Document:

exv4w2

Exhibit 4.2

HEARTWARE INTERNATIONAL, INC.

as Issuer

WILMINGTON TRUST FSB

as Trustee

 

First Supplemental Indenture

Dated as of December 15, 2010

to Indenture Dated as of

December 15, 2010

 

3.50% Convertible Senior Notes due 2017

 

 

TABLE
OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1

Definitions and Other Provisions of General Application
	 	 	 	 
	 
	Section 1.01. Scope of Supplemental Indenture
	 	 	2	 
	Section 1.02. Definitions
	 	 	2	 
	Section 1.03. References to Interest
	 	 	12	 
	 
	ARTICLE 2
	 	 	 	 
	The Securities
	 	 	 	 
	 
	Section 2.01. Title and Terms; Payments
	 	 	13	 
	Section 2.02. Exchange and Registration of Transfer of Notes; Depositary
	 	 	14	 
	Section 2.03. Maintenance of Office or Agency
	 	 	18	 
	Section 2.04. Reporting Requirement
	 	 	18	 
	Section 2.05. Purchase and Cancellation
	 	 	18	 
	Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes
	 	 	19	 
	Section 2.07. Who Are Deemed Absolute Owners
	 	 	20	 
	Section 2.08. Company Owned Notes
	 	 	21	 
	Section 2.09. Revocation of Consents
	 	 	21	 
	Section 2.10. Temporary Notes
	 	 	21	 
	 
	ARTICLE 3

Fundamental Changes and Repurchases Thereupon
	 	 	 	 
	 
	Section 3.01. Repurchase at Option of Holders Upon a Fundamental Change
	 	 	22	 
	Section 3.02. Effect of Fundamental Change Repurchase Notice
	 	 	25	 
	Section 3.03. Withdrawal of Fundamental Change Repurchase Notice
	 	 	25	 
	Section 3.04. Deposit of Fundamental Change Repurchase Price
	 	 	26	 
	Section 3.05. Notes Repurchased in Whole or in Part
	 	 	26	 
	Section 3.06. Covenant to Comply With Applicable Laws Upon Purchase of Notes
	 	 	26	 
	Section 3.07. Repayment to the Company
	 	 	26	 
	 
	ARTICLE 4
	 	 	 	 
	Conversion	 	 	 	 
	 
	Section 4.01. Conversion Privilege
	 	 	27	 
	Section 4.02. Conversion Procedure; Settlement Upon Conversion
	 	 	30	 

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	 	 	Page	 
	Section 4.03. Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Changes
	 	 	35	 
	Section 4.04. Adjustment of Conversion Rate
	 	 	37	 
	Section 4.05. Adjustments of Prices
	 	 	46	 
	Section 4.06. Effect of Recapitalizations, Reclassifications and Changes of the Common Stock
	 	 	47	 
	Section 4.07. Certain Covenants
	 	 	49	 
	Section 4.08. Responsibility of Conversion Agent and Trustee
	 	 	49	 
	Section 4.09. Notice to Holders Prior to Certain Actions
	 	 	50	 
	Section 4.10. Stockholder Rights Plans
	 	 	51	 
	Section 4.11. Limit on Issuance of Shares of Common Stock Upon Conversion
	 	 	51	 
	 
	ARTICLE 5

Events Of Default
	 	 	 	 
	 
	Section 5.01. Events of Default
	 	 	52	 
	Section 5.02. Acceleration; Rescission and Annulment
	 	 	53	 
	Section 5.03. Additional Interest
	 	 	54	 
	Section 5.04. Payments of Notes on Default; Suit Therefor
	 	 	55	 
	Section 5.05. Application of Monies Collected by Trustee
	 	 	57	 
	Section 5.06. Proceedings by Holders
	 	 	58	 
	Section 5.07. Proceedings by Trustee
	 	 	59	 
	Section 5.08. Remedies Cumulative and Continuing
	 	 	59	 
	Section 5.09. Direction of Proceedings and Waiver of Defaults by Majority of Holders
	 	 	59	 
	Section 5.10. Notice of Defaults
	 	 	60	 
	Section 5.11. Statements as to Defaults
	 	 	60	 
	Section 5.12. Further Instruments and Acts
	 	 	61	 
	Section 5.13. Undertaking to Pay Costs
	 	 	61	 
	 
	ARTICLE 6

Satisfaction and Discharge
	 	 	 	 
	 
	Section 6.01. Satisfaction and Discharge of the Supplemental Indenture
	 	 	61	 
	Section 6.02. Deposited Monies and Shares of Common Stock to be Held in Trust by Trustee
	 	 	62	 
	Section 6.03. Paying Agent to Repay Monies Held
	 	 	62	 
	Section 6.04. Reinstatement
	 	 	63	 
	 
	ARTICLE 7

Supplemental Indentures
	 	 	 	 
	 
	Section 7.01. Supplemental Indentures Without Consent of Holders
	 	 	63	 
	Section 7.02. Supplemental Indentures with Consent of Holders
	 	 	64	 

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	 	 	Page	 
	Section 7.03. Notice of Amendment or Supplement
	 	 	65	 
	Section 7.04. Execution of Supplemental Indentures
	 	 	65	 
	Section 7.05. Effect of Supplemental Indentures
	 	 	65	 
	Section 7.06. Conformity with Trust Indenture Act
	 	 	65	 
	Section 7.07. Reference in Securities to Supplemental Indentures
	 	 	65	 
	 
	ARTICLE 8

	 	 	 	 
	Successor Company	 	 	 	 
	 
	Section 8.01. Consolidation, Merger and Sale of Assets
	 	 	66	 
	Section 8.02. Successor Person Substituted
	 	 	66	 
	Section 8.03. Opinion of Counsel to be Given to Trustee
	 	 	67	 
	 
	ARTICLE 9
	 	 	 	 
	
Lists Of Holders	 	 	 	 
	 
	Section 9.01. Lists of Holders
	 	 	67	 
	Section 9.02. Preservation and Disclosure of Lists
	 	 	68	 
	 
	ARTICLE 10

	 	 	 	 
	No Redemption	 	 	 	 
	 
	Section 10.01. No Redemption
	 	 	68	 
	 
	ARTICLE 11

Covenant to Comply with Australian Securities Exchange Listing Rules
	 	 	 	 
	 
	Section 11.01. Australian Securities Exchange
	 	 	68	 
	 
	ARTICLE 12

	 	 	 	 
	Miscellaneous	 	 	 	 
	 
	Section 12.01. Governing Law
	 	 	68	 
	Section 12.02. No Security Interest Created
	 	 	69	 
	Section 12.03. Trust Indenture Act
	 	 	69	 
	Section 12.04. Benefits of the Indenture
	 	 	69	 
	Section 12.05. Calculations
	 	 	69	 
	Section 12.06. Effect of Headings and Table of Contents
	 	 	69	 
	Section 12.07. Execution in Counterparts
	 	 	69	 
	Section 12.08. Separability Clause
	 	 	69	 
	Section 12.09. Elections Under Original Indenture; Ratification of Original Indenture
	 	 	70	 
	Section 12.10. The Trustee
	 	 	70	 
	EXHIBIT
	 	 	 	 
	 
	Exhibit A Form of Note
	 	 	A-1	 

iii

 

     FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of December 15,
2010, between HeartWare International, Inc., a Delaware corporation, and Wilmington Trust FSB, (the
“Trustee”) as trustee under the Indenture dated as of December 15, 2010, between the Company and
the Trustee (the “Original Indenture”; the Original Indenture as amended and supplemented by this
Supplemental Indenture, and as it may be further amended or supplemented from time to time, the
“Indenture”).

RECITALS OF THE COMPANY

     WHEREAS, the Company executed and delivered the Original Indenture to the Trustee to provide,
among other things, for the issuance, from time to time, of the Company’s Securities, in an
unlimited aggregate principal amount, in one or more series to be established by the Company under,
and authenticated and delivered as provided in, the Original Indenture;

     WHEREAS, Section 901(6) of the Original Indenture provides for the Company and the Trustee to
enter into an indenture supplemental to the Original Indenture to establish the form and terms of
Securities of any series as contemplated by Section 201 and Section 301 of the Original Indenture;

     WHEREAS, the Board of Directors (as herein defined) has duly adopted resolutions authorizing
the Company to execute and deliver this Supplemental Indenture;

     WHEREAS, pursuant to the terms of the Original Indenture, the Company desires to establish a
new series of its Securities to be known as its “3.50% Convertible Senior Notes due 2017” (the
“Notes”), the form and substance of such Notes and the terms, provisions and conditions thereof to
be set forth as provided in the Original Indenture and this Supplemental Indenture;

     WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note and the
Form of Notice of Conversion, the Form of Fundamental Change Repurchase Notice and the Form of
Assignment and Transfer contemplated under the terms of the Notes are to be substantially in the
forms hereinafter provided; and

     WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental
Indenture; and

     WHEREAS, the Company represents that all requirements necessary to make (i) this Supplemental
Indenture a valid instrument in accordance with its terms, and (ii) the Notes, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of the Company, in
each case, have been performed, and the execution and delivery of this Supplemental Indenture have
been duly authorized in all respects.

 

 

     NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration of the
premises and the purchases of the Notes by the Holders thereof, it is mutually agreed, for the
benefit of the Company and the equal and proportionate benefit of all Holders of the Notes, as
follows:

ARTICLE 1

Definitions and Other Provisions of General Application

     Section 1.01. Scope of Supplemental Indenture. The changes, modifications and supplements to
the Original Indenture effected by this Supplemental Indenture shall be applicable only with
respect to, and shall only govern the terms of, the Notes, which may be issued from time to time,
and shall not apply to any other Securities that may be issued under the Original Indenture unless
a supplemental indenture with respect to such other Securities specifically incorporates such
changes, modifications and supplements. For purposes of Article Fifteen of the Original Indenture,
the Notes shall constitute a single class of Securities. The provisions of this Supplemental
Indenture shall supersede any conflicting provisions in the Original Indenture; provided that (i)
if any provision of this Supplemental Indenture conflicts with any provision in Section 602 through
Section 611 of the Original Indenture, such provision of the Original Indenture shall govern and
(ii) no provision of this Supplemental Indenture shall be construed (a) to supersede any obligation
that the Company would otherwise have under the Original Indenture to deliver a Company Order, an
Officer’s Certificate or an Opinion of Counsel to the Trustee, or (b) to limit any right that the
Trustee would otherwise have under the Original Indenture to request or rely on a Company Order, an
Officer’s Certificate or an Opinion of Counsel.

