary for consideration consisting only of common Equity Interests of Company, (xiii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Subsidiary or in satisfaction of judgments, (xiv) any other Investment where Company has in good faith reasonably determined that the Investment has a valid business purpose and does not materially impair the value of the Pledged Collateral taken as a whole if, upon the consummation of the Investment, the resulting Investment has been pledged for the benefit of the Secured Parties on a basis consistent with this Agreement and (xv) any other Investments not specified above that do not in the aggregate, since the Issue Date, exceed $1,000,000 (for purposes of calculating which, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment).

“Permitted Securities” means (i) any security issued under any Company or Subsidiary employee, officer and/or director stock or option plan reflected in the financial statements contained in Company’s March 30, 2008 Form 10-Q, or under any Company or Subsidiary employee, officer and/or director stock or option plan adopted in the ordinary course of business after the date hereof, in each case whether directly or upon exercise of any option or other security issued thereunder and (ii) warrants for shares of Company’s common stock or securities issued in connection with the exercise thereof.

“Pledged Collateral” has the meaning provided therefor in Section 2.

“Secured Parties” means, collectively, the Trustee, Collateral Agent and each Holder.

“Securities Account Control Agreement” means, in respect of a Securities Account, a Securities Account Control Agreement, in a form reasonably acceptable to Collateral Agent, by and among the applicable Pledgor, Collateral Agent and a Securities Intermediary, granting Collateral Agent Control over such Securities Account.

“Trademarks” means all trademarks, service marks, designs, logos, indicia, tradenames, trade dress, corporate names, company names, business names, fictitious business names, trade styles and/or other source and/or business identifiers and applications pertaining thereto, owned by a Pledgor, or hereafter adopted and used, in its business.

6

“Trademark Registrations” means all registrations that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations and applications set forth on Schedule VII annexed hereto).

“Trademark Rights” means all common law and other rights (but in no event any of the obligations) in and to the Trademarks in the United States and any state thereof and in foreign countries.

“UCC” means the Uniform Commercial Code, as it exists on that date of the Agreement or as it may hereafter be amended in the State of New York.

(b)           The following terms are used herein as defined in the UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Control, Deposit Account, Documents, Equipment, Farm Products, Goods, Instruments, Inventory, Letter of Credit Rights, Securities Account, Securities Intermediary and Supporting Obligations.

SECTION 2.              Pledge of Security.  Each Pledgor hereby appoints Collateral Agent to act as collateral agent hereunder and pledges and assigns to Collateral Agent, for the ratable benefit of the Secured Parties, and hereby grants to Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in, all of such Pledgor’s right, title and interest in and to the following (the “Pledged Collateral”):

(a)

(i)           all of the Equity Interests now or hereafter owned by such Pledgor in each Domestic Subsidiary that is or subsequently becomes a first tier Subsidiary of Company;

(ii)          all of the Equity Interests now or hereafter owned by such Pledgor in each Foreign Subsidiary of Company listed on Schedule I;

in each case, whether such Equity Interests are classified as investment property or general intangibles under the UCC, and shall include all securities convertible into, and rights, warrants, options and other rights to purchase or otherwise acquire, any Equity Interest, and shall include those owned on the date hereof and described in Schedule I for such Pledgor, the certificates or other instruments representing any of the foregoing and any interest of such Pledgor, and all such interests hereafter acquired by Pledgors (or any of them) and in the entries on the books of any Securities Intermediary pertaining thereto (the “Pledged Equity”), and all distributions, dividends, and other property received, receivable or otherwise distributed in respect of or in exchange therefore;

provided, that, if the issuer of any such Pledged Equity is a controlled foreign corporation (as such term is defined in Section 957(a) of the Internal Revenue Code of 1986, as amended), the Pledged Equity shall not include any Equity Interests of such issuer to the extent that creation of a security interest by Pledgor in such Equity Interests could reasonably be expected to result in material adverse tax consequences to Company, it being acknowledged and agreed that the creation of a security interest in Equity Interests possessing up to 66% of the voting power of all

7

classes of Equity Interests of such issuer entitled to vote will not result in such adverse tax consequences;

(b)           the assets and property described in Schedule II for such Pledgor, whether now owned or hereafter acquired by such Pledgor and howsoever its interest therein may arise or appear (whether by ownership, security interest, claim or otherwise) (the “Pledged Assets”);

(c)           all books, records, ledger cards, files, correspondence, computer programs, tapes, disks and related data processing software that at any time evidence or contain information relating to any of the Pledged Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon; and

(d)           to the extent not covered by clauses (a) and (b) above, all proceeds of any or all of the foregoing Pledged Collateral.  For purposes of this Agreement, the term “proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from such Pledged Collateral, collections thereon or distributions or payments with respect thereto, whatever is receivable or received when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to Pledgors or Collateral Agent from time to time with respect to any of the Pledged Collateral.

SECTION 3.              Security for Obligations.  This Agreement secures, and the Pledged Collateral is collateral security for, the prompt payment or performance in full when due, whether at stated maturity, by required redemption, conversion, repurchase, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a)), of all obligations and liabilities of every nature of Company now or hereafter existing under or arising out of or in connection with this Agreement or any of the Indenture Documents, together with all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to any Pledgor, would accrue on such obligations, whether or not a claim is allowed against such Pledgor for such interest in the related bankruptcy proceeding), fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Collateral Agent as a preference, fraudulent transfer or otherwise; all other loans and future advances made by Collateral Agent to any Pledgor and all other debts, obligations and liabilities of each Pledgor or every kind and character now or hereafter existing in favor of Collateral Agent, whether direct or indirect, primary or secondary, joint or several, fixed or contingent, secured or unsecured, and whether originally payable to Collateral Agent or to a third party and subsequently acquired by Collateral Agent, it being contemplated that any Pledgor may hereafter become indebted to Collateral Agent for such further debts, obligations and liabilities; and all obligations of every nature of Pledgors now or hereafter existing under this Agreement (all such obligations of Pledgors being the “Secured Obligations”).

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SECTION 4.              Delivery of Pledged Equity.  In the case of Pledged Equity consisting of Certificated Securities or Instruments, all such Certificated Securities or Instruments representing or evidencing such Pledged Equity shall be delivered to and held by or on behalf of Collateral Agent in a segregated account pursuant hereto and shall be in suitable form for transfer by delivery or, as applicable, shall be accompanied by the applicable Pledgor’s endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Collateral Agent.  Upon the occurrence and during the continuation of an Event of Default, Collateral Agent shall have the right, without notice to Pledgors, to transfer to or to register in the name of Collateral Agent or any of its nominees any or all of the Pledged Equity.

SECTION 5.              Representations and Warranties.  Each Pledgor represents and warrants as follows:

(a)           Organization and Powers.  Such Pledgor is duly organized, validly existing and in good standing (solely in the case of an entity incorporated or organized under the laws of the United States of America or any state thereof or in any other jurisdiction in which an entity may be in good standing) and has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and proposed to be conducted and to enter into this Agreement and carry out the transactions contemplated hereby.

(b)           Good Standing.  Such Pledgor is qualified to do business and in good standing (solely in the case of an entity incorporated or organized under the laws of the United States of America or any state thereof or in any other jurisdiction in which an entity may be in good standing) wherever necessary to carry on its present business and operations, except in jurisdictions in which the failure to be so qualified or in good standing has not had and will not have a material adverse effect on the business, operations, properties, assets or condition (financial or otherwise) of such Pledgor and its subsidiaries, taken as a whole.

(c)           Binding Obligation.  This Agreement is the legally valid and binding obligation of such Pledgor, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

(d)           Due Authorization, etc. of Pledged Collateral.  All of the Pledged Equity described in Schedule I for such Pledgor has been duly authorized and validly issued and is fully paid and non-assessable and represents  all of the Pledged Equity owned by such Pledgor.

(e)           Description of Pledged Collateral.  The Pledged Equity constitutes all of the issued and outstanding Equity Interests in each issuer thereof (subject to the proviso to Section 2(a)), and there are no outstanding warrants, options or other rights to purchase, or other agreements outstanding with respect to, or property that is now or hereafter convertible into, or that requires the issuance or sale of, any securities, or rights or interest in any securities, of any of the issuers of any of the Pledged Equity or any of the properties or assets of any of such issuers.

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(f)            Ownership of Pledged Collateral.  Such Pledgor is the legal, record and beneficial owner of the Pledged Collateral and its interests in the Pledged Collateral are free and clear of any Lien except for the security interest created by this Agreement.

