EXHIBIT 4.2


ANNALY CAPITAL MANAGEMENT, INC.


and


WELLS FARGO BANK, NATIONAL ASSOCIATION


AS TRUSTEE


4.00% Convertible Senior Notes due 2015


FIRST SUPPLEMENTAL INDENTURE


Dated as of February 12, 2010


to


INDENTURE


Dated as of February 12, 2010





TABLE OF CONTENTS


	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Page

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 
	
 ARTICLE I ADDITIONAL DEFINITIONS AND
 INCORPORATION BY REFERENCE

 	
  

 	
 1

 
	
  

 	
  

 	
  

 
	
 Section 1.01 Definitions 

 	
  

 	
 1

 
	
  

 	
  

 	
  

 
	
 ARTICLE II THE NOTES

 	
  

 	
 5

 
	
  

 	
  

 	
  

 
	
 Section 2.01 Title; Amount and Issue of
Notes; Principal and Interest 

 	
  

 	
 5

 
	
 Section 2.02 Form of Notes 

 	
  

 	
 7

 
	
 Section 2.03 Legends 

 	
  

 	
 7

 
	
 Section 2.04 Security Registrar, Paying
Agent, Withholding Agent, Securities Custodian and Conversion Agent 

 	
  

 	
 8

 
	
 Section 2.05 No Sinking Fund 

 	
  

 	
 9

 
	
 Section 2.06 Redemption of Notes 

 	
  

 	
 9

 
	
 Section 2.07 Discharge of Indenture, Defeasance 

 	
  

 	
 9

 
	
 Section 2.08 Ranking 

 	
  

 	
 9

 
	
 Section 2.09 Repurchase and Cancellation 

 	
  

 	
 9

 
	
  

 	
  

 	
  

 
	
 ARTICLE III ADDITIONAL DEFAULTS AND REMEDIES

 	
  

 	
 9

 
	
  

 	
  

 	
  

 
	
 Section 3.01 Additional Events of Default 

 	
  

 	
 9

 
	
 Section 3.02 Acceleration of Maturity;
Recission and Annulment 

 	
  

 	
 10

 
	
 Section 3.03 Exception to Remedies 

 	
  

 	
 10

 
	
  

 	
  

 	
  

 
	
 ARTICLE IV AMENDMENTS

 	
  

 	
 10

 
	
  

 	
  

 	
  

 
	
 Section 4.01 Amendments 

 	
  

 	
 10

 
	
  

 	
  

 	
  

 
	
 ARTICLE V PURCHASE OF NOTES AT THE OPTION OF
 HOLDERS UPON A FUNDAMENTAL CHANGE

 	
  

 	
 11

 
	
  

 	
  

 	
  

 
	
 Section 5.01 Purchase of Notes at the
Option of the Holder Upon a Fundamental Change 

 	
  

 	
 11

 
	
 Section 5.02 Further Conditions and
Procedures for Purchase at the Option of the Holder Upon a Fundamental
Change 

 	
  

 	
 13

 
	
 Section 5.03 Ownership Limit 

 	
  

 	
 15

 
	
  

 	
  

 	
  

 
	
 ARTICLE VI CONVERSION

 	
  

 	
 15

 
	
  

 	
  

 	
  

 
	
 Section 6.01 Article Seventeen Added 

 	
  

 	
 15

 
	
 Section 6.02 Conversion of Notes 

 	
  

 	
 15

 
	
 Section 6.03 Adjustments to Conversion
Rate 

 	
  

 	
 17

 
	
 Section 6.04 Adjustment Upon Certain
Fundamental Changes 

 	
  

 	
 22

 
	
 Section 6.05 Effect of Reclassification,
Consolidation, Merger or Sale 

 	
  

 	
 23

 


i









	
  

 	
  

 	
  

 
	
 Section 6.06 Responsibility of Trustee 

 	
  

 	
 24

 
	
 Section 6.07 Notice to Holders Prior to
Certain Actions 

 	
  

 	
 24

 
	
 Section 6.08 Stockholder Rights Plan 

 	
  

 	
 25

 
	
 Section 6.09 Mandatory Conversion 

 	
  

 	
 25

 
	
 Section 6.10 Settlement of Change of
Control and Coupon Make-Whole 

 	
  

 	
 26

 
	
  

 	
  

 	
  

 
	
 ARTICLE VII REPORTS BY THE COMPANY

 	
  

 	
 27

 
	
  

 	
  

 	
  

 
	
 Section 7.01 Section 704 Replaced 

 	
  

 	
 27

 
	
  

 	
  

 	
  

 
	
 ARTICLE VIII MISCELLANEOUS

 	
  

 	
 27

 
	
  

 	
  

 	
  

 
	
 Section 8.01 Certain Matters Relating to
the Trustee 

 	
  

 	
 27

 
	
 Section 8.02 Withholding Offset 

 	
  

 	
 28

 
	
 Section 8.03 Calculations in Respect of
Notes 

 	
  

 	
 28

 
	
 Section 8.04 Application of Supplemental
Indenture 

 	
  

 	
 29

 
	
 Section 8.05 Effective Date 

 	
  

 	
 29

 
	
 Section 8.06 Multiple Originals 

 	
  

 	
 29

 
	
 Section 8.07 Governing Law 

 	
  

 	
 29

 
	
 Section 8.08 General 

 	
  

 	
 29

 


ii






          FIRST
SUPPLEMENTAL INDENTURE, dated as of February 12, 2010, by and between Annaly
Capital Management Inc. (the “Company”), a corporation organized under the laws
of the State of Maryland and having its principal executive office located at
1211 Avenue of the Americas, Suite 2902, New York, New York 10036, and Wells
Fargo Bank, National Association, a national banking association duly organized
and existing under the laws of the United States of America, as trustee (the
“Trustee”) to that certain Indenture dated as of February 12, 2010 between the
Company and the Trustee. 


RECITALS OF THE COMPANY


          The
Company and the Trustee are parties to an Indenture dated as of February 12,
2010 (the “Original Indenture”), relating to the issuance from time to time by
the Company of one or more series of its Securities. 


          Sections
901 (4), (7) and (13) of the Original Indenture provide that a supplemental
indenture may be entered into by the Company and the Trustee, without the
consent of any Holders, when authorized by a Board Resolution (a) to
establish the form or terms of any series of Securities and to make any
deletions from or additions or changes to the Original Indenture (provided that
any such deletions, additions and change shall not be applicable to any other
series of Securities then Outstanding), (b) to add any additional Events
of Default and (c) to amend or supplement any provision contained in the
Original Indenture, any supplemental indenture or any Securities, provided that
such amendment or supplement does not apply to any Outstanding Security issued
prior to the date of such supplemental indenture and entitled to the benefits
of such provision. 


          The
Company represents and warrants that all things necessary to make this
Supplemental Indenture a valid agreement of the Company and the Trustee, in
accordance with the terms of the Original Indenture, and a valid amendment of
and supplement to the Original Indenture have been done. 


          The
Company has requested the Trustee to join with it in the execution and delivery
of this first supplemental indenture (the “Supplemental Indenture”) in order to
supplement and amend the Original Indenture, solely with respect to the
establishment and issuance of a new series of Securities to be known as the
4.00% Convertible Senior Notes due 2015 (the “Notes”) issued on the date
hereof. 


          NOW,
THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: 


          For
and in consideration of the premises and the purchase of Notes on the date
hereof by the Holders thereof, it is mutually agreed, for the equal and ratable
benefit of all Holders of the Notes, as follows: 


ARTICLE I


ADDITIONAL DEFINITIONS AND INCORPORATION BY
REFERENCE


          Section
1.01 Definitions. For all purposes of the Original Indenture and this
Supplemental Indenture relating to the series of Securities consisting of the
Notes created hereby, except as otherwise expressly provided or unless the
context otherwise requires, (i) the terms defined in this Article I shall
have the meanings assigned to them in this Article I, (ii) any term that
is defined in both the Original Indenture and this Supplemental Indenture shall
have the meaning assigned to such term in this Supplemental Indenture,
(iii) any capitalized term that is used in this Supplemental Indenture but
not defined herein shall have the meaning specified in the Original Indenture
and (iii) as used in this Supplemental Indenture, the terms “herein,”
“hereof,” “hereunder” and other words of similar import refer to this
Supplemental Indenture. 


          For
purposes of the Notes and this Supplemental Indenture, the following terms
shall have the following definitions: 


          “Additional
Interest” means all amounts, if any, payable pursuant to Section 3.03
hereof. 


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






          “Business
Day” means any day other than a Saturday or Sunday that is not a day on
which banking institutions are authorized or obligated by law or executive
order to close in The City of New York. 


          “Change
of Control Make-Whole” means the additional value that a Holder converting
Notes in connection with a Fundamental Change shall be entitled to receive in
accordance with Section 6.04(a) of this Supplemental Indenture, which shall be
based on a percentage of $1,000 principal amount of the Notes determined by
reference to the table set forth in Schedule A of this Supplemental
Indenture.


          “Charter”
means the Articles of Amendment and Restatement of Articles of Incorporation
filed with the Maryland State Department of Assessment and Taxation on February
4, 1997, all amendments thereto and all Articles Supplementary of the Company,
as may be further amended, restated or supplemented. 


          “Common
Stock” means the common stock, par value $0.01 per share, of the Company
existing on the Issue Date or any other shares of capital stock into which such
common stock shall be reclassified or changed. 


          “Company”
means Annaly Capital Management, Inc. or its successors and assigns. 


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


          “Conversion
Price” means, in respect of each $1,000 principal amount of Notes, $1,000
divided by the Conversion Rate, as may be adjusted from time to time as set
forth herein, and initially shall be $21.456. 


          “Conversion
Rate” means, in respect of each $1,000 principal amount of Notes, initially
46.6070 shares of Common Stock, subject to adjustment as set forth herein. 


          “Conversion
Value” means the applicable Conversion Rate multiplied by the Stock Price.


          “Coupon
Make-Whole” means, for each Holder, a number of shares of Common Stock
(determined in accordance with Section 6.10 of this Supplemental Indenture)
equal to the dollar amount of (1) 2.00% multiplied by the principal amount of
the Notes of such Holder to be converted upon a Mandatory Conversion,
multiplied by (2) the number of Interest Payment Dates remaining between the
Mandatory Conversion Date and the Stated Maturity (including any Interest
Payment Date coinciding with the Stated Maturity, but excluding any Interest
Payment Date for which the Regular Record Date precedes the Mandatory
Conversion Date).


          “Daily
VWAP” means the per share volume-weighted average price as displayed under
the heading “Bloomberg VWAP” on Bloomberg page “NLY.N <equity> AQR” (or
any successor thereto) in respect of the period from the scheduled open of
trading until the scheduled close of trading of the primary trading session on
such Trading Day (or if such volume-weighted average price is unavailable, the
market value of one share of Common Stock on such Trading Day, determined using
a volume weighted average method, by a nationally recognized independent
investment banking firm retained for this purpose by the Company). Daily VWAP
will be determined without regard to after hours trading or any other trading
outside of the regular trading session trading hours. 


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


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


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


          “Ex-Dividend
Date” means the first date upon which the Common Stock trades on the
applicable exchange or in the applicable market, regular way, without the right
to receive the issuance or distribution in question. 


2





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


          A
“Fundamental Change” shall be deemed to have occurred at the time after
the Notes are originally issued that any of the following occurs: 


          (1)
a “person” or “group” within the meaning of Section 13(d) of the Exchange
Act other than the Company, any Subsidiary of the Company or any employee
benefit plans of the Company or a Subsidiary of the Company files a
Schedule 13D or Schedule TO (or any successor schedule, form or
report) pursuant to the Exchange Act disclosing that such person has become the
direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the
Exchange Act, of the Company’s common equity representing more than 50% of the
voting power of all shares of the Company’s common equity entitled to vote
generally in the election of directors of the Company, unless such beneficial
ownership arises as a result of a revocable proxy delivered in response to a
public proxy or consent solicitation made pursuant to the applicable rules and
regulations under the Exchange Act; provided, that no person or group shall be
deemed to be the beneficial owner of any securities tendered pursuant to a
tender or exchange offer made by or on behalf of such person or group until
such tendered securities are accepted for purchase or exchange under such
offer; or 


          (2)
consummation of (A) any recapitalization, reclassification or change of
the Common Stock (other than changes resulting from a subdivision or
combination) as a result of which the Common Stock would be converted into, or
exchanged for, stock, other securities, other property or assets or
(B) any statutory share exchange, consolidation or merger involving the
Company pursuant to which the Common Stock will be converted into cash,
securities or other property or any sale, lease or other transfer in one
transaction or a series of related transactions of all or substantially all of
the consolidated assets of the Company and the Company’s Subsidiaries, taken as
a whole, to any person other than one or more of the Company’s Subsidiaries,
other than any transaction: 


	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (II) where
 the holders of all classes of the Company’s common equity immediately prior
 to such transaction that is a statutory share exchange, consolidation or
 merger own, directly or indirectly, more than 50% of all classes of common
 equity of the continuing or surviving entity or transferee or the parent
 entity thereof immediately after such transaction; 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;
 

 



provided, however, that a Fundamental
Change will not be deemed to have occurred if 90% or more of the consideration
received or to be received by the holders of Common Stock (excluding cash
payments for fractional shares and cash payments made pursuant to dissenters’
appraisal rights) in connection with the transaction or transactions
constituting the Fundamental Change consists of shares of capital stock traded
on the New York Stock Exchange, the Nasdaq Global Select Market or the Nasdaq
Global Market (or their respective successors) or which will be so traded when
issued or exchanged in connection with the transaction that would otherwise be
a Fundamental Change (these securities being referred to as “Publicly Traded
Securities”) and as a result of this transaction or transactions the Notes
become convertible into such Publicly Traded Securities, excluding cash
payments for fractional shares, pursuant to the terms of this Supplemental
Indenture. 


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


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


          “Interest
Payment Date” means February 15 and August 15 of each year. The first
Interest Payment Date shall be August 15, 2010.


3






          “Issue
Date” means February 12, 2010. 


          “Original
Indenture” is as defined in the introductory paragraphs of this
Supplemental Indenture. 


          “Outstanding”
shall have the meaning set forth in Section 101 of the Original Indenture other
than any Notes repurchased by the Company as set forth in Section 2.09 of this
Supplemental Indenture. 


