Document:

exv4wbwii

 

Exhibit 4.b.ii

 

MASCO CORPORATION

Zero Coupon Convertible Senior Notes Due 2031

 

First Supplemental Indenture

Dated as of July 20, 2001

 

BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION

Trustee

 

 

 

ARTICLE ONE

Scope of Supplemental Indenture; General

ARTICLE TWO

Certain Definitions

ARTICLE THREE

Covenants

	 	 	 	 	 	 	 	 	 
	Section 3.01.	 	Reports to Holders of Notes
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE FOUR

	 	 	 	 	 
	 	 	 	 
	REDEMPTION AND CONVERSIONS

	 	 	 	 	 
	 	 	 	 
	Section 4.01.	 	Optional Redemption by the Company
	 	 	11	 
	Section 4.02.	 	Purchase at Option of the Holder upon a Fundamental Change
	 	 	13	 
	Section 4.03.	 	Purchase of Notes at the Option of the Holder; Payment of Purchase Price or Fundamental
Change Purchase Price in Stock
	 	 	14	 
	Section 4.04.	 	Further Conditions for Purchase at the Option of Holders upon a Fundamental Change and
Purchase of Notes at the Option of
the Holder
	 	 	22	 
	Section 4.05.	 	Conversion of Notes
	 	 	25	 
	Section 4.06.	 	Adjustments to Conversion Rate
	 	 	27	 
	Section 4.07.	 	Miscellaneous Provisions Relating to Conversion
	 	 	32	 
	Section 4.08.	 	Optional Conversion to Semi-Annual Cash Pay Note upon Tax Event
	 	 	36	 
	Section 4.09.	 	Calculation of Original Issue Discount for U.S. Federal Income Tax Purposes
	 	 	36	 
	Section 4.10.	 	Payment of Interest
	 	 	37	 

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	ARTICLE FIVE

	 
	Miscellaneous

	 

	Section 5.01.	 	No Adverse Interpretation of Other Agreements
	 	 	39	 
	Section 5.02.	 	No Recourse Against Others
	 	 	39	 
	Section 5.03.	 	Successors and Assigns
	 	 	39	 
	Section 5.04.	 	Duplicate Originals
	 	 	39	 
	Section 5.05.	 	Severability
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	Exhibit A	 	Form of Note	 	 	 	 

Projected Payment Schedule

-ii-

 

          FIRST SUPPLEMENTAL INDENTURE dated as of July 20, 2001 (“Supplemental Indenture”), to
the Indenture dated as of February 12, 2001 (as amended, modified or supplemented from time to time
in accordance therewith, the “Indenture”), by and among MASCO CORPORATION., a Delaware
corporation (the “Company”) and BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION as trustee
(the “Trustee”).

          Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the holders of Notes (as defined herein):

          WHEREAS, the Company and the Trustee have duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of senior debt securities (the
“Securities”) to be issued in one or more series as in the Indenture provided;

          WHEREAS, the Company desires and has requested the Trustee to join it in the execution and
delivery of this Supplemental Indenture in order to establish and provide for the issuance by the
Company of a series of Securities designated as its Zero Coupon Convertible Senior Notes Due 2031
in the aggregate principal amount at maturity of up to $1,901,360,000, substantially in the form
attached hereto as Exhibit A (the “Notes”), on the terms set forth herein;

          WHEREAS, Section 2.01 of the Indenture provides that a supplemental indenture may be entered
into by the Company and the Trustee for such purpose provided certain conditions are met;

          WHEREAS, the conditions set forth in the Indenture for the execution and delivery of this
Supplemental Indenture have been complied with; and

          WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the
Company and the Trustee, in accordance with its terms, and a valid amendment of, and supplement to,
the Indenture have been done;

          NOW, THEREFORE:

          In consideration of the premises and the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee, for the equal and ratable benefit of
the holders, that the Indenture is supplemented and amended, to the extent expressed herein, as
follows:

 

 

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ARTICLE ONE

Scope of Supplemental Indenture; General

          The changes, modifications and supplements to the Indenture effected by this Supplemental
Indenture shall be applicable only with respect to, and govern the terms of, the Notes, which shall
be limited in aggregate principal amount to $1,654,183,000 (or up to $1,901,360,000 if the
over-allotment option is exercised pursuant to the Underwriting Agreement) in one series, and shall
not apply to any other Securities that may be issued under the Indenture unless a supplemental
indenture with respect to such other Securities specifically incorporates such changes,
modifications and supplements. Pursuant to this Supplemental Indenture, there is hereby created
and designated a series of Securities under the Indenture entitled “Zero Coupon Convertible Senior
Notes Due 2031.” The Notes shall be in the form of Exhibit A hereto.

          The aggregate Principal Amount of the Notes shall be payable on the Final Maturity Date unless
the Accreted Value or the Restated Principal Amount has been earlier repaid or the Notes have been
converted in accordance with this Supplemental Indenture.

          The Notes shall be issued at an Issue Price of $394.45 per $1,000 Principal Amount. Except as
provided for in Sections 4.08 and 4.10 and paragraphs 1, 5 and 10 of the Notes, there shall be no
periodic payments of interest on the Notes. The calculation of the Accreted Value in the period
during which each Note remains outstanding shall be on a semi-annual bond equivalent basis using a
360-day year composed of twelve 30-day months, and such accrual shall commence on the Issue Date of
the Notes. In the event of the maturity, conversion, purchase by the Company at the option of a
Holder or redemption of a Note, Accreted Value, if any, shall cease to accrue on such Note, under
the terms and subject to the conditions of this Supplemental Indenture.

          The Notes shall be payable and may be presented for payment, purchase, conversion,
registration of transfer and exchange, without service charge, at the office of the Company
maintained for such purpose in New York, New York, which shall initially be the office or agency of
the Trustee.

ARTICLE TWO

Certain Definitions

          The following terms have the meanings set forth below in this Supplemental Indenture.
Capitalized terms used but not defined herein have the meanings ascribed to such

 

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terms in the
Indenture. To the extent terms defined herein differ from the Indenture, the terms defined herein
will govern.

          “Accreted Conversion Price” as of any date means the price determined by dividing (x)
the Accreted Value at such date, by (y) the Conversion Rate at such date.

          “Accreted Value” means, at any date of determination, (1) prior to such time as the
Notes are converted to Cash Pay Notes, the sum of (x) the Issue Price of the Notes and (y) the
portion of the excess of the Principal Amount of the Notes over the Issue Price which shall have
been amortized by the Company in accordance with GAAP through such date, such amount to be so
amortized on a daily basis and compounded semi-annually on each July 20 and January 20 at the rate
of 3.125% per annum from the Issue Date through the date of determination computed on the basis of
a 360-day year of twelve 30-day months and (2) at or after such time as the Notes are converted to
Cash Pay Notes, the Restated Principal Amount.

          “Affiliate” means, when used with reference to a specified Person, any Person directly
or indirectly controlling or controlled by or under direct or indirect common control with the
Person specified.

          “Bid Agent” means a bid solicitation agent appointed by the Company to act in such
capacity pursuant to paragraph 3 of the Notes.

          “Capital Stock” means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of or in such Person’s capital stock or
other equity interests, and options, rights or warrants to purchase such capital stock or other
equity interests, whether now outstanding or issued after the Issue Date, including, without
limitation, all Preferred Stock.

          “Cash” has the meaning provided in Section 4.03.

          “Cash Dividends” has the meaning assigned thereto in Exhibit A hereto.

          “Cash Pay Notes” means the Notes, after they have been converted to semi-annual cash
pay Notes following the occurrence of a Tax Event.

          “Common Equity” of any Person means Capital Stock of such Person that is generally
entitled to (i) vote in the election of directors of such Person or (ii) if such Person is not a
corporation, 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 the common stock of the Company, par value $1.00 per share, as it
exists on the Issue Date and any shares of any class or classes of capital stock

 

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of the Company
resulting from any reclassification or reclassifications thereof and which 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 which are not subject to redemption by the Company; provided, however, that if at
any time there shall be more than one such resulting class, the shares of each such class then so
issuable on conversion of Notes shall be substantially in the proportion which 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.

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

          “Company Notice” has the meaning provided in Section 4.03.

          “Company Notice Date” has the meaning provided in Section 4.03.

          “Continuing Director” means a director who either was a member of the Board of
Directors of the Company on the date of this Supplemental Indenture or who became a director of the
Company subsequent to such date and whose election, or nomination for election by the Company’s
stockholders, was duly approved by a majority of the Continuing Directors on the Board of Directors
of the Company 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 of the Company in which
such individual is named as nominee for director.

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

          “Conversion Agent” means the office or agency designated by the Company where Notes
may be presented for conversion.

          “Conversion Date” has the meaning provided in Section 4.05.

          “Conversion Rate” has the meaning provided in Section 4.05.

 

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

          “Defaulted Interest” has the meaning specified in Section 4.10.

          “Distributed Securities” has the meaning provided in Section 4.06.

          “Dollars” and “$” mean United States Dollars.

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

          “Expiration Time” has the meaning provided in Section 4.06.

          “Fair Market Value” means, with respect to any asset, the price (after taking into
account any liabilities relating to such assets) that would be negotiated in an arm’s-length
transaction for cash between a willing seller and a willing and able buyer, neither of which is
under any compulsion to complete the transaction, as such price is determined in good faith by the
Board of Directors of the Company or a duly authorized committee thereof, as evidenced by a
resolution of such Board or committee.

          “Final Maturity” or “Final Maturity Date” means July 20, 2031.

          “Five-Day Period” has the meaning assigned thereto in Exhibit A hereto.

          “Fundamental Change” shall be deemed to have occurred at such time after the Issue
Date as:

     (1) 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 to
any Person (other than a Subsidiary); provided, however, that a transaction
where the Holders of all classes of Common Equity of the Company immediately prior to such
transaction own, directly or indirectly, more than 50% of all classes of Common Equity of
such Person immediately after such transaction shall not be a Fundamental Change;

     (2) a “person” or “group” (within the meaning of Section 13(d) of the Exchange Act (other
than the Company)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act) of Common Equity of the Company representing more than 50% of the voting power
of the Common Equity of the Company;

 

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     (3) Continuing Directors cease to constitute at least a majority of the Board of Directors
of the Company; or

     (4) the stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; provided, however, that a liquidation or
dissolution of the Company which is part of a transaction that does not constitute a
Fundamental Change under the proviso contained in clause (1) above shall not constitute a
Fundamental Change.

A Fundamental Change will not be deemed to have occurred, however, if either:

     (I) the Sale Price for (a) any 10 Trading Days within the 20 consecutive Trading Days ending
immediately before the Fundamental Change, and (b) at least five Trading Days within the 10
consecutive Trading Days ending immediately before the Fundamental Change shall equal or exceed
105% of the Accreted Value divided by the Conversion Rate, or

     (II) both

     (a) at least 90% of the consideration (excluding cash payments for fractional shares)
in the transaction or transactions constituting the Fundamental Change consists of shares of
Common Equity with full voting rights traded on a national securities exchange or quoted on
the Nasdaq Stock Market (or which will be so traded or quoted when issued or exchanged in
connection with such Fundamental Change) (such securities being referred to as “Publicly
Traded Securities”) and as a result of such transaction or transactions the Notes become
convertible solely into such Publicly Traded Securities and

     (b) the consideration in the transaction or transactions constituting the Fundamental
Change consists of cash, Publicly Traded Securities or a combination of cash and Publicly
Traded Securities with an aggregate fair market value (which, in the case of Publicly Traded
Securities, shall be equal to the average closing price of such Publicly Traded Securities
during the five consecutive Trading Days commencing with the Trading Day following
consummation of the transaction or transactions constituting the Fundamental Change) of at
least 105% of the Accreted Conversion Price.

          “Fundamental Change Purchase Date” has the meaning provided in Section 4.02(a).

          “Fundamental Change Purchase Notice” has the meaning provided in Section 4.02(b).

 

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          “Fundamental Change Purchase Price” has the meaning provided in Section 4.02(a).

          “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United States, as in
effect on the date of this Supplemental Indenture.

          “Holder” means the Person in whose name a Note is registered in the books of the
Registrar for the Notes.

          “Indenture” has the meaning provided in the Recitals.

          “Interest Payment Date” has the meaning specified in Section 4.08.

          “Investment Grade” shall mean BBB- or higher by S&P or Baa3 or higher by Moody’s
or the successor or other equivalent of such ratings by S&P or Moody’s.

          “Issue Date” means the date on which the Notes that constitute the Firm Securities (as
defined in the Underwriting Agreement) are originally issued under this Supplemental Indenture.
The Issue Date of the Additional Securities (as defined in the Underwriting Agreement) shall be
deemed to be the same as the Issue Date of the Firm Securities.

          “Issue Price” of the Notes means, in connection with the original issuance of the
Notes, the initial issue price at which the Notes were issued as set forth on the face of the
Notes.

          “Market Price” means, on any date, the average of the Sale Prices of the Common Stock
for the 20 Trading Day period ending on the third Business Day (if the third Business Day prior to
the applicable Purchase Date is a Trading Day, or if not, then on the last Trading Day prior to
such third Business Day) prior to such date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such Trading Days during such 20 Trading
Day period and ending on such date, of certain events with respect to the Common Stock that would
result in an adjustment of the Conversion Rate under this Supplemental Indenture.

          “Marketable Securities” means (a) equity securities that are listed on the New York
Stock Exchange, the American Stock Exchange or The Nasdaq National Market and (b) debt securities
that are rated by a nationally recognized rating agency, listed on the New

 

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York Stock Exchange or
the American Stock Exchange or covered by at least two reputable market makers.

          “Moody’s” means Moody’s Investors Service, Inc. or any successor to its debt rating
business.

          “Note Price” has the meaning assigned thereto in Exhibit A hereto.

          “Notes” has the meaning provided in the Recitals.

          “Notice” shall mean, except where expressly otherwise noted herein or otherwise
required by applicable law, the publication of relevant information on www.bloomberg.com or the
Company’s web site or by any other electronic means of publication reasonably calculated by the
Company to constitute notice, except that in the case of delivery of information to the Trustee,
“Notice” shall mean written notice delivered by first class mail or facsimile.

          “Option Exercise Date” has the meaning specified in Section 4.08.

          “Paying Agent” means the Trustee or any successor paying agent.

          “Preferred Stock” of any Person means all Capital Stock of such Person which has a
preference in liquidation or with respect to the payment of dividends.

          “Principal Amount” of a Note means the principal amount of such Note at Final
Maturity.