     Section 1.02. Definitions. For all purposes of the Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

     (a) the terms defined in this Article 1 shall have the meanings assigned to them in this
Article 1 and include the plural as well as the singular;

     (b) all words, terms and phrases defined in the Original Indenture (but not otherwise defined
herein) shall have the same meanings as in the Original Indenture;

     (c) all other terms used herein that are defined in the Trust Indenture Act, either directly
or by reference therein, shall have the meanings assigned to them in the Trust Indenture Act;

     (d) all accounting terms not otherwise defined herein shall have the meanings assigned to them
in accordance with generally accepted accounting

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principles, and, except as otherwise herein
expressly provided, the term “generally accepted accounting principles” with respect to any
computation
required or permitted hereunder shall mean such accounting principles as are generally
accepted at the date of this instrument; and

     (e) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to
the Indenture as a whole and not to any particular Article, Section or other subdivision.

     “Additional Interest” has the meaning specified in Section 5.03.

     “Additional Notes” has the meaning specified in Section 2.01.

     “Additional Shares” has the meaning specified in Section 4.03(a).

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For the
purposes of this definition, “control,” when used with respect to any specified Person means the
power to direct or cause the direction of 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.

     “ASX” has the meaning specified in Section 4.11.

     “Bid Solicitation Agent” means the Trustee or such other Person as may be appointed, from time
to time, by the Company to solicit bids for the Trading Price of the Notes in accordance with
Section 4.01(b)(i).

     “Board of Directors” means the board of directors of the Company or a committee thereof duly
authorized to act for it hereunder.

     “Business Day” means, with respect to the Notes, any day other than a Saturday, a Sunday or a
day on which the Federal Reserve Bank of New York is authorized or required by law or executive
order to close or be closed.

     “Capital Stock” means any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and limited liability company interests and,
with respect to partnerships, partnership interests (whether general or limited) and any other
interest or participation that confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, such partnership.

     “Cash Settlement” has the meaning specified in Section 4.02(a).

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     “Clause A Distribution” has the meaning specified in Section 4.04(c).

     “Clause B Distribution” has the meaning specified in Section 4.04(c).

     “Clause C Distribution” has the meaning specified in Section 4.04(c).

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

     “Combination Settlement” has the meaning specified in Section 4.02(a).

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

     “Common Stock” means the common stock of the Company, par value $0.001 per share, at the date
of this Supplemental Indenture, or such other Reference Property into which the Company’s common
stock is changed pursuant to Section 4.06.

     “Continuing Director” means a director who either was a member of the Board of Directors on
December 9, 2010 or who becomes a member of the Board of Directors subsequent to that date and
whose election, appointment or nomination for election by the Company’s stockholders is duly
approved by a majority of the Continuing Directors on the Board of Directors at the time of such
approval, either by a specific vote or by approval of the proxy statement issued by the Company on
behalf of the entire Board of Directors in which such individual is named as nominee for director.

     “Conversion Agent” shall have the meaning specified in Section 2.03.

     “Conversion Date” has the meaning specified in Section 4.02(c).

     “Conversion Obligation” has the meaning specified in Section 4.01(a).

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

     “Conversion Rate” means, initially, 10.0000 shares of Common Stock per $1,000 principal amount
of Notes, subject to adjustment as set forth herein.

     “Corporate Trust Office” means the office of the Trustee at which at any time its corporate
trust business shall be administered, which office at the date hereof is located at Wilmington
Trust FSB, Corporate Capital Markets, 50 South Sixth Street, Suite 1290, Minneapolis, Minnesota
55402-1544, Attention:

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HeartWare Administrator, or such other address as the Trustee may designate
from time to time by notice to the Holders and the Company, or the corporate trust office of any
successor Trustee (or such other address as such successor Trustee may designate from time to time
by notice to the Holders and the Company).

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

     “Daily Conversion Value” means, for each of the 25 consecutive Trading Days during the
applicable Observation Period, 4% of the product of (a) the Conversion Rate in effect on such
Trading Day and (b) the Daily VWAP on such Trading Day.

     “Daily Measurement Value” means the Specified Dollar Amount, divided by 25.

     “Daily Settlement Amount” means for each of the 25 consecutive Trading Days during the
applicable Observation Period:

     (a) cash in an amount equal to the lesser of (i) the Daily Measurement Value and (ii) the
Daily Conversion Value; and

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

     “Daily VWAP” means, for each of the 25 consecutive Trading Days during the applicable
Observation Period, the per share volume-weighted average price as displayed under the heading
“Bloomberg VWAP” on Bloomberg page “HTWR <equity> AQR” (or its equivalent successor, if such
page is not available) in respect of the period from the scheduled open of trading until the
scheduled close of trading of the primary trading session on such Trading Day (or if such
volume-weighted average price is unavailable, the market value of one share of the Common Stock on
such Trading Day determined, using a volume-weighted average method, by a nationally recognized
independent investment banking firm retained for this purpose by the Company). The “Daily VWAP”
shall be determined without regard to after hours trading or any other trading outside of the
regular trading session’s trading hours.

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

     “Depositary” shall initially be The Depository Trust Company until a successor Depositary
shall have become such pursuant to the applicable

5

 

provisions of the Indenture, and thereafter
“Depositary” shall mean such successor Depositary.

     “Distributed Property” has the meaning specified in Section 4.04(c).

     “Effective Date” has the meaning specified in Section 4.03(c).

     “Event of Default” shall have the meaning specified in Section 5.01.

     “Ex-Dividend Date” means the first date on which shares of Common Stock trade on the
applicable exchange or in the applicable market, regular way, without the right to receive the
issuance, dividend or distribution in question, from the Company or, if applicable, from the seller
of the Common Stock on such exchange or market (in the form of due bills or otherwise) as
determined by such exchange or market.

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

     “Form of Assignment and Transfer” means the “Form of Assignment and Transfer” attached as
Attachment 3 to the Form of Note attached hereto as Exhibit A.

     “Form of Fundamental Change Repurchase Notice” means the “Form of Fundamental Change
Repurchase Notice” attached as Attachment 2 to the Form of Note attached hereto as Exhibit A.

     “Form of Notice of Conversion” means the “Form of Notice of Conversion” attached as Attachment
1 to the Form of Note attached hereto as Exhibit A.

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

     (a) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than
the Company, its Subsidiaries and the employee benefit plans of the Company and its Subsidiaries,
has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange
Act, of the Company’s Common Equity representing more than 50% of the voting power of the Company’s
Common Equity;

     (b) the consummation of (i) any recapitalization, reclassification or change of the Common
Stock (other than changes resulting from a subdivision or combination thereof) as a result of which
the Common Stock would be converted into, or exchanged for, stock, other securities, other property
or assets; (ii) any share exchange, consolidation or merger of the Company pursuant to which the

6

 

Common Stock will be converted into cash, securities or other property; or (iii) any sale, lease or
other transfer in one transaction or a series of transactions of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, taken as a whole, to any person other than
one of the Company’s Subsidiaries; provided, however, that a transaction described in clause (ii)
in which the holders of all classes of the Company’s Common Equity immediately prior to such
transaction own, directly or indirectly, more than 50% of all classes of Common Equity of the
continuing or surviving corporation or transferee or the parent thereof immediately after such
transaction in substantially the same proportions as
such ownership immediately prior to such transaction shall not constitute a Fundamental Change
pursuant to clause (ii);

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

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

     (e) the Common Stock (or other common stock underlying the Notes) ceases to be listed or
quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or any of their respective successors).

     Notwithstanding the foregoing, a transaction or transactions described in clause (b) above
shall not constitute a Fundamental Change if 100% of the consideration received or to be received
by the common stockholders of the Company, excluding cash payments for fractional shares, in
connection with such transaction or transactions consists of shares of common stock that are listed
or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ
Global Market (or any or their respective successors) or will be so listed or so quoted when issued
or exchanged in connection with such transaction or transactions and as a result of such
transaction or transactions the Notes become convertible into such consideration, excluding cash
payments for fractional shares (subject to the provisions set forth under Section 4.02).

     “Fundamental Change Company Notice” has the meaning specified in Section 3.01(b).

     “Fundamental Change Repurchase Date” has the meaning specified in Section 3.01(a).

     “Fundamental Change Repurchase Notice” has the meaning specified in Section 3.01(a)(i).

     “Fundamental Change Repurchase Price” has the meaning specified in Section 3.01(a).

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     “Global Note” means any Note in global form registered in the name of the Depositary or the
nominee of the Depositary.

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

     “Indenture” has the meaning specified in the first paragraph of this Supplemental Indenture.

     “Initial Notes” has the meaning specified in Section 2.01.

     “Interest Payment Date” means, with respect to the payment of interest on the Notes, each June
15 and December 15 of each year, beginning on June 15, 2011.

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

     “Make-Whole Fundamental Change” means any transaction or event that constitutes a Fundamental
Change (as defined in this Supplemental Indenture and determined after giving effect to any
exceptions to or exclusions from such definition, but without regard to the proviso in clause (b)
of the definition thereof).

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

     “Maturity Date” means December 15, 2017.

8

 

     “Measurement Period” has the meaning specified in Section 4.01(b)(i).

     “Merger Event” has the meaning specified in Section 4.06(a).

     “Note” or “Notes” has the meaning specified in the fourth paragraph of the recitals of this
Supplemental Indenture, and shall include any Additional Notes issued pursuant to Section 2.01.

     “Observation Period” with respect to any Note surrendered for conversion means: (i) if the
relevant Conversion Date occurs prior to September 15, 2017, the 25 consecutive Trading Day period
beginning on, and including, the third Trading Day after such Conversion Date; and (ii) if the
relevant Conversion
Date occurs on or after September 15, 2017, the 25 consecutive Trading Days beginning on, and
including, the 27th Scheduled Trading Day immediately preceding the Maturity Date.

     “Officer’s Certificate,” means, with respect to the Notes, a certificate that is delivered to
the Trustee and that is signed by (a) two Officers of the Company or (b) one Officer of the Company
and one of the Treasurer, any Assistant Treasurer, the Secretary, any Assistant Secretary or the
Controller of the Company. Each such certificate shall include the statements provided for in
Section 102 of the Original Indenture if and to the extent required by the provisions of such
Section and subject to Section 5.11. One of the Officers giving an Officer’s Certificate pursuant
to Section 5.11 shall be the principal executive, financial or accounting officer of the Company.

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

     “Original Indenture” has the meaning specified in the first paragraph of this Supplemental
Indenture.

     “Outstanding” means, as of any particular time, all Notes authenticated and delivered by the
Trustee under the Indenture, except:

     (a) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

     (b) Notes, or portions thereof, that have become due and payable and in respect of which
monies in the necessary amount shall have been deposited in trust with the Trustee or with any
Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent);

     (c) Notes that have been paid pursuant to Section 6.01 or Notes in lieu of which, or in
substitution for which, other Notes shall have been authenticated and delivered pursuant to the
terms of Section 2.02(a) unless proof satisfactory to

9

 

the Trustee is presented that any such Notes
are held by bona fide purchasers in whose hands such Notes are valid obligations of the Company;

     (d) Notes converted pursuant to Article 4 and required to be cancelled pursuant to Section
2.05;

     (e) Notes repurchased by the Company pursuant to Article 3; and

     (f) with respect to any direction, consent waiver or other action taken by Holders of the
Notes, Notes that are owned by the Company or any Affiliate thereof.

