Exhibit 4.2


ANNALY CAPITAL MANAGEMENT, INC.


and


WELLS FARGO BANK, NATIONAL ASSOCIATION


AS TRUSTEE


5.00% Convertible Senior Notes due 2015


SECOND SUPPLEMENTAL INDENTURE


Dated as of May 14, 2012


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

 	
  

 	
 7

 
	
  

 	
  

 	
  

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

 	
  

 	
 7

 
	
 Section 2.02 Form of Notes

 	
  

 	
 8

 
	
 Section 2.03 Legends

 	
  

 	
 9

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

 	
  

 	
 10

 
	
 Section 2.05 No Sinking Fund

 	
  

 	
 10

 
	
 Section 2.06 Redemption of Notes

 	
  

 	
 10

 
	
 Section 2.07 Discharge of Indenture,
 Defeasance

 	
  

 	
 10

 
	
 Section 2.08 Ranking

 	
  

 	
 10

 
	
 Section 2.09 Repurchase and Cancellation

 	
  

 	
 11

 
	
  

 	
  

 	
  

 
	
 ARTICLE III ADDITIONAL DEFAULTS AND REMEDIES

 	
  

 	
 11

 
	
  

 	
  

 	
  

 
	
 Section 3.01 Additional Events of Default

 	
  

 	
 11

 
	
 Section 3.02 Acceleration of Maturity;
 Recission and Annulment

 	
  

 	
 11

 
	
 Section 3.03 Exception to Remedies

 	
  

 	
 12

 
	
  

 	
  

 	
  

 
	
 ARTICLE IV AMENDMENTS

 	
  

 	
 12

 
	
  

 	
  

 	
  

 
	
 Section 4.01 Amendments

 	
  

 	
 12

 
	
  

 	
  

 	
  

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

 	
  

 	
 12

 
	
  

 	
  

 	
  

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

 	
  

 	
 12

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

 	
  

 	
 15

 
	
 Section 5.03 Ownership Limit

 	
  

 	
 17

 
	
  

 	
  

 	
  

 
	
 ARTICLE VI CONVERSION

 	
  

 	
 17

 
	
  

 	
  

 	
  

 
	
 Section 6.01 Article Seventeen Added

 	
  

 	
 17

 
	
 Section 6.02 Conversion of Notes

 	
  

 	
 17

 
	
 Section 6.03 Adjustments to Conversion Rate

 	
  

 	
 22

 
	
 Section 6.04 Adjustment Upon Certain
 Fundamental Changes

 	
  

 	
 28

 
	
 Section 6.05 Effect of Reclassification,
 Consolidation, Merger or Sale

 	
  

 	
 29

 


i









	
  

 	
  

 	
  

 
	
 Section 6.06 Responsibility of Trustee

 	
  

 	
 30

 
	
 Section 6.07 Notice to Holders Prior to
 Certain Actions

 	
  

 	
 30

 
	
 Section 6.08 Stockholder Rights Plan

 	
  

 	
 31

 
	
  

 	
  

 	
  

 
	
 ARTICLE VII REPORTS BY THE COMPANY

 	
  

 	
 31

 
	
  

 	
  

 	
  

 
	
 Section 7.01 Section 704 Replaced

 	
  

 	
 31

 
	
  

 	
  

 	
  

 
	
 ARTICLE VIII MISCELLANEOUS

 	
  

 	
 31

 
	
  

 	
  

 	
  

 
	
 Section 8.01 Certain Matters Relating to
 the Trustee

 	
  

 	
 31

 
	
 Section 8.02 Withholding Offset

 	
  

 	
 32

 
	
 Section 8.03 Calculations in Respect of
 Notes

 	
  

 	
 33

 
	
 Section 8.04 Application of Supplemental
 Indenture

 	
  

 	
 33

 
	
 Section 8.05 Effective Date

 	
  

 	
 33

 
	
 Section 8.06 Multiple Originals

 	
  

 	
 33

 
	
 Section 8.07 Governing Law

 	
  

 	
 33

 
	
 Section 8.08 General

 	
  

 	
 33

 


ii





          SECOND
SUPPLEMENTAL INDENTURE, dated as of May 14, 2012, 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 second 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
5.00% 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. 


          “Bid
Solicitation Agent” means the Trustee or such other Person as may be
appointed, from time to time, by the Company to solicit market bid quotations
for the Notes in accordance with Section 6.02(a)(ii).


          “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. 


          “Cash
Settlement Averaging Period” means, with respect to any Note surrendered
for conversion: 


          (1)
if the relevant Conversion Date occurs prior to the 25th Scheduled Trading Day
immediately preceding to the Stated Maturity, the 20 consecutive Trading Day
period beginning on, and including, the third Trading Day immediately following
such Conversion Date; and


          (2)
if the relevant Conversion Date occurs during the period beginning on, and
including, the 25th Scheduled Trading Day prior to the Stated Maturity, and
ending at 5:00 p.m., New York City time, on the second Scheduled Trading Day
immediately prior to the Stated Maturity, the 20 consecutive Trading Days
beginning on, and including, the 22nd Scheduled Trading Day prior to the Stated
Maturity.


