Document:

exv4w1

EXHIBIT 4.1

 

BORGWARNER INC.

as Issuer

AND

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

as Trustee

SECOND SUPPLEMENTAL INDENTURE

Dated as of April 9, 2009

$373,750,000

3.50% Convertible Senior Notes due 2012

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 DEFINITIONS
	 	 	 	 
	Section 1.01. Definitions
	 	 	1	 
	ARTICLE 2 ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
	 	 	 	 
	Section 2.01. Designation and Amount
	 	 	9	 
	Section 2.02. Form of Notes
	 	 	9	 
	Section 2.03. Date and Denomination of Notes; Payments of Interest
	 	 	10	 
	ARTICLE 3 DEFAULTS AND REMEDIES
	 	 	 	 
	Section 3.01. Events of Default
	 	 	11	 
	Section 3.02. Acceleration
	 	 	13	 
	Section 3.03. Additional Interest
	 	 	13	 
	Section 3.04. Payments of Notes on Default; Suit Therefor
	 	 	14	 
	Section 3.05. Application of Monies Collected by Trustee
	 	 	15	 
	Section 3.06. Proceedings by Noteholders
	 	 	16	 
	Section 3.07. Proceedings by Trustee
	 	 	17	 
	Section 3.08. Remedies Cumulative and Continuing
	 	 	17	 
	Section 3.09. Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders
	 	 	17	 
	Section 3.10. Notice of Defaults
	 	 	18	 
	Section 3.11. Undertaking to Pay Costs
	 	 	18	 
	ARTICLE 4 SUPPLEMENTAL INDENTURES
	 	 	 	 
	Section 4.01. Supplemental Indentures Without Consent of Noteholders
	 	 	18	 
	Section 4.02. Supplemental Indentures With Consent of Noteholders
	 	 	19	 
	Section 4.03. Effect of Supplemental Indentures
	 	 	20	 
	Section 4.04. Notation on Notes
	 	 	21	 
	Section 4.05. Evidence of Compliance of Supplemental Indenture to Be Furnished
to Trustee
	 	 	21	 
	ARTICLE 5 CONVERSION OF NOTES
	 	 	 	 
	Section 5.01. Conversion Privilege
	 	 	21	 
	Section 5.02. Conversion Procedure
	 	 	21	 
	Section 5.03. Increased Conversion Rate Applicable to Certain Notes Surrendered
in Connection with Make-Whole Fundamental Changes
	 	 	25	 

i

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	Section 5.04. Adjustment of Conversion Rate
	 	 	27	 
	Section 5.05. Shares to Be Fully Paid
	 	 	36	 
	Section 5.06. Effect of Reclassification, Consolidation, Merger or Sale
	 	 	36	 
	Section 5.07. Certain Covenants
	 	 	39	 
	Section 5.08. Responsibility of Trustee
	 	 	39	 
	Section 5.09. Notice to Noteholders Prior to Certain Actions
	 	 	40	 
	Section 5.10. Stockholder Rights Plans
	 	 	40	 
	Section 5.11. Exchange in Lieu of Conversion
	 	 	41	 
	ARTICLE 6 REPURCHASE OF NOTES AT OPTION OF HOLDERS
	 	 	 	 
	Section 6.01. [Reserved]
	 	 	41	 
	Section 6.02. Repurchase at Option of Noteholders upon a Fundamental Change

	 	 	41	 
	Section 6.03. Withdrawal of Fundamental Change Repurchase Notice
	 	 	44	 
	Section 6.04. Deposit of Fundamental Change Repurchase Price
	 	 	44	 
	ARTICLE 7 MISCELLANEOUS
	 	 	 	 
	Section 7.01. Ratification of Indenture
	 	 	45	 
	Section 7.02. Trustee Not Responsible for Recitals
	 	 	46	 
	Section 7.03. Governing Law
	 	 	46	 
	Section 7.04. Separability
	 	 	46	 
	Section 7.05. Counterparts
	 	 	47	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A            Form of Note
	 	 	A-1	 
	Exhibit B            Form of Notice of Conversion
	 	 	B-1	 
	Exhibit C            Form of Fundamental Change Repurchase Notice
	 	 	C-1	 
	Exhibit D            Form of Assignment and Transfer
	 	 	D-1	 

          SECOND SUPPLEMENTAL INDENTURE, dated as of April 9, 2009 (this “Supplemental
Indenture”), between BorgWarner Inc. (formerly known as Borg-Warner Automotive, Inc.), a Delaware
corporation (the “Company”) and The Bank of New York Mellon Trust Company, N.A., successor in
interest to J.P. Morgan Trust Company, N.A. (formerly known as Chase Manhattan Trust Company,
National Association), a national banking association, as trustee (the “Trustee”), to the
indenture, dated as of September 23, 1999 (the “Base Indenture”), between the Company and the
Trustee.

      

ii

 

          WHEREAS, the Company executed and delivered the Base Indenture to the Trustee to provide for,
among other things, the issuance from time to time of the Company’s debt securities in one or more
series as might be authorized under the Base Indenture;

          WHEREAS, the Base Indenture provides that the Company and the Trustee may enter into an
Indenture supplemental to the Base Indenture to establish the form and terms of any series of
Securities (as defined in Section 1.01 of the Base Indenture) as provided by Sections 2.01 and 3.01
of the Base Indenture;

          WHEREAS, the Board of Directors of the Company has duly adopted resolutions authorizing the
Company to issue the Notes provided for in this Supplemental Indenture;

          WHEREAS, the Company desires to enter into this Supplemental Indenture to provide for the
establishment of a series of Securities (as defined in Section 1.01 of the Base Indenture) to be
known as the 3.50% Convertible Senior Notes due 2012 (each such Security being hereinafter called a
“Note”), the form, substance, terms, provisions and conditions of which shall be set forth in
Article 2 and Article 3 of the Base Indenture as supplemented by this Supplemental Indenture, as
the same may be further amended and supplemented from time to time (being hereinafter called this
“Indenture”);

          WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental
Indenture and has satisfied all requirements necessary to make (i) this Supplemental Indenture a
valid instrument in accordance with its terms and (ii) the Notes provided for hereby, when executed
and delivered by the Company and authenticated by the Trustee, a series of Securities (as defined
in Section 1.01 of the Base Indenture) that are the valid obligations of the Company.

WITNESSETH:

          NOW THEREFORE, each party agrees as follows for the benefit of the other parties and for the
equal and ratable benefit of the Holders of the Notes:

ARTICLE 1

DEFINITIONS

          Section 1.01.
Definitions. Unless otherwise specified herein or the context otherwise
requires:

          (a) a term defined in the Base Indenture has the same meaning when used in this Supplemental
Indenture unless the definition of such term is amended and supplemented pursuant to this
Supplemental Indenture;

 

 

          (b) the terms defined in this Article and in this Supplemental Indenture include the plural as
well as the singular;

          (c) a reference to a Section or Article is to a Section or Article of this Supplemental
Indenture;

          (d) Article and Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof;

          (e) the following terms have the meanings given to them in this Section 1.01(e):

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

“Base Indenture” has the meaning set forth in the recitals hereto.

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of
debtors.

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

“Cash Settlement Averaging Period” means, with respect to any Note surrendered for conversion, the
forty consecutive Trading Day period beginning on, and including, the third Trading Day immediately
following the Conversion Date for such Note; provided that, with respect to any Conversion Date
occurring during the period beginning on, and including, December 15, 2011 and ending at the close
of business on the second Scheduled Trading Day immediately prior to the Maturity Date, the “Cash
Settlement Averaging Period” means the forty consecutive Trading Day period beginning on, and
including, the forty-second Scheduled Trading Day prior to the Maturity Date.

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

“Common Equity” of any Person means Capital Stock of such Person that is generally entitled (a) to
vote in the election of directors of such Person or (b) if such Person is not a corporation, to
vote or otherwise participate in the selection of the governing body, partners, managers or others
that will control the management or policies of such Person.

“Common Stock” means, subject to Section 5.06, shares of common stock of the Company, par value
$0.01 per share, at the date of this Supplemental Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and that have 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 Company and that are not subject to redemption by the
Company; provided that if at any time there shall be more than one such resulting class, the shares
of each such class then so issuable shall be substantially in the

 

 

proportion that the total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such reclassifications.

“Continuing Director” means a director who either was a member of the Board of Directors on April
9, 2009 or who becomes a member of the Board of Directors subsequent to that date and whose
election, appointment or nomination for election by the stockholders of the Company is duly
approved by a majority of the Continuing Directors on the Board of Directors at the time of such
approval, either by a specific vote or by approval of the proxy statement issued by the Company on
behalf of the entire Board of Directors in which such individual is named as nominee for director.

“Company” has the meaning set forth in the recitals hereto.

“Conversion Agent” has the meaning specified in Section 5.08.

“Conversion Date” has the meaning specified in Section 5.02(e).

“Conversion Obligation” has the meaning specified in Section 5.01(a).

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

“Conversion Rate” has the meaning specified in Section 5.01(a).

“Custodian” means the Trustee, as custodian for The Depositary, with respect to the Global Notes,
or any successor entity thereto.

“Daily Conversion Value” means, for each of the forty consecutive Trading Days during the Cash
Settlement Averaging Period, one-fortieth (1/40th) of the product of (a) the then-applicable
Conversion Rate on such Trading Day and (b) the Daily VWAP of the Common Stock on such Trading Day.

“Daily Measurement Value” is equal to the Specified Dollar Amount, divided by forty.

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

     (a) cash equal to the lesser of the Daily Measurement Value and the Daily Conversion Value for
such Trading Day; and

     (b) to the extent the Daily Conversion Value for such Trading Day exceeds the Daily
Measurement Value, a number of shares of Common Stock equal to the Daily Share Amount.

 

 

“Daily Share Amount” means, to the extent the Daily Conversion Value exceeds the Daily Measurement
Value, (i) the difference between the Daily Conversion Value and the Daily Measurement Value,
divided by (ii) the Daily VWAP of the Common Stock for such Trading Day.

“Daily VWAP” for the Common Stock, in respect of any Trading Day, means the per share
volume-weighted average price on the New York Stock Exchange as displayed under the heading
“Bloomberg VWAP” on Bloomberg page “BWA.N <equity> AQR” (or its equivalent successor if such
page is not available) in respect of the period from the scheduled opening of trading until the
scheduled close of trading of the primary trading session on such Trading Day (or if such
volume-weighted average price is unavailable, the market value of one share of the Common Stock on
such Trading Day as determined by the Board of Directors in a commercially reasonable manner, using
a volume-weighted average price method) and will be determined without regard to after hours
trading or any other trading outside of the regular trading session.

“Defaulted Interest” means any interest on any Note that is payable, but is not punctually paid or
duly provided for, on any April 15 or October 15 of each year, beginning October 15, 2009.

“Depositary” means, with respect to the Global Notes the Person specified as the depositary with
respect to such Notes, until a successor shall have been appointed and become such pursuant to the
applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or include such
successor.

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

“Event of Default” has the meaning specified in Section 3.01.

“Ex-Dividend Date” means, with respect to any issuance, dividend or distribution in which the
holders of Common Stock (or other security) have the right to receive any cash, Notes or other
property, the first date on which the shares of the Common Stock (or other security) trade on the
applicable exchange or in the applicable market, regular way, without the right to receive the
issuance, dividend or distribution in question.

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

“Expiration Date” has the meaning specified in Section 5.04(e).

“Expiration Time” has the meaning specified in Section 5.04(e).

“Fundamental Change” means the occurrence after the original issuance of the Notes of any of the
following events:

 

 

     (a) any “person” or “group” (within the meaning of Section 13(d) of the Exchange Act) other
than the Company or its Subsidiaries files a Schedule TO or any schedule, form or report under the
Exchange Act disclosing that such person or group has become the direct or indirect ultimate
“beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Company’s Common Equity
representing more than 50% of the voting power of the Company’s Common Equity;

     (b) consummation of any binding share exchange, exchange offer, tender offer, consolidation or
merger of the Company pursuant to which the Common Stock will be converted into cash, Notes or
other property or any sale, lease or other transfer in one transaction or a series of transactions
of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken
as a whole, to any Person other than one or more of the Company’s Subsidiaries; (any such exchange,
offer, consolidation, merger, transaction or series of transactions being referred to herein as an
“event”); provided, however, that any such event where the holders of more than 50% of our shares
of Common Stock immediately prior to such event, own, directly or indirectly, more than 50% of all
classes of common equity of the continuing or surviving person or transferee or the Parent thereof
immediately after such event shall not be a Fundamental Change;

     (c) the first day on which Continuing Directors cease to constitute at least a majority of the
Board of Directors;

     (d) the stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or

     (e) the Common Stock (or other common stock into which the Notes are then convertible) ceases
to be listed on at least one U. S. national securities exchange,

provided, however, in the case of an event described in clause (b) above, if at least 90% of the
consideration, excluding cash payments for fractional shares, in the transaction or event
constituting the Fundamental Change consists of shares of Publicly Traded Securities, and as a
result of the event, the Notes become convertible into such Publicly Traded Securities, excluding
cash payments for fractional shares (subject to the provisions of Section 5.02(b)), such event
shall not be a Fundamental Change; provided, further, if any transaction in which the Common
Stock is replaced by the securities of another entity shall occur, following completion of any
related Make-Whole Fundamental Change period and any related Fundamental Change Repurchase Date,
references to the Company in this definition shall instead apply to such other entity; and
provided, further, that any filing that would otherwise constitute a Fundamental Change under
clause (a) above shall not constitute a Fundamental Change if (x) the filing occurs in connection
with a transaction in which our common stock is replaced by the securities of another entity and
(y) no such filing is made or is in effect with respect to common equity representing more than 50%
of the voting power of such other entity.

 

 

For purposes of this definition, whether a “person” is a “beneficial owner” shall be determined in
accordance with Rule 13d-3 under the Exchange Act and “person” includes any syndicate or group that
would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

“Fundamental Change Company Notice” has the meaning specified in Section 6.02(b).

“Fundamental Change Expiration Time” has the meaning specified in Section 6.02(b)(ix).

“Fundamental Change Repurchase Date” has the meaning specified in Section 6.02(a).

“Fundamental Change Repurchase Notice” has the meaning specified in Section 6.02(a)(i).

“Fundamental Change Repurchase Price” has the meaning specified in Section 6.02(a).

“Global Note” means a Note in global form registered to the Depositary.

“Indenture” has the meaning set forth in the recitals hereto.

“Interest Payment Date” means each April 15 and October 15 of each year, beginning on October 15,
2009; provided, however, that if any Interest Payment Date falls on a date that is not a Business
Day, such payment of interest (or principal in the case of the Maturity Date) will be postponed
until the next succeeding Business Day, and no interest or other amount will be paid as a result of
such postponement.

“Interest Record Date,” with respect to any Interest Payment Date, means the April 1 or October 1
(whether or not such day is a Business Day) immediately preceding the relevant Interest Payment
Date, respectively.

“Last Reported Sale Price” of the Common Stock on any date means the closing sale price per share
(or if no closing sale price is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average ask prices) on that date as
reported in composite transactions for the principal U.S. national or regional securities exchange
on which the Common Stock is listed for trading. The Last Reported Sale Price will be determined
without reference to after-hours or extended market trading. If the Common Stock is not listed for
trading on a U.S. national securities exchange on the relevant date, then the “Last Reported Sale
Price” of the Common Stock will be the last quoted bid price for the Common Stock in the
over-the-counter market on the relevant date as reported by Pink OTC Markets Inc. or similar
organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” of the Common
Stock will be determined by a U.S. nationally recognized independent investment banking firm
selected by the Company for this purpose.

“Make-Whole Conversion Rate Adjustment” has the meaning specified in Section 5.03(a).

 

 

“Make-Whole Fundamental Change” means any transaction or event that constitutes a Fundamental
Change under clause (a) or (b) of the definition thereof (in the case of any Fundamental Change
described in clause (b) of the definition thereof, determined without regard to the proviso in such
clause (b) but subject to the two paragraphs immediately following clause (e) of the definition of
Fundamental Change.

“Make-Whole Fundamental Change Period” has the meaning specified in Section 5.03(a).

“Market Disruption Event” means (a) a failure by the primary exchange or quotation system on which
the Common Stock trades or is quoted, as the case may be, to open for trading during its regular
trading session or (b) the occurrence or existence prior to 1:00 p.m., New York City time, on any
Trading Day for the Common Stock of an aggregate one-half hour period, of any suspension or
limitation imposed on trading (by reason of movements in price exceeding limits permitted by the
stock exchange or otherwise) in the Common Stock or in any options, contracts or future contracts
relating to the Common Stock.

“Maturity Date” means April 15, 2012.

“Merger Event” has the meaning specified in Section 5.06.

“Note” has the meaning specified in the Preamble.

“Noteholder” or “holder,” as applied to any Note, or other similar terms (but excluding the term
“beneficial holder”), means any person in whose name at the time a particular Note is registered on
the Note Register.

“Note Register” means the Securities Registry (as defined in Section 3.05 of the Base Indenture)
for the Notes.

“Notice of Conversion” has the meaning specified in Section 5.02(d).

“Officer” means, with respect to the Company, (i) the Chairman of the Board, any Vice Chairman of
the Board, the Chief Executive Officer, the President, any Vice President or the Chief Financial
Officer, and (ii) the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant
Secretary.

“opening of business” means 9:00 a.m. (New York City time).

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

“Predecessor Note” of any particular Note means every previous Note evidencing all or a portion of
the same debt as that evidenced by such particular Note; and, for the purposes of this definition,
any Note authenticated and delivered under Section 3.06 of the Base Indenture

 

 

in lieu of or in exchange for a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note that it replaces.

“Prospectus” means the prospectus dated March 4, 2008 as supplemented by the final prospectus
supplement dated April 6, 2009 relating to the offering and sale of the Notes.

“Publicly Traded Securities” means shares of common stock, depositary receipts or other
certificates representing common equity interests, in each case, that are traded on a national
securities exchange or that will be so traded when issued or exchanged in connection with a
Fundamental Change described in clause (a) or (b) of the definition thereof.

“Record Date” has the meaning specified in Section 5.04(f).

“Reference Property” has the meaning specified in Section 5.06(b).

“Scheduled Trading Day” means any day that is scheduled to be a Trading Day.

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

“Settlement Amount” has the meaning specified in Section 5.02(b).

“Settlement Method” means, with respect to a conversion of Notes, the relative proportions of cash
and/or shares of Common Stock with which such conversion is settled under this Indenture, as
elected (or deemed elected) by the Company.

“Settlement Notice” has the meaning specified in Section 5.02(b)(iii).

“Significant Subsidiary” means, at any date of determination, any Subsidiary that would constitute
a “significant subsidiary” within the meaning of Article 1 of Regulation S-X promulgated under the
Securities Act as in effect on the date of this Supplemental Indenture.

“Specified Dollar Amount” means an amount of cash per $1,000 principal amount of a converted Note
specified by the Company in the Settlement Notice related to such converted Note.

“Spin-Off” has the meaning specified in Section 5.04(c).

“Stock Price” means (a) in the case of a Make-Whole Fundamental Change described in clause (b) of
the definition of Fundamental Change in which holders of Common Stock receive solely cash
consideration in connection with such Make-Whole Fundamental Change, the amount of cash paid per
share of the Common Stock and (b) in the case of all other Make-Whole Fundamental Changes, the
average of the Last Reported Sale Prices per share of Common Stock over the period of five
consecutive Trading Days ending on, and including, the Trading Day immediately preceding the
Effective Date of such Make-Whole Fundamental

 

 

Change. The Board of Directors will make appropriate adjustments, in its good faith determination,
to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring
an adjustment to the Conversion Rate where the Ex-Dividend Date of the event occurs, during such
five consecutive Trading Day period.

“Subsidiary” has the meaning specified in Section 1.01 of the Base Indenture.

“Successor Company” means the resulting, surviving or transferee Person resulting from the merger,
consolidation, sale or lease of substantially all of its assets of the Company.

“Supplemental Indenture” has the meaning set forth in the recitals hereto.

“Trading Day” means a day during which trading in the Common Stock generally occurs on the primary
exchange or quotation system on which Common Stock then trades or is quoted and there is no Market
Disruption Event. If the Common Stock (or other security for which a Last Reported Sale Price or
Daily VWAP must be determined) is not so traded or quoted, “Trading Day” means “Business Day.”

“Trading Price” of the Notes on any date of determination means the average of the secondary market
bid quotations obtained by the Company for $2.0 million principal amount of Notes (expressed as a
price per $1,000 principal amount) at approximately 3:30 p.m., New York City time, on such
determination date from three independent U.S. nationally recognized Notes dealers selected by the
Company; provided that if three such bids cannot reasonably be obtained by the Company, but two
such bids are obtained, then the average of the two bids shall be used, and if only one such bid
can reasonably be obtained by the Company, that one bid shall be used. If the Company cannot
reasonably obtain at least one bid for $2.0 million principal amount of Notes from a U.S.
nationally recognized Notes dealer, then the Trading Price per $1,000 principal amount of Notes
will be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common
Stock and the applicable Conversion Rate.

“Trigger Event” has the meaning specified in Section 5.04(c).

“Trustee” has the meaning set forth in the recitals hereto.

“Trust Indenture Act” has the meaning set forth in Section 1.01 of the Base Indenture.

“Valuation Period” has the meaning specified in Section 5.04(c).

“Weighted Average Consideration” has the meaning specified in Section 5.06(c)(iv).

ARTICLE 2

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION

AND EXCHANGE OF NOTES

 

 

          Section 2.01. Designation and Amount. The Notes shall be designated as the “3.50% Convertible
Senior Notes due 2012.” The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is initially limited to $373,750,000, and except for Notes
authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of
other Notes pursuant to Section 3.04, Section 3.05 and Section 3.06 of the Base Indenture and
Section 4.04, Section 5.02 and Section 6.04 hereof.