     “Paying Agent” shall have the meaning specified in Section 2.03.

     “Physical Notes” means permanent certificated Notes in registered form issued in denominations
of $1,000 principal amount and integral multiples thereof.

     “Physical Settlement” has the meaning specified in Section 4.02(a).

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

     “Reference Property” has the meaning specified in Section 4.06(a).

     “Regular Record Date,” with respect to any Interest Payment Date for the Notes, means the June
1 or December 1 (whether or not a Business Day) immediately preceding the applicable June 15 or
December 15 Interest Payment Date, respectively.

     “Sales Price Condition” has the meaning specified in Section 4.01(b)(iv).

     “Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the principal
U.S. national or regional securities exchange or market on which the Common Stock is listed or
admitted for trading; provided that if the Common Stock is not so listed or admitted for trading,
“Scheduled Trading Day” means a Business Day.

     “Security Register” has the meaning specified in Section 2.02(a).

     “Security Registrar” has the meaning specified in Section 2.02(a).

10

 

     “Settlement Amount” has the meaning specified in Section 4.02(a)(iv).

     “Settlement Method” means, with respect to any conversion of Notes, Physical Settlement, Cash
Settlement or Combination Settlement, as elected (or deemed to have been elected) by the Company.

     “Settlement Notice” has the meaning specified in Section 4.02(a)(iii).

     “Share Cap” means the number of shares of Common Stock the Company may deliver upon conversion
per $1,000 principal amount of Notes in accordance with applicable listing rules of ASX, which
shall be, in any 12-month period, 15% of the Company’s issued capital.

     “Significant Subsidiary” means a Subsidiary of the Company that meets the definition of
“significant subsidiary” in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act.

     “Specified Dollar Amount” means the maximum cash amount per $1,000 principal amount of Notes
to be received upon conversion as specified in the relevant Settlement Notice (or deemed to have
been so specified in accordance with Section 4.02(a)(iii)).

     “Spin-Off” has the meaning specified in Section 4.04(c).

     “Stock Price” has the meaning specified in Section 4.03(c).

     “Successor Company” has the meaning specified in Section 8.01(a).

     “Supplemental Indenture” has the meaning specified in the first paragraph hereof.

     “Trading Day” means a day on which (i) trading in the Common Stock generally occurs on The
NASDAQ Global Market or, if the Common Stock is not then listed on The NASDAQ Global Market, on the
principal other U.S. national or regional securities exchange on which the Common Stock is then
listed or, if the Common Stock is not then listed on a U.S. national or regional securities
exchange, on the principal other market on which the Common Stock is then traded and (ii) a Last
Reported Sale Price for the Common Stock is available on such securities exchange or market;
provided that if the Common Stock is not so listed or traded, “Trading Day” means a Business Day;
and provided, further, that for purposes of determining amounts due upon conversion only, “Trading
Day” means a day on which (x) there is no Market Disruption Event and (y) trading in the Common
Stock generally occurs on The NASDAQ Global Market or, if the Common Stock is not then listed on
The NASDAQ Global Market, on the principal other U.S. national or regional securities exchange on
which the Common Stock is then listed or, if the Common Stock is not then listed

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on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then
listed or admitted for trading; and provided, further,
that if the Common Stock is not so listed or admitted for trading, “Trading Day” for such
purpose means a Business Day.

     “Trading Price” of the Notes on any date of determination means the average of the secondary
market bid quotations obtained by the Bid Solicitation Agent for $5 million principal amount of
Notes at approximately 3:30 p.m., New York City time, on such determination date from three
independent nationally recognized securities dealers selected by the Company; provided that if
three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are
obtained, then the average of such two bids shall be used, and if only one such bid can reasonably
be obtained by the Bid Solicitation Agent, then such one bid shall be used. If the Bid
Solicitation Agent cannot reasonably obtain at least one bid for $5 million principal amount of the
Notes from a nationally recognized securities dealer on any date, then the Trading Price per $1,000
principal amount of Notes shall be deemed to be less than 98% of the product of the Last Reported
Sale Price of the Common Stock and the Conversion Rate on such date. If (x) the Company is not
acting as Bid Solicitation Agent, and the Company does not, when it is required to do so pursuant
to Section 4.01(b)(i), instruct the Bid Solicitation Agent to obtain bids, or if the Company gives
such instruction to the Bid Solicitation Agent, and the Bid Solicitation Agent fails to make such
determination, or (y) the Company is acting as Bid Solicitation Agent and it fails to make such
determination, then, in either case, the Trading Price per $1,000 principal amount of Notes shall
be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock
and the Conversion Rate on each Trading Day of such failure.

     “Trading Price Condition” has the meaning specified in Section 4.01(b)(i).

     “Trigger Event” has the meaning specified in Section 4.04(c).

     “Trust Indenture Act” means the Trust Indenture Act of 1939, as in effect on the date thereof,
but giving effect to any amendment thereto after the date hereof to the extent required thereby.

     “Trustee” has the meaning set forth in the first paragraph of this Supplemental Indenture.

     “U.S.” means the United States of America.

     “Valuation Period” has the meaning specified in Section 4.04(c).

     Section 1.03. References to Interest. Unless the context otherwise requires, all references
to interest on, or in respect of, any Note in the Indenture

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shall be deemed to include Additional
Interest if, in such context, Additional Interest is, was or would be payable pursuant to Section
5.03. Any express mention of the payment of Additional Interest in any provision hereof shall not
be construed as excluding Additional Interest in those provisions hereof where such express
mention is not made.

ARTICLE 2

The Securities

     Section 2.01. Title and Terms; Payments. There is hereby established a series of Securities
designated the “3.50% Convertible Senior Notes due 2017” initially limited in aggregate principal
amount to $143.75 million, which amount shall be as set forth in a Company Order for the
authentication and delivery of Notes pursuant to Section 303 of the Original Indenture. The Notes
shall be issuable in registered form (and shall constitute “Registered Securities” within the
meaning of the Original Indenture) without coupons in denominations of $1,000 principal amount and
integral multiples thereof.

     The principal amount of Notes then outstanding shall be payable on the Maturity Date.
Interest on the Notes shall accrue at a rate of 3.50% per annum, from December 15, 2010 or from the
most recent date on which interest has been paid or duly provided for, until the principal thereof
is paid or made available for payment. Interest on each Note shall be payable on each Interest
Payment Date, beginning on June 15, 2011, in arrears, to the Person in whose name such Note is
registered on the Security Register at the close of business on the Regular Record Date immediately
preceding the applicable Interest Payment Date. If any Interest Payment Date, the Maturity Date or
any Fundamental Change Repurchase Date falls on a day that is not a Business Day, the required
payment shall be made on the next succeeding Business Day and no interest on such payment shall
accrue in respect of such delay. Section 112 of the Original Indenture shall not apply to the
Notes and shall be superseded in its entirety by this Section 2.01. Payments of the Fundamental Change Repurchase Price, principal and interest)
that are payable but are not punctually paid or duly provided for shall accrue interest per annum
at the rate borne by the Notes, subject to the enforceability thereof under applicable law.

     The Company may, without the consent of the Holders, upon delivery of an Officer’s Certificate
and Opinion of Counsel to the Trustee, hereafter issue additional Notes (“Additional Notes”) under
the Indenture with the same terms as the Notes issued on the date of this Supplemental Indenture
(the “Initial Notes”) in an unlimited aggregate principal amount; provided that if such Additional
Notes are issued with the same CUSIP number as the Initial Notes, such Additional Notes must be
fungible with the Initial Notes for U.S. federal income tax purposes. Any such Additional Notes
shall constitute a single series

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together with the Initial Notes for all purposes hereunder,
including, without limitation, for purposes of any waivers, supplements or amendments to the
Indenture requiring the approval of Holders of the Notes and any offers to repurchase the Notes.

     The Form of Note shall be substantially as set forth in Exhibit A and the Form of Notice of
Conversion, the Form of Fundamental Change Repurchase Notice and the Form of Assignment and
Transfer shall be substantially as set forth in Attachments 1, 2 and 3, respectively, to Exhibit A,
each of which is incorporated into and shall be deemed a part of this Supplemental Indenture, and
in each case with such appropriate insertions, omissions, substitutions and other variations as are
required or permitted by the Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be required to comply with
the rules of any securities exchange or as may, consistently herewith, be determined to be
necessary or appropriate by the Officers of the Company executing such Notes, as evidenced by their
execution of the Notes.

     The Company shall pay the principal of, and interest on, any Global Note registered in the
name of or held by the Depositary or its nominee in immediately available funds to the Depositary
or its nominee, as the case may be, as the registered Holder of such Global Note. The Company
shall pay the principal of any Physical Notes at the office or agency designated by the Company for
that purpose in accordance with Section 2.03.

     The Company shall pay interest on any Physical Notes (A) to a Holder having an aggregate
principal amount of $5,000,000 or less, by check mailed to such Holder at its address as it appears
in the Security Register and (B) to a Holder having an aggregate principal amount of more than
$5,000,000, either by check mailed to such Holder or, upon application by such a Holder to the
Security Registrar not later than the relevant Regular Record Date, by wire transfer in immediately
available funds to such Holder’s account within the United States, which application shall remain
in effect until the Holder notifies, in writing, the Security Registrar to the contrary. Section
307 of the Original Indenture shall not apply to the Notes and shall be superseded in its entirety
by this Section 2.01 and Section 4.02(h).

     Section 2.02. Exchange and Registration of Transfer of Notes; Depositary. Sections 203 and
305 of the Original Indenture shall not apply with respect to the Notes, and shall be superseded in
their entirety by this Section 2.02.

     (a) The Company shall cause to be kept at the Corporate Trust Office a register (the
register maintained in such office or in any other office or agency of the Company designated
pursuant to Section 2.03, the “Security Register”) in which, subject to such reasonable regulations
as it may prescribe, the Company

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shall provide for the registration of Notes and of transfers of
Notes. Such register shall be in written form or in any form capable of being converted into
written form within a reasonable period of time. The Trustee is hereby appointed the “Security
Registrar” for the purpose of registering Notes and transfers of Notes as herein provided.

     Upon surrender for registration of transfer of any Note to the Security Registrar, and
satisfaction of the requirements for such transfer set forth in this Section 2.02, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized denominations and of a like
aggregate principal amount and bearing such restrictive legends as may be required by the
Indenture.

     Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at any such office or agency
maintained by the Company pursuant to Section 2.03. Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that
the Holder making the exchange is entitled to receive, bearing registration numbers not
contemporaneously outstanding.

     All Notes presented or surrendered for registration of transfer or for exchange, required
repurchase or conversion shall (if so required by the Company, the Trustee or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company and duly executed, by the Holder thereof or its
attorney-in-fact duly authorized in writing.