(g)           Governmental Authorizations.  No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (i) the pledge by such Pledgor of the Pledged Collateral pursuant to this Agreement and the grant by such Pledgor of the security interest granted hereby, (ii) the execution, delivery or performance of this Agreement by such Pledgor, or (iii) the exercise by Collateral Agent of the voting or other rights, or the remedies in respect of the Pledged Collateral, provided for in this Agreement (except as may be required in connection with a disposition of Pledged Collateral by laws affecting the offering and sale of securities generally).

(h)           Perfection.  Upon (i) the filing of UCC financing statements naming such Pledgor as “debtor,” naming Collateral Agent as “secured party” and describing the Pledged Collateral in the filing offices set forth on Schedule III, (ii) in the case of Pledged Collateral consisting of certificated securities or evidenced by instruments, in addition to filing such financing statements, delivery of the certificates representing such certificated securities and delivery of such instruments to Collateral Agent, in each case duly endorsed or accompanied by duly executed instruments of assignment or transfer in blank (and in the case of Pledged Collateral issued by a foreign issuer, any actions required under foreign law to perfect (to the extent such concept or an analogous concept is applicable under the relevant laws) a security interest in such Pledged Collateral), (iii) in the case of the Intellectual Property Collateral, in addition to the filing of such UCC financing statements, the recordation of a Grant with the applicable IP Filing Office, and (iv) in the case of Pledged Collateral consisting of Account Collateral with respect to a Deposit Account or Securities Account, the effectiveness of an Account Control Agreement in respect of such Deposit Account or Securities Account, the security interests in the Pledged Collateral, granted to Collateral Agent, will constitute perfected (to the extent such concept or an analogous concept is applicable under the relevant laws) security interests in the Pledged Collateral prior to all other Liens (except for Permitted Liens of the types described in clauses (i), (ii), (iii), (iv), (vi), (vii), (viii) (solely with respect to the extension, renewal or refinancing of Indebtedness secured by Liens of the type described in clause (vi) thereof), (ix) and (xii) of the definition of Permitted Liens), securing the payment of the Secured Obligations.

(i)            Office Locations; Type and Jurisdiction of Organization.  Such Pledgor’s name as it appears in official filings in its jurisdiction of organization, type of organization (i.e. corporation, limited liability company, etc.), jurisdiction of organization, principal place of business, chief executive office, office where such Pledgor keeps its records regarding the Pledged Collateral, and organization number provided by the applicable government authority of the jurisdiction of organization are set forth on Schedule IV annexed hereto or the applicable Counterpart.

(j)            Names.  No Pledgor (or predecessor by merger or otherwise of such Pledgor) has, within the five-year period preceding the date hereof, or, in the case of an Additional Pledgor, the date of the applicable Counterpart, had a different name from the name

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of such Pledgor listed on the signature pages hereof, except the names set forth on Schedule IV annexed hereto or the applicable Counterpart.

(k)           Margin Regulations.  The pledge of the Pledged Collateral pursuant to this Agreement does not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(l)            Account Collateral.  The value of cash and other property in all Deposit Accounts and Securities Accounts constituting Pledged Collateral, that are not subject to effective Account Control Agreements, does not, in the aggregate, exceed $1,000,000.

(m)          Other Information.  All information heretofore, herein or hereafter supplied to Collateral Agent by or on behalf of such Pledgor with respect to the Pledged Collateral is accurate and complete in all material respects.

(n)           Account Debtors.  None of the account debtors or other persons obligated on any of the portions of the Pledged Assets consisting of accounts receivable is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Pledged Collateral.

The representations and warranties as to the information set forth in Schedules referred to herein are made, as to each Pledgor as of the date hereof (or, in the case of the representation and warranty set forth in clause (l) above, shall be made on and as of June 30, 2008) and, as to each Additional Pledgor, as of the date of the applicable Counterpart, that, in the case of a Pledge Amendment, such representations and warranties are made as of the date of such Pledge Amendment.

Company shall cause its legal counsel to deliver a legal opinion regarding certain of the representations and warranties set forth in this Section 5 and such other matters as may be reasonably requested by Collateral Agent.

SECTION 6.              Covenants.  Each Pledgor shall:

(a)           not, except as expressly permitted by the Indenture Documents and without prejudice to clause (y) below, (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral, except for Permitted Dispositions, (ii) create or suffer to exist any Lien (other than, for the avoidance of doubt, Permitted Liens) upon or with respect to any of the Pledged Collateral, except for the security interest under this Agreement or any other Indenture Document, or (iii) permit any issuer of Pledged Equity to merge or consolidate with another Person (except (x) with a Pledgor in a merger or consolidation in which the surviving or resulting Person is a Pledgor and (y) the Designated Italian Merger) unless upon the effectiveness of such merger or consolidation, the surviving or resulting Person (if other than a Pledgor) becomes a Pledgor hereunder and all of the outstanding Equity Interests of the surviving or resulting Person (subject to the proviso to Section 2(a)) become pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding shares of any other constituent Person;

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(b)           do or cause to be done, and cause each issuer of Pledged Equity to do or cause to be done, all things necessary to preserve and keep in full force and effect its respective corporate existence in accordance with its organizational documents (as the same may be amended from time to time);

(c)           (i) cause each issuer of Pledged Equity not to issue Equity Interests (except Permitted Securities) in addition to or in substitution for the Pledged Equity issued by such issuer, except to Company or any other Pledgor, (ii) subject to the proviso to Section 2(a), pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional Equity Interests of each issuer of Pledged Equity, and (iii) subject to the proviso to Section 2(a), pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all Equity Interests of any Person that, after the date of this Agreement, becomes, as a result of any occurrence, a direct Domestic Subsidiary or a first tier Foreign Subsidiary of Company;

(d)           at its expense (i) perform and comply in all material respects with all terms and provisions of any agreement related to the Pledged Collateral required to be performed or complied with by it, (ii) maintain its agreements in all such agreements in full force and effect, and (iii) enforce its rights under all such agreements in accordance with their terms;

(e)           give Collateral Agent at least 30 days’ prior written notice of any (i) change in such Pledgor’s name, identity or corporate structure and (ii) reincorporation, reorganization or other action that results in a change of the jurisdiction or organization of such Pledgor;

(f)            promptly deliver to Collateral Agent all written notices received by it with respect to the Pledged Collateral;

(g)           pay promptly when due all taxes, assessments and governmental charges or levies imposed upon, and all claims against, the Pledged Collateral, except to the extent the validity thereof is being contested in good faith and with respect to which reserves in conformity with GAAP have been provided on the books of the applicable Pledgor; provided that such Pledgor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgement, writ or warrant of attachment entered or filed against such Pledgor or any of the Pledged Collateral as a result of the failure to make such payment;

(h)           keep adequate records concerning the Pledged Collateral and permit Collateral Agent or its representatives or designees from time to time upon reasonable notice within normal business hours to examine and make copies of and abstracts from such records;

(i)            at its expense, defend Collateral Agent’s right, title and security interest in and to the Pledged Collateral against the claims of any person;

(j)            at its expense, at any time and from time to time, promptly execute and deliver all further instruments, financing statements, continuation statements and documents and take all further action that may be necessary or desirable or that Collateral Agent may reasonably request in order to (i) perfect and protect the security interests created or purported to be created

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hereby, (ii) enable Collateral Agent to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral or (iii) otherwise effect the purposes of this Agreement;

(k)           not make or consent to any amendment or other modification or waiver with respect to any agreement concerning the Pledged Collateral as permitted by the Indenture Documents and this Agreement; not take any action that could, or fail to take any action which failure could, reasonably be expected to result in any one or more of the representations and warranties set forth in Section 5 of this Agreement being incorrect or inaccurate in any material respect when made;

(l)            in the case of Company, not have or permit to exist any first-tier Domestic Subsidiary that is not a Pledgor hereunder without the prior written consent of Collateral Agent (provided, however, in the case of a Domestic Subsidiary that is directly or indirectly acquired or formed by Company after the Issue Date, this covenant shall not be breached for a period of five Business Days after such acquisition or formation thereof, provided that within such period such acquired or formed Domestic Subsidiary shall become an Additional Pledgor in accordance with Section 18, and Schedule II shall be updated to reflect such Domestic Subsidiary as a Pledgor);

(m)          not take any action which would, or fail to take any action which failure would, in any manner impair the enforceability of Collateral Agent’s security interest in any Pledged Collateral;

(n)           keep the Pledged Collateral in good order and repair and not use the same in violation of law or any policy of insurance thereon;

(o)           permit Collateral Agent, or its designee, to inspect the Pledged Collateral at any reasonable time, wherever located;