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


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


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


          “Scheduled
Trading Day” means a day that is scheduled to be a Trading Day on the
primary securities exchange or market on which the Common Stock is listed or
admitted to trading. If the Common Stock is not so listed or admitted to
trading, “Scheduled Trading Day” means a “Business Day”. 


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


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


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


          “Stock
Price” means, with respect to a Fundamental Change, the price per share of
Common Stock paid or deemed paid in connection with such Fundamental Change if
Holders of the Common Stock receive only cash as a result of such Fundamental
Change, or otherwise, the average of the Daily VWAP of the Common Stock for the
10 consecutive Trading-Day period ending on the Trading Day immediately
preceding the Effective Date (excluding such Effective Date). 


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


          “Trading
Day” means a day during which trading in securities generally occurs on the
principal United States national or regional securities exchange on which the
Common Stock is then listed or admitted to trading or, if the Common Stock is
not then listed or admitted to trading on a United States national or regional
securities exchange, in the principal other market on which the Common Stock is
then traded; provided that if the Common Stock is not so listed or traded,
“Trading Day” means a “Business Day”. 


          “Trustee”
means Wells Fargo Bank, National Association, a national banking association
duly organized and existing under the laws of the United States of America, and
its successors and assigns.


          Other
Definitions. 


	
  

 	
  

 	
  

 
	
 Term

 	
  

 	
 Defined in Section

 
	

 


 	
  

 	

 


 
	
 “Additional
 Notes”

 	
  

 	
 2.01(g))

 
	
  

 	
  

 	
  

 
	
 “Adjustment
 Event”

 	
  

 	
 6.03(l)

 
	
  

 	
  

 	
  

 
	
 “Clearstream”

 	
  

 	
 5.02(a)

 


4










	
  

 	
  

 	
  

 
	
 Term

 	
  

 	
 Defined in Section

 
	

 


 	
  

 	

 


 
	
  

 	
  

 	
  

 
	
 “Company
 Notice”

 	
  

 	
 5.01(b)

 
	
  

 	
  

 	
  

 
	
 “Company
 Notice Date”

 	
  

 	
 5.01(b)

 
	
  

 	
  

 	
  

 
	
 “Conversion Date”

 	
  

 	
 6.02(b)

 
	
  

 	
  

 	
  

 
	
 “Determination
 Date”

 	
  

 	
 6.03 (l)

 
	
  

 	
  

 	
  

 
	
 “Effective
 Date”

 	
  

 	
 6.04(b)

 
	
  

 	
  

 	
  

 
	
 “Euroclear”

 	
  

 	
 5.02(a)

 
	
  

 	
  

 	
  

 
	
 “Expiration
 Time”

 	
  

 	
 6.03(e)

 
	
  

 	
  

 	
  

 
	
 “Fundamental
 Change Purchase Date”

 	
  

 	
 5.01(a)

 
	
  

 	
  

 	
  

 
	
 “Fundamental
 Change Purchase Notice”

 	
  

 	
 5.01(c)

 
	
  

 	
  

 	
  

 
	
 “Fundamental
 Change Purchase Price”

 	
  

 	
 5.01(a)

 
	
  

 	
  

 	
  

 
	
 “Indemnitees”

 	
  

 	
 7.01(a)

 
	
  

 	
  

 	
  

 
	
 “Losses”

 	
  

 	
 7.01(a)

 
	
  

 	
  

 	
  

 
	
 “Mandatory
 Conversion”

 	
  

 	
 6.09(a)

 
	
  

 	
  

 	
  

 
	
 “Mandatory
 Conversion Date”

 	
  

 	
 6.09(a)

 
	
  

 	
  

 	
  

 
	
 “Mandatory
 Conversion Press Release”

 	
  

 	
 6.09(a)

 
	
  

 	
  

 	
  

 
	
 “Notice of
 Mandatory Conversion”

 	
  

 	
 6.09(c)

 
	
  

 	
  

 	
  

 
	
 “Reorganization
 Event”

 	
  

 	
 6.05(a)

 
	
  

 	
  

 	
  

 
	
 “Reference
 Property”

 	
  

 	
 6.05(a)

 
	
  

 	
  

 	
  

 
	
 “Settlement
 Date”

 	
  

 	
 6.02(b)

 
	
  

 	
  

 	
  

 
	
 “Spin-Off”

 	
  

 	
 6.03(c)

 
	
  

 	
  

 	
  

 
	
 “Withholding
 Agent”

 	
  

 	
 2.04

 


ARTICLE II


THE NOTES


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


                    (a)
Pursuant to the terms hereof and Section 301 of the Original Indenture, the
Company hereby creates a series of Securities designated as the “4.00%
Convertible Senior Notes due 2015” of the Company (the “Notes”) which Notes
shall be deemed “Securities” for all purposes under the Original Indenture. The
aggregate principal amount of Notes which may be authenticated and delivered
under this Supplemental Indenture is initially $575,000,000, not inclusive of
Notes to be authenticated and delivered upon registration of transfer of or in
exchange for, or in lieu of such Notes pursuant to the terms of this
Supplemental Indenture and the Original Indenture. The Notes shall be issuable
in registered form and in denominations of $2,000 and integral multiples of
$1,000 in excess thereof. 


                    (b)
The Notes shall mature on February 15, 2015. 


                    (c)
Interest on the Notes shall accrue at a rate of 4.00% per annum, from and
including the date specified on the face of such Notes until the principal
thereof is paid, deemed paid, or made available for 


5





payment.
Interest shall be payable semi-annually in arrears on February 15 and
August 15 in each year, commencing August 15, 2010. Interest on the
Notes shall be computed on the basis of a 360-day year comprised of twelve
30-day months. If any Interest Payment Date falls on a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next
succeeding Business Day and no interest on such payment will accrue for the
period from the Interest Payment Date to such next succeeding Business Day. If
the Stated Maturity would fall on a day that is not a Business Day, the
required payment of interest, if any, and principal (and Additional Interest,
if any), will be made on the next succeeding Business Day and no interest on such
payment will accrue for the period from and after the Stated Maturity to such
next succeeding Business Day. If a Fundamental Change Purchase Date would fall
on a day that is not a Business Day, the Company will purchase the Notes
tendered for purchase on the next succeeding Business Day and no interest or
Additional Interest on such Notes will accrue for the period from and after the
earlier Fundamental Change Purchase Date to such next succeeding Business Day.
The Company will pay the Fundamental Change Purchase Price promptly following
the later of (i) such next succeeding Business Day or (ii) the time
of book entry transfer or the delivery of the Notes. 


                    (d)
A Holder of any Notes after 5:00 p.m., New York City time, on a Regular Record
Date shall be entitled to receive interest (including any Additional Interest),
on such Notes on the corresponding Interest Payment Date. Holders of Notes at
5:00 p.m., New York City time, on a Regular Record Date will receive payment of
interest (including any Additional Interest) payable on the corresponding
Interest Payment Date notwithstanding the conversion of such Notes at any time
after 5:00 p.m., New York City time on such Regular Record Date. Notes
surrendered for conversion during the period after 5:00 p.m., New York City
time, on any Regular Record Date to 9:00 a.m., New York City time, on the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest (including any Additional Interest) that the Holder is to
receive on the Notes on such Interest Payment Date. 


          Notwithstanding
the foregoing, no such payment of interest (including any Additional Interest)
need be made by any converting Holder (i) for conversions following the
Regular Record Date immediately preceding the Stated Maturity, (ii) if the
Company has provided a specified a Mandatory Conversion Date in a Notice of
Mandatory Conversion, (iii) if the Company has specified a Fundamental Change
Purchase Date that is after a Regular Record Date and on or prior to the
corresponding Interest Payment Date, or (iv) to the extent of any overdue
interest (including any overdue Additional Interest) existing at the time of
conversion of such Note. Except where Notes surrendered for conversion must be
accompanied by payment as described above, no interest or Additional Interest
on converted Notes will be payable by the Company on any Interest Payment Date
subsequent to the Conversion Date or the Mandatory Conversion Date, as
applicable, and delivery of the shares of Common Stock pursuant to
Article VI of this Supplemental Indenture, together with any cash payment
for any fractional shares, upon conversion will be deemed to satisfy the
Company’s obligation to pay the principal amount of the Notes and accrued and
unpaid interest and Additional Interest, if any, to, but not including, the
related Conversion Date or Mandatory Conversion Date, as applicable. 


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


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


                    (g)
The aggregate principal amount of Notes that may be issued on the date of this
Supplemental Indenture is $575,000,000, but shall be at least $500,000,000. The
Company may from time to time, without notice to, or consent of, the Holders of
the Notes, create and issue additional Notes under this Supplemental Indenture
equal in rank in all respects to the Notes initially issued (or in all respects
except for the issue date, conversion price, conversion rate and public
offering price of such additional Notes, the payment of interest accruing
before the issue date on such Notes, or the first payment of interest following
the issue date of such Notes) 


6






under this
Supplemental Indenture in an unlimited principal amount (“Additional Notes”); provided
that any such Additional Notes must be part of the same issue as the Notes initially
issued under this Supplemental Indenture for U.S. federal income tax purposes. 


          Section
2.02 Form of Notes. 


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


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


          Section
2.03 Legends. 


                    (a)
Global Note Legend. 


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


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


          TRANSFERS
OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE SUPPLEMENTAL INDENTURE AND
THE ORIGINAL INDENTURE.


7






          THIS
GLOBAL NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS
1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS
AMENDED. THE ISSUE PRICE, ISSUE DATE, TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT
AND YIELD TO MATURITY OF THIS GLOBAL NOTE MAY BE OBTAINED BY CONTACTING THE
COMPANY AT 1211 AVENUE OF THE AMERICAS, SUITE 2902, NEW YORK, NEW YORK 10036.” 


                    (b)
Legend for Definitive Notes. 


          Definitive
Notes will bear a legend substantially in the following form: 


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


          THIS
NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272,
1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THE ISSUE PRICE, ISSUE DATE, TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT AND YIELD
TO MATURITY OF THIS NOTE MAY BE OBTAINED BY CONTACTING THE COMPANY AT 1211
AVENUE OF THE AMERICAS, SUITE 2902, NEW YORK, NEW YORK 10036.” 


          Section
2.04 Security Registrar, Paying Agent, Withholding Agent, Securities Custodian
and Conversion Agent. The Company initially appoints the Trustee as
Security Registrar, Paying Agent, Securities Custodian and Conversion Agent for
the Notes. The Company may remove any Security Registrar, Paying Agent,
Securities Custodian or Conversion Agent upon written notice to such Security
Registrar, Paying Agent, Securities Custodian or Conversion Agent and to the
Trustee and without prior notice to the Holders; provided, however,
that no such removal shall become effective until (i) acceptance of any
appointment by a successor as evidenced by an appropriate agreement entered
into by the Company and such successor Security Registrar, successor Paying
Agent, successor Securities Custodian or successor Conversion Agent, as the
case may be, and delivered to the Trustee or (ii) notification to the Trustee
that the Trustee or the Company shall serve as Security Registrar, Paying
Agent, Securities Custodian or Conversion Agent until the appointment of a
successor in accordance with clause (i) above. The Security Registrar, Paying
Agent, Securities Custodian and Conversion Agent may resign at any time upon
written notice to the Company and the Trustee. Any corporation into which any
Security Registrar, Paying Agent, Securities Custodian or Conversion Agent
appointed hereunder may be merged or with which it may be consolidated or to which
the assets of such entity may be sold or otherwise transferred as a whole or
substantially as a whole, or any corporation resulting from any merger,
consolidation or transfer to which any Security Registrar, Paying Agent,
Securities Custodian or Conversion Agent hereunder shall be a party, shall be
the successor Security Registrar, successor Paying Agent, successor Securities
Custodian and successor Conversion Agent, as applicable, under this
Supplemental Indenture, without the execution or filing of any paper or any
further act on the part of the parties hereto, anything herein to the contrary
notwithstanding 


          If
withholding or backup withholding applies to any payments made or deemed made
by the Company to a Holder in respect of the Notes, the Paying Agent shall also
act as withholding agent (“Withholding Agent”) to withhold the appropriate
amount from any such payments to a Holder. 


          The
Company shall enter into an appropriate agency agreement with any Security
Registrar, Paying Agent, Securities Custodian, Conversion Agent or co-registrar
not a party to this Supplemental Indenture, which shall incorporate the terms
of the Trust Indenture Act, except in the case of a Paying Agent that acts as
Paying Agent solely in connection with an offer to purchase the Notes pursuant
to Article V of this Supplemental Indenture. The agreement shall implement the
provisions of this Supplemental Indenture that relate to such agent. The
Company shall notify the Trustee of the name and address of each such agent. If
the Company fails to maintain a Security Registrar, Paying Agent, Securities
Custodian or Conversion Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor. The Company or any of its
domestically organized, wholly-owned Subsidiaries may act as Paying Agent,
Security Registrar, Securities Custodian, Conversion Agent co-registrar or
transfer agent. 


8





          Section
2.05 No Sinking Fund. No sinking fund will be provided with respect to the
Notes issued under this Supplemental Indenture. 


          Section
2.06 Redemption of Notes. The Notes issued under this Supplemental
Indenture shall not be redeemable at the election of the Company prior to their
Stated Maturity. 


          Section
2.07 Discharge of Indenture, Defeasance. The Notes issued under this
Supplemental Indenture shall not be subject to the provisions of Article Four
of the Original Indenture. 


          Section
2.08 Ranking. The Notes are general unsecured obligations and rank senior
in right of payment to indebtedness of the Company that is expressly
subordinated in right of payment to the Notes and equally in right of payment
with its existing and future unsecured indebtedness and liabilities that are
not so subordinated. 


          Section
2.09 Repurchase and Cancellation. To the extent permitted by law, the
Company may repurchase any Notes in the open-market purchases or negotiated
transactions without prior notice to the Holders. The Company shall surrender
any Notes repurchased by the Company to the Trustee for cancellation as
provided by Section 309 of the Original Indenture and any such Notes
repurchased by the Company shall be deemed to be no longer Outstanding. Any
Notes surrendered for cancellation by the Company shall not be reissued or
resold. 