     No service charge shall be imposed by the Company, the Trustee or the Security Registrar for
any registration of transfer or exchange of Notes, but the Company, the Trustee or the Security
Registrar may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar
issue or transfer tax payable in connection therewith as long as, in the case of an exchange, such
tax is payable as a result of the name of the Holder of the new Notes issued upon such exchange of
Notes being different from the name of the Holder of the old Notes surrendered for such exchange.

     None of the Company, the Trustee or the Security Registrar shall be required to exchange or
register a transfer of (i) any Note surrendered for conversion or, if a portion of any Note is
surrendered for conversion, such portion thereof surrendered for conversion or (ii) any Note, or a
portion of any Note, surrendered for required repurchase upon the occurrence of a Fundamental
Change (and not withdrawn) in accordance with Article 3.

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     All Notes issued upon any registration of transfer or exchange of Notes in accordance with the
Indenture shall be the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under the Indenture as the Notes surrendered upon such registration of transfer
or exchange.

     (b) Subject to the third paragraph of Section 2.02(c), all Notes shall be represented by
one or more Global Notes registered in the name of the Depositary or the nominee of the Depositary.
The transfer and exchange of beneficial interests in a Global Note that does not involve the
issuance of a Physical Note, shall be effected through the Depositary (not the Trustee or the Custodian) in accordance with
the Indenture and the procedures of the Depositary therefor.

     (c) Notwithstanding any other provisions of the Indenture (other than the provisions set
forth in this Section 2.02(c)), a Global Note may not be transferred as a whole or in part except
by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

     The Depositary shall be a clearing agency registered under the Exchange Act. The Company
initially appoints The Depository Trust Company to act as Depositary with respect to each Global
Note. The Notes initially shall be issued in the form of one or more Global Notes without interest
coupons (i) registered in the name of Cede & Co., as nominee of the Depositary and (ii) delivered
to the Trustee as custodian for the Depositary.

     The Company shall execute, and the Trustee, upon receipt of an Officer’s Certificate and a
Company Order for the authentication and delivery of the relevant Note or Notes, will authenticate
and deliver (i) if (a) the Depositary notifies the Company that the Depositary is unwilling or
unable to continue as Depositary for the Global Notes and a successor Depositary is not appointed
within 90 days or (b) the Depositary ceases to be registered as a clearing agency under the
Exchange Act and a successor Depositary is not appointed within 90 days, Physical Notes to each
Person the Depositary identifies as a beneficial owner of the related Global Notes (or a portion
thereof) in an aggregate principal amount equal to the principal amount of such Global Notes, in
exchange for such Global Notes, and upon delivery of the Global Notes to the Trustee such Global
Notes shall be cancelled; or (ii) if an Event of Default with respect to the Notes has occurred and
is continuing and any beneficial owner requests that its Global Note (or portion of a Global Note)
be issued as a Physical Note, a Physical Note to such beneficial owner in a principal amount
corresponding to such beneficial owner’s beneficial interest.

     Physical Notes issued in exchange for all or a part of the Global Note pursuant to this
Section 2.02(c) shall be registered in such names and in such

16

 

authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Physical
Notes to the Persons in whose names such Physical Notes are so registered.

     At such time as all interests in a Global Note have been converted, cancelled, repurchased or
transferred, such Global Note shall be, upon receipt thereof, cancelled by the Trustee in
accordance with standing procedures and existing instructions between the Depositary and the
Custodian. At any time prior to such cancellation, if any interest in a Global Note is exchanged
for Physical Notes, converted, cancelled, repurchased or transferred to a transferee who
receives Physical Notes therefor or any Physical Note is exchanged or transferred for part of
such Global Note, the principal amount of such Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian, be appropriately
reduced or increased, as the case may be, and an endorsement shall be made on such Global Note, by
the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or
increase.

     Neither the Company, the Trustee nor any agent of the Company or the Trustee shall have any
responsibility or liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

     A legend in substantially the following form shall appear on the face of all Global Notes:

     THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR
NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A
TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE
OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT
IN LIMITED CIRCUMSTANCES.

     UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN

17

 

SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON 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.

     Section 2.03. Maintenance of Office or Agency. Section 1002 of the Original Indenture shall
not apply with respect to the Notes, and shall be superseded in its entirety by this Section 2.03.
The Company shall maintain an office or agency where the Notes may be surrendered for presentation
for payment or repurchase (“Paying Agent”) or for conversion (“Conversion Agent”)
and where notices and demands to or upon the Company in respect of the Notes and the Indenture
may be served. The Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate
Trust Office.

     The Company hereby initially designates the Trustee as the Paying Agent, Custodian and
Conversion Agent and the Corporate Trust Office and the agency of the Trustee in Minneapolis,
Minnesota shall be considered as an office or agency of the Company for each of the aforesaid
purposes.

     The Place of Payment of the Notes for purposes of the Original Indenture shall be the location
of the Paying Agent, as designated by the Company from time to time in accordance with this Section
2.03.

     Section 2.04. Reporting Requirement. Section 703(1) of the Original Indenture shall not
apply to the Notes, and shall be superseded in its entirety by this Section 2.04. The reference to
paragraph (1) of Section 703 of the Original Indenture in paragraph (3) of Section 703 of the
Original Indenture shall be deemed to be a reference to this Section 2.04. The Company shall file
with the Trustee within 15 days after the Company is required to file the same with the SEC (giving
effect to any grace period provided by Rule 12b-25 under the Exchange Act), copies of any documents
or reports that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. Any such document or report that the Company files with the SEC via the EDGAR system
shall be deemed to be filed with the Trustee for purposes of this Section 2.04 as of the time such
document is filed via the EDGAR system.

     Section 2.05. Purchase and Cancellation. Section 310 of the Original Indenture shall not
apply to the Notes, and shall be superseded in its entirety by

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this Section 2.05. The Company shall
cause all Notes surrendered for payment, required repurchase upon the occurrence of a Fundamental
Change, registration of transfer or exchange or conversion, if surrendered to any Person other than
the Trustee (including any of the Company’s agents, Subsidiaries or Affiliates), to be delivered to
the Trustee for cancellation. All Notes delivered to the Trustee shall be cancelled promptly by the
Trustee. No Notes shall be authenticated in exchange for any Notes cancelled, as provided herein.
The Company may, to the extent permitted by law, and directly or indirectly (regardless of whether
such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise,
without giving prior notice to Holders, whether by the Company or the Company’s Subsidiaries or
through a private or public tender or exchange offer or through counterparties to private
agreements.

     Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes. Section 306 of the Original
Indenture shall not apply to the Notes, and shall be superseded in its
entirety by this Section 2.06. In case any Note shall become mutilated or be destroyed, lost
or stolen, the Company in its discretion may execute, and upon its written request the Trustee or
an Authenticating Agent shall authenticate and deliver, a new Note, bearing a registration number
not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu
of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for
a substituted Note shall furnish to the Company, to the Trustee and, if applicable, to such
Authenticating Agent such security or indemnity as may be reasonably required by them to save each
of them harmless from any loss, liability, cost or expense (including, without limitation, the
reasonable fees and expenses of counsel) caused by or connected with such substitution, and, in
every case of destruction, loss or theft, the applicant shall also furnish to the Company, to the
Trustee and, if applicable, to such Authenticating Agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.

     The Trustee or such Authenticating Agent may authenticate any such substituted Note and
deliver the same upon the receipt of such security or indemnity as the Trustee, the Company and, if
applicable, such Authenticating Agent may reasonably require. Upon the issuance of any substitute
Note, the Company or the Trustee may require the payment by the Holder of a sum sufficient to cover
any tax, assessment or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. In case any Note that has matured or has been surrendered for
required repurchase or has been surrendered for conversion in accordance with Article 4 shall
become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead
of issuing a substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a mutilated Note), as the
case may be, if the applicant for such payment or conversion shall furnish to the Company, to the
Trustee and, if applicable, to such

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Authenticating Agent such security or indemnity as may be
reasonably required by them to save each of them harmless for any loss, liability, cost or expense
caused by or connected with such substitution, and, in every case of destruction, loss or theft,
evidence satisfactory to the Company, the Trustee and, if applicable, any Paying Agent or
Conversion Agent evidence of their satisfaction of the destruction, loss or theft of such Note and
of the ownership thereof.

     Every substitute Note issued pursuant to the provisions of this Section 2.06 by virtue of the
fact that any Note is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any
time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set
forth in) the Indenture equally and proportionately with any and all other Notes duly issued
hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express
condition that the foregoing provisions are exclusive with respect to the replacement or payment or
conversion or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude any and
all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary with respect
to the replacement or payment or conversion of negotiable instruments or other securities without
their surrender.

     Section 2.07. Who Are Deemed Absolute Owners. Section 309 of the Original Indenture shall not
apply to the Notes, and shall be superseded in its entirety by this Section 2.07. The Company, the
Trustee, any Authenticating Agent, any Paying Agent, any Conversion Agent and the Security
Registrar may deem the Person in whose name a Note shall be registered upon the Security Register
to be, and may treat it as, the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon made by any Person
other than the Company or the Security Registrar) for the purpose of receiving payment of or on
account of the principal of and (subject to Section 2.01) accrued and unpaid interest on such Note,
for conversion of such Note and for all other purposes; and neither the Company nor the Trustee nor
any Paying Agent nor any Conversion Agent nor the Security Registrar shall be affected by any
notice to the contrary. All such payments or deliveries so made to any Holder, or upon its order,
shall be valid, and, to the extent of the sum or sums so paid or shares of Common Stock so
delivered, effectual to satisfy and discharge the liability for monies payable upon any such Note
or shares deliverable in respect of any conversion thereof, as applicable. Notwithstanding
anything to the contrary in the Indenture or the Notes following an Event of Default, any Holder of
a beneficial interest in a Global Note may directly enforce against the Company, without the
consent, solicitation, proxy, authorization or any other action of the Depositary or any other
Person, such Holder’s right to exchange such beneficial interest for a Note in certificated form in
accordance with the provisions of the Indenture.

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     Section 2.08. Company Owned Notes. Notwithstanding clause (f) of the definition of
“Outstanding” in Section 1.02, (x) for the purpose of determining whether the Trustee shall be
protected in relying on any direction, consent, waiver or other action by Holders, only Notes that
a Responsible Officer knows are owned by the Company or any Affiliate thereof shall be disregarded
and deemed not to be Outstanding pursuant to such clause (f) and (y) Notes owned by the Company or
any Affiliate thereof that have been pledged in good faith may be regarded as Outstanding under the
Indenture and the Notes if the pledgee shall establish to the satisfaction of the Trustee the
pledgee’s right to take the relevant action with respect to such Notes and that the pledgee is not
the Company or an Affiliate thereof. In the case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request
of the Trustee, the Company shall furnish to the Trustee promptly an Officers’ Certificate listing
and identifying all Notes, if any, known by the Company to be owned or held by or for the account
of the Company or any Affiliate thereof; and, subject to Section 602 of the Original Indenture, the
Trustee shall be entitled to accept such Officers’ Certificate as conclusive evidence of the facts
therein set forth and of the fact that all Notes not listed therein are Outstanding for the purpose
of any such determination.

