exv4w1



 





Exhibit 4.1





 







FRANKLIN BANK CORP.,




ISSUER




AND




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




TRUSTEE





 







FIRST SUPPLEMENTAL INDENTURE




Dated as of April 18, 2007




Supplementing that Certain




INDENTURE




Dated as of April 9, 2007





 







4% CONTINGENT CONVERTIBLE SENIOR NOTES DUE 2027





 







 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I ISSUANCE OF SECURITIES	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 1.1	 	Issuance of Notes; Principal Amount; Maturity	 	 	1	 
	 
	 	SECTION 1.2	 	Interest	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 2.1	 	Definitions	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III SECURITY FORMS	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 3.1	 	Form Generally	 	 	9	 
	 
	 	SECTION 3.2	 	Form of Note	 	 	9	 
	 
	 	SECTION 3.3	 	Form of Certificate of Authentication	 	 	22	 
	 
	 	SECTION 3.4	 	Form of Conversion Notice	 	 	22	 
	 
	 	SECTION 3.5	 	Form of Assignment	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV REMEDIES	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 4.1	 	Events of Default	 	 	24	 
	 
	 	SECTION 4.2	 	Acceleration of Maturity; Rescission and Annulment	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 5.1	 	Company May Consolidate, Etc. Only on Certain Terms	 	 	27	 
	 
	 	SECTION 5.2	 	Successor Substituted	 	 	28	 
	 
	 	SECTION 5.3	 	Indenture Article VIII	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI CERTAIN COVENANTS	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 6.1	 	Commission and Other Reports	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII REDEMPTION OF SECURITIES	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 7.1	 	Right of Redemption	 	 	29	 
	 
	 	SECTION 7.2	 	Conversion Arrangement on Call for Redemption	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII CONVERSION OF THE SECURITIES	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 8.1	 	Conversion Privilege	 	 	30	 
	 
	 	SECTION 8.2	 	Conversion Procedure	 	 	33	 
	 
	 	SECTION 8.3	 	Taxes on Conversion	 	 	35	 
	 
	 	SECTION 8.4	 	Company to Provide Stock	 	 	35	 
	 
	 	SECTION 8.5	 	Adjustment of Conversion Price	 	 	35	 
	 
	 	SECTION 8.6	 	No Adjustment	 	 	40	 
	 
	 	SECTION 8.7	 	Equivalent Adjustments	 	 	40	 
	 
	 	SECTION 8.8	 	Adjustment for Tax Purposes	 	 	40	 
	 
	 	SECTION 8.9	 	Notice of Adjustment	 	 	41	 
	 
	 	SECTION 8.10	 	Notice of Certain Transactions	 	 	41	 






 









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	SECTION 8.11	 	Effect of Reclassification, Consolidation, Merger, Share Exchange or Sale on Conversion Privilege	 	 	42	 
	 
	 	SECTION 8.12	 	Trustee’s Disclaimer	 	 	43	 
	 
	 	SECTION 8.13	 	Voluntary Reduction	 	 	43	 
	 
	 	SECTION 8.14	 	Conversion Value of Notes Tendered	 	 	43	 
	 
	 	SECTION 8.15	 	Physical Settlement Election	 	 	44	 
	 
	 	SECTION 8.16	 	Simultaneous Adjustments	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX REPURCHASES OF NOTES AT OPTION OF HOLDER ON SPECIFIED DATES	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 9.1	 	Repurchase of Notes at Option of the Holder on Specified Dates	 	 	45	 
	 
	 	SECTION 9.2	 	Effect of Repurchase Notice	 	 	48	 
	 
	 	SECTION 9.3	 	Deposit of Repurchase Price	 	 	49	 
	 
	 	SECTION 9.4	 	Notes Repurchased in Part	 	 	49	 
	 
	 	SECTION 9.5	 	Covenant to Comply with Notes Laws upon Repurchase of Notes	 	 	49	 
	 
	 	SECTION 9.6	 	Repayment to the Company	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 10.1	 	Right to Require Repurchase Upon a Fundamental Change	 	 	50	 
	 
	 	SECTION 10.2	 	Notices; Method of Exercising Repurchase Right, Etc	 	 	50	 
	 
	 	SECTION 10.3	 	Certain Definitions	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI SUPPLEMENTAL INDENTURES	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 11.1	 	Supplemental Indentures Without Consent of Holders of Notes	 	 	54	 
	 
	 	SECTION 11.2	 	Supplemental Indentures with Consent of Holders of Notes	 	 	55	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XII MEETINGS OF HOLDERS OF NOTES	 	 	57	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 12.1	 	Purposes for Which Meetings May Be Called	 	 	57	 
	 
	 	SECTION 12.2	 	Call, Notice and Place of Meetings	 	 	57	 
	 
	 	SECTION 12.3	 	Persons Entitled to Vote at Meetings	 	 	57	 
	 
	 	SECTION 12.4	 	Quorum; Action	 	 	57	 
	 
	 	SECTION 12.5	 	Determination of Voting Rights; Conduct and Adjournment of Meetings	 	 	58	 
	 
	 	SECTION 12.6	 	Counting Votes and Recording Action of Meetings	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XIII WAIVER OF PAST DEFAULTS	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	 
	 	SECTION 13.01	 	Waiver of Past Defaults.	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	SCHEDULE A	 	 	1	 






ii









 





     This First Supplemental Indenture, dated as of April 18, 2007 (the “Supplemental Indenture”),
between Franklin Bank Corp., a corporation duly organized and existing under the laws of the State
of Delaware, having its principal office at 9800 Richmond Avenue, Suite 680, Houston, Texas 77042
(herein called the “Company”), and The Bank of New York Trust Company, N.A., a national banking
association, as Trustee hereunder (herein called the “Trustee”), supplementing that certain
Indenture, dated as of April 9, 2007, between the Company and the Trustee (the “Indenture”).



RECITALS OF THE COMPANY




     A. The Company has duly authorized the execution and delivery of the Indenture to provide for
the issuance from time to time of its unsecured debentures, notes, or other evidences of
indebtedness to be issued in one or more series as provided for in the Indenture.



     B. The Indenture provides that the Securities of each series shall be in substantially the
form set forth in the Indenture, or in such other form as may be established by or pursuant to a
Board Resolution or in one or more supplemental indentures thereto, in each case with such
appropriate insertions, omissions, substitutions, and other variations as are required or permitted
by the Indenture, and may have such letters, numbers, or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently therewith, be determined by the officers executing such
securities, as evidenced by their execution thereof.



     C. The Company and the Trustee have agreed that the Company shall issue and deliver, and the
Trustee shall authenticate, Securities denominated “4% Contingent Convertible Senior Notes due
2027” (the “Notes”) pursuant to the terms of this Supplemental Indenture and substantially in the
form set forth in Section 3.2 below, in each case with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by the Indenture and this
Supplemental Indenture, and with such letters, numbers, or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of such Notes.



ARTICLE I

ISSUANCE OF SECURITIES





			
	SECTION 1.1	 	Issuance of Notes; Principal Amount; Maturity.





     (1) On April 18, 2007, the Company shall issue and deliver to the Trustee, and the Trustee
shall authenticate, Notes substantially in the form set forth in Section 3.2 below, in each case
with such appropriate insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture and this Supplemental Indenture, and with such letters, numbers, or
other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their execution of such Notes.



1









 





     (2) The Notes shall be issued in the aggregate principal amount of $100,000,000 and shall
mature on May 1, 2027. The Notes shall be issued only in denominations of $1,000 principal amount
and any integral multiple thereof.




			
	SECTION 1.2	 	Interest.





     (1) The Company shall pay interest on the Notes at a rate of 4% per annum (the “Note Interest
Rate”), payable semi-annually in arrears on May 1 and November 1 of each year (each, an “Interest
Payment Date,” as defined in the Indenture), commencing November 1, 2007.



     (2) Interest on a Note will accrue semi-annually at the Note Interest Rate from and including
April 18, 2007 or the last Interest Payment Date in respect of which interest has been paid or duly
provided for, as applicable, to but excluding the next succeeding Interest Payment Date, or the
relevant Conversion Date, Repurchase Date, Fundamental Change Purchase Date or Redemption Date, or
the maturity date, as the case may be.



     (3) Interest shall be paid on each Interest Payment Date to the Person in whose name a given
Note is registered in the Security Register at the close of business on the applicable Regular
Record Date.



     (4) The Company will pay Contingent Interest to Holders during the period commencing May 6,
2012 and ending on October 31, 2012 and for any six-month period thereafter from and including an
Interest Payment Date up to, but excluding, the next Interest Payment Date (each an “Interest
Period”), if the average Contingent Interest Trading Price per $1,000 principal amount of the Notes
for the five Trading Day measurement period ending on the third Trading Day immediately preceding
the first day of the applicable Interest Period (the “Measurement Period”) equals 130% or more of
an equal principal amount of the Notes as of the last day of the Measurement Period. The amount of
Contingent Interest payable per $1,000 principal amount of Notes in any Interest Period pursuant to
this Section 1.2(4) shall equal 0.25% per annum of the average Contingent Interest Trading Price of
$1,000 principal amount of Notes for the applicable Measurement Period. Contingent Interest, if
any, will accrue from the first day of any relevant Interest Period.



     (5) The Company shall pay Contingent Interest owed pursuant to Section 1.2(4) for any Interest
Period on the Interest Payment Date at the end of the applicable Interest Period, to Holders of
Notes as of the Regular Record Date related to such Interest Payment Date.



     (6) Promptly following the first Business Day of an Interest Period for which Contingent
Interest will be payable pursuant to Section 1.2(4), the Company shall notify the Holders of the
right of such Holders to receive Contingent Interest by (i) disseminating a press release
containing this information and by using the Company’s reasonable efforts to post the information on the
Company’s website or otherwise publicly disclose the information and (ii) providing notice to
Holders through the facilities of the Depositary.



2









 





     (7) All references to “interest” in the Supplemental Indenture shall be deemed to include
interest due to Holders of the Notes under both Section 1.2(1) and Section 1.2(4) unless the
context otherwise requires.



     (8) Each Holder is deemed to have agreed (a) that for United States federal income tax
purposes, the Notes will be treated as indebtedness subject to the United States Department of
Treasury regulations governing contingent payment debt instruments, (b) that the Holders will
report original issue discount and interest on the Notes in accordance with the Company’s
determination of both the “comparable yield” and the “projected payment schedule” and (c) to be
bound by the Company’s application of the United States Department of Treasury regulations that
govern contingent payment debt instruments. For this purpose, the “comparable yield” for the Notes
is 6.75% compounded semi-annually and the “projected payment schedule” may be obtained by
contacting the Company at 9800 Richmond Avenue, Suite 680, Houston, Texas 77042, Attention:
Treasurer. The Company shall file with the Trustee no later than the end of each calendar year,
(i) a written notice specifying the amount of original issue discount (including daily rates and
accrual periods) accrued on Outstanding Notes as of the end of such year and (ii) such other
specific information relating to such original issue discount as may then be relevant under the
United States Internal Revenue Code of 1986, as amended. The Trustee has no obligation with
respect to the foregoing clauses (i) and (ii), except to retain such information in its files and
to release the same upon request to any Holder or beneficial owner of the Notes.



     (9) Notwithstanding anything in this Supplemental Indenture or in the Indenture to the
contrary, a Holder that converts its Notes after the Company has called the Notes for redemption
pursuant to Section 7.1(1) of this Supplemental Indenture shall be entitled to receive all accrued
and unpaid interest (including Contingent Interest and Special Interest, if any) to, but excluding,
the Conversion Date.



ARTICLE II

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION





			
	SECTION 2.1	 	Definitions.





     The terms defined in this Section 2.1 (except as herein otherwise expressly provided or unless
the context of this Supplemental Indenture otherwise requires) for all purposes of this
Supplemental Indenture and of any indenture supplemental hereto have the respective meanings
specified in this Section 2.1. All other terms used in this Supplemental Indenture that are
defined in the Indenture or the Trust Indenture Act, either directly or by reference therein
(except as herein otherwise expressly provided or unless the context of this Supplemental Indenture
otherwise requires), have the respective meanings assigned to such terms in the Indenture or the
Trust Indenture Act, as the case may be, as in force at the date of this Supplemental Indenture as
originally executed.



     “Additional Shares” has the meaning specified in Section 8.1(2).



3









 





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



     “Capital Stock” for any Person means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
stock or other interests however designated evidencing the right to participate in the value of the
equity of such Person issued by that Person, but excluding from all of the foregoing any debt
securities convertible into Capital Stock, whether or not such debt securities include any right of
participation with Capital Stock.



     “Code” has the meaning specified in Section 3.1.



     “Common Stock” shall mean shares of the Company’s Common Stock, $0.01 par value per share, as
they exist on the date of this Supplemental Indenture or any other shares of Capital Stock of the
Company into which the Common Stock shall be reclassified or changed.



     “common stock” includes any stock of any class of Capital Stock which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the issuer thereof and which is not subject to redemption
by the issuer thereof.



     “Common Stock Price” 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 such date for the Common Stock as
reported on the Nasdaq Global Select Market or the principal United States securities exchange on
which the Common Stock is traded or listed or, if the Common Stock is not so traded or listed, any
United States system of automated dissemination of quotations of securities prices or an establish
automated over-the-counter trading market in the United States. If the Common Stock is not so
traded, listed or quoted, the “Common Stock Price” will be the average of the mid-point of the last
bid and asked prices for the Common Stock on the relevant date quoted by each of at least three
nationally recognized independent investment banking firms selected by the Company for this
purpose.



     “Company Repurchase Notice” has the meaning specified in Section 9.1(2).



     “Contingent Interest” means the interest amounts payable pursuant to Section 1.2(4) hereof.



     “Contingent Interest Trading Price” of the Notes on any date of determination means the
average of the secondary market bid quotations per Note obtained by the Conversion Agent for this
purpose 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 at least three such bids cannot reasonably be obtained by
the Conversion Agent, but two such bids can reasonably be obtained by the Conversion Agent, then



4









 






the average of such two bids shall be used; provided, further, that if at least two such bids
cannot reasonably be obtained by the Conversion Agent, but one such bid can reasonably be obtained,
then such one bid shall be used. If the Conversion Agent cannot reasonably obtain at least one bid
for $5,000,000 principal amount of the Notes from a nationally recognized securities dealer or, in
the Company’s reasonable judgment, the bid quotations are not indicative of the secondary market
value of the Notes, then the Contingent Interest Trading Price on such date of determination of the
Notes will equal (a) the Applicable Conversion Rate of the Notes multiplied by (b) the Common Stock
Price on such date of determination.



     “Conversion Agent” means The Bank of New York Trust Company, N.A., or any successor entity
thereof.



     “Conversion Price” means U.S.$22.00 per share of Common Stock, subject to the adjustments
described in Section 8.5 hereof.



     “Conversion Date” means, with respect to a Note, the date on which the Holder of the Note has
complied with all requirements under this Supplemental Indenture to convert such Note.



     “Conversion Rate” means the number of shares of Common Stock equal to $1,000 divided by the
Conversion Price, which shall be approximately 45.4545 prior to any adjustment thereto.



     “Conversion Reference Period” means:



     (i) for Notes that are converted during the period beginning on the 30th day prior to May 1,
2027 or any Repurchase Date, the 20 consecutive Trading Days beginning on the third Trading Day
following May 1, 2027 or the applicable Repurchase Date;



     (ii) with respect to optional redemption, the 20 consecutive Trading Days beginning on the
third Trading Day following the Redemption Date; and



     (iii) in all other instances, the 20 consecutive Trading Days beginning on the third Trading
Day following the Conversion Date.



     “Conversion Value” means, for each $1,000 principal amount of Notes, the average of the Daily
Conversion Values for each of the 20 consecutive Trading Days of the Conversion Reference Period.



     “Daily Conversion Value” means, with respect to any Trading Day, the product of (1) the
applicable Conversion Rate and (2) the Volume Weighted Average Price of the Company’s Common Stock
on such Trading Day.