The following Sections of the Base Indenture shall not apply to the Notes:

          (a) Article 11 (Redemption of Notes)

          (b) Article 12 (Sinking Funds)

          (c) Article 13 (Repayment at Option of Holders)

          (d) Article 14 (Defeasance and Covenant Defeasance)

          (e) Section 10.09 (Limitation on Liens)

          (f) Section 10.10 (Limitation on Sale-Leaseback Transactions)

          Section 2.02. Form of Notes. The Notes and the Trustee’s certificate of authentication to be
borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, which
are incorporated in and made a part of this Indenture.

Any Global Note may be endorsed with or have incorporated in the text thereof such legends or
recitals or changes not inconsistent with the provisions of this Indenture as may be required by
the Custodian, the Depositary, any regulatory body or required to comply with any applicable law or
regulation thereunder or with the rules and regulations of any securities exchange or automated
quotation system upon which the Notes may be listed or traded or designated for issuance or to
conform with any usage with respect thereto, or to indicate any special limitations or restrictions
to which any particular Notes are subject.

Any of the Notes may have such letters, numbers or other marks of identification and such
notations, legends or endorsements as the Officer executing the same may approve (execution thereof
to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any securities exchange or automated quotation
system on which the Notes may be listed or designated for issuance, or to conform to usage or to
indicate any special limitations or restrictions to which any particular Notes are subject.

A Global Note shall represent such principal amount of the outstanding Notes as shall be specified
therein and shall provide that it shall represent the aggregate principal amount of outstanding
Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be increased or reduced to

 

 

reflect repurchases, conversions, transfers or exchanges permitted hereby. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee,
in such manner and upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal (including any Fundamental Change Repurchase Price), accrued and
unpaid interest, and Additional Interest, if any, on a Global Note shall be made to the holder of
such Note on the date of payment, unless a record date or other means of determining holders
eligible to receive payment is provided for herein.

The terms and provisions contained in the form of Note attached as Exhibit A hereto shall
constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable,
the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.

          Section 2.03. Date and Denomination of Notes; Payments of Interest. The Notes shall be
issuable in registered form without coupons in minimum denominations of $1,000 principal amount and
in integral multiples of $1,000 in excess thereof. Each Note shall be dated the date of its
authentication and shall bear interest from the date specified on the face of the form of Note
attached as Exhibit A hereto. Interest (including Additional Interest, if any) on the Notes shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.

The Person in whose name any Note (or its Predecessor Note) is registered on the Note Register at
the close of business on any Interest Record Date with respect to any Interest Payment Date shall
be entitled to receive the interest payable on such Interest Payment Date. Interest (including
Additional Interest, if any) shall be payable at the office or agency of the Company maintained by
the Company for such purposes in The Borough of Manhattan, City of New York, which shall initially
be the office of the Paying Agent. The Company shall pay interest (including Additional Interest,
if any) (a) on any Notes in certificated form by check mailed to the address of the Person entitled
thereto as it appears in the Note Register or (b) on any Global Note by wire transfer of
immediately available funds to the account of the Depositary or its nominee.

Any Defaulted Interest shall forthwith cease to be payable to the Noteholder on the relevant
Interest Record Date by virtue of its having been such Noteholder, and such Defaulted Interest
shall be paid by the Company, at its election in each case, as provided in clause (1) or (2) below:

     (1) The Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Notes (or their respective Predecessor Notes) are registered at the close of
business on a special record date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed
payment (which shall be not less than twenty-five days after the receipt by the Trustee of
such notice, unless the Trustee shall consent to an earlier date), and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate amount to
be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed payment, such money when
deposited to

 

 

be held in trust for the benefit of the Persons entitled to such Defaulted Interest as
in this clause provided. Thereupon the Company shall fix a special record date for the
payment of such Defaulted Interest which shall be not more than fifteen days and not less
than ten days prior to the date of the proposed payment, and not less than ten days after
the receipt by the Trustee of the notice of the proposed payment (unless the Trustee shall
consent to an earlier date). The Company shall promptly notify the Trustee of such special
record date and the Trustee, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record date
therefor to be mailed, first-class postage prepaid, to each holder at its address as it
appears in the Note Register, not less than ten days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the special record date
therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Notes (or their respective Predecessor Notes) are registered at the close of
business on such special record date and shall no longer be payable pursuant to the
following clause (2) of this Section 2.03.

     (2) The Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange or automated quotation
system on which the Notes may be listed or designated for issuance, and upon such notice as
may be required by such exchange or automated quotation system.

ARTICLE 3

DEFAULTS AND REMEDIES

          Section 3.01. Events of Default. Each of the following shall be an “Event of Default”:

          (a) default in the payment in respect of the principal of any Note at its maturity upon
required repurchase, upon declaration of acceleration or otherwise;

          (b) default in the payment of any interest upon any Note when it becomes due and payable, and
continuance of such default for a period of 30 days;

          (c) default in the performance, or breach, of any covenant or agreement of the Company in this
Indenture (other than a covenant or agreement a default in whose performance or whose breach is
specifically dealt with in clauses (a), (b) or (f) of this Section 3.01), and continuance of such
default or breach for a period of 90 days after written notice thereof has been given 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;

          (d) a default or defaults under any bonds, debentures, Notes or other evidences of
indebtedness (other than the Notes) by the Company or any Subsidiary that is a Significant
Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) having, individually or in the aggregate, a principal or similar amount outstanding of
at least $25.0 million, whether such indebtedness now exists or shall hereafter be created, which
default or defaults shall have resulted in the acceleration of the maturity of such indebtedness
prior to its express maturity or shall constitute a failure to pay at least $25.0 million of such
indebtedness when due and payable after the expiration of any applicable grace period with respect
thereto;

 

 

          (e) the entry against the Company or any Subsidiary that is a Significant Subsidiary (or any
group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of a final
judgment or final judgments for the payment of money in an aggregate amount in excess of $25.0
million (excluding any amounts covered by insurance), by a court or courts of competent
jurisdiction, which judgments remain undischarged, unwaived, unstayed, unbonded or unsatisfied for
a period of 60 consecutive days;

          (f) the failure to comply with the obligations to convert the Notes into Common Stock, cash or
a combination of cash and Common Stock, as applicable, upon exercise of a holder’s conversion right
and such failure continues for five days;

          (g) the failure to timely issue a Fundamental Change Company Notice in accordance with Section
6.02(b); or

          (h)

(i) the Company, any Subsidiary that is a Significant Subsidiary or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, pursuant to
or within the meaning of the Bankruptcy Law:

     (a) commences a voluntary case,

     (b) consents to the entry of an order for relief against it in an involuntary
case,

     (c) consents to the appointment of a custodian of it or for all or
substantially all of its property,

     (d) makes a general assignment for the benefit of its creditors, or

     (e) generally is not paying its debts as they become due; or

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

     (a) is for relief against the Company or any Subsidiary that is a Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, in an involuntary case;

     (b) appoints a Custodian of the Company or any Subsidiary that is a Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary or for all or substantially all of the property of the
Company or any of its Subsidiaries; or

     (c) orders the liquidation of the Company or any Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary and the order or decree remains unstayed and in
effect for 60 consecutive days.

 

 

          Section 3.02. Acceleration. In case one or more Events of Default shall have occurred and be
continuing (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), then, and in
each and every such case (other than an Event of Default specified in Section 3.01(h) with respect
to the Company (and not solely with respect to a Significant Subsidiary of the Company, or a group
of Subsidiaries of the Company that in aggregate would constitute a Significant Subsidiary of the
Company), unless the principal of all of the Notes shall have already become due and payable (or
waived), either the Trustee or the holders of at least 25% in aggregate principal amount of the
Notes then outstanding by notice in writing to the Company (and to the Trustee if given by
Noteholders), may declare 100% of the principal of and accrued and unpaid interest and accrued and
unpaid Additional Interest, if any, on all the Notes to be due and payable immediately, and upon
any such declaration the same shall become and shall automatically be immediately due and payable,
anything in this Indenture or in the Notes contained to the contrary notwithstanding.

If an Event of Default specified in Section 3.01(h) with respect to the Company (and not solely
with respect to a Significant Subsidiary of the Company, or a group of Subsidiaries of the Company
that in aggregate would constitute a Significant Subsidiary of the Company) occurs and is
continuing, the principal of all the Notes and accrued and unpaid interest and accrued and unpaid
Additional Interest, if any, shall be immediately due and payable. This provision, however, is
subject to the conditions that if, at any time after the principal of the Notes shall have been so
declared due and payable, and before any judgment or decree for the payment of the monies due shall
have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with
the Trustee a sum sufficient to pay installments of accrued and unpaid interest and accrued and
unpaid Additional Interest, if any, upon all Notes and the principal of any and all Notes that
shall have become due otherwise than by acceleration (with interest on overdue installments of
accrued and unpaid interest and accrued and unpaid Additional Interest, if any (to the extent that
payment of such interest is enforceable under applicable law), and on such principal at the rate
borne by the Notes at such time) and amounts due to the Trustee pursuant to Section 6.06 of the
Base Indenture, then and in every such case the holders of a majority in aggregate principal amount
of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all
Defaults or Events of Default with respect to the Notes (other than a Default or an Event of
Default resulting from a failure to repurchase any Notes when required upon a Fundamental Change or
a failure to deliver, upon conversion, cash, shares of Common Stock or a combination of cash and
shares of Common Stock, as applicable, due upon conversion) and rescind and annul such declaration
and its consequences (other than a declaration or consequences, as the case may be, resulting from
a failure to repurchase any Notes when required upon a Fundamental Change or a failure to deliver,
upon conversion, cash, shares of Common Stock or a combination of cash and shares of Common Stock,
as applicable, due upon conversion) and such Default (other than a Default resulting from a failure
to repurchase any Notes when required upon a Fundamental Change or a failure to deliver, upon
conversion, cash, shares of Common Stock or a combination of cash and shares of Common Stock, as
applicable, due upon conversion) shall cease to exist, and any Event of Default arising therefrom
(other than a

 

 

Default resulting from a failure to repurchase any Notes when required upon a Fundamental Change or
a failure to deliver, upon conversion, cash, shares of Common Stock or a combination of cash and
shares of Common Stock, as applicable, due upon conversion) shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent Default or Event of Default, or shall impair any right consequent
thereon.

          Section 3.03. Additional Interest. Notwithstanding anything in this Indenture or in the Notes
to the contrary, if the Company so elects, the sole remedy of Noteholders for an Event of Default
relating to any obligation to file reports as required under Section 7.03 of the Base Indenture
shall, for the first 180 days after the occurrence of such an Event of Default which will be the
90th day after written notice is provided to the Company in accordance with Section 3.01(c)),
consist exclusively of the right to receive Additional Interest on the Notes at an annual rate
equal to (x) 0.25% of the outstanding principal amount of the Notes for the first 90 days an Event
of Default is continuing in such 180-day period and (y) 0.50% of the outstanding principal amount
of the Notes for the remaining 90 days an Event of Default is continuing in such 180-day period.
Additional Interest shall be payable in arrears on each Interest Payment Date following the
occurrence of such Event of Default in the same manner as regular interest on the Notes. The
Company may elect to pay Additional Interest as the sole remedy under this Section 3.03 by giving
notice to the holders, the Trustee and Paying Agent of such election on or before the close of
business on the 5th Business Day after the date on which such Event of Default otherwise would
occur. If the Company fails to timely give such notice or pay Additional Interest, the Notes will
be immediately subject to acceleration as provided in Section 3.02. On the 181st day after such
Event of Default (if such violation is not cured or waived prior to such 181st day), the Notes will
be subject to acceleration as provided in Section 3.02. This Section 3.03 shall not affect the
rights of the Noteholders in the event of the occurrence of any other Event of Default. In the
event the Company does not elect to pay Additional Interest upon an Event of Default in accordance
with this Section, the Notes will be subject to acceleration as provided in Section 3.02. Whenever
in this Indenture there is mentioned, in any context, the payment of interest on, or in respect of,
any Note, such mention shall be deemed to include mention of the payment of “Additional Interest”
provided for in this Section 3.03 to the extent that, in such context, Additional Interest is, was
or would be payable in respect thereof pursuant to the provisions of such sections, and express
mention of the payment of Additional Interest (if applicable) in any provision shall not be
construed as excluding Additional Interest in those provisions where such express mention is not
made.

          Section 3.04. Payments of Notes on Default; Suit Therefor. If an Event of Default under
clause (a) or (b) of Section 3.01 shall have occurred and be continuing, the Company shall, upon
demand of the Trustee, pay to it, for the benefit of the holders of the Notes, the whole amount
then due and payable on the Notes for principal and interest and Additional Interest, if any, with
interest on any overdue principal, interest and Additional Interest, if any, at the rate borne by
the Notes at such time, and, in addition thereto, such further amount as shall be sufficient to
cover any amounts due to the Trustee under Section 6.06 of the Base Indenture. If the Company
shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Notes and collect the monies adjudged or decreed
to be payable in the manner

 

 

provided by law out of the property of the Company or any other obligor upon the Notes,
wherever situated.

In the event there shall be pending proceedings for the bankruptcy or for the reorganization of the
Company or any other obligor on the Notes under the Bankruptcy Law, or in case a receiver, assignee
or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have
been appointed for or taken possession of the Company or such other obligor, the property of the
Company or such other obligor, or in the event of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be
due and payable as therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this Section 3.04, shall be
entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim
or claims for the whole amount of principal and accrued and unpaid interest and accrued and unpaid
Additional Interest, if any, in respect of the Notes, and, in case of any judicial proceedings, to
file such proofs of claim and other papers or documents and to take such other actions as it may
deem necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Noteholders allowed in such judicial proceedings relative to the Company or any
other obligor on the Notes, its or their creditors, or its or their property, and to collect and
receive any monies or other property payable or deliverable on any such claims, and to distribute
the same after the deduction of any amounts due the Trustee under Section 6.06 of the Base
Indenture; and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
custodian or similar official is hereby authorized by each of the Noteholders to make such payments
to the Trustee, as administrative expenses, and, in the event that the Trustee shall consent to the
making of such payments directly to the Noteholders, to pay to the Trustee any amount due it for
reasonable compensation, expenses, advances and disbursements, including agent’s and counsel fees,
and including any other amounts due to the Trustee under Section 6.06 of the Base Indenture,
incurred by it up to the date of such distribution. To the extent that such payment of reasonable
compensation, expenses, advances and disbursements out of the estate in any such proceedings shall
be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out
of, any and all distributions, dividends, monies, securities and other property that the holders of
the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan
of reorganization or arrangement or otherwise.

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

 

 

All rights of action and of asserting claims under this Indenture, or under any of the Notes, may
be enforced by the Trustee without the possession of any of the Notes, or the production thereof at
any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of
the holders of the Notes.

In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of
any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to
represent all the holders of the Notes, and it shall not be necessary to make any holders of the
Notes parties to any such proceedings.

In case the Trustee shall have proceeded to enforce any right under this Indenture and such
proceedings shall have been discontinued or abandoned because of such waiver or rescission and
annulment or for any other reason or shall have been determined adversely to the Trustee, then and
in every such case the Company, the Noteholders, and the Trustee shall, subject to any
determination in such proceeding, be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Company, the Noteholders, and the Trustee
shall continue as though no such proceeding had been instituted.

          Section 3.05. Application of Monies Collected by Trustee. Any monies collected by the Trustee
pursuant to this Article 3 with respect to the Notes shall be applied in the order following, at
the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of
the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender
thereof, if fully paid:

     First, to the payment of all amounts due the Trustee under Section 6.06 of the Base Indenture;

     Second, in case the principal of the outstanding Notes shall not have become due and be
unpaid, to the payment of interest on the Notes, including Additional Interest, if any, in default
in the order of the date due of the installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee) upon the overdue installments of interest at
the rate borne by the Notes at such time, such payments to be made ratably to the Persons entitled
thereto;

     Third, in case the principal of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid to the payment of the whole amount including the payment of the
Fundamental Change Repurchase Price and the cash component of the Conversion Obligation, if any,
then owing and unpaid upon the Notes for principal and interest, including Additional Interest, if
any, with interest on the overdue principal and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of interest at the rate borne by the Notes at
such time, and in case such monies shall be insufficient to pay in full the whole amounts so due
and unpaid upon the Notes, then to the

 

 

payment of such principal and interest without preference or
priority of principal over interest,
or of interest over principal or of any installment of interest over any other installment of
interest, or of any Note over any other Note, ratably to the aggregate of such principal and
accrued and unpaid interest, and Additional Interest, if any; and

     Fourth, to the payment of the remainder, if any, to the Company.

          Section 3.06. Proceedings by Noteholders. No holder of any Note shall have any right by
virtue of or by availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture, or for the
appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore provided, and unless
also the holders of not less than 25% in aggregate principal amount of the Notes then outstanding
shall have made written request to the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such security or indemnity
reasonably satisfactory to it against any loss, liability or expense to be incurred therein or
thereby, and the Trustee for sixty days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or proceeding and no
direction that, in the opinion of the Trustee, is inconsistent with such written request shall have
been given to the Trustee by the holders of a majority in principal amount of the Notes outstanding
within such sixty-day period pursuant to Section 3.09; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other taker and holder and
the Trustee that no one or more Noteholders shall have any right in any manner whatever by virtue
of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of
any other Noteholder, or to obtain or seek to obtain priority over or preference to any other such
holder, or to enforce any right under this Indenture, except in the manner herein provided and for
the equal, ratable and common benefit of all Noteholders (except as otherwise provided herein).
For the protection and enforcement of this Section 3.06, each and every Noteholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.

Notwithstanding any other provision of this Indenture and any provision of any Note, the right of
any Noteholder to receive payment of the principal of (including the Fundamental Change Repurchase
Price upon repurchase pursuant to Section 6.02), and accrued and unpaid interest and accrued and
unpaid Additional Interest, if any, on such Note, on or after the respective due dates expressed or
provided for in such Note or in this Indenture, or to institute suit for the enforcement of any
such payment on or after such respective dates against the Company shall not be impaired or
affected without the consent of such Noteholder.

Anything in this Indenture or the Notes to the contrary notwithstanding, the holder of any Note,
without the consent of either the Trustee or the holder of any other Note, in its own behalf and
for its own benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, its rights of conversion as provided herein.

          Section 3.07. Proceedings by Trustee. In case of an Event of Default the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either
by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the
specific

 

 

enforcement of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.

          Section 3.08. Remedies Cumulative and Continuing. Except as provided in Section 3.06 of the
Base Indenture and Section 3.04, all powers and remedies given by this Article 3 to the Trustee or
to the Noteholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any thereof or of any other powers and remedies available to the Trustee or the holders of the
Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of
any holder of any of the Notes to exercise any right or power accruing upon any Default or Event of
Default shall impair any such right or power, or shall be construed to be a waiver of any such
Default or any acquiescence therein; and, subject to the provisions of Section 3.06, every power
and remedy given by this Article 3 or by law to the Trustee or to the Noteholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or by the Noteholders.

          Section 3.09. Direction of Proceedings and Waiver of Defaults by Majority of Noteholders. The
holders of a majority in aggregate principal amount of the Notes at the time outstanding shall have
the right to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the Trustee with respect to
Notes; provided, however, that (a) such direction shall not be in conflict with any rule of law or
with this Indenture, and (b) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. The Trustee may refuse to follow any direction that
it determines is unduly prejudicial to the rights of any other holder or that would involve the
Trustee in personal liability. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may on behalf of the holders of all of the Notes waive any past
Default or Event of Default hereunder and its consequences except (i) a default in the payment of
accrued and unpaid interest or accrued and unpaid Additional Interest, if any, on, or the principal
(including any Fundamental Change Repurchase Price) of, the Notes when due that has not been cured
pursuant to the provisions of Section 3.01, (ii) a failure by the Company to deliver cash, shares
of Common Stock or a combination of cash and shares of Common Stock, as applicable, upon conversion
of the Notes or (iii) a default in respect of a covenant or provision hereof which under Article 4
cannot be modified or amended without the consent of each holder of an outstanding Note affected.
Upon any such waiver the Company, the Trustee and the holders of the Notes shall be restored to
their former positions and rights hereunder; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. Whenever any Default or
Event of Default hereunder shall have been waived as permitted by this Section 3.09, said Default
or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been
cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any right consequent thereon.

          Section 3.10. Notice of Defaults. The Trustee shall, within ninety days after the occurrence
and continuance of a Default of which a Responsible Officer has actual knowledge, mail to all
Noteholders as the names and addresses of such holders appear upon the Note Register, notice of all
Defaults known to a Responsible Officer, unless such Defaults shall have been cured or waived
before the giving of such notice; and provided that, except in the case of a Default in the payment
of the principal of, accrued and unpaid interest or accrued and unpaid Additional Interest, if any,
on any of the Notes, including without limiting the generality of the foregoing any Default in the
payment of

 

 

any Fundamental Change Repurchase Price, then in any such event the Trustee shall be
protected in withholding such notice if and so long as a committee of Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in the interests of the
Noteholders.

          Section 3.11. Undertaking to Pay Costs. All parties to this Indenture agree, and each holder
of any Note by its acceptance thereof shall be deemed to have agreed, that any court may,
in its discretion, require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that
such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the merits and good faith
of the claims or defenses made by such party litigant; provided that the provisions of this Section
3.11 (to the extent permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholder, or group of Noteholders, holding in the aggregate more than 10%
in principal amount of the Notes at the time outstanding, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of accrued and unpaid interest or
accrued and unpaid Additional Interest, if any, on any Note (including, but not limited to, the
Fundamental Change Repurchase Price with respect to the Notes being repurchased as provided in this
Indenture) on or after the due date expressed or provided for in such Note or to any suit for the
enforcement of the right to convert any Note in accordance with the provisions of Article 5.