     Section 2.09. Revocation of Consents. At any time prior to (but not after) the evidencing to
the Trustee, as provided in Section 104 of the Original Indenture, of the taking of any action by
the Holders of the percentage in aggregate principal amount of the Notes specified in the Indenture
in connection with such action, any Holder of a Note that is shown by the evidence to be included
in the Notes the Holders of which have consented to such action may, by filing written notice with
the Trustee at its Corporate Trust Office and upon proof of holding as provided in Section 104(a)
of the Original Indenture, revoke such action so far as concerns such Note.

     Section 2.10. Temporary Notes. Section 304 of the Original Indenture shall not apply to the
Notes, and shall be superseded in its entirety by this Section 2.10. Pending the preparation of
Physical Notes, the Company may execute and the Trustee or an Authenticating Agent shall, upon
written request of the Company as set forth in a Company Order, authenticate and deliver temporary
Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination,
and substantially in the form of the Physical Notes but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined by the Company and
notified to the Trustee in writing. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such Authenticating Agent upon the same conditions and in
substantially the same manner, and with the same effect, as the Physical Notes. Without
unreasonable delay, the Company will execute and deliver to the Trustee or such Authenticating
Agent Physical Notes (other than any Global Note) and thereupon any or all temporary Notes (other
than any

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Global Note) may be surrendered in exchange therefor, at each office or agency maintained
by the Company pursuant to Section 2.03 and the Trustee or such Authenticating Agent shall
authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount
of Physical Notes. Such exchange shall be made by the Company at its own expense and without any
charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits and subject to the same limitations under the Indenture as Physical Notes
authenticated and delivered hereunder.

ARTICLE 3

Fundamental Changes and Repurchases Thereupon

     Section 3.01. Repurchase at Option of Holders Upon a Fundamental Change. (a) If a
Fundamental Change occurs at any time, then each Holder of a Note shall have the right, at such
Holder’s option, to require the Company to repurchase for cash such Holder’s Note, or any portion
of the principal amount thereof that is equal to $1,000 or an integral multiple of $1,000, on a
date (the “Fundamental Change Repurchase Date”) specified by the Company that is not less than 20
nor more than 35 calendar days following the date the Company delivers the related Fundamental
Change Company Notice pursuant to Section 3.01(b), at a repurchase price equal to 100% of the
principal amount of the Note
to be repurchased pursuant to this Article 3, plus accrued and unpaid interest thereon, if
any, to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase
Price”), unless the Fundamental Change Repurchase Date falls after a Regular Record Date but on or
prior to the Interest Payment Date to which such Regular Record Date relates, in which case the
Company shall instead pay the full amount of such accrued and unpaid interest, if any, on the
Interest Payment Date to the Holder of record of such Note on such Regular Record Date, and the
Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of the Note to
be repurchased pursuant to this Article 3.

     To exercise the right to require the Company to repurchase its Note or a portion thereof upon
a Fundamental Change in accordance pursuant to this Section 3.01, a Holder must:

     (i) deliver to the Paying Agent a duly completed notice (the “Fundamental Change
Repurchase Notice”) in the form set forth in Attachment 2 to the Form of Note attached
hereto as Exhibit A, and comply with the Depositary’s procedures for surrendering
interests in Global Notes if such Note is represented by an interest in a Global Note, in
each case on or before the close of business on the Business Day immediately preceding the
Fundamental Change Repurchase Date; and

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     (ii) deliver such Note, in the case of a Physical Note, to the Paying Agent
together with, or at any time after, delivery of the Fundamental Change Repurchase Notice
(together with all necessary endorsements for transfer) at the Corporate Trust Office of
the Paying Agent, or effect book-entry transfer of such Note (or such portion of a Note),
if such Note is represented by an interest in a Global Note, in compliance with the
procedures of the Depositary, in each case such delivery or transfer being a condition to
receipt by the Holder of the Fundamental Change Repurchase Price therefor.

     Each Fundamental Change Repurchase Notice in respect of any Note (or portion of a Note) to be
repurchased shall state:

     (A) if such Note is a Physical Note, the certificate number of such
Note;

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

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

provided, however, that if such Note is represented by an interest in a Global Note, the
Fundamental Change Repurchase Notice must also comply with the applicable procedures of the
Depositary.

     (b) On or before the 20th calendar day after (i) the date the Company knew or reasonably
should have known that the Fundamental Change occurred, in the case of a Fundamental Change
described under clause (a) of the definition thereof, or (ii) the date the Fundamental Change
occurred, in the case of any other Fundamental Change, the Company shall provide to all Holders of
the Notes, the Trustee and the Paying Agent (in the case of any Paying Agent other than the
Trustee) a notice (the “Fundamental Change Company Notice”) of the occurrence of such Fundamental
Change and of the repurchase right of the Holders arising as a result thereof. For the purpose of
clause (i) of the preceding sentence, the Company shall be deemed to know of any Schedule TO or any
other schedule, form or report filed under the Exchange Act by any person or group. Such notice
shall be sent by first class mail or, in the case of any Global Notes, in accordance with the
procedures of the Depositary for providing notices. Simultaneously with providing such Fundamental
Change Company Notice, the Company shall publish a notice containing the information included
therein in a newspaper of general circulation in The City of New York or publish such

23

 

information on the Company’s website or through such other public medium as the Company may
use at such time.

     Each Fundamental Change Company Notice shall specify:

     (i) the events causing the Fundamental Change;

     (ii) the effective date of the Fundamental Change;

     (iii) the last date on which a Holder may exercise the repurchase right pursuant to
this Article 3;

     (iv) the Fundamental Change Repurchase Price;

     (v) the Fundamental Change Repurchase Date;

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

     (vii) if applicable, the Conversion Rate in effect on the date of the Fundamental
Change Repurchase Notice and, if applicable, any adjustments that will be made to the
Conversion Rate;

     (viii) if applicable, that the Note with respect to which a Fundamental Change
Repurchase Notice has been delivered by the Holder thereof may be converted only if such
Holder withdraws such Fundamental Change Repurchase Notice in accordance with Section
3.03; and

     (ix) the procedures that a Holder must follow to require the Company to repurchase
its Note.

     No failure of the Company to give the foregoing notices and no defect therein shall limit the
repurchase rights of the Holders of Notes or affect the validity of the proceedings for the
purchase of the Notes pursuant to this Section 3.01.

     (c) Notwithstanding the foregoing, there shall be no repurchase of any Note pursuant to this
Section 3.01 on any date if the principal amount of the Notes has been accelerated, and such
acceleration has not been rescinded, on or prior to such date (except in the case of an
acceleration resulting from an Event of Default by the Company in the payment of the Fundamental
Change Repurchase Price with respect to any Note). The Paying Agent shall promptly return to the
respective Holders thereof any Physical Notes held by it during the acceleration of the Notes
(except in the case of an acceleration resulting from an Event of Default by the Company in the
payment of the Fundamental Change Repurchase Price

24

 

with respect to any Note), and any instructions
for book-entry transfer of Notes in compliance with the procedures of the Depositary shall be
deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Fundamental Change
Repurchase Notice with respect to such Notes shall be deemed to have been withdrawn.

     Section 3.02. Effect of Fundamental Change Repurchase Notice. Upon receipt by the Paying
Agent of a Fundamental Change Repurchase Notice specified in Section 3.01, the Holder of the Note
in respect of which such Fundamental Change Repurchase Notice was given shall (unless such
Fundamental Change Repurchase Notice is withdrawn in accordance with Section 3.03) thereafter be
entitled to receive the Fundamental Change Repurchase Price in cash with respect to such Note.
Such Fundamental Change Repurchase Price shall be paid to such Holder, subject to receipt of funds
by the Paying Agent, on the later of (x) the Fundamental Change Repurchase Date with respect to
such Note (provided the conditions in Section 3.01 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 3.01.

     Section 3.03. Withdrawal of Fundamental Change Repurchase Notice. A Fundamental Change
Repurchase Notice with respect to any Note may be withdrawn (in whole or in part) by means of a
written notice of withdrawal delivered to the Paying Agent in accordance with this Section 3.03 at
any time prior to the close of business on the Business Day immediately preceding the Fundamental
Change Repurchase Date, specifying:

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

     (b) if such Note is a Physical Note, the certificate number of such withdrawn Note; and

     (c) the principal amount, if any, of such Note that remains subject to such Fundamental Change
Repurchase Notice, which must be $1,000 or an integral multiple thereof;

provided, however, that if such Note is a Global Note, the notice must comply with the applicable
procedures of the Depositary.

     The Paying Agent will promptly return to the respective Holders thereof any Physical Notes
with respect to which a Fundamental Change Repurchase Notice has been withdrawn in compliance with
the provisions of this Section 3.03.

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

25

 

     Section 3.04. Deposit of Fundamental Change Repurchase Price. Prior to 11:00 a.m. (local
time in The City of New York) on the Fundamental Change Repurchase Date, the Company shall deposit
with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, the
Company or such Subsidiary or Affiliate shall segregate and hold in trust as provided herein) an
amount of money (in immediately available funds if deposited on such Business Day) sufficient to
pay the Fundamental Change Repurchase Price for each Note or portion of a Note that is to be
repurchased as of the Fundamental Change Repurchase Date. If the Paying Agent on the Fundamental
Change Repurchase Date holds cash sufficient to pay the Fundamental Change Repurchase Price of all
Notes for which a Fundamental Change Repurchase Notice has been delivered and not withdrawn in
accordance with this Article 3 as of the close of business on the Business Day immediately
preceding the Fundamental Change Repurchase Date, then as of such Fundamental Change Repurchase
Date, (a) such Notes shall cease to be outstanding and interest on such Notes shall cease to accrue
(whether or not book-entry transfer of such Notes is made or whether or not such Notes are
delivered to the Paying Agent, as applicable) and (b) all other rights of the Holders with respect
to such Notes shall terminate (other than the right to receive the Fundamental Change Repurchase
Price of such Notes upon delivery or book-entry transfer of such Notes).

     Section 3.05. Notes Repurchased in Whole or in Part. Upon surrender of any Note to be
repurchased in part pursuant to this Article 3 to the Paying Agent in accordance with Section
3.01(a), 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 that is not repurchased.

     Section 3.06. Covenant to Comply With Applicable Laws Upon Purchase of Notes. In connection
with any offer to repurchase Notes under Section 3.01, the Company shall, in each case if required
under such law or regulation, (i) comply with Rule 13e-4, Rule 14e-1 and any other tender offer
rules under the Exchange Act that may then be applicable, (ii) file a Schedule TO or any other
required schedule under the Exchange Act and (iii) otherwise comply with all federal and state
securities laws, in each case, so as to permit the rights and obligations under Section 3.01 to be
exercised in the time and in the manner specified in Section 3.01.