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

          “Purchase Date” has the meaning provided in Section 4.03.

          “Purchase Notice” has the meaning provided in Section 4.03.

          “Purchase Price” has the meaning provided in Section 4.03.

          “Purchased Shares” has the meaning provided in Section 4.06.

          “Rating Agencies” shall mean (1) S&P and (2) Moody’s.

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

 

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          “Redemption Notice” has the meaning
provided in Section 4.01(c).

          “Redemption Price” when used with respect to any Note to be redeemed, means, in the
case of Notes converted to Cash Pay Notes, the Restated Principal Amount plus accrued and unpaid
interest from the date of such conversion through the Redemption Date, and otherwise means the
Accreted Value plus accrued and unpaid contingent interest, if any.

          “Registrar” means Bank One Trust Company, National Association or any successor
registrar of the Notes.

          “Regular Record Date” has the meaning specified in Section 4.08.

          “Restated Principal Amount” has the meaning specified in Section 4.08.

          “S&P” means Standard and Poor’s Ratings Group or any successor to its debt rating
business.

          “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 average ask prices) on such date as reported
in the composite transactions for the principal United States securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United States national or
regional securities exchange, as reported by the Nasdaq Stock Market.

          “Special Record Date” has the meaning specified in Section 4.10.

          “Stated Maturity”, when used with respect to any Note or any installment of
semi-annual or contingent interest thereon, means the date specified in such Note as the fixed date
on which an amount equal to the Principal Amount of such Note or such installment of semi-annual or
contingent interest is due and payable.

          “Supplemental Indenture” has the meaning provided in the Preamble.

          “Tax Event” means that the Company shall have received an opinion from independent tax
counsel experienced in such matters to the effect that, on or after July 13, 2001, as a result of:

          (a) any amendment to, or change (including any announced prospective change) in, the laws,
rules or any regulations thereunder of the United States or any political subdivision or taxing
authority thereof or therein or

 

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          (b) any amendment to, or change in, an interpretation or application of such laws, rules or
regulations by any legislative body, court, governmental agency or regulatory authority,

          in each case which amendment or change is enacted, promulgated, issued or announced or which
interpretation is issued or announced or which action is taken, on or after July 13, 2001, there is
more than an insubstantial risk that interest (including original issue discount or contingent
interest, if any) payable on the Notes either (i) would not be
deductible on a current accrual basis or (ii) would not be deductible under any other method,
in either case in whole or in part, by the Company (by reason of deferral, disallowance, or
otherwise) for United States Federal income tax purposes.

          “Tax Event Date” has the meaning specified in Section 4.08.

          “Trading Day” means (x) if the applicable security is listed or admitted for trading
on the New York Stock Exchange or another national security exchange, a day on which the New York
Stock Exchange or other national security exchange is open for business or (y) if the applicable
security is quoted on the NASDAQ National Market, a day on which trades may be made thereon or (z)
if the applicable security is not so listed, admitted for trading or quoted, any day other than a
Saturday or Sunday or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.

          “Trustee” means the party named as such above until a successor replaces such party in
accordance with the applicable provisions of this Indenture and thereafter means the successor
serving hereunder.

          “Twenty-Day Average Price” means the average of the Sale Prices of the Common Stock
for each Trading Day in the 20 Trading Day period ending on the last Trading Day prior to the
applicable Conversion Date, appropriately adjusted to take into account the occurrence, during such
20 Trading Day period, of any event requiring adjustment of the Conversion Rate under this
Supplemental Indenture.

          “Underwriting Agreement” means that certain underwriting agreement relating to the
Notes by and among Masco Corporation and Salomon Smith Barney Inc. dated as of July 12, 2001.

 

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ARTICLE THREE

Covenants

Section 3.01. Reports to Holders of Notes.

          The Company will file with the Commission the annual reports and the information, documents
and other reports required to be filed pursuant to Section 13 or 15(d) of the Exchange Act. The
Company will file with the Trustee and mail to each Holder of record of Notes such annual and other
regular and periodic reports within 15 days after it files them with the Commission. In the event
that the Company is no longer subject to these periodic requirements of the Exchange Act, it will
nonetheless continue to file reports with the Commission and the Trustee and mail such reports to
each Holder of Notes as if it were subject to such reporting requirements. Regardless of whether
the Company is required to
furnish such reports to its stockholders pursuant to the Exchange Act, the Company will cause
its consolidated financial statements and a “Management’s Discussion and Analysis of Results of
Operations and Financial Condition” written report, similar to those that would have been required
to appear in annual or quarterly reports, to be delivered to Holders of Notes.

ARTICLE FOUR

REDEMPTION AND CONVERSIONS

Section 4.01. Optional Redemption by the Company.

          (a) Right to Redeem; Notice to Trustee. The Company, at its option, may redeem the
Notes in accordance with the provisions of paragraphs 6 and 8 of the Notes. If the Company elects
to redeem Notes pursuant to paragraph 6 of the Notes, it shall notify the Trustee in writing of the
Redemption Date, the Principal Amount of Notes to be redeemed, the Redemption Price and the amount
of contingent interest, if any, payable on the Redemption Date. The Company shall give the Notice
to the Trustee provided for in this Section 4.01(a) at least 30 days but not more than 60 days
before the Redemption Date.

          (b) Selection of Notes to Be Redeemed. If any Note selected for partial redemption is
thereafter surrendered for conversion in part before termination of the conversion right with
respect to the portion of the Note so selected, the converted portion of such Note shall be deemed
(so far as may be), solely for purposes of determining the aggregate Principal Amount of Notes to
be redeemed by the Company, to be the portion selected for redemption. Notes which have been
converted during a selection of Notes to be redeemed may be treated by the Trustee as outstanding
for the purpose of such selection. Nothing in this Section 4.01(b) shall affect the right of any
Holder to convert any Note

 

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pursuant to Sections 4.05, 4.06 and 4.07 before the termination of the
conversion right with respect thereto.

          (c) Notice of Redemption. At least 30 days but not more than 60 days before a
Redemption Date, the Company shall provide Notice of redemption (“Redemption Notice”) to the
Trustee and to each Holder of Notes to be redeemed.

          The Notice shall identify the Notes to be redeemed and shall state:

     (i) the Redemption Date;

     (ii) the Redemption Price and, to the extent known at the time of such Notice, the
amount of contingent interest, if any, payable on the Redemption Date;

     (iii) the then current Conversion Rate;

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

     (v) that Notes called for redemption must be presented and surrendered to the Paying
Agent to collect the Redemption Price and contingent interest, if any;

     (vi) that the Notes called for redemption may be converted at any time before the close
of business on the Business Day prior to the Redemption Date;

     (vii) that Holders who wish to convert Notes must comply with the procedures in
paragraph 9 of the Notes;

     (viii) that, unless the Company defaults in making payment of such Redemption Price and
contingent interest, if any, Accreted Value and interest (including contingent interest), if
any, on the Notes called for redemption will cease to accrue on and after the Redemption
Date and the only remaining right of the Holder will be to receive payment of the Redemption
Price upon presentation and surrender to the Paying Agent of the Notes;

     (ix) if fewer than all the outstanding Notes are to be redeemed, the certificate number
and Principal Amounts at Final Maturity of the particular Notes to be redeemed; and

     (x) the CUSIP number or numbers for the Notes called for redemption.

          At the Company’s request, the Trustee shall give the Notice of redemption in the Company’s
name and at the Company’s expense.

 

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          (d) Effect of Notice of Redemption. Once Notice of redemption is given, Notes called
for redemption become due and payable on the Redemption Date and at the Redemption Price (together
with accrued and unpaid contingent interest, if any) stated in the Notice, except for Notes that
are converted in accordance with the provisions of Sections 4.05, 4.06 and 4.07. Upon presentation
and surrender to the Paying Agent, Notes called for redemption shall be paid at the Redemption
Price (together with accrued contingent interest, if any).

          (e) Sinking Fund. There shall be no sinking fund provided for the Notes.

          (f) Deposit of Redemption Price. On or before 11:00 a.m. (New York City time) on the
Redemption Date, the Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or an Affiliate of the Company is acting as the Paying Agent, shall segregate and hold in
trust) an amount of money sufficient to pay the aggregate Redemption Price of, and any accrued and
unpaid contingent interest with respect to, all the Notes to be redeemed on that date other than
the Notes or portions thereof called for
redemption which on or prior thereto have been delivered by the Company to the Trustee for
cancellation or have been converted in accordance with the provisions hereof. The Trustee and the
Paying Agent shall, as promptly as practicable, return to the Company any money not required for
that purpose because of conversion of the Notes in accordance with the provisions of Sections 4.05,
4.06 and 4.07. If such money is then held by the Company or a Subsidiary in trust and is not
required for such purpose, it shall be discharged from such trust.

Section 4.02. Purchase at Option of the Holder upon a Fundamental Change.

          (a) If a Fundamental Change shall occur at any time prior to July 20, 2002, each Holder of
Notes shall have the right, at such Holder’s option, to require the Company to purchase such
Holder’s Notes on the date (the “Fundamental Change Purchase Date”) (or if such date is not
a Business Day, the next succeeding Business Day) that is 95 days after the date of the Fundamental
Change. The Notes shall be purchased in integral multiples of $1,000 of Principal Amount. The
Company shall purchase such Notes for Cash at a price (the “Fundamental Change Purchase
Price”) equal to the Accreted Value on the Fundamental Change Purchase Date or for shares of
Common Stock as set forth in Section 4.03. No Notes may be purchased at the option of the Holders
due to a Fundamental Change if there has occurred and is continuing an Event of Default other than
an Event of Default that is cured by the payment of the Purchase Price of all such Notes.

          (b) The Company, or at its request (which must be received by the Trustee at least three
Business Days (or such lesser period as agreed to by the Trustee) prior to the date the Trustee is
requested to give such Notice as described below) the Trustee in the name of and at the expense of
the Company, shall mail to all Holders of record of the Notes a Notice (a

 

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“Fundamental Change
Purchase Notice”) of the occurrence of a Fundamental Change and of the purchase right arising
as a result thereof, including the information required by Section 4.03(f), on or before the 30th
day after the occurrence of such Fundamental Change. The Company shall promptly furnish to the
Trustee a copy of such Notice.

          (c) For a Note to be so purchased at the option of the Holder, the Paying Agent must receive
such Note with the form entitled “Fundamental Change Purchase Notice” on the reverse thereof duly
completed, together with such Note duly endorsed for transfer, on or before the 60th day after the
Fundamental Change Purchase Notice is delivered; provided, however, if the Notes
are in book-entry form such transfer shall be made in accordance with the customary practices of
the depository. All questions as to the validity, eligibility (including time of receipt) and
acceptance of any Note for redemption shall be determined by the Company, whose determination shall
be final and binding.

			
	Section 4.03.	 	Purchase of Notes at the Option of the Holder; Payment of Purchase Price
or Fundamental Change Purchase Price in Stock.

          (a) Purchase of Notes at the Option of the Holder. On each of July 20, 2002, January
20, 2005, January 20, 2007, July 20, 2011, July 20, 2016, July 20, 2021 and July 20, 2026 (each, a
“Purchase Date”), at the purchase price specified in paragraph 7 of the Notes (each, a
“Purchase Price”), a Holder of Notes shall have the option to require the Company to
purchase any outstanding Notes, upon:

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

     (A) if certificated, the certificate numbers of the Notes which the Holder
shall deliver to be purchased;

     (B) the portion of the Principal Amount of the Notes which the Holder shall
deliver to be purchased, which portion must be $1,000 in Principal Amount or a
multiple thereof;

     (C) that such Notes shall be purchased as of the Purchase Date pursuant to the
terms and conditions specified in paragraph 7 of the Notes and in this Supplemental
Indenture; and

     (D) if the Company elects, pursuant to a Company Notice, to pay the Purchase
Price to be paid as of such Purchase Date, in whole or in part, in

 

-15-

Common Stock but
such portion of the Purchase Price shall ultimately be payable to such Holder in
Cash because any of the conditions to the payment of the Purchase Price in Common
Stock are not satisfied prior to or on the Purchase Date, as set forth in Section
4.03(e), whether such Holder elects (x) to withdraw such Purchase Notice as to some
or all of the Notes to which such Purchase Notice relates (stating the Principal
Amount and certificate numbers, if the Notes are in certificated form, of the Notes
as to which such withdrawal shall relate), or (y) to receive Cash in respect of the
entire Purchase Price for all Notes (or portions thereof) to which such Purchase
Notice relates; and

     (ii) delivery or book-entry transfer of such Note to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements) at the offices of the
Paying Agent, such delivery or transfer being a condition to receipt by the Holder of the
Purchase Price therefor; provided, however, that such Purchase Price shall
be so paid pursuant to this Section 4.03 only if the Note so delivered or
transferred to the Paying Agent shall conform in all respects to the description thereof in
the related Purchase Notice.

          (b) Procedures. If a Holder, in such Holder’s Purchase Notice or Fundamental Change
Purchase Notice (and in any written notice of withdrawal of a portion of a Holder’s Notes
previously submitted for purchase pursuant to a Purchase Notice or Fundamental Change Purchase
Notice, the portion that remains subject to the Purchase Notice or Fundamental Change Purchase
Notice), fails to indicate such Holder’s choice with respect to the election regarding a
conditional withdrawal pursuant to the terms of clause (D) of Section 4.03(a)(i) or paragraph II of
the Fundamental Change Purchase Notice such Holder shall be deemed to have elected to receive Cash
in respect of all Notes subject to such Purchase Notice or Fundamental Change Purchase Notice in
the circumstances set forth in such clause (D) and paragraph II of the Fundamental Change Purchase
Notice.

          The Company shall purchase from the Holder thereof, pursuant to this Section 4.03, a portion
of a Note if the Principal Amount of such portion is $1,000 or a multiple of $1,000 if so requested
by the Holder. Provisions of this Supplemental Indenture that apply to the purchase of all of a
Note also apply to the purchase of such portion of such Note.

          Any purchase by the Company contemplated pursuant to the provisions of Section 4.02 or this
Section 4.03 shall be consummated by the delivery of the consideration to be received by the Holder
(together with accrued and unpaid contingent interest, if any) promptly following the later of the
Purchase Date and the time of delivery or book-entry transfer of the Note.

 

-16-

          Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Purchase Notice or Fundamental Change Purchase Notice contemplated by Section 4.02 or this Section
4.03(a) shall have the right at any time prior to the close of business on the Purchase Date or
Fundamental Change Purchase Date to withdraw such Purchase Notice or Fundamental Change Purchase
Notice (in whole or in part) by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 4.04(a).