ARTICLE III


ADDITIONAL DEFAULTS AND REMEDIES


          Section
3.01 Additional Events of Default. For purposes only of this Supplemental
Indenture in respect of the Notes issued hereunder, the provisions of Section
501 of Article Five of the Original Indenture are hereby amended by replacing
the period at the end of subparagraph (11) thereof with “; or” and adding the
following subparagraphs thereafter: 


	
  

 	
  

 
	
  

 	
           (12) the
 Company shall fail to comply with its obligation to convert the Notes in accordance
 with the provisions of this Supplemental Indenture upon exercise of a
 Holder’s conversion right which default shall continue for a period of three
 Business Days after there has been given to the Company, by registered or
 certified mail, by the Trustee or by such Holder, a written notice specifying
 such default or breach and requiring it to be remedied and stating that such
 notice is a “Notice of Default” under the Original Indenture; or 

 
	
  

 	
  

 
	
  

 	
           (13) the
 Company shall fail to comply with its obligation to deliver any shares of
 Common Stock required to be delivered to a Holder entitled to receive the
 Change of Control Make-Whole or the Coupon Make-Whole, or any other premium
 required pursuant to the terms of this Supplemental Indenture; or 

 
	
  

 	
  

 
	
  

 	
           (14) the Company
 shall fail to deliver a notice of Fundamental Change in accordance with
 Section 5.01(b) of this Supplemental Indenture when due; or 

 
	
  

 	
  

 
	
  

 	
           (15) a
 Fundamental Change occurs and a Holder, upon exercising its right to require
 the Company to purchase any or all of such Holder’s notes, or any portion
 thereof in accordance with Section 5.01 of this Supplemental Indenture, is
 not entitled on the Fundamental Change Purchase Date to receive at least the
 same amount and form of consideration per share of Common Stock as was
 received by the existing holders of the Common Stock receiving the highest
 consideration in connection with such Fundamental Change; or 

 
	
  

 	
  

 
	
  

 	
           (16) the
 Company’s stockholders approve any plan or proposal for the liquidation or
 dissolution of the Company; or 

 
	
  

 	
  

 
	
  

 	
           (17) the
 Common Stock (or other capital stock into which the Notes are then
 convertible pursuant to the terms of this Supplemental Indenture) ceases to
 be listed on the New York Stock Exchange, the Nasdaq Global Select Market or
 the Nasdaq Global Market (or their respective successors). 

 


9





          Section
3.02 Acceleration of Maturity; Recission and Annulment. 


                    (a)
For purposes only of this Supplemental Indenture in respect of the Notes issued
hereunder, Section 502 of the Original Indenture is hereby amended by adding
the following sentence to the end of the first paragraph: 


	
  

 	
  

 
	
  

 	
 In addition,
 if an Event of Default specified in clause (15), (16) or (17) of Section 501
 with respect to the Company occurs with respect to the Notes, then the
 principal and any accrued an unpaid interest, including Additional Interest,
 if any, thereon shall ipso facto become and be immediately due and payable
 without any declaration or other act on the part of the Trustee or any Holder
 of the Notes. 

 



                    (b)
For the avoidance of doubt, the second paragraph of Section 502 of the Original
Indenture shall apply to the sentence added pursuant to Section 3.02(a) of this
Supplemental Indenture above. 


          Section
3.03 Exception to Remedies. Notwithstanding anything in this Supplemental
Indenture or the Original Indenture to the contrary, to the extent elected by
the Company, the sole remedy for an Event of Default relating to the failure by
the Company to comply with the reporting obligations set forth in Section 704
of the Original Indenture as further supplemented by this Supplemental
Indenture and for any failure to comply with § 314(a)(1) of the Trust Indenture
Act, will for the first 120 days after the occurrence of such an Event of
Default, consist exclusively of the right of Holders to receive Additional
Interest on the Notes at an annual rate equal to 0.25% of the principal amount
of the Notes. If the Company so elects, such Additional Interest will be
payable in the same manner and on the same dates as the stated interest payable
on the Notes. The Additional Interest will accrue on all outstanding Notes from
and including the date on which such Event of Default first occurs to but not
including the 120th day thereafter (or such earlier date on which such Event of
Default shall have been cured or waived). On such 120th day after such Event of
Default (if the Event of Default relating to such obligation is not cured or
waived prior to such 120th day), such Additional Interest will cease to accrue
and the Notes will be subject to acceleration as provided in the Original
Indenture. The provisions of this Section 3.03 shall not affect the rights of
Holders in the event of the occurrence of any other Event of Default. In the
event the Company does not elect to pay the Additional Interest upon such Event
of Default in accordance with this Section 3.03, the Notes shall be subject to
acceleration as provided in the Original Indenture. In order to elect such
Additional Interest remedy pursuant to this Section 3.03, the Company must
notify all Holders, the Trustee and the Paying Agent of such election on or
before the close of business on the date on which such Event of Default first
occurs, stating (i) the amount of such Additional Interest that is payable and
(ii) the date on which such Additional Interest is payable. 


ARTICLE IV


AMENDMENTS


          Section
4.01 Amendments. 


                    (a)
For purposes only of this Supplemental Indenture in respect of the Notes issued
hereunder, Section 902 of the Original Indenture is hereby amended by replacing
subparagraph (3) with the following: 


                    (3)
make any change that adversely affects the conversion rights of any Notes; 


                    (b)
For purposes only of this Supplemental Indenture in respect of the Notes issued
hereunder, Section 902 of the Original Indenture is hereby amended by replacing
the period at the end of subparagraph (4) with “; or” and adding the following
thereafter: 


	
  

 	
  

 
	
  

 	
           (5)
 reduce the Mandatory Conversion price, Fundamental Change Purchase Price of
 any Note, amend or modify the Coupon Make-Whole or amend or modify the Change
 of Control Make-Whole amounts set forth in Schedule A to this
 Supplemental Indenture, or amend or modify in any manner adverse to Holders
 the Company’s obligation to make such payment, whether through an amendment
 or waiver of provisions in the covenants, definitions or otherwise. 

 


10





ARTICLE V


PURCHASE OF NOTES AT THE OPTION OF HOLDERS
UPON A FUNDAMENTAL CHANGE


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



                    (a)
Purchase of Notes at the Option of the Holder. If a Fundamental Change
occurs at any time, each Holder shall have the right, at such Holder’s option,
to require the Company to purchase any or all of the Holder’s Notes, or any
portion of the principal amount thereof, that is equal to $1,000 or an integral
multiple thereof at a purchase price equal to 100% of the principal amount of
the Notes to be purchased from such Holder plus accrued and unpaid interest
thereon, including Additional Interest, if any, to but excluding the
Fundamental Change Purchase Date (the “Fundamental Change Purchase Price”); provided,
that, if the Fundamental Change Purchase Date occurs after a Regular
Record Date and on or prior to the corresponding Interest Payment Date, the
Company shall pay such accrued and unpaid interest plus Additional Interest, if
any, to but excluding the Fundamental Change Purchase Date to the record Holder
on the Regular Record Date corresponding to such Interest Payment Date and the
Fundamental Change Purchase Price payable to the Holder who presents the Note
for repurchase will be 100% of the principal amount of such Note. The Fundamental
Change Purchase Date shall be a date specified by the Company that is no later
than the 35th calendar day following the date of the Company Notice (excluding
such date of the Company Notice) delivered in connection with such Fundamental
Change pursuant to Section 5.01(b) (subject to extension to comply with
applicable law, as provided in Section 5.02(d)) (the “Fundamental Change
Purchase Date”). Any Notes purchased by the Company shall be paid for in Common
Stock. 


                    (b)
Notice of Fundamental Change. The Company shall deliver, or cause to be
delivered in accordance with the last paragraph of this Section 5.01(b),
notices of the occurrence of a Fundamental Change and of the purchase rights
arising as a result thereof (each, a “Company Notice”) to the Holders at their
addresses shown in the Security Register maintained by the Security Registrar,
and to the Trustee and the Paying Agent, on or before the 20th calendar day
after the occurrence of the Fundamental Change (each such date of delivery, a
“Company Notice Date”). Each Company Notice shall include a form of Fundamental
Change Purchase Notice to be completed by a Holder and shall state: 


                              (i)
the events causing the Fundamental Change; 


                              (ii)
the date of the Fundamental Change; 


                              (iii)
the last date on which a Holder may exercise its repurchase rights under
Section 5.01; 


                              (iv)
the Fundamental Change Purchase Price; 


                              (v)
the Fundamental Change Purchase Date; 


                              (vi)
whether the consummation of the Fundamental Change and the resulting repurchase
right resulted or will result in an Event of Default under Section 501(15); 


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


                              (viii)
the applicable Conversion Rate and, if applicable, any adjustments to the
applicable Conversion Rate; 


                              (ix)
that the Notes with respect to which a Fundamental Change Purchase Notice has
been delivered by a Holder may be converted only if the Holder withdraws the
Fundamental Change Purchase Notice in accordance with the terms of this
Supplemental Indenture; and 


                              (x)
the procedures the Holder must follow to require the Company to purchase its
Notes pursuant to Section 5.01. 


11





          The
Company shall deliver to the Paying Agent on or prior to the Fundamental Change
Purchase Date, a number of shares of Common Stock equal to the aggregate
Fundamental Change Purchase Price to be paid in Common Stock divided by the
average of the Daily VWAP of the Common Stock for the twenty consecutive
Trading Days ending on the Trading Day immediately prior to the occurrence of
the Fundamental Change. The Company shall not issue fractional shares of Common
Stock upon repurchase of the Notes. Instead, the Company shall pay cash in lieu
of fractional shares based on the Daily VWAP of the Common Stock on the Trading
Day immediately prior to the occurrence of the Fundamental Change. If the
Common Stock has been replaced by Reference Property prior to the Fundamental
Change Purchase Date, the number of shares of Common Stock otherwise
deliverable on such date will instead be deliverable in the amount and type of
Reference Property that a holder of that number of shares of Common Stock would
have received in the relevant Reorganization Event. The Company shall use its
reasonable best efforts to cause a shelf registration statement to be declared
effective prior to the Fundamental Change Purchase Date for the sale of such
shares of Common Stock (or Reference Property, if applicable). 


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



          At
the Company’s request, made at least three Business Days (or such lesser period
as agreed to by the Trustee) prior to the date upon which such notice is to be
mailed, and at the Company’s expense, the Trustee shall give the Company Notice
in the Company’s name; provided, however, that, in all cases, the
text of the Company Notice shall be prepared by the Company. 


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


                              (i)
if the Notes are certificated, the certificate numbers of the Holder’s Notes to
be delivered for purchase; 


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


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


                    (d)
Procedures. The Company shall purchase from a Holder on the Fundamental
Change Purchase Date, subject to extension to comply with applicable law,
pursuant to this Section 5.01, Notes if the principal amount of such Notes is
$1,000 or an integral multiple thereof if so requested by such Holder. 


          Any
purchase by the Company contemplated pursuant to the provisions of this Section
5.01 shall be consummated by the delivery of the Fundamental Change Purchase
Price, to be received by the Holder, to the Paying Agent as provided in Section
5.02(a), promptly following the later of the Fundamental Change Purchase Date
or the time of book-entry transfer or delivery of the Notes. 


          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 shares of Common Stock (or cash in lieu of fractional shares,
if any) held by the Paying Agent for the payment of the Fundamental Change
Purchase Price and shall notify the Trustee of any Default by the Company in
making any such payment. The Company at any time may require a Paying Agent to
deliver all shares of Common Stock held by it to the Trustee and to account for
any shares disbursed by the Paying Agent. Upon doing so, the Paying Agent shall
have no further liability for the shares of Common Stock delivered to the
Trustee. 


           The Company shall
not be required to make an offer to purchase the Notes in accordance with this Section 5.01 upon a
Fundamental Change if a third party makes the offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Article V applicable to an offer by the Company
to purchase the Notes upon a Fundamental Change and such third party purchases all Notes validly
tendered and not withdrawn upon such offer.


12





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


                    (a)
Effect of Fundamental Change Purchase Notice; Withdrawal; Effect of Event of
Default. Upon receipt by the Company of the Fundamental Change Purchase
Notice specified in, and the Notes to be purchased as provided in, Section
5.01(c), the Holder of the Notes in respect of which such Fundamental Change
Purchase Notice was given shall (unless such Fundamental Change Purchase Notice
is withdrawn as specified in this Section 5.02(a)) thereafter be entitled to
receive solely the Fundamental Change Purchase Price with respect to such
Notes. Such Fundamental Change Purchase Price shall be delivered by the Paying
Agent, solely from shares of Common Stock received from the Company for such
purpose (and any cash in lieu of fractional shares), to such Holder promptly
following the later of (x) the Fundamental Change Purchase Date with respect to
such Notes (provided the conditions in this Article V have been satisfied) and
(y) the time of delivery or book-entry transfer of such Notes to the Paying
Agent by the Holder thereof in the manner required by Section 5.01. Notes in
respect of which a Fundamental Change Purchase Notice has been given by the
Holder thereof may not be converted on or after the date of the delivery of
such Fundamental Change Purchase Notice unless such Fundamental Change Purchase
Notice has first been validly withdrawn as specified in this Section 5.02(a).
Notwithstanding anything herein to the contrary, any Holder delivering to the
Paying Agent the Fundamental Change Purchase Notice contemplated by Section
5.01(c), shall have the right at any time prior to the close of business on the
Business Day prior to the Fundamental Change Purchase Date to withdraw such Fundamental
Change Purchase Notice (in whole or in part) by delivery of a written notice of
withdrawal to the Paying Agent in accordance with this Section 5.02(a). 


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


          On
or before 10:00 a.m. (New York City time) on the Fundamental Change Purchase
Date, the Company shall deliver to the Paying Agent (or if the Company or an
Affiliate of the Company is acting as the Paying Agent, shall segregate and
hold in trust) a number of shares of Common Stock sufficient to satisfy the
aggregate Fundamental Change Purchase Price of the Notes to be purchased
pursuant to Section 5.01 (plus any cash in lieu of fractional shares). If the
Paying Agent holds, in accordance with the terms of this Supplemental
Indenture, a number of shares of Common Stock sufficient to pay the Fundamental
Change Purchase Price of such Notes on the second Business Day after the Fundamental
Change Purchase Date, then (i) the Notes tendered for purchase and not
withdrawn shall cease to be outstanding and interest, including Additional
Interest, if any, shall cease to accrue (whether or not book-entry transfer of
such Notes is made or whether or not the Note is delivered to the Paying Agent)
on the Fundamental Change Purchase Date; and (ii) all other rights of the
Holders with respect to Notes tendered for purchase will terminate (other than
the right to receive the Fundamental Change Purchase Price upon delivery or
transfer of the Notes). Nothing herein shall preclude any withholding tax
required by law. 