     Section 3.07. Repayment to the Company. To the extent that the aggregate amount of cash
deposited by the Company pursuant to Section 3.04 exceeds the aggregate Fundamental Change
Repurchase Price of the Notes or portions thereof that the Company is obligated to repurchase as of
the Fundamental Change Repurchase Date, then, following the Fundamental Change

26

 

Repurchase Date,
upon receipt of a Company Order, the Paying Agent shall promptly return any such excess to the
Company.

ARTICLE 4

Conversion

     Section 4.01. Conversion Privilege. (a) Holders may not convert their Notes prior to
February 1, 2011, regardless of whether any of the following conditions are satisfied. Subject to
and upon compliance with the provisions of this Article 4, each Holder of a Note shall have the
right, at such Holder’s option, to convert all or any portion (if the portion to be converted is
$1,000 principal amount or an integral multiple thereof) of such Note (i) upon satisfaction of one
or more of the conditions described in Section 4.01(b), on or after February 1, 2011, and prior to
June 15, 2017 under the circumstances and during the periods set forth in Section 4.01(b), and (ii)
regardless of whether any of the conditions set forth in Section 4.01(b) has been met, at any time
on or after June 15, 2017 and prior to the close of business on the Business Day immediately
preceding the Maturity Date, in each case, at the Conversion Rate (subject to the settlement
provisions of Section 4.02, the “Conversion Obligation”).

     (b) (i) On or after February 1, 2011 and prior to June 15, 2017, the Notes may be surrendered
for conversion in accordance with the Indenture during the five Business Day period immediately
after any five consecutive Trading Day period (the “Measurement Period”) in which the Trading Price
per $1,000 principal amount of Notes, as determined following a request by a Holder of Notes in
accordance with this (i), for each Trading Day of the Measurement Period was less than 98% of the
product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on such Trading
Day (the “Trading Price Condition”). The Company shall provide written notice to the Bid
Solicitation Agent of the independent nationally recognized securities dealer or dealers selected
by the Company pursuant to the definition of Trading Price, along with appropriate contact
information for each. The Bid Solicitation Agent shall have no obligation to determine the Trading
Price per $1,000 principal amount of Notes unless the Company has requested such determination by
Company Order; and the Company shall have no obligation to make such request unless a Holder
provides the Company with reasonable evidence that the Trading Price per $1,000 principal amount of
Notes would be less than 98% of the product of the Last Reported Sale Price of the Common Stock and
the Conversion Rate, at which time the Company shall instruct the Bid Solicitation Agent by Company
Order to determine the Trading Price per $1,000 principal amount of Notes beginning on the next
Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount
of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the
Common Stock and the Conversion Rate. If the Trading Price Condition has been met pursuant to such

27

 

determination, the Bid Solicitation Agent shall so notify the Company and the Company shall so
notify the Holders, the Trustee and the Conversion Agent (if other than the Trustee), in each case
within one Business Day of the Trading Price Condition being met. If, at any time after the
Trading Price Condition has been met, the Trading Price per $1,000 principal amount of Notes is
greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock
and the applicable Conversion Rate, the Company shall so notify the Holders, the Trustee and
the Conversion Agent (if other than the Trustee) within one Business Day. The Company hereby
initially designates the Trustee to act as the Bid Solicitation Agent.

     (ii) If, prior to June 15, 2017, the Company elects to:

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

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

then, in either case, the Company shall notify the Holders of the Notes, the Trustee and the
Conversion Agent (if other than the Trustee) at least 35 Scheduled Trading Days prior to the
Ex-Dividend Date for such issuance or distribution. If the Ex-Dividend Date for such issuance or
distribution is on or after February 1, 2011, the Notes may be surrendered for conversion at any
time during the period beginning on, and including, the later of (1) February 1, 2011 and (2) the
Company’s delivery of such notice and ending at the earlier of close of business on the Business
Day immediately preceding the Ex-Dividend Date for such issuance or distribution and the Company’s
announcement that such issuance or distribution will not take place, even if the Notes are not
otherwise convertible at such time. Notes may not be surrendered for conversion pursuant to this
Section 4.01(b)(ii) if Holders of such Notes have the right to participate (as a result of holding
the Notes, and at the same time and on the same terms as common stockholders participate) in any of
the transactions described in this Section

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4.01(b)(ii) as if such Holders held a number of shares
of the Common Stock, for each $1,000 principal amount of such Notes, equal to the applicable
Conversion Rate, without having to convert such Notes.

     (iii) If a transaction or event that constitutes (1) a Fundamental Change, (2) a
Make-Whole Fundamental Change or (3) a consolidation, merger, combination or statutory
share exchange involving the Company, or a sale, lease or other transfer of all or
substantially all of its assets,
pursuant to which the Common Stock would be converted into cash, securities or other
assets, in each case (A) occurs after the 35th Trading Day prior to February 1, 2011 (or,
if such transaction also constitutes a Fundamental Change, the related Fundamental Change
Repurchase Date occurs after February 1, 2011), and (B) occurs prior to June 15, 2017,
regardless of whether a Holder has the right to require the Company to repurchase the
Notes pursuant to Section 3.01, the Notes may be surrendered for conversion at any time
from or after the date that is the later of (x) February 1, 2011 and (y) 35 Scheduled
Trading Days prior to the anticipated effective date of the transaction (or, if later, the
Business Day after the Company gives notice of such transaction) until 35 Trading Days
after the actual effective date of such transaction or, if such transaction also
constitutes a Fundamental Change, until the related Fundamental Change Repurchase Date.
The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the
Trustee) (i) as promptly as practicable following the date the Company publicly announces
such transaction but in no event less than 35 Scheduled Trading Days prior to the
anticipated effective date of such transaction or (ii) if the Company does not have
knowledge of such transaction at least 35 Scheduled Trading Days prior to the anticipated
effective date of such transaction, within one Business Day of the date upon which the
Company receives notice, or otherwise becomes aware, of such transaction but in no event
later than the actual effective date of such transaction.

     (iv) On or after February 1, 2011 and prior to June 15, 2017, the Notes may be
surrendered for conversion during any calendar quarter commencing after the calendar
quarter ending on March 31, 2011 (and only during such calendar quarter), if the Last
Reported Sale Price of the Common Stock for at least 20 Trading Days (whether or not
consecutive) during the period of 30 consecutive Trading Days ending on the last Trading
Day of the immediately preceding calendar quarter is greater than or equal to 130% of the
Conversion Price on each applicable Trading Day (the “Sales Price Condition”). The
Company shall determine at the beginning of each calendar quarter commencing after the
calendar quarter ending on March 31, 2011 whether the Sales Price Condition has been met
and, if the Company determines that the Sales Price Condition has been met, the Company
shall notify the Holders, the Trustee and the

29

 

Conversion Agent (if other than the Trustee)
as soon as reasonably practicable after such determination.

     Section 4.02. Conversion Procedure; Settlement Upon Conversion.

     (a) Subject to this Section 4.02, Section 4.03(b) and Section 4.06(a), upon conversion of any
Note, the Company shall satisfy its Conversion Obligation by paying or delivering, as the case may
be, to the converting Holder, in respect of each $1,000 principal amount of Notes being converted,
cash (“Cash Settlement”), shares of Common Stock, together with cash, if applicable, in lieu
of any fractional share of Common Stock in accordance with subsection (j) of this Section 4.02
(“Physical Settlement”) or a combination of cash and shares of Common Stock, together with cash, if
applicable, in lieu of any fractional share of Common Stock in accordance with subsection (j) of
this Section 4.02 (“Combination Settlement”), at its election, as set forth in this Section 4.02.

     (i) All conversions occurring on or after September 15, 2017 shall be settled using
the same Settlement Method.

     (ii) Prior to September 15, 2017, the Company shall use the same Settlement Method
for all conversions occurring on the same Conversion Date, but the Company shall not have
any obligation to use the same Settlement Method with respect to conversions that occur on
different Trading Days.

     (iii) If, in respect of any Conversion Date or period of potential Conversion Dates,
the Company elects to deliver a notice (the “Settlement Notice”) of the relevant
Settlement Method in respect of such Conversion Date or such period, as the case may be,
the Company, through the Trustee, shall deliver such Settlement Notice to converting
Holders (or in the case of a period of potential Conversion Dates, to all Holders) no
later than the close of business on the second Trading Day immediately following the
relevant Conversion Date (or, in the case of any conversions occurring on or after
September 15, 2017, no later than September 15, 2017). If the Company does not elect a
Settlement Method prior to the deadline set forth in the immediately preceding sentence,
the Company shall no longer have the right to elect Cash Settlement or Physical Settlement
and the Company shall be deemed to have elected Combination Settlement in respect of its
Conversion Obligation, and the Specified Dollar Amount shall be equal to $1,000. If the
Company delivers a Settlement Notice in accordance with the second preceding sentence
electing Combination Settlement in respect of its Conversion Obligation but does not
indicate a Specified Dollar Amount in such Settlement Notice, the Specified Dollar Amount
shall be deemed to be $1,000. Each Settlement Notice shall specify (x) the relevant
Settlement

30

 

Method, (y) in the case of an election of Combination Settlement, the relevant
Settlement Notice shall indicate the Specified Dollar Amount and (z) in the case of
Physical Settlement or Combination Settlement, if the Company reasonably expects that it
will deliver cash in lieu of shares of Common Stock otherwise deliverable upon such
conversion pursuant to Section 4.11, the maximum number of shares the Company is permitted
under ASX listing rules to deliver in respect of conversions on such Conversion Date.

     (iv) The amount of cash, if any, and number of shares of Common Stock, if any,
payable or deliverable by the Company upon any
conversion of a Note (the “Settlement Amount”) shall be computed as follows:

     (A) if the Company elects to satisfy its Conversion Obligation in respect
of such conversion by Physical Settlement, the Company shall deliver to the
converting Holder, in respect of each $1,000 principal amount of such Note being
converted, a number of shares of Common Stock equal to the Conversion Rate in
effect on the Conversion Date;

     (B) if the Company elects to satisfy its Conversion Obligation in respect
of such conversion by Cash Settlement, the Company shall pay to the converting
Holder in respect of each $1,000 principal amount of such Note being converted
cash in an amount equal to the sum of the Daily Conversion Values for each of
the 25 consecutive Trading Days during the relevant Observation Period; and

     (C) if the Company elects (or is deemed to have elected) to satisfy its
Conversion Obligation in respect of such conversion by Combination Settlement,
the Company shall pay or deliver, as the case may be, to the converting Holder
in respect of each $1,000 principal amount of such Note being converted, a
Settlement Amount equal to the sum of the Daily Settlement Amounts for each of
the 25 consecutive Trading Days during the relevant Observation Period.