ARTICLE 4

SUPPLEMENTAL INDENTURES

          Section 4.01. Supplemental Indentures Without Consent of Noteholders. The Company and the
Trustee, at the Company’s expense, may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:

          (a) to cure any ambiguity, omission, defect or inconsistency in this Indenture or the Notes in
a manner that does not materially adversely affect the rights of any holder;

          (b) to conform the terms of the Indenture or the Notes to the description thereof in the
Prospectus;

          (c) to provide for the assumption by a Successor Company of the obligations of the Company
under this Indenture pursuant to Article 8 of the Base Indenture;

          (d) to add guarantees with respect to the Notes;

          (e) to secure the Notes;

          (f) to add to the covenants of the Company such further covenants, restrictions or conditions
for the benefit of the Noteholders or surrender any right or power conferred upon the Company;

          (g) to make any change that does not materially adversely affect the rights of any holder or
to execute and deliver a supplemental indenture pursuant to the provisions of Section 5.06 of this
Supplemental Indenture;

 

 

          (h) to appoint a successor Trustee with respect to the Notes; or

          (i) to comply with any requirements of the Trust Indenture Act.

Upon the written request of the Company, the Trustee is hereby authorized to join with the Company
in the execution of any such supplemental indenture, to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall
not be obligated to, but may in its discretion, enter into any supplemental indenture that affects
the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section 4.01 may be executed by the
Company and the Trustee without the consent of the holders of any of the Notes at the time
outstanding, notwithstanding any of the provisions of Section 4.02.

          Section 4.02. Supplemental Indentures With Consent of Noteholders. With the consent of the
holders of at least a majority in aggregate principal amount of the Notes at the time outstanding
(including, without limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), the Company, when authorized by the resolutions of the Board of
Directors and the Trustee, at the Company’s expense, may from time to time and at any time enter
into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or any supplemental
indenture or of modifying in any manner the rights of the holders of the Notes or waiving any past
default; provided, however, that no such supplemental indenture shall:

          (a) reduce the percentage in aggregate principal amount of Notes outstanding necessary to
modify or amend this Indenture or to waive any past Default or Event of Default;

          (b) reduce the rate or extend the stated time for payment of interest, including Additional
Interest, on any Note;

          (c) reduce the principal of, or extend the Maturity Date of, any Note;

          (d) make any change that impairs or adversely affects the conversion rights of any Notes;

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

          (f) make any Note payable in a currency other than that stated in the Note or change any
Note’s place of payment;

          (g) change the ranking of the Notes;

          (h) impair the right of any holder to receive payment of principal of and interest, including
Additional Interest, if any, on such holder’s Notes on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such holder’s Note;

 

 

          (i) make any change in this Article 4 that requires each holder’s consent or in the waiver
provisions in Section 3.01 or Section 3.09; or

          (j) reduce any quorum requirements or the voting requirements contained in the Indenture.

in each case without the consent of each holder of an outstanding Note affected.

Upon the written request of the Company, and upon the filing with the Trustee of evidence of the
consent of Noteholders as aforesaid and subject to Section 4.05, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental indenture affects
the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such supplemental
indenture.

It shall not be necessary for the consent of the Noteholders under this Section 4.02 to approve the
particular form of any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof. After an amendment under this Indenture becomes effective,
the Company shall mail to the holders a notice briefly describing such amendment. However, the
failure to give such notice to all the holders, or any defect in the notice, will not impair or
affect the validity of the amendment.

          Section 4.03. Effect of Supplemental Indentures. Any supplemental indenture executed pursuant
to the provisions of this Article 4 shall comply with the Trust Indenture Act, as then in effect;
provided that this Section 4.03 shall not require such supplemental indenture to be qualified under
the Trust Indenture Act prior to the time such qualification is in fact required under the terms of
the Trust Indenture Act or this Indenture has been qualified under the Trust Indenture Act, nor
shall any such qualification constitute any admission or acknowledgment by any party to such
supplemental indenture that any such qualification is required prior to the time such qualification
is in fact required under the terms of the Trust Indenture Act or this Indenture has been qualified
under the Trust Indenture Act. Upon the execution of any supplemental indenture pursuant to the
provisions of this Article 4, this Indenture shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitation of rights, obligations, duties and
immunities under this Indenture of the Trustee, the Company and the Noteholders shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such modifications and
amendments and all the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all purposes.

          Section 4.04. Notation on Notes. Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article 4 may, at the Company’s expense,
bear a notation as to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Notes so modified as to conform, in the opinion of the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may, at the Company’s
expense, be prepared and executed by the Company, authenticated by the Trustee or Authenticating
Agent and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.

 

 

          Section 4.05. Evidence of Compliance of Supplemental Indenture to Be Furnished to Trustee. In
addition to the documents required by Section 1.02 of the Base Indenture, the Trustee shall receive
an Officers’ Certificate and an Opinion of Counsel (each as defined in Section 1.01 of the Base
Indenture) as conclusive evidence that any supplemental indenture executed pursuant hereto complies
with the requirements of this Article 4 and is permitted or authorized by the Indenture.

ARTICLE 5

CONVERSION OF NOTES

          Section 5.01. Conversion Privilege.

          (a) Upon compliance with the provisions of this Article 5, a Noteholder shall have the right,
at such holder’s option, to convert all or any portion (if the portion to be converted is $1,000
principal amount or an integral multiple thereof) of such Note prior to the close of business on
the second Scheduled Trading Day immediately preceding the Maturity Date, in each case, at an
initial conversion rate (the “Conversion Rate”) of 30.4706 shares of Common Stock (subject to
adjustment as provided in Section 5.04 of this Indenture) per $1,000 principal amount of Notes
(subject to the settlement provisions of Section 5.02, the “Conversion Obligation”).

          Section 5.02. Conversion Procedure.

          (a) [Reserved]

          (b) Subject to this Section 5.02, upon any conversion of any Note, the Company shall deliver
to converting Noteholders, in respect of each $1,000 principal amount of Notes being converted,
solely cash, solely shares of Common Stock or a combination of cash and Common Stock (the
“Settlement Amount”), at its election, as set forth in this Section 5.02.

     (i) All conversions on or after December 15, 2011 will be settled using the same
Settlement Method.

     (ii) Prior to December 15, 2011, the Company will elect (or be deemed to have elected)
the same Settlement Method for all conversions occurring on any given Conversion Date.
Except for any conversions that occur on or after December 15, 2011, the Company need not
elect the same Settlement Method with respect to conversions that occur on different Trading
Days.

     (iii) If, in respect of any Conversion Date (or the period beginning on, and including,
December 15, 2011 and ending on, and including, the second Scheduled Trading Day immediately
preceding the Maturity Date, as the case may be), the Company elects to deliver a notice
(the “Settlement Notice”) of the relevant Settlement Method in respect of such Conversion
Date (or such period, as the case may be), the Company, through the Trustee, shall deliver
such Settlement Notice to converting Noteholders no later than the second Business Day
immediately following the relevant Conversion Date. Such Settlement Notice shall specify
whether the Company shall satisfy its Conversion Obligation by (A) delivering solely shares
of Common Stock, (B) paying solely cash or (C) paying and delivering, as the case may be, a
combination of cash and shares of Common Stock. In the case of an election to pay and
deliver, as the case may be, a combination of cash and shares of Common Stock,

 

 

the relevant
Settlement Notice shall indicate the Specified Dollar Amount. If the Company does not
deliver a Settlement Notice, the Company will be deemed to have elected to deliver a
combination of cash and shares of Common Stock in respect of its Conversion Obligation, and
the Specified Dollar Amount shall be deemed to be equal to $1,000. If the Company delivers
a Settlement Notice electing to pay and deliver, as the case may be, a combination of cash
and shares of Common Stock in respect of its Conversion Obligation but does not indicate a
Specified Dollar Amount in such Settlement Notice, the Specified Dollar Amount shall be
deemed to be equal to $1,000.

     (iv) The Settlement Amount in respect of any conversion of Notes shall be computed as
follows:

     (A) if the Company elects to satisfy its Conversion Obligation in respect of
such conversion by delivering solely Common Stock, the Company will deliver to the
converting Noteholder a number of shares of Common Stock equal to (1)(i) the
aggregate principal amount of Notes to be converted, divided by (ii) $1,000,
multiplied by (2) the then-applicable Conversion Rate;

     (B) if the Company elects to satisfy its Conversion Obligation in respect of
such conversion by paying solely cash, the Company shall pay to the converting
Noteholder, cash in an amount per $1,000 principal amount of Notes being converted
equal to the sum of the Daily Conversion Values for each of the forty consecutive
Trading Days during the related Cash Settlement Averaging Period; and

     (C) if the Company elects to satisfy its Conversion Obligation in respect of
such conversion by paying and delivering, as the case may be, a combination of cash
and shares of Common Stock, if any, the Company shall pay and deliver to the
converting Noteholder, as the case may be, in respect of each $1,000 principal
amount of Notes being converted, a Settlement Amount equal to the sum of the Daily
Settlement Amounts for each of the forty consecutive Trading Days during the related
Cash Settlement Averaging Period.

     (v) The Company will also deliver to each converting Noteholder cash in lieu of
fractional shares of Common Stock as set forth pursuant to clause (l) below.

     (vi) The Daily Settlement Amounts (if applicable) and the Daily Conversion Values (if
applicable) shall be determined by the Company promptly following the last day of the Cash
Settlement Averaging Period. Promptly after such determination of the Daily Settlement
Amounts or the Daily Conversion Values, as the case may be, and the amount of cash
deliverable in lieu of fractional shares (if any), the Company shall notify the Trustee and
the Conversion Agent of the Daily Settlement Amounts or the Daily Conversion Values, as the
case may be, and the amount of cash deliverable in lieu of fractional shares of Common
Stock. The Trustee and the Conversion Agent shall have no responsibility for any such
determination.

     (c) [Reserved]

 

 

          (d) Before any holder of a Note shall be entitled to convert the same as set forth above, such
holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in
effect at that time and, if required, pay funds equal to the amount of interest and Additional
Interest, if any, payable on the next Interest Payment Date to which such holder is not entitled as
set forth in Section 5.02(j) and, if required, all transfer or similar taxes, if any, and (ii) in
the case of a Note issued in certificated form, (1) complete and manually sign and deliver an
irrevocable notice to the Conversion Agent in the form on the reverse of such certificated Note (or
a facsimile thereof) (Exhibit B hereto) (a “Notice of Conversion”) at the office of the Conversion
Agent and shall state in writing therein the principal amount of Notes to be converted and the name
or names (with addresses) in which such holder wishes the certificate or certificates for any
shares of Common Stock, if any, to be delivered upon settlement of the Conversion Obligation to be
registered, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by
appropriate endorsement and transfer documents), at the office of the Conversion Agent, (3) if
required, pay funds equal to interest (including additional interest, if any) payable on the next
Interest Payment Date to which such holder is not entitled as set forth in Section 5.02(j), (4) if
required, furnish appropriate endorsements and
transfer documents, and (5) if required, pay all transfer or similar taxes, if any as set
forth in Section 5.02(g). The Trustee (and if different, the relevant Conversion Agent) shall
notify the Company of any conversion pursuant to this Article 5 on the date of such conversion. No
Notice of Conversion with respect to any Notes may be surrendered by a holder thereof if such
holder has also delivered a Fundamental Change Repurchase Notice to the Company in respect of such
Notes and not validly withdrawn such Fundamental Change Repurchase Notice in accordance with
Section 6.03, unless the Company defaults in the payment of the Fundamental Change Repurchase
Price.

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

          (e) A Note shall be deemed to have been converted immediately prior to the close of business
on the date (the “Conversion Date”) that the holder has complied with the requirements set forth in
clause (d) of this Section 5.02. The Company shall pay or deliver, as the case may be, such cash
and/or shares of Common Stock on the third Trading Day immediately following the last Trading Day
of the Cash Settlement Averaging Period; provided, that if the Company elects to fulfill its
Conversion Obligation solely in shares of Common Stock, the Company shall deliver such Common Stock
on the third Trading Day immediately following the relevant Conversion Date; provided, further,
that if prior to the relevant Conversion Date, the Common Stock has been replaced by Reference
Property consisting solely of cash, pursuant to Section 5.06(b), the Company shall pay such cash on
the third Trading Day immediately following the relevant Conversion Date. Notwithstanding the
foregoing, if any information required to calculate the Conversion Obligation is not available as
of the applicable settlement date, the Company will deliver the additional shares of Common Stock
resulting from such adjustment on the third Trading Day after the earliest Trading Day on which
such calculation can be made. If application of the provisions described above would result in
settlement of a conversion during the 10 Trading Days immediately following the Effective Date of a
Fundamental Change, settlement will instead take place on the tenth Trading Day following the
relevant Effective Date. If any shares of Common Stock are due to converting Noteholders, the
Company shall issue or cause to be issued, and deliver to the Conversion Agent or to such
Noteholder, or such Noteholder’s nominee or nominees, certificates or a book-entry transfer through
the Depositary for the number of

 

 

full shares of Common Stock to which such Noteholder shall be
entitled in satisfaction of such Conversion Obligation.

          (f) In case any Note shall be surrendered for partial conversion, the Company shall execute
and the Trustee shall authenticate and deliver to or upon the written order of the holder of the
Note so surrendered, without charge to such holder, a new Note or Notes in authorized denominations
in an aggregate principal amount equal to the unconverted portion of the surrendered Note.

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

          (h) Except as provided in Section 5.04, no adjustment shall be made for dividends on any
shares of Common Stock issued upon the conversion of any Note as provided in this Article.

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

          (j) Upon conversion, a Noteholder shall not receive any additional cash payment for accrued
and unpaid interest and Additional Interest, if any, except as set forth below. The Company’s
settlement of the Conversion Obligations pursuant to Section 5.02 shall be deemed to satisfy its
obligation to pay the principal amount of the Note and accrued and unpaid interest and Additional
Interest, if any, to, but not including, the Conversion Date. As a result, accrued and unpaid
interest and Additional Interest, if any, to, but not including, the Conversion Date shall be
deemed to be paid in full rather than cancelled, extinguished or forfeited. Notwithstanding the
preceding sentence, if Notes are converted after the close of business on a Interest Record Date,
holders of such Notes as of the close of business on the Interest Record Date will receive the
interest and Additional Interest, if any, payable on such Notes on the corresponding Interest
Payment Date notwithstanding the conversion. Notes surrendered for conversion during the period
from the close of business on any Interest Record Date to the opening of business on the
corresponding Interest Payment Date must be accompanied by payment of an amount equal to the
interest and Additional Interest, if any, payable on the Notes so converted; provided, however,
that no such payment shall be required (1) if the Company has specified a Fundamental Change
Repurchase Date that is after a Interest Record Date but on or prior to the corresponding Interest
Payment Date, (2) to the extent of any Defaulted Interest, if any, existing at the time of
conversion with respect to such Note or (3) if the Notes are surrendered for conversion after the
close of business on the Interest Record Date immediately preceding the Maturity Date. Except as
set forth in this Section 5.02(j), no payment or adjustment will be made for accrued and unpaid
interest and Additional Interest, if any, on converted Notes.

 

 

          (k) The Person in whose name the certificate for any shares of Common Stock delivered upon
conversion is registered shall be treated as a stockholder of record as of the close of business on
the relevant Conversion Date (if the Company elects to satisfy the related Conversion Obligation
solely in shares of Common Stock) or the last Trading Day of the related Cash Settlement Averaging
Period (in the case of any other Settlement Method), as the case may be; provided, however, if such
Conversion Date or such last Trading Day of the Cash Settlement Averaging Period occurs on any date
when the stock transfer books of the Company shall be closed, such occurrence shall not be
effective to constitute the Person or Persons entitled to receive any such shares of Common Stock
due upon conversion as the record holder or holders of such shares of Common Stock on such date,
but such occurrence 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. Upon conversion
of Notes, such Person shall no longer be a Noteholder.

          (l) For each Note surrendered for conversion, if the Company has elected to deliver a
combination of cash and shares of Common Stock in respect of its Conversion Obligation, the number
of full shares that shall be issued upon conversion thereof shall be computed on the basis of the
aggregate Daily Settlement Amounts for the applicable Cash Settlement Averaging Period and any
fractional shares remaining after such computation shall be paid in cash. 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 issued upon conversion thereof shall be computed on the basis of the aggregate principal
amount of
the Notes (or specified portions thereof) so surrendered. The Company shall not issue
fractional shares of Common Stock upon conversion of Notes. Instead, the Company shall pay cash in
lieu of fractional shares based on the Daily VWAP on the relevant Conversion Date (if the Company
elects to satisfy its Conversion Obligation solely in shares of Common Stock) or based on the Daily
VWAP on the last Trading Day of the relevant Cash Settlement Averaging Period (in the case of any
other Settlement Method).

          Section 5.03. Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection
with Make-Whole Fundamental Changes.

          (a) Notwithstanding anything herein to the contrary, the Conversion Rate applicable to each
Note that is surrendered for conversion, in accordance with this Article 5, at any time from, and
including, the effective date (the “Effective Date”) of a Make-Whole Fundamental Change until, and
including, the close of business on the second Scheduled Trading Day immediately preceding the
related Fundamental Change Repurchase Date corresponding to such Make-Whole Fundamental Change, or
the fortieth Trading Day immediately following the Effective Date of such Make-Whole Fundamental
Change (in the case of a Make-Whole Fundamental Change that does not constitute a Fundamental
Change by virtue of the parenthetical in the definition of Make-Whole Fundamental Change) (such
period, the “Make-Whole Fundamental Change Period”), shall be increased to an amount equal to the
Conversion Rate that would, but for this Section 5.03, otherwise apply to such Note pursuant to
this Article 5, plus an amount equal to the Make-Whole Conversion Rate Adjustment.

As used herein, “Make-Whole Conversion Rate Adjustment” means, with respect to a Make-Whole
Fundamental Change, the amount set forth in the following table that corresponds to the Effective
Date of such Make-Whole Fundamental Change and the Stock Price for such Make-Whole Fundamental
Change, all as determined by the Company:

 

 

Make-Whole Conversion Rate Adjustment

(per $1,000 principal amount of Notes)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Price
	 
	Effective Date
	 	$	25.74	 	 	$	26.00	 	 	$	28.00	 	 	$	30.00	 	 	$	35.00	 	 	$	40.00	 	 	$	50.00	 	 	$	60.00	 	 	$	70.00	 	 	$	80.00	 	 	$	90.00	 	 	$	100..00	 	 	$	110..00	 	 	$	130..00	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	April 9, 2009
	 	 	8.3794	 	 	 	8.1798	 	 	 	6.8387	 	 	 	5.7847	 	 	 	3.9998	 	 	 	2.9530	 	 	 	1.8843	 	 	 	1.3849	 	 	 	1.1013	 	 	 	0.9152	 	 	 	0.7804	 	 	 	0.6765	 	 	 	0.5932	 	 	 	0.4666	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	April 15, 2010
	 	 	8.3794	 	 	 	7.9909	 	 	 	6.2199	 	 	 	5.0701	 	 	 	3.2062	 	 	 	2.2043	 	 	 	1.3048	 	 	 	0.9455	 	 	 	0.7560	 	 	 	0.6331	 	 	 	0.5431	 	 	 	0.4729	 	 	 	0.4160	 	 	 	0.3288	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	April 15, 2011
	 	 	8.3794	 	 	 	7.9909	 	 	 	5.5414	 	 	 	4.1873	 	 	 	2.1597	 	 	 	1.2478	 	 	 	0.6462	 	 	 	0.4763	 	 	 	0.3902	 	 	 	0.3311	 	 	 	0.2858	 	 	 	0.2497	 	 	 	0.2202	 	 	 	0.1748	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	April 15, 2012
	 	 	8.3794	 	 	 	7.9909	 	 	 	5.2437	 	 	 	2.8627	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 

     provided, however, that:

     (i) if the actual Stock Price of such Make-Whole Fundamental Change is between two
Stock Prices listed in the table above under the row titled “Stock Price,” or if the actual
Effective Date of such Make-Whole Fundamental Change is between two Effective Dates listed
in the table above in the column immediately below the title “Effective Date,” then the
Make-Whole Conversion Rate Adjustment for such Make-Whole Fundamental Change shall be
determined by the Company by straight-line interpolation between the Make-Whole Conversion
Rate Adjustment set forth for such higher and lower Stock Prices, or for such earlier and
later Effective Dates based on a 365 day year, as applicable;

     (ii) if the actual Stock Price of such Make-Whole Fundamental Change is greater than
$130.00 per share (subject to adjustment in the same manner as the Stock Price as provided
in clause (iii) below), or if the actual Stock Price of such Make-Whole Fundamental Change
is less than $25.74 per share (subject to adjustment in the same manner as the Stock Price
as provided in clause (iii) below), then the Make-Whole Conversion Rate Adjustment shall be
equal to zero and this Section 5.03 shall not require the Company to increase the Conversion
Rate with respect to such Make-Whole Fundamental Change;

     (iii) if an event occurs that requires, pursuant to this Article 5 (other than solely
pursuant to this Section 5.03), an adjustment to the Conversion Rate, then, on the date and
at the time such adjustment is so required to be made, each price set forth in the table
above under the row titled “Stock Price” shall be deemed to be adjusted so that such Stock
Price, at and after such time, shall be equal to the product of (1) such Stock Price as in
effect immediately before such adjustment to such Stock Price and (2) a fraction whose
numerator is the Conversion Rate in effect immediately before such adjustment to the
Conversion Rate and whose denominator is the Conversion Rate to be in effect, in accordance
with this Article 5, immediately after such adjustment to the Conversion Rate;

     (iv) [Reserved];

     (v) each Make-Whole Conversion Rate Adjustment set forth in the
table above shall be adjusted in the same manner in which, at the same time and
for the same events for which, the Conversion Rate is to be adjusted pursuant
to Section 5.04; and

 

 

     (vi) in no event will the total number of shares of Common Stock issuable upon
conversion of the Notes exceed 38.8500 per $1,000 principal amount of Notes, subject to
adjustment in the same manner as the Conversion Rate pursuant to Section 5.04.