          “Change
of Control Make-Whole” means the number of Additional Shares 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 the date on which the Fundamental Change occurs or
becomes effective and the Stock Price paid or deemed paid per share of Common
Stock in the Fundamental Change per $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 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
Obligation” means the Company’s obligation to pay or deliver, as the case
may be, shares of Common Stock, cash or a combination of cash and shares of
Common Stock, determined by the applicable Settlement Method, upon conversion
of the Notes.


          “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 $18.94051. 


          “Conversion
Rate” means, in respect of each $1,000 principal amount of Notes, initially
52.7969 shares of Common Stock, subject to adjustment as set forth herein. 


          
“Daily Conversion Value” means, for each of the 20 consecutive Trading
Days during the applicable Cash Settlement Averaging Period, 1/20th of the
product of (1) the applicable Conversion Rate and (2) the Daily VWAP of Common
Stock on such Trading Day.


          “Daily
Measurement Value” has the meaning provided in the definition of Daily
Settlement Amount in this Section 1.01.


2





          The
“Daily Settlement Amount” for each of the 20 consecutive Trading Days
during the Cash Settlement Averaging Period, shall consist of:


          (1)
cash equal to the lesser of (i) the maximum dollar amount per $1,000 principal
amount of Notes to be received upon conversion as specified in the notice
specifying the Company’s chosen Settlement Method (the “Specified Dollar
Amount”), if any, divided by 20 (such quotient, the “Daily Measurement
Value”) and (ii) the Daily Conversion Value; and


          (2)
if the Daily Conversion Value exceeds the Daily Measurement Value, a number of
shares of Common Stock equal to (i) the difference between the Daily Conversion
Value and the Daily Measurement Value, divided by (ii) the Daily VWAP for such
Trading Day. 


          “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
its equivalent successor if such page is not available) 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. 


          “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 


3







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 as a result of clause (2) 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 consideration or a unit of
such consideration received by a holder of one share of Common Stock in the
relevant transaction used to calculate the Daily VWAP, as the case may be. 


          
“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 November 15 and May 15 of each year. The first
Interest Payment Date shall be November 15, 2012.


          “Issue
Date” means May 14, 2012. 


          The
“Last Reported Sale Price” of the Common Stock on any date means the
closing sale price per share (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on that date as reported
in composite transactions for the principal U.S. securities exchange on which
the Common Stock is traded. If the Common Stock is not listed for trading on a
U.S. national or regional securities exchange on the relevant date, the Last
Reported Sale Price will be the average of the last quoted bid and ask prices
for the Common Stock in the over-the-counter market on the relevant date as
reported by Pink OTC Markets Inc. or a similar organization. If the Common
Stock is not so quoted, the Last Reported Sale Price will be the average of the
mid-point of the last bid and ask prices for the Common Stock on the relevant
date from each of at least three nationally recognized independent investment
banking firms selected by the Company for this purpose.


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


4





          “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 November 1 (whether or
not a Business Day) next preceding the Interest Payment Date on November 15 and
the close of business on May 1 (whether or not a Business Day) next
preceding the Interest Payment Date on May 15. 


          “Scheduled
Trading Day” means a day that is scheduled to be a Trading Day on the
primary United States 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. 


          “Specified
Dollar Amount” has the meaning provided in the definition of “Daily
Settlement Amount” in this Section 1.01.


          “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,
provided that (a) if holders of the Common Stock receive only cash as a result
of such Fundamental Change, the Stock Price shall be the cash amount paid per
share of Common Stock, and (b) otherwise, the Stock Price shall be 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, except as otherwise provided in Section 6.02(c)(iv), a day on
which (i) trading in the Common Stock generally occurs on The New York Stock
Exchange or, if the Common Stock is not then listed on The New York Stock
Exchange, on the principal other United States national or regional securities
exchange on which the Common Stock is then listed or, if the Common Stock is
not then listed on a United States national or regional securities exchange, on
the principal other market on which the Common Stock is then traded, and (ii) a
Last Reported Sale Price for the Common Stock is available on such securities
exchange or market. If the Common Stock (or other security for which a closing
sale price must be determined) is not so listed or traded, “Trading Day” means
a “Business Day.”


          “Trading
Price” of the Notes on any date of determination means the average of the
secondary market bid quotations obtained by the Bid Solicitation Agent for
$5,000,000 principal amount of the Notes at approximately 3:30 p.m., New York
City time, on such determination date from three independent nationally recognized
securities dealers selected by the Company; provided
that, if three such bids cannot reasonably be obtained by the Bid
Solicitation Agent but two such bids are obtained, then the average of the two
bids shall be used, and if only one 


5





such bid can
reasonably be obtained by the Bid Solicitation Agent, that one bid shall be
used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid
for $5,000,000 principal amount of the Notes from a nationally recognized
securities dealer, then the trading price per $1,000 principal amount of Notes
will be deemed to be less than 98% of the product of the Last Reported Sale
Price of the Common Stock and the applicable Conversion Rate.