     (v) The Daily Settlement Amounts (if applicable) and the Daily Conversion Values (if
applicable) shall be determined by the Company promptly following the last day of the
Observation Period. Promptly after such determination of the Daily Settlement Amounts or
the Daily Conversion Values, as the case may be, and the amount of cash payable in lieu of
any fractional share, the Company shall notify the Trustee and the Conversion Agent (if
other than the Trustee) of the Daily Settlement

31

 

Amounts or the Daily Conversion Values, as
the case may be, and the amount of cash payable in lieu of fractional shares of Common
Stock. The Trustee and the Conversion Agent (if other than the Trustee) shall have no
responsibility for any such determination.

     (b) Subject to Section 4.02(d) and Section 4.02(e), before any Holder of a Note, or beneficial
owner of an interest in a Global Note, shall be entitled to convert a Note as set forth above, such
Holder or beneficial owner shall (i) in the case of a Global Note, comply with the procedures of
the Depositary for converting a beneficial interest in a global note and, if required, pay funds
equal to the amount of interest payable on the next Interest Payment Date to which such Holder is
not entitled pursuant to Section 4.02(h) and (ii) in the case of a Physical Note (1) complete,
manually sign and deliver an irrevocable notice to the
Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) (a
“Notice of Conversion”), at the office of the Conversion Agent and state in writing therein the
principal amount of such Note to be converted and the name or names (with addresses) in which such
Holder wishes the certificate or certificates for any shares of Common Stock to be delivered upon
settlement of the Conversion Obligation to be registered, (2) surrender such Notes, duly endorsed
to the Company or in blank, at the office of the Conversion Agent, (3) if required, furnish
appropriate endorsements and transfer documents and (4) if required, pay funds equal to the amount
of interest payable on the next Interest Payment Date to which such Holder is not entitled as set
forth in Section 4.02(h). The Trustee (and if different, the Conversion Agent) shall notify the
Company of any conversion pursuant to this Article 4 on the Conversion Date for such conversion.
No Notice of Conversion may be delivered with respect to any Note by the Holder thereof if such
Holder has delivered a Fundamental Change Repurchase Notice to the Paying Agent in respect of such
Note and not validly withdrawn such Fundamental Change Repurchase Notice in accordance with Section
3.03.

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

     (c) Each conversion of a Note shall be deemed to have been effected at the close of business
on the date (the “Conversion Date”) that the Holder thereof has complied with the requirements set
forth in subsection (b) above. Subject to Section 4.03(b) and Section 4.06(a), upon conversion of
a Note, the Company shall pay or deliver, as the case may be, the consideration due in respect of
the relevant Conversion Obligation (i) on the third Business Day immediately following the relevant
Conversion Date, if the Company elects to satisfy such Conversion Obligation by Physical
Settlement, or (ii) on the third Business Day immediately following the last Trading Day of the
relevant Observation Period, if

32

 

the Company elects to satisfy such Conversion Obligation by any
other Settlement Method. If any shares of Common Stock are due to a converting Holder, the Company
shall issue or cause to be issued, and deliver to the Conversion Agent or to such Holder, or such
Holder’s nominee or nominees, certificates or make a book-entry transfer through the Depositary to
such Holder or such Holder’s nominee or nominees for the full number of shares of Common Stock to
which such Holder shall be entitled in satisfaction of the Company’s Conversion Obligation.

     (d) In case any Note shall be surrendered for partial conversion, the Company shall execute
and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the
Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal
amount equal to the unconverted portion of the surrendered Note, without payment of any service
charge by the converting Holder but, if required by the Company or Trustee, with
payment of a sum sufficient to cover any documentary, stamp or similar issue or transfer tax
in connection therewith as a result of the name of the Holder of the new Notes issued upon such
conversion being different from the name of the Holder of the old Notes surrendered for such
conversion.

     (e) If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp or
similar issue or transfer tax due on the issuance of any shares of Common Stock upon conversion,
unless such tax is due because such Holder requests such shares to be issued in a name other than
such Holder’s name, in which case such Holder shall pay such tax. The Conversion Agent may refuse
to deliver the certificates representing the shares of Common Stock being issued in a name other
than the Holder’s name until the Trustee receives a sum sufficient to pay any tax that is due by
such Holder in accordance with the immediately preceding sentence.

     (f) Except as provided in Section 4.04, no adjustment shall be made for dividends on any
shares issued upon the conversion of any Note as provided in this Article 4.

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

     (h) Upon conversion, a Holder shall not receive any separate cash payment for accrued and
unpaid interest, if any, except as set forth below. Upon conversion of a Note, the Company’s
settlement of its Conversion Obligation with respect to such Note in accordance with this Section
4.02 shall be deemed to satisfy in full the Company’s obligation to pay the principal amount of
such Note

33

 

and accrued and unpaid interest, if any, to, but not including, the Conversion Date. As a
result, accrued and unpaid interest, if any, to, but not including, the Conversion Date shall be
deemed to be paid in full rather than cancelled, extinguished or forfeited. Upon a conversion of
Notes to which Combination Settlement applies, accrued and unpaid interest shall be deemed to be
paid first out of the cash paid upon such conversion. Notwithstanding the foregoing, if Notes are
converted after the close of business on a Regular Record Date, Holders of such Notes as of the
close of business on such Regular Record Date shall receive the full amount of interest payable on
such Notes on the corresponding Interest Payment Date notwithstanding such conversion. Notes
surrendered for conversion during the period from the close of business on any Regular Record Date
to the open of business on the immediately following Interest Payment Date must be accompanied by
funds equal to the amount of interest payable on the Notes so converted; provided that no such
payment shall be required (1) for conversions following the Regular Record Date immediately
preceding the Maturity Date; (2) if the Company has specified a Fundamental Change Repurchase Date
that is after a Regular Record Date and on or prior to the
Business Day immediately following the corresponding Interest Payment Date; or (3) to the
extent of any overdue interest, if any overdue interest exists at the time of conversion with
respect to such Note.

     (i) The Person in whose name the certificate for any shares of Common Stock delivered upon
conversion is registered, or to whom book entry transfer of such shares is made, pursuant to
Section 4.02(c) shall be treated as if such person were the holder of record of such shares as of
(i) the close of business on the relevant Conversion Date (if the Company elects to satisfy the
related Conversion Obligation by Physical Settlement) or (ii) the last Trading Day of the relevant
Observation Period (if the Company elects to satisfy the related Conversion Obligation by
Combination Settlement), as the case may be, in each case solely for the purpose of receiving or
participating in any dividend, distribution, issuance, share split or combination, tender or
exchange offer or any other event that would lead to a Conversion Rate Adjustment pursuant to
Section 4.03 or Section 4.04. Upon a conversion of Notes, such Person shall no longer be a Holder
of such Notes surrendered for conversion, except for purposes of Section 4.02(h) and receiving
consideration due upon conversion.

     (j) The Company shall not issue any fractional share of Common Stock upon conversion of the
Notes and shall instead pay cash in lieu of any fractional share of Common Stock issuable upon
conversion based on the Daily VWAP on the relevant Conversion Date (in the case of Physical
Settlement) or based on the Daily VWAP on the last Trading Day of the relevant Observation Period
(in the case of Combination Settlement). For each Note surrendered for conversion, if the Company
has elected Combination Settlement, the full number of shares that shall be issued upon conversion
thereof shall be computed on the basis of the aggregate

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Daily Settlement Amounts for the applicable
Observation Period and any fractional shares remaining after such computation shall be paid in
cash.

     Section 4.03. Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection
with Make-Whole Fundamental Changes. (a) If a Make-Whole Fundamental Change occurs and a Holder
elects to convert its Notes in connection with such Make-Whole Fundamental Change, the Company
shall, under the circumstances described below, increase the Conversion Rate for the Notes so
surrendered for conversion by a number of additional shares of Common Stock (the “Additional
Shares”), as described below. The conversion of a Note shall be deemed for these purposes to be
“in connection with” a Make-Whole Fundamental Change if the Notice of Conversion with respect to
such Note is received by the Conversion Agent from, and including, the Effective Date of such
Make-Whole Fundamental Change up to, and including, the Business Day immediately prior to the
related Fundamental Change Repurchase Date (or, in the case of a Make-Whole Fundamental Change that
would have been a Fundamental Change but for the proviso in clause (b) of the definition thereof,
the 35th Trading Day immediately following the Effective Date of such Make-Whole Fundamental
Change).

     (b) Upon surrender of Notes for conversion in connection with a Make-Whole Fundamental Change,
the Company shall, at its option, satisfy the related Conversion Obligation by Physical Settlement,
Cash Settlement or Combination Settlement in accordance with Section 4.02; provided, however, that
if, at the effective time of a Make-Whole Fundamental Change described in clause (b) of the
definition of Fundamental Change (without giving effect to the proviso therein), the Reference
Property is composed entirely of cash, for any conversion of Notes following the Effective Date of
such Make-Whole Fundamental Change, the Conversion Obligation shall be calculated based solely on
the Stock Price for the transaction and shall be deemed to be an amount of cash per $1,000
principal amount of converted Notes equal to the Conversion Rate in effect on the Conversion Date
(including any adjustment for Additional Shares), multiplied by such Stock Price. In such event,
such amount of cash shall be paid to the converting Holder on the third Business Day following the
relevant Conversion Date. The Company shall notify the Holders of Notes of the Effective Date of
any Make-Whole Fundamental Change and issue a press release announcing such Effective Date no later
than five Business Days after such Effective Date.

     (c) The number of Additional Shares, if any, by which the Conversion Rate shall be increased
shall be determined by reference to the table below, based on the date on which the Make-Whole
Fundamental Change occurs or becomes effective (the “Effective Date”) and the price (the “Stock
Price”) paid (or deemed to be paid) per share of the Common Stock in the Make-Whole Fundamental
Change. If the holders of the Common Stock receive only cash in a Make-Whole Fundamental Change
described in clause (b) of the definition of

35

 

Fundamental Change (without giving effect to the
proviso therein), the Stock Price shall be the cash amount paid per share of Common Stock.
Otherwise, the Stock Price shall be the average of the Last Reported Sale Prices of the Common
Stock over the five Trading Day period ending on, and including, the Trading Day immediately
preceding the Effective Date of the Make-Whole Fundamental Change. The Board of Directors as
evidenced by a Board Resolution shall make appropriate adjustments to the Stock Price, in its good
faith determination, to account for any adjustment to the Conversion Rate that becomes effective,
or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date of the event
occurs, during such five consecutive Trading Day period.

     (d) The Stock Prices set forth in the column headings of the table below shall be adjusted as
of any date on which the Conversion Rate of the Notes is otherwise adjusted. The adjusted Stock
Prices shall equal the Stock Prices in effect immediately prior to such adjustment multiplied by a
fraction, the numerator of which is the Conversion Rate in effect immediately prior to such
adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion
Rate as so adjusted. The number of Additional Shares set forth in the table below shall be
adjusted in the same manner and at the same time as the Conversion Rate as set forth in Section
4.04.