          A
Fundamental Change Purchase Notice may be withdrawn by means of a written
notice of withdrawal delivered to the office of the Paying Agent prior to the
close of business on the Business Day prior to the Fundamental Change Purchase
Date (excluding such Fundamental Change Purchase Date). The notice of
withdrawal shall state: 


                              (i)
the principal amount of the withdrawn Notes; 


                              (ii)
if Definitive Notes have been issued, the certificate numbers of the withdrawn
Notes, or if not certificated, the written notice of withdrawal must comply
with appropriate procedures of DTC, and if applicable, Clearstream Banking
Luxembourg S.A. (“Clearstream”) and Euroclear Bank S.A./N.A. (“Euroclear”);
and 


                              (iii)
the principal amount, if any, of such Notes which remains subject to the
original Fundamental Change Purchase Notice. 


          If
the Notes are Definitive Notes, the Paying Agent shall promptly return to the
respective Holders thereof any Notes with respect to which a Fundamental Change
Purchase Notice has been withdrawn in compliance with this Indenture. 


13





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


                    (c)
Covenant to Comply with Securities Laws Upon Purchase of Notes. In
connection with any offer to purchase, or purchase of, Notes under Section
5.01, the Company shall, to the extent applicable, (a) comply with Rules 13e-4
and 14e-1 (and any successor provisions thereto) under the Exchange Act, if
applicable; (b) file the related Schedule TO (or any successor schedule, form
or report) under the Exchange Act, if applicable; and (c) otherwise comply with
all applicable federal and state securities laws. To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of this Supplemental Indenture as described in this Article V, compliance by
the Company with such laws and regulations shall not in and of itself cause a
breach of the Company’s obligations described in this Article V. 


                    (d)
Repayment to the Company. The Trustee and the Paying Agent shall return
to the Company any cash or property that remains unclaimed, together with
interest that the Trustee or Paying Agent, as the case may be, has expressly
agreed in writing to pay, if any, that is held by them for the payment of a
Fundamental Change Purchase Price; provided, however, that to the
extent that the aggregate amount of property deposited by the Company pursuant
to Section 5.02(b), as applicable, exceeds the aggregate Fundamental Change
Purchase Price of the Notes or portions thereof which the Company is obligated
to purchase as of the Fundamental Change Purchase Date, then promptly on and
after the second Business Day following the Fundamental Change Purchase Date,
the Trustee and the Paying Agent shall return any such excess to the Company
together with interest that the Trustee or Paying Agent, as the case may be,
has expressly agreed in writing to pay, if any. 


                    (e)
Officers’ Certificate. At least three Business Days (or such lesser
period as agreed to by the Trustee) before the Company Notice Date, the Company
shall deliver an Officers’ Certificate to the Trustee specifying whether the
Company desires the Trustee to give the Company Notice required by Section
5.02(a) hereof. 


                    (f)
Taxes on Repurchase. If a Holder exercises its right to require the
Company to repurchase the Notes pursuant to this Section 5.02, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issuance of shares of Common Stock upon such repurchase. However, the Holder
shall pay any such tax which is due because the Holder requests the shares to
be issued in a name other than the Holder’s name. The Paying Agent 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 Paying Agent receives a
sum sufficient to pay any tax which shall be due because the shares are to be
issued in a name other than the Holder’s name, but the Paying Agent shall have
no duty to determine if any such tax is due. Nothing herein shall preclude any
withholding of tax required by law. 


                    (g)
Certain Covenants of the Company. 


                              (i)
The Company shall, prior to issuance of any Notes hereunder, and from time to
time as may be necessary, reserve out of its authorized but unissued Common
Stock or shares of Common Stock held in treasury, sufficient number of shares
of Common Stock, free of preemptive rights, to permit the repurchase of the
Notes pursuant to this Section 5.02. 


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


                              (iii)
The Company shall endeavor to comply promptly with all applicable federal and
state securities laws regulating the issuance and delivery of shares of Common
Stock upon the repurchase of Notes. 


                              (iv)
The Company shall use its reasonable best efforts to ensure that at all times it has
shares of its Common Stock deliverable upon a conversion or repurchase of the Notes
approved for listing with the New York Stock Exchange, or if the Company’s Common Stock
is no longer so listed on the New York Stock Exchange, Nasdaq Global Select Market or
the Nasdaq Global Market (or their respective successors).  Following any repurchase or
conversion of the Notes, to the extent the listing of the shares of Common Stock delivered
upon such repurchase or conversion has not been so approved, the Company shall promptly
comply with the listing requirements of the applicable securities exchange.
 
14





          Section
5.03 Ownership Limit. Notwithstanding any other provision of the Original
Indenture, this Supplemental Indenture or the Notes, no Holder of Notes shall
be entitled to convert such Notes for Common Stock to the extent that the
receipt of such Common Stock would violate any of the limitations on ownership
of Common Stock contained in the Charter. Any attempted conversion of Notes
that would result in the issuance of Common Stock in excess of such ownership
limit in the absence of an exemption shall be void to the extent of the number
of shares of Common Stock that would cause such violation and the related Note
or portion thereof shall be returned to the Holder as promptly as practicable.
The Company shall have no further obligation to the Holder with respect to such
voided conversion and such Notes shall be treated as if they had not been
submitted for conversion. A Holder of returned Notes may resubmit such Notes
for conversion at a later date subject to compliance with the terms hereof and
the ownership limits set forth in the Charter. 


ARTICLE VI


CONVERSION


          Section
6.01 Article Seventeen Added. The following is hereby added as Article
Seventeen of the Original Indenture in respect of the Notes established and
issued under this Supplemental Indenture. 


          Section
6.02 Conversion of Notes. 


                    (a)
Right to Convert. Subject to the restrictions on ownership of Common
Stock as set forth in Section 5.03 of this Supplemental Indenture and to the
procedures for conversion set forth in this Article VI, a Holder may convert
its Notes at their full principal amount, or any portion of their principal
amount that is equal to $1,000 or an integral multiple thereof, into shares of
Common Stock at the Conversion Rate in effect at the time of conversion at any
time prior to the close of business on the second Scheduled Trading Day
immediately preceding the Stated Maturity (excluding the date of such Stated
Maturity). No payment or adjustment shall be made for dividends on, or other
distributions with respect to, any Common Stock except as expressly provided in
this Article VI. The Company may also require a Holder to convert its Notes in
connection with a Mandatory Conversion pursuant to Section 6.09 of this
Supplemental Indenture. 


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


                              (i)
In respect of a Definitive Note, a Holder must (A) complete and manually sign
the conversion notice on the back of the Note, or a facsimile of such
conversion notice; (B) deliver such conversion notice, which is irrevocable,
and the Note to the Conversion Agent; (C) if required, furnish appropriate
endorsements and transfer documents as may be required by the Conversion Agent
and, if required pursuant to Section 6.02(d), pay all transfer or similar
taxes; and (D) if required pursuant to Section 2.01(d) of this Supplemental
Indenture, pay funds equal to interest payable on the next Interest Payment
Date to which such Holder is not entitled; provided, however, that in
connection with a Mandatory Conversion, a Holder shall only be required to
comply with subpoints (C) and (D) of this Section 6.02(b)(i). 


                              (ii)
In respect of a beneficial interest in a Global Note, a Beneficial Owner must
comply with the procedures of DTC and, if applicable, Euroclear and
Clearstream, for converting a beneficial interest in a Global Note and, if
required pursuant to Section 2.01(d) of this Supplemental Indenture, pay funds
equal to interest payable on the next Interest Payment Date to which such
Beneficial Owner is not entitled, and if required, pay all taxes or duties
required pursuant to Section 6.02(d), if any. 


                              (iii)
The date a Holder complies with the foregoing requirements is the “Conversion
Date” hereunder. At the Conversion Date or the Mandatory Conversion Date (as
defined in Section 6.09 of this Supplemental Indenture) the rights of the
Holders of such converted Notes as Holders shall cease, and the Person or
Persons entitled to receive the shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such
Common Stock as and after such time. The Company shall issue and shall deliver
at such office or agency a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in cash
in lieu of any fractional shares, as provided in Section 6.02(c) by (1) the
Mandatory Conversion Date in the case of a Mandatory Conversion, and (2) in all
other cases, the third Business 


15





Day
immediately following the Conversion Date (excluding such Conversion Date)
(each, the “Settlement Date”). A Holder may convert a portion of its Notes only
if the principal amount of such portion is $1,000 or an integral multiple
thereof. 


                              (iv)
In the case of any Note which is converted in part only, upon such conversion
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Company, a new Note or Notes of
authorized denominations in aggregate principal amount equal to the unconverted
portion of the principal amount of such Note. 


                              (v)
If a Holder has already delivered a Fundamental Change Purchase Notice in
connection with a Fundamental Change, with respect to a Note, the Holder may
not surrender that Note for conversion until the Holder has validly withdrawn
the Fundamental Change Purchase Notice in accordance with this Supplemental
Indenture. Upon surrender of a Note that is converted in part, the Company
shall execute, and the Trustee or the Authenticating Agent shall authenticate
and deliver to the Holder, a new Note in an authorized denomination equal in
principal amount to the unconverted portion of the Note surrendered. 


                              (vi)
If more than one Note 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 Notes (or specified portions thereof) so surrendered. 


                    (c)
Cash Payments in Lieu of Fractional Shares. The Company shall not issue
fractional shares of Common Stock upon conversion of Notes. Instead the Company
shall deliver cash, rounded to the nearest whole cent, for such fractional
shares based on the Daily VWAP of the Common Stock on the applicable Conversion
Date or Mandatory Conversion Date, as applicable. The Company’s delivery to the
Holder of the shares of Common Stock together with any cash payment for any
fractional share into which a Note is convertible, will be deemed to satisfy in
full the Company’s obligation to pay (i) the principal amount of the Note; and
(ii) accrued and unpaid interest and Additional Interest, if any, to, but not
including, the Conversion Date or the Mandatory Conversion Date, as applicable.
As a result, accrued and unpaid interest and Additional Interest, if any, to,
but not including, the Conversion Date or the Mandatory Conversion Date, as
applicable, will be deemed to be paid in full rather than cancelled,
extinguished or forfeited. 


          Notwithstanding
the preceding paragraph, if Notes are converted after 5:00 p.m., New York City
time, on a Regular Record Date for the payment of interest, Holders of such
Notes at 5:00 p.m., New York City time, on such Regular Record Date will
receive the interest and Additional Interest, if any, payable on such Notes on
the corresponding Interest Payment Date notwithstanding the conversion. Notes,
upon surrender for conversion during the period from 5:00 p.m., New York City
time, on any Regular Record Date to 9:00 a.m., New York City time, on the
immediately following Interest Payment Date, must be accompanied by funds equal
to the amount of interest and Additional Interest, if any, payable on such
Interest Payment Date on the Notes so converted; provided, that no such
payment need be made (i) for conversions following the Regular Record Date
immediately preceding Stated Maturity; (ii) if the Company has provided a
specified a Mandatory Conversion Date in a Notice of Mandatory Conversion;
(iii) if the Company has specified a Fundamental Change Purchase Date that is
after a Regular Record Date and on or prior to the corresponding Interest
Payment Date; or (iv) to the extent of any overdue interest (including any
overdue Additional Interest), if any overdue interest exists at the time of
conversion with respect to such Note. 


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


16





                    (e)
Certain Covenants of the Company. 


                              (i)
The Company shall, prior to issuance of any Notes hereunder, and from time to
time as may be necessary, reserve out of its authorized but unissued Common
Stock or shares of Common Stock held in treasury, sufficient number of shares
of Common Stock, free of preemptive rights, to permit the conversion of the
Notes pursuant to Section 6.02(a). 


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


                              (iii)
The Company shall endeavor to comply promptly with all applicable federal and
state securities laws regulating the issuance and delivery of shares of Common
Stock upon the conversion of Notes. 


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


          Section
6.03 Adjustments to Conversion Rate. The Conversion Rate shall be adjusted
from time to time by the Company as described below, except that the Company
will not make any adjustments to the Conversion Rate if Holders of the Notes
participate (as a result of holding the Notes, and at the same time as holders
of the Common Stock participate) in any of the transactions described in this Section
6.03 as if such Holders of the Notes held a number of shares of the Common
Stock equal to the applicable Conversion Rate, multiplied by the principal
amount (expressed in thousands) of Notes held by such Holders, without having
to convert their Notes. 


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


	
  

 	
  

 
	
 CR1=CR0 x 

 	
 OS1

 
	

 


 
	
  

 	
 OS0

 






	
  

 	
  

 	
  

 
	
  

 	
   where,

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 CR0 =

 	
 the
 Conversion Rate in effect immediately prior to the Ex-Dividend Date of such
 dividend or distribution, or the effective date of such share split or share
 combination, as applicable 

 
	
  

 	
  

 	
  

 
	
  

 	
 CR1
 =

 	
 the Conversion
 Rate in effect immediately after such Ex-Dividend Date or effective date, as
 applicable

 
	
  

 	
  

 	
  

 
	
  

 	
 OS0 =

 	
 the number
 of shares of Common Stock outstanding immediately prior to such Ex-Dividend Date or effective date, as
 applicable 

 
	
  

 	
  

 	
  

 
	
  

 	
 OS1
 =

 	
 the number of
 shares of Common Stock outstanding immediately prior to such Ex-Dividend Date
 or effective date, as applicable, after giving pro forma effect to such
 dividend, distribution, share split or share combination 

 



Such adjustment shall become
effective immediately after 9:00 a.m., New York City time, on the Business Day
following the Record Date for such dividend or distribution, or the date fixed
for determination for such share split or share combination. The Company will
not pay any dividend or make any distribution on shares of Common Stock held in
treasury by the Company. If any dividend or distribution of the type described
in this Section 6.03(a) is 


17






declared but
not so paid or made, the Conversion Rate shall again be adjusted to the
Conversion Rate that would then be in effect if such dividend or distribution
had not been declared. 