          “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)

 
	
  

 	
  

 	
  

 
	
 “Additional
 Shares”

 	
  

 	
 6.04(a)

 
	
  

 	
  

 	
  

 
	
 “Adjustment
 Event”

 	
  

 	
 6.03(l)

 
	
  

 	
  

 	
  

 
	
 “Cash
 Settlement”

 	
  

 	
 6.02(c)

 
	
  

 	
  

 	
  

 
	
 “Clearstream”

 	
  

 	
 5.02(a)

 
	
  

 	
  

 	
  

 
	
 “Combination
 Settlement”

 	
  

 	
 6.02(c)

 
	
  

 	
  

 	
  

 
	
 “Company
 Notice”

 	
  

 	
 5.01(b)

 
	
  

 	
  

 	
  

 
	
 “Company
 Notice Date”

 	
  

 	
 5.01(b)

 
	
  

 	
  

 	
  

 
	
 “Conversion Date”

 	
  

 	
 6.02(b)

 
	
  

 	
  

 	
  

 
	
 “Determination
 Date”

 	
  

 	
 6.03 (l)

 
	
  

 	
  

 	
  

 
	
 “Dividend
 Threshold”

 	
  

 	
 6.03(d)

 
	
  

 	
  

 	
  

 
	
 “Effective
 Date”

 	
  

 	
 6.04(c)

 
	
  

 	
  

 	
  

 
	
 “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)

 


6









	
  

 	
  

 	
  

 
	
 Term

 	
  

 	
 Defined in Section

 
	

 


 	
  

 	

 


 
	
  

 	
  

 	
  

 
	
 “Measurement
 Period”

 	
  

 	
 6.02(a)

 
	
  

 	
  

 	
  

 
	
 “Physical
 Settlement”

 	
  

 	
 6.02(c)

 
	
  

 	
  

 	
  

 
	
 “Reorganization
 Event”

 	
  

 	
 6.05(a)

 
	
  

 	
  

 	
  

 
	
 “Reference
 Property”

 	
  

 	
 6.05(a)

 
	
  

 	
  

 	
  

 
	
 “Settlement
 Date”

 	
  

 	
 6.02(c)

 
	
  

 	
  

 	
  

 
	
 “Settlement
 Method”

 	
  

 	
 6.02(c)

 
	
  

 	
  

 	
  

 
	
 “Spin-Off”

 	
  

 	
 6.03(c)

 
	
  

 	
  

 	
  

 
	
 “Trading
 Price Condition”

 	
  

 	
 6.02(a)

 
	
  

 	
  

 	
  

 
	
 “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 “5.00%
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 $862,500,000, 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 May 15, 2015. 


                    (c)
Interest on the Notes shall accrue at a rate of 5.00% 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 payment. Interest shall be
payable semi-annually in arrears on November 15 and May 15 in each
year, commencing November 15, 2012. 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 shall accrue for such intervening period. 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 


7





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
specified a Fundamental Change Purchase Date that is after a Regular Record
Date and on or prior to the corresponding Interest Payment Date, or (iii) 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. The Company’s delivery
to the Holder of Common Stock, cash or a combination of cash and Common Stock,
as applicable, together with any cash payment for any fractional share of
Common Stock, into which a Note is convertible 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. 


                    (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 $862,500,000, but shall be at least $750,000,000. 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) 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 


8





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.


          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
CHIEF FINANCIAL OFFICER AT C/O ANNALY CAPITAL MANAGEMENT, INC., 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.


9





          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 CHIEF FINANCIAL OFFICER
AT C/O ANNALY CAPITAL MANAGEMENT, INC., 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. 


          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. 


10





          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 pay for or deliver
 any consideration required to be paid for or delivered to a Holder entitled
 to receive the Change of Control 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).

 
	
  

 	
  

 
	
  

 	
 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. 

 


11





                    (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 Fundamental Change Purchase Price of any Note, 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. 

 


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 


12





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. 


          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 


13






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.


14





          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 of 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. 


15





                    (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.


16





                              (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.


          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, at the
Conversion Rate in effect at the time of conversion, (1) prior to the close of
business on the Business Day immediately preceding February 15, 2015, only upon
satisfaction of one or more of the conditions described in clauses (i) through
(iv) below and (2) on or after February 15, 2015, 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), regardless of
whether any of the conditions described in clauses (i) through (iv) below has
been met. 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.


                              (i)
Prior to the close of business on the Business Day immediately preceding
February 15, 2015, a Holder may surrender its Notes for conversion during any
calendar quarter commencing after June 30, 2012 (and only during such calendar
quarter), if the Last Reported Sale Price of the Common Stock for at least 20
Trading Days (whether or not consecutive) during the period of 30 consecutive
Trading Days ending on the last Trading Day of the preceding calendar quarter
exceeds 110% of the applicable Conversion Price in effect on each applicable
Trading Day. The Company shall notify the Trustee and the Conversion Agent if
the Notes become convertible in accordance with this Section 6.02(a)(i).