     “Daily Share Amount” means, for each Trading Day of the Conversion Reference Period and for
each $1,000 principal amount of Notes surrendered for conversion, a number of shares (but in no
event less than zero) equal to (i) the amount of (a) the Volume Weighted Average Price for such



5









 






Trading Day multiplied by the Conversion Rate in effect on the Conversion Date, less (b) $1,000;
divided by (ii) the Volume Weighted Average Price for such Trading Day multiplied by 20 .



     “DTC” means The Depository Trust Company, a New York corporation.



     “Effective Date” has the meaning specified in Section 8.1(2).



     “Equity Interests” means with respect to any Person, Capital Stock of any class or kind
ordinarily having the power to vote for the election of directors, managers, or other voting
members of the governing body of such Person, as applicable.



     “Event of Default” has the meaning specified in Section 4.1.



     “Ex-Dividend Date” has the meaning specified in Section 8.1(1)(i).



     “Fundamental Change” has the meaning specified in Section 10.3(2).



     “Fundamental Change Company Notice” has the meaning specified in Section 10.2.



     “Fundamental Change Repurchase Date” has the meaning specified in Section 10.1.



     “Fundamental Change Repurchase Price” has the meaning specified in Section 10.1.



     “Interest Period” has the meaning specified in Section 1.2(4).



     “Issue Date” means April 18, 2007.



     “Market Price” means the average of the Common Stock Prices for 20 consecutive Trading Days
commencing 30 Trading Days before the record date with respect to any distribution, issuance or
other event requiring such computation, appropriately adjusted (as determined in good faith by the
Board of Directors, whose determination shall be conclusive) to take into account the occurrence,
during the period commencing on the first of such 20 consecutive Trading Days and ending on such
record date, of any event requiring adjustment of the Conversion Price under this Supplemental
Indenture.



     “Measurement Period” has the meaning specified in Section 1.2(4).



     “Net Shares” has the meaning specified in Section 8.14(1).



     “Note Interest Rate” has the meaning specified in Section 1.2(1).



     “Notes” has the meaning ascribed to it in the third paragraph under the caption “Recitals of
the Company.”



     “Notice of Default” means a written notice of the kind specified in Section 4.1.



6









 





     “Offer Expiration Time” has the meaning specified in Section 8.5(4)(i).



     “Physical Settlement Election” has the meaning specified in Section 8.15(1).



     “Place of Conversion” means any city in which any Conversion Agent is located.



     “Post-Fundamental Change Redemption” has the meaning specified in Section 7.1(1).



     “Pre-Dividend Sale Price” has the meaning specified in Section 8.5(5)(i).



     “Principal Return” has the meaning specified in Section 8.14(1).



     “Purchasers” has the meaning specified in Section 7.2.



     “Quarter” has the meaning specified in Section 8.1(1)(i).



     “Record Date” means any Regular Record Date or Special Record Date.



     “Redemption Date,” when used with respect to any Note to be redeemed, means the date fixed for
such redemption by or pursuant to this Supplemental Indenture.



     “Redemption Price,” when used with respect to any Note to be redeemed, means the price at
which it is to be redeemed pursuant to this Supplemental Indenture.



     “Regular Record Date” for interest payable in respect of any Note on any Interest Payment Date
means the April 15 or October 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date.



     “Repurchase Date” has the meaning specified in Section 9.1(1).



     “Repurchase Notice” shall have the meaning specified in Section 9.1(1)(i).



     “Repurchase Price” has the meaning specified in Section 9.1(1).



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



     “Rights Plan” has the meaning specified in Section 8.5(3).



     “Share Price” has the meaning specified in Section 8.1(2).



7









 





     “Significant Subsidiary” has the meaning ascribed to such term under Rule 1-02 of Regulation
S-X under the Securities Act of 1933, as amended.



     “Special Interest” has the meaning specified in Section 4.2.



     “Spinoff Valuation Period” has the meaning specified in Section 8.5(3).



     “Trading Day” means any regular or abbreviated trading day of the Nasdaq Global Select Market
or, if the Common Stock is not traded on the Nasdaq Global Select Market, the principal United
States national securities exchange on which such common stock is traded, or if such common stock
is not traded on the Nasdaq Global Select Market or listed on a United States national securities
exchange, as quoted on any other system of automated dissemination of quotation of securities
prices, or if not so quoted, any day on which the Common Stock is traded regular way in the
over-the-counter market and for which a closing bid and a closing ask price for the Common Stock
are available.



     “Trading Price” on any date of determination means the average of the secondary market bid
quotations per $1,000 principal amount of Notes obtained by the Trustee for $5,000,000 principal
amount of the Notes at approximately 3:30 p.m., New York City time, on such determination date from
two independent nationally recognized securities dealers the Company selects, which may include any
of the Underwriters; provided that if at least two such bids cannot reasonably be obtained by the
Trustee, but one such bid can reasonably be obtained by the Trustee, this one bid shall be used.
If the Trustee cannot reasonably obtain at least one such bid or, in the Company’s reasonable
judgment, the bid quotations are not indicative of the secondary market value of the Notes, then
the Trading Price of the Notes will be deemed to be less than 98% of the applicable Conversion Rate
of the Notes multiplied by the Common Stock Price on such determination date.



     “Underwriters” means RBC Capital Markets Corporation and Bear, Stearns & Co. Inc.



     “Underwriting Agreement” means the Underwriting Agreement, dated April 12, 2007, between the
Company and the Underwriters, as such agreement may be amended from time to time.



     “Volume Weighted Average Price” per share of Common Stock on any Trading Day means such price
as displayed on Bloomberg (or any successor service) page FBTX <equity> VAP in respect of the
period from 9:30 a.m. to 4:00 p.m., New York City time, on such Trading Day; or, if such price is
not available, the Volume Weighted Average Price means the market value per share of Common Stock
on such day as determined by a nationally recognized independent investment banking firm retained
for this purpose by the Company, which may include any of the Underwriters.



     “Waiver Election” has the meaning specified in Section 8.15.



8









 





ARTICLE III

SECURITY FORMS





			
	SECTION 3.1	 	Form Generally.





     The Notes shall be in substantially the form set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this
Supplemental Indenture and the Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be required to comply with
the rules of any securities exchange, the Internal Revenue Code of 1986, as amended, and
regulations of the United States Department of Treasury thereunder (the “Code”), or any applicable
securities laws, or as may, consistent herewith, be determined by the officers executing such
Notes, as evidenced by their execution thereof. All Notes shall be in fully registered form.



     The Trustee’s certificates of authentication shall be in substantially the form set forth in
Section 3.3.



     Conversion notices shall be in substantially the form set forth in Section 3.4.



     Repurchase notices shall be in substantially the form set forth in Section 9.1.



     The Notes shall be printed, lithographed, typewritten or engraved or produced by any
combination of these methods or may be produced in any other manner permitted by the rules of any
automated quotation system or securities exchange (including on steel engraved borders if so
required by any securities exchange upon which the Notes may be listed) on which the Notes may be
quoted or listed, as the case may be, all as determined by the officers executing such Notes, as
evidenced by their execution thereof.



     Upon their original issuance, Notes issued as contemplated by the Underwriting Agreement shall
be issued in the form of one or more Global Securities in definitive, fully registered form without
interest coupons. Each such Global Security shall be registered in the name of DTC, as Depositary,
or its nominee, and deposited with the Trustee, as custodian for DTC, for credit by DTC to the
respective accounts of beneficial owners of the Notes represented thereby (or such other accounts
as they may direct).




			
	SECTION 3.2	 	Form of Note.





[FORM OF FACE]




     FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT. THE ISSUE DATE OF THIS NOTE IS APRIL 18,
2007. THE COMPANY AGREES TO PROVIDE PROMPTLY TO THE HOLDER OF THIS NOTE, UPON WRITTEN REQUEST, THE
ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND



9









 






PROJECTED PAYMENT SCHEDULE. ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO THE COMPANY AT THE
FOLLOWING ADDRESS: FRANKLIN BANK CORP., 9800 RICHMOND AVENUE, SUITE 680, HOUSTON, TEXAS 77042,
ATTENTION: TREASURER.



     [THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:



     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE
TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR
ALL PURPOSES.



     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED
FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]



     [THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY FOR WHICH THE
DEPOSITORY TRUST COMPANY IS TO BE THE DEPOSITARY:



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




10









 





FRANKLIN BANK CORP.




4% CONTINGENT CONVERTIBLE SENIOR NOTE DUE 2027




			
	 	 	 
	No. ______	 	$______






CUSIP NO. ______




     Franklin Bank Corp., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the “Company”, which term includes any successor Person under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay to
______, or registered assigns, the principal sum of ______ United States Dollars
(U.S.$___) [if this Note is a Global Security, then insert — which principal amount may from
time to time be increased or decreased to such other principal amounts (which, taken together with
the principal amounts of all other Outstanding Notes, shall not exceed U.S.$100,000,000 by
adjustments made on the records of the Trustee hereinafter referred to in accordance with the
Indenture)] on May 1, 2027 and to pay interest thereon, from April 18, 2007, or from the most
recent Interest Payment Date (as defined below) to which interest has been paid or duly provided
for, semi-annually in arrears on May 1 and November 1 in each year (each, an “Interest Payment
Date”), commencing November 1, 2007, at the rate of 4% per annum, until the principal hereof is
paid, and at the rate of 4% per annum on any overdue principal and, to the extent permitted by law,
on any overdue interest. The Company will pay Contingent Interest to Holders during the period
commencing May 6, 2012 and ending on October 31, 2012 and for any six-month period thereafter from
and including an Interest Payment Date up to, but excluding, the next Interest Payment Date (each
an “Interest Period”), if the average Contingent Interest Trading Price per $1,000 principal amount
of the Notes for the five Trading Day measurement period ending on the third Trading Day
immediately preceding the first day of the applicable Interest Period (the “Measurement Period”)
equals 130% or more of an equal principal amount of the Notes as of the last day of the Measurement
Period. The amount of Contingent Interest payable per $1,000 principal amount of Notes in any
Interest Period pursuant to this paragraph and Section 1.2(4) of the Supplemental Indenture shall
equal 0.25% per annum of the average Contingent Interest Trading Price of $1,000 principal amount
of Notes for the applicable Measurement Period. Contingent Interest, if any, will accrue from the
first day of any relevant Interest Period.



     Interest will be computed on the basis of a 360-day year composed of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the 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 April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Except as otherwise provided in the 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 Company, notice whereof shall be



11









 






given to Holders of Notes not less than 10 days prior to the Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of any automated
quotation system or securities exchange on which the Notes may be quoted or listed, and upon such
notice as may be required by such exchange, all as more fully provided in the Indenture. Payments
of principal shall be made upon the surrender of this Note at any office or agency of the Company
as may be designated by it for such purpose in The City of New York, in such lawful money of the
United States of America as at the time of payment shall be legal tender for the payment of public
and private debts, by, at the option of the Holder (i) United States Dollar check drawn on, or (ii)
wire transfer to, a United States Dollar account maintained in The City of New York (such a
transfer to be made only to a Holder of an aggregate principal amount of Notes in excess of
U.S.$5,000,000 and only if such Holder shall have furnished wire instructions in writing to the
Trustee no later than 15 days prior to the relevant payment date). Payment of interest on this
Note 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, or, upon written application by the Holder
to the Security Registrar setting forth wire instructions not later than the relevant Record Date,
by transfer to a United States Dollar account maintained in The City of New York (such a transfer
to be made only to a Holder of an aggregate principal amount of Notes in excess of U.S.$5,000,000
and only if such Holder shall have furnished wire instructions in writing to the Trustee no later
than 15 days prior to the relevant payment date).



     Except as specifically provided herein or in the Indenture, the Company shall not be required
to make any payment with respect to any tax, assessment or other governmental charge imposed by any
government or any political subdivision or taxing authority thereof or therein.



     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 or an Authenticating Agent by the manual signature of one of their respective
authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.



12









 





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



	 	 	 	 	 
	 	FRANKLIN BANK CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



TRUSTEE’S CERTIFICATE OF AUTHENTICATION




This is one of the Notes referred to in the within-mentioned Indenture.




Dated:




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

as Trustee




	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 







13









 







[FORM OF REVERSE OF NOTE]




     This Note is one of a duly authorized issue of securities of the Company designated as its “4%
Contingent Convertible Senior Notes due 2027” (herein called the “Notes”), limited in aggregate
principal amount to U.S.$100,000,000, issued and to be issued under an Indenture, dated as of April
9, 2007, as supplemented by that certain First Supplemental Indenture, dated as of April 18, 2007
(herein called, collectively, the “Indenture”), between the Company and The Bank of New York Trust
Company, N.A., as Trustee (herein called the “Trustee,” which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights, 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.



     No sinking fund is provided for the Notes.



     Following a Repurchase Date arising as a result of either Section 10.3(2)(ii) or Section
10.3(2)(iii) of the Supplemental Indenture that occurs prior to May 6, 2012 (a “Post-Fundamental
Change Redemption”), the Company may redeem the Notes for cash in whole, but not in part, at a
Redemption Price equal to U.S.$1,000 per U.S.$1,000 aggregate principal amount of the Notes being
redeemed, plus accrued and unpaid interest (including Contingent Interest and Special Interest, if
any) to, but excluding, the Redemption Date.



     On or after May 6, 2012, the Company may redeem all or any portion of the Notes for cash at a
Redemption Price equal to 100% of the principal amount of the Notes plus accrued and unpaid
interest (including Contingent Interest and Special Interest, if any) to, but excluding, the
Redemption Date. Interest installments on Notes whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Notes, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture. Whenever in this Note there is a reference, in any
context, to the principal of any Note as of any time, such reference shall be deemed to include
reference to the Redemption Price payable in respect of such Note to the extent that such
Redemption Price is, was or would be so payable at such time, and express mention of the Redemption
Price in any provision of this Note shall not be construed as excluding the Redemption Price so
payable in those provisions of this Note when such express mention is not made.



     In any case where the due date for the payment of the principal of or interest (including
Contingent Interest and Special Interest, if any) on any Note or the last day on which a Holder of
a Note has a right to convert his Note shall not be a Business Day, at any Place of Payment or
Place of Conversion as the case may be, then payment of principal of or interest (including
Contingent Interest and Special Interest, if any) on or delivery for conversion of such Note need
not be made on or by such date at such place but may be made on or by the next succeeding Business
Day at such Place of Payment or Place of Conversion, as the case may be, with the same force and
effect as if made on the date for such payment, or by such last day for conversion, and if the
payment is made



14









 






on such next succeeding Business Day no interest shall accrue on the amount so payable for the
period after such due date.



     Subject to the terms and conditions of the Supplemental Indenture, the Company shall become
obligated to repurchase, at the option of the Holder on May 1, 2012, May 1, 2017 and May 1, 2022
(each a “Repurchase Date”), all or a portion of the Notes held by such Holder, in any integral
multiple of U.S.$1,000, for cash at a price per Note equal to 100% of the aggregate principal
amount of the Note (the “Repurchase Price”), together with accrued but unpaid interest (including
Contingent Interest and Special Interest, if any) thereon to, but excluding, the Repurchase Date
upon delivery of a Repurchase Notice containing the information set forth in the Supplemental
Indenture, together with the Notes subject thereto, at any time from the opening of business on the
date that is 30 Business Days prior to such Repurchase Date until the close of business on the
Repurchase Date, and upon delivery of the Notes to the Paying Agent by the Holder as set forth in
the Supplemental Indenture.



     If cash sufficient to pay the Repurchase Price and accrued but unpaid interest (including
Contingent Interest and Special Interest, if any) on all Notes or portions thereof to be
repurchased as of the Repurchase Date is held by the Paying Agent by 10:30 a.m., New York City
time, on the Business Day immediately following the Repurchase Date, interest (including Contingent
Interest and Special Interest, if any) shall cease to accrue on such Notes (or portions thereof) as
of such Repurchase Date and the Holder thereof shall have no other rights as such, other than the
right to receive the Repurchase Price and such interest (including Contingent Interest and Special
Interest, if any) upon surrender of such Note.