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

          (c) Company’s Right to Elect Manner of Payment of Purchase Price. The Company may
elect with respect to any Purchase Date or Fundamental Change Purchase Date to pay the Purchase
Price or Fundamental Change Purchase Price in respect of the Notes to be purchased pursuant to
Section 4.02 or Section 4.03(a) as of such Purchase Date or Fundamental Change Purchase Date, in
U.S. legal tender (“Cash”) or Common Stock, or in any combination of Cash and Common Stock,
subject to the conditions set forth in
Sections 4.03(d) and (e); provided, however, that any Purchase Price paid on
July 20, 2002 pursuant to Section 4.03(a) must be paid fully in Cash. The Company shall designate,
in the Company Notice delivered pursuant to Section 4.03(f), whether the Company shall purchase the
Notes for Cash or Common Stock, or, if a combination thereof, the percentages of the Purchase Price
or Fundamental Change Purchase Price of Notes in respect of which it shall pay in Cash and/or
Common Stock; provided that the Company shall pay Cash for fractional interests in Common Stock.
For purposes of determining the existence of potential fractional interests, all Notes subject to
purchase by the Company held by a Holder shall be considered together (no matter how many separate
certificates are to be presented). Each Holder whose Notes are purchased pursuant to this Section
4.03 shall receive the same percentage of Cash and/or Common Stock in payment of the Purchase Price
or Fundamental Change Purchase Price for such Notes, except (i) as provided in Section 4.03(e) with
regard to the payment of Cash in lieu of fractional interests in Common Stock and (ii) in the event
that the Company is unable to purchase the Notes of a Holder or Holders for Common Stock because
any necessary qualifications or registrations of the Common Stock under applicable federal or state
securities laws cannot be obtained, the Company may purchase the Notes of such Holder or Holders
for Cash. Once the Company has given its Company Notice to Holders, the Company may not change its
election with respect to the consideration (or components or percentages of components thereof) to
be paid except pursuant to this Section 4.03(c) or Section 4.03(e).

          At least five Business Days before the Company Notice Date, the Company shall deliver an
Officers’ Certificate to the Trustee specifying:

     (i) the manner of payment selected by the Company;

 

-17-

     (ii) the information required by Section 4.03(f);

     (iii) if the Company elects to pay the Purchase Price or Fundamental Change Purchase
Price, or a specified percentage thereof, in Common Stock, that the conditions to such
manner of payment set forth in Section 4.03(e) have been or shall be complied with; and

     (iv) whether the Company desires the Trustee to give the Company Notice required by
Section 4.03(f).

          (d) Purchase with Cash. At the option of the Company, the Purchase Price or
Fundamental Change Purchase Price of Notes in respect of which a Purchase Notice or Fundamental
Change Purchase Notice pursuant to Section 4.02 or Section 4.03(a) has been given, or a specified
percentage thereof, may be paid by the Company with Cash equal to the aggregate Purchase Price or
Fundamental Change Repurchase Price, or such specified percentage thereof, as the case may be, of
such Notes.

          (e) Payment by Issuance of Common Stock. At the option of the Company, subject to
Section 4.03(c), the Purchase Price of Notes in respect of which a Purchase Notice pursuant to
Section 4.03(a) or Fundamental Change Purchase Notice has been given, or a specified percentage
thereof, may be paid by the Company by the issuance of a number of shares of Common Stock equal to
the quotient obtained by dividing (x) the amount of Cash to which the Holders would have been
entitled had the Company elected to pay all or such specified percentage, as the case may be, of
the Purchase Price or Fundamental Change Purchase Price of such Notes in Cash by (y) the Market
Price of a share of Common Stock, subject to the next succeeding paragraph.

          The Company shall not issue a fractional share of Common Stock in payment of the Purchase
Price or Fundamental Change Purchase Price. Instead the Company shall pay Cash for the current
market value of the fractional share. The current market value of a fraction of a share shall be
determined by multiplying the Market Price by such fraction and rounding the product to the nearest
whole cent. It is understood that if a Holder elects to have more than one Note purchased, the
number of shares of Common Stock shall be based on the aggregate amount of Notes to be purchased.

          The Company’s right to exercise its election to purchase the Notes pursuant to Section 4.02 or
Section 4.03 through the issuance of shares of Common Stock shall be conditioned upon:

 

-18-

     (i) the Company having given timely Notice in accordance with Section 4.03(f) of its
election to purchase all or a specified percentage of the Notes with Common Stock as
provided herein;

     (ii) (A) (1) the registration of the shares of Common Stock to be issued in respect of
the payment of the specified percentage of the Purchase Price or Fundamental Change Purchase
Price under the Securities Act of 1933 or (2) the issuance of the shares of Common Stock in
an action which is exempt from the registration requirements of the Securities Act of 1933
and which will not result in such shares of Common Stock being deemed “restricted
securities” under the Securities Act of 1933 or otherwise, and (B) the registration of the
            shares of Common Stock under the Exchange Act, to the extent required thereby;

     (iii) any necessary qualification or registration under applicable state securities
laws or the availability of an exemption from such qualification and registration; and

     (iv) the receipt by the Trustee of an Officers’ Certificate and an Opinion of Counsel
each stating that (A) the terms of the issuance of the Common Stock are in conformity with
this Supplemental Indenture and (B) the shares of Common Stock to be issued by the Company
in payment of the specified percentage of the Purchase
Price or Fundamental Change Purchase Price in respect of Notes have been duly authorized
and, when issued and delivered pursuant to the terms of this Supplemental Indenture in
payment of the specified percentage of the Purchase Price or Fundamental Change Purchase
Price in respect of Notes, shall be validly issued, fully paid and nonassessable, and, to
the best of such counsel’s knowledge, free from preemptive rights, and in the case of such
Officers’ Certificate, stating that conditions (i), (ii) and (iii) above have been satisfied
and, in the case of such Opinion of Counsel, stating that condition (ii) has been satisfied.

          Such Officers’ Certificate shall also set forth the number of shares of Common Stock to be
issued for each $1,000 Principal Amount of Notes and the Sale Price of a share of Common Stock on
each Trading Day during the period during which the Market Price is calculated and ending on the
Purchase Date or Fundamental Change Purchase Date. The Company may elect to pay the Purchase Price
or Fundamental Change Purchase Price (or any portion thereof) in Common Stock only if the
information necessary to calculate the Market Price is publicly reported and the Common Stock is
then listed on a national securities exchange or traded on the Nasdaq Stock Market (or any
successor). If any of the conditions set forth in this Section 4.03(e) are not satisfied with
respect to a Holder or Holders prior to or on the Purchase Date or Fundamental Change Repurchase
Date and the Company elected to purchase the Notes to be purchased as of such Purchase Date or
Fundamental Change

 

-19-

Repurchase Date pursuant to Section 4.02 or this Section 4.03 through the
issuance of shares of Common Stock, the Company shall pay the entire Purchase Price or Fundamental
Change Purchase Price in respect of such Notes of such Holder or Holders in Cash.

          Upon determination of the actual number of shares of Common Stock which the Holder of each
$1,000 Principal Amount of the Notes shall receive, the Company shall provide Notice of such
determination.

          (f) Notice of Election. The Company’s Notices of election to purchase with Cash or
Common Stock, or any combination thereof (each a “Company Notice”), shall be sent to the
Holders (and to beneficial owners if required by applicable law) at their addresses shown in the
Note register maintained by the Registrar, and delivered to the Trustee, not less than 30 Business
Days prior to the Purchase Date (the “Company Notice Date”) or on or before the 30th day
after the occurrence of the Fundamental Change, as the case may be. Such Company Notices shall
state the manner of payment elected and shall contain the following information.

          In the event the Company has elected to pay a Purchase Price or Fundamental Change Purchase
Price (or a specified percentage thereof) with Common Stock, the Company Notice shall:

     (i) state that each Holder shall receive Common Stock in respect of the specified
percentage of the Purchase Price or Fundamental Change Purchase Price of
the Notes held by such Holder (except any Cash amount to be paid in lieu of fractional
            shares);

     (ii) state that the total number of shares of Common Stock to be issued to Holders will
be equal to the quotient obtained by dividing (x) the amount of cash to which the Holders
would have been entitled had the Company elected to pay all or such specified percentage, as
the case may be, of the Purchase Price or Fundamental Change Purchase Price of such Notes in
cash by (y) the Market Price of a share of Common Stock;

     (iii) set forth the method of calculating the Market Price of the Common Stock; and

     (iv) state that because the Market Price of Common Stock will be determined prior to
the Purchase Date or Fundamental Change Purchase Date, Holders will bear the market risk
with respect to the value of the Common Stock to be received from the date such Market Price
is determined to the Purchase Date.

 

-20-

          In any case, each Company Notice shall include a form of Purchase Notice or Fundamental Change
Repurchase Notice to be completed by a Holder and shall state:

     (i) the Purchase Price, the Fundamental Change Purchase Price, the Conversion Rate and, to
the extent known at the time of such Notice, the amount of contingent interest, if any, that
will be payable with respect to the Notes on the Purchase Date;

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

     (iii) that Notes as to which a Purchase Notice or Fundamental Change Purchase Notice has
been given may be converted only if the applicable Purchase Notice has been withdrawn in
accordance with the terms of this Supplemental Indenture;

     (iv) that Notes must be surrendered to the Paying Agent to collect payment of the Purchase
Price or Fundamental Change Purchase Price and contingent interest, if any;

     (v) that the Purchase Price or Fundamental Change Purchase Price for any Note as to which a
Purchase Notice has been given and not withdrawn, together with any accrued contingent
interest payable with respect thereto, shall be paid promptly following the later of the
Purchase Date or Fundamental Change Purchase Date and the time of surrender of such Note as
described in (iv);

     (vi) the procedures the Holder must follow under Section 4.02 and Section 4.03;

     (vii) briefly, the conversion rights of the Notes;

     (viii) that, unless the Company defaults in making payment of such Purchase Price or
Fundamental Change Purchase Price and contingent interest, if any, Accreted Value and
interest (including contingent interest), if any, on Notes covered by any Purchase Notice or
Fundamental Change Purchase Notice (or interest, if the Notes have been converted into Cash
Pay Notes pursuant to Section 4.08 of this Supplemental Indenture, if any) will cease to
accrue on and after the Purchase Date or the Fundamental Change Purchase Date, as the case
may be;

     (ix) the CUSIP or ISIN number of the Notes; and

     (x) the procedures for withdrawing a Purchase Notice or Fundamental Change Purchase Notice
(including, without limitation, for a conditional withdrawal

 

-21-

pursuant to the terms of
Section 4.03(a)(i)(D) or paragraph II of the Fundamental Change Purchase Notice).

          At the Company’s request and at the Company’s expense, the Trustee shall give the Company
Notice in the Company’s name; provided, however, that, in all cases, the text of
the Company Notice shall be prepared by the Company.

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

          The Company shall cause to have listed or quoted all such shares of Common Stock on each
United States national securities exchange or over-the-counter or other domestic market on which
the Common Stock is then listed or quoted.

          (h) Procedure upon Purchase. On or before 11:00 a.m. (New York City time) on the
Business Day immediately following the Purchase Date or Fundamental Change Purchase Date, the
Company shall deposit with the Paying Agent Cash (in respect of a Cash purchase under Section
4.03(d) or for fractional interests or contingent interest, as applicable), or shares of Common
Stock, or a combination thereof, as applicable, sufficient to pay the aggregate Purchase Price or
Fundamental Change Purchase Price of, and any accrued and unpaid contingent interest with respect
to, the Notes to be purchased pursuant to this Section 4.03. If the Company is delivering Common
Stock, the Company shall deliver to each Holder entitled to receive Common Stock, through the
Paying Agent, a certificate for the number of full shares of Common Stock, as applicable, issuable
in payment of such
Purchase Price or Fundamental Change Purchase Price and Cash in lieu of any fractional
interests. The Person in whose name the certificate for Common Stock is registered shall be
treated as a holder of record following the Purchase Date or Fundamental Change Purchase Date.
Subject to Section 4.03(e), no payment or adjustment shall be made for dividends on the Common
Stock the Common Stock Record Date for which occurred on or prior to the Purchase Date or
Fundamental Change Purchase Date. If the Paying Agent holds, in accordance with the terms of the
Indenture, money or securities sufficient to pay the Purchase Price or Fundamental Change Purchase
Price of such Note on the Business Day following the Purchase Date or Fundamental Change Purchase
Date, then, on and after such date, such Note shall cease to be outstanding and Accreted Value on
such Note shall cease to accrue, whether or not book-entry transfer of such Note is made or such
Note is delivered to the Paying Agent, and all other rights of the Holder shall terminate (other
than the right to receive the Purchase Price or Fundamental Change Purchase Price upon delivery or
transfer of the Note).

 

-22-

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

			
	Section 4.04.	 	Further Conditions for Purchase at the Option of Holders upon a Fundamental
Change and Purchase of Notes at the Option of the Holder.

          (a) Effect of Purchase Notice or Fundamental Change Purchase Notice. Upon receipt by
the Company of the Purchase Notice or Fundamental Change Purchase Notice specified in Section
4.03(a) or Section 4.02(c), as applicable, the Holder of the Note in respect of which such Purchase
Notice or Fundamental Change Purchase Notice, as the case may be, was given shall (unless such
Purchase Notice or Fundamental Change Purchase Notice is withdrawn as specified in the following
two paragraphs) thereafter be entitled to receive solely the Purchase Price or Fundamental Change
Purchase Price, as the case may be, and any accrued and unpaid contingent interest, if any, with
respect to such Note. Such Purchase Price or Fundamental Change Purchase Price and contingent
interest, if any, shall be paid to such Holder promptly following the later of (x) the Purchase
Date or the Fundamental Change Purchase Date, as the case may be, with respect to such Note
(provided the conditions in Section 4.03(a) or Section 4.02(c), as applicable, have been satisfied)
and (y) the time of delivery or book-entry transfer of such Note to the Paying Agent by the
Holder thereof in the manner required by Section 4.03(a) or Section 4.02(c), as applicable.
Notes in respect of which a Purchase Notice or Fundamental Change Purchase Notice, as the case may
be, has been given by the Holder thereof may not be converted for shares of Common Stock on or
after the date of the delivery of such Purchase Notice (or Fundamental Change Purchase Notice, as
the case may be), unless such Purchase Notice (or Fundamental Change Purchase Notice, as the case
may be) has first been validly withdrawn as specified in the following two paragraphs.