(p)           not, from and after June 30, 2008, permit the value of all cash and other assets maintained in all Deposit Accounts and Securities Accounts constituting Pledged Collateral, that are not subject to effective Account Control Agreements, to exceed, in the aggregate, $1,000,000;

(q)           not grant Control over any Deposit Account or Securities Account constituting Pledged Collateral to any Person other than Collateral Agent;

(r)            promptly notify Collateral Agent in writing of, and update Schedule II so as to list with specificity, all Commercial Tort Claims at any time held or acquired by such Pledgor (except for such Commercial Tort Claims in amounts as do not, in the aggregate, exceed $1,000,000), in each case including a summary description of such claim, and grant to Collateral Agent in writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Collateral Agent;

(s)[Intentionally omitted];

(t)[Intentionally omitted];

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(u)           [Intentionally omitted];

(v)           conduct all transactions with any of its Affiliates on terms that are fair and reasonable and no less favorable to such Pledgor than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate;

(w)          [Intentionally omitted];

(x)           [Intentionally omitted];

(y)           in the case of Company, maintain direct ownership of all of, and not transfer or dispose of any of, and not permit to be issued to any Person other than Company any of, the Capital Stock in the Pledged Subsidiaries; provided that, in the case of Shenzhen, PAI shall maintain direct ownership of all of, and shall not transfer or dispose of any of, and shall not permit to be issued to any Person other than PAI any of, the Capital Stock in Shenzhen; and provided further that, in the case of PowerOne UK, Company shall maintain direct ownership of no less than 60.5% of, and shall not transfer or dispose of any of, and shall not permit to be issued (if after such issuance Company shall have less than 60.5% of the Capital Stock in PowerOne UK) to any Person other than Company any of, the Capital Stock in PowerOne UK; and

(z)            not make or hold any Investments in any other Person, except for Permitted Investments.

SECTION 7.              Further Assurances.

(a)           Each Pledgor agrees that from time to time, at the expense of such Pledgor, such Pledgor will promptly execute and deliver, and cause to be executed and delivered, at request of Collateral Agent, agreements establishing that Collateral Agent has control over all Pledged Collateral and all further instruments and documents, and take all further action, that may be necessary or desirable, or that Collateral Agent may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral.  Without limiting the generality of the foregoing, each Pledgor will:  (i) execute (if necessary) and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Collateral Agent may request, in order to perfect and preserve the security interests granted or purported to be granted hereby (including, without limitation, pledge agreements under the local law of the jurisdiction of any Person the Equity Interests in which constitute Pledged Collateral, and all filings, notices, instruments and other documents relating thereto) and (ii) at Collateral Agent’s request, appear in and defend any action or proceeding that may affect such Pledgor’s title to or Collateral Agent’s security interest in all or any part of the Pledged Collateral.  Each Pledgor hereby authorizes Collateral Agent (provided Collateral Agent shall have no obligation) to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Pledged Collateral without the signature of such Pledgor; provided, however, that each Pledgor shall have the primary obligation to file any financing or continuation statement.

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(b)           Each Pledgor further agrees that it will, upon obtaining any additional Equity Interest (including any additional Equity Interest hereafter owned in a Domestic Subsidiary that is a direct subsidiary of Company or a Foreign Subsidiary that is a first tier subsidiary of Company (in each case, formed or acquired after the date of this Agreement)), promptly (and in any event within five Business Days) deliver to Collateral Agent a Pledge Amendment, duly executed by such Pledgor, in substantially the form of Schedule V annexed hereto (a “Pledge Amendment”), in respect of the additional Pledged Equity to be pledged pursuant to this Agreement; provided that the failure of such Pledgor to execute a Pledge Amendment with respect to any additional Pledged Equity shall not impair the security interest of Collateral Agent therein or otherwise adversely affect the rights and remedies of Collateral Agent hereunder with respect thereto.  Upon each such acquisition, the representations and warranties contained in Section 5 hereof shall be deemed to have been made by such Pledgor as to the Pledged Equity described in such Pledge Amendment.

(c)           Each Pledgor shall promptly notify Collateral Agent in writing of any rights to Intellectual Property Collateral acquired by such Pledgor after the date hereof.  Promptly after the filing of an application for any Trademark Registration, Patent or Copyright Registration, each Pledgor shall execute and deliver to Collateral Agent an IP Supplement, and submit a Grant for recordation with respect thereto in the applicable IP Filing Office; provided, the failure of any Pledgor to execute an IP Supplement or submit a Grant for recordation with respect to any additional Intellectual Property Collateral shall not impair the security interest of Collateral Agent therein or otherwise adversely affect the rights and remedies of Collateral Agent hereunder with respect thereto.  Upon delivery to Collateral Agent of an IP Supplement, Schedules VII, VIII, IX annexed hereto and Schedule A to each Grant, as applicable, shall be deemed modified to include a reference to any right, title or interest in any existing Intellectual Property Collateral or any Intellectual Property Collateral set forth on Schedule A to such IP Supplement.  Upon each such acquisition, the representations and warranties contained in Section 5(h) hereof shall be deemed to have been made by such Pledgor as to such Intellectual Property Collateral, whether or not such IP Supplement is delivered.

(d)           Company agrees to use commercially reasonable efforts to perfect, within 30 days after the Issue Date, the Lien granted hereby on the Equity Interests owned by Company in Power-One Ltd. (Cayman Islands) by means of a legal pledge, in a manner that ensures the first priority of such Lien and is otherwise on customary terms reasonably acceptable to Collateral Agent.

SECTION 8.              Voting Rights; Dividends; Etc.

(a)           So long as no Event of Default shall have occurred and be continuing:

(i)            each Pledgor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Indenture Documents; provided, however, that such Pledgor shall not exercise or refrain from exercising any such right if Collateral Agent shall have notified such Pledgor that, in Collateral Agent’s judgment, such action would have a material adverse effect on the value of the Pledged Collateral or any part thereof; and

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(ii)           each Pledgor shall be entitled to receive and retain any and all dividends, other distributions and interest paid in respect of the Pledged Collateral.

(b)          Upon the occurrence and during the continuation of an Event of Default:

(i)            upon written notice from Collateral Agent to Pledgors, all rights of Pledgors to exercise the voting and other consensual rights that they would otherwise be entitled to exercise pursuant to Section 8(a)(i) shall cease, and all such rights shall thereupon become vested in Collateral Agent who shall thereupon have the sole right to exercise such voting and other consensual rights;

(ii)           all rights of Pledgors to receive the dividends, other distributions and interest payments that they would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) shall cease, and all such rights shall thereupon become vested in Collateral Agent who shall thereupon have the sole right to receive and hold as Pledged Collateral such dividends, other distributions and interest payments; and

(iii)          all dividends, principal, interest payments and other distributions that are received by Pledgors contrary to the provisions of paragraph (ii) of this Section 8(b) shall be received in trust for the benefit of Collateral Agent, shall be segregated from other funds of Pledgors and shall forthwith be paid over to Collateral Agent as Pledged Collateral in the same form as so received (with any necessary endorsements).

(c)           In order to permit Collateral Agent to exercise the voting and other consensual rights that it may be entitled to exercise pursuant to Section 8(b)(i) and to receive all dividends and other distributions which it may be entitled to receive under Section 8(a)(ii) or Section 8(b)(ii), (i) each Pledgor shall promptly execute and deliver (or cause to be executed and delivered) to Collateral Agent all such proxies, dividend payment orders and other instruments as Collateral Agent may from time to time reasonably request and (ii) without limiting the effect of the immediately preceding clause (i), each Pledgor hereby grants to Collateral Agent an irrevocable proxy to vote the Pledged Equity and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Equity would be entitled (including, without limitation, giving or withholding written consents of holders of Equity Interests, calling special meetings of holders of Equity Interests and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Equity on the record books of the issuer thereof) by any other Person (including the issuer of the Pledged Equity or any officer or agent thereof), upon the occurrence of an Event of Default and which proxy shall only terminate upon the payment in full of the Secured Obligations.