     Upon satisfaction of the conditions set forth in Section 8.1(1) of the Supplemental Indenture,
a Holder of a Note may convert any portion of the principal amount of any Note that is an integral
multiple of U.S.$1,000 into cash and fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/1,000th of a share) of Common Stock in accordance with the provisions
of Section 8.14 of the Supplemental Indenture, unless the Company has made a Physical Settlement
Election pursuant to Section 8.15 of the Supplemental Indenture; provided that if such Note is
called for redemption or delivered for repurchase pursuant to Article IX or Article X of the
Supplemental Indenture, the conversion right will terminate at the close of business on the
Business Day immediately preceding the Redemption Date, Repurchase Date or Fundamental Change
Repurchase Date, as applicable, of such Note (unless the Company shall default in making the
redemption or repurchase payment when due, in which case the conversion right shall terminate at
the close of business on the date such default is cured and such Note is redeemed or repurchased).
Subject to the satisfaction of the conditions set forth in Section 8.1(1) of the Supplemental
Indenture, such conversion right shall commence on the initial issuance date of the Notes and
expire at the close of business on the date of maturity, subject, in the case of conversion of any
Global Security, to any Applicable Procedures. The Conversion Price shall, as of the date of the
Supplemental Indenture, initially be $22.00 per share of Common Stock. The Conversion Rate shall,
as of the date of the Supplemental Indenture, initially be approximately 45.4545. The Conversion
Price and Conversion Rate will be adjusted under the circumstances specified in the Supplemental
Indenture. Upon conversion, no adjustment for interest (including Contingent Interest and Special
Interest, if any) or



15









 






dividends will be made. No fractional shares will be issued upon conversion; in lieu thereof,
an amount will be paid in cash in accordance with the provisions of Section 8.14(3) of the
Supplemental Indenture. Except as provided in Section 8.2(3) and Section 1.9 of the Supplemental
Indenture, delivery of the Principal Return, Net Shares and cash in lieu of fractional shares shall
be deemed to satisfy the Company’s obligation to pay the principal amount of a converted Note and
accrued but unpaid interest (including Contingent Interest and Special Interest, if any) thereon.
Any accrued interest (including Contingent Interest and Special Interest, if any) payable on a
converted Note will be deemed paid in full, rather than canceled, extinguished or forfeited.
Notwithstanding the foregoing to the contrary, a Holder that converts its Notes after the Company
has called the Notes for redemption pursuant to Section 7.1(1) of the Supplemental Indenture shall
be entitled to receive all accrued and unpaid interest (including Contingent Interest and Special
Interest, if any) to, but excluding, the Conversion Date.



     A Holder who elects to convert its Notes (i) in connection with a corporate transaction that
occurs on or prior to May 1, 2012 that constitutes a Fundamental Change or (ii) after the Company
has called the Notes for redemption pursuant to a Post-Fundamental Change Redemption, will be
entitled to receive Additional Shares of Common Stock upon conversion in certain circumstances set
forth in the Supplemental Indenture, subject to the provisions of Section 8.1(2) of the
Supplemental Indenture.



     To convert a Note, a Holder must (a) complete and manually sign the conversion notice set
forth below, if the Note is in definitive form, and deliver such notice to the Conversion Agent,
(b) if the Note is in definitive form, surrender the Note to the Conversion Agent, (c) if the Note
is in definitive form, furnish appropriate endorsements and transfer documents if required by the
Security Registrar or the Conversion Agent, (d) pay any transfer or other tax, if required and (e)
if the Note is held in book-entry form, complete and deliver to the Depositary appropriate
instructions pursuant to the Applicable Procedures. If a Holder surrenders a Note for conversion
between the close of business on the Regular Record Date and prior to the opening of business on
the related Interest Payment Date, including the date of maturity, the Note must be accompanied by
payment of an amount equal to the interest (including Contingent Interest and Special Interest, if
any) payable on such Interest Payment Date on the principal amount of the Note or portion thereof
then converted; provided that no such payment shall be required if such Note has been called for
redemption on a Redemption Date within the period between close of business on such Record Date and
the opening of business on such Interest Payment Date, or if such Note is surrendered for
conversion on the Interest Payment Date. A Holder may convert a portion of a Note equal to
U.S.$1,000 or any integral multiple thereof.



     A Note in respect of which a Holder has delivered a Repurchase Notice exercising the option of
such Holder to require the Company to repurchase such Note as provided in Article IX or Article X,
respectively, of the Supplemental Indenture may be converted only if such notice of exercise is
withdrawn in accordance with the terms of the Supplemental Indenture.



     Whenever in this Note there is a reference, in any context, to the payment of interest on, or
in respect of, any Note as of any time, such reference shall be deemed to include reference to



16









 






Contingent Interest and Special Interest, if any, payable in respect of such Note to the
extent that such Contingent Interest and Special Interest, if any, is, was or would be so payable
at such time, and express mention of Contingent Interest and Special Interest, if any, in any
provision of this Note shall not be construed as excluding Contingent Interest and Special
Interest, if any, so payable in those provisions of this Note when such express mention is not
made.



     If a Fundamental Change occurs, the Holder of this Note, at the Holder’s option, shall have
the right, in accordance with the provisions of the Supplemental Indenture, to require the Company
to repurchase this Note (or any portion of the aggregate principal amount hereof that is at least
U.S.$1,000 or an integral multiple of U.S.$1,000 in excess thereof, provided that the portion of
the aggregate principal amount of this Note to be Outstanding after such repurchase is at least
equal to U.S.$1,000) for cash at a Fundamental Change Repurchase Price equal to 100% of the
aggregate principal amount thereof plus interest (including Contingent Interest and Special
Interest, if any) accrued to, but excluding, the Fundamental Change Repurchase Date, as provided in
the Supplemental Indenture. Whenever in this Note there is a reference, in any context, to the
principal of any Note as of any time, such reference shall be deemed to include reference to the
Fundamental Change Repurchase Price payable in respect of such Note to the extent that such
Fundamental Change Repurchase Price is, was or would be so payable at such time, and express
mention of the Fundamental Change Repurchase Price in any provision of this Note shall not be
construed as excluding the Fundamental Change Repurchase Price so payable in those provisions of
this Note when such express mention is not made.



     If this Note is a Global Security, then, in the event of a deposit or withdrawal of an
interest in this Note, including an exchange, transfer, redemption, repurchase or conversion of
this Note in part only, the Trustee, as custodian of the Depositary, shall make an adjustment on
its records to reflect such deposit or withdrawal in accordance with the Applicable Procedures.



     If an Event of Default shall occur and be continuing, the principal of all the Notes, together
with accrued interest to the date of declaration, may be declared due and payable in the manner and
with the effect provided in the Supplemental Indenture. Upon payment (i) of the amount of
principal so declared due and payable, together with accrued interest to the date of declaration,
and (ii) of interest on any overdue principal and, to the extent permitted by applicable law,
overdue interest, all of the Company’s obligations in respect of the payment of the principal of
and interest on the Notes shall terminate.



     The Indenture permits, 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 Holders of the
Notes under the Indenture at any time by the Company and the Trustee with either (a) the written
consent of the Holders of not less than a majority in aggregate principal amount of the Notes at
the time Outstanding, or (b) by the adoption of a resolution, at a meeting of Holders of the
Outstanding Notes at which a quorum is present, by the Holders of at least 66 2/3% in aggregate
principal amount of the Outstanding Notes represented and entitled to vote at such meeting. The
Indenture also contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes,
to waive compliance by



17









 






the Company with certain provisions of the Indenture and certain past defaults under the
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 or such other Note. Certain
modifications or amendments to the Indenture require the consent of the Holder of each Outstanding
Note affected.



     As provided in and subject to the provisions of the Indenture, the Holder of this Note shall
not have the right to institute any proceeding with respect to the Indenture or for the appointment
of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in aggregate principal amount of the Outstanding Notes shall have made written
request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee security or indemnity reasonably satisfactory to the Trustee and the Trustee
shall not have received from the Holders of a majority in aggregate principal amount of the Notes
Outstanding a direction inconsistent with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of security or indemnity
(or if requested, receipt of security or indemnity). The foregoing shall not apply to any suit
instituted by the Holder of this Note for the enforcement of any payment of principal hereof or
interest (including Contingent Interest and Special Interest, if any) hereon, on or after the
respective due dates expressed herein or for the enforcement of the right to convert this Note as
provided in the Indenture.



     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair (without the consent of the Holder hereof) the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest (including Contingent Interest and
Special Interest, if any) on this Note at the times, places and rate, and in the coin or currency,
herein prescribed or to convert this Note as provided in the Indenture.



     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Note is registrable on the Security Register upon surrender of this Note for
registration of transfer at such office or agency of the Company as may be designated by it for
such purpose in The City of New York, or at such other offices or agencies as the Company may
designate, duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees by the Security Registrar. As provided in the Indenture and subject to
certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount
of Notes of any authorized denominations as requested by the Holder surrendering the same upon
surrender of the Note or Notes to be exchanged, at such office or agency of the Company. The
Trustee upon such surrender by the Holder will issue the new Notes in the requested denominations.
No service charge shall be made for any such registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.



18









 





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



     No recourse for the payment of the principal of or interest on this Note and no recourse under
or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture
supplemental thereto or in any Note, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, agent, officer or director
or subsidiary, as such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of consideration for the
issue hereof, expressly waived and released by the Holder hereof.



     THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.



     All terms used in this Note which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.



19









 





ABBREVIATIONS




     The following abbreviations, when used in the inscription of the face of this Note, shall be
construed as though they were written out in full according to applicable laws or regulations:



	 	 	 	 	 	 	 
	TEN COM
	 	as tenant in common
	 	UNIF GIFT MIN ACT	 	______ Custodian ______
	TEN ENT
	 	as tenants by the entireties (Cust)	 	 	 	(Cust)                (Minor)
	JT TEN

	 	as joint tenants with right of
survivorship and not as tenants in
common
	 	 	 	under Uniform Gifts to 
Minors
Act ______
	 

	 	 	 	 	 	(State)






     Additional abbreviations may also be used though not in the above list.



20









 





ELECTION OF HOLDER TO REQUIRE REPURCHASE




     (1) Pursuant to
Section 10.1 of the Supplemental Indenture, the undersigned hereby elects to
have this Note repurchased by the Company.



     (2) The
undersigned hereby directs the Trustee or the Company to pay it or ______ an
amount in cash equal to 100% of the aggregate principal amount to be repurchased (as set forth
below), plus interest (including Contingent Interest and Special Interest, if any) accrued to, but
excluding, the Fundamental Change Repurchase Date, as provided in the Supplemental Indenture.




	 	 	 
	Dated:

	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	Signature(s)
	 	 
	 
	 	 
	Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant
to Rule 17Ad-15 under the Securities Exchange
Act of 1934.
	 	 
	 
	 	 
	 
	 	 
	Signature Guaranteed
	 	 
	 
	 	 
	Principal amount to be repurchased (at least
U.S.$1,000 or an integral multiple of $1,000
in excess thereof): _________
	 	 
	 
	 	 
	Remaining aggregate principal amount following such
repurchase (not less than U.S.$1,000):
	 	 
	 
	 	 
	_________
	 	 





NOTICE: The signature to the foregoing election must correspond to the name as written upon the
face of this Note in every particular, without alteration or any change whatsoever.




21









 







SECTION 3.3 Form of Certificate of Authentication.




     The Trustee’s certificate of authentication shall be in substantially the following form:



     This is one of the Notes referred to in the within-mentioned Indenture.



	 	 	 	 	 
	Dated:

	 	 	 	 
	 

	 	 	 	 






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

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 



SECTION 3.4 Form of Conversion Notice.




CONVERSION NOTICE





     The undersigned Holder of this Note hereby irrevocably exercises the option to convert this
Note, or any portion of the aggregate principal amount hereof (which is U.S.$1,000 or an integral
multiple of U.S.$1,000 in excess thereof, provided that the unconverted portion of such aggregate
principal amount is U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof) below
designated, into shares of Common Stock in accordance with the terms of the Supplemental Indenture
referred to in this Note, and directs that such shares, together with a check in payment for any
fractional share and any Notes representing any unconverted aggregate principal amount hereof, be
delivered to and be registered in the name of the undersigned unless a different name has been
indicated below. If shares of Common Stock or Notes are to be registered in the name of a Person
other than the undersigned, (a) the undersigned will pay all transfer taxes payable with respect
thereto and (b) signature(s) must be guaranteed by an Eligible Guarantor Institution with
membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities
Exchange Act of 1934. Any amount required to be paid by the undersigned on account of interest
accompanies this Note.



	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Signature(s)
	If shares or Notes are to be registered in the
name of a Person other than the Holder, please
print such Person’s name and address:	 	 
	 
	 	 	 	 
	 	 	 
	(Name)
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	(Address)	 	 






22









 





	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Social Security or other Identification 

Number, if any	 	 
	 
	 	 	 	 
	 	 	 
	[Signature Guaranteed]	 	 





If only a portion of the Notes is to be converted, please indicate:





	1.	 	Principal amount to be converted: U.S.$ _________
	 
	2.	 	Principal amount and denomination of Notes

representing unconverted aggregate principal amount to be issued:
	 
	 	 	Amount: U.S.$_________       Denominations:
U.S.$_________




(U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof, provided that the unconverted
portion of such aggregate principal amount is U.S.$1,000 or any integral multiple of U.S.$1,000 in
excess thereof)




SECTION 3.5 Form of Assignment.




     For value received _________
hereby sell(s), assign(s) and transfer(s) unto
_________ (Please insert social security or other identifying number of assignee) the within
Note, and hereby irrevocably constitutes and appoints _________ as attorney to transfer
the said Note on the books of the Company, with full power of substitution in the premises.




	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature(s)
	 
	 	 	 	 
	 

	 	 	 	Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange Act
of 1934.
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature Guaranteed







23









 





ARTICLE IV

REMEDIES




SECTION 4.1 Events of Default.




     Section 501 of the Indenture shall not be applicable to the Notes.



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



     (1) default in the payment of principal of any Notes, when such principal becomes due and
payable, at Stated Maturity, upon acceleration, upon redemption or otherwise (including the failure
to make cash payments due upon conversion or make a payment to repurchase Notes tendered in
connection with a Fundamental Change or on a Repurchase Date), whether or not such failure shall be
due to compliance with agreements with respect to any other indebtedness; or



     (2) default in the payment of any interest (including Contingent Interest and Special
Interest, if any) upon any Note when it becomes due and payable, and continuance of such default
for a period of 30 days, whether or not such failure shall be due to compliance with agreements
with respect to any other indebtedness; or



     (3) failure by the Company to comply with its obligation convert any Notes into cash and/or
shares of Common Stock, as applicable, in accordance with Article VIII hereto, and continuance of
such failure for a period of 5 days;



     (4) failure by the Company to give a Fundamental Change Company Notice in accordance with
Section 10.2; or



     (5) default in the performance, or breach, of any covenant of the Company in this Supplemental
Indenture or the Indenture (other than a covenant, a default in the performance or breach of which
is specifically dealt with elsewhere in this Section), and continuance of such default or breach
for a period of 90 days after there has been given written notice, sent by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Outstanding Notes specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or



     (6) any indebtedness under any bonds, debentures, notes or other evidences of indebtedness for
money borrowed (or guarantee thereof) by the Company or any Significant Subsidiary of the Company
in an aggregate principal amount in excess of U.S.$10,000,000, whether such indebtedness now exists
or shall hereafter be created, is not paid when due (either at its Stated Maturity or upon
acceleration thereof), and such indebtedness is not discharged, or such acceleration is not
rescinded or annulled, within a period of 30 days after there has been given written notice, sent



24









 




by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Outstanding Notes specifying
such default and requiring the Company to cause such indebtedness to be discharged or cause such
default to be cured or waived or such acceleration to be rescinded or annulled and stating that
such notice is a “Notice of Default” hereunder; or




     (7) the entry by a court having jurisdiction in the premises of (A) a decree or order for
relief in respect of the Company or any Significant Subsidiary of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company or any Significant Subsidiary of
the Company a bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the Company or any
Significant Subsidiary of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the
Company or any Significant Subsidiary of the Company or of any substantial part of the property of
either, or ordering the winding up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in effect for a period of
60 consecutive days; or



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



SECTION 4.2 Acceleration of Maturity; Rescission and Annulment.




     Section 502 of the Indenture shall not be applicable to the Notes.