          A Purchase Notice or Fundamental Change Purchase Notice, as the case may be, may be withdrawn
by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time
prior to the close of business on the Purchase Date or the Fundamental Change Purchase Date, as the
case may be, to which it relates specifying:

          (i) if certificated, the certificate number of the Notes in respect of which such notice of
withdrawal is being submitted;

 

-23-

          (ii) the Principal Amount of the Notes with respect to which such notice of withdrawal is
being submitted; and

          (iii) the Principal Amount, if any, of the Notes which remain subject to the original Purchase
Notice or Company Fundamental Change Notice, as the case may be, and which has been or shall be
delivered for purchase by the Company.

          A written notice of withdrawal of a Purchase Notice or Fundamental Change Purchase Notice may
be in the form of (i) a conditional withdrawal contained in a Purchase Notice pursuant to the terms
of Section 4.03(a)(i)(D) or a Fundamental Change Purchase Notice pursuant to paragraph II thereof
or (ii) a conditional withdrawal containing the information set forth in the preceding paragraph
and contained in a written notice of withdrawal delivered to the Paying Agent as set forth in the
preceding paragraph.

          There shall be no purchase of any Notes pursuant to Section 4.02 or Section 4.03 (other than
through the issuance of Common Stock in payment of the Purchase Price or Fundamental Purchase
Price, including Cash in lieu of any fractional shares) or redemption pursuant to Section 4.01 if
there has occurred prior to, on or after, as the case may be, the giving, by the Holders of such
Notes, of the required Purchase Notice or Fundamental Change Purchase Notice, as the case may be,
or the giving by the Company of the required Redemption Notice, and is continuing an Event of
Default (other than an Event of Default that is cured by the payment of the Purchase Price or
Fundamental Change Purchase Price, as the case may be, and any accrued and unpaid contingent
interest with respect to all such Notes). The Paying Agent will promptly return to the respective
Holders thereof any Notes (x) with respect to which a Purchase Notice or Fundamental Change
Purchase Notice, as the case may be, has been withdrawn in compliance with this Supplemental
Indenture, or (y) held by it during the continuance of an Event of Default
(other than an Event of Default that is cured by the payment of the Purchase Price or
Fundamental Change Purchase Price, as the case may be, and any accrued and unpaid contingent
interest with respect to all such Notes) in which case, upon such return, the Purchase Notice or
Fundamental Change Purchase Notice with respect thereto shall be deemed to have been withdrawn.

          (b) Deposit of Purchase Price or Fundamental Change Purchase Price. On or before
11:00 a.m. (New York City time) on the Business Day immediately following a Purchase Date or a
Fundamental Change Purchase Date, as the case may be, the Company shall deposit with the Trustee or
with the Paying Agent (or, if the Company or an Affiliate of the Company is acting as the Paying
Agent, shall segregate and hold in trust) an amount of money and/or Common Stock, if permitted
hereunder, sufficient to pay the aggregate Purchase

 

-24-

Price or
Fundamental Change Purchase Price, as the case may be, of, and any
accrued and unpaid contingent interest, with respect to, all the Notes
or portions thereof which are to be purchased as of such Purchase Date or Fundamental Change
Redemption Date, as the case may be.

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

          (d) Covenant to Comply with Securities Laws upon Purchase of Notes. In connection
with any offer to purchase Notes under Section 4.02 or 4.03, the Company shall (i) comply with
Rules 13e-4 and 14e-1 (which terms, as used herein, include any successor provision thereto) under
the Exchange Act, if applicable; (ii) file the related Schedule TO (or any successor schedule, form
or report) under the Exchange Act, if applicable; and (iii) otherwise comply with all federal and
state securities laws so as to permit the rights and obligations under Sections 4.02 and 4.03 to be
exercised in the time and in the manner specified in Sections 4.02 and 4.03.

          (e) Repayment to the Company. The Trustee and the Paying Agent shall return to the
Company any Cash or shares of Common Stock that remain unclaimed as provided in paragraph 14 of the
Notes, together with interest that the Trustee has agreed to pay, if any, or dividends, if any,
paid thereon while such shares are held by the Trustee or the Paying Agent, held by them for the
payment of a Purchase Price or Fundamental Change Purchase Price, as the case may be, or contingent
interest, if any; provided, however, that to
the extent that the aggregate amount of Cash or shares of Common Stock deposited by the
Company pursuant to Section 4.04(b) exceeds the aggregate Purchase Price or Fundamental Change
Purchase Price, as the case may be, of, and any accrued and unpaid contingent interest with respect
to, the Notes or portions thereof which the Company is obligated to purchase as of the Purchase
Date or Fundamental Change Purchase Date, as the case may be, then promptly after the Business Day
following the Purchase Date or Fundamental Change Purchase Date, as the case may be, the Trustee
and the Paying Agent shall return any such excess to the Company together with interest that the
Trustee has agreed to pay, if any, or dividends, if any, paid thereon while such Cash or shares are
held by the Trustee or the Paying Agent.

 

-25-

			
	Section 4.05.	 	Conversion of Notes.

          (a) Right to Convert. A Holder of a Note may convert such Note for Common Stock at
any time during which the conditions stated in paragraph 9 of the Notes are met. The number of
shares of Common Stock issuable upon conversion of a Note per $1,000 of Principal Amount (the
“Conversion Rate”) shall be that set forth in paragraph 9 in the Notes, subject to
adjustment as herein set forth.

          A Holder may convert a portion of the Principal Amount of a Note if the portion is $1,000 or a
multiple of $1,000. Provisions of this Supplemental Indenture that apply to conversion of all of a
Note also apply to conversion of a portion of a Note.

          (b) Conversion Procedures. To convert a Note a Holder must satisfy the requirements
in paragraph 9 of the Notes. The date on which the Holder of Notes satisfies all those
requirements is the conversion date (the “Conversion Date”). As soon as practicable, but
in no event later than the fifth Business Day following the Conversion Date the Company shall
deliver to the Holder, through the Conversion Agent, a certificate for the number of full shares of
Common Stock issuable upon the conversion and Cash in lieu of any fractional share determined
pursuant to Section 4.05(c). The Person in whose name the certificate is registered shall be
treated as a stockholder of record on and after the Conversion Date; provided,
however, that no surrender of a Note on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the Person or Persons entitled to receive
the shares of Common Stock upon such conversion as the record holder or holders of such shares of
Common Stock on such date, but such surrender shall be effective to constitute the Person or
Persons entitled to receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on which such stock transfer books
are open; such conversion shall be at the Conversion Rate in effect on the date that such Note
shall have been surrendered for conversion, as if the stock transfer books of the Company had not
been closed. Upon conversion of a Note, such Person shall no longer be a Holder of such Note.

          No payment or adjustment shall be made for dividends on or other distributions with respect to
any Common Stock except as provided in Section 4.06. On conversion of a Note, that portion of
Accreted Value (or interest, if the Company has exercised its option to convert the Notes to Cash
Pay Notes pursuant to Section 4.08) attributable to the period from the Issue Date of the Note to
the Conversion Date and accrued contingent interest with respect to the converted Note shall not be
canceled, extinguished or forfeited, but rather shall be deemed to be paid in full (except as
contemplated in paragraph 10 of the Notes) to the Holder thereof through delivery of the Common
Stock (together with the Cash payment, if any, in lieu of fractional shares) in exchange for the
Note being converted.

 

-26-

          If a Holder converts more than one Note at the same time, the number of shares of Common Stock
issuable upon the conversion shall be based on the total Principal Amount of the Notes converted.

          Upon surrender of a Note that is converted in part, 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 (or the Restated Principal Amount, if applicable) to the unconverted portion of
the Note surrendered.

          If the last day on which a Note may be converted is a legal holiday in a place where a
Conversion Agent is located, the Note may be surrendered to that Conversion Agent on the next
succeeding day that it is not a legal holiday.

          (c) Cash Payments in Lieu of Fractional Shares. The Company shall not issue a
fractional share of Common Stock upon conversion of a Note. Instead the Company shall deliver Cash
for the current market value of the fractional share. The current market value of a fractional
share shall be determined to the nearest 1/10,000th of a share by multiplying the Sale Price of a
full share of Common Stock on the Trading Day immediately preceding the Conversion Date by the
fractional amount and rounding the product to the nearest whole cent.

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

          (e) Company to Provide Stock. The Company shall, prior to issuance of any Notes
hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued
Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Notes.

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

 

-27-

          The Company shall endeavor promptly to comply with all federal and state securities laws
regulating the order and delivery of shares of Common Stock upon the conversion of Notes, if any,
and shall cause to have listed or quoted all such shares of Common Stock on each United States
national securities exchange or over-the-counter or other domestic market on which the Common Stock
is then listed or quoted.

			
	Section 4.06.	 	Adjustments to Conversion Rate.

          The Conversion Rate shall be adjusted from time to time by the Company as follows:

     (a)  In case the Company shall (i) pay a dividend, or make a distribution, in shares of Common Stock or other capital stock, on Common Stock; (ii) subdivide its outstanding Common Stock into a greater number of shares; or (iii) combine its outstanding Common Stock into a smaller number of shares, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the holder of
any Note thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which such holder would have owned or have been entitled to receive after the happening of any of the events described above had such Note been converted immediately prior to the happening of such event. If any dividend or distribution of the type described in clause (i) above is not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. An adjustment made pursuant to this Section 4.06 shall become effective immediately after the Common Stock Record Date in the case of a dividend and shall become effective immediately after the effective date in the case of subdivision or combination.

     (b)  In case the Company shall issue rights or warrants to all holders of any class or series of its Common Stock entitling them (for a period expiring within 60 days after the date fixed for determination of stockholders entitled to receive such rights or warrants) to subscribe for or purchase Common Stock at a price per share less than the Sale Price per share of Common Stock on the day preceding the date of announcement of the Common Stock Record Date for the determination of stockholders entitled to receive such rights or warrants, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the date of the issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of
 such rights or warrants

 

 

 - 28 - 

plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Sale Price. Such adjustment shall
be made
successively whenever any such rights or warrants are issued, and shall become effective
immediately after the opening of business on the day following the Common Stock Record Date
for the determination of the stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered after the expiration of such rights
or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which would then
be in effect had the adjustments made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of shares of Common Stock actually delivered.
If such rights or warrants are not so issued, the Conversion Rate shall again be adjusted to
be the Conversion Rate which would then be in effect if such Common Stock Record Date for
the determination of stockholders entitled to receive such rights or warrants had not been
fixed. In determining whether any rights or warrants entitle the holders to subscribe for
or purchase shares of Common Stock at less than such Sale Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken into account
any consideration received by the Company for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.

     (c) In case the Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock (excluding any distribution in connection with the liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary) any evidences of its
indebtedness or assets (other than Cash dividends or other Cash distributions from the
Company’s current or retained earnings) or rights or warrants to subscribe for or purchase
any of its securities (excluding those referred to in Section 4.06(b)) (any of the foregoing
hereinafter in this Section 4.06(c) called the “Distributed Securities”), then, the
Conversion Rate shall be adjusted so that the same shall equal the Conversion Rate
determined by multiplying the Conversion Rate in effect immediately prior to the date of
such distribution by a fraction of which the numerator shall be the Market Price per share
of the Common Stock on the Common Stock Record Date mentioned below, and the denominator
shall be the Sale Price per share of the Common Stock on such Common Stock Record Date less
the fair market value on such Common Stock Record Date (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a certificate filed
with the Trustee) of the Distributed Securities so distributed applicable to one share of
Common Stock. Such adjustment shall become effective immediately after the Common Stock
Record Date for the determination of stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event (a) the then fair market value (as so
determined) of the portion of the Distributed Securities so distributed

 

 - 29 - 

applicable to one share of Common Stock is equal to or greater than the Market Price of
the Common Stock on the Common Stock Record Date or (b) such Market Price exceeds the fair
market value of such Distributed Securities by less than $1.00, in
lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the right to
receive upon conversion the amount of Distributed Securities such Holder would have received
had such Holder converted each Note on such Common Stock Record Date. In the event that
such distribution is not so paid or made, the Conversion Rate shall again be adjusted to the
Conversion Rate which would then be in effect if such distribution had not been declared.
If the Board of Directors determines the fair market value of any distribution for purposes
of this Section 4.06(c) by reference to the actual or when issued trading market for any
securities, it must in doing so consider the prices in such market on the same day used in
computing the Sale Price of the Common Stock.

     Notwithstanding the foregoing provisions of this Section 4.06(c), no adjustment shall
be made thereunder for any distribution of Distributed Securities if the Company makes
proper provision so that each Holder of a Note who converts such Note (or any portion
thereof) after the Common Stock Record Date for such distribution shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock issuable upon such
conversion, the amount and kind of Distributed Securities that such Holder would have been
entitled to receive if such Holder had, immediately prior to such Common Stock Record Date,
converted such Note for Common Stock; provided that, with respect to any Distributed
Securities that are convertible, exchangeable or exercisable, the foregoing provision shall
only apply to the extent (and so long as) the Distributed Securities receivable upon
conversion of such Note would be convertible, exchangeable or exercisable, as applicable,
without any loss of rights or privileges for a period of at least 60 days following
conversion of such Note.