                              (ii)
Prior to the close of business on the Business Day immediately preceding
February 15, 2015, a Holder may surrender its Notes for conversion during the
five Business Day period after any five consecutive Trading Day period (the
“Measurement Period”) in which the Trading Price per $1,000 principal amount of
Notes, as determined following a request by a Holder in accordance with the
procedures set forth in this Section 6.02(a)(ii), for each Trading Day of such
Measurement Period was less than 98% of the product of the Last Reported Sale
Price of the Common Stock and the Conversion Rate on such Trading Day (the
“Trading Price Condition”). The Bid Solicitation Agent shall have no obligation
to determine the Trading Price of the Notes in 


17





accordance
with this Section 6.02(a)(ii) unless requested by the Company, and the Company
shall have no obligation to make such request unless a Holder of Notes provides
the Company with reasonable evidence that the Trading Price per $1,000
principal amount of Notes would be less than 98% of the product of the Last
Reported Sale Price of the Common Stock and the applicable Conversion Rate. The
Company shall instruct the Bid Solicitation Agent to determine (or, if the
Company is then acting as Bid Solicitation Agent, the Company shall determine)
the Trading Price of the Notes beginning on the next Trading Day promptly
following the receipt of such evidence and on each successive Trading Day until
such Trading Day on which the Trading Price per $1,000 principal amount of
Notes is greater than or equal to 98% of the product of the Last Reported Sale
Price of the Common Stock and the applicable Conversion Rate. If the Company
does not so instruct the Bid Solicitation Agent to obtain (or, if the Company
is then acting as Bid Solicitation Agent, the Company does not obtain) bids
when required, the Trading Price per $1,000 principal amount of the Notes shall
be deemed to be less than 98% of the product of the Last Reported Sale Price of
the Common Stock and the applicable Conversion Rate on each day the Company
fails to do so. If the Trading Price Condition has been met, the Company shall
so notify Holders, the Trustee and the Conversion Agent. If, at any time after
the Trading Price Condition has been met, the Trading Price per $1,000
principal amount of Notes is greater than or equal to 98% of the product of the
Last Reported Sale Price of the Common Stock and the Conversion Rate for such
date, the Company shall so notify Holders, the Trustee and the Conversion
Agent. 


                              (iii)
Prior to the close of business on the Business Day immediately preceding
February 15, 2015, if the Company elects to:


                                        (A)
issue to all or substantially all holders of Common Stock any rights, options
or warrants entitling them for a period of not more than 45 calendar days after
the announcement date of such issuance to subscribe for or purchase shares of
Common Stock at less than the average of the Last Reported Sale Prices of a
share of Common Stock for the 10 consecutive Trading Day period ending on, and
including, the Trading Day immediately preceding the date of announcement of
such issuance; or


                                        (B)
distribute to all, or substantially all, holders of Common Stock assets, debt
securities or rights to purchase securities of the Company, which distribution
has a per share value, as reasonably determined by the Company’s Board of
Directors, exceeding 10% of the Last Reported Sale Price of the Common Stock on
the Trading Day preceding the date of announcement for such distribution,


then, in
either case, the Company shall notify the Holders of the Notes at least 35
Scheduled Trading Days prior to the Ex-Dividend Date for such issuance or
distribution. Once the Company has given such notice, Holders may surrender
Notes for conversion at any time until the earlier of (1) 5:00 P.M., New York
City time, on the Business Day immediately preceding the Ex-Dividend Date and
(2) the Company’s announcement that such issuance or distribution will not take
place, even if the Notes are not otherwise convertible at such time. A Holder
of the Notes may not exercise this conversion right if it will participate (as
a result of holding the Notes, and at the same time on the same terms as Common
Stock holders participate) in any of the transactions described above as if
such Holder held a number of shares of Common Stock equal to the applicable
Conversion Rate, multiplied by the principal amount of Notes held by such
Holder divided by $1,000 without having to convert its Notes.


                              (iv)
Prior to the close of business on the Business Day immediately preceding
February 15, 2015, if a transaction or event that constitutes a Fundamental
Change or a Change of Control Make-Whole occurs, regardless of whether a Holder
has the right to require the Company to purchase the Notes pursuant to Article V hereof, or if the Company is
a party to a consolidation, merger, binding share exchange, sale, conveyance,
transfer or lease of all or substantially all of the Company’s assets, pursuant
to which the Common Stock would be converted into cash, securities or other
assets, Holders may surrender Notes for conversion at any time from or after
the date which is 35 Scheduled Trading Days prior to the anticipated effective
date of such transaction (or, if later, the Business Day after the Company
gives notice of such transaction) until 35 Trading Days after the actual
effective date of such transaction (or, if such transaction also constitutes a
Fundamental Change, until the related Fundamental Change Purchase Date). The
Company shall notify Holders and the Trustee: (1) as promptly as practicable
following the date the Company publicly announces such transaction, but in no
event less than 35 Scheduled Trading Days prior to the anticipated effective
date of such transaction or (2) if the Company does not have knowledge of such
transaction at least 35 Scheduled Trading Days prior to the anticipated
effective 


18





date of such
transaction, within one Business Day of the date upon which the Company
receives notice, or otherwise becomes aware, of such transaction but in no
event later than the actual effective date of such transaction.


Failure by the
Company to give any notice required by Section 6.02(a), or any defect therein,
shall not affect the legality or validity of the relevant transaction or event.



                    (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.