     If an Event of Default (other than an Event of Default specified in Section 4.1(7) or 4.1(8))
occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25%
in aggregate principal amount of the Outstanding Notes may declare the principal of and accrued and
unpaid interest (including Contingent Interest and Special Interest, if any) on all the Notes to be
due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by
the Holders), and upon any such declaration such principal and
accrued and unpaid interest (including



25









 




Contingent Interest and Special Interest, if any) thereon shall become immediately due
and payable. If an Event of Default specified in Section 4.1(7) or 4.1(8) occurs, the principal of,
and accrued and unpaid interest (including Contingent Interest and Special Interest, if any) on,
all the Notes shall ipso facto become immediately due and payable without any declaration or other Act of the Holders or any
act on the part of the Trustee.




     Notwithstanding the foregoing, 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 provisions of Section 6.1 of
this Supplemental Indenture shall, for the first 120 days after the occurrence of such an Event of
Default, consist exclusively of the right to receive special interest (“Special Interest”) on the
Notes at an annual rate equal to 0.50% of the principal amount of the Notes. Such Special Interest
shall be paid semi-annually in arrears, with the first semi-annual payment due on the first
Interest Payment Date following the date on which such Special Interest began to accrue on the
Notes. Special Interest shall accrue on all Outstanding Notes from and including the date on which
an Event of Default relating to a failure to comply with the provisions of Section 6.1 shall first
occur 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 (or earlier, if the Event of Default
relating to the failure to comply with Section 6.1 is cured or waived prior to such 120th day),
such Special Interest shall cease to accrue and, if the Event of Default relating to the failure to
comply with Section 6.1 shall not have been cured or waived prior to such 120th day, the Notes
shall be subject to acceleration as provided in this Section 4.2. The provisions of this paragraph
shall not affect the rights of holders in the event of the occurrence of any other Event of
Default. In the event the Company shall not elect to pay Special Interest upon an Event of Default
resulting from the failure of the Company to comply with the provisions of Section 6.1, the Notes
shall be subject to acceleration as provided above in this Section 4.2.



     If the Company shall elect to pay Special Interest in connection with an Event of Default relating
to its failure to comply with the requirements of Section 6.1, (1) the Company shall notify all
Holders and the Trustee and Paying Agent of such election in writing on or before the close of
business on the date on which such Event of Default shall first occur, and (2) all references
herein to interest accrued or payable as of any date shall include any Special Interest accrued or
payable as of such date as provided in this Section 4.2.



     At any time after such declaration of acceleration has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee as hereinafter in this Article IV
provided, the Holders of a majority in aggregate principal amount of the Outstanding Notes, by
written notice to the Company and the Trustee, may, on behalf of all Holders, rescind and annul
such declaration and its consequences if:



     (1) the Company has paid or deposited with the Trustee a sum sufficient to pay



          (i) all overdue interest on all Notes,




26









 





          (ii) the principal on any Notes that have become due otherwise than by such declaration of
acceleration and any interest (including Contingent Interest and Special Interest, if any) thereon
at the rate borne by the Notes,




          (iii) to the extent permitted by applicable law, interest upon overdue interest at a rate of
4% per annum, and




          (iv) all sums paid or advanced by the Trustee or any Agent hereunder and the reasonable
compensation, expenses, disbursements and advances of each of the Trustee and such Agents and their
respective agents and counsel;




     (2) all Events of Default, other than the nonpayment of the principal of and interest
(including Contingent Interest and Special Interest, if any) on, Notes which have become due solely
by such declaration of acceleration, have been cured or waived as provided in Section 513 of the
Indenture; and



     (3) such rescission and annulment would not conflict with any judgment or decree issued in
appropriate judicial proceedings regarding the payment by the Trustee to the Holders of the amounts
referred to in Section 4.2(1).



     No rescission or annulment referred to above shall affect any subsequent default or impair any
right consequent thereon.



ARTICLE V

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE




SECTION 5.1 Company May Consolidate, Etc. Only on Certain Terms.




     The Company shall not consolidate with or merge into any other Person or convey, transfer, sell or
lease its properties and assets substantially as an entirety to any Person, and the Company shall
not permit any Person to consolidate with or merge into the Company unless:



     (1) the Person formed by such consolidation or into or with which the Company is merged or the
Person to which the properties and assets of the Company are so conveyed, transferred, sold or
leased shall be a corporation organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and, if other than the Company, shall
expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and
interest (including Contingent Interest and Special Interest, if any) on all of the Notes as
applicable, and the performance or observance of every covenant of this Supplemental Indenture and
the Indenture on the part of the Company to be performed or observed and shall have provided for
conversion rights in accordance with Article VIII;



27









 





     (2) immediately after giving effect to such transaction, no Event of Default, and no event
that, after notice or lapse of time or both, would become an Event of Default, shall have occurred
and be continuing; and



     (3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer, sale or lease and, if
a supplemental indenture is required in connection with such transaction, such supplemental
indenture complies with this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.



SECTION 5.2 Successor Substituted.




     Upon any consolidation of the Company with, or merger of the Company into, any other Person or any
conveyance, transfer, sale or lease of all or substantially all the properties and assets of the
Company in accordance with Section 5.1, the successor Person formed by such consolidation or into
or with which the Company is merged or to which such conveyance, transfer, sale or lease is made
shall succeed to, and be substituted for, and may exercise every right and power of, the Company
under this Supplemental Indenture and the Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this Supplemental
Indenture, the Indenture and the Notes.



SECTION 5.3 Indenture Article VIII.




     The provisions of Article VIII of the Indenture shall not be applicable to the Notes.



ARTICLE VI

CERTAIN COVENANTS




SECTION 6.1 Commission and Other Reports.




     In addition to the covenants contained in Article X of the Indenture, the following covenants shall
apply to the Notes:



     (1) The Company shall timely file all reports and other information and documents which it is
required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, and
within 15 days after it files them with the Commission, the Company shall file copies of all such
reports, information and other documents with the Trustee; provided that any such reports,
information and documents filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval (or EDGAR) system shall be deemed to be filed with the Trustee. The Company
shall inform the Trustee by electronic mail or other written means that it has filed with the
Commission an annual report on Form 10-K or quarterly report on Form 10-Q. The Company also shall
at all times comply with the provisions of TIA Section 314(a).



28









 





     (2) 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 VII

REDEMPTION OF SECURITIES




SECTION 7.1 Right of Redemption.




     (1) At any time during the 30 calendar days following a Repurchase Date arising as a result of
either Section 10.3(2)(ii) or Section 10.3(2)(iii) that occurs prior to May 6, 2012 (a
“Post-Fundamental Change Redemption”), the Company may call the Notes for redemption for cash in
whole, but not in part, at a Redemption Price equal to 100% of the aggregate principal amount of
the Notes being redeemed, plus accrued and unpaid interest (including Contingent Interest and
Special Interest, if any) to, but excluding, the Redemption Date.



     (2) On or after May 6, 2012 the Company may redeem the Notes for cash in whole, or from time
to time in part (which must be equal to U.S.$1,000 or any integral multiple thereof), at a
Redemption Price equal to 100% of the aggregate principal amount of the Notes being redeemed, plus
accrued and unpaid interest (including Contingent Interest and Special Interest, if any) to, but
excluding, the Redemption Date.



     (3) Whenever in this Supplemental Indenture or the Indenture there is a reference, in any context,
to the principal of any Note as of any time, such reference shall be deemed to include reference to
the Redemption Price payable in respect of such Note to the extent that such Redemption Price is,
was or would be so payable at such time, and express mention of the Redemption Price in any
provision of this Supplemental Indenture shall not be construed as excluding the Redemption Price
in those provisions of this Supplemental Indenture or the Indenture when such express mention is
not made.



     Interest installments on Notes whose Stated Maturity is on or prior to a Redemption Date will be
payable to the Holders of such Notes, or one or more Predecessor Securities, of record at the close
of business on the relevant Record Dates.



     Notes or portions of the Notes called for redemption shall be convertible by the Holder in
accordance with the provisions of Article VIII until the close of business on the Business Day
prior to the Redemption Date.



SECTION 7.2 Conversion Arrangement on Call for Redemption.




     In connection with any redemption of Notes, the Company may arrange for the purchase and conversion
of any Notes by an agreement with one or more investment bankers or other purchasers (the
“Purchasers”) to purchase such Notes by paying to the Trustee in trust for the Holders, before



29









 




10:30 a.m. (New York City time) on the Redemption Date, an amount not less than the applicable
Redemption Price, together with interest accrued to, but excluding, the Redemption Date of such
Notes. Notwithstanding anything to the contrary contained in this Article VII, the obligation of
the Company to pay the Redemption Price, together with interest accrued to, but excluding, the
Redemption Date shall be deemed to be satisfied and discharged to the extent such amount is so paid
by such Purchasers. If such an agreement is entered into (a copy of which shall be filed with the
Trustee prior to the close of business on the Business Day immediately prior to the Redemption
Date), any Notes called for redemption that are not duly surrendered for conversion by the Holders
thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, and
consistent with any agreement or agreements with such Purchasers, to be acquired by such Purchasers
from such Holders and (notwithstanding anything to the contrary contained in Article VIII)
surrendered by such Purchasers for conversion, all as of immediately prior to the close of business
on the Redemption Date (and the right to convert any such Notes shall be extended through such
time), subject to payment of the above amount as aforesaid. At the direction of the Company,
pursuant to a written Company Order, the Trustee shall hold and dispose of any such amount paid to
it by the Purchasers to the Holders in the same manner as it would money deposited with it by the
Company for the redemption of Notes. Without the Trustee’s prior written consent expressly
authorizing a change, no arrangement between the Company and such Purchasers for the purchase and
conversion of any Notes shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Supplemental Indenture and the
Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any
loss, liability or expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Notes between the Company and such Purchasers, including the costs
and expenses, including reasonable legal fees, incurred by the Trustee in the defense of any claim
or liability arising out of or in connection with the exercise or performance of any of its powers,
duties, responsibilities or obligations under this Supplemental Indenture and the Indenture.




ARTICLE VIII

CONVERSION OF THE SECURITIES




SECTION 8.1 Conversion Privilege.




     (1) If the Company has not made a Physical Settlement Election and subject to the provisions
of this Article VIII, a Holder of a Note may convert each $1,000 principal amount of Notes into
cash and Common Stock, if any, at the Conversion Price if any of the conditions described in
clauses (i), (ii), (iii), (iv), (v) or (vi) below is satisfied.



          (i) during any fiscal quarter (the “Quarter”) commencing after the Issue Date, if the Common
Stock Price for at least 20 Trading Days in the period of 30 consecutive Trading Days ending on the
last Trading Day of the Quarter immediately preceding such Quarter (appropriately adjusted to take
into account the occurrence, during such 30 consecutive Trading Day period, of any event requiring
adjustment of the Conversion Price under this Supplemental Indenture) is more than 130% of the
Conversion Price on such 30th Trading Day;




30









 





          (ii) during the five consecutive Business Day period after any five consecutive Trading Day
period in which the Trading Price per U.S.$1,000 principal amount of Notes, as determined following
a request by a Holder in accordance with the procedures described below in Section 8.1(5), for each
day of that period was less than 98% of the product of the Common Stock Price for each day of that
period and the then-current Conversion Rate;




          (iii) such Note has been called for redemption by the Company pursuant to Section 7.1 and the
redemption has not yet occurred, so long as the Holder surrenders such Note for conversion prior to
the close of business on the date that is one Business Day prior to the applicable Redemption Date,
even if the Note is not otherwise convertible at such time;




          (iv) (A) a distribution to all or substantially all holders of Common Stock of rights,
warrants or options entitling them (for a period expiring not more than 60 days after the date of
distribution) to subscribe for or purchase shares of Common Stock at a price less than the average
Common Stock Price for the 10 Trading Days immediately preceding the date such distribution was
first publicly announced; or




                
(B) a distribution to all or substantially all holders of Common Stock of cash or other
assets, evidences of Company indebtedness, rights or warrants to purchase or subscribe for Capital
Stock or other securities of the Company, where the fair market value of such distribution per
share of Common Stock (as determined in good faith by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value) exceeds 10% of the Common Stock Price on
the Trading Day immediately preceding the date such distribution was first publicly announced;


provided that the Holder shall have no right to convert any Note pursuant to this Section
8.1(1)(iv) if the Holder of a Note otherwise participates in the distribution described in this
Section 8.1(1)(iv) on an as-converted basis solely into Common Stock at the then applicable
Conversion Price without conversion of such Holder’s Notes;




          (v) if the Company is party to a Fundamental Change or a consolidation, merger, share
exchange, sale of all or substantially all of its properties and assets or other similar
transaction, in each case pursuant to which the Common Stock is subject to conversion into cash,
securities or other property, at any time from and after the 20th scheduled Trading Day prior to
the anticipated effective date of such transaction and ending on the 20th Trading Day following the
effective date of such transaction. The Company shall give written notice to all Holders and the
Trustee at least 30 scheduled Trading Days prior to the anticipated effective date of such
transaction; or




          (vi) at any time during the period beginning 30 days prior to, but excluding, any Repurchase
Date or May 1, 2027.




     (2) If a Holder elects to convert its Notes (i) in connection with a corporate transaction
that occurs on or prior to May 1, 2012, which constitutes a Fundamental Change or (ii) after the
Company has called the Notes for redemption pursuant to a Post-Fundamental Change Redemption, then
the Conversion Rate of the Notes being converted by such Holder at that time shall be increased



31









 




so that such Holder will be entitled to receive, in addition to the consideration upon conversion such
Holder is otherwise entitled to receive, a number of additional shares of Common Stock (the
“Additional Shares”) determined in the manner set forth below; provided that if the Share Price in
such transaction is in excess of U.S.$78.50 or less than U.S.$15.70 (subject in each case to
adjustment as described in Section 8.5 below), no increase in the Conversion Rate shall be made;
and provided further that in no event will the Conversion Rate exceed 63.6946 per U.S.$1,000
principal amount of Notes, subject to adjustments in the same manner as the Conversion Price as set
forth in this Supplemental Indenture. For the avoidance of doubt, the adjustment provided for in
this Section 8.1(2) shall only be made with respect to the Notes being converted in connection with
such Fundamental Change on or prior to May 1, 2012 and shall not be effective as to any Notes not
so converted.




     The increase in the Conversion Rate expressed as a number of Additional Shares per U.S.$1,000
principal amount of Notes will be determined by the Company by reference to the table attached as
Schedule A hereto, based on the date the corporate transaction becomes effective (the “Effective
Date”) and the share price paid per share of Common Stock in the corporate transaction (the “Share
Price”); provided that if holders of the Common Stock receive only cash in such corporate
transaction, the Share Price shall be the cash amount paid per share. Otherwise, the Share Price
will be the average of the Common Stock Price on the five Trading Days prior to but not including
the Effective Date; provided further that if the Share Price is between two Share Price amounts in
the table or the Effective Date is between two Effective Dates in the table, the Company shall
determine the number of Additional Shares by a straight-line interpolation between the number of
Additional Shares set forth for the higher and lower Share Price amounts and the two dates, as
applicable, based on a 365-day year.



     The Share Prices set forth in the first row of the table (i.e., column headers) in Schedule A
hereto will be adjusted as of any date on which the Conversion Price of the Notes is adjusted
pursuant to this Supplemental Indenture. The adjusted Share Prices will equal the Share Prices
applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which
is the Conversion Price immediately prior to the adjustment giving rise to the Share Price
adjustment and the denominator of which is the Conversion Price as so adjusted. The number of
Additional Shares will be adjusted in the same manner as the Conversion Price as set forth in this
Supplemental Indenture.



     (3) In the case of the foregoing Section 8.1(1)(iv)(A) and Section 8.1(1)(iv)(B), the Company
shall cause a notice of such distribution to be filed with the Trustee and the Conversion Agent and
to be mailed to each Holder of Notes no later than 20 days prior to the Ex-Dividend Date for such
distribution. Once the Company has given such notice, Holders may surrender their Notes for
conversion at any time thereafter until the earlier of the close of business on the Business Day
prior to the Ex-Dividend Date or the Company’s announcement that such distribution will not take
place. The “Ex-Dividend Date” for any such distribution means the date immediately prior to the
commencement of “ex-dividend” trading for such distribution on the Nasdaq Global Select Market or
such other United States national securities exchange or system of automated dissemination of
quotations of securities prices on which the Common Stock is then listed or quoted.