     (d) In case the Company shall, by dividend or otherwise, distribute to all holders of
any class of its Common Stock Cash (excluding any Cash that is distributed upon a merger or
consolidation to which Section 4.07(f) applies) in an aggregate amount that, combined
together with (i) the aggregate amount of any other such distributions to all holders of any
class of its Common Stock made exclusively in Cash within the 12 months preceding the date
of payment of such distribution, and in respect of which no adjustment pursuant to this
Section 4.06(d) has been made, and (ii) the aggregate of any Cash plus the fair market value
of other consideration (as so determined by the Board of Directors, whose determination
shall be conclusive, and described in a certificate filed with the Trustee) payable in
respect of any tender offer by the Company for all or any portion of any class of its Common
Stock concluded within the 12 months preceding the date of payment of such distribution, and
in

 

 - 30 - 

 respect of which no adjustment pursuant to Section 4.06(e) has been made, exceeds 10%
of the product of the Sale Price on the day preceding the date of declaration of such
dividend or distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case, immediately after the close of business on such date, the
Conversion Rate shall be increased so that the same shall equal the Conversion Rate
determined by multiplying the Conversion Rate in effect immediately prior to the Common
Stock Record Date by a fraction of which the numerator shall be such Sale Price of the
Common Stock and the denominator shall be such Sale Price of the Common Stock less the
amount of Cash and the fair market value (as so determined) of such other consideration so
distributed (and not excluded as provided above) applicable to one share of Common Stock,
such increase to be effective immediately prior to the opening of business on the day
following the Common Stock Record Date; provided, however, that no
adjustment will be made in respect of any such dividends and distributions that are paid
during any period for which the Company is paying contingent interest to Holders;
provided, further, that, if the portion of the cash so distributed
applicable to one share of Common Stock is (i) equal to or greater than the Market Price of
the Common Stock on the day preceding the date of declaration of such dividend or
distribution or (ii) the Market Price of the Common Stock on the day preceding the date of
declaration of such dividend or distribution is greater than the fair market value of the
consideration distributed pursuant to Section 4.06(e) by less than $1.00, then, in lieu of
the foregoing adjustment, adequate provision shall be made so that each Holder shall have
the right to receive upon conversion, in addition to the shares of Common Stock, Cash and
other consideration the Holder would have received had such Holder converted such Note
immediately prior to such Common Stock Record Date. If such dividend or distribution is not
so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which
would then be in effect if such dividend or distribution had not been declared. If any
adjustment is required to be made as set forth in this Section 4.06(d) as a result of a
distribution that is a quarterly dividend, such adjustment shall be based upon the amount by
which such distribution exceeds the amount of the quarterly cash dividend permitted to be
excluded pursuant hereto. If an adjustment is required to be made as set forth in this
Section 4.06(d) above as a result of a distribution that is not a quarterly dividend, such
adjustment shall be based upon the full amount of the distribution.

     (e) In case a tender offer made by the Company or any of its subsidiaries for all or
any portion of any class of its Common Stock expires and such tender offer (as amended upon
the expiration thereof) requires the payment to stockholders (based on the acceptance (up to
any maximum specified in the terms of the tender offer) of Purchased Shares) for an
aggregate consideration having a fair market value (as

 

 - 31 - 

determined by the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors) that, combined together with (a) the
aggregate of the Cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the Board of Directors), as of the expiration of such tender offer, of consideration payable in respect
of any other tender offers, by the Company or any of its subsidiaries for all or any portion
of any class of its Common Stock expiring within the 12 months preceding the expiration of
such tender offer and in respect of which no adjustment pursuant to this Section 4.06(e) has
been made, and (b) the aggregate amount of any distributions to all holders of the Common
Stock made exclusively in Cash within 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to Section 4.06(d) has been made
(except as excluded by the first parenthetical phrase thereof), exceeds 10% of the product
of the Market Price (determined as provided herein) as of the last time (the “Expiration
Time”) tenders could have been made pursuant to such tender offer (as it may be amended)
times the number of shares of Common Stock outstanding (including any tendered shares) at
the Expiration Time, then, and in each such case, immediately prior to the opening of
business on the day after the date of the Expiration Time, the Conversion Rate shall be
increased so that the same shall equal the Conversion Rate determined by multiplying the
Conversion Rate in effect immediately prior to the Expiration Time by a fraction of which
the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to an maximum
specified in the terms of the tender or exchanged offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the “Purchased Shares”) and (y) the product
of the number of shares of Common Stock outstanding (less any Purchased Shares) on the
Expiration Time and the Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied
by the Market Price of the Common Stock on the Trading Day next succeeding the Expiration
Time, such increase (if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. If the Company is obligated to purchase
            shares pursuant to any such tender offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are rescinded, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in
effect if such tender offer had not been made.

     (f) For purposes of this Section 4.06, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the

 

 - 32 - 

Company but shall include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. The Company shall not pay any dividend or make
any distribution on shares of Common Stock held in the treasury of
the Company.

Section 4.07. Miscellaneous Provisions Relating to Conversion.

          (a) When Adjustment May be Deferred. No adjustment in the Conversion Rate need be
made unless the adjustment would require an increase or decrease of at least 1% in the Conversion
Rate then in effect; provided that any adjustment that would otherwise be required to be made shall
be carried forward and taken into account in any subsequent adjustment. Except as stated in
Section 4.06, the Conversion Rate will not be adjusted for the issuance of Common Stock or any
securities convertible into or exchangeable for Common Stock or carrying the right to purchase any
of the foregoing. Any adjustments that are made shall be carried forward and taken into account
any subsequent adjustment. All calculations under Sections 4.05, 4.06 and 4.07 shall be made to
the nearest cent or to the nearest 1/10,000th of a share, as the case may be.

          (b) When No Adjustment Required. No adjustment need be made for rights to purchase
Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment
need be made for a change in the par value or no par value of the Common Stock. To the extent the
Notes become convertible into cash, assets or property (other than securities of the Company or
another Person), no adjustment need be made thereafter as to the cash, assets or property.
Interest shall not accrue on the Cash.

          No adjustment need be made for a transaction referred to in Section 4.06(a), (b), (c), (d) or
(e) if Holders participate in the transaction (without converting their Notes) by receiving the
same Cash, assets, property or securities that they would have received had they converted their
Notes immediately prior to the Common Stock Record Date or the effective date of the transaction as
the case may be.

          (c) Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall
promptly provide to Holders a Notice of the adjustment. The Company shall file with the Trustee
and the Conversion Agent such Notice. The certificate shall, absent manifest error, be conclusive
evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to exhibit the same to
any Holder desiring inspection thereof.

          (d) Voluntary Increase. The Company may make such increases in the Conversion Rate,
in addition to those required by Section 4.06, as the Board of Directors considers to be advisable
to avoid or diminish any income tax to holders of Common Stock

 

 - 33 - 

or
rights to purchase Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax purposes. To the extent
permitted by applicable law, the Company may from time to time increase the Conversion Rate by any
amount for any period of time if the period is at least 20 days, the increase is irrevocable during
the period and the Board of Directors shall have made a determination that such increase would be
in the best interests of the Company, which determination shall be conclusive. Whenever the
Conversion Rate is so increased, the Company shall provide to Holders and file with the Trustee and
the Conversion Agent a Notice of such increase. Neither the Trustee nor any Conversion Agent shall
be under any duty or responsibility with respect to any such certificate except to exhibit the same
to any holder desiring inspection thereof. The Company shall provide the Notice at least 15 days
before the date the increased Conversion Rate takes affect. The Notice shall state the increased
Conversion Rate and the period it shall be in effect.

          (e) Notice to Holders Prior to Certain Actions. In case:

     (i) 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 4.06;

     (ii) the Company shall authorize the granting to all or substantially all the Holders
of its Common Stock of rights or warrants to subscribe for or purchase any share of any
class or any other rights or warrants to purchase Common Stock;

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

     (iv) 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 provided to Holders of Notes, as
promptly as possible but in any event at least 20 days prior to the applicable date hereinafter
specified, a Notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights 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 or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up

 

 - 34 - 

is expected to become effective or occur, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, 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.

          (f) Effect of Reclassification, Consolidation, Merger or Sale. If any of the
following events occur, namely (i) any reclassification or change of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination); (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets (including Cash) with
respect to or in exchange for such Common Stock; or (iii) any sale or conveyance of the properties
and assets of the Company as, or substantially as, an entirety to any other corporation as a result
of which holders of Common Stock shall be entitled to receive stock, securities or other property
or assets (including Cash) with respect to or in exchange for such Common Stock, then the Company
or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a
supplemental indenture, providing that each Note shall be convertible into the kind and amount of
shares of stock and other securities or property or assets (including Cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance by a holder of a
number of shares of Common Stock issuable upon conversion of such Notes immediately prior to such
reclassification, change, consolidation, merger, combination, sale or conveyance. Such
supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.07(f).

          The Company shall cause Notice of the execution of such supplemental indenture to be provided
to Holders of Notes, within 20 days after execution thereof. Failure to deliver such Notice shall
not affect the legality or validity of such supplemental indenture.

          The above provisions of this Section shall similarly apply to successive reclassifications,
changes, consolidations, mergers, combinations, sales and conveyances.

          If this Section 4.07(f) applies to any event or occurrence, Section 4.06 shall not apply.

          (g) Responsibility of Trustee. The Trustee and any other Conversion Agent shall not
at any time be under any duty or responsibility to any Holder of Notes to either calculate the
Conversion Rate or determine whether any facts exist which may require any adjustment of the
Conversion Rate, or with respect to the nature or extent or calculation of any

 

 - 35 - 

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 and shall be protected in
relying upon an Officer’s Certificate with respect to the same. The Trustee and any other
Conversion Agent shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which may at any time be
issued or delivered upon the conversion of any Note and the Trustee and any other Conversion Agent
make no representations with respect thereto. Subject to the provisions of Article Six of the
Indenture, 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
securities 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
Section. 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 4.07(f) relating either to the kind or
amount of shares of stock or securities or property (including Cash) receivable by Holders upon the
conversion of their Notes after any event referred to in such Section 4.07(f) or to any adjustment
to be made with respect thereto, but, subject to the provisions of Article Six of the Indenture,
may accept as conclusive evidence of the correctness of any such provisions, and shall be protected
in relying upon, the Officer’s Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect thereto.

          (h) Simultaneous Adjustments. In the event that Sections 4.05, 4.06 or 4.07 require
adjustments to the Conversion Rate under more than one of Section 4.06(a), (b), (c) or (d), and the
Common Stock Record Dates for the distributions giving rise to such adjustments shall occur on the
same date, then such adjustments shall be made by applying, first, the provisions of Section
4.06(c), second, the provisions of Section 4.06(d), third, the provisions of Section 4.06(a), and
fourth, the provisions of Section 4.06(b).

          (i) Successive Adjustments. After an adjustment to the Conversion Rate under Sections
4.05, 4.06 or 4.07, any subsequent event requiring an adjustment under Sections 4.05, 4.06 or 4.07
shall cause an adjustment to the Conversion Rate as so adjusted.

          (j) General Considerations. Whenever successive adjustments to the Conversion Rate
are called for pursuant to Sections 4.05, 4.06 or 4.07, such adjustments shall be made to the Sale
Price or Market Price as may be necessary or appropriate to effectuate the intent of Sections 4.05,
4.06 or 4.07 and to avoid unjust or inequitable results as determined in good faith by the Board of
Directors.

          (k) Stockholder Rights Plans. Upon conversion of the Notes the Holders shall receive,
in addition to the Common Stock issuable upon such conversion, any rights

 

 - 36 - 

issued under any stockholder rights plan the Company shall have implemented (notwithstanding
the occurrence of an event causing such rights to separate from the Common Stock at or prior to the
time of conversion).

			
	Section 4.08.	 	Optional Conversion to Semi-Annual Cash Pay Note upon Tax Event.

          From and after (i) the date (the “Tax Event Date”) of the occurrence of a Tax Event
and (ii) the date the Company exercises its option set forth in this 4.08, whichever is later (the
“Option Exercise Date”), at the option of the Company, cash interest in lieu of future
Accreted Value shall accrue at the rate of 3.125% per annum on a restated principal amount per
$1,000 original Principal Amount (the “Restated Principal Amount”) equal to its Accreted
Value on the Option Exercise Date and shall be payable semi-annually on July 20 and January 20 of
each year (each an “Interest Payment Date”) to holders of record at the close of business
on July 1 and January 1 (each a “Regular Record Date”) immediately preceding such Interest
Payment Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day
months and will accrue from the most recent date on which interest has been paid or, if no interest
has been paid, from the Option Exercise Date. Within 15 days of the occurrence of a Tax Event, the
Company shall deliver a written Notice of such Tax Event by facsimile and first-class mail to the
Trustee and within 15 days of their exercise of such option the Company shall deliver a written
Notice of the Option Exercise Date by facsimile and first-class mail to the Trustee and provide
Notice to the Holders of the Notes. From and after the Option Exercise Date, (i) the Company shall
be obligated to pay at Maturity or upon a Redemption Date, Purchase Date or Fundamental Change
Purchase Date, in lieu of the Principal Amount or Accreted Value, as applicable, of a Note, the
Restated Principal Amount thereof plus accrued and unpaid interest and (ii) contingent interest
shall cease to accrue on the Notes. Notes authenticated and delivered after the Option Exercise
Date may, and shall if required by the Trustee, bear a notation in a form approved by the Trustee
as to the conversion of the Notes to Cash Pay Notes.

			
	Section 4.09.	 	Calculation of Original Issue Discount for U.S. Federal Income Tax
Purposes.

     The Company agrees, and each Holder and any beneficial holder of a Note by its purchase
thereof shall be deemed to agree, to treat (in the absence of an administrative determination or
judicial ruling to the contrary), for United States federal income tax purposes, the Notes as
contingent payment debt instruments subject to Section 1.1275-4 of the Treasury Regulations. For
United States federal income tax purposes, interest will accrue on the Notes as original issue
discount according to the “noncontingent bond method,” set forth

 

 - 37 - 

in Section 1.1275-4(b) of the Treasury Regulations, based on a comparable yield of 8.125%
compounded semi-annually and the projected payment schedule attached hereto as Exhibit B.

     The Company acknowledges and agrees, and each Holder and any beneficial holder of a Note by
its purchase thereof shall be deemed to acknowledge and agree, that (i) the comparable yield means
the annual yield the Company would pay, as of the Issue Date, on a fixed-rate cash pay
nonconvertible debt security with no contingent payments, but with terms and conditions otherwise
comparable to those of the Notes; (ii) the schedule of projected payments attached hereto as
Exhibit B is determined on the basis of the comparable yield and an assumption of linear growth of
the stock price and a constant dividend yield; (iii) the comparable yield and the schedule of
projected payments are not determined for any purpose other than for the determination of interest
accruals and adjustments thereof in respect of the Notes for United States federal income tax
purposes; and (iv) the comparable yield and the schedule of projected payments do not constitute a
projection or representation regarding the future stock price or the amounts payable on the Notes.

Section 4.10. Payment of Interest.

          (a) Paying Agent To Hold Money in Trust. Prior to 11:00 a.m. (New York City time) on
any applicable Interest Payment Date, the Company shall deposit with the Paying Agent (or if the
Company or a Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of
the Persons entitled thereto) a sum sufficient to pay semi-annual or contingent interest when due.
The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the
Paying Agent for the payment of principal or interest on the Notes and shall notify the Trustee of
any default by the Company in making any such payment. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by
the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.

          (b) Holder Lists. The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of Holders. If the
Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders.