          (b) As soon as practicable after the Company determines the anticipated Effective Date of any
proposed Make-Whole Fundamental Change, the Company shall mail to each Noteholder, the Trustee and
the Conversion Agent written notice of, and shall issue a press release indicating, and publicly
announce, through a public medium that is customary for such announcements, and publish on the
Company’s website, the anticipated Effective Date of such proposed Make-Whole Fundamental Change
and shall use commercially reasonable efforts in time to give such notice fifty Business Days in
advance of such anticipated Effective Date. Each such press release notice, announcement and
publication shall also state that in connection with such Make-Whole Fundamental Change, the
Company shall increase, in accordance herewith, the Conversion Rate applicable to Notes entitled as
provided herein to such increase (along with a description of how such increase shall be calculated
and the time periods during which Notes must be surrendered in order to be entitled to such
increase). No later than five Business Days after the actual Effective Date of each Make-Whole
Fundamental Change, the Company shall mail to each Noteholder, the Trustee and the Conversion Agent
written notice of, and shall issue a press release indicating, and publicly announce, through a
public medium that is customary for such announcements, and publish on the Company’s website, such
Effective Date and the amount by which the Conversion Rate has been so increased.

Nothing in this Section 5.03 shall prevent an adjustment to the Conversion Rate pursuant to Section
5.04 in respect of a Make-Whole Fundamental Change.

          Section 5.04. Adjustment of Conversion Rate. The Conversion Rate shall be adjusted from time
to time by the Company as follows:

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

where

	 	 	 	 	 	 	 
	 

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

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

 

 

	 	 	 	 	 	 	 
	 

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

	 	OS
	 	=
	 	the number of shares of Common Stock outstanding immediately after such
dividend or distribution, or immediately after the effective date of such share split
or share combination, as the case may be.

Such adjustment shall become effective immediately after the opening of business on the Ex-Dividend
Date for such dividend or distribution, or the effective date for such share split or share
combination. If any dividend or distribution of the type described in this Section 5.04(a) is
declared but not so paid or made, or the outstanding shares of Common Stock are not split or
combined, as the case may be, the Conversion Rate shall be immediately readjusted, effective as of
the date the Board of Directors determines not to pay such dividend or distribution, or split or
combine the outstanding shares of Common Stock, as the case may be, to the Conversion Rate that
would then be in effect if such dividend, distribution, share split or share combination had not
been declared or announced.

          (b) If the Company distributes to all or substantially all holders of its Common Stock any
rights, options or warrants entitling them for a period of not more than sixty days from the record
date for such distribution to subscribe for or purchase shares of the Common Stock, at a price per
share less than the average of the Last Reported Sale Prices of the Common Stock for the ten
consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the
declaration date for such distribution, the Conversion Rate shall be increased based on the
following formula:

where

	 	 	 	 	 	 	 
	 

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

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

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

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

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

 

 

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

For purposes of this Section 5.04(b), in determining whether any rights, options or warrants
entitle the holders to subscribe for or purchase shares of the Common Stock at less than the
average of the Last Reported Sale Prices of the Common Stock for each Trading Day in the applicable
ten-consecutive-Trading Day period, there shall be taken into account any consideration received by
the Company for such rights, options or warrants and any amount payable on exercise or conversion
thereof, the value of such consideration, if other than cash, to be determined by the Board of
Directors. In no event shall the Conversion Rate be decreased pursuant to this Section 5.04(b).

          (c) If the Company shall distribute shares of its Capital Stock, evidences of its indebtedness
or other of its assets or property other than (i) dividends or distributions (including share
splits) covered by Section 5.04(a) or Section 5.04(b), (ii) dividends or distributions paid
exclusively in cash, and (iii) Spin-Offs to which the provisions set forth below in this Section
5.04(c) shall apply to all or substantially all holders of its Common Stock, then, in each such
case the Conversion Rate shall be increased based on the following formula:

where

	 	 	 	 	 	 	 
	 

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

	 	CR
	 	=
	 	the applicable Conversion Rate in effect immediately after the open of
business on the Ex-Dividend Date for such distribution.
	 
	 	 	 	 	 	 
	 

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

	 	FMV
	 	=
	 	the fair market value (as determined by the Board of Directors) of the shares
of Capital Stock, evidences of indebtedness, assets or property distributed with
respect to each outstanding share of the Common Stock as of the open of business on the
Ex-Dividend Date for such distribution.

 

 

Such adjustment shall become effective immediately prior to the opening of business on the
Ex-Dividend Date for such distribution; provided that if “FMV” as set forth above is equal to or
greater than “SP0” as set forth above, in lieu of the foregoing adjustment, adequate
provisions shall be made so that each Noteholder shall have the right to receive on conversion in
respect of each $1,000
principal amount of the Notes held by such holder, in addition to the number of shares of Common
Stock equal to the Conversion Rate, the amount and kind of Distributed Property such holder would
have received had such holder owned a number of shares of Common Stock equal to the Conversion Rate
immediately prior to the Record Date for such distribution. If such distribution is not so paid or
made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in
effect if such dividend or distribution had not been declared. If the Board of Directors
determines “FMV” for purposes of this Section 5.04(c) by reference to the actual or when issued
trading market for any Notes, it must in doing so consider the prices in such market over the same
period used in computing the Last Reported Sale Prices of the Common Stock over the ten consecutive
Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such
distribution.

With respect to an adjustment pursuant to this Section 5.04(c) where there has been a dividend or
other distribution on the Common Stock of shares of Capital Stock of any class or series, or
similar equity interest, of or relating to a Subsidiary or other business unit of the Company (a
“Spin-Off”), the Conversion Rate will be increased based on the following formula:

where

	 	 	 	 	 	 	 
	 

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

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

	 	FMV0
	 	=
	 	the average of the Last Reported Sale Prices of the Capital Stock or
similar equity interest distributed to holders of the Common Stock applicable to one
share of the Common Stock over the first ten consecutive Trading Day period immediately
following, and including, the Ex-Dividend Date for the Spin-Off (such period, the
“Valuation Period”), and
	 
	 	 	 	 	 	 
	 

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

The adjustment to the Conversion Rate under the preceding paragraph of this Section 5.04(c) shall
be made immediately after the opening of business on the day after the last day of the Valuation
Period, but shall become effective as of the opening of business on the Ex-Dividend Date for the
Spin-Off. If

 

 

the Ex-Dividend Date for the Spin-Off is less than ten Trading Days prior to, and
including, the end of the Cash Settlement Averaging Period in respect of any conversion references
within this Section 5.04(c) to ten Trading Days shall be deemed replaced, for purposes of
calculating the affected daily Conversion Rates in respect of that conversion, with such lesser
number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for the Spin-Off
to, and including, the last Trading Day of such Cash Settlement Averaging Period. For purposes of
determining the applicable Conversion Rate, in respect of any conversion during the ten Trading
Days commencing on the Ex-
Dividend Date of any Spin-Off, references in the portion of this Section 5.04(c) related to
Spin-Offs to ten Trading Days shall be deemed replaced with such lesser number of Trading Days as
have elapsed from, and including, the Ex-Dividend Date for such Spin-Off to, but excluding, the
Conversion Date for such conversion.

Subject in all respect to Section 5.10, rights, options or warrants distributed by the Company to
all holders of its Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company’s Capital Stock, including Common Stock (either initially or under certain
circumstances), which rights, options or warrants, until the occurrence of a specified event or
events (“Trigger Event”): (i) are deemed to be transferred with such shares of the Common Stock;
(ii) are not exercisable; and (iii) are also issued in respect of future issuances of the Common
Stock, shall be deemed not to have been distributed for purposes of this Section 5.04 (and no
adjustment to the Conversion Rate under this Section 5.04 will be required) until the occurrence of
the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made
under this Section 5.04(c). If any such right, option or warrant, including any such existing
rights, options or warrants distributed prior to the date of this Supplemental Indenture, are
subject to events, upon the occurrence of which such rights, options or warrants become exercisable
to purchase different Notes, evidences of indebtedness or other assets, then the date of the
occurrence of any and each such event shall be deemed to be the date of distribution and
Ex-Dividend Date with respect to new rights, options or warrants with such rights (and a
termination or expiration of the existing rights, options or warrants without exercise by any of
the holders thereof). In addition, in the event of any distribution (or deemed distribution) of
rights, options or warrants, or any Trigger Event or other event (of the type described in the
preceding sentence) with respect thereto that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Rate under this Section 5.04 was
made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or Trigger Event, as the
case may be, as though it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder or holders of Common Stock with respect to such rights, options or
warrants (assuming such holder had retained such rights or warrants), made to all holders of Common
Stock as of the date of such redemption or repurchase, and (2) in the case of such rights, options
or warrants that shall have expired or been terminated without exercise by any holders thereof, the
Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.

 

 

For purposes of this Section 5.04(c), Section 5.04(a), and Section 5.04(b), any dividend or
distribution to which this Section 5.04(c) is applicable that also includes shares of Common Stock,
or rights, options or warrants to subscribe for or purchase shares of Common Stock to which Section
5.04(b) applies (or both), shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, assets or shares of capital stock other than such shares of Common Stock
or rights, options or warrants to which Section 5.04(c) applies (and
any Conversion Rate adjustment required by this Section 5.04(c) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend or distribution of such
shares of Common Stock or such rights, options or warrants (and any further Conversion Rate
adjustment required by Section 5.04(a) and Section 5.04(b) with respect to such dividend or
distribution shall then be made), except (A) the Ex-Dividend Date of such dividend or distribution
shall be substituted as “the Ex-Dividend Date,” “the Ex-Dividend Date relating to such distribution
of such rights, options or warrants” and “the Ex-Dividend Date for such distribution” within the
meaning of Section 5.04(a) and Section 5.04(b) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed “outstanding immediately prior to the Ex-Dividend Date
for such dividend or distribution, or the effective date of such share split or share combination,
as the case may be” within the meaning of Section 5.04(a) or “outstanding immediately prior to the
Ex-Dividend Date for such dividend or distribution” within the meaning of Section 5.04(b).

In no event shall the Conversion Rate be decreased pursuant to this Section 5.04(c).

          (d) If any cash dividend or distribution is made to all or substantially all holders of its
outstanding Common Stock, the applicable Conversion Rate shall be increased based on the following
formula:

where

	 	 	 	 	 	 	 
	 

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

	 	CR
	 	=
	 	the applicable Conversion Rate in effect immediately after the open of
business on the Ex-Dividend Date for such dividend or distribution;
	 
	 	 	 	 	 	 
	 

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

	 	C
	 	=
	 	the amount in cash per share the Company pays or distributes to holders of
its Common Stock.

Such adjustment shall become effective immediately after the opening of business on the Ex-Dividend
Date for such dividend or distribution; provided that if “C” as set forth above is equal to or
greater

 

 

than “SP0” as set forth above, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Noteholder shall have the right to receive on the date on which the
relevant cash dividend or distribution is distributed to holders of Common Stock, for each $1,000
principal amount of Notes, the amount of cash such holder would have received had such holder owned
a number of shares equal to the Conversion Rate on the Record Date for such distribution. If such
dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be
the Conversion Rate that would then be in effect if such dividend or distribution had not been
declared.

For the avoidance of doubt, for purposes of this Section 5.04(d), in the event of any
reclassification of the Common Stock, as a result of which the Notes become convertible into more
than one class of Common Stock, if an adjustment to the Conversion Rate is required pursuant to
this Section 5.04(d), references in this Section to one share of Common Stock or Last Reported Sale
Prices of one share of Common Stock shall be deemed to refer to a unit or to the price of a unit
consisting of the number of shares of each class of Common Stock into which the Notes are then
convertible equal to the numbers of shares of such class issued in respect of one share of Common
Stock in such reclassification. The above provisions of this paragraph shall similarly apply to
successive reclassifications.

In no event shall the Conversion Rate be decreased pursuant to this Section 5.04(d).

          (e) If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or
exchange offer for the Common Stock and if the cash and value of any other consideration included
in the payment per share of the Common Stock exceeds the average of the Last Reported Sale Prices
of the Common Stock over the ten consecutive Trading-Day period commencing on, and including, the
Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to
such tender or exchange offer (the “Expiration Date”), the Conversion Rate shall be increased based
on the following formula:

where

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the applicable Conversion Rate in effect immediately prior to the open of
business on the Trading Day next succeeding the Expiration Date;
	 
	 	 	 	 	 	 
	 

	 	CR
	 	=
	 	the applicable Conversion Rate in effect immediately after the open of
business on the Trading Day next succeeding the Expiration Date;
	 
	 	 	 	 	 	 
	 

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

	 	OS0
	 	=
	 	the number of shares of Common Stock outstanding immediately prior to the
time (the “Expiration Time”) such tender or exchange offer expires (prior to giving
effect to such tender offer or exchange offer);

 

 

	 	 	 	 	 	 	 
	 

	 	OS
	 	=
	 	the number of shares of Common Stock outstanding immediately after the
Expiration Time (after giving effect to such tender offer or exchange offer); and
	 
	 	 	 	 	 	 
	 

	 	SP
	 	=
	 	the average of the Last Reported Sale Prices of Common Stock over the ten
consecutive Trading Day period commencing on, and including, the Trading Day next
succeeding the Expiration Date.

Such adjustment under this Section 5.04(e) shall become effective at the opening of business on the
Trading Day next succeeding the Expiration Date. If the Trading Day next succeeding the Expiration
Date is less than ten Trading Days prior to, and including, the end of the Cash Settlement
Averaging Period in respect of any conversion, references within this Section 5.04(e) to ten
Trading Days shall be deemed replaced, for purposes of calculating the affected daily Conversion
Rates in respect of that conversion, with such lesser number of Trading Days as have elapsed from,
and including, the Trading Day next succeeding the Expiration Date to, and including, the last
Trading Day of such Cash Settlement Averaging Period. For purposes of determining the applicable
Conversion Rate, in respect of any conversion during the ten Trading Days commencing on the Trading
Day next succeeding the Expiration Date, references within this Section 5.04(e) to ten Trading Days
shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and
including, the Trading Day next succeeding the Expiration Date to, but excluding, the Conversion
Date for such conversion. 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 or all or any portion of such purchases or all such purchases are rescinded, the Conversion
Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such tender
or exchange offer had not been made or had been made only in respect of the purchases that had been
effected. In no event shall the Conversion Rate be decreased pursuant to this Section 5.04(e).

          (f) The term “Record Date” means, with respect to any dividend, distribution or other
transaction or event in which the holders of Common Stock (or other security) have the right to
receive any cash, Notes or other property or in which the Common Stock (or other applicable
security) is exchanged for or converted into any combination of cash, Notes or other property, the
date fixed for determination of stockholders entitled to receive such cash, Notes or other property
(whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

          (g) Except as stated herein, the Company shall not adjust the Conversion Rate for the issuance
of shares of its Common Stock or any Notes convertible into or exchangeable for shares of its
Common Stock or the right, option or warrant to purchase shares of its Common Stock or such
convertible or exchangeable Notes.

          (h) Notwithstanding this Section 5.04 or any other provision of this Indenture or the Notes,
if any Conversion Rate adjustment becomes effective, or any Ex-Dividend Date for any issuance,
dividend or distribution (relating to a required Conversion Rate adjustment) occurs, during the
period beginning on, and including, the open of business on a Conversion Date and ending on, and
including, (x) the close of business on the third Trading Day immediately following the relevant
Conversion Date (if the Company elects to satisfy the related Conversion Obligation solely in
shares of Common Stock) or (y) the close of business on the last Trading Day of a related Cash
Settlement Averaging Period (in the case of any other Settlement Method), the Board of Directors
shall make adjustments to the Conversion Rate and the amount of cash or number of shares of Common
Stock

 

 

issuable upon conversion of the Notes, as the case may be, as are necessary or appropriate to
effect the intent of this Section 5.04 and the other provisions of this Article 5 and to avoid
unjust or inequitable results, as determined in good faith by the Board of Directors. Any
adjustment made pursuant to this Section 5.04(h) shall apply in lieu of the adjustment or other
term that would otherwise be applicable.

          (i) In addition to those required by clauses (a), (b), (c), (d) and (e) of this Section 5.04,
and to the extent permitted by applicable law and subject to the applicable rules of the New York
Stock Exchange, the Company from time to time may increase the Conversion Rate by any amount for
a period of at least twenty Business Days if the Board of Directors determines that such
increase would be in the Company’s best interest. In addition, the Company may also (but is not
required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common
Stock or rights to purchase Common Stock in connection with any dividend or distribution of shares
(or rights to acquire shares) or similar event. Whenever the Conversion Rate is increased pursuant
to the preceding sentence, the Company shall mail to the holder of each Note at its last address
appearing on the Note Register provided for in Section 3.05 of the Base Indenture a notice of the
increase at least fifteen days prior to the date the increased Conversion Rate takes effect, and
such notice shall state the increased Conversion Rate and the period during which it will be in
effect.

          (j) The Company shall not take any action that would result in adjustment of the Conversion
Rate, pursuant to this Article 5, in such a manner as to result in the reduction of the Conversion
Price to less than the par value per share of Common Stock.

          (k) The applicable Conversion Rate will not be adjusted:

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

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

     (iii) upon the issuance of any shares of the Common Stock pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security not described in clause
(ii) of this subsection and outstanding as of the date the Notes were first issued;

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

     (v) for accrued and unpaid interest, including Additional Interest, if any; or

     (vi) for any transactions described in this Section 5.04 if Noteholders participate (as
a result of holding the Notes, and at the same time as holders of Common Stock participate)
in such transactions as if such Noteholders held a number shares of Common Stock equal to
the Conversion Rate at the time such adjustment would be required, multiplied by the
principal amount (expressed in thousands) of Notes held by such Noteholder, without having
to convert their Notes.

 

 

          (l) All calculations and other determinations under this Article 5 shall be made by the
Company and shall be made to the nearest one-ten thousandth (1/10,000) of a share.

          (m) The Company shall not be required to make an adjustment in the Conversion Rate unless the
adjustment would require a change of at least 1% in the Conversion Rate. However, the Company
shall carry forward any adjustments that are less than 1% of the Conversion Rate and make such
carried forward adjustment, regardless of whether the aggregate adjustment is less than 1%,
(i) upon any conversion of Notes, and (ii) on each of the forty-two Scheduled Trading Days
immediately preceding the Maturity Date.

          (n) Except as set forth in this Article 5, the Company shall not adjust the Conversion Rate.

          (o) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly
file with the Trustee and any Conversion Agent other than the Trustee an Officers’ Certificate
setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have
received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any
adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of
which it has knowledge is still in effect. Promptly after delivery of such certificate, the
Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted
Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice
of such adjustment of the Conversion Rate to the holder of each Note at its last address appearing
on the Note Register provided for in Section 3.05 of the Base Indenture, within ten days of the
effective date of such adjustment. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.

          (p) If, in respect of any Trading Day within the Cash Settlement Averaging Period for a
converted Note:

     (i) shares of Common Stock are deliverable with respect to the Daily Settlement Amount
for such Trading Day in accordance with this Article 5;

     (ii) any event that requires an adjustment to the Conversion Rate under any of clauses
(a), (b), (c), (d) and (e) of this Section 5.04 has not resulted in an adjustment to the
Conversion Rate as of such Trading Day; and

     (iii) the shares of Common Stock the holder of such Note shall receive in respect of
such Trading Day are not entitled to participate in the distribution or transaction giving
rise to such adjustment event because, pursuant to the terms of Section 5.02(k), such shares
were not held by such holder on the record date corresponding to such distribution or
transaction,

then the Company will adjust the number of shares of Common Stock deliverable with respect to the
Daily Settlement Amount for such Trading Day to reflect the relevant distribution or transaction.

          (q) If:

     (i) the Company elects to satisfy the Conversion Obligation solely in shares of Common
Stock;

 

 

     (ii) any event that requires an adjustment to the Conversion Rate under any of clauses
(a), (b), (c), (d) and (e) of this Section 5.04 has not resulted in an adjustment to the
Conversion Rate as of the Conversion Date; and

     (iii) the shares of Common Stock the holder of such Note shall receive on settlement
are not entitled to participate in the distribution or transaction giving rise to such
adjustment event because, pursuant to the terms of Section 5.02(k), such shares were
not held by such holder on the record date corresponding to such distribution or
transaction,

then the Company will adjust the number of shares of Common Stock deliverable with respect to the
relevant Trading Day to reflect the relevant distribution or transaction.

          (r) For purposes of this Section 5.04, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.
The Company will not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.

          (s) In the event that the Company adjusts the conversion rate pursuant to this Section 5.04,
the Company shall notify the Trustee and issue a press release containing the relevant information
(and make such press release available on the Company’s website).

          Section 5.05. Shares to Be Fully Paid. The Company shall provide, free from preemptive
rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of
Common Stock to provide for conversion of the Notes from time to time as such Notes are presented
for conversion.