32









 





     (4) For each Quarter of the Company commencing after the Issue Date, the Company, or at the
request of the Company, the Trustee, on behalf of the Company, will determine, on the first
Business Day following the last Trading Day of the prior Quarter, whether the Notes are convertible
pursuant to clause (i) of Section 8.1(1), and, if so, will notify the Trustee and the Company in
writing.



     (5) The Trustee shall have no obligation to determine the Trading Price of the Notes and
whether the Notes are convertible pursuant to clause (ii) of Section 8.1(1) unless the Company has
requested such determination in a Company Request; and the Company shall have no obligation to make
such request unless a Holder of the Notes provides the Company with reasonable evidence that the
Trading Price per U.S.$1,000 principal amount of Notes is reasonably likely to be less than 98% of
the product of the Common Stock Price and the Conversion Rate then in effect per U.S.$1,000
principal amount of Notes. At such time, the Company shall instruct the Trustee in a Company
Request to determine the Trading Price of the Notes beginning on the next Trading Day and on each
successive Trading Day until the Trading Price per U.S.$1,000 principal amount of Notes is greater
than 98% of the product of (A) the Common Stock Price and (B) the then current Conversion Rate, and
to notify the Company accordingly.



     (6) A Holder may convert a portion of a Note equal to U.S.$1,000 or any integral multiple
thereof. Provisions of this Supplemental Indenture that apply to conversion of all of a Note also
apply to conversion of a portion of a Note.



     If a Note is called for redemption pursuant to Section 7.1, in order to convert such Note if such
Note is then convertible pursuant to the terms of this Supplemental Indenture, the Holder must
deliver the Note to the Conversion Agent (or, if the Note is held in book-entry form, complete and
deliver to the Depositary appropriate instructions in accordance with the Applicable Procedures) at
any time prior to the close of business on the day that is one Business Day prior to the applicable
Redemption Date (unless the Company shall default in paying the Redemption Price when due, in which
case the conversion right shall terminate on the date such default is cured and such Note is
redeemed). A Note in respect of which a Holder has delivered a Repurchase Notice pursuant to
Article IX or a similar notice pursuant to Section 10.2 exercising the option of such Holder to
require the Company to repurchase such Note may be converted only if such Repurchase Notice or
Fundamental Change Company Notice, as the case may be, is withdrawn by a written notice of
withdrawal delivered to the Paying Agent prior to the close of business on the Business Day prior
to the Repurchase Date or the Fundamental Change Repurchase Date, as the case may be, in accordance
with Article IX or Article X.



     (7) A Holder of Notes is not entitled to any rights of a holder of Common Stock until such
Holder has converted its Notes into Common Stock.



SECTION 8.2 Conversion Procedure.




     (1) To convert a Note, a Holder must (i) if the Note is in definitive form, complete and
manually sign the irrevocable conversion notice on the back of the Note and deliver such notice to
the Conversion Agent, (ii) if the Note is in definitive form, surrender the Note to the Conversion



33









 




Agent, (iii) if the Note is in definitive form, furnish appropriate endorsements and transfer
documents if required by the Security Registrar or the Conversion Agent, (iv) pay any transfer or
other tax, if required by Section 8.3 and (v) if the Note is held in book-entry form, complete and
deliver to the Depositary appropriate instructions pursuant to the Applicable Procedures. As
promptly as practicable after the later of the Conversion Date and the date that all calculations
necessary to make such payment and delivery have been made, but in no event later than five
Business Days after the later of those days, the Company shall deliver to the Holder through the
Conversion Agent cash and shares of Common Stock, as applicable, in the amounts calculated in
accordance with Section 8.14 or Section 8.15, as applicable.




     (2) The person in whose name the shares of Common Stock are issuable upon conversion shall be
deemed to be a holder of record of such Common Stock on the later of (i) the Conversion Date, (ii)
the expiration of the period in which the Company may elect to deliver cash in lieu of shares of
Common Stock if the Company has not made a Physical Settlement Election, or (iii) if the Company
has not made a Physical Settlement Election and elects to deliver cash in lieu of some, but not
all, of such shares of Common Stock, the date on which the amount of cash issuable per Note has
been determined; provided that no surrender of a Note on any date when the stock transfer books of
the Company shall be closed shall be effective to constitute the Person or Persons entitled to
receive the shares of Common Stock upon such conversion as the record holder or holders of such
shares of Common Stock on such date, but such surrender shall be effective to constitute the Person
or Persons entitled to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which such stock transfer
books are open; provided, further that such conversion shall be at the Conversion Price in effect on
the date that such Note shall have been surrendered for conversion, as if the stock transfer books
of the Company had not been closed. Upon conversion of a Note, such Person shall no longer be a
Holder of such Note.



     (3) No payment or adjustment will be made for accrued but unpaid interest (including
Contingent Interest and Special Interest, if any) on a converted Note or for dividends or
distributions on shares of Common Stock issued upon conversion of a Note. The Company shall not
adjust the Conversion Price to account for the accrued but unpaid interest. Notwithstanding the
foregoing, if Notes are converted after the close of business on a Regular Record Date and prior to
the opening of business on the next Interest Payment Date, including the date of maturity, Holders
of such Notes at the close of business on such Regular Record Date shall receive the accrued but
unpaid interest (including Contingent Interest and Special Interest, if any) payable on such Notes
on the corresponding Interest Payment Date notwithstanding the conversion. In such event, such
Note, when surrendered for conversion, must be accompanied by delivery of a check payable to the
Conversion Agent in an amount equal to the accrued but unpaid interest (including Contingent
Interest and Special Interest, if any) payable on such Interest Payment Date on the portion so
converted. If such payment does not accompany such Note, the Note shall not be converted; provided
that no such check shall be required (i) if such Note has been called for redemption, (ii) if the
Company has specified a Fundamental Change Repurchase Date, (iii) to the extent of any overdue
interest, if any overdue interest exists at the time of conversion with respect to such Note; or
(iv) in respect of any conversions that occur (a) between the Record Date immediately preceding a



34









 




Repurchase Date and the related Repurchase Date or (b) after the Record Date immediately preceding
May 1, 2027. If the Company defaults in the payment of interest (including Contingent Interest and
Special Interest, if any) payable on the Interest Payment Date, the Conversion Agent shall promptly
repay such funds to the Holder. Notwithstanding anything in this Supplemental Indenture or in the
Indenture to the contrary, a Holder that converts its Notes after the Company has called the Notes
for redemption pursuant to Section 7.1(1) of this Supplemental Indenture shall be entitled to
receive all accrued and unpaid interest (including Contingent Interest and Special Interest, if
any) to, but excluding, the Conversion Date.




     (4) Upon surrender of a Note that is converted in part, the Company shall execute, and the
Trustee shall, upon receipt of a Company Order, authenticate and deliver to the Holder, a new Note
equal in principal amount to the unconverted portion of the Note surrendered.



SECTION 8.3 Taxes on Conversion.




     If a Holder converts a Note, the Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Common Stock upon such conversion. However, the Holder
shall pay any tax which is due because the Holder requests the shares to be issued in a name other
than the Holder’s name. The Conversion Agent may refuse to deliver the certificates representing
the Common Stock being issued in a name other than the Holder’s name until the Conversion Agent
receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a
name other than the Holder’s name. Nothing herein shall preclude any tax withholding required by
law or regulations.



SECTION 8.4 Company to Provide Stock.




     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, a sufficient number of shares
of Common Stock to permit the conversion of all outstanding Notes into shares of Common Stock.



     The Company covenants that all shares of Common Stock delivered upon conversion of the Notes shall
be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and
non-assessable and shall be free from preemptive rights and free of any lien or adverse claim.



     The Company will comply with all federal and state securities laws regulating the offer and
delivery of shares of Common Stock upon conversion of Notes, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in the over-the-counter
market or such other market on which the Common Stock is then listed or quoted.



SECTION 8.5 Adjustment of Conversion Price.




     The Conversion Price shall be adjusted (without duplication) from time to time by the Company as
follows:



35









 





     (1) In case the Company shall (i) pay a dividend or other distribution in shares of Common
Stock to all or substantially all holders of Common Stock, (ii) subdivide its outstanding Common
Stock into a greater number of shares or (iii) combine its outstanding Common Stock into a smaller
number of shares, the Conversion Price shall be adjusted so that the Holder of any Note thereafter
surrendered for conversion shall be entitled to receive the number of shares of Common Stock which
it would have owned or been entitled to receive had such Note been converted immediately prior to
the happening of such event. For the purposes of calculating the Conversion Price adjustment
pursuant to this Section 8.5(1), Holders of a Note shall be treated as if they had the right to
convert the Note solely into Common Stock at the then applicable Conversion Price. An adjustment
made pursuant to this Section 8.5(1) shall become effective immediately after the record date in
the case of a dividend or distribution and shall become effective immediately after the effective
date in the case of subdivision, combination or reclassification.



     (2) In case the Company shall issue to all or substantially all holders of Common Stock
rights, warrants or options entitling such holders (for a period expiring not more than 60 days
after the date of distribution) to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price per share less than the average Common Stock Price for
the 10 Trading Days immediately preceding the date the distribution of such rights, warrants or
options was first publicly announced by the Company, the Conversion Price shall be decreased so
that the Conversion Price shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the record date for such issue by a fraction,



          (i) the numerator of which shall be the number of shares of Common Stock outstanding on such
date of public announcement, plus the number of shares which the aggregate subscription or purchase
price for the total number of shares of Common Stock offered by the rights, warrants or options so
issued (or the aggregate conversion price of the convertible securities offered by such rights,
warrants or options) would purchase at such average Common Stock Price, and




          (ii) the denominator of which shall be the number of shares of Common Stock outstanding on
such date of public announcement plus the number of additional shares of Common Stock offered by
such rights, warrants or options (or into which the convertible securities so offered by such
rights, warrants or options are convertible),



provided that no adjustment will be made if Holders of the Notes are entitled to participate in the
distribution on substantially the same terms as holders of the Common Stock as if such Holders had
converted their Notes solely into Common Stock immediately prior to such distribution at the then
applicable Conversion Price. Such adjustment shall be made successively whenever any such rights,
warrants or options are issued, and shall become effective immediately after such record date. If
at the end of the period during which such rights, warrants or options are exercisable not all
rights, warrants or options shall have been exercised, the adjusted Conversion Price shall be
immediately readjusted to what it would have been upon application of the foregoing adjustment
substituting the number of additional shares of Common Stock actually issued (or the number of
shares of Common Stock issuable upon conversion of convertible securities actually issued) for the
total number of shares of Common Stock offered (or convertible securities offered).




36









 





     (3) In case the Company shall distribute to all or substantially all holders of Common Stock
any shares of Capital Stock of the Company (other than Common Stock) or evidences of its
indebtedness, other securities or other assets, or shall distribute to all holders of Common Stock,
rights (other than the rights distributed pursuant to a Rights Plan, if any, to the extent that
such rights have been distributed to the holders of the Notes as described below), warrants or
options to subscribe for or purchase any of its securities (excluding (i) those rights, options and
warrants referred to in Section 8.5(2); (ii) those dividends, distributions, subdivisions and
combinations referred to in Section 8.5(1); and (iii) those dividends and distributions paid in
cash referred to in Section 8.5(5)), then in each such case the Conversion Price shall be decreased
so that the same shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a fraction,



          (i) the numerator of which shall be the Market Price on the record date for the determination
of holders of Common Stock entitled to receive such distribution less the fair market value on such
record date (as determined in good faith by the Board of Directors, whose determination shall be
conclusive evidence of such fair market value) of the portion of the Capital Stock or evidences of
indebtedness, securities or assets so distributed or of such rights, warrants or options, in each
case applicable to one share of Common Stock, and




          (ii) the denominator of which shall be the Market Price on such record date,



such adjustment to become effective immediately after the record date for such distribution;
provided that if the numerator of the foregoing fraction is less than $1.00 (including a negative
amount), then in lieu of the foregoing adjustment, adequate provision shall be made so that each
Holder shall have the right to receive upon conversion, in addition to the cash and Common Stock
issuable upon such conversion, as applicable, the distribution such Holder would have received had
such Holder converted its Note solely into Common Stock at the then applicable Conversion Price
immediately prior to the record date for such distribution; provided that no adjustment will be
made if Holders of the Notes are entitled to participate in the distribution on substantially the
same terms as holders of the Common Stock as if such Holders had converted their Notes solely into
Common Stock immediately prior to such distribution at the then applicable Conversion Price;



Notwithstanding the foregoing, if the distribution by the Company to all or substantially all
holders of its Common Stock consists of Capital Stock of, or similar Equity Interests in, a
Subsidiary or other business unit of the Company (unless such Capital Stock or similar Equity
Interests are distributed to holders in such distribution as if such holders had converted their
Notes into Common Stock), the Conversion Price shall be decreased so that the same shall be equal
to the rate determined by multiplying the Conversion Price in effect on the record date with
respect to such distribution by a fraction:




          (i) the numerator of which shall be the average Common Stock Price over the Spinoff Valuation
Period; and




          (ii) the denominator of which shall be the sum of (x) the average Common Stock Price over the
ten (10) consecutive Trading Day period (the “Spinoff Valuation Period”)




37









 




commencing on and including the fifth Trading Day after the date on which “ex-dividend trading” commences for such
dividend or distribution on the Nasdaq Global Select National Market or such other national or
regional exchange or market on which the Common Stock is then listed or quoted plus (y) the average
fair market value (as determined by the Board of Directors and described in a resolution of the
Board of Directors, which determination shall equal the average closing sale price where such
closing sale price is available) over the Spinoff Valuation Period of the portion of the assets so
distributed applicable to one share of Common Stock,



such adjustment to become effective immediately prior to the opening of business on the day
following such record date; provided that the Company may in lieu of the foregoing adjustment make
adequate provision so that each Holder shall have the right to receive upon conversion the amount
of the distribution such Holder would have received had such Holder converted its Note on the
record date with respect to such distribution. If any dividend or distribution of the type
described in this Section 8.5(3) is declared but not so paid or made, such adjustment to the
Conversion Price shall be reversed. In any case in which this paragraph is applicable, Section
8.5(1), Section 8.5(2) and the first paragraph of this Section 8.5(3) shall not be applicable.




     To the extent that the Company has a share rights plan (“Rights Plan”) in effect upon conversion of
Notes, the Holders of the Notes will receive, in addition to the cash and/or Common Stock issuable
upon conversion, as applicable, the rights under the Rights Plan, unless the rights have separated
from the Common Stock at the time of the conversion, and, as a result, upon conversion of the
Notes, the Holder of the Notes would not be entitled to receive the rights, then in such case the
Conversion Price will be adjusted as described in this Section 8.5(3).



     (4) In case the Company or any Subsidiary of the Company makes a payment in respect of a
tender or exchange offer to holders of Common Stock where the cash and value of any other
consideration included in the payment per share exceeds the Common Stock Price on the last Trading
Day prior to the Offer Expiration Time, the Conversion Price shall be decreased so that the same
shall equal the price determined by multiplying the Conversion Price in effect immediately prior to
the Offer Expiration Time by a fraction,



          (i) the numerator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the last time (the “Offer Expiration Time”) tenders
or exchanges may be made pursuant to such tender or exchange offer (as it may be amended)
multiplied by the Common Stock Price on the Trading Day next succeeding the Offer Expiration Time, and




          (ii) the denominator of which shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to holders of Common Stock based on the
acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares
of Common Stock validly tendered or exchanged and not withdrawn as of the Offer Expiration Time
(the shares deemed so accepted up to any such maximum being referred to as the “Purchased Shares”)
and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares)
at the Offer Expiration Time and the Common Stock Price on the Trading Day next succeeding the
Offer Expiration Time,




38









 




such adjustment to become effective immediately prior to the opening of business on the day
following the Offer Expiration Time. 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 Price shall again
be adjusted to be the Conversion Price that would then be in effect if such tender or exchange
offer had not been made.