                    (b)
If the Company distributes to holders of all or substantially all the Common
Stock any rights or warrants entitling them for a period of not more than 60
calendar days to subscribe for or purchase shares of Common Stock at a price
per share less than the average of the Daily VWAP of the Common Stock for the
10 consecutive Trading-Day period ending on the Trading Day immediately
preceding the date of announcement of such distribution (excluding such date of
announcement), the Conversion Rate will be adjusted based on the following
formula: 


	
  

 	
  

 
	
 CR1=CR0 x  

 	
 OS0+X 

 
	
  

 	



 
	
  

 	
 OS0+Y

 



          where,



	
  

 	
  

 	
  

 
	
  

 	
 CR0 =

 	
 the
 Conversion Rate in effect immediately prior the Ex-Dividend Date for such
 distribution

 
	
  

 	
  

 	
  

 
	
  

 	
 CR1
 =

 	
 the
 Conversion Rate in effect immediately after such Ex-Dividend Date

 
	
  

 	
  

 	
  

 
	
  

 	
 OS0 =

 	
 the number
 of shares of Common Stock outstanding immediately after such Ex-Dividend Date

 
	
  

 	
  

 	
  

 
	
  

 	
 X =

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

 
	
  

 	
  

 	
  

 
	
  

 	
 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 Daily VWAP of the
 Common Stock over the 10 consecutive Trading-Day period ending on the Trading
 Day immediately preceding the date of announcement of the distribution of
 such rights or warrants (excluding such date of announcement)

 



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


          In
determining whether any rights or warrants entitle the Holders to subscribe for
or purchase shares of Common Stock at less than such Daily VWAP, 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
Company’s Board of Directors. 


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


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


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


                              (iii)
as described below in this Section 6.03(c) with respect to Spin-Offs, then the
Conversion Rate will be adjusted based on the following formula: 


18









	
  

 	
  

 
	
 CR1=CR0 x 

 	
 SP0

 
	
  

 	



 
	
  

 	
 SP0-FMV

 



          where,



	
  

 	
  

 	
  

 
	
  

 	
 CR0 = 

 	
 the
 Conversion Rate in effect immediately prior to the Ex-Dividend Date for such
 distribution

 
	
  

 	
  

 	
  

 
	
  

 	
 CR1
 =

 	
 the
 Conversion Rate in effect immediately after such Ex-Dividend Date

 
	
  

 	
  

 	
  

 
	
  

 	
 SP0 =

 	
 the average
 of the Daily VWAP of the Common Stock over the 10 consecutive Trading-Day
 period ending on the Trading Day immediately preceding the Ex-Dividend Date
 for such distribution (excluding such Ex-Dividend Date) 

 
	
  

 	
  

 	
  

 
	
  

 	
 FMV =

 	
 the Fair
 Market Value (as determined by the Company’s Board of Directors) of the shares
 of capital stock, evidences of indebtedness, assets or property distributed
 with respect to each outstanding share of Common Stock on the Record Date for
 such distribution. 

 



Such
adjustment shall become effective immediately prior to 9:00 a.m., New York City
time, on the Business Day following the date fixed for the determination of
stockholders entitled to receive such distribution. With respect to an
adjustment pursuant to this clause (c) where there has been a payment of a
dividend or other distribution on the Common Stock in shares of capital stock
of any class or series, or similar equity interest, of or relating to a
Subsidiary or other business unit (a “Spin-Off”), the Conversion Rate in effect
immediately prior to 5:00 p.m., New York City time, on the effective date of
such Spin-Off will be increased based on the following formula: 


	
  

 	
  

 
	
 CR1=CR0
 x

 	
 FMV0+MP0

 
	
  

 	



 
	
  

 	
 MP0

 



          where,





	
  

 	
  

 
	
 CR0 =

 	
 the
 Conversion Rate in effect immediately prior to 5:00 p.m., New York City time,
 on the effective date of the Spin-Off

 
	
  

 	
  

 
	
 CR1
 =

 	
 the
 Conversion Rate in effect immediately after the effective date of the
 Spin-Off

 
	
  

 	
  

 
	
 FMV0 =

 	
 the average
 of the Daily VWAP of the capital stock or similar equity interest distributed
 to holders of Common Stock applicable to one share of Common Stock over the
 first 10 consecutive Trading-Day period from, and including, the effective
 date of the Spin-Off

 
	
  

 	
  

 
	
 MP0 =

 	
 the average
 of the Daily VWAP of Common Stock over the first 10 consecutive Trading-Day
 period from, and including, the effective date of the Spin-Off. 

 



Such
adjustment shall occur on the tenth Trading Day from, and including, the
effective date of the Spin-Off and shall be applied on a retroactive basis
from, and including, the effective date of the Spin-Off; provided that
in respect of any conversion occurring prior to the effective date of the
Spin-Off with respect to which the Settlement Date would occur during the 10
Trading Days from, and including, the effective date of any Spin-Off,
references with respect to the Spin-Off to the 10 consecutive Trading-Day
period shall be deemed replaced with such lesser number of Trading Days as have
elapsed between the effective date of such Spin-Off and the Settlement Date in
determining the applicable Conversion Rate; provided, further,
that in respect of any conversion occurring prior to the effective date of the
Spin-Off with respect to which the Settlement Date would occur during the three
Trading Days from, and including, the effective date of such Spin-Off,
references to the 10 consecutive Trading-Day period shall be deemed replaced
with a three consecutive Trading-Day period with such adjustment to the
Conversion Rate being applied on a retroactive basis from, and including, the
effective date of the Spin-Off.


19





 


                    (d)
If the Company makes any dividend or any other distribution of cash to the
holders of all or substantially all of the Common Stock, then immediately prior
to the opening of business on the Ex-Dividend Date for such dividend or
distribution the Conversion Rate will be increased based on the following
formula: 


	
  

 	
  

 
	
 CR1=CR0
 x 

 	
 SP0

 
	
  

 	



 
	
  

 	
 SP0-C

 



          where, 



	
  

 	
  

 
	
 CR0 =

 	
 the
 Conversion Rate in effect immediately prior to the Ex-Dividend Date for such
 dividend or distribution

 
	
  

 	
  

 
	
 CR1
 =

 	
 the
 Conversion Rate in effect immediately after the Ex-Dividend Date for such
 dividend or distribution

 
	
  

 	
  

 
	
 SP0 =

 	
 the average
 of the Daily VWAP of the Common Stock for each Trading Day in the five
 consecutive Trading Day period ending on the Trading Day immediately preceding
 the Ex-Dividend Date for such dividend or distribution (excluding such
 Ex-Dividend Date)

 
	
  

 	
  

 
	
 C =

 	
 the amount
 in cash per share the Company distributes to holders of Common Stock. 

 






In connection
with any adjustment to the Conversion Rate based on this Section 6.03(d), the
Company must issue a press release for publication through Dow Jones &
Company, Inc., Bloomberg Business News, BusinessWire, or PR Newswire or a
substantially equivalent financial news organization within five Business Days
following the Record Date for such dividend or distribution (excluding such
record date), announcing such an adjustment. If any dividend or distribution of
the type described in this Section 6.03(d) is declared but not so paid or made,
the Conversion Rate will again be adjusted to the Conversion Rate that would
then be in effect if such dividend or distribution had not been declared. 


                    (e)
If the Company or any of its Subsidiaries makes a payment in respect of a
tender or exchange offer for Common Stock, to the extent that the cash and
value of any other consideration included in the payment per share of Common
Stock exceeds the Daily VWAP of the Common Stock on the Trading Day next
succeeding the last date on which tenders or exchanges may be made pursuant to
such tender or exchange offer (such last date, the “Expiration Time”), the
Conversion Rate will be increased based on the following formula: 


	
  

 	
  

 
	
 CR1=CR0
 x 

 	
 AC+(SP1xOS1)

 
	
  

 	



 
	
  

 	
 OS0xSP1

 



          where, 




	
  

 	
  

 
	
 CR0 =

 	
 the
 Conversion Rate in effect immediately prior to the effective date of the
 adjustment

 
	
  

 	
  

 
	
 CR1
 =

 	
 the
 Conversion Rate in effect immediately after the effective date of the
 adjustment

 
	
  

 	
  

 
	
 AC =

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

 
	
  

 	
  

 
	
 OS0 =

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

 
	
  

 	
  

 
	
 OS1
 =

 	
 the number
 of shares of Common Stock outstanding immediately after the date such tender
 or exchange offer expires (after giving effect to the reduction of shares
 accepted for purchase or exchange in such tender or exchange offer)

 
	
  

 	
  

 
	
 SP1
 =

 	
 the average
 of the Daily VWAP of the Common Stock over the 10 consecutive Trading-Day
 period 

 


20









	
  

 	
  

 
	
  

 	
 commencing
 on the Trading Day next succeeding the date such tender or exchange offer
 expires.

 



Such
adjustment will occur on the tenth Trading Day from, and including, the Trading
Day next succeeding the date such tender or exchange offer expires and shall be
applied on a retroactive basis from, and including, the Trading Day next
succeeding the date such tender or exchange offer expires; provided that in
respect of any conversion occurring prior to the date such tender or exchange
offer expires with respect to which the Settlement Date would occur during the
10 Trading Days from, and including, the Trading Day next succeeding the date
such tender or exchange offer expires, references with respect to the tender or
exchange offer to the 10 consecutive Trading-Day period shall be deemed
replaced with such lesser number of Trading Days as have elapsed between the
Trading Day next succeeding the date such tender or exchange offer expires and
the Settlement Date in determining the applicable Conversion Rate.  


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


                    (f)
The Company may (but is not required to) increase the Conversion Rate to avoid
or diminish income tax to holders of Common Stock or rights to purchase Common
Stock in connection with a dividend or distribution of shares (or rights to
acquire shares) or any similar event treated as such for income tax purposes. 


                    (g)
To the extent permitted by applicable law and the rules of any stock exchange
or market upon which the Common Stock is listed or admitted for trading, the
Company may increase the Conversion Rate by any amount for a period of at least
20 days if the Company’s Board of Directors determines that such increase would
be in the best interest of the Company, which determination shall be
conclusive. 


                    (h)
Notwithstanding the foregoing provisions of this Section 6.03, the applicable
Conversion Rate need not be adjusted: 


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


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


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


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


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


                    (i)
All calculations under this Section 6.03 shall be made by the Company and shall
be made to the one-ten thousandth (1/10,000) of a share. 


                    (j)
Notwithstanding the adjustments in this Section 6.03, the Company shall not
make an adjustment which would result in a decrease in the Conversion Rate
(other than as a result of a share split or combination). The Company shall not
make an adjustment which would result in the reduction of the Conversion Price
below $0.01. 


21





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


                    (l)
Any case in which this Section 6.03 provides that an adjustment shall become
effective immediately after (i) a Record Date for an event, (ii) the date fixed
for the determination of a share split or combination pursuant to Section
6.03(a), or (iii) the Expiration Time for any tender or exchange offer pursuant
to Section 6.03(e), (each a “Determination Date”), the Company may elect to
defer until the occurrence of the applicable Adjustment Event (x) issuing to
the Holder of any Note converted after such Determination Date and before the
occurrence of such Adjustment Event, the additional shares of Common Stock or
other securities issuable upon such conversion by reason of the adjustment
required by such Adjustment Event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (y) paying to such
Holder any amount in cash in lieu of such additional shares of Common Stock or
other securities or in lieu of any fraction pursuant to Section 6.02(c). For
purposes of this Section 6.03(l), the term “Adjustment Event” shall mean: 


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


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


                              (3)
in any case referred to in clause (iii) above, the date a sale or exchange of
Common Stock pursuant to such tender or exchange offer is consummated and
becomes irrevocable. 


                    (m)
For purposes of this Section 6.03, the number of shares of Common Stock at any
time Outstanding shall not include shares held in the treasury of the Company
but shall include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company. 


                    (n)
Whenever any provision of this Article VI requires a calculation of an average
of the Daily VWAP over a span of multiple days, the Company will make
appropriate adjustments (determined in good faith by the Company’s Board of
Directors) to account for any adjustment to the Conversion Rate that becomes
effective at any time during the period from which the average is to be
calculated. Such adjustments shall be effective as of the effective date of the
adjustment to the Conversion Rate. 


          Section
6.04 Adjustment Upon Certain Fundamental Changes. 


                    (a)
If a Holder elects to convert Notes at a time when a Fundamental Change has
occurred, then such Holder shall be entitled to receive Common Stock as
determined by the applicable Conversion Rate and the Change of Control
Make-Whole. Any conversion of Notes will be deemed to have occurred in
connection with a Fundamental Change giving rise to an adjustment only if (i)
in the case of a Fundamental Change described in clause (2) of the definition
thereof, such Notes are surrendered for conversion from and after the date that
is 35 Scheduled Trading Days prior to the anticipated Effective Date of such
Fundamental Change through and including the Business Day immediately preceding
the related Fundamental Change Purchase Date, or (ii) in the case of a
Fundamental Change described in clause (1) of the definition thereof, such
Notes are surrendered for conversion from and after the Effective Date of such
Fundamental Change through and including the Business Day immediately preceding
the related Fundamental Change Purchase Date. The Company will notify
Noteholders of any Fundamental Change described in clause (2) of the definition
thereof not later than 35 Scheduled Trading Days prior to the anticipated
Effective Date (excluding such anticipated Effective Date) of such Fundamental
Change. 


22





                    (b)
The Change of Control Make-Whole that a Holder will be entitled to receive
pursuant to Section 6.04(a) shall be equal to a percentage of $1,000 of principal
amount and determined by reference to the table attached as Schedule A hereto, based
on the date on which the Fundamental Change occurs or becomes effective (the
“Effective Date”) and the Conversion Value as a percentage of $1,000 of
principal amount of Notes being converted. If a Holder elects to convert its
Notes prior to the Effective Date of any Fundamental Change, and the
Fundamental Change does not occur, such Holder will not be entitled to an
increased Conversion Rate in connection with such conversion. 


          The
exact Conversion Value and Effective Dates may not be set forth in the table in
Schedule A, in which case: 


                              (i)
if the Conversion Value is between two Conversion Value amounts in the table or
the Effective Date is between two Effective Dates in the table, the Change of
Control Make-Whole percentage will be determined by a straight-line
interpolation between the Change of Control Make-Whole percentage set forth for
the higher and lower Conversion Value amounts and the two dates, as applicable,
based on a 365-day year. 


                              (ii)
if the Conversion Value is greater than 600.00%, no adjustment to the Change of
Control Make-Whole percentage will be made. 


                              (iii)
if the Conversion Value is less than 83.33%, no adjustment to the Change of Control
Make-Whole percentage will be made. 