          Section 5.06. Effect of Reclassification, Consolidation, Merger or Sale. Upon the occurrence
of (i) any reclassification or change of the outstanding shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to par value, or as a
result of a split, subdivision or combination covered by Section 5.04(a)), (ii) any consolidation,
merger, combination or binding share exchange involving the Company, or (iii) any sale or
conveyance of all or substantially all of the property and assets of the Company to any other
Person, in each case as a result of which holders of Common Stock shall be entitled to receive
cash, Notes or other property or assets with respect to or in exchange for such Common Stock (any
such event a “Merger Event”), then:

     (a) the Company or the successor or purchasing Person, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the Trust
Indenture Act as in force at the date of execution of such supplemental indenture if such
supplemental indenture is then required to so comply) permitted under Section 4.01(g) as set
forth in this Supplemental Indenture. Such supplemental indenture shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 5. If, in the case of any Merger Event, the Reference Property
includes shares of stock or other Notes and assets of a corporation other than the successor
or purchasing corporation, as the case may be, in such reclassification, change,
consolidation, merger, combination, binding 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, including to
the extent required by the Board of Directors and practicable the provisions providing for
the repurchase rights set forth in Article 6 herein.

     In the event the Company shall execute a supplemental indenture pursuant to this Section 5.06,
the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the
reasons therefor, the kind or amount of cash, securities or property or asset that will comprise
the Reference Property after any such Merger Event, any adjustment to be made with respect thereto
and that all conditions precedent have been complied with, and shall promptly mail notice thereof
to all Noteholders. The Company shall cause notice of the execution of such supplemental indenture
to be mailed to each Noteholder, at its address appearing on the Note Register provided for in this
Indenture, within twenty days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture.

     (b) Notwithstanding the provisions of Section 5.02(b), and subject to the provisions of
Section 5.01 and Section 5.03, at and after the effective time of such Merger Event, (i) the
right to convert each $1,000 principal amount of Notes into cash, shares of Common Stock or
a combination of cash and shares of Common Stock at the Company’s election as set forth in
Section 5.02 will be changed to a right to convert each $1,000 principal amount of such Note
into cash, the kind and amount of shares of stock, securities or other property or assets
(including cash or any combination thereof) that a holder of a number of shares of Common
Stock equal to the Conversion Rate immediately prior to such transaction would have owned or
been entitled to receive (the “Reference Property”) or a combination of cash and Reference
Property at the Company’s election and (ii) the related Conversion Obligation shall be
settled as set forth under clause (c) below.

     (c) With respect to each $1,000 principal amount of Notes surrendered for conversion
after the effective date of any such Merger Event, the Company’s Conversion Obligation shall
be settled in cash or units of Reference Property, at the Company’s election, in accordance
with Section 5.02(b) as follows:

     (i) (A) if the Company elects to satisfy its Conversion Obligation in respect of such
conversion by delivering solely Reference Property, the Company shall deliver to the
converting Noteholder a number of units of Reference Property (each such unit comprised of
the kind and amount of shares of stock, securities or other property or assets (including
cash or any combination thereof) that a holder of one share of Common Stock immediately
prior to such Merger Event would have owned or been entitled to receive based on the
Weighted Average Consideration) equal to (1) the aggregate principal amount of Notes to be
converted, divided by $1,000, multiplied by (2) the then-applicable Conversion Rate; (B) if
the Company elects to satisfy its Conversion Obligation in respect of such conversion by
paying solely cash, the Company shall pay to the converting Noteholder cash in an amount,
per $1,000 principal amount of Notes equal to the sum of the Daily Conversion Values for
each of the forty consecutive Trading Days during the related Cash Settlement Averaging
Period, such Daily Conversion Values determined as if the reference to “the Daily VWAP of
the Common Stock” in definition thereof were instead a reference to “the Daily VWAP of a
unit of Reference Property” comprised of the kind and amount of shares of stock, securities
or other property or assets (including cash or any combination thereof) that a holder of one
share of Common Stock immediately prior to such Merger Event would have owned or been
entitled to receive based on the Weighted Average Consideration; and (C) if the Company
elects to satisfy its Conversion Obligation through delivery of a combination of cash and
Reference

 

 

Property, the
Company shall deliver in respect of each $1,000 principal amount of Notes being
converted, a Settlement Amount equal to the sum of the Daily Settlement Amounts for each of
the forty consecutive Trading Days during the Cash Settlement Averaging Period for such
Note, such Daily Settlement Amounts determined as if the reference to “the Daily VWAP of the
Common Stock” in definition of Daily Conversion Value and Daily Share Amount were instead a
reference to “the Daily VWAP of a unit of Reference Property” comprised of the kind and
amount of shares of stock, securities or other property or assets (including cash or any
combination thereof) that a holder of one share of Common Stock immediately prior to such
Merger Event would have owned or been entitled to receive based on the Weighted Average
Consideration.

     (ii) The Company will deliver the cash in lieu of fractional units of Reference
Property as set forth pursuant to Section 5.02(l) (provided that the amount of such cash
shall be determined as if references in such Section to “the Daily VWAP of the Common Stock”
were instead a reference to “the Daily VWAP of a unit of Reference Property” composed of the
kind and amount of shares of stock, securities or other property or assets (including cash
or any combination thereof) that a holder of one share of Common Stock immediately prior to
such Merger Event would have owned or been entitled to receive based on the Weighted Average
Consideration).

     (iii) The Daily Settlement Amounts (if applicable) and Daily Conversion Values (if
applicable) shall be determined by the Company promptly following the last day of the Cash
Settlement Averaging Period.

     (iv) For purposes of this Section 5.06, the “Weighted Average Consideration” means the
weighted average of the types and amounts of consideration received by the holders of the
Common Stock entitled to receive cash, securities or other property or assets with respect
to or in exchange for such Common Stock in any Merger Event who affirmatively make such an
election.

     (v) The Company shall notify the holders and the Trustee of the Weighted Average
Consideration as soon as practicable after the Weighted Average Consideration is determined.

          (d) The above provisions of this Section shall similarly apply to successive Merger Events.

          (e) In the event that the Notes become convertible into Reference Property pursuant to this
Section 5.06, the Company shall notify the Trustee and issue a press release containing the
relevant information (and make such press release available on the Company’s website).

          Section 5.07. Certain Covenants.

 

 

          (a) The Company covenants that all shares of Common Stock issued upon conversion of Notes will
be fully paid and non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.

          (b) The Company covenants that, if any shares of Common Stock to be provided for the purpose
of conversion of Notes hereunder require registration with or approval of any governmental
authority under any federal or state law before such shares may be validly issued upon conversion,
the Company will, to the extent then permitted by the rules and interpretations of the Securities
and Exchange Commission, secure such registration or approval, as the case may be.

          (c) The Company further covenants that if at any time the Common Stock shall be listed on any
national securities exchange or automated quotation system, the Company will list and keep listed,
so long as the Common Stock shall be so listed on such exchange or automated quotation system, any
Common Stock issuable upon conversion of the Notes.

          Section 5.08. Responsibility of Trustee. The Company hereby appoints the Trustee as the
initial Conversion Agent, which appointment the Trustee accepts and agrees to perform in accordance
with the terms of this Indenture. The Trustee and any other Conversion Agent shall not at any time
be under any duty or responsibility to any Noteholder to determine the Conversion Rate (or any
adjustment thereto) or whether any facts exist that may require any adjustment (including any
increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any
such adjustment when made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent
(“Conversion Agent”) shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any Notes, property or cash that may at any time be
issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent
make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall
be responsible for any failure of the Company to issue, transfer or deliver any shares of Common
Stock or stock certificates or other Notes or property or cash upon the surrender of any Note for
the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the
Company contained in this Article. Without limiting the generality of the foregoing, neither the
Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of
any provisions contained in any supplemental indenture entered into pursuant to Section 5.06
relating either to the kind or amount of shares of stock or Notes or property (including cash)
receivable by Noteholders upon the conversion of their Notes after any event referred to in such
Section 5.06 or to any adjustment to be made with respect thereto, but, subject to the provisions
of Section 6.02 of the Base Indenture, may accept (without any independent investigation) as
conclusive evidence of the correctness of any such provisions, and shall be protected in relying
upon, the Officers’ Certificate (which the Company shall be obligated to file with the Trustee
prior to the execution of any such supplemental indenture) with respect thereto. The rights,
privileges, protections, immunities and benefits given to the Trustee, including without limitation
its right to be compensated, reimbursed, and indemnified, are extended to, and shall be enforceable
by, the Trustee in each of its capacities hereunder, including its capacity as Conversion Agent.

          Section 5.09. Notice to Noteholders Prior to Certain Actions. In case:

 

 

     (a) the Company shall declare a dividend (or any other distribution) on its Common
Stock that would require an adjustment in the Conversion Rate pursuant to Section 5.04; or

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

     (c) 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
or merger to which the Company is a party and for which approval of any stockholders of the
Company is required, or of the sale or transfer of all or substantially all of the assets of
the Company; or

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

the Company shall cause to be filed with the Trustee and to be mailed to each Noteholder at its
address appearing on the Note Register, provided for in Section 3.05 of the Base Indenture, as
promptly as possible but in any event at least twenty days prior to the applicable date hereinafter
specified, a notice stating (i) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights, options or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined, or (ii) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective or
occur, and the date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for Notes or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
Failure to give such notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up.

          Section 5.10. Stockholder Rights Plans. To the extent that the Company has a stockholder
rights plan or other “poison pill” in effect upon conversion of the Notes, each share of Common
Stock, if any, issued upon such conversion shall be entitled to receive the appropriate number of
rights, if any, and the certificates representing the Common Stock issued upon such conversion
shall bear such legends, if any, in each case as may be provided by the terms of any such
stockholder rights plan or poison pill, as the same may be amended from time to time. If, however,
prior to the time of conversion, the rights have separated from the shares of Common Stock in
accordance with the provisions of the applicable stockholder rights agreement so that the holders
of the Notes would not be entitled to receive any rights in respect of Common Stock, if any,
issuable upon conversion of the Notes, the Conversion Rate will be adjusted at the time of
separation as if the Company has distributed to all holders of Common Stock, shares of Capital
Stock of the Company, evidence of indebtedness or assets as provided in Section 5.04(c), subject to
readjustment in the event of the expiration, termination or redemption of such rights.

          Section 5.11. Exchange in Lieu of Conversion. When a holder surrenders its Notes for
conversion, the Company may, at its election, direct the Conversion Agent to surrender, on or prior

 

 

to the second Business Day following the relevant Conversion Date, such Notes to a financial
institution designated by the Company (the “Designated Institution”) for exchange in lieu of
conversion. In order to accept any Notes surrendered for conversion for exchange in lieu of
conversion, the Designated Institution must agree to timely deliver, in exchange for such Notes,
the
shares of Common stock and/or cash that would otherwise be due upon conversion pursuant to
Section 5.02 and in respect of which the Company has notified converting Noteholders. If the
Company makes the election provided for in this Section 5.11, the Company shall, by the close of
business on the second Business Day following the relevant Conversion Date as part of its
Settlement Notice, notify the holder surrendering its Notes for conversion that it has made such
election. In addition, the Company shall concurrently notify the Designated Institution of the
Settlement Method (and, if applicable, the Specified Dollar Amount) that Company has elected with
respect to such conversion and the relevant deadline for delivery of the consideration due upon
conversion. Any Notes exchanged by the Designated Institution will remain outstanding.

If the Designated Institution agrees to accept any Notes for exchange but does not timely deliver
the related consideration due upon conversion to the Conversion Agent, or if the Designated
Institution does not accept such Notes for exchange, the Company shall, within the time period
specified in Section 5.02(e), convert such Notes into cash and/or shares of Common Stock, as
applicable in accordance with the provisions of Section 5.02.

          For the avoidance of doubt, in no event will the Company’s designation of a Designated
Institution pursuant to this Section 5.11 require the Designated Institution to accept any Notes
for exchange.

ARTICLE 6

REPURCHASE OF NOTES AT OPTION OF HOLDERS

          Section 6.01. [Reserved]

          Section 6.02. Repurchase at Option of Noteholders upon a Fundamental Change. (a) If there
shall occur a Fundamental Change at any time prior to the Maturity Date, then each Noteholder shall
have the right, at such holder’s option, to require the Company to repurchase for cash all of such
holder’s Notes, or any portion thereof that is an integral multiple of $1,000 principal amount, on
the date (the “Fundamental Change Repurchase Date”) specified by the Company that is not less than
twenty Business Days and not more than thirty-five Business Days after the date of the Fundamental
Change Company Notice (as defined below) at a repurchase price equal to 100% of the principal
amount thereof, together with accrued and unpaid interest, including unpaid Additional Interest, if
any, thereon to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change
Repurchase Price”), unless the Fundamental Change Repurchase Date is after an Interest Record Date
and on or prior to the related Interest Payment Date, in which case interest accrued to the
Interest Payment Date will be paid to holders of the Notes as of the preceding Interest Record Date
and the Fundamental Change Repurchase Price payable to the holder surrendering the Note for
repurchase pursuant to this Article 6 shall be equal to the principal amount of Notes subject to
repurchase and will not include any accrued and unpaid interest, including Additional Interest, if
any. Repurchases of Notes under this Section 6.02 shall be made, at the option of the holder
thereof, upon:

 

 

     (i) delivery to the Paying Agent by a holder of a duly completed notice (the
“Fundamental Change Repurchase Notice”) in the form set forth on the reverse of the Note as
Exhibit C thereto on or prior to the Scheduled Trading Day immediately preceding the
Fundamental Change Repurchase Date; and

     (ii) delivery or book-entry transfer of the Notes to the Paying Agent at any time after
delivery of the Fundamental Change Repurchase Notice (together with all necessary
endorsements) at the office of the Paying Agent, such delivery being a condition to receipt
by the holder of the Fundamental Change Repurchase Price therefor; provided that such
Fundamental Change Repurchase Price shall be so paid pursuant to this Section 6.02 only if
the Note so delivered to the Paying Agent shall conform in all respects to the description
thereof in the related Fundamental Change Repurchase Notice.

The Fundamental Change Repurchase Notice shall state:

          (A) if certificated, the certificate numbers of Notes to be delivered for
repurchase;

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

          (C) that the Notes are to be repurchased by the Company pursuant to the
applicable provisions of the Notes and this Indenture;

provided, however, that if the Notes are not in certificated form, the Fundamental Change
Repurchase Notice must comply with appropriate Depositary procedures.

Any repurchase by the Company contemplated pursuant to the provisions of this Section 6.02 shall be
consummated by the payment of the Fundamental Change Repurchase Price pursuant to Section 6.04(a).

Notwithstanding anything herein to the contrary, any holder delivering to the Paying Agent the
Fundamental Change Repurchase Notice contemplated by this Section 6.02 shall have the right to
withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the
close of business on the Scheduled Trading Day immediately preceding the Fundamental Change
Repurchase Date in accordance with Section 6.03.

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

          (b) On or before the twentieth calendar day after the occurrence of the effective date of a
Fundamental Change, the Company shall mail or cause to be mailed to all holders of record of the
Notes and the Trustee a notice (the “Fundamental Change Company Notice”) of, issue a press release
in respect of (and make such press release available on the Company’s website), the occurrence of
the effective date of the Fundamental Change and of the repurchase right at the option of the
holders arising as a result thereof. Such mailing shall be by first class mail. The Company shall

 

 

also deliver a copy of the Fundamental Change Company Notice to the Trustee, the Paying Agent
and the Conversion Agent within five Business Days after the effective date of the Fundamental
Change. Simultaneously with the providing of such notice, the Company will also publish a notice
containing the information set forth in the Fundamental Change Company Notice in a newspaper of
general circulation in The City of New York or publish such information on the Company’s website or
through such other public medium as the Company may use at that time. Each Fundamental Change
Company Notice shall specify:

     (i) the events causing the Fundamental Change;

     (ii) the effective date of the Fundamental Change, and whether the Fundamental Change
is a Make-Whole Fundamental Change, in which case the Effective Date of the Make-Whole
Fundamental Change;

     (iii) the last date on which a holder may exercise the repurchase right pursuant to
this Article 6;

     (iv) the Fundamental Change Repurchase Price;

     (v) the Fundamental Change Repurchase Date;

     (vi) if applicable, the name and address of the Paying Agent and the Conversion Agent;

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

     (viii) if applicable, that the Notes with respect to which a Fundamental Change
Repurchase Notice has been delivered by a holder may be converted only if the holder
withdraws the Fundamental Change Repurchase Notice in accordance with the terms of this
Indenture;

     (ix) that the holder must exercise the repurchase right on or prior to the close of
business on the Scheduled Trading Day immediately preceding the Fundamental Change
Repurchase Date (the “Fundamental Change Expiration Time”);

     (x) that the holder shall have the right to withdraw any Notes surrendered prior to the
Fundamental Change Expiration Time; and

     (xi) the procedures that holders must follow to require the Company to repurchase their
Notes.

No failure of the Company to give the foregoing notices and no defect therein shall limit the
Noteholders’ repurchase rights or affect the validity of the proceedings for the repurchase of the
Notes pursuant to this Section 6.02.

          (c) Notwithstanding the foregoing, no Notes may be repurchased by the Company at the option of
the holders upon a Fundamental Change if the principal amount of the Notes

 

 

has been accelerated, and such acceleration has not been rescinded, on or prior to the
Fundamental Change Repurchase Date (except in the case of an acceleration resulting from a Default
by the Company in the payment of the Fundamental Change Repurchase Price with respect to such
Notes).

          (d) In connection with any purchase offer, the Company will:

     (i) comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer
rules under the Exchange Act, if required under the Exchange Act,

     (ii) file a Schedule TO or any successor or similar schedule, if required under the
Exchange Act, and

     (iii) otherwise comply with all federal and state securities laws in connection with
any offer by the Company to purchase the Notes.

Notwithstanding anything to the contrary provided in this Indenture, compliance by the Company with
Rule 13e-4, Rule 14e-1 and any other tender offer rule under the Exchange Act in accordance with
clause (i) above, to the extent inconsistent with any other provision of this Indenture, will not,
standing alone, constitute an Event of Default solely as a result of compliance by the Company with
such rules.

Notwithstanding the foregoing the Company shall not be required to repurchase the Notes in
accordance with this Section 6.02 if a third party makes an offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Section 6.02 and purchases all
Notes validly tendered and not withdrawn under such purchase offer.

          Section 6.03. Withdrawal of Fundamental Change Repurchase Notice.

          (a) A Fundamental Change Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the Corporate Trust Office (as defined in Section 1.01 of the Base
Indenture) of the Paying Agent in accordance with this Section 6.03 at any time prior to the close
of business on the Scheduled Trading Day immediately preceding the Fundamental Change Repurchase
Date, specifying:

     (i) the certificate number, if any, of the Note in respect of which such notice of
withdrawal is being submitted, or the appropriate Depositary information if the Note in
respect of which such notice of withdrawal is being submitted is represented by a Global
Note,

     (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 that remains subject to the original
Fundamental Change Repurchase Notice, which portion must be in principal amounts of $1,000
or an integral multiple of $1,000;

 

 

          Section 6.04. Deposit of Fundamental Change Repurchase Price.

          (a) The Company will deposit with the Trustee (or other Paying Agent appointed by the Company,
or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust) on or
prior to 11:00 a.m. New York City time, on the Fundamental Change Repurchase Date an amount of cash
sufficient to repurchase all of the Notes to be repurchased at the appropriate Fundamental Change
Repurchase Price. Subject to receipt of funds and/or Notes by the Trustee (or other Paying Agent
appointed by the Company), payment for Notes surrendered for repurchase (and not withdrawn prior to
the Fundamental Change Expiration Time) will be made on the later of (i) the Fundamental Change
Repurchase Date with respect to such Note (provided the holder has satisfied the conditions in
Section 6.02) and (ii) the time of book-entry transfer or the delivery of such Note to the Trustee
(or other Paying Agent appointed by the Company) by the holder thereof in the manner required by
Section 6.02 by mailing checks for the amount payable to the holders of such Notes entitled thereto
as they shall appear in the Note Register, provided, however, that payments to the Depositary shall
be made by wire transfer of immediately available funds to the account of the Depositary or its
nominee. The Trustee shall, promptly after such payment and upon written demand by the Company,
return to the Company any funds in excess of the Fundamental Change Repurchase Price.

          (b) If by 11:00 a.m. New York City time, on the Fundamental Change Repurchase Date, the
Trustee (or other Paying Agent appointed by the Company) holds money sufficient to make payment on
all the Notes or portions thereof that are to be repurchased as a result of the corresponding
Fundamental Change, then (i) such Notes will cease to be outstanding, (ii) interest, including
Additional Interest, if any, will cease to accrue on such Notes, and (iii) all other rights of the
holders of such Notes will terminate (other than the right to receive the Fundamental Change
Repurchase Price, and previously accrued but unpaid interest, including Additional Interest, if
any, upon delivery of the Notes), whether or not book-entry transfer of the Notes has been made or
the Notes have been delivered to the Trustee or Paying Agent.

          (c) Upon surrender of a Note that is to be repurchased in part pursuant to Section 6.02, the
Company shall execute and the Trustee shall authenticate and deliver to the holder a new Note in an
authorized denomination equal in principal amount to the unrepurchased portion of the Note
surrendered.

ARTICLE 7

MISCELLANEOUS

          Section 7.01. Ratification of Indenture.

The Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and
confirmed, and this Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided with the following revisions in regard to the Notes only:

          (a) Section 4.01 of the Base Indenture is hereby replaced, in regard to the Notes only, with
the following text (provided that capitalized terms in the following text shall have the meaning
given them in the Supplemental Indenture, notwithstanding their deemed use in the Base Indenture):

 

 

     (1) (A) all Notes theretofore authenticated and delivered (other than (x) Notes which
have been destroyed, lost or stolen and which have been replaced or paid as provided in
Section 3.06 and (y) Notes for whose payment money has theretofore been deposited in trust
with the Trustee or any Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company as proved in Section 10.03) have been delivered to the
Trustee for cancellation; or (B) the Company has deposited with the Trustee or delivered to
Holders of the Notes, as applicable, after the Notes have become due and payable, whether at
the Maturity Date, any Fundamental Change Repurchase Date, upon conversion or otherwise,
cash or cash and shares of Common Stock, if any (solely to satisfy the Company’s Conversion
Obligation, if applicable), sufficient to pay all of the outstanding Notes and all other
sums due payable under this Indenture by the Company;

          (b) Section 3.03 of the Base Indenture is hereby amended by the deletion therefrom, in regard
to the Notes only, of the words, “, under its corporate seal reproduced thereon attested by its
Secretary or an Assistant Secretary”.

          (c) Section 7.03 of the Base Indenture is hereby supplemented, in regard to the Notes only,
through the appending thereto of the following text: For purposes of this Section 7.03, documents
filed the Commission by the Company via the Commission’s the Electronic Data-Gathering, Analysis,
and Retrieval system or any publicly accessible electronic successor thereto shall be deemed
furnished to the Trustee as of the time they are filed via such system. References in this Section
7.03 to the dates upon which documents are required to be filed with the Commission shall give
effect to any grace period provided by Rule 12b-25 under the Exchange Act.

          (d) Section 8.01(1) of the Base Indenture is hereby replaced, in regard to the Notes with the
following text:

if the Company is not the surviving Person, the corporation formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an entirety (A)
shall be a corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and (B) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the Company’s obligation for the due and punctual payment of the principal
of (and premium, if any) and interest and Additional Interest, if any, on all the Notes and
the performance and observance of every covenant of this Indenture on the part of the
Company to be performed or observed;

          Section 7.02. Trustee Not Responsible for Recitals.

The recitals herein contained are made by the Company and not by the Trustee, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee makes no representation as to
the validity or sufficiency of this Supplemental Indenture. All of the provisions contained in the
Indenture in respect of the rights, privileges, immunities, powers, and duties of the Trustee shall
be applicable in respect of the Supplemental Indenture as fully and with like force and effect as
though fully set forth in full herein.

 

 

          Section 7.03. Governing Law.

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

          Section 7.04. Separability.

In case any provision contained in this Supplemental Indenture or in the Notes shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Supplemental Indenture or of the
Notes, but this Supplemental Indenture and the Notes shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.

          Section 7.05. Counterparts.

          This Supplemental Indenture may be executed in any number of counterparts, each of which shall
be an original but such counterparts shall together constitute but one and the same instrument

 

 

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

	 	 	 	 	 
	 	BORGWARNER INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as
Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT A

[FORM OF FACE OF SECURITY]

[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.]1

 

			
	1	 	Use bracketed language for a Global Note.

A-1

 

BORGWARNER INC.

3.50% Convertible Senior Note due 2012

			
	 	 	 
	No. [                    ]
	 	$[          ]

CUSIP No. [          ]

BorgWarner Inc., a corporation duly organized and validly existing under the laws of the State of
Delaware (herein called the “Company,” which term includes any successor corporation or other
entity under the Indenture referred to on the reverse hereof), for value received hereby promises
to pay to [CEDE & CO., or its registered assigns,]2 the principal sum of [ ]
Dollars, [as revised by the Schedule of Increases and Decreases in Global Note attached
hereto,]3 on April 15, 2012, interest thereon as set forth below and Additional Interest
in the manner, at the rates and to the Persons set forth in Section 3.03 of the Indenture.

The Company promises to pay interest on the principal amount of this Note at the rate of 3.50% per
annum (subject to increase pursuant to Section 3.03 of the Indenture) from April 9, 2009 until
April 15, 2012. The Company will pay interest semi-annually on October 15 and April 15 of each
year, commencing on October 15, 2009, to holders of record at the close of business on the
preceding October 1 and April 1 (whether or not such day is a Business Day), respectively.
Interest on the Note will accrue from the most recent date to which interest has been paid, or, if
no interest has been paid on the Note, from April 9, 2009.

Payment of the principal of and accrued and unpaid interest and Additional Interest, if any, on
this Note shall be made at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, 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; provided,
however, that any payment to the Depositary or its nominee shall be paid by wire transfer in
immediately available funds in accordance with the wire transfer instruction supplied by the
Depositary or its nominee from time to time to the Trustee and Paying Agent (if different from
Trustee).

Reference is made to the further provisions of this Note set forth on the reverse hereof,
including, without limitation, provisions giving the holder of this Note the right to convert this
Note into cash, shares of Common Stock of the Company or a combination of cash and shares of Common
Stock, as applicable, on the terms and subject to the limitations set forth in the Indenture. Such
further provisions shall for all purposes have the same effect as though fully set forth at this
place.

 

			
	2	 	Use bracketed language for a Global Note.
	 
	3	 	Use bracketed language for a Global Note.

A-2

 

This Note shall be deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with and governed by the laws of said State (without
regard to the conflicts of laws provisions thereof).

This Note shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been manually signed by the Trustee or a duly authorized
authenticating agent under the Indenture.

[Remainder of page intentionally left blank]

A-3

 

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

	 	 	 	 	 
	 	BORGWARNER INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK MELLON TRUST COMPANY,

NATIONAL ASSOCIATION

as Trustee, certifies that this is one of the Notes described

in the within-named Indenture.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Officer
	 	 

A-4

 

[FORM OF REVERSE OF SECURITY]

BORGWARNER INC.

3.50% Convertible Senior Note due 2012

This Note is one of a duly authorized issue of Notes of the Company, designated as its 3.50%
Convertible Senior Notes due 2012 (the “Notes”), limited to the aggregate principal amount of
$373,750,000 all issued or to be issued under and pursuant to a Second Supplemental Indenture,
dated as of April 9, 2009, between the Company and The Bank of New York Mellon Trust Company,
National Association, as trustee (the “Trustee”), to the Indenture, dated as of September
23, 1999, between Borg-Warner Automotive, Inc. (predecessor in interest to the Company) and the
Chase Manhattan Trust Company, National Association, a national banking association (predecessor in
interest to the Trustee) (as such may be amended from time to time, the “Indenture”) to which
Indenture and all indentures supplemental thereto reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Notes. Additional Notes may be issued in an unlimited aggregate
principal amount, subject to certain conditions specified in the Indenture.

In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing,
the principal of and interest, including Additional Interest, if any, on all Notes may be declared,
by either the Trustee or the holders of not less than 25% in aggregate principal amount of Notes
then outstanding, and upon said declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions and certain exceptions set forth in the Indenture.

Subject to the terms and conditions of the Indenture, the Company will make all payments and
deliveries in respect of the Fundamental Change Repurchase Price and the principal amount on the
Maturity Date, as the case may be, to the holder who surrenders a Note to a Paying Agent to collect
such payments in respect of the Note. The Company will pay cash amounts in money of the United
States that at the time of payment is legal tender for payment of public and private debts.

The Indenture contains provisions permitting the Company and the Trustee in certain circumstances,
without the consent of the holders of the Notes, and in other circumstances, with the consent of
the holders of not less than a majority in aggregate principal amount of the Notes at the time
outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying
the terms of the Indenture and the Notes as described therein. It is also provided in the
Indenture that, subject to certain exceptions, the holders of a majority in aggregate principal
amount of the Notes at the time outstanding may on behalf of the holders of all of the Notes waive
any past Default or Event of Default under the Indenture and its consequences.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and unconditional, to pay the

A-5

 

principal of and accrued and unpaid interest, and Additional Interest, if any, on this Note at the
place, at the respective times, at the rate and in the lawful money herein prescribed.

The Notes are issuable in registered form without coupons in denominations of $1,000 principal
amount and integral multiples thereof. At the office or agency of the Company referred to on the
face hereof, and in the manner and subject to the limitations provided in the Indenture, Notes may
be exchanged for a like aggregate principal amount of Notes of other authorized denominations,
without payment of any service charge but, if required by the Company or Trustee, with payment of a
sum sufficient to cover any tax, assessments or other governmental charges that may be imposed in
connection therewith as a result of the name of the holder of the new Notes issued upon such
exchange of Notes being different from the name of the holder of the old Notes surrendered for such
exchange.

The Notes are not subject to redemption through the operation of any sinking fund or otherwise.

Upon the occurrence of a Fundamental Change, the holder has the right, at such holder’s option, to
require the Company to repurchase for cash all of such holder’s Notes or any portion thereof (in
principal amounts of $1,000 or integral multiples thereof) on the Fundamental Change Repurchase
Date at a price equal to the Fundamental Change Repurchase Price.

Subject to the provisions of the Indenture, the holder hereof has the right, at its option, prior
to the close of business on the second Scheduled Trading Day immediately preceding the Maturity
Date, to convert any Notes or portion thereof that is $1,000 or an integral multiple thereof, into
cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, at
a Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the
Indenture.

Terms used in this Note and defined in the Indenture are used herein as therein defined.

A-6

 

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 tenants in common

	 	UNIF GIFT MIN ACT	 	 
	 
	 	 	 	Custodian 
	 

	 	 

(Cust)
	 	 
	 
	 	 	 	 
	TEN ENT -as tenants by the entireties
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Minor)	 	 
	 
	 	

 	 	 
	JT TEN -as joint tenants with right of
survivorship and not as tenants in
common

	 	Uniform Gifts to Minors Act
	 	(State) 
	 

	 	 	 	 

Additional abbreviations may also be used

though not in the above list.

A-7

 

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL SECURITY4

BORGWARNER INC.

3.50% Convertible Senior Notes due 2012

The initial principal amount of this Global Note is $[           ]. The following increases or decreases in
this Global Note have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Signature of	 
	 	 	Amount of decrease in	 	 	Amount of increase in	 	 	Principal Amount of this	 	 	authorized signatory of	 
	 	 	Principal Amount of this	 	 	Principal Amount of this	 	 	Global Note following	 	 	Trustee or	 
	Date	 	Global Note	 	 	Global Note	 	 	such decrease or increase	 	 	Custodian	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	4	 	For Global Notes only.

A-8

 

EXHIBIT B

[FORM OF NOTICE OF CONVERSION]

To: BORGWARNER INC.

     The undersigned registered owner of this Note hereby exercises the option to convert this
Note, or the portion hereof (that is $1,000 principal amount or an integral multiple thereof) below
designated, into cash, shares of Common Stock or a combination of cash and shares of Common Stock,
as applicable, in accordance with the terms of the Indenture referred to in this Note, and directs
that any shares of Common Stock issuable and deliverable upon such conversion, together with any
cash comprising the Daily Conversion Values or a portion of the Daily Settlement Amounts for each
of the forty Trading Days during the Cash Settlement Averaging Period and for any fractional
shares, and any Notes representing any unconverted principal amount hereof, be issued and delivered
to the registered holder hereof unless a different name has been indicated below. If any shares of
Common Stock or any portion of this Note not converted are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of interest accompanies this
Note.

	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature(s)	 	 

Signature Guarantee          

	 	 	 	 	 
	Signature(s) must be guaranteed
	 	 	 	 
	by an eligible Guarantor Institution
	 	 	 	 
	(banks, stock brokers, savings and
	 	 	 	 
	loan associations and credit unions)
	 	 	 	 
	with membership in an approved
	 	 	 	 
	signature guarantee medallion program
	 	 	 	 
	pursuant to Securities and Exchange
	 	 	 	 
	Commission Rule 17Ad-15 if shares
	 	 	 	 
	of Common Stock are to be issued, or
	 	 	 	 
	Notes to be delivered, other than
	 	 	 	 
	to and in the name of the registered holder.
	 	 	 	 

B-1

 

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

	 	 
	 	 
	(Name)
	 	 	 	 
	 
	 	 	 	 
	 
	 

	 	 
	 	 
	(Street Address)
	 	 	 	 
	 
	 
	 	 	 	 
	 

	 	 
	 	 
	(City, State and Zip Code)
	 	 	 	 
	Please print name and address
	 	 	 	 
	 
	 	 	 	 
	 

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

	 	$                    ,000
	 	 
	 

	 	NOTICE: The above signature(s) of the holder(s)	 	 
	 

	 	hereof must correspond with the name as written upon	 	 
	 

	 	the face of the Note in every particular without	 	 
	 

	 	alteration or enlargement or any change whatever.	 	 
	 
	 

	 	 
	 	 
	 

	 	Social Security or Other Taxpayer Identification

Number	 	 

B-2

 

EXHIBIT C

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

To: BORGWARNER INC.

The undersigned registered owner of this Note hereby acknowledges receipt of a notice from
BorgWarner Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the
Company and specifying the Fundamental Change Repurchase Date and requests and instructs the
Company to repay to the registered holder hereof in accordance with the applicable provisions of
the Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion
thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2)
if such Fundamental Change Repurchase Date does not fall during the period after an Interest Record
Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest,
including Additional Interest, if any, thereon to, but excluding, such Fundamental Change
Repurchase Date.

In the case of certificated Notes, the certificate numbers of the Notes to be repurchased are as
set forth below:

Dated:                                         

	 	 	 
	 

	 	 

	 

	 	Signature(s)
	 
	 	 
	 

	 	 

	 

	 	Social Security or Other Taxpayer Identification
	 

	 	Number
	 

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

	 	$___,000
	 

	 	NOTICE: The above signature(s) of the holder(s)
	 

	 	hereof must correspond with the name as written upon
	 

	 	the face of the Note in every particular without
	 

	 	alteration or enlargement or any change whatever.

C-1

 

EXHIBIT D

[FORM OF ASSIGNMENT AND TRANSFER]

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

 

 

Dated:                                         

 

 

Signature(s)

 

Signature Guarantee

Signature(s) must be guaranteed by an

eligible Guarantor Institution (banks, stock

brokers, savings and loan associations and

credit unions) with membership in an approved

signature guarantee medallion program pursuant

to Securities and Exchange Commission

Rule 17Ad-15 Notes are to be delivered, other

than to and in the name of the registered holder.

NOTICE: The signature on the assignment must correspond with the name as written upon the face of
the Note in every particular without alteration or enlargement or any change whatever.exv10w1

EXHIBIT 10.1

FORM OF CONVERTIBLE BOND HEDGE TRANSACTION

Opening Transaction

	 	 	 
	To:

	 	BorgWarner Inc.
	 

	 	3850 Hamlin Road
	 

	 	Auburn Hills, MI 48326
	 
	 	 
	From:

	 	Bank of America, N.A.
	 

	 	c/o Banc of America Securities LLC
	 

	 	Bank of America Tower at One Bryant Park
	 

	 	New York, NY 10036
	 
	 	 
	Re:

	 	Convertible Bond Hedge Transaction
	 
	 	 
	Ref. No:

	 	NY-38449
	 
	 	 
	Date:

	 	April 6, 2009

Dear Sir(s):

     The purpose of this communication (this “Confirmation”) is to set forth the terms and
conditions of the above-referenced transaction entered into on the Trade Date specified below (the
“Transaction”) between Bank of America, N.A. (“Dealer”) and BorgWarner Inc.
(“Counterparty”). This communication constitutes a “Confirmation” as referred to in the
ISDA Master Agreement specified below.

     This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006
ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA
Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006 Definitions,
the “Definitions”), in each case as published by the International Swaps and Derivatives
Association, Inc. (“ISDA”). In the event of any inconsistency between the 2006 Definitions and the
Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the
meanings assigned to them in the Prospectus Supplement dated April 6, 2009 to the Prospectus dated
March 4, 2008 (the “Prospectus Supplement”) and the Supplemental Indenture, to be dated as of the
closing date of the initial issuance of the Convertible Securities described below, to the Senior
Indenture dated as of September 23, 1999 between Counterparty and The Bank of New York Trust
Company, N.A., as trustee (together, the “Indenture”), each relating to the USD325 million
principal amount of 3.50% convertible senior notes due April 15, 2012 (the “Convertible
Securities”). In the event of any inconsistency between the terms defined in the Indenture or
defined in the Prospectus Supplement and this Confirmation, this Confirmation shall govern. For
the avoidance of doubt, references herein to provisions of the Indenture are based on the
description of the Convertible Securities set forth in the Prospectus Supplement. If any relevant
provisions of the Indenture differ in any material respect from those described in the Prospectus
Supplement, the parties will, if appropriate, amend this Confirmation in good faith to preserve the
economic intent of the parties. The parties further acknowledge that references to the Indenture
herein are references to the Indenture as in effect on the date of its execution, and if the
Indenture is amended, modified or supplemented following its execution, any such amendment,
modification or supplement will be disregarded for purposes of this Confirmation (other than for
purposes of Section 8(b) below) unless the parties agree otherwise in writing. The Transaction is
subject to early unwind if the closing of the Convertible Securities is not consummated for any
reason, as set forth below in Section 8(k).

1

 

     Each party is hereby advised, and each such party acknowledges, that the other party has
engaged in, or refrained from engaging in, substantial financial transactions and has taken other
material actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below.

     This Confirmation evidences a complete and binding agreement between Dealer and Counterparty
as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be
subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement
(Multicurrency—Cross Border) as if Dealer and Counterparty had executed an agreement in such form
on the date hereof (but without any Schedule except for (i) the election of Loss and Second Method
and US Dollars (“USD”) as the Termination Currency, (ii) the replacement of the word “third” in the
last line of Section 5(a)(i) of the Agreement with the word “second,” (iii) the election that the
“Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty with a
“Threshold Amount” of USD25 million and (iv) such other elections as set forth in this
Confirmation.

     All provisions contained in, or incorporated by reference to, the Agreement will govern this
Confirmation except as expressly modified herein. In the event of any inconsistency between this
Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.

     The Transaction hereunder shall be the sole Transaction under the Agreement. If there exists
any ISDA Master Agreement between Dealer and Counterparty or any confirmation or other agreement
between Dealer and Counterparty pursuant to which an ISDA Master Agreement is deemed to exist
between Dealer and Counterparty, then notwithstanding anything to the contrary in such ISDA Master
Agreement, such confirmation or agreement or any other agreement to which Dealer and Counterparty
are parties, the Transaction shall not be considered a Transaction under, or otherwise governed by,
such existing or deemed ISDA Master Agreement.

     The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions.
The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

	 	 	 	 	 
	 

	 	Trade Date:
	 	April 6, 2009
	 
	 	 	 	 
	 

	 	Effective Date:
	 	The closing date of the initial issuance of the Convertible Securities.
	 
	 	 	 	 
	 

	 	Option Style:
	 	Modified American, as described under “Procedures for Exercise” below.
	 
	 	 	 	 
	 

	 	Option Type:
	 	Call
	 
	 	 	 	 
	 

	 	Seller:
	 	Dealer
	 
	 	 	 	 
	 

	 	Buyer:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Shares:
	 	The Common Stock of Counterparty, par value USD0.01 per share (Ticker Symbol:
“BWA”).
	 
	 	 	 	 
	 

	 	Number of Options:
	 	The number of Convertible Securities in denominations of USD1,000
principal amount issued by Counterparty on the closing date for the initial issuance
of the Convertible Securities; provided that the Number of Options shall be
automatically increased as of the date of exercise by Morgan Stanley & Co.
Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated of the
underwriters’ option pursuant to Section 2 of the Underwriting Agreement dated as of
April 6, 2009,

2

 

	 	 	 	 	 
	 

	 	 	 	between Counterparty and Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Citigroup Global Markets Inc.
and Deutsche Bank Securities Inc. as managers for
the underwriters party thereto (the “Underwriting
Agreement”) by the number of Convertible
Securities in denominations of USD1,000 principal
amount issued pursuant to such exercise (such
Convertible Securities, the “Additional
Convertible Securities”). For the avoidance of
doubt, the Number of Options outstanding shall be
reduced by each exercise of Options hereunder.
	 
	 	 	 	 
	 

	 	Applicable Percentage:
	 	50%
	 
	 	 	 	 
	 

	 	Option Entitlement:
	 	As of any date, a number of Shares per Option equal to the “Conversion
Rate” (as defined in the Indenture as described in the Prospectus Supplement under
“Description of Notes — Conversion Rights — General”), but without regard to any
adjustments to the Conversion Rate as set forth in the section of the Indenture
containing the provision described in the Prospectus Supplement under “Description of
Notes — Conversion Rights — Adjustment to Shares Delivered upon Conversion upon
Certain Corporate Transactions” (a “Fundamental Change Adjustment”) or a discretionary
adjustment as set forth in the section of the Indenture containing the provisions
described in the fifth to last paragraph in the Prospectus Supplement under
“Description of Notes — Conversion Rights — Conversion Rate Adjustments” (i.e., the
paragraph commencing with “We are permitted to increase...”) (a “Discretionary
Adjustment”).
	 
	 	 	 	 
	 

	 	Strike Price:
	 	As of any date, an amount in USD, rounded to the nearest cent (with 0.5 cents
being rounded upwards), equal to USD1,000 divided by the Option Entitlement as of such
date.
	 
	 	 	 	 
	 

	 	Number of Shares:
	 	As of any date, the product of the Number of Options and the Option
Entitlement and the Applicable Percentage.
	 
	 	 	 	 
	 

	 	Premium:
	 	USD24,553,750 (Premium per Option USD75.55); provided that if the Number of
Options is increased pursuant to the proviso to the definition of “Number of Options”
above, an additional Premium equal to the product of the number of Options by which
the Number of Options is so increased and the Premium per Option shall be paid on the
Additional Premium Payment Date.
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	The Effective Date
	 
	 	 	 	 
	

	 	Additional Premium Payment Date:
	 	The closing date for the purchase and sale of the
Additional Convertible Securities.
	 
	 	 	 	 
	 

	 	Exchange:
	 	New York Stock Exchange

3

 

	 	 	 	 	 
	 

	 	Related Exchange:
	 	All Exchanges located in the United States.