     (5) In case the Company shall declare a cash dividend or cash distribution to all or
substantially all of the holders of Common Stock, the Conversion Price shall be decreased so that
the Conversion Price shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the record date for such dividend or distribution by a fraction,



          (i) the numerator of which shall be the average of the Common Stock Price for the three
consecutive Trading Days ending on the Trading Day immediately preceding the record date for such
dividend or distribution (the “Pre-Dividend Sale Price”), minus the amount of the dividend or
distribution to the extent payable in cash applicable to one share of Common Stock, and




          (ii) the denominator of which shall be the Pre-Dividend Sale Price,



such adjustment to become effective immediately after the record date for such dividend or
distribution; provided that if the numerator of the foregoing fraction is less than U.S.$1.00
(including a negative amount), then in lieu of the foregoing adjustment, adequate provision shall
be made so that each Holder shall have the right to receive upon conversion, in addition to the
cash and Common Stock issuable upon such conversion, as applicable, the amount of cash such Holder
would have received had such Holder converted its Note solely into Common Stock at the then
applicable Conversion Price immediately prior to the record date for such cash dividend or cash
distribution. If such cash dividend or cash distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price that would then be in effect if such
dividend or distribution had not been declared.




     (6) [Reserved].



     (7) In any case in which this Section 8.5 shall require that an adjustment be made immediately
following a record date established for purposes of this Section 8.5, the Company may elect to
defer (but only until three Business Days following the filing by the Company with the Trustee of
the certificate described in Section 8.9) issuing to the holder of any Note converted after
such record date the cash, shares of Common Stock and other Capital Stock of the Company
issuable upon such conversion over and above the cash, shares of Common Stock and other Capital
Stock of the Company issuable upon such conversion only on the basis of the Conversion Price prior
to adjustment; and, in lieu of the cash and shares the issuance of which is so deferred, the
Company shall issue or cause its transfer agents to issue due bills or other appropriate evidence
of the right to receive such shares.



     (8) Before taking any action which would cause an adjustment decreasing the Conversion Price
so that the shares of Common Stock issuable upon conversion of the Notes would be issued for



39









 




less than the par value of such Common Stock, the Company will take all corporate action which may be
necessary in order that the Company may validly and legally issue fully paid and non-assessable
shares of such Common Stock at such adjusted Conversion Price.




SECTION 8.6 No Adjustment.




     No adjustment in the Conversion Price shall be required unless the adjustment would require an
increase or decrease of at least 1% in the Conversion Price then in effect; provided that any
adjustments which by reason of this Section 8.6 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. Regardless of whether the aggregate
adjustment is less than 1%, the Company will make such carried forward adjustments upon conversion
of the Notes, within one year of the first such adjustment carried forward, if the Company has
called the Notes for redemption, upon a Fundamental Change, upon the Stated Maturity of the Notes
or when a Holder converts its Notes. All calculations under this Article VIII shall be made to the
nearest cent, with one-half cent rounded up, or to the nearest one thousandth (0.001) of a share,
with each one-half thousandth (0.0005) of a share being rounded up, as the case may be.



     No adjustment need be made upon the issuance of Common Stock under any present or future employee
benefits plan or program of the Company or in connection with an acquisition made by the Company.



     No adjustment need be made upon the issuance of Common Stock pursuant to (i) the exercise of any
options, warrants or rights to purchase such Common Stock (other than options, warrants or rights
issued under an employee benefit plan or program), (ii) the exchange of any exchangeable securities
for such Common Stock or (iii) the conversion of any convertible securities into such Common Stock,
in each case so long as such option, warrant, right to purchase, exchangeable security or
convertible security is outstanding at the Issue Date.



     No adjustment need be made for a change in the par value or a change to no par value of the Common
Stock.



SECTION 8.7 Equivalent Adjustments.




     If, as a result of an adjustment made pursuant to Section 8.5 above, the Holder of any Note
thereafter surrendered for conversion shall become entitled to receive any shares of Capital Stock
of the Company other than shares of Common Stock, thereafter the Conversion Price of such other
shares so receivable upon conversion of any Notes shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions with respect to
Common Stock contained in this Article VIII.



SECTION 8.8 Adjustment for Tax Purposes.




     The Company shall be entitled to make such reductions in the Conversion Price, in addition to those
required by Section 8.5, as the Board of Directors in its discretion shall determine to be



40









 




advisable in order that any stock dividends, subdivisions of shares, distributions of rights to
purchase stock or other securities, or distributions of securities convertible into or exchangeable
for stock hereafter made by the Company to its holders of Common Stock shall not be taxable to such
holders.




SECTION 8.9 Notice of Adjustment.




     Whenever the Conversion Price (or Conversion Rate) is adjusted, or Holders become entitled to other
securities or due bills, the Company shall promptly mail to Holders a notice of the adjustment and
file with the Trustee an Officers’ Certificate briefly stating the facts requiring the adjustment
and the manner of computing it. The certificate shall be conclusive evidence of the correctness of
such adjustment, absent manifest error, and the Trustee may conclusively assume that, unless and
until such certificate is received by it, no such adjustment is required.



SECTION 8.10 Notice of Certain Transactions.




     In case:



     (1) the Company shall declare a dividend (or any other distribution) on the Common Stock; or



     (2) the Company shall authorize the granting, generally, to the holders of Common Stock of
rights, warrants or options to subscribe for or purchase any share of any class or any other
rights, warrants or options; or



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



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


the Company shall cause to be filed with the Trustee and the Conversion Agent and to be mailed to
each Holder of Notes as promptly as possible but in any event at least ten days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights, warrants or options, or, if a
record is not to be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice, or any defect
therein, shall not




41









 




affect the legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, share exchange, transfer, dissolution, liquidation
or winding-up.





			
	SECTION 8.11	 	Effect of Reclassification, Consolidation, Merger, Share Exchange or Sale on
Conversion Privilege.





     If any of the following shall occur, namely: (i) any reclassification or change of outstanding
shares of Common Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination); (ii) any
consolidation, combination, merger or share exchange to which the Company is a party other than a
merger in which the Company is the resulting or surviving corporation and which does not result in
any reclassification of, or change (other than a change in name, or par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision or combination)
in, outstanding shares of Common Stock; or (iii) any sale or conveyance of all or substantially all
of the properties and assets of the Company, in each case pursuant to which shares of Common Stock
are converted into cash, securities or other property, then the Company, or such successor or
purchasing corporation, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, share exchange, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of each Note then
outstanding shall have the right to convert such Note into the kind and amount of cash, securities
or other property receivable upon such reclassification, change, consolidation, merger, share
exchange, sale or conveyance by a holder that such Holder would have received if such Holder had
converted such Notes solely into shares of Common Stock at the then applicable Conversion Price of
such Note immediately prior to such reclassification, change, consolidation, merger, share
exchange, sale or conveyance. Such supplemental indenture shall (a) provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable (to the extent the
Company has not made a Physical Settlement Election) to the adjustments of the conversion privilege
and Conversion Price provided for in this Article VIII, (b) set forth appropriate modifications to
the means of determining the Conversion Value and other settlement provisions specified in Section
8.14 so as to be, in the good faith determination of the Company’s Board of Directors, nearly
equivalent to such provisions as may be practicable (to the extent the Company has not made a
Physical Settlement Election) and (c) specify the Conversion Price immediately after such
transactions. If, in the case of any such consolidation, merger, share exchange, sale or
conveyance, the stock or other securities and property (including cash) receivable thereupon by a
holder of Common Stock includes shares of Capital Stock or other securities and property of a
corporation other than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, share exchange, sale or conveyance, then such supplemental indenture shall
also be executed by such other corporation and shall contain such additional provisions to protect
the interests of the Holders of the Notes as the Board of Directors shall reasonably consider
necessary by reason of the foregoing. The provisions of this Section 8.11 shall similarly apply to
successive consolidations, mergers, share exchanges, sales or conveyances. Notwithstanding the
foregoing, a distribution by the Company to all or substantially all holders of Common Stock for
which an adjustment to the Conversion Price or provision for conversion of the Notes may be made
pursuant to Section 8.5 shall not be deemed to be a sale or conveyance of all or substantially all
of the properties and assets of the Company for purposes of this Section 8.11.




42










 





     In the event the Company shall execute a supplemental indenture pursuant to this Section 8.11,
the Company shall promptly file with the Trustee an Opinion of Counsel stating that such
supplemental indenture is authorized or permitted by the Indenture and an Officers’ Certificate
briefly stating the reasons therefor, the kind or amount of cash, securities or other property
receivable by Holders of the Notes upon the conversion of their Notes after any such
reclassification, change, consolidation, merger, share exchange, sale or conveyance, any adjustment
to be made with respect thereto and that all conditions precedent have been complied with.



SECTION 8.12 Trustee’s Disclaimer.




     The Trustee has no duty to determine when an adjustment under this Article VIII should be
made, how it should be made or what such adjustment should be made, but may accept as conclusive
evidence of the correctness of any such adjustment, and shall be fully protected in relying upon,
the Officers’ Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 8.9. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued upon conversion of
Notes, and the Trustee shall not be responsible for the Company’s failure to comply with any
provisions of this Article VIII. Each Conversion Agent (other than the Company or an Affiliate of
the Company) shall have the same protection under this Section 8.12 as the Trustee.



     The Trustee shall not be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture executed pursuant to Section 8.11, but may
accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon,
the Officers’ Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 8.11.



SECTION 8.13 Voluntary Reduction.




     The Company from time to time may reduce the Conversion Price by any amount for any period of
time if such period is at least 20 Trading Days or such longer period as may be required by law and
if the reduction is irrevocable during such period, if the Board of Directors determines, in good
faith, that such decrease would be in the best interests of the Company; provided that in no event
may the Conversion Price be less than the par value of a share of Common Stock. Any such
determination by the Board of Directors shall be conclusive.



SECTION 8.14 Conversion Value of Notes Tendered.




     (1) Unless the Company has made a Physical Settlement Election, the Company will satisfy its
obligation to convert a Holder’s Note pursuant to Section 8.1 with respect to each $1,000 principal
amount of Notes tendered for conversion in cash and shares of fully paid Common Stock, if
applicable, as follows:




(A) cash (the “Principal Return”) in an amount equal to the lesser of (1) $1,000 and

(2) the Conversion Value; and



43









 






(B) if the Conversion Value is greater than $1,000, a number of shares of Common
Stock (the “Net Shares”) equal to the sum of the Daily Share Amounts for each of the
20 consecutive Trading Days in the Conversion Reference Period, appropriately
adjusted to reflect stock splits, stock dividends, combinations or similar events
occurring during the Conversion Reference Period.



     (2) For the purposes of Section 8.14(1) in the event that any of Conversion Value, Daily Share
Amounts, Volume Weighted Average Price or any other computation required of this Section 8.14
cannot be determined or do not produce results consistent with the provisions of this Article VIII
for all portions of the Conversion Reference Period, the Company’s Board of Directors shall in good
faith determine the values necessary to calculate the Conversion Value, Daily Share Amounts and
Volume Weighted Average Price, as applicable.



     (3) The Company will not issue fractional shares of Common Stock upon conversion of Notes. If
more than one Note shall be surrendered for conversion at one time by the same Holder, the number
of full shares that 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. In lieu of any fractional shares, the Company will pay an amount in cash
for the current market value of the fractional shares. The current market value of a fractional
share shall be determined (calculated to the nearest 1/100th of a share) by multiplying the
arithmetic average of the Volume Weighted Average Price of the Common Stock for each of the 20
consecutive Trading Days of the Conversion Reference Period by such fractional share and rounding
the product to the nearest whole cent.



     (4) Except as provided in Section 8.2(3) and Section 1.9, delivery of the cash obligation upon
conversion, Daily Share Amount and cash in lieu of fractional shares, as applicable, shall be
deemed to satisfy the Company’s obligation to pay the principal amount of a converted Note and
accrued but unpaid interest (including Contingent Interest and Special Interest, if any) thereon.
Any accrued interest (including Contingent Interest and Special Interest, if any) payable on a
converted Note shall be deemed paid in full rather than canceled, extinguished or forfeited.



     (5) Neither the Trustee nor the Conversion Agent has any duty to determine or calculate the
Conversion Value, Daily Conversion Value, Daily Share Amount, the number of shares of Common Stock
to be issued upon conversion, if any, or any other computation required under this Article VIII,
all of which shall be determined by the Company in accordance with the provisions of this
Supplemental Indenture, and the Trustee and Conversion Agent shall not be under any responsibility
to determine the correctness of any such determinations and/or calculations and may conclusively
rely on the correctness thereof.



SECTION 8.15 Physical Settlement Election.




     (1) At any time prior to May 1, 2027, the Company may make an irrevocable election to provide,
upon the conversion of outstanding Notes, in lieu of providing the Principal Return and the Net
Shares, if any, as provided by Section 8.14, shares of Common Stock at the Conversion Price for
each $1,000 principal amount of Notes converted (and the amount of any cash in lieu of fractional



44









 




shares pursuant to Section 8.14(3)) (a “Physical Settlement Election”). In the event that the
Company makes a Physical Settlement Election, the Company shall promptly issue a press release and
mail to Holders and file with the Trustee a notice of such election.




     (2) Notwithstanding anything contained in Section 8.1 to the contrary, and subject to Section
10.1, upon making a Physical Settlement Election, any Note or portion thereof that is an integral
multiple of $1,000 principal amount may be converted at the option of the Holder into fully paid
and nonassessable shares (calculated as to each conversion to the nearest 1/100th of a share) of
Common Stock at any time prior to the close of business on the Business Day immediately preceding
May 1, 2027 or such earlier date set forth in this Article VIII at the Conversion Price in effect
at such time.



     (3) Prior to making a Physical Settlement Election, the Company may irrevocably waive the
right to make a Physical Settlement Election in the future with respect to the Notes by delivering
to the Trustee a notice of such election (a “Waiver Election”). Any Waiver Election shall
irrevocably waive the Company’s ability to make a Physical Settlement Election at any time in the
future with respect to the Notes. A Waiver Election may not be made if the Company has previously
made a Physical Settlement Election.



SECTION 8.16 Simultaneous Adjustments.




     In the event that this Article VIII requires adjustments to the Conversion Price under more
than one of Section 8.5(1) and Section 8.5(3), and the record dates for the distributions giving
rise to such adjustments shall occur on the same date, then such adjustments shall be made by
applying, first, the provisions of Section 8.5(3), as applicable, and, second, the provisions of
Section 8.5(1). If more than one event requiring adjustment pursuant to Section 8.5 shall occur
before completing the determination of the Conversion Price for the first event requiring such
adjustment, then the Board of Directors (whose determination shall, if made in good faith, be
conclusive) shall make such adjustments to the Conversion Price (and the calculation thereof) after
giving effect to all such events as shall preserve for Holders the Conversion Price protection
provided in Section 8.5.



ARTICLE IX

REPURCHASES OF NOTES AT OPTION OF HOLDER ON SPECIFIED DATES




SECTION 9.1 Repurchase of Notes at Option of the Holder on Specified Dates.




     (1) At the option of the Holder, the Company shall repurchase on May 1, 2012, May 1, 2017 and
May 1, 2022 (each, a “Repurchase Date”) all or a portion of the Notes held by such Holder for cash
at a price per Note equal to 100% of the aggregate principal amount of the Note (the “Repurchase
Price”), together with accrued but unpaid interest (including Contingent Interest and Special
Interest, if any) thereon, up to but not including the Repurchase Date.



     Notes shall be repurchased pursuant to this Section 9.1 at the option of the Holder thereof
upon:



45









 





          (i) delivery to the Company and the Paying Agent by the Holder of a written notice (a
“Repurchase Notice”) at any time from the opening of business on the date that is 30 Business Days
prior to the Repurchase Date until the close of business on such Repurchase Date stating:




               (a) if the Note which the Holder will deliver to be repurchased is a Note in definitive form,
the certificate number of such Note, or if such Note is a Global Security, the notice must comply
with the Applicable Procedures;



               (b) the portion of the principal amount of the Note which the Holder will deliver to be
repurchased, which portion must be in a principal amount of U.S.$1,000 or any integral multiple
thereof; and



               (c) that such Note shall be repurchased as of the Repurchase Date pursuant to the terms and
conditions specified in this Supplemental Indenture; and



          (ii) delivery or book-entry transfer of such Note to the Paying Agent prior to, on or after
the Repurchase Date (together with all necessary endorsements) at the offices of the Paying Agent,
such delivery being a condition to receipt by the Holder of the Repurchase Price therefor, together
with accrued but unpaid interest (including Contingent Interest and Special Interest, if any);
provided that the Repurchase Price, together with accrued but unpaid interest (including Contingent
Interest and Special Interest, if any) thereon, shall be so paid pursuant to this Section 9.1 only
if the Note so delivered to the Paying Agent shall conform in all respects to the description
thereof in the related Repurchase Notice.