          Notwithstanding
the foregoing, in no event will the Change of Control Make-Whole exceed
16.6667% of the par value of the Notes. 


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


                    (a)
If any of the following events occur: (i) any recapitalization,
reclassification or change of Common Stock (other than changes resulting from a
subdivision or combination) as a result of which the Common Stock would be converted
into, or exchanged for, stock, other securities, or other property or assets
(or any combination thereof), or (ii) any statutory share exchange,
consolidation or merger involving the Company pursuant to which the Common
Stock will be converted into cash, securities or other property (or any
combination thereof), or (iii) any sale, lease or other transfer in one
transaction or a series of related transactions of all or substantially all of
the consolidated assets of the Company and its Subsidiaries, taken as a whole,
to any Person (other than one or more of the Subsidiaries) as a result of which
the Common Stock will be converted into cash, securities or other property (or
any combination thereof) (any such event or transaction, a “Reorganization Event”),
then the Company or the successor or purchasing Person, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall comply
with the Trust Indenture Act as in force at the date of execution of such
supplemental indenture) providing that at the effective time of the
Reorganization Event each Note shall be convertible into, with respect to each
$1,000 in principal amount of such Note, the kind and amount of shares of
stock, other securities or other property or assets (including cash or any
combination thereof) that a holder of a number of shares of Common Stock equal
to the Conversion Rate immediately prior to such Reorganization Event would
have owned or been entitled to receive upon such Reorganization Event (the
“Reference Property”). For purposes of the foregoing, the type and amount of
consideration that a holder of Common Stock would have been entitled to receive
in the case of any such Reorganization Event that causes the Common Stock to be
converted into the right to receive more than a single type of consideration
(determined based in part upon any form of stockholder election) will be deemed
to be the weighted average of the types and amounts of consideration received
by the holders of Common Stock that affirmatively make such an election. Such
supplemental indenture shall provide for provisions and adjustments which shall
be as nearly equivalent as may be practicable to the provisions and adjustments
provided for in this Article VI and in Article V of this Supplemental Indenture
and in the definition of Fundamental Change, as appropriate, as determined in
good faith by the Company (which determination shall be conclusive and
binding), to make such provisions apply to such other Person if different from
the original issuer of the Notes. If, in the case of any Reorganization Event,
the cash, securities or other property receivable thereupon by a holder of
Common Stock includes cash, securities or other property of a Person other than
the successor or purchasing Person, as the case may be, in such Reorganization
Event, then such supplemental indenture shall also be executed by such
successor or purchasing Person, as the case may be, and shall contain such
additional provisions to protect the interests of the 


23







Holders of the
Notes as the Board of Directors of the Company shall reasonably consider
necessary by reason of the foregoing. 

                    (b)
The Company shall cause notice of the execution of any supplemental indenture
required by this Section 6.05 to be mailed to each Holder of Notes, at its
address appearing on the Security Register, within 20 calendar days after
execution thereof. Failure to deliver such notice shall not affect the legality
or validity of such supplemental indenture. 


                    (c)
The above provisions of this Section 6.05 shall similarly apply to successive
Reorganization Events. 


                    (d)
None of the foregoing provisions shall affect the right of a Holder of Notes to
convert the Notes into shares of Common Stock as set forth in Section 6.02
prior to the effective time of such Reorganization Event. 


          Section
6.06 Responsibility of Trustee. The Trustee and any other Conversion Agent
shall not at any time be under any duty or responsibility to the Company or any
Holder of Notes to determine the Conversion Rate, or whether any facts exist
which may require any adjustment of the Conversion Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed in making the same. The Trustee and any other
Conversion Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and the Trustee and any other Conversion Agent make no
representations with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to issue, transfer or
deliver any cash or shares of Common Stock or stock certificates or other
securities or property upon the surrender of any Note for the purpose of
conversion or to comply with any of the duties, responsibilities or covenants
of the Company contained in this Article VI. Without limiting the generality of
the foregoing, neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine whether a supplemental indenture needs to be
entered into pursuant to Section 6.05 or the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 6.05
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders upon the conversion of their Notes
after any Reorganization Event or to any adjustment to be made with respect
thereto, but, subject to the provisions of Section 6.02, may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, the Officers’ Certificate (which the Company shall
be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto. 


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


                    (a)
the Company shall declare a dividend (or any other distribution) on the Common
Stock that would require an adjustment in the Conversion Rate pursuant to
Section 6.03; or 


                    (b)
the Company shall authorize the grant to the holders of all or substantially
all of the Common Stock of rights or warrants to subscribe for or purchase any
shares of Common Stock; or 


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


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


in addition to
any press release required under Section 6.03, the Company shall cause to be
filed with the Trustee and to be mailed to each Holder of Notes at his address
appearing on the Security Register, as promptly as possible but in any event at
least three (3) calendar days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights or 


24





warrants, or,
if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights are to
be determined, or (y) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up
is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. 


          Section
6.08 Stockholder Rights Plan. To the extent that the Company has a rights
plan in effect upon conversion of the Notes into Common Stock, Holders that
convert their Notes will receive, in addition to the Common Stock, the rights
under the rights plan, unless prior to any conversion, the rights have
separated from the Common Stock, in which case, and only in such case, the
Conversion Rate will be adjusted at the time of separation as if the Company
distributed to all holders of Common Stock shares of the Company’s capital
stock, evidences of indebtedness or assets as described in Section 6.03(b)
above, subject to readjustment in the event of the expiration, termination or
redemption of such rights. In lieu of any such adjustment, the Company may
amend such applicable stockholder rights agreement to provide that upon
conversion of the Notes the Holders will receive, in addition to the Common
Stock issuable upon such conversion, the rights which would have attached to
such Common Stock if the rights had not become separated from the Common Stock
under such applicable stockholder rights agreement. 


          Section
6.09 Mandatory Conversion. 


                    (a)
Subject to the requirements of Section 6.09(b) and Section 6.09(c) of this
Supplemental Indenture, at any time following the issuance of the Notes, the
Company shall have the right, at its option, may, to cause the Notes, in whole
or in part, to be automatically converted into Common Stock (a “Mandatory
Conversion”). Upon a Mandatory Conversion, a Holder shall be entitled to
receive (i) a number of shares of Common Stock based on the applicable
Conversion Rate, and (ii) the Coupon Make-Whole. The “Mandatory Conversion
Date” shall be the tenth Business Day following the date of the Mandatory
Conversion Press Release (as defined in Section 6.09(c)), excluding the date
such Mandatory Conversion Press Release is issued; provided, however, that if
the Company is required to adjust the Conversion Rate in accordance with the
requirements of Section 6.03 of this Supplemental Indenture and the Mandatory
Conversion Date would occur during the time period in which the average Daily
VWAP of the Common Stock is being calculated for purposes of such an
adjustment, then the Mandatory Conversion Date shall be the next Business Day
following the effectiveness of such adjustment. 


                    (b)
The Company may exercise a Mandatory Conversion pursuant to Section 6.09(a) of
this Supplemental Indenture only if the Daily VWAP of the Common Stock exceeds
130% of the applicable Conversion Price for at least ten Trading Days in a
period of fifteen consecutive Trading Days, including the last Scheduled
Trading Day of such fifteen-day period, ending on the Scheduled Trading Day
prior to the Company’s issuance of the Mandatory Conversion Press Release
pursuant to Section 6.09(c). 


                    (c)
In order to exercise a Mandatory Conversion, the Company must issue a press
release for publication through Dow Jones & Company, Inc., Bloomberg
Business News, BusinessWire, or PR Newswire or a substantially equivalent
financial news organization (the “Mandatory Conversion Press Release”) no later
than the third Business Day following any date on which the conditions
described in Section 6.09(b) are satisfied, announcing such a Mandatory
Conversion. The Company will also give notice by mail or by publication (with
subsequent prompt notice by mail) to the Holders (not more than four Business
Days after the date of such Mandatory Conversion Press Release) of the
Mandatory Conversion announcing the Company’s intention to convert the Notes at
their addresses shown in the Security Register maintained by the Security
Registrar (such notice, the “Notice of Mandatory Conversion”). In addition to
any information required by applicable law or regulation, the Mandatory
Conversion Press Release and the Notice of Mandatory Conversion shall each
state 


                              (i)
the Mandatory Conversion Date; 


                              (ii)
the number of shares of Common Stock to be issued upon conversion per $1,000
principal amount of Notes; 


25





                              (iii)
the aggregate amount of Notes to be converted in such Mandatory Conversion; 


                              (iv)
the amount of the Coupon Make-Whole payable to Holders per $1,000 principal
amount of Notes; 


                              (v)
the dates of the five day trading-period that will be used for purposes of calculating
the number of shares of Common Stock to be delivered in connection with the
Coupon Make-Whole pursuant to Section 6.09 of this Supplemental Indenture; and 


                              (vi)
that interest on the Notes to be converted shall cease to accrue on the
Mandatory Conversion Date. 


          Notwithstanding
the number of shares of Common Stock to be issued upon conversion as specified
in such Mandatory Conversion Press Release and Notice of Mandatory Conversion,
if following the publication or distribution of such Mandatory Conversion Press
Release or Notice of Mandatory Conversion, but prior to the Mandatory
Conversion Date, an adjustment to the applicable Conversion Rate pursuant to
Section 6.03 of this Supplemental Indenture is applicable, the Company shall
issue an additional Mandatory Conversion Press Release reflecting the number of
shares of Common Stock to be issued upon conversion per $1,000 principal amount
of Notes, taking into account such adjustment. 


                    (d)
On and after the Mandatory Conversion Date, interest shall cease to accrue on
the Notes subject to a Mandatory Conversion and all rights of Holders of such
Notes shall terminate, except for the right to receive the shares of Common
Stock issuable upon conversion of such Notes, the right to receive the Coupon
Make-Whole and the right to receive any accrued and unpaid interest accruing
prior to the Mandatory Conversion Date. The interest payment with respect to
the Notes called for a Mandatory Conversion on a date during the period between
the close of business on any Regular Record Date for the payment of interest
and the close of business on the corresponding Interest Payment Date will be
payable on such Interest Payment Date to the Holder of record of the Notes so
called on such Regular Record Date if the Notes have been converted after such
Regular Record Date and prior to such Interest Payment Date. 


                    (e)
If less than all of the Notes are to be subject to a Mandatory Conversion, the
particular Notes to be converted shall be selected by the Trustee from the
Outstanding Notes not previously called for conversion, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection
for conversion of portions of the principal amount of Notes, provided, however,
that no such partial conversion shall reduce the portion of the principal
amount of a Note not redeemed to less than the minimum denomination of $2,000.
The Trustee shall promptly notify the Company and the Security Registrar (if
other than the Trustee) in writing of the Notes selected for conversion and, in
the case of any Notes selected for partial conversion, the principal amount
thereof to be redeemed. 


                    (f)
In the event a Mandatory Conversion Date occurs between a Regular Record Date
and the related Interest Payment Date, the Company shall pay any accrued an
unpaid interest to the Holder of record on such Regular Record Date, and such
Interest Payment Date shall be excluded from the calculation of the Coupon
Make-Whole, as specified in Section 1.01 of this Supplemental Indenture. 


          Section
6.10 Settlement of Change of Control and Coupon Make-Whole. 


                    (a)
In order to satisfy its obligation to deliver the Change of Control Make-Whole
and the Coupon Make-Whole, the Company shall deliver solely Common Stock,
together with cash, if applicable, in lieu of any fractional shares of Common
Stock. 


                    (b)
The number of shares of Common Stock to be delivered in satisfaction of the
Change of Control Make-Whole or the Coupon Make-Whole shall be computed as
follows: 




	
  

 	
  

 
	
  

 	
           (i)
     the Company shall deliver to the Conversion Agent on behalf of a Holder
     entitled to receive the Change of Control Make-Whole a number of shares
     of Common Stock equal to (1)(i) the Change of 

 


26









	
  

 	
  

 
	
  

 	
 Control
 Make-Whole amount determined by reference to the table set forth in Schedule
 A to this Supplemental Indenture, multiplied by (ii) $1,000, divided by (2)
 the Stock Price; and

 
	
  

 	
  

 
	
  

 	
           (ii)
 the Company shall deliver to the Conversion Agent on behalf of a Holder entitled
 to receive the Coupon Make-Whole a number of shares of Common Stock equal to
 (1) the Coupon Make-Whole, divided by (2) the average of the Daily VWAP of
 the Common Stock over the five consecutive Trading-Day period ending on the
     Trading Day that is two Trading Days immediately prior to the Mandatory
     Conversion Date. 

 



                    (c)
The Company shall deliver any shares of Common Stock pursuant to this Section
6.10 (l) to the Conversion Agent on behalf of Holders entitled to receive the
Coupon Make-Whole on the Mandatory Conversion Date, and (2) to the Conversion
    Agent on behalf of Holder entitled to receive the Change of Control Make-Whole
    on the third Trading Day following the Conversion Date, but such Holders
    will be deemed to be the owners of the Common Stock delivered in satisfaction
    of the Change of Control Make-Whole as of the close of business on the Conversion
Date. The Company shall not issue fractional shares of Common Stock in
satisfaction of the Change of Control Make-Whole or the Coupon Make-Whole.
Instead the Company shall deliver cash, rounded to the nearest whole cent, for
such fractional shares based on the Stock Price of the Common Stock. 


ARTICLE VII


REPORTS BY THE COMPANY


          Section
7.01 Section 704 Replaced. Section 704 of the Original Indenture is hereby
superseded and replaced in its entirety by the following in respect of the
Notes established and issued under this Supplemental Indenture: 


	
  

 	
  

 
	
  

 	
 The Company
 shall file with the Trustee and the Commission, and transmit to Holders, such
 information, documents and other reports, and such summaries thereof, as may
 be required pursuant to the Trust Indenture Act at the times and in the
 manner provided pursuant to such Act; provided that any such information, documents
 or reports required to be filed with the Commission pursuant to Section 13 or
 15(d) of the Exchange Act shall be filed with the Trustee within 15 days
 after the same is so required to be filed with the Commission. Delivery of
 such reports, information and documents to the Trustee is for informational
 purposes only and the Trustee’s receipt of such shall not constitute
 constructive notice of any information contained therein or determinable from
 information contained therein, including the Company’s compliance with any of
 its covenants hereunder (as to which the Trustee is entitled to rely
 exclusively on Officers’ Certificates). 