Procedures for Exercise:

	 	 	 	 	 
	 

	 	Potential Exercise Dates:
	 	Each Conversion Date.
	 
	 	 	 	 
	 

	 	Conversion Date:
	 	Each “Conversion Date” (as defined in the Indenture as described in the
Prospectus Supplement under “Description of Notes — Conversion Rights — General”)
occurring during the Exercise Period for Convertible Securities each in denominations
of USD1,000 principal amount (such Convertible Securities, the “Relevant Convertible
Securities” for such Conversion Date).
	 
	 	 	 	 
	 

	 	Exercise Period:
	 	The period from and excluding the Effective Date to and including the
Expiration Date.
	 
	 	 	 	 
	 

	 	Expiration Date:
	 	The earlier of (i) the last day on which any Convertible Securities remain
outstanding and (ii) the second “Scheduled Trading Day” (as defined in the Indenture
as described in the Prospectus Supplement under “Description of Notes — Conversion
Rights — Settlement upon Conversion”) immediately preceding the “Maturity Date” (as
defined in the Indenture as described in the Prospectus Supplement under “Description
of Notes — General”).
	 
	 	 	 	 
	 

	 	Automatic Exercise on

Conversion Dates:
	 	Applicable; and means that on each Conversion Date, a number of Options
equal to the number of Relevant Convertible Securities for such Conversion Date in
denominations of USD1,000 principal amount shall be automatically exercised, subject
to “Notice of Exercise” below.
	 
	 	 	 	 
	 

	 	Notice Deadline:
	 	In respect of any exercise of Options hereunder on any Conversion Date,
12:00 P.M., New York City time, on the Exchange Business Day prior to the first
“Scheduled Trading Day” of the “Cash Settlement Averaging Period” (each as defined in
the Indenture as described in the Prospectus Supplement under “Description of Notes —
Conversion Rights — Settlement upon Conversion” and, for the avoidance of doubt,
irrespective of whether Counterparty’s election of the settlement method with respect
to the Relevant Convertible Securities includes any portion thereof to be delivered in
cash) relating to the Convertible Securities converted on the Conversion Date
occurring on the relevant Exercise Date; provided that in the case of any exercise of
Options hereunder in connection with the conversion of any Relevant Convertible
Securities on any Conversion Date occurring during the Final Convertibility Period (as
defined below), the Notice Deadline shall be 12:00 P.M., New York City time, on the
Exchange Business Day immediately following such Conversion Date.

4

 

	 	 	 	 	 
	 

	 	Notice of Exercise:
	 	Notwithstanding anything to the contrary in the Equity Definitions,
Dealer shall have no obligation to make any payment or delivery in respect of any
exercise of Options hereunder unless Counterparty notifies Dealer in writing prior to
12:00 P.M., New York City time, on the Notice Deadline in respect of such exercise of
(i) the number of Options being exercised on such Exercise Date, (ii) the scheduled
settlement date under the Indenture for the Convertible Securities converted on the
Conversion Date corresponding to such Exercise Date, (iii) whether such Relevant
Convertible Securities will be settled by Counterparty by delivery of cash, Shares or
a combination of cash and Shares and, if such a combination, the applicable “Specified
Dollar Amount” (as defined in the Indenture as described in the Prospectus Supplement
under “Description of Notes — Conversion Rights — Settlement upon Conversion”) and
(iv) the first “Scheduled Trading Day” of the “Cash Settlement Averaging Period” (each
as defined in the Indenture as described in the Prospectus Supplement under
“Description of Notes — Conversion Rights — Settlement upon Conversion”); provided
that in the case of any exercise of Options hereunder in connection with the
conversion of any Relevant Convertible Securities on any Conversion Date occurring
during the Final Convertibility Period, the contents of such notice shall be as set
forth in clause (i) above and, in the case of any exercise of Options hereunder in
connection with the conversion of any Relevant Convertible Securities occurring on or
after December 15, 2011, Counterparty shall notify Dealer of the settlement method and
the applicable “Specified Dollar Amount” (as defined in the Indenture as described in
the Prospectus Supplement under “Description of Notes — Conversion Rights — Settlement
upon Conversion”) as provided in “Notice of Specified Dollar Amount for Conversions
during the Final Convertibility Period” below. Counterparty acknowledges its
responsibilities under applicable securities laws, and in particular Section 9 and
Section 10(b) of the Exchange Act (as defined below) and the rules and regulations
thereunder, in respect of any election of a settlement method with respect to the
Convertible Securities. For the avoidance of doubt, if Counterparty fails to give
such notice when due in respect of any exercise of Options hereunder, Dealer’s
obligation to make any payment or delivery in respect of such exercise shall be
permanently extinguished, and late notice shall not cure such failure; provided that
notwithstanding the foregoing, such notice (and the related exercise of Options) shall
be effective if given after the Notice Deadline, but prior to (x) in the case of the
Final Convertibility Period, 5:00 P.M., New York City time, on the

5

 

	 	 	 	 	 
	 

	 	 	 	Scheduled Trading Day immediately preceding the
relevant Settlement Date and (y) in all other
cases, 5:00 P.M., New York City time, on the
fifth Exchange Business Day following the Notice
Deadline, in which event, except in the case of
the Final Convertibility Period, the Calculation
Agent shall have the right to adjust the Delivery
Obligation as appropriate to reflect the
additional costs (including, but not limited to,
hedging mismatches and market losses) and
expenses incurred by Dealer in connection with
its hedging activities (including the unwinding
of any hedge position) as a result of Dealer not
having received such notice on or prior to the
Notice Deadline.
	 
	 	 	 	 
	 

	 	Notice of Specified Dollar Amount for
Conversions during the
Final Convertibility Period:
	 	Counterparty shall notify Dealer in writing before
5:00 P.M., New York City time, on the “Scheduled Trading Day” (as defined in the
Indenture as described in the Prospectus Supplement under “Description of Notes —
Conversion Rights — Settlement upon Conversion”) immediately prior to December 15,
2011 of the election by the Counterparty, in accordance with the provision of the
Indenture described in the Prospectus Supplement under “Description of Notes —
Conversion Rights — Settlement upon Conversion,” of the settlement method and, if
applicable, the “Specified Dollar Amount” (as defined in the Indenture as described in
the Prospectus Supplement under “Description of Notes — Conversion Rights — Settlement
upon Conversion”) applicable to the Relevant Convertible Securities with a Conversion
Date occurring on or after December 15, 2011 and ending on, and including, the second
“Scheduled Trading Day” immediately preceding the “Maturity Date” (as defined in the
Indenture as described in the Prospectus Supplement under “Description of Notes —
General”) (the “Final Convertibility Period”). If Counterparty fails timely to
provide such notice, Counterparty shall be deemed to have notified Dealer of
combination settlement with a “Specified Dollar Amount” (as defined in the Indenture
as described in the Prospectus Supplement under “Description of Notes — Conversion
Rights — Settlement upon Conversion”) of USD1,000. Counterparty agrees that it shall
settle any Relevant Convertible Securities with a Conversion Date occurring during the
Final Convertibility Period in the same manner as provided in the Notice of Specified
Dollar Amount for Conversions during the Final Convertibility Period it provides or is
deemed to have provided hereunder.

6

 

	 	 	 	 	 
	 

	 	Dealer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
Giving Notice:
	 	As specified in Section 6(b) below.

Settlement Terms:

	 	 	 	 	 
	 

	 	Settlement Date:
	 	In respect of an Exercise Date occurring on a Conversion Date, the
settlement date for the cash and Shares (if any) to be delivered in respect of the
Relevant Convertible Securities converted on such Conversion Date pursuant to the
section of the Indenture containing the provisions described in the Prospectus
Supplement under “Description of Notes — Conversion Rights — Settlement upon
Conversion”; provided that the Settlement Date will not be prior to the latest of (i)
the date that is one Settlement Cycle following the final day of the relevant Cash
Settlement Averaging Period (as modified herein), (ii) the Exchange Business Day
immediately following the date on which Counterparty gives notice to Dealer of such
Settlement Date prior to 5:00 P.M., New York City time and (iii) the Exchange Business
Day immediately following the date Counterparty provides the Notice of Delivery
Obligation prior to 12:00 P.M., New York City time.
	 
	 	 	 	 
	 

	 	Delivery Obligation:
	 	In lieu of the obligations set forth in Sections 8.1 and 9.1 of the
Equity Definitions, and subject to “Notice of Exercise” above, in respect of an
Exercise Date occurring on a Conversion Date, Dealer will deliver to Counterparty, on
the related Settlement Date, a number of Shares and/or amount of cash in USD equal to
the product of (i) the Applicable Percentage and (ii) the aggregate number of Shares
(and cash in lieu of fractional Shares) that Counterparty would be obligated to
deliver to the holder(s) of the Relevant Convertible Securities converted on such
Conversion Date pursuant to the section of the Indenture containing the provisions
described in the Prospectus Supplement under “Description of Notes — Conversion Rights
— Settlement upon Conversion” and/or the aggregate amount of cash, if any, in excess
of USD1,000 per Convertible Security (in denominations of USD1,000) that Counterparty
would be obligated to deliver to holder(s) pursuant to the section of the Indenture
containing the provisions described in the Prospectus Supplement under “Description of
Notes — Conversion Rights — Settlement upon Conversion” and cash in lieu of fractional
Shares, if any, as if Counterparty had elected to satisfy its conversion obligation in
respect of such Relevant Convertible Securities by the Convertible Security Settlement
Method, notwithstanding any different actual election by Counterparty with respect to
the settlement of such

7

 

	 	 	 	 	 
	 

	 	 	 	Relevant Convertible Securities (the “Convertible
Obligation”); provided that such obligation shall
be determined excluding any Shares and/or cash
that Counterparty is obligated to deliver to
holder(s) of the Relevant Convertible Securities
as a result of any adjustments to the Conversion
Rate pursuant to a Fundamental Change Adjustment
or a Discretionary Adjustment. Notwithstanding
the foregoing, in all events the Delivery
Obligation shall be capped so that the value of
the Delivery Obligation does not exceed the
Applicable Percentage of the value of the
Convertible Obligation (with the Convertible
Obligation determined based on the actual
settlement method elected by Counterparty with
respect to such Relevant Convertible Securities
instead of the Convertible Security Settlement
Method and with the value of any Shares included
in either the Delivery Obligation or such
Convertible Obligation determined by the
Calculation Agent using the VWAP Price on the
last day of the relevant Cash Settlement
Averaging Period (as modified herein)).
	 
	 	 	 	 
	 

	 	Convertible Security Settlement Method:
	 	For any Relevant Convertible Securities, if
Counterparty has notified Dealer in the related Notice of Exercise (or in the Notice
of Specified Dollar Amount for Conversions during the Final Convertibility Period, as
the case may be) that it has elected (or been deemed to have elected) to satisfy its
conversion obligation in respect of such Relevant Convertible Securities in cash or in
a combination of cash and Shares in accordance with the section of the Indenture
containing the provisions described in the Prospectus Supplement under “Description
of Notes — Conversion Rights — Settlement upon Conversion” (a “Cash Election”) with a
“Specified Dollar Amount” (as defined in the Indenture as described in the Prospectus
Supplement under “Description of Notes — Conversion Rights — Settlement upon
Conversion”) of at least USD1,000, the Convertible Security Settlement Method shall be
the settlement method actually so elected or deemed to have been elected by
Counterparty in the related Notice of Exercise or the related Notice of Specified
Dollar Amount, as the case may be, in respect of such Relevant Convertible Securities;
otherwise, the Convertible Security Settlement Method shall (i) assume Counterparty
had made a Cash Election with respect to such Relevant Convertible Securities with a
“Specified Dollar Amount” (as defined in the Indenture as described in the Prospectus
Supplement under “Description of Notes — Conversion Rights — Settlement upon
Conversion”) of USD1,000 per Relevant Convertible Security and (ii) be calculated as
if the relevant “Cash Settlement Averaging Period” consisted of 80 “Trading Days”
(each, as defined in the Indenture as described in the

8

 

	 	 	 	 	 
	 

	 	 	 	Prospectus Supplement under “Description of Notes
— Conversion Rights — Settlement upon
Conversion”) commencing on (x) the third
“Scheduled Trading Day” (as defined in the
Indenture as described in the Prospectus
Supplement under “Description of Notes —
Conversion Rights — Settlement upon Conversion”)
after the Conversion Date for conversions
occurring prior to the Final Convertibility
Period or (y) the 82nd “Scheduled Trading Day”
(as defined in the Indenture as described in the
Prospectus Supplement under “Description of Notes
— Conversion Rights — Settlement upon
Conversion”) prior to the “Maturity Date” (as
defined in the Indenture as described in the
Prospectus Supplement under “Description of Notes
— General”) for conversions occurring during the
Final Convertibility Period.
	 
	 	 	 	 
	 

	 	Notice of Delivery Obligation:
	 	No later than the second Exchange Business Day immediately
following the last day of the relevant Cash Settlement Averaging Period (as modified
herein), Counterparty shall give Dealer notice of the final number of Shares and/or
cash comprising the Convertible Obligation; provided that, with respect to any
Exercise Date occurring during the Final Convertibility Period, Counterparty may
provide Dealer with a single notice of an aggregate number of Shares and/or cash
comprising the Convertible Obligations for all Exercise Dates occurring in such period
(it being understood, for the avoidance of doubt, that the requirement of Counterparty
to deliver such notice shall not limit Counterparty’s obligations with respect to
Notice of Exercise or Notice of Specified Dollar Amount for Conversions during the
Final Convertibility Period.
	 
	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	To the extent Dealer is obligated to deliver Shares
hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the Equity Definitions shall
be modified by excluding any representations therein relating to restrictions,
obligations, limitations or requirements under applicable securities laws arising as a
result of the fact that Counterparty is the Issuer of the Shares) and 9.12 of the
Equity Definitions will be applicable as if “Physical Settlement” applied to the
Transaction.

Adjustments:

	 	 	 	 	 
	 

	 	Method of Adjustment:
	 	Notwithstanding Section 11.2 of the Equity Definitions, upon the
occurrence of any event or condition set forth in the sections of the Indenture
containing the provisions described in the Prospectus Supplement under “Description of
Notes — Conversion Rights — Conversion Rate Adjustments” other than any event or
condition that would result in a Fundamental Change Adjustment or a

9

 

	 	 	 	 	 
	 

	 	 	 	Discretionary Adjustment or a Merger Event (as
defined below) (each an “Adjustment Event”), the
Calculation Agent shall make the corresponding
adjustment in respect of any one or more of the
Number of Options, the Option Entitlement and any
other variable relevant to the exercise,
settlement, payment or other terms of the
Transaction, to the extent an analogous
adjustment is made under the Indenture. Promptly
upon the occurrence of any Adjustment Event
Counterparty shall notify the Calculation Agent
of such Adjustment Event; and once the
adjustments to be made to the terms of the
Indenture and the Convertible Securities in
respect of such Adjustment Event have been
determined, Counterparty shall promptly notify
the Calculation Agent in writing of the details
of such adjustments. The Calculation Agent shall,
promptly after receiving such notice, make any
corresponding adjustments to the terms of the
Transaction and promptly notify Dealer and
Counterparty thereof.

Extraordinary Events:

	 	 	 	 	 
	 

	 	Merger Events:
	 	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event”
means the occurrence of any event or condition set forth in the section of the
Indenture containing the provisions described in the eighth to last paragraph in the
Prospectus Supplement under “Description of Notes — Conversion Rights — Conversion
Rate Adjustments” (i.e., the paragraph commencing with “In the event of: any
reclassification...”).
	 
	 	 	 	 
	 

	 	Consequences of Merger Events:
	 	Notwithstanding Section 12.2 of the Equity Definitions, upon
the occurrence of a Merger Event, the Calculation Agent shall make the corresponding
adjustment in respect of any adjustment under the Indenture to any one or more of the
nature of the Shares, the Number of Options, the Option Entitlement and any other
variable relevant to the exercise, settlement, payment or other terms of the
Transaction, to the extent an analogous adjustment is made under the Indenture in
respect of such Merger Event; provided that such adjustment shall be made without
regard to any adjustment to the Conversion Rate pursuant to a Fundamental Change
Adjustment or a Discretionary Adjustment; and provided further that if, with respect
to a Merger Event, the consideration for the Shares includes (or, at the option of a
holder of Shares, may include) shares (or depositary receipts with respect to shares)
of an entity or person not organized under the laws of the United States, any State
thereof or the District of Columbia, Cancellation and Payment (Calculation Agent
Determination) shall apply.

10

 

	 	 	 	 	 
	 

	 	Notice of Merger Consideration and
Consequences:
	 	Upon the occurrence of a Merger Event that causes the Shares to be converted
into the right to receive more than a single type of consideration (determined based
in part upon any form of stockholder election), Counterparty shall reasonably promptly
(but in any event on or prior to the relevant merger date) notify the Calculation
Agent of (i) the type and amount of consideration that a holder of Shares would have
been entitled to in the case of reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions that cause Shares to be converted into the
right to receive more than a single type of consideration, (ii) the weighted average
of the types and amounts of consideration to be received by the holders of Shares that
affirmatively make such an election (or if no holders of Shares affirmatively make
such an election, the types and amount of consideration actually received by such
holders), and (iii) the details of the adjustment to be made under the Indenture in
respect of such Merger Event.
	 
	 	 	 	 
	 

	 	Nationalization, Insolvency

or Delisting:
	 	Cancellation and Payment (Calculation Agent Determination);
provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity
Definitions, it will also constitute a Delisting if the Exchange is located in the
United States and the Shares are not immediately re-listed, re-traded or re-quoted on
any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective successors); if the Shares are immediately
re-listed, re-traded or re-quoted on any such exchange or quotation system, such
exchange or quotation system shall thereafter be deemed to be the Exchange.
	 
	 	 	 	 
	 

	 	Additional Disruption Events:	 	 
	 
	 	 	 	 
	 

	 	     (a) Change in Law:
	 	Applicable; provided that Section 12.9(a)(ii) of the
Equity Definitions is hereby amended by (i) replacing the phrase “the
interpretation” in the third line thereof with the phrase “or announcement or
statement of the formal or informal interpretation” and (ii) immediately following
the word “Transaction” in clause (X) thereof, adding the phrase “in the manner
contemplated by Hedging Party on the Trade Date.”
	 
	 	 	 	 
	 

	 	     (b) Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	 

	 	     (c) Insolvency Filing:
	 	Applicable
	 
	 	 	 	 
	 

	 	     (d) Hedging Disruption:
	 	Applicable
	 
	 	 	 	 
	 

	 	     (e) Increased Cost of Hedging:
	 	Applicable
	 
	 	 	 	 
	 

	 	Hedging Party:
	 	Dealer for all applicable Additional Disruption Events
	 
	 	 	 	 
	 

	 	Determining Party:
	 	Dealer for all applicable Additional Disruption Events

11

 

	 	 	 	 	 
	 

	 	Non-Reliance:
	 	Applicable
	 
	 	 	 	 
	 

	 	Agreements and Acknowledgments
Regarding Hedging Activities:
	 	Applicable
	 
	 	 	 	 
	 

	 	Additional Acknowledgments:
	 	Applicable
	 
	 

	 	Calculation Agent:
	 	Dealer. All determinations made by the Calculation Agent shall
be made in good faith and in a commercially reasonable manner. Following any
calculation by the Calculation Agent hereunder, upon a prior written request by
Counterparty, the Calculation Agent will provide to Counterparty by e-mail to the
e-mail address provided by Counterparty in such prior written request a report (in a
commonly used file format for the storage and manipulation of financial data)
displaying in reasonable detail the basis for such calculation, it being understood
that the Calculation Agent shall not be obligated to disclose any proprietary models
used by it for such calculation. No transferee of Dealer with respect to any Options
in accordance with the terms of this Confirmation shall act as Calculation Agent with
respect to such transferred Options without the prior consent of Counterparty, such
consent not to be unreasonably withheld or delayed.

Account Details:

Dealer Payment Instructions:

Bank of America

New York, NY

SWIFT: BOFAUS65

Bank Routing: 026-009-593

Account Name: Bank of America

Account No. : 0012333-34172

Counterparty Payment Instructions:

To be provided by Counterparty.

Offices:

The Office of Dealer for the Transaction is:

Bank of America, N.A.

c/o Banc of America Securities LLC

Bank of America Tower at One Bryant Park

New York, NY 10036

The Office of Counterparty for the Transaction is:

Inapplicable. Counterparty is not a Multibranch Party.

Notices: For purposes of this Confirmation:

	(a)	 	Address for notices or communications to Counterparty:

	 	 	 	 	 
	 

	 	To:
	 	BorgWarner Inc.
	 

	 	 	 	3850 Hamlin Road
	 

	 	 	 	Auburn Hills, MI 48326

12

 

	 	 	 	 	 
	 

	 	Attn:
	 	Anthony D. Hensel,
	 

	 	 	 	Vice President and Treasurer
	 

	 	Telephone:
	 	248-754-0861
	 

	 	Facsimile:
	 	248-754-9069

	(b)	 	Address for notices or communications to Dealer:

	 	 	 	 	 
	 

	 	To:
	 	Bank of America, N.A. 

c/o Banc of America Securities LLC  

Bank of America Tower at One Bryant Park  

New York, NY 10036
	 

	 	Attn:
	 	John Servidio
	 

	 	Telephone:
	 	646-855-7127
	 

	 	Facsimile:
	 	212-230-8610

     Representations, Warranties and Agreements:

     (a) In addition to the representations and warranties in the Agreement and those contained
elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with,
Dealer as follows:

     (i) On the Trade Date, and as of the date of any election by Counterparty of the Share
Termination Alternative under (and as defined in) Section 8(c) below, none of Counterparty
and its executive officers and directors is aware of any material nonpublic information
regarding Counterparty or the Shares. On the Trade Date, all reports and other documents
filed by Counterparty with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole
(with the more recent such reports and documents deemed to amend inconsistent statements
contained in any earlier such reports and documents), do not contain any untrue statement
of a material fact or any omission of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in which they
were made, not misleading.