          (c) Payment of Interest; Interest Rights Preserved. (i) Semi-annual or contingent
interest on any Note that is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Note is registered at

 

 - 38 - 

the close of business on the Regular Record Date or accrual date, as the case may be, for such
interest at the office or agency of the Company maintained for such purpose. Each installment of
semi-annual or contingent interest on any Note shall be paid in same-day funds by transfer to an
account maintained by the payee located inside the United States. In the case of a Global Note,
semi-annual or contingent interest payable on any applicable payment date will be paid to the
depository, with respect to that portion of such Global Note held for its account by Cede & Co.
for the purpose of permitting such party to credit the interest received by it in respect of such
Global Note to the accounts of the beneficial owners thereof.

          (ii) Except as otherwise specified with respect to the Notes, any semi-annual or contingent
interest on any Note that is payable, but is not punctually paid or duly provided for, within 30
days following any applicable payment date (herein called “Defaulted Interest”, which term
shall include any accrued and unpaid interest that has accrued on such defaulted amount in
accordance with paragraph 1 of the Notes), shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date or accrual date, as the case may be, by virtue
of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (A) or (B) below.

     (A) The Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Notes are registered at the close of business on a date for the payment of
such Defaulted Interest (the “Special Record Date”), 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
not be less than 20 days after such Notice is received by the Trustee), and at the same time
the Company shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed 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 Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the Notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date and, 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 of Notes at his address as it appears on the list of Holders
maintained pursuant to this Supplemental Indenture not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall
be paid to the Persons in whose names the Notes are registered

 

 - 39 - 

at the close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (B).

     (B) Alternatively, the Company may make payment of any Defaulted Interest on the Notes
in any other lawful manner not inconsistent with the requirements of any Notes exchange on
which such Notes may be listed, and upon such Notice as may be required by such exchange,
if, after Notice given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the Trustee.

          Subject to the foregoing provisions of this Section 4.10, each Note delivered under this
Supplemental Indenture upon registration of transfer of or in exchange for or in lieu of any other
Note shall carry the rights to semi-annual or contingent interest accrued and unpaid to, and to
accrue, which were carried by such other Note.

ARTICLE FIVE

Miscellaneous

Section 5.01. No Adverse Interpretation of Other Agreements.

          This Supplemental Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be
used to interpret this Supplemental Indenture.

Section 5.02. No Recourse Against Others.

          All liability described in paragraph 18 of the Notes of any director, officer, employee or
stockholder, as such, of the Company is waived and released.

Section 5.03. Successors and Assigns.

          All covenants and agreements of the Company in this Supplemental Indenture and the Notes shall
bind its successors and assigns. All agreements of the Trustee in this Supplemental Indenture
shall bind its successors and assigns.

Section 5.04. Duplicate Originals.

          The parties may sign any number of copies of this Supplemental Indenture. Each signed copy
shall be an original, but all of them together represent the same agreement.

 

Section 5.05. Severability.

          In case any one or more of the provisions 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.

 

SIGNATURES

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

	 	 	 	 	 
	 	MASCO CORPORATION

 	 
	 	By:  	/s/ John R. Leekley
 	 
	 	 	Name:  	John R. Leekley 	 
	 	 	Title:  	Senior Vice President and
General Counsel 	 
	 

 

 - 41 - 

BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee

	 	 	 	 	 
	By:

	 	/s/ Benita A. Pointer
	 	 
	 

	 	 	 	 
	 

	 	Name: Benita A. Pointer	 	 
	 

	 	Title: Account Executive	 	 

 

 

EXHIBIT A

[FORM OF FACE OF GLOBAL SECURITY]

          This security is a global security within the meaning of the Indenture hereinafter referred to
and is registered in the name of a depository or a nominee of a depository or a successor
depository. This security is not exchangeable for securities registered in the name of a person
other than the depository or its nominee except in the limited circumstances described in the
Indenture, and no transfer of this security (other than a transfer of this security as a whole by
the depository to a nominee of the depository or by a nominee of the depository to the depository
or another nominee of the depository) may be registered except in the limited circumstances
described in the Indenture.

          Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York Corporation (“DTC”), to the issuer 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.

 

 - 2 - 

MASCO CORPORATION

ZERO COUPON CONVERTIBLE SENIOR NOTE DUE 2031

	 	 	 
	No.                                         

	 	CUSIP:
	Issue Date: July 20, 2001

	 	ISIN:
	Issue Price: $394.45
	 	 
	(for each $1,000 Principal
	 	 
	Amount at Final Maturity)
	 	 

          Masco Corporation, a Delaware corporation, promises to pay to ___or registered
assigns, on July 20, 2031 the Principal Amount of ___Dollars ($___).

          This Note shall not bear periodic interest except as specified on the other side of this
instrument. This Note shall accrete as specified on the other side of this Note. This Note is
convertible as specified on the other side of this Note.

          Additional provisions of this Note are set forth on the other side of this Note.

 

 - 3 - 

          IN WITNESS WHEREOF, Masco Corporation has caused this instrument to be duly executed.

	 	 	 	 	 
	 	MASCO CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Attest:

	 	 	 	 	 
	 	 
	 	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

Dated:

Bank One Trust Company, National Association

as Trustee, certifies that this is one of the

Securities referred to in the within mentioned

Indenture

Date:

	 	 	 	 	 
	 	 
	 	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

 

 - 4 - 

[FORM OF REVERSE SIDE OF GLOBAL SECURITY]

MASCO CORPORATION

ZERO COUPON CONVERTIBLE SENIOR NOTE DUE 2031

          1. INTEREST

          This Note shall not bear periodic interest, except as specified in this paragraph and in
paragraphs 5 and 10 hereof. If the Principal hereof or any portion of such Principal is not paid
when due (whether upon acceleration pursuant to the Indenture, upon the date set for payment of the
Redemption Price pursuant to paragraph 6 hereof, upon the date set for payment of a Purchase Price
or Fundamental Change Purchase Price pursuant to paragraph 7 hereof or upon the Final Maturity of
this Note) or if interest (including contingent interest, if any) due hereon or any portion of such
interest is not paid when due in accordance with paragraph 5 or 10 hereof, then in each such case
the overdue amount shall bear interest at the rate of 3.125% per annum, compounded semiannually (to
the extent that the payment of such interest shall be legally enforceable), which interest shall
accrue from the date such overdue amount was due to the date payment of such amount, including
interest thereon, has been made or duly provided for. All such interest shall be payable on
demand. The accrual of such interest on overdue amounts shall be in lieu of, and not in addition
to, the continued accretion.

          The Notes shall increase in Accreted Value commencing on the Issue Date.

          “Accreted Value” means, at any date of determination, (1) prior to such time as this Note is
converted to a Cash Pay Note, the sum of (x) the Issue Price of this Note and (y) the portion of
the excess of the Principal Amount of this Note over the Issue Price which shall have been
amortized by the Company in accordance with GAAP through such date, such amount to be so amortized
on a daily basis and compounded semi-annually on each July 20 and January 20 at the rate of 3.125%
per annum from the Issue Date through the date of determination compounded on the basis of a
360-day year and twelve 30-day months and (2) at or after such time as this Note is converted to a
Cash Pay Note, its Restated Principal Amount.

          2. METHOD OF PAYMENT

          Subject to the terms and conditions of the Indenture, the Company shall make payments in
respect of the Notes to the Persons who are registered Holders of Notes at the close of business on
the Business Day preceding the Redemption Date or Final Maturity, as the case may be, or at the
close of business on a Purchase Date or Fundamental Change Purchase Date, as the case may be.
Holders must surrender Notes to a Paying Agent to collect

 

 - 5 - 

such
payments in respect of the Notes. The Company shall 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.
However, the Company may make such cash payments by check payable in such money.

          3. PAYING AGENT, CONVERSION AGENT, BID AGENT AND REGISTRAR

          Initially, Bank One Trust Company, National Association (the “Trustee”), shall act as Paying
Agent, Conversion Agent, Bid Agent and Registrar. The Company may appoint and change any Paying
Agent, Conversion Agent, Bid Agent, Registrar or co-registrar without Notice, other than Notice to
the Trustee except that the Company will maintain at least one Paying Agent in the State of New
York, City of New York, Borough of Manhattan, which shall initially be an office or agency of the
Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying
Agent, Conversion Agent, Bid Agent, Registrar or co-registrar.

          4. INDENTURE

          The Company issued the Notes under an Indenture dated as of February 12, 2001 between the
Company and Trustee, as supplemented by a Supplemental Indenture relating to the Notes between the
Company and Trustee dated July 20, 2001 (together, the “Indenture”). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (“TIA”) as in effect on the date of the Indenture. The Notes are
subject to all such terms, and Holders are referred to the Indenture and the Act for a statement of
them. Capitalized terms not defined herein have the meanings given to those terms in the
Indenture.

          The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture and the applicable Authorizing Resolution or supplemental indenture. Requests may be
made to: Masco Corporation, 21001 Van Born Road, Taylor Michigan, 48180, Attention: Samuel Cypert.

          5. CONTINGENT INTEREST

          Subject to the accrual and Common Stock Record Date provisions specified in this paragraph 5,
the Company shall pay contingent interest to the Holders during any six-month period (a “Contingent
Interest Period”) from January 20 to July 19 and from July 20 to January 19, commencing January 20,
2007, if the average Note Price for the Five-Day Period with respect to such Contingent Interest
Period equals 120% or more of the Accreted Value of

 

 - 6 - 

such Note to the Trading Day immediately preceding the first day of the relevant Contingent
Interest Period.

          The amount of contingent interest payable per $1,000 Principal Amount hereof in respect of any
Contingent Interest Period shall equal the greater of (x) Cash Dividends paid by the Company per
share of Common Stock during that Contingent Interest Period multiplied by the number of shares of
Common Stock into which $1,000 Principal Amount hereof is convertible pursuant to paragraph 9
hereof as of the accrual date for such contingent interest and (y) 0.125% of the average Note Price
for the Five-Day Period with respect to such Contingent Interest Period.

          Contingent interest, if any, will accrue and be payable to Holders as of the Common Stock
Record Date for the related Cash Dividend or, if no Cash Dividend is paid by the Company during a
Contingent Interest Period, to Holders as of the 15th day preceding the last day of the relevant
Contingent Interest Period. Such payments shall be paid on the payment date of the related Cash
Dividend or, if no Cash Dividend is paid by the Company during a Contingent Interest Period, on the
last day of the relevant Contingent Interest Period. In addition, on any Purchase Date or
Redemption Date that occurs during a Contingent Interest Period for which a Holder is entitled to
contingent interest pursuant to clause (y) of the preceding paragraph, contingent interest will be
payable to such Holder in an amount equal to the amount that would have been otherwise payable to
such Holder on the last day of such Contingent Interest Period divided by the actual number of days
from the first day of such Contingent Interest Date to the Purchase Date or Redemption Date, as the
case may be, using a 360-day year composed of twelve 30-day months.

          “Five-Day Period” means, with respect to any Contingent Interest Period, the five Trading Days
ending on the second Trading Day immediately preceding the first day of such Contingent Interest
Period; provided, however, if the Company shall have declared a Cash Dividend on its Common Stock
that is payable during such Contingent Interest Period but for which the Common Stock Record Date
for determining stockholders entitled thereto precedes the first day of such Contingent Interest
Period, then “Five-Day Period” means, with respect to such Contingent Interest Period, the five
Trading Days ending on the second Trading Day immediately preceding such Common Stock Record Date.

          “Cash Dividends” means all cash dividends on the Common Stock (whether regular, periodic,
extraordinary, special, nonrecurring or otherwise) as declared by the Company’s Board of Directors
as part of its cash dividend payment practices.

          “Note Price” means, as of any date of determination, the average of the secondary market bid
quotations per Note obtained by the Bid Agent for $10 million Principal Amount of Notes at
approximately 4:00 p.m. (New York City time) on such determination

 

 - 7 - 

date from three recognized securities dealers in The City of New York (none of which shall be
an Affiliate of the Company) selected by the Company; provided, however, if (a) at least three such
bids are not obtained by the Bid Agent or (b) in the Company’s reasonable judgment, the bid
quotations are not indicative of the secondary market value of the Notes as of such determination
date, then the Note Price for such determination date shall equal (i) the Conversion Rate in effect
as of such determination date multiplied by (ii) the average Sale Price of Common Stock for the
five Trading Days ending on such determination date, appropriately adjusted to take into account
the occurrence, during the period commencing on the first of such Trading Days during such five
Trading Day period and ending on such determination date, of any event described in Section
4.06(a), 4.06(b) or 4.06(c) (subject to the conditions set forth in Sections 4.07(a) and 4.07(b))
of the Supplemental Indenture.

          Upon determination that Holders will be entitled to receive contingent interest which may
become payable during a Contingent Interest Period, on or prior to the first day of such Contingent
Interest Period, the Company shall issue a press release and publish such information on its web
site at www.masco.com, if such web site exists.

          6. REDEMPTION AT THE OPTION OF THE COMPANY

          No sinking fund is provided for the Notes. Between July 20, 2002 and January 25, 2007 the
Company may only redeem the Notes for cash, in whole but not in part, if the Sale Price of Common
Stock is equal to or greater than the below specified percentage of the conversion price in effect
for at least 20 Trading Days in any consecutive 30-Trading Day period, where “conversion price”
means the Redemption Price divided by the Conversion Rate. The Company will give holders not less
than 30-days’ nor more than 60-days’ Notice of redemption. The table below shows ranges of dates
between July 20, 2002 and January 25, 2007 and the percentage of the conversion price Common Stock
must attain within the specified date range before the Company may redeem the Notes.

	 	 	 	 	 
	 	 	Percentage of Conversion Price that
	 	 	Common Stock Price Must Attain for
	Redemption Date Range	 	20 of 30 Trading Days
	July 20, 2002 through July 19, 2003

	 	 	150	%
	 
	 	 	 	 
	July 20, 2003 through July 19, 2004

	 	 	140	%
	 
	 	 	 	 
	July 20, 2004 through January 24, 2007

	 	 	130	%

          Beginning on January 25, 2007, the Company may, at its option, redeem the Notes for cash at
any time as a whole, or from time to time in part, at their Redemption Price.