                              (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 which time the rights of the Holders of such converted
Notes as Holders shall cease. Each conversion shall be deemed to have been
effected as to any Notes (or portion thereof) surrendered for conversion on the
relevant Conversion Date, and with respect to any shares of Common Stock that
are issuable upon such conversion: (i) if such conversion was subject to a
Physical Settlement, the Person in whose name the certificate or certificates
for such shares of Common Stock will be registered, shall become the holder of
record of such shares as of the close of business on the Conversion Date; and
(ii) if such conversion was subject to a Combination Settlement, the Person in
whose name the certificate or certificates for such shares of Common Stock will
be registered, shall become the holder of record of such shares as of the close
of business on the last Trading Day of the relevant Cash Settlement Averaging
Period.


                              (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, cash or a combination
of shares of Common Stock and cash, as applicable, 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.


                              (vii)
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 


19





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 specified a Fundamental Change
Purchase Date that is after a Regular Record Date and on or prior to the
corresponding Interest Payment Date; or (iii) 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.


                    (c)
Settlement upon Conversion. Upon any conversion of any Note, the Company
shall deliver to converting Holders, in respect of each $1,000 principal amount
of Notes being converted, at the Company’s election, in full satisfaction of
the Company’s Conversion Obligation, (1) shares of Common Stock, together with
cash in lieu of fractional shares, if any (a “Physical Settlement”), (2) a cash payment without any delivery of
shares of Common Stock (a “Cash
Settlement”) or (3) a combination of cash and shares of Common Stock,
together with cash in lieu of fractional shares, if any (a “Combination Settlement” and, together
with “Physical Settlement” and “Cash Settlement”, each a “Settlement Method”),
in each case, as set forth below:


                              (i)
Conversions that occur on or after the 25th Scheduled Trading Day immediately
preceding the Stated Maturity will be settled using the same Settlement Method.
If the Company has not delivered a notice of election of settlement method
prior to the 26th Scheduled Trading Day immediately preceding the Stated
Maturity in respect of conversions occurring on or after the 25th Scheduled
Trading Day prior to the Stated Maturity, the Company will be deemed to have
elected Combination Settlement and the Specified Dollar Amount will be equal to
$1,000.


                              (ii)
Conversions that occur prior to the 25th Scheduled Trading Day prior to the
Stated Maturity, will be settled using the same Settlement Method for all
conversions occurring on any given Conversion Date. Except for any conversions
that occur on or after the 25th Scheduled Trading Day prior to the Maturity
Date, however, the Company will not have any obligation to use the same
Settlement Method with respect to conversions that occur on different
Conversion Dates. If the Company elects a Settlement Method, the Company will
inform Holders so converting through the Trustee of such Settlement Method that
has been selected no later than the second Trading Day immediately following
the related Conversion Date (or, in the case of any conversions occurring on or
after the 25th Scheduled Trading Day prior to the Stated Maturity, no later
than the 26th Scheduled Trading Day prior to the Stated Maturity). If the
Company does not timely elect a Settlement Method in respect of a particular
Conversion Date, the Company will be deemed to have elected Combination
Settlement in respect of the Company’s Conversion Obligation and the Specified
Dollar Amount will be equal to $1,000. If the Company has timely elected
Combination Settlement in respect of any conversion, but fails to notify the
converting Holders of the Specified Dollar Amount, the Company will be deemed
to have elected that the Specified Dollar Amount be $1,000.


                              (iii)
The type and amount of consideration due upon conversion will be computed as
follows:


                              (A)
If the Company has elected a Physical Settlement with respect to any Notes
tendered for conversion, the Company shall deliver to the converting Holder a
number of shares of Common Stock equal to the product of (1) the aggregate
principal amount of Notes to be converted, divided by $1,000, and (2) the
applicable Conversion Rate, together with cash in lieu of fractional shares.


                              (B)
If the Company has elected a Cash Settlement with respect to any Notes tendered
for conversion, the Company shall deliver, for each $1,000 principal amount of
Notes being converted, cash in an amount equal to the sum of the Daily
Conversion Values for each of the twenty (20) consecutive Trading Days during
the relevant Cash Settlement Averaging Period.


                              (C)
If the Company has elected or is deemed to have elected a Combination
Settlement with respect to any Notes tendered for conversion, the Company shall
pay or deliver, as the case may be, to the converting Holder for each $1,000
principal amount of Notes being converted, the sum of the Daily Settlement
Amounts for each of the twenty (20) consecutive Trading Days during the
relevant Cash Settlement Averaging Period.


20





Except for
conversions upon a Fundamental Change as provided in Section 6.04, (1) in the
case of a Physical Settlement, the Company shall deliver the consideration due
in respect of conversion no later than the third Business Day immediately
following the relevant Conversion Date and (2) in the case of any other
Settlement Method, the Company shall deliver the consideration due in respect
of the conversion no later than the third Business Day immediately following
the last Trading Day of the relevant Cash Settlement Averaging Period (each,
the “Settlement Date”). 