     (ii) (A) On the Trade Date, the Shares or securities that are convertible into, or
exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted
period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”)
and (B) Counterparty shall not engage in any “distribution,” as such term is defined in
Regulation M, other than a distribution meeting the requirements of the exceptions set
forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange
Business Day immediately following the Trade Date.

     (iii) Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that neither Dealer nor any of its affiliates is making any
representations or warranties or taking a position or expressing any view with respect to
the treatment of the Transaction under any accounting standards, including FASB Statements
128, 133 (as amended), 149 or 150, EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any
successor issue statements) or under the FASB’s Liabilities & Equity Project.

     (iv) Without limiting the generality of Section 3(a)(iii) of the Agreement, the
Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

     (v) Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of
Counterparty’s board of directors authorizing the Transaction and such other certificate or
certificates as Dealer shall reasonably request.

     (vi) Counterparty is not entering into this Confirmation to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable for
Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for Shares) or to otherwise violate the Exchange
Act.

13

 

     (vii) Counterparty is not, and after giving effect to the transactions contemplated
hereby will not be, required to register as, an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.

     (viii) On each of the Trade Date, the Premium Payment Date and the Additional Premium
Payment Date, if any, Counterparty is not “insolvent” (as such term is defined under
Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the
“Bankruptcy Code”)) and Counterparty would be able to purchase the Shares hereunder in
compliance with the laws of the jurisdiction of Counterparty’s incorporation.

     (ix) Counterparty understands no obligations of Dealer to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not be
guaranteed by any governmental agency.

     (b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract
participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

     (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to
it is intended to be exempt from registration under the Securities Act of 1933, as amended (the
“Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and
warrants to Dealer that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment and its
investments in and liabilities in respect of the Transaction, which it understands are not readily
marketable, are not disproportionate to its net worth, and it is able to bear any loss in
connection with the Transaction, including the loss of its entire investment in the Transaction,
(ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under
the Securities Act, (iii) it is entering into the Transaction for its own account and without a
view to the distribution or resale thereof, (iv) the assignment, transfer or other disposition of
the Transaction has not been and will not be registered under the Securities Act and is restricted
under this Confirmation, the Securities Act and state securities laws, and (v) its financial
condition is such that it has no need for liquidity with respect to its investment in the
Transaction and no need to dispose of any portion thereof to satisfy any existing or contemplated
undertaking or indebtedness and is capable of assessing the merits of and understanding (on its own
behalf or through independent professional advice), and understands and accepts, the terms,
conditions and risks of the Transaction.

     (d) Subject to Section 8(j): Each of Dealer and Counterparty agrees and acknowledges that
Dealer is a “financial institution,” “swap participant” and “financial participant” within the
meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto
further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such
term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and
delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other
transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement
payment” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as
such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment
and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or
“other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a
“transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer is
entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17),
362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

     (e) Counterparty shall deliver to Dealer (i) an incumbency certificate, dated as of the Trade
Date, of Counterparty in customary form and (ii) an opinion of counsel, dated as of the Trade Date
and reasonably acceptable to Dealer in form and substance, with respect to due incorporation,
existence and good standing of the Counterparty in Delaware, its qualifications as a foreign
corporation and good standing in Michigan, the due authorization, execution and delivery of the
Confirmation, and the absence of conflict of the execution and delivery of the Confirmation with
any material agreement required to be filed as any exhibit to the Counterparty’s Annual Report on
Form 10-K and the Counterparty’s charter documents.

14

 

     (f) Each party acknowledges and agrees to be bound by the Conduct Rules of the National
Association of Securities Dealers, Inc. applicable to transactions in options, and further agrees
not to violate the position and exercise limits set forth therein.

     8. Other Provisions:

     (a) Right to Extend. Dealer may postpone any Exercise Date or Settlement Date or any other
date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in
which event the Calculation Agent shall make appropriate commercially reasonable adjustments to the
Delivery Obligation), if Dealer determines, in its reasonable discretion, that such extension is
reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder
in light of existing liquidity conditions in the cash market, the stock borrow market or other
relevant market or to enable Dealer to effect purchases of Shares in connection with its hedging,
hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty
or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or
self-regulatory requirements, or with related policies and procedures applicable to Dealer.

     (b) Additional Termination Events. The occurrence of (i) an “Event of Default” with respect
to Counterparty under the terms of the Convertible Securities as set forth in the Indenture as
described in the Prospectus Supplement under “Description of Notes — Events of Default,” or (ii) an
Amendment Event shall be an Additional Termination Event with respect to which the Transaction is
the sole Affected Transaction and Counterparty is the sole Affected Party, and Dealer shall be the
party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and
to determine the amount payable pursuant to Section 6(e) of the Agreement.

     “Amendment Event” means that Counterparty amends, modifies, supplements or obtains a waiver in
respect of any term of the Indenture or the Convertible Securities governing the principal amount,
coupon, maturity, a repurchase obligation of Counterparty, a redemption right of Counterparty, any
term relating to conversion of the Convertible Securities (including changes to the conversion
price, conversion settlement dates or conversion conditions), or any term that would require
consent of the holders of not less than 100% of the principal amount of the Convertible Securities
to amend, in each case without the prior consent of Dealer.

     (c) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary
Events. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events”
above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an
Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or
proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii)
of the Agreement (except in the event of an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected Party, that resulted
from an event or events within Counterparty’s control) (a “Payment Obligation”), Counterparty shall
have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by
the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to
Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 8:00 A.M. and
4:00 P.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date
or date of cancellation or termination in respect of an Additional Disruption Event, as applicable
(“Notice of Share Termination”); provided that if Counterparty does not require Dealer to satisfy
its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its
sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative,
notwithstanding Counterparty’s failure to elect or election to the contrary. Upon such Notice of
Share Termination or such Dealer election, the following provisions shall apply on the Scheduled
Trading Day immediately following the relevant merger date, Announcement Date, Early Termination
Date or date of cancellation or termination in respect of an Additional Disruption Event, as
applicable:

	 	 	 
	Share Termination Alternative:

	 	Applicable and means that Dealer shall deliver to Counterparty the
Share Termination Delivery Property on the date on which the Payment Obligation would
otherwise be due pursuant to “Consequences of Merger Events” above, Section 12.7 or 12.9 of
the Equity Definitions

15

 

	 	 	 
	 

	 	or Section 6(d)(ii) of the Agreement, as applicable, or such later date as the
Calculation Agent may reasonably determine (the “Share Termination Payment
Date”), in satisfaction of the Payment Obligation.
	 
	 	 
	Share Termination Delivery
Property:

	 	A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
Price. The Calculation Agent shall
adjust the Share Termination Delivery
Property by replacing any fractional
portion of a security therein with an
amount of cash equal to the value of such
fractional security based on the values
used to calculate the Share Termination
Unit Price.
	 
	 	 
	Share Termination Unit Price:

	 	The value of property contained in one
Share Termination Delivery Unit on the
date such Share Termination Delivery
Units are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent in
its discretion by commercially reasonable
means and notified by the Calculation
Agent to Dealer at the time of
notification of the Payment Obligation.
	 
	 	 
	Share Termination Delivery Unit:

	 	In the case of a Termination Event, Event
of Default, Delisting or Additional
Disruption Event, one Share or, in the
case of an Insolvency, Nationalization or
Merger Event, a unit consisting of the
number or amount of each type of property
received by a holder of one Share
(without consideration of any requirement
to pay cash or other consideration in
lieu of fractional amounts of any
securities) in such Insolvency,
Nationalization or Merger Event. If such
Insolvency, Nationalization or Merger
Event involves a choice of consideration
to be received by holders, such holder
shall be deemed to have elected to
receive the maximum possible amount of
cash.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other applicable provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections
9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in
Section 9.11 of the Equity Definitions
shall be modified by excluding any
representations therein relating to
restrictions, obligations, limitations or
requirements under applicable securities
laws arising as a result of the fact that
Counterparty is the Issuer of the Shares)
and 9.12 of the Equity Definitions will
be applicable as if “Physical Settlement”
applied to the Transaction, except that
all references to “Shares” shall be read
as references to “Share Termination
Delivery Units.”

     (d) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Dealer or Counterparty, based on the advice of counsel, the Shares (the
“Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the
Transaction cannot be sold in the U.S. public market by Dealer without registration under the
Securities Act, Counterparty shall, at its election within two Exchange Business Days after a
party’s written notice to the other party of such judgment: (i) in order to allow Dealer to sell
the Hedge Shares in a registered offering, make available to Dealer an effective registration
statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an
agreement, in form and substance satisfactory to Dealer, substantially in the form of an
underwriting agreement for underwritten follow-on offerings of equity securities of companies of
comparable size, maturity and lines of business, (B) provide accountant’s “comfort” letters in
customary form for underwritten follow-on offerings of equity securities, (C) provide disclosure
opinions of nationally recognized outside counsel to Counterparty as are customarily requested in
connection with underwritten follow-on offerings of equity securities of companies of comparable
size, maturity and lines of business, (D) provide other customary opinions, certificates and
closing documents customary in form for

16

 

underwritten follow-on offerings of equity securities of companies of comparable size,
maturity and lines of business and (E) afford Dealer a reasonable opportunity to conduct a “due
diligence” investigation with respect to Counterparty customary in scope for underwritten follow-on
offerings of equity securities of companies of comparable size, maturity and lines of business;
provided, however, that if Dealer, in its sole commercially reasonable discretion, is not satisfied
with access to due diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above, then clause (ii) or
clause (iii) of this Section 8(d) shall apply at the election of Counterparty, provided that with
respect to such registered offering Dealer has given the Counterparty reasonable notice of its
determination and provided the Counterparty with reasonable opportunity to satisfy Dealer’s
concerns; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into
a private placement agreement substantially similar to private placement purchase agreements
customary for private placements of equity securities of companies of comparable size, maturity and
lines of business, in form and substance reasonably satisfactory to Dealer, including customary
representations, covenants, blue sky and other governmental filings and/or registrations,
indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares
from Dealer), opinions and certificates and such other documentation as is customary for private
placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent
shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable
judgment, to compensate Dealer for any discount from the public market price of the Shares incurred
on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer
at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. For the
avoidance of doubt, unless the Counterparty elects to repurchase the Hedge Shares pursuant to
clause (iii) of this Section 8(d), nothing in this Confirmation shall be interpreted as requiring
the Counterparty to repurchase the Hedge Shares and under no circumstances shall the Counterparty
be required to repurchase the Hedge Shares. “VWAP Price” means, on any Exchange Business Day, the
per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on
Bloomberg Screen BWA.N <equity> AQR (or any successor thereto) in respect of the period from
9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such
volume-weighted average price is unavailable, the market value of one Share on such Exchange
Business Day, as determined by the Calculation Agent using a volume-weighted method).

     (e) Repurchase and Conversion Rate Adjustment Notices. Counterparty shall, at least two
Exchange Business Days prior to any day on which Counterparty effects any repurchase of Shares or
consummates or otherwise engages in any transaction or event (a “Conversion Rate Adjustment Event”)
that could reasonably be expected to lead to an increase in the Conversion Rate, give Dealer a
written notice of such repurchase or Conversion Rate Adjustment Event (a “Repurchase Notice”) on
such day if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage
would reasonably be expected to be greater by 0.5% than the Notice Percentage included in the
immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice,
greater than the Notice Percentage as of the date hereof). The “Notice Percentage” as of any day
is the fraction, expressed as a percentage, the numerator of which is the number of Shares
underlying all Convertible Securities outstanding on such day and the denominator of which is the
number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer
with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then, to the
extent permitted by applicable law, Counterparty agrees to indemnify and hold harmless Dealer, its
affiliates and their respective directors, officers, employees, agents and controlling persons
(Dealer and each such person being an “Indemnified Party”) from and against any and all losses,
claims, damages and liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Party is subject under applicable securities laws, including without limitation,
Section 16 of the Exchange Act or under any state or federal law, regulation or regulatory order,
as a result of such failure. If for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall
contribute, to the maximum extent permitted by law, to the amount paid or payable by the
Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty
will reimburse any Indemnified Party for any reasonable expenses (including reasonable counsel fees
and expenses) as they are incurred (after notice to Counterparty) in connection with the
investigation of, preparation for or defense or settlement of any pending or threatened claim or
any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party
thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on
behalf of

17

 

Counterparty. This indemnity shall survive the completion of the Transaction contemplated by
this Confirmation and any assignment and delegation of the Transaction made pursuant to this
Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

     (f) Transfer and Assignment. Either party may transfer any of its rights or obligations under
the Transaction with the prior written consent of the non-transferring party, such consent not to
be unreasonably withheld or delayed; provided that Dealer may transfer or assign without any
consent of Counterparty its rights and obligations hereunder, in whole or in part, to any person,
or any person whose obligations would be guaranteed by a person, in either case, of credit quality
equivalent to Dealer’s (or its guarantor’s), but in no event with a rating for its long term,
unsecured and unsubordinated indebtedness of less than A- by Standard and Poor’s Ratings Services
or its successor (“S&P”), and less than A3 by Moody’s Investors Service, Inc. or its successor
(“Moody’s”), or, if either S&P or Moody’s ceases to rate such debt, less than an equivalent rating
by a substitute agency mutually agreed by Counterparty and Dealer. Dealer shall as soon as
reasonably practicable notify Counterparty of any such transfer or assignment. If at any time at
which (1) the Equity Percentage exceeds 8.0% or (2) Dealer, Dealer Group (as defined below) or any
person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer,
Dealer Group or any such person, a “Dealer Person”) under Section 203 of the Delaware General
Corporation Law (the “DGCL Takeover Statute”) or other federal, state or local regulations or
regulatory orders applicable to ownership of Shares (“Applicable Laws”), owns, beneficially owns,
constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of
ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to
reporting or registration obligations or other requirements (including obtaining prior approval by
a state or federal regulator) of a Dealer Person under Applicable Laws (including, without
limitation, “interested stockholder” or “acquiring person” status under the DGCL Takeover Statute)
and with respect to which such requirements have not been met or the relevant approval has not been
received minus (y) 1% of the number of Shares outstanding on the date of determination (either such
condition described in clause (1) or (2), an “Excess Ownership Position”), Dealer, in its
discretion, is unable to effect a transfer or assignment to a third party after its commercially
reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such
that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day
as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the
Transaction, such that an Equity Ownership Position no longer exists following such partial
termination. In the event that Dealer so designates an Early Termination Date with respect to a
portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement and
Section 8(c) of this Confirmation as if (i) an Early Termination Date had been designated in
respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii)
Counterparty were the sole Affected Party with respect to such partial termination, (iii) such
portion of the Transaction were the only Terminated Transaction and (iv) Dealer were the party
entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to
determine the amount payable pursuant to Section 6(e) of the Agreement. The “Equity Percentage” as
of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of
Shares that Dealer and any of its affiliates subject to aggregation with Dealer for purposes of the
“beneficial ownership”

18

 

test under Section 13 of the Exchange Act and all persons who may form a “group” (within the
meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer (collectively, “Dealer Group”)
“beneficially own” (within the meaning of Section 13 of the Exchange Act) without duplication on
such day and (B) the denominator of which is the number of Shares outstanding on such day. In the
case of a transfer or assignment by Counterparty of its rights and obligations hereunder and under
the Agreement, in whole or in part (any such Options so transferred or assigned, the “Transfer
Options”), to any party, withholding of such consent by Dealer shall not be considered unreasonable
if such transfer or assignment does not meet the following reasonable conditions that Dealer may
impose:

     (A) With respect to any Transfer Options, Counterparty shall not be released from its
notice and indemnification obligations pursuant to Section 8(e) or any obligations under
Section 2 (regarding Extraordinary Events) or 8(d) of this Confirmation;

     (B) Any Transfer Options shall only be transferred or assigned to a third party that
is a U.S. person (as defined in the Internal Revenue Code of 1986, as amended);

     (C) Such transfer or assignment shall be effected on terms, including any reasonable
undertakings by such third party (including, but not limited to, undertakings with respect
to compliance with applicable securities laws in a manner that, in the reasonable judgment
of Dealer, will not expose Dealer to material risks under applicable securities laws) and
execution of any documentation and delivery of legal opinions with respect to securities
laws and other matters by such third party and Counterparty as are requested and
reasonably satisfactory to Dealer;

     (D) Dealer will not, as a result of such transfer and assignment, be required to pay
the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement
greater than an amount that Dealer would have been required to pay to Counterparty in the
absence of such transfer and assignment;

     (E) An Event of Default, Potential Event of Default or Termination Event will not
occur as a result of such transfer and assignment;

     (F) Without limiting the generality of clause (B), Counterparty shall have caused the
transferee to make such Payee Tax Representations and to provide such tax documentation as
may be reasonably requested by Dealer to permit Dealer to determine that results described
in clauses (D) and (E) will not occur upon or after such transfer and assignment; and

     (G) Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Dealer in connection with such transfer or
assignment.

     (g) Staggered Settlement. Dealer may, by notice to Counterparty on or prior to any Settlement
Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a
“Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows:

19

 

     (i) in such notice, Dealer will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but
not prior to the beginning of the related Cash Settlement Averaging Period (as modified
herein)) or delivery times and how it will allocate the Shares it is required to deliver
under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times;
and

     (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder
on all such Staggered Settlement Dates and delivery times will equal the number of Shares
that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

     (h) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Counterparty and each of its employees, representatives, or other agents may disclose
to any and all persons, without limitation of any kind, the tax treatment and tax structure of the
Transaction and all materials of any kind (including opinions or other tax analyses) that are
provided to Counterparty relating to such tax treatment and tax structure.

     (i) No Netting and Set-off. The provisions of Section 2(c) of the Agreement shall not apply
to the Transaction. Each party waives any and all rights it may have to set-off payment
obligations it owes to the other party under the Transaction against any payment obligations owed
to it by the other party, whether arising under the Agreement, under any other agreement between
parties hereto, by operation of law or otherwise.

     (j) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to
convey to it rights with respect to the Transaction that are senior to the claims of common
stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties
agree that the preceding sentence shall not apply at any time other than during Counterparty’s
bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations
under this Confirmation or the Agreement.

     (k) Early Unwind. In the event the sale by Counterparty of the Convertible Securities is not
consummated pursuant to the Underwriting Agreement for any reason by the close of business in New
York on April 9, 2009 (or such later date as agreed upon by the parties, which in no event shall be
later than five business days after April 9, 2009) (April 9, 2009 or such later date being the
“Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the
Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer
and Counterparty hereunder shall be cancelled and terminated and Counterparty shall pay to Dealer,
other than in cases involving a breach of the Underwriting Agreement by the underwriters, an amount
in cash equal to the aggregate amount of reasonable costs and expenses relating to the unwinding of
Dealer’s hedging activities in respect of the Transaction (including market losses incurred in
reselling any Shares purchased by Dealer or its affiliates in connection with such hedging
activities, unless Counterparty agrees to purchase any such Shares at the cost at which Dealer
purchased such Shares). Following such termination and cancellation and payment, each party shall
be released and discharged by the other party from, and agrees not to make any claim against the
other party with respect to, any obligations or liabilities of either party arising out of, and to
be performed in connection with, the Transaction either prior to or after the Early Unwind Date.
Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and
following the payment referred to above, all obligations with respect to the Transaction shall be
deemed fully and finally discharged.

     (l) Payments by Counterparty upon Early Termination. The parties hereby agree that,
notwithstanding anything to the contrary herein, in the Definitions or in the Agreement, following
the payment of the Premium and the Additional Premium, if any, in the event that an Early
Termination Date (whether as a result of an Event of Default or an Amendment Event or a Termination
Event) occurs or is designated with respect to the Transaction or the Transaction is terminated or
cancelled pursuant to Article 12 of the Equity Definitions and, as a result, Counterparty would owe
to Dealer an amount calculated under Section 6(e) of the Agreement or Article 12 of the Equity
Definitions, such amount shall be deemed to be zero.

20

 

     (m) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON
ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS
AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

     (n) Governing Law; Jurisdiction. THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING IN
CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF
LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS
RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT
FORUM WITH RESPECT TO, THESE COURTS.

     (o) Amendment. This Confirmation and the Agreement may not be modified, amended or
supplemented, except in a written instrument signed by Counterparty and Dealer.

     (p) Counterparts. This Confirmation may be executed in several counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same instrument.

     (q) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other
securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell,
receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in
respect of the Transaction and any such designee may assume such obligations. Dealer shall be
discharged of its obligations to Counterparty to the extent of any such performance.

     (r) Delivery of Cash. For the avoidance of doubt, nothing in this Confirmation shall be
interpreted as requiring the Counterparty to deliver cash in respect of the settlement of the
Transaction, except in circumstances where the required cash settlement thereof is permitted for
classification of the contract as equity by EITF 00-19 as in effect on the relevant Settlement
Date.

21

 

	 	 	 	 	 
	 

	 	 	 	Counterparty hereby agrees (a) to check this
Confirmation carefully and immediately upon receipt
so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the
foregoing (in the exact form provided by Dealer)
correctly sets forth the terms of the agreement
between Dealer and Counterparty with respect to the
Transaction, by manually signing this Confirmation or
this page hereof as evidence of agreement to such
terms and providing the other information requested
herein and immediately returning an executed copy to
us.
	 
	 	 	 	 
	 

	 	 	 	Yours faithfully,

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

	 	 	 	 	 
	Agreed and Accepted By:	 	 
	 
	 	 	 	 
	BORGWARNER INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

1

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