 


ARTICLE VIII


MISCELLANEOUS


          Section
8.01 Certain Matters Relating to the Trustee. 


                    (a)
The Company hereby confirms Article Six of the Original Indenture and agrees to
protect, exonerate, defend, indemnify and save the Trustee and its officers,
directors, employees and agents (collectively, the “Indemnitees”) harmless from
and against any and all liabilities, losses, damages, fines, suits, actions,
demands, penalties, costs and expenses, including out-of-pocket, incidental
expenses, legal fees and expenses, the allocated costs and expenses of counsel
and legal staff and the costs and expenses of defending or preparing to defend
against any claim (“Losses”) that may be imposed on, incurred by, or assessed
against, the Indemnitees or any of them for following any instruction or other
direction upon which the Trustee is authorized to rely pursuant to the terms of
this Supplemental Indenture, whether acting in its capacity as Trustee,
Conversion Agent, Paying Agent, Securities Custodian or Security Registrar. In
addition to and not in limitation of the immediately preceding sentence, the
Company also covenants and agrees to indemnify and hold the Indemnitees and
each of them harmless from and against any and all Losses that may be imposed
on, incurred by, or asserted against


27





the
Indemnitees or any of them in connection with or arising out of the Trustee’s
performance, as applicable, under this Supplemental Indenture provided that
such party has not acted with negligence or engaged in willful misconduct. The
provisions of this Section 8.01 shall survive the termination of this
Supplemental Indenture and the resignation or removal of the Trustee. 


                    (b)
Except for information provided by the Trustee, in writing, specifically
concerning the Trustee, the Trustee shall not have any responsibility with
respect to any information included in any prospectus or other disclosure
material distributed with respect to the Notes, and the Trustee shall have no
responsibility for compliance with securities laws in connection with the
issuance and sale of the Notes. 


                    (c)
The Trustee, whether in its capacity as Trustee, Conversion Agent, Paying
Agent, Securities Custodian or Security Registrar, agrees to accept and act
upon instructions or directions pursuant to this Supplemental Indenture sent by
unsecured e-mail, facsimile transmission or other similar unsecured electronic
methods, provided, however, that (i) the Company, subsequent to such
transmission of written instructions, shall provide the originally executed
instructions or directions to the Trustee in a timely manner, (ii) such originally
executed instructions or directions shall be signed by an authorized officer of
the Company, and (iii) the Company shall provide to the Trustee an incumbency
certificate listing such authorized officer, which incumbency certificate shall
be amended whenever a person is to be added or deleted from the listing. If the
Company elects to give the Trustee e-mail or facsimile instructions (or
instructions by a similar electronic method) and the Trustee in its discretion
elects to act upon such instructions, such instructions shall be deemed to
constitute authorized instructions of the Company. The Trustee shall not be
liable for any losses, costs or expenses arising directly or indirectly from
the Trustee’s reliance upon and compliance with such instructions
notwithstanding such instructions conflict or are inconsistent with a
subsequent written instruction. The Company agrees to assume all risks arising
out of the use of such electronic methods to submit instructions and directions
to the Trustee, including without limitation, the risk of the Trustee acting on
unauthorized instructions, and the risk of interception and misuse by third
parties. 

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

                    (d)
The recitals contained in this Supplemental Indenture shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
of this Supplemental Indenture. The Original Indenture, as supplemented and
amended by this Supplemental Indenture, is in all respects hereby adopted,
ratified and confirmed in respect of the Notes. 


          Section
8.02 Withholding Offset. 


                    (a)
The Company (through the Withholding Agent or otherwise) shall be entitled to
reduce or otherwise set-off against any payments made or deemed made by the
Company to Holders in respect of the Notes or the Common Stock for any amounts
the Company believes it is required to withhold by law. For the avoidance of
doubt, if the Company pays any withholding taxes on behalf of Holders as a
result of an adjustment to the Conversion Rate of the Notes, the Company may,
at its option, set-off such payments against payments of cash and Common Stock
in respect of the Notes. Any amounts withheld pursuant to this Section 8.02
shall be paid over by the Company (through the Withholding Agent or otherwise)
to the appropriate taxing authority. 


                    (b)
Prior to or upon the occurrence of any event that results in an actual or
deemed payment by the Company to Holders in respect of the Notes or the Common
Stock, the Company (through the Trustee, Paying Agent, Withholding Agent, or
otherwise) may request a Holder to furnish any appropriate documentation that
may be required in order to determine the Company’s withholding obligations
under applicable law (including, without limitation, a United States Internal
Revenue Service Form W-9, Form W-8BEN, Form W-8ECI, or any certifications
prepared by the Company or on its behalf in order to enable the Company to
attempt to comply with its potential withholding obligations under the “Foreign
Investment in Real Property Tax Act,” as appropriate). Upon the receipt of any
such documentation, or in the event no such documentation is provided, the
Company (through the Trustee, Paying Agent, Withholding Agent, or otherwise)
will withhold pursuant to Section 8.02(a) to the extent required by applicable
law. 


          Section
8.03 Calculations in Respect of Notes. Except as otherwise provided herein,
the Company shall make all calculations called for in respect of the Notes.
These calculations include, but are not limited to, determinations of the Daily
VWAP, accrued interest payable on the Notes and the Conversion Rate. The
Company


28





shall make all
calculations in good faith and, absent manifest error, such calculations shall
be final and binding on the Holders. The Company shall provide a schedule of
its calculations to each of the Trustee and the Conversion Agent, and each of
the Trustee and Conversion Agent is entitled to rely conclusively upon the
accuracy of such calculations without independent verification. The Trustee
shall forward the Company’s calculations to any Holder upon such Holder’s
request. 


          Section
8.04 Application of Supplemental Indenture. Each and every term and
condition contained in this Supplemental Indenture that modifies, amends or
supplements the terms and conditions of the Original Indenture shall apply only
to the Notes created by this Supplemental Indenture and not to any past or
future series of Securities established under the Original Indenture. Except as
specifically amended and supplemented by, or to the extent inconsistent with,
this Supplemental Indenture, the Original Indenture shall remain in full force
and effect and is hereby ratified and confirmed. 


          Section
8.05 Effective Date. This Supplemental Indenture shall be effective as of
the date first written above and upon the execution and delivery hereof by the
parties hereto. 


          Section
8.06 Multiple Originals. The parties may sign any number of copies of this
Supplemental 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
Supplemental Indenture. 


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


          Section
8.08 General. The Company hereby certifies that this Supplemental Indenture
conforms to the current requirements of the Trust Indenture Act. 


29





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


	
  

 	
  

 	
  

 
	
  

 	
 ANNALY CAPITAL MANAGEMENT,
 INC. 

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
      /s/ Kathryn Fagan

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
 Name: Kathryn Fagan

 
	
  

 	
  

 	
 Title: Chief Financial Officer

 
	
  

 	
  

 
	
  

 	
 WELLS FARGO BANK, NATIONAL

 ASSOCIATION, as Trustee 

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
      /s/ Martin Reed

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
 Name: Martin Reed

 
	
  

 	
  

 	
 Title: Vice President

 


30






SCHEDULE A


          The
following table sets forth the Conversion Value and the Change of Control
Make-Whole to be received per $1,000 principal amount of Notes pursuant to
Section 6.04 of this Supplemental Indenture: 


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
Conversion Value as a Percentage of $1,000 of Principal
Amount of Notes
 
	
  

 
	
 Effective
 Date

 	
  

 	
 83.33%

 	
  

 	
 90.00%

 	
  

 	
 100.00%

 	
  

 	
 110.00%

 	
  

 	
 120.00%

 	
  

 	
 130.00%

 	
  

 	
 140.00%

 	
  

 	
 150.00%

 	
  

 	
 175.00%

 	
  

 	
 200.00%

 	
  

 	
 250.00%

 	
  

 	
 300.00%

 	
  

 	
 400.00%

 	
  

 	
 500.00%

 	
  

 	
 600.00%

 	
  

 
	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 
	
  

 
	
 February 12, 2010 

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 15.5443

 	
  

 	
 14.6152

 	
  

 	
 13.8497

 	
  

 	
 12.4166

 	
  

 	
 11.3922

 	
  

 	
 9.8846

 	
  

 	
 8.6594

 	
  

 	
 6.4845

 	
  

 	
 4.5316

 	
  

 	
 2.8182

 	
  

 
	
  

 
	
 February 15, 2011 

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 16.2569

 	
  

 	
 14.6321

 	
  

 	
 13.3700

 	
  

 	
 12.3813

 	
  

 	
 11.5971

 	
  

 	
 10.2229

 	
  

 	
 9.3248

 	
  

 	
 8.1027

 	
  

 	
 7.1370

 	
  

 	
 5.3613

 	
  

 	
 3.6198

 	
  

 	
 1.8823

 	
  

 
	
  

 
	
 February 15, 2012 

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 16.2413

 	
  

 	
 13.7661

 	
  

 	
 11.9113

 	
  

 	
 10.5348

 	
  

 	
 9.5182

 	
  

 	
 8.7638

 	
  

 	
 7.5742

 	
  

 	
 6.8866

 	
  

 	
 6.0238

 	
  

 	
 5.3525

 	
  

 	
 4.0974

 	
  

 	
 2.8558

 	
  

 	
 1.7429

 	
  

 
	
  

 
	
 February 15, 2013 

 	
  

 	
 16.6667

 	
  

 	
 16.6667

 	
  

 	
 13.4153

 	
  

 	
 10.5460

 	
  

 	
 8.4997

 	
  

 	
 7.0788

 	
  

 	
 6.1148

 	
  

 	
 5.4683

 	
  

 	
 4.6103

 	
  

 	
 4.2058

 	
  

 	
 3.7340

 	
  

 	
 3.3505

 	
  

 	
 2.6059

 	
  

 	
 1.8633

 	
  

 	
 1.1177

 	
  

 
	
  

 
	
 February 15, 2014 

 	
  

 	
 16.6667

 	
  

 	
 14.1129

 	
  

 	
 9.2648

 	
  

 	
 6.0122

 	
  

 	
 3.9854

 	
  

 	
 2.7995

 	
  

 	
 2.1410

 	
  

 	
 1.7895

 	
  

 	
 1.4736

 	
  

 	
 1.3787

 	
  

 	
 1.2514

 	
  

 	
 1.1280

 	
  

 	
 0.8811

 	
  

 	
 0.6342

 	
  

 	
 0.3873

 	
  

 
	
  

 
	
 February 15, 2015 

 	
  

 	
 16.6667

 	
  

 	
 10.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 	
  

 









EXHIBIT A


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


TRANSFERS OF
THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE SUPPLEMENTAL INDENTURE AND
THE ORIGINAL INDENTURE. 


THIS GLOBAL
NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF
SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF
1986, AS AMENDED. THE ISSUE PRICE, ISSUE DATE, TOTAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT AND YIELD TO MATURITY OF THIS GLOBAL NOTE MAY BE OBTAINED BY
CONTACTING THE COMPANY AT 1211 AVENUE OF THE AMERICAS, SUITE 2902, NEW YORK,
NEW YORK 10036.


This Note is a
Book-Entry Note within the meaning of the Original Indenture and every Note
authenticated and delivered upon registration of transfer of, or in exchange
for or in lieu of, this Note shall be a Book-Entry Note except in the limited
circumstances described in the Original Indenture. 


	
  

 	
  

 
	
 No. R-__

 	
  Principal Amount (US) $______________

 
	
 CUSIP # 035710AA0
ISIN #
 US035710AA05

 	
 as revised by the Schedule of Increases and

 Decreases in Global Note attached hereto

 
	
 Euroclear
 and Clearstream Common Code: #048751695

 	
  

 


4.00% Convertible Senior Notes due 2015


          Annaly
Capital Management, Inc., a corporation duly organized and existing under the
laws of Maryland (herein called the “Company”, which term includes any
successor Person under the Supplemental Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum
of          (United States)
Dollars (US$          ), as
revised by the Schedule of Increases and Decreases in Global Note attached
hereto, on February 15, 2015, and to pay interest thereon from February 12,
2010, or from the most recent February 15 or August 15 (each, an “Interest
Payment Date”) to which interest has been paid, deemed paid or duly provided
for, semi-annually in arrears on February 15 and August 15 in each year,
commencing August 15, 2010, at the rate of 4.00% per annum, until the
principal hereof is converted into shares of common stock of the Company, paid,
deemed paid or made available for payment. 


          The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Supplemental Indenture, be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest, which shall
be the February 1 or August 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Interest will be paid on the
basis of a 360-day year consisting of twelve 30-day months. Except as otherwise
provided in the Supplemental Indenture, any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on





a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes of this series not
less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes of this series may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
the Original Indenture. Payment of the principal of and any premium and
interest on this Note will be made (a) at the Corporate Trust Office of
the Trustee in 45 Broadway, 14th Floor, New York, New York 10006, Attention:
Corporate Trust Services, or such other office or agency of the Company as may
be designated by it for such purpose in the Borough of Manhattan, The City of
New York, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts or (b) subject to any laws or regulations applicable thereto and to
the right of the Company (limited as provided in the Supplemental Indenture) to
rescind the designation of any such Paying Agent, at the main offices of the
Company in the Borough of Manhattan, The City of New York, or at such other
offices or agencies as the Company may designate, by United States dollar check
drawn on, or transfer to a United States dollar account maintained by the payee
with, a bank in The City of New York; provided, however, that at the option of
the Company payment of interest may be made by United States dollar check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.


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


          Unless
the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof, directly or through an Authenticating Agent,
by manual signature of an authorized signatory, this Note shall not be entitled
to any benefit under the Original Indenture or be valid or obligatory for any
purpose. 


A-2





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


Dated:
February 12, 2010


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ANNALY CAPITAL MANAGEMENT,
 INC.

 
	
  

 	
  

 
	
  

 	
 By:

 	
  

 	 
	
  

 	
  

 	

 


 	 
	
  

 	
  

 	
 Name: 

 	 
	
  

 	
  

 	
 Title: 

 	 
	
  

 	
  

 	
  

 	 
	
  

 	
 By:

 	
  

 	 
	
  

 	
  

 	

 


 	 
	
  

 	
  

 	
 Name: 

 	 
	
  

 	
  

 	
 Title: 

 	 
	
  

 	
  

 	
  

 	 
	
 CERTIFICATE OF AUTHENTICATION

 
	
 This is one
 of the Notes of the series designated

 
	
 therein
 referred to in the within-mentioned 

 
	
 Supplemental
 Indenture and the Original Indenture.