SECTION 9.              Collateral Agent Appointed Attorney-in-Fact.  Each Pledgor hereby irrevocably appoints Collateral Agent as such Pledgor’s attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of such Pledgor, Collateral Agent or otherwise, from time to time in Collateral Agent’s discretion to take any action and to execute any instrument that Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation:

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(a)           to file one or more financing or continuation statements, or amendments thereto, relative to all or any part of the Pledged Collateral without the signature of such Pledgor;

(b)           upon the occurrence and during the continuance of an Event of Default, to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Pledged Collateral;

(c)           upon the occurrence and during the continuance of an Event of Default, to receive, endorse and collect any instruments made payable to such Pledgor representing any dividend, principal or interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same;

(d)           upon the occurrence and during the continuance of an Event of Default, to file any claims or take any action or institute any proceedings that Collateral Agent may deem necessary or desirable for the collection of any of the Pledged Collateral or otherwise to enforce the rights of Collateral Agent with respect to any of the Pledged Collateral;

(e)           to pay or discharge taxes or Liens levied or placed upon or threatened against the Pledged Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Collateral Agent in its sole discretion, any such payments made by Collateral Agent to become obligations of such Pledgor to Collateral Agent, due and payable immediately without demand;

(f)            upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Pledged Collateral as fully and completely as though Collateral Agent were the absolute owner thereof for all purposes, and to do, at Collateral Agent’s option and such Pledgor’s expense, at any time or from time to time, all acts and things that Collateral Agent deems necessary to protect, preserve or realize upon the Pledged Collateral and Collateral Agent’s security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Pledgor might do; and

(g)           upon the occurrence and during the continuance of an Event of Default, to obtain and adjusted insurance required to be maintained by such Pledgor.

However, Collateral Agent shall have no obligation to do any of the foregoing or to take any actions relating to the Pledged Collateral, and Collateral Agent may, without liability to any Pledgor or any other Person, take or refrain from taking any such actions, as Collateral Agent in its sole discretion deems to be in the interest of Collateral Agent.

SECTION 10.            Collateral Agent May Perform; No Assumption.

(a)           If any Pledgor fails to perform any agreement contained herein, Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of Collateral Agent incurred in connection therewith shall be payable by such Pledgor under Section 15(b).

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(b)           Anything contained herein to the contrary notwithstanding, (i) each Pledgor shall remain liable under any agreements included in or related to the Pledged Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by Collateral Agent of any of its rights hereunder shall not release any Pledgor from any of its duties or obligations under any such agreements, and (iii) Collateral Agent shall not have any obligation or liability under any such agreements by reason of this Agreement, nor shall Collateral Agent be obligated to perform any of the obligations or duties of any Pledgor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

SECTION 11.            Standard of Care.

(a)           The powers conferred on Collateral Agent under this Agreement are solely to protect the interests of Collateral Agent in the Pledged Collateral and shall not impose any duty upon Collateral Agent to exercise any such powers.  Except for the exercise of reasonable care in the custody of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, Collateral Agent shall have no duty as to any Pledged Collateral, it being understood that Collateral Agent shall have no responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not Collateral Agent has or is deemed to have knowledge of such matters, (b) taking any necessary steps (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Pledged Collateral) to preserve rights against any prior parties or any other rights pertaining to any Pledged Collateral, (c) taking any necessary steps to collect or realize upon the Secured Obligations or any guarantee therefor, or any part thereof, or any of the Pledged Collateral, or (d) initiating any action to protect the Pledged Collateral against the possibility of a decline in market value.  Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equal to that which Collateral Agent accords its own property consisting of negotiable securities.

(b)           The duties and obligations of Collateral Agent shall be determined solely by the express provisions of this Agreement and Collateral Agent shall not be liable except for the performance of such duties and obligations as are specifically set out in this Agreement.  Collateral Agent shall not be required to inquire as to the performance or observation of any obligation, term or condition under any agreement or arrangement by the Trustee, the Issuer or any other party to the transaction documents.  Collateral Agent shall be under no liability to any party hereto by reason of any failure on the part of any party hereto or any maker, guarantor, endorser or other signatory of any document or any other Person to perform such Person’s obligations under any such document.

(c)           Collateral Agent shall not be responsible in any manner for the validity or sufficiency of this Agreement or of any Pledged Collateral delivered hereunder or under the Pledged Equity agreements, or for the value or collectibility of any note, check or other instrument, if any, so delivered, or for any representations made or obligations assumed by any party other than Collateral Agent. Collateral Agent shall not be bound to examine or inquire into or be liable for any defect or failure in the right or title of each Pledgor to all or any of such

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assets whether such defect or failure was known to Collateral Agent or might have been discovered upon examination or inquiry and whether capable of remedy or not.

(d)           Collateral Agent shall be fully protected in acting on and relying upon any written notice direction, request, waiver, consent, receipt or other paper or document which Collateral Agent in good faith believes to have been signed and presented by the proper party or parties.

(e)           Collateral Agent shall not be responsible for any unsuitability, inadequacy or unfitness of any security interest created hereunder or pursuant to any other security document pertaining to this matter nor shall it be obligated to make any investigation into, and shall be entitled to assume, the adequacy and fitness of any security interest created hereunder or pursuant to any other security document pertaining to this matter.

(f)            Collateral Agent shall not be liable for any error of judgment, or for any act done or step taken or omitted by it in good faith or for any mistake in act or law, or for anything which it may do or refrain from doing in connection herewith, except its own gross negligence or willful misconduct.

(g)           Collateral Agent may seek the advice, at the expense of Company, of legal counsel in the event of any dispute or question as to the construction of any of the provisions of this Agreement or its duties hereunder, and it shall incur no liability and shall be fully protected in respect of any action taken, omitted or suffered by it in good faith in accordance with the advice or opinion of such counsel.

(h)           Collateral Agent shall not be required to use or risk its own funds or otherwise incur any liability in the performance of its obligations or duties, or in exercise of any rights or powers, and shall not be required to take any action which, in Collateral Agent’s sole judgment, could involve it in expense or liability unless furnished with security and indemnity which Collateral Agent deems in its sole discretion to be satisfactory.

(i)            In the absence of gross negligence, willful misconduct or bad faith on the part of Collateral Agent, Collateral Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Collateral Agent which conform to the requirements of this Agreement.

(j)            Collateral Agent shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with any direction given under this Agreement.

(k)           Collateral Agent may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties.

(l)            Collateral Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, approval or other paper or document.

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(m)          Collateral Agent may act through agents and attorneys-in-fact under this Agreement and shall not be responsible for the conduct or negligence of any agent appointed with due care.  Collateral Agent may also appoint additional institutions as co-collateral agents, pledgee’s or chargee’s with respect to the Pledged Equity or any of the other Pledged Collateral.

(n)           Collateral Agent may resign and be discharged from its duties hereunder at any time by giving written notice of such resignation to Company. Upon such notice, a successor collateral agent shall be appointed by Company and such successor collateral agent shall become the successor collateral agent hereunder upon the resignation date specified in such notice.  If Company shall fail to have appointed a successor collateral agent within 30 days after Collateral Agent has given written notice of its resignation to Company, Collateral Agent may petition a court of competent jurisdiction to appoint a successor collateral agent.

(o)           In no event shall Collateral Agent be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if it has been advised of the likelihood of such loss or damage and regardless of the form of action.

(p)           In no event shall Collateral Agent be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, strikes, work stoppages, civil or military disturbances, nuclear or natural catastrophes, fire, riot, embargo, loss or malfunctions of utilities, communications or computer (software and hardware) services, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Agreement.

(q)           Collateral Agent agrees to accept and act upon facsimile transmission of written instructions pursuant to this Agreement; provided, however, that (a) the party providing such written instructions, subsequent to such transmission of written instructions, shall provide the originally executed instructions or directions to Collateral Agent in a timely manner, and (b) such originally executed instructions or directions shall be signed by an authorized representative of the party providing such instructions or directions.

(r)            The Pledgors and Collateral Agent hereby appoint BNY Corporate Trustee Services Limited, The Bank of New York Trust Company (Cayman) Limited, The Bank of New York (Luxembourg) S.A. and The Bank of New York, as co-collateral agents with respect to the Pledged Equity (the “Pledged Equity Co-Collateral Agents”).  Upon an Event of Default, the Pledged Equity Co-Collateral Agents shall take all enforcement actions with respect to the Pledged Equity as directed by Collateral Agent.  From time to time Collateral Agent may also appoint additional institutions as co-collateral agents, pledgees or chargees with respect to the Pledged Equity or any of the other Pledged Collateral.

The Pledgors hereby agree that all rights, privileges, protections, immunities and benefits given to the Trustee under the Indenture and Collateral Agent hereunder (including, but not limited to, the right to be indemnified by the Pledgors)  are extended to the Pledged Equity

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Co-Collateral Agents and any other co-collateral agent, pledgee or chargee appointed by Collateral Agent with respect to the Pledged Equity or any of the other Pledged Collateral.

SECTION 12.            Insurance Matters.