                              
(iv) Solely for purposes of determining the payments and deliveries due upon
conversion under this Section 6.02(c), and notwithstanding the definition of
“Trading Day” contained in Section 1.01, “Trading Day” means a day on which (i)
there is no Market Disruption Event and (ii) trading in the Common Stock
generally occurs on The New York Stock Exchange or, if the Common Stock is not
then listed on The New York Stock Exchange, on the principal other United
States national or regional securities exchange on which the Common Stock is
then listed or, if the Common Stock is not then listed on a United States
national or regional securities exchange, on the principal other market on
which the Common Stock is then listed or admitted for trading. If the Common
Stock (or other security for which a Daily VWAP must be determined) is not so
listed or admitted for trading, “Trading Day” means a “Business Day.”


                              (v)
The Company shall not issue fractional shares of Common Stock upon conversion
of Notes. If multiple Notes 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 shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of Common Stock would
be issuable upon the conversion of any Notes, the Company shall make payment
therefor in cash in lieu of fractional shares of Common Stock based on:


	
  

 	
  

 	
  

 
	
  

 	
 (1)

 	
 if Physical
 Settlement applies, on the Daily VWAP of the Common Stock on the relevant
 Conversion Date, and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 if
 Combination Settlement applies, the Daily VWAP of the Common Stock on the
 last Trading Day of the relevant Cash Settlement Averaging Period. 

 



                    (d)
Taxes on Conversion. If a Holder converts Notes 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. 


                    (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 


21





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 the open of business on such
 Ex-Dividend Date or effective date, as applicable

 
	
  

 	
  

 	
  

 
	
  

 	
 OS0 =

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

 
	
  

 	
  

 	
  

 
	
  

 	
 OS1 =

 	
 the number of
 shares of Common Stock outstanding immediately after giving pro forma effect
 to such dividend, distribution, share split or share combination

 



Such
adjustment shall become effective immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution, or immediately after the
open of business on the effective date 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 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 to the Ex-Dividend Date for such
 distribution

 


22









	
  

 	
  

 	
  

 
	
  

 	
 CR1 =

 	
 the Conversion
 Rate in effect immediately after the open of business on such Ex-Dividend
 Date

 
	
  

 	
  

 	
  

 
	
  

 	
 OS0 =

 	
 the number
 of shares of Common Stock outstanding immediately prior to 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 the open of business on the
Ex-Dividend Date for such issuance. 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 Ex-Dividend Date for such issuance had not occurred. 


          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: 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 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 the open of business on such
 Ex-Dividend Date

 
	
  

 	
  

 	
  

 
	
  

 	
 SP0 =

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

 
	
  

 	
  

 	
  

 
	
  

 	
 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
 Ex-Dividend Date for such distribution.

 


23





Such
adjustment shall become effective immediately after the open of business on the
Ex-Dividend Date for 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. In addition, if the effective date for the Spin-Off
is less than 10 Trading Days prior to, and including, the end of the Cash
Settlement Averaging Period in respect of any conversion, references in the
portion of this Section 6.03(c) related to Spin-Offs to 10 Trading Days shall
be deemed replaced, for purposes of calculating the affected daily Conversion
Rates in respect of that conversion, with such lesser number of Trading Days as
have elapsed from, and including, the effective date for such Spin-Off to, and
including, the last Trading Day of such Cash Settlement Averaging Period.


                    (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, other than a regular
quarterly dividend that does not exceed $0.55 per share, as subject to
adjustment as provided below (the “Dividend Threshold”), in which case,
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
 - DTA

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
 SP0-C

 	
  

 



          where,



24









	
  

 	
  

 
	
 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 open of business on 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, and including, the Trading Day
 immediately preceding the Ex-Dividend Date for such dividend or distribution

 
	
  

 	
  

 
	
 C =

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

 
	
  

 	
  

 
	
 DTA =

 	
 the initial
 Dividend Threshold amount, provided that if the dividend is not a regular
 quarterly dividend, the Dividend Threshold will be zero

 



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. Such increase to the Conversion
Rate will become effective immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution. 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.


          The
Dividend Threshold will be adjusted, in a manner inversely proportional to
adjustments to the Conversion Rate; provided that no adjustment will be made to
the Dividend Threshold for any adjustment to the Conversion Rate under this
Section 6.03(d). If an adjustment is required to be made as set forth in this
Section 6.03(d) as a result of a distribution that is not a regular quarterly
dividend, the Dividend Threshold amount will be deemed to be zero.
Notwithstanding the foregoing, if at any time regular dividends are distributed
other than on a quarterly basis, the Dividend Threshold amount shall be appropriately
adjusted and shall apply to such regular dividends.


          If
“C” (as defined above) is equal to or greater than “SP0” (as defined above), or if the
difference between “SP0”
and “C” is less than $0.01, in lieu of the foregoing increase, each Holder of a
Note shall receive, in respect of each $1,000 principal amount thereof, at the
same time and upon the same terms as holders of shares of Common Stock, the
amount of cash that such Holder would have received if such holder owned a
number of shares of Common Stock equal to the Conversion Rate on the Record
Date for such cash dividend or distribution. 


          If
the Company makes a dividend or distribution to all or substantially all
holders of Common Stock that consists in the aggregate of both cash and shares
of Common Stock that is deductible for U.S. federal income tax purposes, the
adjustment to the Conversion Rate shall be determined pursuant to this Section
6.03(d) only, with the value of Common Stock, as determined by the Company’s
Board of Directors, constituting “cash” for purposes hereof.