 
	
  

 
	
 WELLS FARGO BANK, NATIONAL 

 
	
 ASSOCIATION, as Trustee

 






	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 
	
  

 	

 


 	
  

 
	
  

 	
 Authorized
 Signatory

 	
  

 


A-3





          This
Note is one of a duly authorized issue of securities of the Company (herein
called the “Notes”), issued under a Supplemental Indenture dated as of
February 12, 2010 (the “Supplemental Indenture”) to an indenture dated
as of February 12, 2010 (as it may be further amended or supplemented from time
to time in accordance with the terms thereof, the “Original Indenture”),
between the Company and Wells Fargo Bank, National Association, as Trustee
(herein called the “Trustee”, which term includes any successor trustee
under the Original Indenture), to which the Supplemental Indenture and the
Original Indenture reference is hereby made for a statement of the respective
rights, limitations of rights, obligations duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. This Note is
one of the series designated on the face hereof, initially limited to the
aggregate principal amount of (U.S.) $500,000,000 (or $575,000,000 if the
underwriter’s over-allotment option with respect to this series is exercised in
full) issued under and pursuant to the Supplemental Indenture and Original
Indenture. 


          No
reference herein to the Supplemental Indenture and the Original Indenture, and
no provision of this Note or of the Supplemental Indenture or the Original
Indenture, shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place(s) and rate, and in the coin or
currency, herein prescribed. In the event of any conflict or inconsistency
between the terms and provisions of this Note and the terms and provisions of
the Supplemental Indenture and the Original Indenture, the terms and provisions
of the Supplemental Indenture and the Original Indenture shall control.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Supplemental Indenture and the Original Indenture. 


          The
Notes of this series are not subject to redemption at the election of the
Company. 


          If
any Interest Payment Date falls on a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next succeeding Business Day
and no interest on such payment will accrue for the period from the Interest Payment
Date to such next succeeding Business Day. If the Stated Maturity date would
fall on a day that is not a Business Day, the required payment of interest, if
any, and principal (and Additional Interest, if any), will be made on the next
succeeding Business Day and no interest on such payment will accrue for the
period from and after the Stated Maturity date to such next succeeding Business
Day. If a Fundamental Change Purchase Date would fall on a day that is not a
Business Day, the Company will purchase the Notes tendered for purchase on the
next succeeding Business Day and no interest or Additional Interest on such
Notes will accrue for the period from and after the earlier Fundamental Change
Purchase Date to such next succeeding Business Day. The Company will pay the
Fundamental Change Purchase Price promptly following the later of (i) such
next succeeding Business Day or (ii) the time of book entry transfer or
the delivery of the Note. 


          The
Holder of this Note after 5:00 p.m., New York City time, on a Regular Record
Date shall be entitled to receive interest (including any Additional Interest),
on this Note on the corresponding Interest Payment Date. Holders of this Note
at 5:00 p.m., New York City time, on a Regular Record Date will receive payment
of interest (including any Additional Interest) payable on the corresponding
Interest Payment Date notwithstanding the conversion of this Note at any time
after 5:00 p.m., New York City time on such Regular Record Date. If this Note
is surrendered for conversion during the period after 5:00 p.m., New York City
time, on any Regular Record Date to 9:00 a.m., New York City time, on the
corresponding Interest Payment Date it must be accompanied by payment of an
amount equal to the interest (including any Additional Interest) that the
Holder is to receive on this Note on such Interest Payment Date. 


          Notwithstanding
the foregoing, no such payment of interest (including any Additional Interest)
need be made by the converting Holder (i) for conversions following the
Regular Record Date immediately preceding the Stated Maturity, (ii) if the
Company has provided a specified a Mandatory Conversion Date in a Notice of
Mandatory Conversion, (iii) if the Company has specified a Fundamental Change Purchase
Date that is after a Regular Record Date and on or prior to the corresponding
Interest Payment Date, or (iv) to the extent of any overdue interest
(including any overdue Additional Interest) existing at the time of conversion
of this Note. Except where this Note surrendered for conversion must be
accompanied by payment as described above, no interest or Additional Interest
on converted portions of this Note will be payable by the Company on any
Interest Payment Date subsequent to the Conversion Date or the Mandatory
Conversion Date, as applicable, and delivery of the shares of Common Stock,
together with any cash payment for any fractional shares, upon conversion will
be deemed to satisfy 


A-4





the Company’s
obligation to pay the principal amount of this Note and accrued and unpaid
interest and Additional Interest, if any, to, but not including, the related
Conversion Date or Mandatory Conversion Date, as applicable. 


          Whenever
in this Note there is a reference, in any context, to the payment of the
principal of, premium, if any, or interest on, or in respect of, this Note,
such mention shall be deemed to include mention of the payment of Additional
Interest as provided for in the Supplemental Indenture to the extent that, in
such context, the Additional Interest is, was or would be payable in respect of
this Note and express mention of the payment of Additional Interest (if
applicable) in any provisions of this Note shall not be construed as excluding
Additional Interest in those provisions of this Note where such express mention
is not made. 


          If
a Fundamental Change occurs at any time, subject to the provisions set forth in
the Supplemental Indenture, the Holder of this Note shall have the right, at
such Holder’s option, to require the Company to purchase all of such Note, or
any portion of the principal amount thereof, that is equal to $1,000 or an
integral multiple thereof, at the Fundamental Change Purchase Price specified
in the Supplemental Indenture plus accrued and unpaid interest, including
Additional Interest, if any, to but excluding the Fundamental Change Purchase
Date. Any Notes purchased by the Company shall be paid for in Common Stock.
Article V of the Supplemental Indenture sets forth the procedures, obligations,
conditions and other terms of such repurchase option upon the occurrence of a
Fundamental Change. In the event the Holder converts this Note in connection
with a Fundamental Change, such Holder shall be entitled to receive the Change
of Control Make-Whole in accordance with the provisions of Section 6.04 of the
Supplemental Indenture.


          Subject
to the conditions and procedures set forth in Article VI of the Supplemental
Indenture, and during the periods specified in the Supplemental Indenture, the
Holder may convert this Note prior to the close of business on the second
Scheduled Trading Day immediately preceding the Stated Maturity (excluding such
Maturity Date), into shares of Common Stock at the applicable Conversion Rate. 


          Subject
to the conditions and procedures set forth in Article VI of the Supplemental
Indenture, and during the periods specified in the Supplemental Indenture, the
Company may, at its option, cause this Note, in whole or in part, to be
automatically converted into shares of Common Stock at the applicable
Conversion Rate. In connection with such a Mandatory Conversion, the Holder
will be entitled to receive the Coupon Make-Whole.


          The
initial Conversion Rate is, in respect of each $1,000 principal amount of this
Note, 46.6070 shares of Common Stock, subject to adjustments as set forth in
the Supplemental Indenture. 


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


          This
Note is in registered form without coupons in denominations of principal amount
of $2,000 and integral multiples of $1,000 in excess thereof. The Holder may
transfer or exchange this Note in accordance with the Supplemental Indenture.
The Security Registrar may require the Holder, among other things, to furnish
appropriate endorsements or transfer documents. No service charge shall be made
for any registration of transfer or exchange of this Note, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection with any such transfer or exchange.
Neither the Company nor the Security Registrar shall be required to exchange or
register a transfer of any Notes surrendered for conversion or, if a portion of
this Note is surrendered for conversion, the portion thereof surrendered for
conversion. 


          Prior
to due presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Note is registered as the owner hereof for all purposes,
whether or not this Note is overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary. 


          The
registered Holder of this Note may be treated as the absolute owner of such
Note for all purposes whatsoever. 


A-5





          The
Supplemental Indenture and the Original Indenture permit, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Noteholders at
any time by the Company and the Trustee with the consent of the holders of 50%
in principal amount of Notes at the time Outstanding. The Supplemental
Indenture and the Original Indenture also contain provisions permitting the
holders of specified percentages in principal amount of the Notes Outstanding,
on behalf of all Noteholders, to waive compliance by the Company with certain
provisions of the Supplemental Indenture and the Original Indenture and certain
past defaults under the Supplemental Indenture and the Original Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note. 


          If
an Event of Default with respect to this Note shall occur and be continuing,
the principal of this Note may be declared due and payable in the manner and
with the effect provided in the Supplemental Indenture and the Original
Indenture. The provisions relating to discharge set forth in Section 401 of the
Original Indenture and defeasance and covenant defeasance set forth in Section
402 of the Original Indenture are not applicable to this Note.


          To
the extent elected by the Company, the sole remedy for an Event of Default
relating to the failure by the Company to comply with the obligation to furnish
reports required under Section 704 of the Original Indenture as further
supplemented by the Supplemental Indenture and for any failure to comply with §314(a)(1)
of the Trust Indenture Act, will for the first 120 days after the occurrence
of such an Event of Default, consist exclusively of the right for the Holder
to receive Additional Interest on this Note equal to 0.25% per annum of
the principal amount of this Note (“Additional
Interest”). If the Company so elects, such Additional Interest will
be payable in the same manner and on the same dates as the stated interest payable
on this Note. The Additional Interest will accrue from and including the date
on which such Event of Default first occurs to but not including the 120th day
thereafter (or such earlier date on which such Event of Default shall have been
cured or waived). On such 120th day after such Event of Default (if the Event
of Default relating to such obligation is not cured or waived prior to such
120th day), such Additional Interest will cease to accrue and this Note will
be subject to acceleration as provided in the Original Indenture. In the event
the Company does not elect to pay the Additional Interest upon such Event of
Default in accordance with the Supplemental Indenture, this Note will be
subject to acceleration as provided in the Original Indenture. 


          As
set forth in, and subject to, the provisions of the Supplemental Indenture and
the Original Indenture, no Noteholder will have any right to institute any
proceeding with respect to the Supplemental Indenture or the Original Indenture
or for any remedy thereunder, unless such Holder shall have previously given to
the Trustee written notice of a continuing Event of Default with respect to
this series, the Holders of not less than 25% in principal amount of the
Outstanding Notes of this series shall have made written request, and offered
indemnity reasonably satisfactory, to the Trustee to institute such proceeding
as trustee, and the Trustee shall not have received from the Holders of a
majority in principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days; provided, however, that such limitations do not apply to a suit
instituted by the Holder for the enforcement of payment of the principal of and
any premium or interest on this Note on or after the respective due dates
expressed herein. The Supplemental Indenture provides that the principal and
any accrued and unpaid interest, including Additional Interest, if any, of this
Note shall become immediately due and payable without declaration or other act
on the part of the Trustee or the Holder if an Event of Default specified in
clauses (15), (16) or (17) of Section 501 occurs. 


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


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


Annaly Capital Management, Inc.

1211 Avenue of the Americas, Suite 2902

New York, New York 10036


A-6





ASSIGNMENT
FORM


To assign this Note, fill in the form below:


I or we assign and transfer this Note to


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


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


and irrevocably
appoint          agent to
transfer this Note on the books of the Company. The agent may substitute

another to act for him.


	
  

 
	
 Date:
 ______________ Your Signature:
 ____________________________________________________________

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

 
	
  

 
	
 Signature Guarantee:
 _____________________________________________________________________________________________

 
	
 (Signature must be guaranteed)

 
	
 Signature
 must be guaranteed by a participant in a recognized signature guarantee
 medallion program or other signature guarantor acceptable to the Trustee.

 


A-7





SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
NOTE


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


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Amount of

 decrease in

 Principal

 Amount

 of this Global

 Note

 	
  

 	
 Amount of

 increase in

 Principal

 Amount of this

 Global Note

 	
  

 	
 Principal

 Amount of this

 Global Note

 following such

 decrease or

 increase

 	
  

 	
 Signature of

 authorized

 signatory of

 Trustee

 	
  

 	
 Date

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 


A-8






FORM OF CONVERSION NOTICE


To: Annaly
Capital Management, Inc. 


          The
undersigned registered Holder of this Note hereby exercises the option to
convert this Note, or portion hereof (which is $1,000 principal amount or an
integral multiple thereof) designated below, for shares of Common Stock of
Annaly Capital Management, Inc., in accordance with the terms of the
Supplemental Indenture and the Original Indenture referred to in this Note, and
directs that the shares issuable and deliverable upon such conversion, cash in
lieu of fractional shares and any portion of this Note representing any
unconverted principal amount hereof, be issued and delivered to the registered
Holder hereof unless a different name has been indicated below. If shares or
any portion of this Note not converted are to be issued in the name of a Person
other than the undersigned, the undersigned shall pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the undersigned
on account of interest accompanies this Note. The undersigned acknowledges that
the conversion of the specified Notes is subject to the requirements
established by the Company in the Supplemental Indenture and the Original
Indenture, as applicable, as well as the procedures of any Depositary, each as
in effect from time to time. 


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


Dated: 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
 Signature(s)

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Signature(s) must be guaranteed by a participant
 in a recognized signature guarantee medallion
 program or other signature guarantor acceptable to the Trustee.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
 Signature
 Guarantee

 
	
  

 	
  

 	
  

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

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 $

 	
  

 
	

 


 	
  

 	
  

 	

 


 
	
 (Name)

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 (Street
 Address)

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	

 


 
	
 (City state
 and zip code)

 	
  

 	
 Social
 Security or Other Taxpayer Number

 
	
  

 	
  

 	
  

 
	
 Please print
 name and address:

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	
  

 


A-9





FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE


To: Annaly
Capital Management, Inc. 


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


Dated: 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
 Signature(s)

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Signature must be guaranteed by a participant
 in a recognized signature guarantee medallion
 program or other signature guarantor acceptable to the Trustee.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
 Signature
 Guarantee

 
	
  

 	
  

 	
  

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

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 $

 	
  

 
	

 


 	
  

 	
  

 	

 


 
	
 (Name)

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (if
 certificated, state the certificate number for each Note to be delivered for
 purchase) 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	

 


 
	
  

 	
  

 	
  

 
	

 


 	
  

 	

 


 
	
 (Street
 Address)

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	

 


 
	
 (City state
 and zip code)

 	
  

 	
 Social
 Security or Other Taxpayer Number

 
	
  

 	
  

 	
  

 
	
 Please print
 name and address:

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	
  

 


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