(a)           Each Pledgor will maintain with financially sound and reputable insurers insurance with respect to its Inventory insured with casualty or physical hazard insurance on an “all risks” basis, with a full replacement cost endorsement and an “agreed amount” clause in an amount equal to 100% of the full replacement cost of such Inventory.  Such insurance shall be in such minimum amounts that such Pledgor will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to Collateral Agent.  In addition, within thirty (30) days of the date of this Agreement, all such insurance shall name Collateral Agent as an additional insured.

(b)           The proceeds of any casualty insurance in respect of any casualty loss of any of the Pledged Collateral shall be held by Collateral Agent as cash collateral for the Secured Obligations.  Collateral Agent may, at its sole option, disburse from time to time all or any part of such proceeds so held as cash collateral, upon such terms and conditions as Collateral Agent may reasonably prescribe, for direct application by such Pledgor solely to the repair or replacement of the inventory property so damaged or destroyed, or Collateral Agent may apply all or any part of such proceeds to the Secured Obligations.

(c)           All policies of insurance shall provide for at least thirty (30) days’ prior written cancellation notice to Collateral Agent.  In the event of failure by any Pledgor to provide and maintain insurance as herein provided, Collateral Agent may (but shall have no obligation to), at its option, provide such insurance and charge the amount thereof to such Pledgor.  Within thirty (30) days of the date of this Agreement, and on each annual anniversary date thereafter, Company shall furnish Collateral Agent with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.

SECTION 13.            Remedies.

(a)           If any Event of Default shall have occurred and be continuing, Collateral Agent may (and upon the written direction and indemnity of the Holders of a majority in principal amount of the outstanding Securities under the Indenture shall) exercise in respect of the Pledged Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Pledged Collateral), and Collateral Agent may also in its sole discretion (and upon the written direction and indemnity of the Holders of a majority in principal amount of the outstanding Securities under the Indenture shall), without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange or broker’s board or at any of Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Collateral Agent may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Pledged Collateral.  Collateral Agent may be the purchaser of any or all of the Pledged Collateral at any

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such sale, and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Pledged Collateral payable by Collateral Agent at such sale.  Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Pledgors, and each Pledgor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.  Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to such Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  Collateral Agent shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given.  Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each Pledgor hereby waives any claims against Collateral Agent arising by reason of the fact that the price at which any Pledged Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if Collateral Agent accepts the first offer received and does not offer such Pledged Collateral to more than one offeree.  If the proceeds of any sale or other disposition of the Pledged Collateral are insufficient to pay all the Secured Obligations, Pledgors shall be jointly and severally liable for the deficiency and the fees of any attorneys employed by Collateral Agent to collect such deficiency.

(b)           Each Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933, as from time to time amended (the “Securities Act”), and applicable state securities laws, Collateral Agent may be compelled, with respect to any sale of all or any part of the Pledged Equity conducted without prior registration or qualification of such Pledged Equity under the Securities Act and/or such state or other applicable securities laws, to limit purchasers to those who will agree, among other things, to acquire the Pledged Equity for their own account, for investment and not with a view to the distribution or resale thereof.  Each Pledgor acknowledges that any such private placement may be at prices and on terms less favorable than those obtainable through a sale without such restrictions (including, without limitation, an offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, such Pledgor agrees that any such private placement shall, in and of itself, not be deemed to be commercially unreasonable and that Collateral Agent shall have no obligation to delay the sale of any Pledged Equity for the period of time necessary to permit the issuer thereof to register it for a form of sale requiring registration under the Securities Act or under applicable state or other securities laws, even if such issuer would, or should, agree to so register it.

(c)           If Collateral Agent determines to exercise its right to sell any or all of the Pledged Equity, upon written request, each Pledgor shall and shall cause each issuer of any Pledged Equity to be sold hereunder from time to time to furnish to Collateral Agent all such information as Collateral Agent may request in order to determine the amount of Pledged Equity that may be sold by Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.

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(d)           Collateral Agent shall not be liable for any decline in the value of any Collateral or for any loss realized upon any sale or other disposition of the Pledged Collateral.

SECTION 14.            Application of Proceeds.  Except as expressly provided elsewhere in this Agreement, all proceeds received by Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in the order of priority specified in Section 7.06 of the Indenture.

SECTION 15.            Indemnity and Expenses.

(a)           Pledgors jointly and severally agree to indemnify Collateral Agent and the Pledged Equity Co-Collateral Agents (including their officers, directors, employees and agents) from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including, without limitation, enforcement of this Agreement and any Account Control Agreement), except to the extent such claims, losses or liabilities result solely from their gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.

(b)           Pledgors jointly and severally agree to pay to Collateral Agent and the Pledged Equity Co-Collateral Agents upon demand the amount of any and all costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Collateral, (iii) the exercise or enforcement of any of the rights of Collateral Agent hereunder, or (iv) the failure by any Pledgor to perform or observe any of the provisions hereof.

(c)           The obligations of Pledgors in this Section 15 shall survive the termination of this Agreement, the resignation or removal of Collateral Agent and the Pledged Equity Co-Collateral Agents, and the discharge of Pledgors’ other obligations under this Agreement and the Indenture Documents, as the case may be.

SECTION 16.            Set-Off.  Each Pledgor hereby irrevocably authorizes Collateral Agent and each other Secured Party at any time and from time to time while an Event of Default shall have occurred and be continuing, without notice to such Pledgor or any other Pledgor, any such notice being expressly waived by each Pledgor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Collateral Agent or such Secured Party to or for the credit or the account of such Pledgor, or any part thereof in such amounts as Collateral Agent or such Secured Party may elect, against and on account of the obligations and liabilities of such Pledgor to Collateral Agent or such Secured Party hereunder and claims of every nature and description of Collateral Agent or such Secured Party against such Pledgor, in any currency, whether arising hereunder or under the Indenture Documents, as Collateral Agent or such Secured Party may elect, whether or not Collateral Agent or any Secured Party has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured.  Collateral Agent and each other Secured Party shall

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notify such Pledgor promptly of any such set-off and the application made by Collateral Agent or such Secured Party of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of Collateral Agent and each other Secured Party under this Section 16 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which Collateral Agent or such Secured Party may have.

SECTION 17.       Continuing Security Interest; Assigns.  This Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until the payment in full of all Secured Obligations, (b) be binding upon each Pledgor, its successors and assigns, and (c) inure, together with the rights and remedies of Collateral Agent hereunder, to the benefit of Collateral Agent and its successors, transferees and assigns; provided, however, that neither Secured Party nor any Pledgor may assign this Agreement without the prior written consent of the other.  Upon the payment in full of all Secured Obligations, the security interest granted hereby shall terminate and all rights to the Pledged Collateral shall revert to Pledgors.  Upon any such termination Collateral Agent will, at Pledgors’ expense, execute and deliver to Pledgors such documents as Pledgors shall reasonably request to evidence such termination.

SECTION 18.       Additional Pledgors.  From time to time subsequent to the date hereof, additional Subsidiaries of Company may become parties hereto as additional Pledgors (each an “Additional Pledgor”), by executing a counterpart of this Agreement substantially in the form of Schedule VI annexed hereto.  Upon delivery of any such counterpart to Collateral Agent, notice of which is hereby waived by Pledgors, each such Additional Pledgor shall be a Pledgor and shall be as fully a party hereto as if such Additional Pledgor were an original signatory hereto.  Each Pledgor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Pledgor hereunder, nor by any election of Collateral Agent not to cause any Subsidiary of Company to become an Additional Pledgor hereunder.  This Agreement shall be fully effective as to any Pledgor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Pledgor hereunder.

SECTION 19.       Amendments; Etc.  No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by any Pledgor therefrom, shall in any event be effective unless the same shall be in writing and signed by Collateral Agent and, in the case of any such amendment or modification, by Pledgors.  Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given.

SECTION 20.       Notices.  Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices to Collateral Agent shall not be effective until received.  For the purposes hereof, the address of each party hereto shall be as set forth under such party’s name on the signature

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pages hereof or such other address as shall be designated by such party in a written notice delivered to the other party hereto.

SECTION 21.       Failure or Indulgence Not Waiver; Remedies Cumulative.  No failure or delay on the part of Collateral Agent in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

SECTION 22.       Severability.  In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

SECTION 23.       Headings.  Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

SECTION 24.       Governing Law; Terms.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

SECTION 25.       Consent to Jurisdiction and Service of Process.  ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PLEDGOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PLEDGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 20; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PLEDGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT COLLATERAL AGENT RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 25 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW.