                    (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

 	
  

 


25





          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 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
Trading Day next succeeding the date such tender or exchange offer expires is
less than 10 Trading Days prior to, and including, the end of the Cash
Settlement Averaging Period in respect of any conversion, references in this
Section 6.03(e) to 10 Trading Days shall be deemed replaced, for purposes of
calculating the affected daily Conversion Rates in respect of that conversion,
with such lesser number of Trading Days as have elapsed from, and including,
the Trading Day next succeeding the date such tender or exchange offer expires
to, and including, the last Trading Day of such Cash Settlement Averaging
Period.


          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)
Notwithstanding the foregoing provisions of this Section 6.03, if a Conversion
Rate adjustment becomes effective on any date as described above, and a Holder
that has converted its Notes on or after such date and on or prior to the related
Record Date would be treated as the record holder of shares of Common Stock as
of the related Conversion Date as set forth in Section 6.02(b) based on an adjusted Conversion Rate for such
Ex-Dividend Date, then, notwithstanding the foregoing Conversion Rate
adjustment provisions set forth in this Section 6.03, the Conversion Rate
adjustment relating to such Ex-Dividend Date shall not be made for such
converting Holder. Instead, such Holder shall be treated as if such Holder were
the record owner of a number of shares of Common Stock based on an unadjusted
Conversion Rate and participate in the related dividend, distribution or other
event giving rise to such adjustment.


                    (g)
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. 


                    (h)
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 


26





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. 


                    (i)
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). 


                    (j)
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. 


                    (k)
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.


                    (l)
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. 


                    (m)
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, 


27





                              (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. 


                    (n)
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. 


                    (o)
Whenever any provision of this Article VI requires a calculation of the Daily
VWAP, Daily Conversion Values or Daily Settlement Amounts 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 such Daily VWAPs, Daily Conversion Values or Daily Settlement
Amounts are 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 the Conversion Rate applicable to the Notes so converted will be
increased by an additional number of shares of Common Stock (the “Additional
Shares”) as described below, which is also referred to as 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. 


                    (b)
Upon surrender of Notes for conversion in connection with a Fundamental Change,
the Company shall have the right to deliver, in lieu of shares of Common Stock,
including the Additional Shares, cash or a combination of cash and shares of
Common Stock as provided under Section
6.02(c); provided, however, that if the consideration
for the Common Stock in any Fundamental Change described in clause (2) of the
definition of Fundamental Change is comprised entirely of cash, then, for any
conversion of Notes following the Effective Date of such Fundamental Change,
the amounts deliverable by the Company shall be calculated based solely on the
Stock Price for the Fundamental Change and shall be deemed to be an amount
equal to the applicable Conversion Rate (including any adjustment for
Additional Shares described in this Section) multiplied by such Stock Price. In
such event, the amounts deliverable by the Company shall be determined as of
the Conversion Date and paid to Holders in cash on the third Business Day
following the Conversion Date. 


                    (c)
The number of Additional Shares by which the Conversion Rate will be increased
pursuant to Section 6.04(a) shall be 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 Stock Price
paid or deemed paid per share of Common Stock in the Fundamental Change. 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 Stock
Prices set forth in the column headings of the table attached as Schedule A
will be adjusted as of any date on which the Conversion Rate of the Notes is
adjusted pursuant to Section 6.03. The adjusted Stock Prices will equal the
Stock Prices applicable immediately prior to such adjustment, multiplied by a
fraction, the numerator of which is the Conversion Rate immediately prior to
the adjustment and the denominator of which is the Conversion Rate as so 


28





adjusted. The
number of Additional Shares set forth in such table will be adjusted in the
same manner as the Conversion Rate as set forth in Section 6.03.


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


                              (i)
if the Stock Price is between two Stock Prices in the table or the Effective
Date is between two Effective Dates in the table, the number of Additional
Shares by which the Conversion Rate will be increased will be determined by a
straight-line interpolation between the number of Additional Shares set forth
for the higher and lower Stock Prices and the two dates, as applicable, based
on a 365-day year. 


                              (ii)
if the Stock Price is greater than $22.00 (subject to adjustment), no
Additional Shares will be added to the Conversion Rate. 


                              (iii)
if the Stock Price is less than $16.47 (subject to adjustment), no Additional
Shares will be added to the Conversion Rate. 


          Notwithstanding
the foregoing, in no event will the total number of shares of Common Stock
issuable upon conversion of the Notes exceed 60.7165 per $1,000 principal
amount of Notes, subject to adjustment in the same manner as the Conversion
Rate as set forth above in Section 6.03. 


          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”). 