 

 - 8 - 

          The table below shows what the Accreted Value of a Note would be on July 20, 2002, and at
specified dates thereafter prior to maturity and at Final Maturity.
The Accreted Value, in
dollars, of a Note per $1,000 Principal Amount redeemed between such dates shall include an
additional amount reflecting the increase in Accreted Value since the next preceding date in the
table to but excluding the actual Redemption Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Increase in Accreted	 	Redemption
	Redemption Date	 	Issue Price(1)	 	Value at 3.125% (2)	 	Price (1+2)
	July 20, 2002
	 	$	394.45	 	 	$	12.42	 	 	$	406.88	 
	July 20, 2003
	 	$	394.45	 	 	$	25.24	 	 	$	419.69	 
	July 20, 2004
	 	$	394.45	 	 	$	38.46	 	 	$	432.91	 
	January 20, 2005
	 	$	394.45	 	 	$	45.22	 	 	$	439.67	 
	July 20, 2005
	 	$	394.45	 	 	$	52.09	 	 	$	446.54	 
	July 20, 2006
	 	$	394.45	 	 	$	66.15	 	 	$	460.61	 
	January 20, 2007
	 	$	394.45	 	 	$	73.35	 	 	$	467.80	 
	July 20, 2007
	 	$	394.45	 	 	$	80.66	 	 	$	475.11	 
	July 20, 2008
	 	$	394.45	 	 	$	95.62	 	 	$	490.08	 
	July 20, 2009
	 	$	394.45	 	 	$	111.06	 	 	$	505.51	 
	July 20, 2010
	 	$	394.45	 	 	$	126.98	 	 	$	521.43	 
	July 20, 2011
	 	$	394.45	 	 	$	143.40	 	 	$	537.85	 
	July 20, 2012
	 	$	394.45	 	 	$	160.34	 	 	$	554.79	 
	July 20, 2013
	 	$	394.45	 	 	$	177.81	 	 	$	572.27	 
	July 20, 2014
	 	$	394.45	 	 	$	195.83	 	 	$	590.29	 
	July 20, 2015
	 	$	394.45	 	 	$	214.43	 	 	$	608.88	 
	July 20, 2016
	 	$	394.45	 	 	$	233.60	 	 	$	628.06	 
	July 20, 2017
	 	$	394.45	 	 	$	253.38	 	 	$	647.84	 
	July 20, 2018
	 	$	394.45	 	 	$	273.78	 	 	$	668.24	 
	July 20, 2019
	 	$	394.45	 	 	$	294.83	 	 	$	689.28	 
	July 20, 2020
	 	$	394.45	 	 	$	316.54	 	 	$	710.99	 
	July 20, 2021
	 	$	394.45	 	 	$	338.93	 	 	$	733.39	 
	July 20, 2022
	 	$	394.45	 	 	$	362.03	 	 	$	756.48	 
	July 20, 2023
	 	$	394.45	 	 	$	385.85	 	 	$	780.31	 
	July 20, 2024
	 	$	394.45	 	 	$	410.43	 	 	$	804.88	 
	July 20, 2025
	 	$	394.45	 	 	$	435.78	 	 	$	830.23	 
	July 20, 2026
	 	$	394.45	 	 	$	461.92	 	 	$	856.38	 
	July 20, 2027
	 	$	394.45	 	 	$	488.90	 	 	$	883.35	 
	July 20, 2028
	 	$	394.45	 	 	$	516.72	 	 	$	911.17	 
	July 20, 2029
	 	$	394.45	 	 	$	545.41	 	 	$	939.87	 
	July 20, 2030
	 	$	394.45	 	 	$	575.01	 	 	$	969.47	 
	July 20, 2031
	 	$	394.45	 	 	$	605.55	 	 	$	1,000.00	 

          If this Note has been converted to Cash Pay Notes, the Redemption Price will be equal to
the Restated Principal Amount plus accrued and unpaid interest from the date of such conversion to
the Redemption Date; but in no event will this Note be redeemable before July 20, 2002.

          In addition to the Redemption Price payable with respect to all Notes or portions thereof to
be redeemed as of a Redemption Date, the Holders of such Notes (or portions thereof) shall be
entitled to receive accrued and unpaid contingent interest, if any, with respect thereto, which
contingent interest shall be paid in cash on the Redemption Date.

 

 - 9 - 

          7. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; PURCHASE
AT THE OPTION OF THE HOLDER 

             
UPON A FUNDAMENTAL CHANGE

          Subject to the terms and conditions of the Indenture, a Holder of Notes shall have the option
to require the Company to purchase the Notes held by such Holder on the following Purchase Dates
and at the following Purchase Prices per $1,000 Principal Amount, plus, in the case of purchases
after July 20, 2007, accrued and unpaid contingent interest, if any, upon delivery of a Purchase
Notice containing the information set forth in the Indenture, from the opening of business on the
date that is 30 Business Days prior to such Purchase Date until the close of business on such
Purchase Date and upon delivery of the Notes to the Paying Agent by the Holder as set forth in the
Indenture. For any Purchase Date after July 20, 2002, such Purchase Prices may be paid, at the
option of the Company, in cash or by the issuance and delivery of shares of Common Stock, or in any
combination thereof. The Company will pay the Purchase Price for any purchase on July 20, 2002
only in cash.

The purchase price of a Note will be:

	 	•	 	$406.88 per Note on July 20, 2002;
	 
	 	•	 	$439.67 per Note on January 20, 2005;
	 
	 	•	 	$467.80 per Note on January 20, 2007;
	 
	 	•	 	$537.85 per Note on July 20, 2011, plus accrued and unpaid contingent interest, if any;
	 
	 	•	 	$628.06 per Note on July 20, 2016, plus accrued and unpaid contingent interest, if any;
	 
	 	•	 	$733.39 per Note on July 20, 2021, plus accrued and unpaid contingent interest, if any; and
	 
	 	•	 	$856.38 per Note on July 20, 2026, plus accrued and unpaid contingent interest, if any.

          Notes in denominations larger than $1,000 of Principal Amount may be purchased in part, but
only in multiples of $1,000 of Principal Amount.

          If prior to a Purchase Date this Note has been converted to a Cash Pay Note, the Purchase
Price will be equal to the Restated Principal Amount plus accrued and unpaid interest from the date
of conversion to the Purchase Date.

          If a Fundamental Change shall occur at any time prior to July 20, 2002, each Holder shall have
the right, at such Holder’s option and subject to the terms and conditions of the Indenture, to
require the Company to purchase such Holder’s Notes on the Business Day that is 95 days after the
date of the Fundamental Change for a Fundamental Change Purchase
Price equal to Accreted Value to the Fundamental Change Purchase Date. If, prior to the
Fundamental Change Purchase Date, the Notes were converted to Cash Pay Notes, the Fundamental
Change Purchase Price will be equal to the Restated Principal Amount plus accrued and unpaid
interest from the date of conversion to the Fundamental Change Purchase
Date, which Fundamental Change Purchase

 

 - 10 - 

Price shall be paid at the option of the Company in cash or by the issuance and
delivery of shares of Common Stock or in any combination thereof. Notes in denominations larger
than $1,000 of Principal Amount may be redeemed in part in connection with a Fundamental Change,
but only in multiples of $1,000 of Principal Amount.

          In addition to the Purchase Price payable with respect to all Notes or portions thereof to be
purchased as of the Purchase Date, the Holders of such Notes (or portions thereof) shall be
entitled to receive accrued and unpaid contingent interest, if any, with respect thereto, which
contingent interest shall be paid in cash promptly following the later of the Purchase Date and the
time of delivery of such Notes to the Paying Agent pursuant to the Indenture.

          Holders have the right to withdraw any Purchase Notice or Fundamental Change Purchase Notice,
as the case may be, by delivery to the Paying Agent of a written notice of withdrawal in accordance
with the provisions of the Indenture.

          If cash (and/or Common Stock if permitted under the Indenture) sufficient to pay a Fundamental
Change Purchase Price or, cash (and/or Common Stock if permitted under the Indenture) sufficient to
pay a Purchase Price (together with any accrued and unpaid contingent interest), with respect to
all Notes or portions thereof to be purchased as of the Purchase Date or the Fundamental Change
Purchase Date, as the case may be, is deposited with the Paying Agent on the Business Day
immediately following the Purchase Date or the Fundamental Change Purchase Date, as the case may
be, such Notes will cease to accrete and interest (including, where applicable, contingent
interest), if any, will cease to accrue on such Notes (or portions thereof) on and after such date,
and the Holder thereof shall have no other rights as such (other than the right to receive the
Purchase Price or Fundamental Change Purchase Price, as the case may be, and, where applicable,
accrued and unpaid contingent interest, if any, upon surrender or such Note).

          8. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY

          Notice of redemption at the option of the Company shall be mailed at least 30 days but not
more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at the Holder’s
registered address. If money sufficient to pay the Redemption Price of, together with any accrued
and unpaid contingent interest with respect to, all Notes (or portions thereof) to be redeemed on
the Redemption Date is deposited with the Paying Agent

 

 - 11 - 

prior to
or on the Redemption Date, on and after such date Accreted Value and interest (including contingent interest), if any, ceases to accrue on such Notes or portions thereof. Notes
in denominations larger than $1,000 Principal Amount may be redeemed in part but only in multiples
of $1,000 or Principal Amount.

          9. CONVERSION

          A Holder of a Note may convert this Note for Common Stock at any time on or before the close
of business on July 20, 2031 if at least one of the following conditions is satisfied:

     (a) the Twenty-Day Average Price on the Conversion Date is at least a specified
percentage of the Accreted Conversion Price, such percentage beginning at 120% for the first
year and declining 1/3% on July 20 each year thereafter, reaching 110-1/3% for the year
beginning July 20, 2030 and declining to 110% at Final Maturity;

     (b) the credit rating assigned to the Notes by either Moody’s Investors Service, Inc.
or Standard & Poor’s Ratings Services is reduced to below Investment Grade;

     (c) the Notes have been called for redemption by the Company, at any time prior to the
close of business on the Business Day prior to the Redemption Date; or

     (d) (i) the Company elects to distribute to all holders of Common Stock rights
entitling them to purchase, for a period expiring within 60 days after the date of such
distribution, Common Stock at less than the Sale Price at the time of such distribution,
(ii) the Company elects to distribute to all holders of Common Stock assets, debt,
securities or rights to purchase securities of the Company, which distribution has a per
share value as determined by the Company’s Board of Directors exceeding 15% of the Sale
Price of the Common Stock on the day preceding the declaration date for such distribution,
or (iii) in the event the Company is a party to a consolidation, merger or binding share
exchange pursuant to which the Common Stock would be converted into cash, securities or
other property, at any time from and after the date which is 15 days prior to the date the
Company announces as the anticipated effective time until 15 days after the actual effective
date of such transaction.

          In the case of the foregoing clauses (d)(i) and (ii), the Company must notify the Holders of
Notes at least 20 days prior to the Ex-Dividend Date for such distribution. Once the Company has
given such Notice, Holders may surrender their Notes for conversion at any

 

 - 12 - 

time thereafter until the earlier of the close of business on the Business Day prior to the
Ex-Dividend Date or the Company’s announcement that such
distribution will not take place.

          If this Note is called for redemption, the Holder may convert it at any time before the close
of business on the last Business Day prior to the Redemption Date. A Note in respect of which a
Holder has delivered a notice of exercise of the option to require the Company to purchase such
Note or to purchase such Note in the event of a Fundamental Change may be converted only if the
notice of exercise is withdrawn in accordance with the terms of the Indenture.

          The initial Conversion Rate is 12.7243 shares of Common Stock per Note with a $1,000 Principal
Amount, subject to adjustment in certain events described in the Indenture. The Company shall
deliver cash or a check in lieu of any fractional share of Common Stock.

          In the event the Company exercises its option pursuant to Section 4.08 of the Supplemental
Indenture to convert the Notes to Cash Pay Notes, the Holder will be entitled on conversion to
receive the same number of shares of Common Stock such Holder would have received if the Company
had not exercised such option. If the Company exercises such option, Notes surrendered for
conversion during the period from the close of business on any Regular Record Date next preceding
any Interest Payment Date to the opening of business of such Interest Payment Date (except Notes
with respect to which the Company has provided a Notice of redemption) must be accompanied by
payment of an amount equal to the interest thereon that the registered Holder is to receive.
Except where Notes surrendered for conversion are so surrendered after a Regular Record Date but
prior to the opening of business on the corresponding Interest Payment Date (in which case such
converting Holder shall receive a final interest payment on such Interest Payment Date, which
interest payment may be repayable to the Company upon conversion as described in this paragraph),
no interest on converted Notes will be payable by the Company on any Interest Payment Date
subsequent to the date of conversion.

          Notes surrendered for conversion during the period from the close of business on any date on
which contingent interest accrues to the opening of business on the date on which such contingent
interest is payable (except Notes with respect to which the Company has provided a Notice of
redemption) must be accompanied by payment of an amount equal to the contingent interest with
respect thereto that the registered Holder is to receive. Except where Notes surrendered for
conversion are so surrendered during the period from the close of business on any date on which
contingent interest accrues to the opening of business on the date on which such contingent
interest is payable (in which case such converting Holder shall receive a final contingent interest
payment on the date such contingent interest is payable, which contingent interest payment may be
repayable to the Company upon conversion as

 

 - 13 - 

described in this paragraph), no contingent interest on converted Notes will accrue after the
date of conversion.

          To convert this Note a Holder must (1) complete and manually sign the conversion notice on the
back of this Note (or complete and manually sign a facsimile of such notice) and deliver such
notice to the Conversion Agent at the office maintained by the Conversion Agent for such purpose,
(2) surrender this Note to the Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Conversion Agent, the Company or the Trustee, (4) pay any transfer or
similar tax, if required and (5) if required, pay any interest on the Note such Holder is to
receive on the next Interest Payment Date by virtue of having been a Holder on the relevant Regular
Record Date.

          A Holder may convert a portion of this Note only if the Principal Amount of such portion is
$1,000 or a multiple of $1,000. No payment or adjustment shall be made for dividends on the Common
Stock except as provided in the Indenture. On conversion of this Note, that portion of Accreted
Value (or, interest, if the Company has exercised its option provided for in paragraph 10 hereof)
attributable to the period from the Issue Date (or, if the Company has exercised the option
referred to in paragraph 10 hereof, the later of (x) the date of such exercise and (y) the date on
which interest was last paid) to the Conversion Date and (except as provided above) accrued
contingent interest with respect to the converted portion of this Note shall not be canceled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof
through the delivery of the Common Stock (together with any cash payment in lieu of fractional
shares) in exchange for the portion of this Note being converted pursuant to the terms hereof; and
the fair market value of such shares of Common Stock (together with any such cash payment in lieu
of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for
Accreted Value (or interest, if the Company has exercised its option provided for in paragraph 10
hereof) accrued through the Conversion Date and accrued contingent interest, and the balance, if
any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as
issued in exchange for the Issue Price of the Note being converted pursuant to the provisions
hereof.