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NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 25 SHALL LIMIT THE RIGHT OF COLLATERAL AGENT TO TAKE PROCEEDINGS AGAINST ANY PLEDGOR IN ANY OTHER COURT OF COMPETENT JURISDICTION, NOR SHALL THE TAKING OF PROCEEDINGS IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE TAKING OF PROCEEDINGS IN ANY OTHER JURISDICTIONS, WHETHER CONCURRENTLY OR NOT, TO THE EXTENT PERMITTED BY THE LAW OF SUCH OTHER JURISDICTION.

SECTION 26.       Waiver of Jury Trial.   EACH OF THE PLEDGORS AND COLLATERAL AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT.  In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

SECTION 27.       Acknowledgments.  Each Pledgor hereby acknowledges that:

(a)           it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the Indenture Documents to which it is a party;

(b)           neither Collateral Agent nor any other Secured Party has any fiduciary relationship with or duty to any Pledgor arising out of or in connection with this Agreement or the Indenture Documents, and the relationship between the Pledgors, on the one hand, and the Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c)           no joint venture is created hereby or by the Indenture Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Pledgors and the Secured Parties.

(d)           its agreement to fulfill its obligations hereunder is a material and essential part of the consideration and inducement of Collateral Agent to enter into this Agreement, and without such agreement by such Pledgor, the Securities would not be purchased.

SECTION 28.       Counterparts.  This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

SECTION 29.Suretyship Waivers by Pledgors, etc.

(a)           Each Pledgor jointly and severally agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Secured Obligations.  In furtherance of the foregoing and without limiting the generality thereof, each Pledgor agrees as follows:  (i) Collateral Agent may from time to

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time, without notice or demand and without affecting the validity or enforceability of this Agreement or giving rise to any limitation, impairment or discharge of such Pledgor’s liability hereunder, (A) renew, extend, accelerate or otherwise change the time, place, manner or terms of payment or performance of the Secured Obligations, (B) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Secured Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations, (C) request and accept guaranties of the Secured Obligations and take and hold other security for the payment of the Secured Obligations, (D) release, exchange, compromise, subordinate or modify, with or without consideration, any other security for payment of the Secured Obligations, any guaranties of the Secured Obligations, or any other obligation of any Person with respect to the Secured Obligations, (E) enforce and apply any other security now or hereafter held by or for the benefit of Collateral Agent in respect of the Secured Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that Collateral Agent may have against any such security, as Collateral Agent in its discretion may determine consistent with the Indenture and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and (F) exercise any other rights available to Collateral Agent under the Indenture, at law or in equity; and (ii) this Agreement and the obligations of such Pledgor hereunder shall be valid and enforceable and shall not be subject to any limitation, impairment or discharge for any reason (other than payment in full of the Secured Obligations), including without limitation the occurrence of any of the following, whether or not such Pledgor shall have had notice or knowledge of any of them:  (A) any failure to assert or enforce or agreement not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy with respect to the Secured Obligations or any agreement relating thereto, or with respect to any guaranty of or other security for the payment of the Secured Obligations, (B) any waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions of the Indenture or any agreement or instrument executed pursuant thereto, or of any guaranty or other security for the Secured Obligations, (C) the Secured Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect, (D) the application of payments received from any source to the payment of indebtedness other than the Secured Obligations, even though Collateral Agent might have elected to apply such payment to any part or all of the Secured Obligations, (E) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Secured Obligations, (F) any defenses, set-offs or counterclaims which Company may allege or assert against Collateral Agent in respect of the Secured Obligations, including but not limited to failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury, and (G) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of such Pledgor as an obligor in respect of the Secured Obligations.

(b)           Each Pledgor hereby waives, for the benefit of Collateral Agent:  (i) any right to require Collateral Agent, as a condition of payment or performance by such Pledgor, to (A) proceed against Company, any guarantor of the Secured Obligations or any other Person, (B) proceed against or exhaust any other security held from Company, any guarantor of the Secured Obligations or any other Person, (C) proceed against or have resort to any balance of

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any deposit account or credit on the books of Collateral Agent in favor of Company or any other Person, or (D) pursue any other remedy in the power of Collateral Agent whatsoever; (ii) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Company including, without limitation, any defense based on or arising out of the lack of validity or the unenforceability of the Secured Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Company from any cause other than payment in full of the Secured Obligations; (iii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (iv) any defense based upon Collateral Agent’s errors or omissions in the administration of the Secured Obligations, except behavior which amounts to bad faith; (v) (A) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Agreement and any legal or equitable discharge of such Pledgor’s obligations hereunder, (B) the benefit of any statute of limitations affecting such Pledgor’s liability hereunder or the enforcement hereof, (C) any rights to set-offs, recoupments and counterclaims, and (D) promptness, diligence and any requirement that Collateral Agent protect, secure, perfect or insure any other security interest or lien or any property subject thereto; (vi) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, notices of default under the Indenture or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Secured Obligations or any agreement related thereto, notices of any extension of credit to Company and notices of any of the matters referred to in Section 29(a) and any right to consent to any thereof; and (vii) to the fullest extent permitted by law, any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Agreement.

(c)           [Intentionally Omitted].

(d)           Until the Secured Obligations shall have been paid in full, each Pledgor shall withhold exercise of (i) any claim, right or remedy, direct or indirect, that such Pledgor now has or may hereafter have against Company or any of its assets in connection with this Agreement or the performance by such Pledgor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (A) any right of subrogation, reimbursement or indemnification that such Pledgor now has or may hereafter have against Company, (B) any right to enforce, or to participate in, any claim, right or remedy that Collateral Agent now has or may hereafter have against Company, and (C) any benefit of, and any right to participate in, any other collateral or security now or hereafter held by Collateral Agent, and (ii) any right of contribution such Pledgor now has or may hereafter have against any guarantor of any of the Secured Obligations.  Each Pledgor further agrees that, to the extent the agreement to withhold exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Pledgor may have against Company or against any other collateral or security, and any rights of contribution such Pledgor may have against any such guarantor, shall be junior and subordinate to any rights Collateral Agent may have against Company, to all right, title and interest Collateral Agent may have in any such other collateral or security, and to any right Collateral Agent may have against any such guarantor.

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(e)           Collateral Agent shall have no obligation to disclose or discuss with Pledgors its assessment, or any Pledgor’s assessment, of the financial condition of Company.  Each Pledgor has adequate means to obtain information from Company on a continuing basis concerning the financial condition of Company and its ability to perform its obligations under the Indenture, and each Pledgor assumes the responsibility for being and keeping informed of the financial condition of Company and of all circumstances bearing upon the risk of nonpayment of the Secured Obligations.  Each Pledgor hereby waives and relinquishes any duty on the part of Collateral Agent to disclose any matter, fact or thing relating to the business, operations or condition of Company now known or hereafter known by Collateral Agent.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, Pledgors and Collateral Agent have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

PLEDGORS:
POWER-ONE, INC., a Delaware corporation
By:	/ s / Randall Holliday
	Title: Secretary

Notice	740 Calle Plano
Address:
	Camarillo, CA 93012
	Attn: Randall H. Holliday

P-O DELAWARE, INC., a Delaware corporation
By:	/ s / Randall Holliday
	Title: Secretary

Notice	740 Calle Plano
Address:
	Camarillo, CA 93012
	Attn: Randall H. Holliday

PAI CAPITAL LLC, a Delaware limited liability company
By:	/ s / Randall Holliday
	Title: Member

Notice	740 Calle Plano
Address:
	Camarillo, CA 93012
	Attn: Randall H. Holliday

S-1

PLEDGORS:
HC POWER, INC., a California corporation
By:	/ s / Randall Holliday
	Title: Secretary

Notice	740 Calle Plano
Address:
	Camarillo, CA 93012
	Attn: Randall H. Holliday

P-O NEVADA CORP., a Nevada corporation
By:	/ s / Randall Holliday
	Title: Secretary

Notice	740 Calle Plano
Address:
	Camarillo, CA 93012
	Attn: Randall H. Holliday

S-2

SECURED PARTY:
THE BANK OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent
By:	/ s/ Teresa Petta
	Title: Vice President

Notice	700 South Flower Street, suite
Address:	500
	Los Angeles, CA 90017

ACKNOWLEDGED BY:
THE BANK OF NEW YORK
By:	/s/ Tania Sibree
Title:	Vice President
Notice Address: Level 12, Three Pacific Place, 1 Queen’s Road East, Hong Kong

BNY CORPORATE TRUSTEE SERVICES LIMITED
By:	/s / Mark Elsom
	Title: Assistant Vice President

Notice	40th Floor, One Canada Square,
Address:	London, E14 5AL

THE BANK OF NEW YORK TRUST COMPANY (CAYMAN) LIMITED
By:	/s/ Illegible
	Title: Field Secretaries (Cayman) Limited