     The Company shall repurchase from the Holder thereof, pursuant to this Section 9.1, a portion
of a Note if the principal amount of such portion is U.S.$1,000 or an integral multiple of
U.S.$1,000. Provisions of this Supplemental Indenture that apply to the repurchase of all of a
Note also apply to the repurchase of a portion of a Note.



     Any repurchase by the Company contemplated pursuant to the provisions of this Section 9.1
shall be consummated by the delivery to the Paying Agent of the Repurchase Price, together with
accrued but unpaid interest (including Contingent Interest and Special Interest, if any) thereon,
to be received by the Holder promptly following the later of the Repurchase Date and the time of
delivery or book-entry transfer of the Note to the Paying Agent in accordance with this Section
9.1.



     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Repurchase Notice contemplated by this Section 9.1(1) shall have the right to withdraw such
Repurchase Notice at any time prior to the close of business on the Repurchase Date by delivery of
a written notice of withdrawal to the Paying Agent at the principal office of the Paying Agent in
accordance with Section 9.2.



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



46









 





     (2) Company Repurchase Notice. In connection with any repurchase of Notes pursuant to this
Section 9.1, the Company shall give written notice of the Repurchase Date to the Holders (the
“Company Repurchase Notice”). The Company Repurchase Notice shall be sent by first-class mail to
the Trustee, to each Holder and to beneficial owners as required by applicable law in accordance
with the Indenture, not less than 30 Business Days prior to any Repurchase Date. Each Company
Repurchase Notice shall include a form of Repurchase Notice to be completed by a Holder and shall
state:



          (i) the Repurchase Price, the Conversion Price and accrued, but unpaid interest, if any
(including Contingent Interest and Special Interest, if any) to, but excluding, the Repurchase
Date;




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




          (iii) that Notes as to which a Repurchase Notice has been given may be converted only if (x)
the applicable Repurchase Notice has been withdrawn in accordance with the terms of this
Supplemental Indenture and (y) the Notes may be converted pursuant to Article VIII of the
Supplemental Indenture;




          (iv) that Notes must be surrendered to the Paying Agent to collect payment of the Repurchase
Price and accrued but unpaid interest (including Contingent Interest and Special Interest, if any);




          (v) that the Repurchase Price for any Notes as to which a Repurchase Notice has been given and
not withdrawn, together with accrued but unpaid interest (including Contingent Interest and Special
Interest, if any) payable with respect thereto, shall be paid promptly following the later of the
Repurchase Date and the time of surrender of such Notes as described in clause (iv);




          (vi) the procedures the Holder must follow under this Section 9.1;




          (vii) the conversion rights of the Notes;




          (viii) that, unless the Company defaults in making payment of such Repurchase Price, interest
(including Contingent Interest and Special Interest, if any) on Notes covered by any Repurchase
Notice will cease to accrue on and after the Repurchase Date;




          (ix) the CUSIP number of the Notes; and




          (x) the procedures for withdrawing a Repurchase Notice (as specified in Section 9.2).




     At the Company’s request, which shall be made at least three Business Days prior to the date
by which the Company Repurchase Notice is to be given to the Holders in accordance with this
Section 9.1, and at the Company’s expense, the Trustee shall give the Company Repurchase Notice



47









 




in the Company’s name; provided that, in all cases, the text of the Company Repurchase Notice shall be
prepared by the Company.




     If any of the Notes is in the form of a Global Security, then the Company shall modify such
notice to the extent necessary to accord with the Applicable Procedures that apply to the
repurchase of Global Securities.



SECTION 9.2 Effect of Repurchase Notice.




     Upon receipt by the Paying Agent of a Repurchase Notice, the Holder of the Note in respect of
which such Repurchase Notice was given shall (unless such Repurchase Notice is withdrawn as
specified in the following two paragraphs) thereafter be entitled to receive solely the Repurchase
Price, together with accrued but unpaid interest (including Contingent Interest and Special
Interest, if any) thereon, to but not including the Repurchase Date with respect to such Note.
Such Repurchase Price, together with accrued but unpaid interest (including Contingent Interest and
Special Interest, if any) thereon, to but not including the Repurchase Date shall be paid to such
Holder, subject to receipt of funds by the Paying Agent, promptly following the later of (x) the
Repurchase Date with respect to such Note (provided that the conditions in Section 9.1 have been
satisfied) and (y) the time of delivery or book-entry transfer of such Note to the Paying Agent by
the Holder thereof in the manner required by Section 9.1. Notes in respect of which a Repurchase
Notice has been given by the Holder thereof may not be converted pursuant to Article VIII hereof on
or after the date of the delivery of such Repurchase Notice unless such Repurchase Notice has first
been validly withdrawn as specified in the following two paragraphs.



     A Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to
the office of the Paying Agent in accordance with the Repurchase Notice at any time prior to the
close of business on the Business Day prior to the Repurchase Date specifying:



          (i) if the Note with respect to which such notice of withdrawal is being submitted is a Note
in definitive form, the certificate number of such Note, or if such Note is a Global Security, the
notice must comply with the Applicable Procedures;




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




          (iii) the principal amount, if any, of such Note which remains subject to the original
Repurchase Notice and which has been or will be delivered for repurchase by the Company.




     There shall be no repurchase of any Notes pursuant to Section 9.1 if an Event of Default
(other than a default in the payment of the Repurchase Price) has occurred prior to, on or after,
as the case may be, the giving by the Holders of such Notes of the required Repurchase Notice and
such Event of Default is continuing. The Paying Agent will promptly return to the respective
Holders thereof any Notes (x) with respect to which a Repurchase Notice has been withdrawn in
compliance with this Supplemental Indenture, or (y) held by it during the continuance of an Event
of Default



48









 




(other than a default in the payment of the Repurchase Price) in which case, upon such
return, the Repurchase Notice with respect thereto shall be deemed to have been withdrawn.




SECTION 9.3 Deposit of Repurchase Price.




     Prior to 10:30 a.m. (New York City time) on the Business Day immediately following the
Repurchase Date the Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary thereof or an Affiliate of either of them is acting as the Paying Agent,
shall segregate and hold in trust) an amount of money (in immediately available funds if deposited
on such Business Day) sufficient to pay the aggregate Repurchase Price together with accrued but
unpaid interest (including Contingent Interest and Special Interest, if any) thereon, to but not
including the Repurchase Date of all the Notes or portions thereof which are to be repurchased as
of the Repurchase Date.



     If the Paying Agent holds money sufficient to pay the Repurchase Price of all Notes on the
Business Day immediately following such Repurchase Date in accordance with this Supplemental
Indenture, then on and after such Business Day, the Notes shall cease to be outstanding, whether or
not the Notes are delivered to the Paying Agent, and all other rights of the Holder under this
Supplemental Indenture and the Indenture shall terminate, except the right to receive the
Repurchase Price thereof upon delivery of the Notes



SECTION 9.4 Notes Repurchased in Part.




     Any Note in definitive form that is to be repurchased only in part shall be surrendered at the
office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or
a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service
charge, one or more new Notes in definitive form, 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 Note in definitive form so surrendered which is not repurchased.



SECTION 9.5 Covenant to Comply with Notes Laws upon Repurchase of Notes.




     When complying with the provisions of Section 9.1 hereof (so long as such offer or repurchase
constitutes an “issuer tender offer” for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act at the time of such offer or
repurchase), the Company shall (i) comply in all material respects with Rule 13e-4 and Rule 14e-1
under the Exchange Act, (ii) file the related Schedule TO (or any successor schedule, form or
report) under the Exchange Act and (iii) otherwise comply in all material respects with all federal
and state securities laws so as to permit the rights and obligations under Section 9.1 to be
exercised in the time and in the manner specified in Section 9.1.



     If any of the provisions of this Article IX are inconsistent with applicable law, such law
shall govern.



49









 





SECTION 9.6 Repayment to the Company.




     To the extent that the aggregate amount of cash deposited by the Company pursuant to Section
9.3 exceeds the aggregate Repurchase Price of the Notes or portions thereof which the Company is
obligated to repurchase as of the Repurchase Date together with accrued but unpaid interest
(including Contingent Interest and Special Interest, if any) thereon, then, unless otherwise agreed
in writing with the Company, promptly after the Business Day following the Repurchase Date the
Trustee shall return any such excess to the Company together with interest, if any, thereon.



ARTICLE X

REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER




SECTION 10.1 Right to Require Repurchase Upon a Fundamental Change.




     In the event that a Fundamental Change (as hereinafter defined) shall occur, then each Holder
shall have the right, at the Holder’s option, to require the Company to repurchase, and upon the
exercise of such right the Company shall repurchase, all of such Holder’s Notes not theretofore
converted or called for redemption, or any portion of the aggregate principal amount thereof that
is equal to U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof (provided that no
single Note may be repurchased in part unless the portion of the aggregate principal amount of such
Note to be Outstanding after such repurchase is equal to U.S.$1,000 or integral multiples of
U.S.$1,000 in excess thereof), on the date (the “Fundamental Change Repurchase Date”) that is 30
Business Days after the date of the Fundamental Change Company Notice (as defined in Section 10.2)
at a purchase price equal to 100% of the aggregate principal amount of the Notes to be repurchased
plus interest accrued but unpaid to, but excluding, the Fundamental Change Repurchase Date (the
“Fundamental Change Repurchase Price”); provided, however, that installments of interest on Notes
whose Stated Maturity is on or prior to the Fundamental Change Repurchase Date shall be payable to
the Holders of such Notes, or one or more Predecessor Securities, registered as such on the
relevant Record Date according to their terms and the provisions of Section 1.2(3) of this
Supplemental Indenture. Such right to require the repurchase of the Notes shall not continue after a discharge of the
Company from its obligations with respect to the Notes in accordance with Article V of the
Indenture, unless a Fundamental Change shall have occurred prior to such discharge. Whenever in
this Supplemental Indenture there is a reference, in any context, to the principal of any Note as
of any time, such reference shall be deemed to include reference to the Fundamental Change
Repurchase Price payable in respect of such Note to the extent that such Fundamental Change
Repurchase Price is, was or would be so payable at such time, and express mention of the
Fundamental Change Repurchase Price in any provision of this Supplemental Indenture shall not be
construed as excluding the Fundamental Change Repurchase Price in those provisions of this
Supplemental Indenture when such express mention is not made.



SECTION 10.2 Notices; Method of Exercising Repurchase Right, Etc.




     (1) Unless the Company shall have theretofore called for redemption all of the Outstanding
Notes, on or before the 30th day after the occurrence of a Fundamental Change, the Company or, at
the request in a Company Order and expense of the Company on or before the 15th



50









 




day after such occurrence, the Trustee, shall give to all Holders of Notes, in the manner provided in Section 106
of the Indenture, notice (the “Fundamental Change Company Notice”) of the occurrence of the
Fundamental Change and of the repurchase right set forth herein arising as a result thereof. The
Company shall also deliver a copy of such Fundamental Change Company Notice to the Trustee. If
such notice is to be given by the Trustee, the Company shall deliver, on or before the fifth day
after such occurrence, a Company Order requesting the Trustee to give such notice and setting forth
all the information to be included in such notice including the information set forth below.




     Each Fundamental Change Company Notice shall state:



          (i) the Fundamental Change Repurchase Date,




          (ii) the date by which the repurchase right must be exercised,




          (iii) the Fundamental Change Repurchase Price,




          (iv) a description of the procedure that a Holder must follow to exercise a repurchase right,
and the place or places where such Notes are to be surrendered for payment of the Fundamental
Change Repurchase Price and accrued interest, if any (including Contingent Interest and Special
Interest, if any), to the Fundamental Change Repurchase Date,




          (v) that on the Fundamental Change Repurchase Date the Fundamental Change Repurchase Price,
and accrued interest, if any (including Contingent Interest and Special Interest, if any), to, but
excluding, the Fundamental Change Repurchase Date will become due and payable upon each such Note
designated by the Holder to be repurchased, and that interest thereon shall cease to accrue on and
after said date,




          (vi) the Conversion Rate then in effect, the date on which the right to convert the aggregate
principal amount of the Notes to be repurchased will terminate and the place or places where such
Notes may be surrendered for conversion, and




          (vii) the place or places that the Note certificate with the Election of Holder to Require
Repurchase as specified in Section 3.2 shall be delivered.




     No failure of the Company to give the foregoing notices or defect therein shall limit any
Holder’s right to exercise a repurchase right or affect the validity of the proceedings for the
repurchase of Notes.



     If any of the foregoing provisions or other provisions of this Article X are inconsistent with
applicable law, such law shall govern.



     (2) To exercise a repurchase right pursuant to Article X, a Holder shall deliver to the
Trustee on or before the close of business on the Business Day prior to the Fundamental Change
Repurchase Date (i) written notice of the Holder’s exercise of such right, which notice shall set
forth



51









 




the name of the Holder, the aggregate principal amount of the Notes to be repurchased (and,
if any Note is to repurchased in part, the serial number thereof, the portion of the aggregate
principal amount thereof to be repurchased and the name of the Person in which the portion thereof
to remain Outstanding after such repurchase is to be registered) and a statement that an election
to exercise the repurchase right is being made thereby, and (ii) the Notes with respect to which
the repurchase right is being exercised. Such written notice shall be irrevocable, except that the
right of the Holder to convert the Notes with respect to which the repurchase right is being
exercised shall continue until the close of business on the Business Day immediately preceding the
Fundamental Change Repurchase Date.




     (3) In the event a repurchase right shall be exercised in accordance with the terms hereof,
the Company shall pay or cause to be paid to the Trustee before 10:30 a.m. (New York City time) on
the Fundamental Change Repurchase Date the Fundamental Change Repurchase Price in cash, as provided
above, for payment to the Holder on the Fundamental Change Repurchase Date, together with accrued
and unpaid interest (including Contingent Interest and Special Interest, if any) to, but excluding,
the Fundamental Change Repurchase Date, payable with respect to the Notes as to which the
repurchase right has been exercised; provided, however, that installments of interest that mature
on or prior to the Fundamental Change Repurchase Date shall be payable in cash to the Holders of
such Notes, or one or more Predecessor Securities, registered as such at the close of business on
the relevant Regular Record Date.



     (4) If any Note (or portion thereof) surrendered for repurchase shall not be so paid on the
Fundamental Change Repurchase Date, the aggregate principal amount of such Note (or portion
thereof, as the case may be), shall, until paid, bear interest to the extent permitted by
applicable law from the Fundamental Change Repurchase Date at the rate of 4% per annum, and each
Note shall remain convertible into cash and Common Stock, if any, until the principal of such Note
(or portion thereof, as the case may be) shall have been paid or duly provided for.



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



     (6) All Notes delivered for repurchase shall be delivered to the Trustee to be canceled at the
direction of the Trustee, which shall cancel the same as provided in Section 309 of the Indenture.



     (7) To the extent that the aggregate amount of cash deposited by the Company pursuant to
Section 10.2(3) exceeds the aggregate Fundamental Change Repurchase Price of the Notes or portions
thereof which the Company is obligated to repurchase as of the Fundamental Change Repurchase Date
together with accrued but unpaid interest (including Contingent Interest and



52









 




Special Interest, if any) thereon, then, unless otherwise agreed in writing with the Company, promptly after the
Business Day following the Fundamental Change Repurchase Date the Trustee shall return any such
excess to the Company together with interest, if any, thereon.