          10. TAX EVENT

          (a) From and after (i) the date (the “Tax Event Date”) of the occurrence of a Tax Event and
(ii) the date the Company exercises such option, whichever is later (the “Option Exercise Date”),
at the option of the Company, all of the Notes will cease to accrete, and cash interest shall
accrue at the rate of 3.125% per annum on the restated principal amount (the “Restated Principal
Amount”), equal to the Accreted Value on the Option Exercise Date, and shall be payable
semiannually on July 20 and January 20 of each year (each an “Interest Payment Date”) to holders
of record at the close of business on July 1 or January 1 (each a “Regular Record Date”)
immediately preceding such Interest Payment Date.

 

 - 14 - 

Interest
will be computed on the basis of a 360-day year comprised of twelve
30-day months and will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the
Option Exercise Date.

          (b) Interest on any Note that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the person in whose name that Note is registered at the
close of business on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose. Each installment of interest on any Note shall be paid in
same-day funds by transfer to an account maintained by the payee located inside the United States.

          (c) From and after the Option Exercise Date, contingent interest provided for in paragraph 5
hereof shall cease to accrue on this Note.

          11. DEFAULTED INTEREST

          Except as otherwise specified with respect to the Notes, any Defaulted Interest on any Note
shall forthwith cease to be payable to the registered Holder thereof on the relevant Regular Record
Date or accrual date, as the case may be, by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company as provided for in Section 4.10(c)(ii) of the Supplemental
Indenture.

          12. DENOMINATIONS; TRANSFER; EXCHANGE

          The Notes are in registered form, without coupons, in denominations of $1,000 of Principal
Amount and multiples of $1,000. A Holder may transfer or convert Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Notes selected for redemption
(except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed)
or any Notes in respect of which a Purchase Notice or Fundamental Change Purchase Notice has been
given and not withdrawn (except, in the case of a Note to be purchased in part, the portion of the
Note not to be purchased) or any Notes for a period of 15 days before any selection of Notes to be
redeemed.

          13. PERSONS DEEMED OWNERS

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

 

 - 15 - 

          14. UNCLAIMED MONEY OR PROPERTY

          If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent will pay the money back to the Company at its request. After that, Holders
entitled to the money must look to the Company for payment unless an abandoned property law
designates another person.

          15. AMENDMENT; SUPPLEMENT; WAIVER

          Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in Principal Amount of the outstanding Notes and
any past default or compliance with any provision relating to the Notes may be waived in a
particular instance with the consent of the Holders of a majority in Principal Amount of the
outstanding Notes. Without the consent of any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to create a Series and
establish its terms, or to make any other change, provided such action does not adversely affect
the rights of any Holder.

          16. SUCCESSOR CORPORATION

          When a successor corporation assumes all the obligations of its predecessor under the Notes
and the Indenture, the predecessor corporation will be released from those obligations.

          17. TRUSTEE DEALINGS WITH THE COMPANY

          Bank One Trust Company, National Association, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and perform services for
the Company or its affiliates, and may otherwise deal with the Company or its affiliates, as if it
were not Trustee.

          18. NO RECOURSE AGAINST OTHERS

          A director, officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.

          19. AUTHENTICATION

          This Note shall not be valid until the Trustee signs the certificate of authentication on the
other side of this Note.

          20. ABBREVIATIONS

          Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to
Minors Act).

 

 - 16 - 

FORM OF CONVERSION NOTICE

To: Masco Corporation

          The undersigned registered holder of this Note hereby exercises the option to convert this
Note, or portion hereof (which is $1,000 Principal Amount or a multiple thereof) designated below,
for shares of Common Stock of Masco Corporation in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares, if any, issuable and deliverable upon such
conversion, together with any check for cash deliverable upon such conversion, 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 shares or any portion of this
Note not converted are to be issued in the name of a Person other than the undersigned, the
undersigned shall pay all transfer taxes payable with respect thereto.

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

Dated:

	 	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 

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

	 	Principal Amount
	 

	 	to be converted (if less than all):

 

 - 17 - 

	 	 	 
	 	 	 
	(Name)
	 	 
	 
	 	 
	 

	 	$___,000
	 	 	 
	(Street Address)
	 	 
	 
	 	 
	 

	 	Social Security or Other
	 	 	 
	(City, state and zip code)

	 	Taxpayer Number
	 
	 	 
	Please print name and address
	 	 

 

 - 18 - 

FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE

To: Masco Corporation

          (I) The undersigned registered holder of this Note hereby acknowledges receipt of a
Notice from Masco Corporation (the “Company”) as to the occurrence of a Fundamental Change with
respect to the Company and requests and instructs the Company to purchase this Note, or the portion
hereof (which is $1,000 Principal Amount or a multiple thereof) designated below, in accordance
with the terms of the Indenture referred to in this Note and directs that the check in payment for
this Note or the portion thereof (or, if the Company elects in accordance with Section 4.03(c) of
the Supplemental Indenture, Common Stock) and any Notes representing any unrepurchased principal
amount hereof, be issued and delivered to the registered holder hereof unless a different name has
been indicated below. If any portion of this Note not repurchased is to be issued in the name of a
Person other than the undersigned, the undersigned shall pay all transfer taxes payable with
respect thereto.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

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

	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	(Name)
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	(Street Address)
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	(City, state and zip code)
	 	 	 	 
	 
	 	 	 	 
	Please print name and address
	 	 	 	 
	 
	 	 	 	 
	 

	 	Principal Amount to be purchased
(if less than all): $___,000	 	 

 

 - 19 - 

          (II) If the Company has elected to pay the Fundamental Change Purchase Price, in whole
or in part, in Common Stock but such portion of the Fundamental Change Purchase Price shall
ultimately be payable in Cash because any of the conditions to the payment of the Fundamental
Change Purchase Price in Common Stock are not satisfied I elect [check one]:

     ___to withdraw such Purchase Notice as to the Notes to which such Fundamental Change
Purchase Notice relates in the Principal Amount of $___,000, with certificate numbers
___, or

     ___to receive Cash in respect of the entire Fundamental Change Purchase Price for all
Notes (or portions thereof) to which such Purchase Notice relates.

 

 - 20 - 

ASSIGNMENT FORM

          If you the Holder want to assign this Note, fill in the form below:

          I or we assign and transfer this Note to

 

 

(Insert assignee’s social security or tax ID number)

 

 

 

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

and irrevocably appoint

 

agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

  

	 	 	 
	Date:                                         

	 	Your signature:                                                             
	 

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

	 	 	 
	Signature Guarantee:
	 	 
	 

	 	 
	 

	 	Signature must be guaranteed by participant in a recognized Signature

Guarantee Medallion Program (or other signature guarantor program reasonably
acceptable to the Trustee)

 

 

EXHIBIT B

PROJECTED PAYMENT SCHEDULE*

	 	 	 	 	 
	Semi-annual Period Ending	 	Projected Payment Per Note
	July 20, 2001

	 	$	0.00	 
	January 20, 2002

	 	$	0.00	 
	July 20, 2002

	 	$	0.00	 
	January 20, 2003

	 	$	0.00	 
	July 20, 2003

	 	$	0.00	 
	January 20, 2004

	 	$	0.00	 
	July 20, 2004

	 	$	0.00	 
	January 20, 2005

	 	$	0.00	 
	July 20, 2005

	 	$	0.00	 
	January 20, 2006

	 	$	0.00	 
	July 20, 2006

	 	$	0.00	 
	January 20, 2007

	 	$	0.00	 
	July 20, 2007

	 	$	0.00	 
	January 20, 2008

	 	$	0.00	 
	July 20, 2008

	 	$	0.00	 
	January 20, 2009

	 	$	3.31	 
	July 20, 2009

	 	$	3.31	 
	January 20, 2010

	 	$	3.31	 
	July 20, 2010

	 	$	3.31	 
	January 20, 2011

	 	$	3.31	 
	July 20, 2011

	 	$	3.31	 
	January 20, 2012

	 	$	3.31	 
	July 20, 2012

	 	$	3.31	 
	January 20, 2013

	 	$	3.31	 
	July 20, 2013

	 	$	3.31	 
	January 20, 2014

	 	$	3.31	 
	July 20, 2014

	 	$	3.31	 
	January 20, 2015

	 	$	3.31	 
	July 20, 2015

	 	$	3.31	 
	January 20, 2016

	 	$	3.31	 
	July 20, 2016

	 	$	3.31	 
	January 20, 2017

	 	$	3.31	 
	July 20, 2017

	 	$	3.31	 
	January 20, 2018

	 	$	3.31	 
	July 20, 2018

	 	$	3.31	 
	January 20, 2019

	 	$	3.31	 
	July 20, 2019

	 	$	3.31	 
	January 20, 2020

	 	$	3.31	 

 

 

	 	 	 	 	 
	Semi-annual Period Ending	 	Projected Payment Per Note
	July 20, 2020

	 	$	3.31	 
	January 20, 2021

	 	$	3.31	 
	July 20, 2021

	 	$	3.31	 
	January 20, 2022

	 	$	3.31	 
	July 20, 2022

	 	$	3.31	 
	January 20, 2023

	 	$	3.31	 
	July 20, 2024

	 	$	3.31	 
	January 20, 2025

	 	$	3.31	 
	July 20, 2025

	 	$	3.31	 
	January 20, 2026

	 	$	3.31	 
	July 20, 2026

	 	$	3.31	 
	January 20, 2027

	 	$	3.33	 
	July 20, 2027

	 	$	3.47	 
	January 20, 2028

	 	$	3.62	 
	July 20, 2028

	 	$	3.77	 
	January 20, 2029

	 	$	3.93	 
	July 20, 2029

	 	$	4.10	 
	January 20, 2030

	 	$	4.27	 
	July 20, 2030

	 	$	4.45	 
	January 20, 2031

	 	$	4.64	 
	July 20, 2031

	 	$	3,871.34	 

 

			
	*	 	The comparable yield means the annual yield the Company would pay, as of the Issue Date, on a
fixed-rate cash-pay nonconvertible debt security with no contingent payments but with terms and
conditions otherwise comparable to those of the Notes. The schedule of projected payments is
determined on the basis of the comparable yield and an assumption of linear growth of the Company’s
stock price and a constant dividend yield. The comparable yield and the schedule of projected
payments are not determined for any purpose other than for the determination of interest accruals
and adjustment thereof in respect of the Notes for United States federal income tax purposes. The
comparable yield and the schedule of projected payments do not constitute a projection or
representation regarding the future stock price or the amounts payable on the Notes.exv4wbwiii

 

Exhibit 4.b.iii

SUPPLEMENTAL INDENTURE

     THIS SUPPLEMENTAL INDENTURE, dated as of November 30, 2006, between Masco Corporation, a
Delaware corporation (the “Company”), N. A. and the Bank of New York Trust Company, N. A. (“BNY”).

     WHEREAS, the Company entered into an Indenture dated as of February 12, 2001 with Bank One
Trust Company, N. A. (the “Indenture”), under which J. P. Morgan Trust Company, N. A. (“J. P.
Morgan”) became the successor trustee;

     WHEREAS, through its acquisition of J. P. Morgan (the “Transaction”), effective October 1,
2006, BNY has become the successor trustee under the Indenture;

     WHEREAS, Section 9.01(i) the Indenture provides for supplemental indentures to make changes,
provided such action does not adversely affect the interests of the holders of the Securities.

     NOW, THEREFORE, the parties agree as follows:

     1. Section 6.10 of the Indenture shall be amended by inserting the following as a new
subparagraph (g):

     “(g) Notwithstanding the provisions of Section 6.12, in connection with any sale
or proposed sale of all or any portion of the corporate trust business of any Trustee
hereunder or any other transaction that would result in a change of control of such
corporate trust business, and provided that no Event of Default exists, the Company
may remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which instrument
shall be delivered to the Trustee so removed and one copy to the successor trustee.
Any removal of the Trustee and appointment of a successor trustee pursuant to the
foregoing shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 6.11 and payment of any outstanding fees or expenses
due to the Trustee.”

     2. BNY agrees that the amendment described in Paragraph 1 above will apply to the Transaction
and consents to the Company soliciting proposals for a successor trustee under the Indenture for
any or all of the securities issued and outstanding thereunder.

     3. Except as hereinabove expressly set forth, all other terms and provisions set forth in the
Indenture shall remain in full force and effect and without any change whatsoever being made
hereby.

 

 

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

	 	 	 	 	 
	 	 	MASCO CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John G. Sznewajs
	 

	 	 	 	 
	 

	 	Name:
	 	John G. Sznewajs
	 

	 	Title:
	 	Vice President-Corporate
	 

	 	 	 	      Development and Treasurer

[Seal]

Attest:

	 	 	 
	/s/ Eugene A. Gargaro, Jr.
 

	 	 
	Eugene A. Gargaro, Jr.
	 	 
	Secretary
	 	 

State of Michigan      )

                                   ) ss

County of Wayne       )

     On the 30th day of November, 2006, before me personally came John G. Sznewajs, to me known,
who, being by me duly sworn, did depose and say that he is a Vice President of Masco Corporation,
the corporation described in and which executed the above instrument; that he knows the corporate
seal of said corporation; that the seal affixed to the said instrument is such corporate seal; that
it was so affixed by authority of the Board of Directors of said corporation; and that he signed
his name thereto by like authority.

	 	 	 
	 

	 	/s/ Cynthia A. Peters
	 

	 	 
	 

	 	Cynthia A. Peters
	 

	 	Notary Public
	 

	 	Wayne County, Michigan
	 

	 	My Comm. Exp.: May 24, 2013

[NOTARIAL SEAL]

-2-

 

	 	 	 	 	 
	 	 	THE BANK OF NEW YORK
	 

	 	TRUST
	 	COMPANY, N. A.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Benita A. Vaughn  

	 

	 	Name:
	 	Benita A. Vaughn
	 

	 	Title:
	 	 Vice President

[Seal]

Attest:

	 	 	 
	/s/ George Reaves
 

	 	 
	Name: George Reaves 

Title Vice President
	 	 

State of Illinois       )

                                ) ss

County of Cook      )

     On
the 30th day of November, 2006, before me personally came _____, to me
known, who, being by me duly sworn, did depose and say that he is a Vice President of The Bank of
New York Trust Company, N. A., the corporation described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation; and that he signed his name thereto by like authority.

	 	 	 
	 

	 	/s/ Diane Mary Wuertz
	 

	 	 
	 
	 	 
	 

	 	 
	 

	 	Notary Public
	 

	 	                     County,                     
	 

	 	My Comm. Exp.:

[NOTARIAL SEAL]

-3-

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