S-3

Notice Address:

THE BANK OF NEW YORK (LUXEMBOURG) S.A
By:	/ s / Adriana Pierelli
	Title: MD and General Manager

Notice	Italian Branch, Via Carducci 31
Address:	20123 Milan, Italy

S-4

SCHEDULE I

Pledged Equity

Issuer	Class of  Equity Interest	Certificate  Nos.	Amount of  Equity  Interests	Percentage  Pledged
DOMESTIC SUBSIDIARIES
P-O Delaware, Inc. (Delaware)	Common Stock	2	100%	100%
P-O Nevada Corp. (Nevada)	Common Stock	2	100%	100%
PAI Capital LLC (Delaware)	Membership Interest	N/A	100%	100%
HC Power, Inc. (California)	Common Stock	40	100%	100%
FOREIGN SUBSIDIARIES
Power-One Limited (Cayman Islands)	Ordinary	2	100%	Up to 66%
Power-One Asia Pacific Electronics (Shenzhen) Co. (China)	Not applicable	Not applicable	100%	Up to 66%
Power-One Italy Holdings S.p.A. (Italy)	Ordinary	Certificate to be issued	100%	Up to 66%
Power-One Limited (UK)	Ordinary	5	100%	Up to 66%

I-1

SCHEDULE II

Property and Assets

All of the property and assets (other than leased or owned real property, and foreign intellectual property) of the entities listed below as Pledgors, including all such property and assets that are now owned and all such property and assets that may hereafter be acquired, and including, but not limited to, inventory, accounts, equipment, chattel paper, documents, instruments, copyrights, trademarks, service marks, patents and related rights, general intangibles, deposit accounts, cash and cash equivalents, investment property (including, but not limited to, interests in subsidiaries) and any and all proceeds and products of any of the foregoing and any of the proceeds or products thereof:

The Pledgors of the collateral described herein shall include the following:

Power-One, Inc.,

P-O Delaware, Inc.,

PAI Capital LLC,

HC Power, Inc., and

P-O Nevada Corp.

Notwithstanding the foregoing, the Pledged Collateral shall not include the following assets:

(a)           certain power supply products to be sold to Emerson Process Management Power and Water Solutions, Inc. and Fisher-Rosemount Systems, Inc. for a purchase price of approximately $1.59 million;

(b)           certain non-exclusive licensing and second source rights relating to the Company’s Z-One digital power management and control products intellectual property; and

(c)           certain products relating to power management of residential appliances (i.e., the Company’s digital motor control product line).

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SCHEDULE III

Filing Offices

Pledgor	Filing Offices
Power-One, Inc.	Delaware
P-O Delaware, Inc.	Delaware
PAI Capital LLC	Delaware
HC Power, Inc.	California
P-O Nevada Corp.	Nevada

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SCHEDULE IV

Office Locations, Type and Jurisdiction of Organization

Name of Pledgor	Type of Organization	Office Locations	Jurisdiction of Organization	Organization Number
Power-One, Inc.	Corporation	Camarillo, CA	Delaware	77-0420182
P-O Delaware, Inc.	Corporation	Camarillo, CA	Delaware	3621936
PAI Capital LLC	Limited liability company	Camarillo, CA	Delaware	20-8164367
HC Power, Inc.	Corporation	Camarillo, CA	California	1260082
P-O Nevada Corp.	Corporation	Camarillo, CA	Nevada	C18404-00

Names of Pledgors Used in Past Five Years

Not applicable

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SCHEDULE V

Pledge Amendment

This Pledge Amendment, dated                         ,      , is delivered pursuant to Section 7(b) of the Security Agreement referred to below.  The undersigned hereby agrees that this Pledge Amendment may be attached to the Security Agreement dated                  ,         , among                         , as Company, the other Pledgors named therein, and                         , as Collateral Agent (the “Security Agreement,” capitalized terms defined therein being used herein as therein defined) and that the Pledged Equity listed on this Pledge Amendment shall be deemed to be part of the Pledged Equity and shall become part of the Pledged Collateral and shall secure all Secured Obligations.

[NAME OF PLEDGOR]
By:
	Title:

Issuer Class of 
Equity 
Interests Certificate  
Nos. Amount of 
Equity 
Interests Percentage 
Ownership 
Interest Percentage 
Pledged

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SCHEDULE VI

Form of Counterpart

COUNTERPART (this “Counterpart”), dated                         , is delivered pursuant to Section 18 of the Security Agreement referred to below.  The undersigned hereby agrees that this Counterpart may be attached to the Security Agreement, dated as of                         ,                         (as it may be from time to time amended, modified or supplemented, the “Security Agreement”; capitalized terms used herein not otherwise defined herein shall have the meanings ascribed therein), among Power-One, Inc., PAI Capital LLC and The Bank Of New York Trust Company, N.A., as Collateral Agent.  The undersigned, by executing and delivering this Counterpart, hereby becomes a Pledgor under the Security Agreement in accordance with Section 18 thereof and agrees to be bound by all of the terms thereof.  Without limiting the generality of the foregoing, the items of property described in the schedule attached hereto shall be deemed to be part of the and shall become part of the Pledged Collateral and shall secure all Secured Obligations.

[NAME OF ADDITIONAL PLEDGOR]
By:
	Name:
	Title:

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EXHIBIT I TO
SECURITY AGREEMENT

[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]

GRANT OF TRADEMARK SECURITY INTEREST

WHEREAS, [NAME OF PLEDGOR], a                 corporation (“Pledgor”), owns and uses in its business, and will in the future adopt and so use, various intangible assets, including the Trademark Collateral (as defined below); and

WHEREAS, pursuant to (i) that certain Indenture dated as of June 17, 2008 (as such Indenture may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Indenture”) among The Bank of New York Trust Company, N.A., as Trustee for the Holders (as defined in the Indenture) (in such capacity, the “Trustee”), the Company, as Issuer, and (ii) the Purchase Agreement dated as of June [    ], 2008 (as such Purchase Agreement may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”) among the Company, and Lehman Brothers Inc., as Initial Purchaser, the Company issued the 8.0% Senior Secured Notes due 2013 (the “Notes”), and (iii) the terms of a Security Agreement dated as of June 17, 2008 (as further amended, supplemented or otherwise modified from time to time, the “Security Agreement”; capitalized terms used in this Agreement without definition have the respective meanings assigned such terms in the Security Agreement), among Grantor, Collateral Agent and the other grantors named therein, Grantor has agreed to create in favor of Collateral Agent a secured and protected interest in, and Collateral Agent has agreed to become a secured creditor with respect to, the Trademark Collateral;

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence further the security interest granted by Pledgor to Collateral Agent pursuant to the Security Agreement, Pledgor hereby grants to Collateral Agent a security interest in all of Pledgor’s right, title and interest in and to the following, in each case whether now or hereafter existing or in which Pledgor now has or hereafter acquires an interest and wherever the same may be located (the “Trademark Collateral”):

(i)            all rights, title and interest (including rights acquired pursuant to a license or otherwise) in and to all trademarks, service marks, designs, logos, indicia, tradenames, trade dress, corporate names, company names, business names, fictitious business names, trade styles and/or other source and/or business identifiers and applications pertaining thereto, owned by such Pledgor, or hereafter adopted and used, in its business (including, without limitation, the trademarks set forth on Schedule A annexed hereto) (collectively, the “Trademarks”), all registrations that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations and applications set forth on Schedule A annexed hereto), all common law and other rights (but in no event any of the obligations) in and to the Trademarks in the United States and any state thereof

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and in foreign countries, and all goodwill of such Pledgor’s business symbolized by the Trademarks and associated therewith; and

(ii)           all proceeds, products, rents and profits of or from any and all of the foregoing Trademark Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Trademark Collateral.  For purposes of this Grant of Trademark Security Interest, the term “proceeds” includes whatever is receivable or received when Trademark Collateral or proceeds are sold, licensed, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

Pledgor does hereby further acknowledge and affirm that the rights and remedies of Collateral Agent with respect to the security interest in the Trademark Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, Pledgor has caused this Grant of Trademark Security Interest to be duly executed and delivered by its officer thereunto duly authorized as of the      day of     ,     .