     (8) When complying with the provisions of Section 10.1 hereof (so long as such offer or
repurchase constitutes an “issuer tender offer” for purposes of Rule 13e-4 (which term, as used
herein, includes any successor provision thereto) under the Exchange Act at the time of such offer
or repurchase), the Company shall (i) comply in all material respects with Rule 13e-4 and Rule
14e-1 under the Exchange Act, (ii) file the related Schedule TO (or any successor schedule, form or
report) under the Exchange Act and (iii) otherwise comply in all material respects with all federal
and state securities laws so as to permit the rights and obligations under Section 10.1 to be
exercised in the time and in the manner specified in Section 10.1.



     SECTION 10.3 Certain Definitions.




     For purposes of this Article X,




     (1) the term “beneficial owner” shall be determined in accordance with Rule 13d-3, as in
effect on the date of the original execution of this Supplemental Indenture, promulgated by the
Commission pursuant to the Exchange Act;



     (2) a “Fundamental Change” shall be deemed to have occurred, at any time after the original
issuance of the Notes, if any of the following occurs:



          (i) during any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors (together with any new directors whose election to
the Board of Directors, or whose nomination for election by the stockholders of the Company,
was approved by a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the Board of Directors
then in office; or




          (ii) any Person acquires beneficial ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of shares of capital stock of
the Company entitling such person to exercise 50% or more of the total voting power of all shares
of capital stock of the Company entitled to vote generally in the elections of directors, other
than any such acquisition by the Company, any Subsidiary or any employee benefit plan of the
Company; or




          (iii) the Company merges or consolidates with or into any other Person, another Person merges
into the Company, or the Company conveys, sells, transfers, leases or otherwise disposes of all or
substantially all of the properties and assets of the Company to another Person (other than (a) any
such transaction (x) involving a merger or consolidation that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of Capital Stock of
the Company and (y) pursuant to which the holders of 50% or more of the total voting power of all
shares of the Company’s Capital Stock entitled to vote generally in the election of directors
immediately prior to such transaction have the entitlement to exercise, directly or indirectly,
more




53









 




than 50% of the total voting power of all shares of Capital Stock entitled to vote generally
in the election of directors of the continuing or surviving corporation immediately after such
transaction; provided, that it shall not be a Fundamental Change pursuant to this Section
10.3(2)(iii) if the consideration for such merger or consolidation consists solely of shares of
publicly traded common stock listed on the Nasdaq Global Select Market or on an established
national securities exchange or automated over-the-counter trading market in the United States, but
disregarding any cash payments for fractional shares or pursuant to dissenters’ appraisal rights or
(b) any transaction which is effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of outstanding shares of Common
Stock into solely shares of common stock of the surviving entity); or




          (iv) the Common Stock into which the Notes are convertible ceases to be listed on the Nasdaq
Global Select Market and is not listed on an established national securities exchange or automated
over-the-counter trading market in the United States; or




          (v) the stockholders of the Company pass a resolution approving a plan of liquidation,
dissolution or winding up of the Company or any Significant Subsidiary of the Company; and




     (3) for purposes of Section 10.3(2)(ii) only, the term “Person” shall include any syndicate or
group which would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act, as in
effect on the date of the original execution of this Supplemental Indenture.



ARTICLE XI

SUPPLEMENTAL INDENTURES




SECTION 11.1 Supplemental Indentures Without Consent of Holders of Notes.




     Section 901 of the Indenture shall not be applicable to the Notes.



     Without the consent of any Holders of Notes the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the
following purposes:



     (1) to evidence the succession of another Person to the Company and the assumption by any such
successor of the covenants and obligations of the Company herein and in the Notes as permitted by
Article V of this Supplemental Indenture; or



     (2) to add to the covenants of the Company and Events of Default for the benefit of the
Holders of Notes or to surrender any right or power herein conferred upon the Company; or



     (3) to provide collateral for the Notes; or



54









 





     (4) to make provision with respect to the conversion rights of Holders of Notes pursuant to
Section 8.11 of this Supplemental Indenture or to make provision with respect to the repurchase
rights of Holders of Notes pursuant to Section 9.1 and Section 10.1 of this Supplemental Indenture;
or



     (5) to comply with the requirements of the Trust Indenture Act or the rules and regulations of
the Commission thereunder in order to effect or maintain the qualification of the Indenture under
the Trust Indenture Act, as contemplated by this Indenture or otherwise; or



     (6) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee; or



     (7) to cure any ambiguity, to correct or supplement any provision herein that may be
inconsistent with any other provision herein or that is otherwise defective, or to make any other
provisions with respect to matters or questions arising under this Supplemental Indenture or the
Indenture, provided such action pursuant to this clause (7) shall not adversely affect the
interests of the Holders of Notes in any material respect.



     Upon a Company Request, accompanied by a Board Resolution authorizing the execution of any
such supplemental indenture, and subject to and upon actual receipt by a Responsible Officer of the
Trustee of the documents described in Section 903 of the Indenture, the Trustee is hereby
authorized to join with the Company in the execution of any supplemental indenture authorized or
permitted by the terms of this Supplemental Indenture and to make any further appropriate
agreements and stipulations that may be therein contained.



SECTION 11.2 Supplemental Indentures with Consent of Holders of Notes.




     Section 902 of the Indenture shall not be applicable to the Notes.



     With either (i) the written consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes, by the Act of said Holders delivered to the Company and
the Trustee, or (ii) by the adoption of a resolution, at a meeting of Holders of the Outstanding
Notes at which a quorum is present, by the Holders of at least 66 2/3% in aggregate principal
amount of the Outstanding Notes represented at such meeting, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto, in
form reasonably satisfactory to the Trustee, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any
manner the rights of the Holders of Notes under the Indenture; provided, however, that no such
supplemental indenture shall, without the consent or affirmative vote of the Holder of each
Outstanding Security affected thereby,



     (1) change the Stated Maturity of the principal of, or any installment of interest on, any
Note, or reduce the aggregate principal amount of or the rate of interest payable thereon, or
reduce the amount payable upon a redemption, or mandatory repurchase, or reduce the amount payable
upon acceleration of the Stated Maturity of the Notes, or change the place or currency of payment
of



55









 




the principal of or interest on any Note (including any payment of Contingent Interest, Special
Interest, Redemption Price, Repurchase Price or Fundamental Change Repurchase Price in respect of
such Note) or impair the right to institute suit for the enforcement of any payment in respect of
any Note on or after the Stated Maturity thereof (or, in the case of redemption or any repurchase,
on or after the Redemption Date, Repurchase Date or Fundamental Change Repurchase Date, as the case
may be) or adversely affect the right of Holders to convert any Note as provided in Article VIII of
this Supplemental Indenture other than a modification or amendment required by the terms of this
Supplemental Indenture; or




     (2) reduce the requirements of Section 12.4 of this Supplemental Indenture for quorum or
voting, or reduce the percentage in aggregate principal amount of the Outstanding Notes for
adoption of a resolution or whose Holders’ consent is required for any such supplemental indenture
or whose Holders’ consent is required for any waiver of compliance with certain provisions of this
Supplemental Indenture or certain defaults hereunder and their consequences provided for in this
Supplemental Indenture; or



     (3) modify the obligation of the Company to maintain an office or agency in The City of New
York, pursuant to Section 305 of the Indenture; or



     (4) modify any of the provisions of this Section, Article XIII of this Supplemental Indenture
or Section 513 of the Indenture, except to increase any percentage contained herein or therein or
to provide that certain other provisions of this Supplemental Indenture and the Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding Note affected thereby; or



     (5) modify the provisions of Article IX or Article X of this Supplemental Indenture in a
manner adverse to the Holders



     (6) modify the provisions of this Supplemental Indenture relating to the Company’s requirement
to repurchase Notes (i) upon a Fundamental Change after the occurrence thereof or (ii) on May 1,
2012, May 1, 2017 and May 1, 2022; or



     (7) modify the provisions of Sections 6.1 or 7.1 of this Supplemental Indenture in a manner
adverse to the Holders.



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



56









 





ARTICLE XII

MEETINGS OF HOLDERS OF NOTES




SECTION 12.1 Purposes for Which Meetings May Be Called.




     A meeting of Holders of Notes may be called at any time and from time to time pursuant to this
Article XII to make, give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Supplemental Indenture or the Indenture to be made, given
or taken by Holders of Notes.



SECTION 12.2 Call, Notice and Place of Meetings.




     (1) The Trustee may at any time call a meeting of Holders of Notes for any purpose specified
in Section 12.1 of this Supplemental Indenture, to be held at such time and at such place in The
City of New York, as the Trustee shall determine. Notice of every meeting of Holders of Notes,
setting forth the time and the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given, in the manner provided in Section 106 of the Indenture, not
less than 21 nor more than 180 days prior to the date fixed for the meeting.



     (2) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at
least 25% in aggregate principal amount of the Outstanding Notes shall have requested the Trustee
to call a meeting of the Holders of Notes for any purpose specified in Section 12.1 of this
Supplemental Indenture, by written request setting forth in reasonable detail the action proposed
to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within
21 days after its actual receipt by a Responsible Officer of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company or the Holders of
Notes in the amount specified, as the case may be, may determine the time and the place in The City
of New York, for such meeting and may call such meeting for such purposes by giving notice thereof
as provided in paragraph (1) of this Section 12.2.



SECTION 12.3 Persons Entitled to Vote at Meetings.




     To be entitled to vote at any meeting of Holders of Notes, a Person shall be (i) a Holder of
one or more Outstanding Notes, or (ii) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Notes by such Holder or Holders. The only Persons
who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons
entitled to vote at such meeting and their counsel, any representatives or agents of the Trustee
and its counsel and any representatives of the Company and its counsel.



SECTION 12.4 Quorum; Action.




     The presence of Persons entitled to vote a majority in aggregate principal amount of the
Outstanding Notes shall constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the request of Holders of
Notes, be dissolved. In any other case, the meeting may be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In
the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period not less than 10



57









 




days as determined by the chairman of the meeting prior to
the adjournment of such adjourned meeting (subject to repeated applications of this sentence).
Notice of the reconvening of any adjourned meeting shall be given by the Company as provided in
Section 12.2(1) of this Supplemental Indenture, except that such notice need be given only once not
less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice
of the reconvening of an adjourned meeting shall state expressly the percentage of the aggregate
principal amount of the Outstanding Notes that shall constitute a quorum.




     Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum,
the Persons entitled to vote 25% in aggregate principal amount of the Outstanding Notes at the time
shall constitute a quorum for the taking of any action set forth in the notice of the original
meeting.



     At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as
aforesaid, any resolution and all matters (except as limited by the proviso to Section 11.2 of this
Supplemental Indenture and except to the extent Section 513 of the Indenture requires a different
vote) shall be effectively passed and decided if passed or decided by either (i) the written
consent of Holders of not less than a majority in aggregate principal amount of Outstanding Notes,
or (ii) the Persons entitled to vote not less than 66 2/3% in aggregate principal amount of
Outstanding Notes represented and entitled to vote at such meeting.



     Any resolution passed or decisions taken at any meeting of Holders of Notes duly held in
accordance with this Section shall be binding on all the Holders of Notes whether or not present or
represented at the meeting. The Trustee shall, pursuant to a Company Order setting forth the
action taken, in the name and at the expense of the Company, notify all the Holders of Notes of any
such resolutions or decisions pursuant to Section 106 of the Indenture.



SECTION 12.5 Determination of Voting Rights; Conduct and Adjournment of Meetings.




     (1) Notwithstanding any other provisions of this Indenture, the Trustee may make such
reasonable regulations as it may deem advisable for any meeting of Holders of Notes in regard to
proof of the holding of Notes and of the appointment of proxies and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the conduct of the meeting
as it shall deem appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Notes shall be proved in the manner specified in Section 104 of the Indenture and
the appointment of any proxy shall be proved in the manner specified in Section 104 of the
Indenture or by having the signature of the Person executing the proxy guaranteed by any bank,
broker or other eligible institution participating in a recognized medallion signature guarantee
program. Neither the Trustee nor any of its agents shall be liable, and the Company shall
indemnify the Trustee and each such agent, for any action taken or omitted to be taken by it in
good faith in connection with any such meeting.



58









 





     (2) The Trustee shall, by an instrument in writing, appoint a temporary chairman (which may be
the Trustee) of the meeting, unless the meeting shall have been called by the Company or by Holders
of Notes as provided in Section 12.2(2), in which case the Company or the Holders of Notes calling
the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled
to vote a majority in aggregate principal amount of the Outstanding Notes represented at the
meeting.



     (3) At any meeting, each Holder of a Note or proxy shall be entitled to one vote for each
U.S.$1,000 aggregate principal amount of Notes held or represented by him; provided, however, that
no vote shall be cast or counted at any meeting in respect of any Note challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Note or proxy.



     (4) Any meeting of Holders of Notes duly called pursuant to Section 12.2 at which a quorum is
present may be adjourned from time to time by Persons entitled to vote a majority in
aggregate principal amount of the Outstanding Notes represented at the meeting, and the
meeting may be held as so adjourned without further notice.



SECTION 12.6 Counting Votes and Recording Action of Meetings.




     The vote upon any resolution submitted to any meeting of Holders of Notes shall be by written
ballots on which shall be subscribed the signatures of the Holders of Notes or of their
representatives by proxy and the aggregate principal amounts at Stated Maturity and serial numbers
of the Outstanding Notes held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the
proceedings of each meeting of Holders of Notes shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts
setting forth a copy of the notice of the meeting and showing that said notice was given as
provided in Section 12.2 and, if applicable, Section 12.4. Each copy shall be signed and verified
by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Company and another to the Trustee to be preserved by the Trustee, the latter to
have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.



ARTICLE XIII

WAIVER OF PAST DEFAULTS




SECTION 13.01 Waiver of Past Defaults.




     For purposes of Section 513 of the Indenture, the waiver of compliance by the Company with
restrictive provisions and the waiver of any past defaults by the Company under the Indenture



59









 




(subject to the exceptions described in Section 513 of the Indenture) may only be waived with
either (i) the written consent of the Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes, by the Act of said Holders delivered to the Company and the
Trustee, or (ii) by the adoption of a resolution, at a meeting of Holders of the Outstanding Notes
at which a quorum is present, by the Holders of at least 66 2/3% in aggregate principal amount of
the Outstanding Notes represented at such meeting.




60









 





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



	 	 	 	 	 	 	 
	 	 	FRANKLIN BANK CORP.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Anthony J. Nocella
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Anthony J. Nocella
	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK TRUST
	 	 	COMPANY, N.A., as Trustee
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mauri J. Cowen	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Mauri J. Cowen
	 	 	Title: Vice President






 









 





SCHEDULE A




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Share Price
	Effective Date	 	$15.70	 	$18.00	 	$20.00	 	$22.00	 	$24.00	 	$26.00	 	$30.00	 	$50.00	 	$78.50
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	April 18, 2007
	 	 	18.240	 	 	 	18.000	 	 	 	15.788	 	 	 	14.329	 	 	 	12.454	 	 	 	11.542	 	 	 	9.718	 	 	 	5.406	 	 	 	1.021	 
	May 1, 2008
	 	 	18.240	 	 	 	17.406	 	 	 	14.876	 	 	 	12.454	 	 	 	11.359	 	 	 	10.447	 	 	 	8.806	 	 	 	4.859	 	 	 	0.868	 
	May 1, 2009
	 	 	18.240	 	 	 	16.687	 	 	 	12.454	 	 	 	10.630	 	 	 	8.806	 	 	 	8.076	 	 	 	6.672	 	 	 	3.035	 	 	 	0.691	 
	May 1, 2010
	 	 	18.240	 	 	 	15.862	 	 	 	11.182	 	 	 	9.900	 	 	 	8.259	 	 	 	6.672	 	 	 	3.947	 	 	 	2.123	 	 	 	0.492	 
	May 1, 2011
	 	 	18.240	 	 	 	15.077	 	 	 	9.718	 	 	 	7.894	 	 	 	5.771	 	 	 	4.494	 	 	 	3.035	 	 	 	1.728	 	 	 	0.261	 
	May 1, 2012
	 	 	18.240	 	 	 	13.781	 	 	 	7.829	 	 	 	4.859	 	 	 	3.035	 	 	 	2.123	 	 	 	0.730	 	 	 	0.000	 	 	 	0.000	 







SCHEDULE A-1