Provided, however,
that at and after the effective time of the Reorganization Event (i) the
Company will continue to have the right to determine the form of consideration
to be paid or delivered, as the case may be, upon conversion of the Notes, as
set forth under Section 6.02(c) and (ii) (x) the amount payable in cash upon
conversion of the Notes as set forth under Section 6.02(c) will continue to be payable in cash, (y) the
number of shares of Common Stock that the Company (if the Company elects
Physical Settlement or Combination Settlement) would have been required to
deliver upon conversion of the Notes under Section 6.02(c) will be instead deliverable in the amount and type
of Reference Property that a holder of that number of shares of Common Stock
would have been entitled to receive in such Reorganization Event and (z) the
Daily VWAP will be calculated based on the value of a unit of 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), the Reference Property
into which the Notes will be convertible or used to calculate the Daily VWAP,
as the case may be, 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


29





(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
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; 


30





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 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 (if any), 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 (if any) 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.


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 


31





(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 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. 


32





                    (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 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. 


33





          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/ Yana Kisienko

 	
  

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
 Name: Yana Kisienko

 	
  

 
	
  

 	
  

 	
 Title: Vice President

 	
  

 


34





SCHEDULE A


          The
following table sets forth the hypothetical Stock Price and the number of
Additional Shares to be received per $1,000 principal amount of Notes pursuant
to Section 6.04 of this Supplemental Indenture: 


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Stock Price

 
	
  

 
	
 Effective
 Date

 	
  

 	
 $16.47

 	
  

 	
 $16.75

 	
  

 	
 $17.00

 	
  

 	
 $17.50

 	
  

 	
 $18.00

 	
  

 	
 $18.50

 	
  

 	
 $18.94

 	
  

 	
 $20.00

 	
  

 	
 $21.00

 	
  

 	
 $22.00

 
	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 May
 14, 2012

 	
  

 	
 7.9196

 	
  

 	
 7.7404

 	
  

 	
 7.5073

 	
  

 	
 6.0970

 	
  

 	
 4.8355

 	
  

 	
 3.7200

 	
  

 	
 2.8581

 	
  

 	
 1.2579

 	
  

 	
 0.0698

 	
  

 	
 0.0667

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 May
 15, 2013

 	
  

 	
 7.9196

 	
  

 	
 7.7255

 	
  

 	
 7.2447

 	
  

 	
 5.8144

 	
  

 	
 4.5383

 	
  

 	
 3.4142

 	
  

 	
 2.5483

 	
  

 	
 0.9146

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 May
 15, 2014

 	
  

 	
 7.9196

 	
  

 	
 7.4335

 	
  

 	
 6.6238

 	
  

 	
 5.1251

 	
  

 	
 3.7917

 	
  

 	
 2.6287

 	
  

 	
 1.7491

 	
  

 	
 0.1785

 	
  

 	
 0.0000

 	
  

 	
 0.0000

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 May
 15, 2015

 	
  

 	
 7.9196

 	
  

 	
 6.9046

 	
  

 	
 6.0266

 	
  

 	
 4.3460

 	
  

 	
 2.7587

 	
  

 	
 1.2572

 	
  

 	
 0.0014

 	
  

 	
 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 CHIEF
FINANCIAL OFFICER AT C/O ANNALY CAPITAL MANAGEMENT, INC., 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 #
 035710AB8

 	
 as revised by the Schedule of Increases and

 
	
 ISIN #
 US035710AB87

 	
 Decreases in Global Note attached hereto

 
	
 Euroclear
 and Clearstream Common Code: #[•]

 	
  

 


5.00% 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 May 15, 2015, and to pay interest thereon from May 14, 2012, or from
the most recent November 15 or May 15 (each, an “Interest Payment Date”) to
which interest has been paid, deemed paid or duly provided for, semi-annually
in arrears on November 15 and May 15 in each year, commencing November 15,
2012, at the rate of 5.00% 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 November 1 or May 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: May 14,
2012


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 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 Second

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 Second Supplemental Indenture dated
as of May 14, 2012 (the “Supplemental Indenture”) to an indenture dated
as of February 12, 2010 (as supplemented, and 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.) $750,000,000 (or
$862,500,000 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
specified a Fundamental Change Purchase Date that is after a Regular Record
Date and on or prior to the corresponding Interest Payment Date, or (iii) 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. The Company’s delivery to the Holder of Common Stock, cash or
a combination of cash and Common Stock, as applicable, together with any cash
payment for any fractional share of Common Stock, into 


A-4





which a Note
is convertible upon conversion will be deemed to satisfy 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. 


          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 certain conditions applicable to certain periods specified in the Supplemental
Indenture, at any time until the close of business on the second Scheduled
Trading Day immediately preceding the Stated Maturity of this Note (excluding
the date of such Stated Maturity), the Holder hereof has the right, at its
option, to convert each $1,000 principal amount of this Note into cash, shares
of Common Stock or a combination of cash and shares of Common Stock, at the
Company’s election, determined as set forth in the Supplemental Indenture,
based on the applicable Conversion Rate, as the same may be adjusted from time
to time pursuant to the terms of the Indenture.


          The
initial Conversion Rate is, in respect of each $1,000 principal amount of this
Note, 52.7969 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. 


          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 


A-5





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, into cash, shares of Common Stock
of Annaly Capital Management, Inc., or a combination thereof, at Annaly Capital
Management Inc.’s election in accordance with the terms of the Supplemental
Indenture and the Original Indenture referred to in this Note, and directs that
any cash payable and any 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:

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 


 	
  

 	
  

 


A-10