[NAME OF PLEDGOR]
By:
	Name:
	Title:

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SCHEDULE A

TO

GRANT OF TRADEMARK SECURITY INTEREST

Owner Trademark
Description Registration/Appl.
Number Registration/Appl.
Date

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EXHIBIT II TO
SECURITY AGREEMENT

[FORM OF GRANT OF PATENT SECURITY INTEREST]

GRANT OF PATENT SECURITY INTEREST

WHEREAS, [NAME OF PLEDGOR], a                       corporation (“Pledgor”), owns and uses in its business, and will in the future adopt and so use, various intangible assets, including the Patent Collateral (as defined below); and

WHEREAS, pursuant to (i) that certain Indenture dated as of June 17, 2008 (as such Indenture may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Indenture”) among The Bank of New York Trust Company, N.A., as Trustee for the Holders (as defined in the Indenture) (in such capacity, the “Trustee”), the Company, as Issuer, and (ii) the Purchase Agreement dated as of June [    ], 2008 (as such Purchase Agreement may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”) among the Company, and Lehman Brothers Inc., as Initial Purchaser, the Company issued the 8.0% Senior Secured Notes due 2013 (the “Notes”), and (iii) the terms of a Security Agreement dated as of June 17, 2008 (as further amended, supplemented or otherwise modified from time to time, the “Security Agreement”; capitalized terms used in this Agreement without definition have the respective meanings assigned such terms in the Security Agreement), among Grantor, Collateral Agent and the other grantors named therein, Grantor has agreed to create in favor of Collateral Agent a secured and protected interest in, and Collateral Agent has agreed to become a secured creditor with respect to, the Patent Collateral;

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence further the security interest granted by Pledgor to Collateral Agent pursuant to the Security Agreement, Pledgor hereby grants to Collateral Agent a security interest in all of Pledgor’s right, title and interest in and to the following, in each case whether now or hereafter existing or in which Pledgor now has or hereafter acquires an interest and wherever the same may be located (the “Patent Collateral”):

(i)            all rights, title and interest (including rights acquired pursuant to a license or otherwise) in and to all patents and patent applications and rights and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned or held by such Pledgor and all patents and patent applications and rights, title and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned by such Pledgor in whole or in part (including, without limitation, the patents and patent applications set forth on Schedule A annexed hereto), all rights (but not obligations) corresponding thereto to sue for past, present and future infringements and all re-issues, divisions, continuations, renewals, extensions and continuations-in-part thereof; and

(ii)           all proceeds, products, rents and profits of or from any and all of the foregoing Patent Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Collateral Agent is the loss payee thereof), or any indemnity, warranty or

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guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Patent Collateral.  For purposes of this Grant of Patent Security Interest, the term “proceeds” includes whatever is receivable or received when Patent Collateral or proceeds are sold, licensed, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

Pledgor does hereby further acknowledge and affirm that the rights and remedies of Collateral Agent with respect to the security interest in the Patent Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

[The remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, Pledgor has caused this Grant of Patent Security Interest to be duly executed and delivered by its officer thereunto duly authorized as of the        day of               ,        .

[NAME OF PLEDGOR]
By:
	Name:
	Title:

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SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST

Patents Issued:

Patent No. Issue Date Invention Inventor

Patents Pending:

Applicant’s
Name Date
Filed Application
Number Invention Inventor

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EXHIBIT III TO
SECURITY AGREEMENT

[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]

GRANT OF COPYRIGHT SECURITY INTEREST

WHEREAS, [NAME OF PLEDGOR], a                       corporation (“Pledgor”), owns and uses in its business, and will in the future adopt and so use, various intangible assets, including the Copyright Collateral (as defined below); and

WHEREAS, pursuant to (i) that certain Indenture dated as of June 17, 2008 (as such Indenture may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Indenture”) among The Bank of New York Trust Company, N.A., as Trustee for the Holders (as defined in the Indenture) (in such capacity, the “Trustee”), the Company, as Issuer, and (ii) the Purchase Agreement dated as of June [    ], 2008 (as such Purchase Agreement may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”) among the Company, and Lehman Brothers Inc., as Initial Purchaser, the Company issued the 8.0% Senior Secured Notes due 2013 (the “Notes”), and (iii) the terms of a Security Agreement dated as of June 17, 2008 (as further amended, supplemented or otherwise modified from time to time, the “Security Agreement”; capitalized terms used in this Agreement without definition have the respective meanings assigned such terms in the Security Agreement), among Grantor, Collateral Agent and the other grantors named therein, Grantor has agreed to create in favor of Collateral Agent a secured and protected interest in, and Collateral Agent has agreed to become a secured creditor with respect to, the Copyright Collateral;

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence further the security interest granted by Pledgor to Collateral Agent pursuant to the Security Agreement, Pledgor hereby grants to Collateral Agent a security interest in all of Pledgor’s right, title and interest in and to the following, in each case whether now or hereafter existing or in which Pledgor now has or hereafter acquires an interest and wherever the same may be located (the “Copyright Collateral”):

(i)            all rights, title and interest (including rights acquired pursuant to a license or otherwise) under copyright in various published and unpublished works of authorship including, without limitation, computer programs, computer data bases, other computer software layouts, trade dress, drawings, designs, writings, and formulas (including, without limitation, the works set forth on Schedule A annexed hereto, as the same may be amended pursuant hereto from time to time) (collectively, the “Copyrights”), all copyright registrations issued to Pledgor and applications for copyright registration that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations set forth on Schedule A annexed hereto, as the same may be amended pursuant hereto from time to time) (collectively, the “Copyright Registrations”), all common law and other rights in and to the Copyrights in the United States and any state thereof and in

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foreign countries including all copyright licenses (but with respect to such copyright licenses, only to the extent permitted by such licensing arrangements) (the “Copyright Rights”), including, without limitation, each of the Copyrights, rights, titles and interests in and to the Copyrights, all derivative works and other works protectable by copyright, which are presently, or in the future may be, owned, created (as a work for hire for the benefit of Pledgor), authored (as a work for hire for the benefit of Pledgor), or acquired by Pledgor, in whole or in part, and all Copyright Rights with respect thereto and all Copyright Registrations therefor, heretofore or hereafter granted or applied for, and all renewals and extensions thereof, throughout the world, including all proceeds thereof (such as, by way of example and not by limitation, license royalties and proceeds of infringement suits), the right (but not the obligation) to renew and extend such Copyright Registrations and Copyright Rights and to register works protectable by copyright and the right (but not the obligation) to sue in the name of such Pledgor or in the name of Collateral Agent or Lenders for past, present and future infringements of the Copyrights and Copyright Rights; and

(ii)           all proceeds, products, rents and profits of or from any and all of the foregoing Copyright Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Copyright Collateral.  For purposes of this Grant of Copyright Security Interest, the term “proceeds” includes whatever is receivable or received when Copyright Collateral or proceeds are sold, licensed, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

Pledgor does hereby further acknowledge and affirm that the rights and remedies of Collateral Agent with respect to the security interest in the Copyright Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

IN WITNESS WHEREOF, Pledgor has caused this Grant of Copyright Security Interest to be duly executed and delivered by its officer thereunto duly authorized as of the        day of             ,       .

		[NAME OF PLEDGOR]
By:
	Name:
	Title:

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SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST

U.S. Copyright Registrations:

Title Registration
No. Date of Issue Registered Owner

Foreign Copyright Registrations:

Country Title Registration
No. Date of Issue

Pending U.S. Copyright Registration Applications:

Title Appl. No. Date of
Application Copyright Claimant

Pending Foreign Copyright Registration Applications:

Country Title Appl. No. Date of Application

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EXHIBIT IV TO
SECURITY AGREEMENT

IP SUPPLEMENT

This IP SUPPLEMENT, dated as of           , is delivered pursuant to and supplements (i) the Security Agreement, dated as of                                  ,         (said Security Agreement, as it may heretofore have been and as it may hereafter be further amended, restated, supplemented or otherwise modified from time to time, being the “Security Agreement”), among                               [Insert Company name], [Insert Name of Pledgor] (“Pledgor”), the other Pledgors named therein, and [Insert name of Lender], as Collateral Agent, and (ii) the [Grant of Trademark Security Interest] [Grant of Patent Security Interest] [Grant of Copyright Security Interest] dated as of                 ,        (the “Grant”) executed by Pledgor.  Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Grant.

Pledgor grants to Collateral Agent a security interest in all of Pledgor’s right, title and interest in and to the [Trademark Collateral] [Patent Collateral] [Copyright Collateral] set forth on Schedule A annexed hereto.  All such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright Collateral] and shall be hereafter subject to each of the terms and conditions of the Security Agreement and the Grant.

IN WITNESS WHEREOF, Pledgor has caused this IP Supplement to be duly executed and delivered by its duly authorized officer as of                                .

		[PLEDGOR]
By:
	Name:
	Title:

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