     (e) The following table sets forth the number of Additional Shares to be added to the
Conversion Rate per $1,000 principal amount of Notes pursuant to this Section 4.03 for each Stock
Price and Effective Date set forth below:

Stock Price

Effective Date

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	$81.31	 	 	$85.00	 	 	$90.00	 	 	$95.00	 	 	$100.00	 	 	$110.00	 	 	$120.00	 	 	$130.00	 	 	$140.00	 	 	$150.00	 	 	$175.00	 	 	$200.00	 	 	$250.00	 	 	$300.00	 	 	$350.00	 	 	$400.00	 	 	$450.00	 
	 
	December 15, 2010
	 	 	2.2986	 	 	 	2.2002	 	 	 	2.0016	 	 	 	1.8301	 	 	 	1.6809	 	 	 	1.4351	 	 	 	1.2419	 	 	 	1.0868	 	 	 	0.9601	 	 	 	0.8549	 	 	 	0.6573	 	 	 	0.5203	 	 	 	0.3445	 	 	 	0.2379	 	 	 	0.1678	 	 	 	0.1191	 	 	 	0.0842	 
	December 15, 2011
	 	 	2.2986	 	 	 	2.2093	 	 	 	1.9963	 	 	 	1.8137	 	 	 	1.6560	 	 	 	1.3988	 	 	 	1.1995	 	 	 	1.0416	 	 	 	0.9141	 	 	 	0.8095	 	 	 	0.6162	 	 	 	0.4847	 	 	 	0.3190	 	 	 	0.2200	 	 	 	0.1550	 	 	 	0.1100	 	 	 	0.0777	 
	December 15, 2012
	 	 	2.2986	 	 	 	2.2117	 	 	 	1.9807	 	 	 	1.7843	 	 	 	1.6161	 	 	 	1.3451	 	 	 	1.1388	 	 	 	0.9781	 	 	 	0.8504	 	 	 	0.7473	 	 	 	0.5610	 	 	 	0.4377	 	 	 	0.2862	 	 	 	0.1972	 	 	 	0.1392	 	 	 	0.0989	 	 	 	0.0699	 
	December 15, 2013
	 	 	2.2986	 	 	 	2.2080	 	 	 	1.9529	 	 	 	1.7380	 	 	 	1.5559	 	 	 	1.2672	 	 	 	1.0521	 	 	 	0.8884	 	 	 	0.7614	 	 	 	0.6609	 	 	 	0.4853	 	 	 	0.3739	 	 	 	0.2422	 	 	 	0.1669	 	 	 	0.1180	 	 	 	0.0839	 	 	 	0.0593	 
	December 15, 2014
	 	 	2.2986	 	 	 	2.1757	 	 	 	1.8902	 	 	 	1.6526	 	 	 	1.4537	 	 	 	1.1448	 	 	 	0.9217	 	 	 	0.7574	 	 	 	0.6340	 	 	 	0.5395	 	 	 	0.3828	 	 	 	0.2897	 	 	 	0.1861	 	 	 	0.1288	 	 	 	0.0916	 	 	 	0.0654	 	 	 	0.0462	 
	December 15, 2015
	 	 	2.2986	 	 	 	2.0834	 	 	 	1.7586	 	 	 	1.4925	 	 	 	1.2738	 	 	 	0.9447	 	 	 	0.7183	 	 	 	0.5605	 	 	 	0.4487	 	 	 	0.3680	 	 	 	0.2461	 	 	 	0.1819	 	 	 	0.1169	 	 	 	0.0822	 	 	 	0.0592	 	 	 	0.0425	 	 	 	0.0299	 
	December 15, 2016
	 	 	2.2986	 	 	 	1.9104	 	 	 	1.5205	 	 	 	1.2092	 	 	 	0.9618	 	 	 	0.6122	 	 	 	0.3969	 	 	 	0.2654	 	 	 	0.1855	 	 	 	0.1366	 	 	 	0.0798	 	 	 	0.0584	 	 	 	0.0395	 	 	 	0.0286	 	 	 	0.0209	 	 	 	0.0151	 	 	 	0.0106	 
	December 15, 2017
	 	 	2.2986	 	 	 	1.7647	 	 	 	1.1111	 	 	 	0.5263	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	 

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

     (i) if the Stock Price is between two Stock Prices in the table above or the
Effective Date is between two Effective Dates in the table, the number of Additional
Shares shall be determined by a straight-line interpolation between the number of
Additional Shares set forth for the higher and lower Stock Prices or the earlier and later
Effective Dates based on a 365-day year, as applicable;

     (ii) if the Stock Price is greater than $450.00 per share (subject to adjustment in
the same manner as the Stock Prices set forth in the

36

 

column headings of the table above pursuant to subsection (d) above), no
Additional Shares shall be added to the Conversion Rate; and

     (iii) if the Stock Price is less than $81.31 per share (subject to adjustment in the
same manner as the Stock Prices set forth in the column headings of the table above
pursuant to subsection (d) above), no Additional Shares shall be added to the Conversion
Rate.

Notwithstanding the foregoing, in no event shall the total number of shares of Common Stock
issuable upon conversion exceed 12.2986 per $1,000 principal amount of Notes, subject to adjustment
in the same manner as the Conversion Rate pursuant to Section 4.04.

     (f) Nothing in this Section 4.03 shall prevent an adjustment to the Conversion Rate pursuant
to Section 4.04 in respect of a Make-Whole Fundamental Change.

     Section 4.04. Adjustment of Conversion Rate. The Conversion Rate shall be adjusted from time
to time by the Company if any of the following events occurs, except that the Company shall not
make any adjustment to the Conversion Rate if each Holder has the right to participate, at the same
time and upon the same terms as holders of the Common Stock and solely as a result of holding its
Note, in any of the transactions described in this Section 4.04, without having to convert its
Note, as if it held a number of shares of Common Stock, per $1,000 principal amount of its Note,
equal to the Conversion Rate.

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

	 	 	 	 	 	 	 

	 	 	CR1 = CR0 x	 	OS1 
	 	 
	 	 	 	OS0	 	 

	 	 	 	 	 

	where,
	 	 	 	 
	 
	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to
the open of business on the Ex-Dividend Date of
such dividend or distribution, or immediately
prior to the open of business on the effective
date of such share split or combination, as
applicable;
	 
	 	 	 	 
	CR1

	 	=
	 	the Conversion Rate in effect immediately after
the open of business on such Ex-Dividend Date or
effective date;

37

 

	 	 	 	 	 

	OS0

	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to the open of business on such
Ex-Dividend Date or effective date; and
	 
	 	 	 	 
	OS1

	 	=
	 	the number of shares of Common Stock outstanding
immediately after and solely as a result of giving
effect to such dividend, distribution, share split
or share combination.

Any adjustment made under this Section 4.04(a) shall become effective immediately after the open of
business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open
of business on the effective date for such share split or share combination, as applicable. If any
dividend or distribution of the type described in this Section 4.04(a) is declared but not so paid
or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of
Directors as evidenced by a Board Resolution determines not to pay such dividend or distribution,
to the Conversion Rate that would then be in effect if such dividend or distribution had not been
declared.

     (b) If the Company issues to all or substantially all holders of its Common Stock any rights,
options or warrants entitling them, for a period of not more than 45 calendar days after the
announcement of such issuance, to subscribe for or purchase shares of the Common Stock at a price
per share that is less than the average of the Last Reported Sale Prices of the Common Stock for
the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately
preceding the date of such announcement, the Conversion Rate shall be increased based on the
following formula:

	 	 	 	 	 	 	 

	 	 	CR1 = CR0 x	 	OS0 + X

 

	 	 
	 
	 	 	OS0 + Y	 	 

	 	 	 	 	 

	where,
	 	 	 	 
	 
	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to
the open of business on the Ex-Dividend Date for
such issuance;
	 
	 	 	 	 
	CR1

	 	=
	 	the Conversion Rate in effect immediately after
the open of business on such Ex-Dividend Date;
	 
	 	 	 	 
	OS0

	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to the open of business on such
Ex-Dividend Date;
	 
	 	 	 	 
	X

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

38

 

	 	 	 	 	 

	Y

	 	=
	 	the number of shares of Common Stock equal to the
aggregate price payable to exercise such rights,
options or warrants, divided by the average of the
Last Reported Sale Prices of the Common Stock over
the 10 consecutive Trading Day period ending on,
and including, the Trading Day immediately
preceding the date of announcement of the issuance
of such rights, options or warrants.

Any increase made under this Section 4.04(b) shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the open of business on
the Ex-Dividend Date for such issuance. To the extent that shares of the Common Stock are not
delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be
decreased to the Conversion Rate that would then be in effect had the increase with respect to the
issuance of such rights, options or warrants been made on the basis of delivery of only the number
of shares of Common Stock actually delivered. If such rights, options or warrants are not so
issued, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect
if such Ex-Dividend Date for such issuance had not occurred.

     For the purpose of this Section 4.04(b) and for the purpose of Section 4.01(b)(ii)(A), in
determining whether any rights, options or warrants entitle the holders to subscribe for or
purchase shares of the Common Stock at less than such average of the Last Reported Sale Prices of
the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading
Day immediately preceding the date of announcement for such issuance, 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, options or warrants and any amount payable
on exercise or conversion thereof, the value of such consideration, if other than cash, to be
determined by the Board of Directors.

     (c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness,
other assets or property of the Company or rights, options or warrants to acquire its Capital Stock
or other securities, to all or substantially all holders of the Common Stock, excluding (i)
dividends, distributions or issuances as to which an adjustment was effected pursuant to Section
4.04(a) or Section 4.04(b), (ii) dividends or distributions paid exclusively in cash as to which an
adjustment was effected pursuant to Section 4.04(d), and (iii) Spin-Offs as to which the provisions
set forth below in this Section 4.04(c) shall apply (any of such shares of Capital Stock, evidences
of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock
or other securities of the Company, the “Distributed Property”), then the Conversion Rate shall be
increased based on the following formula:

	 	 	 	 	 	 	 

	 
	 	CR1 = CR0 x
	 	SP0
 

SP0 — FMV
	 	 

39

 

	 	 	 	 	 

	where,
	 	 	 	 
	 
	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to
the open of business on the Ex-Dividend Date for
such distribution;
	 
	 	 	 	 
	CR1

	 	=
	 	the Conversion Rate in effect immediately after
the open of business on such Ex-Dividend Date;
	 
	 	 	 	 
	SP0

	 	=
	 	the average of the Last Reported Sale Prices of
the Common Stock over the 10 consecutive Trading
Day period ending on, and including, the Trading
Day immediately preceding the Ex-Dividend Date for
such distribution; and
	 
	 	 	 	 
	FMV

	 	=
	 	the fair market value (as determined by the Board
of Directors) of the Distributed Property
distributed with respect to each outstanding share
of the Common Stock on the Ex-Dividend Date for
such distribution.

Any increase made under the portion of this Section 4.04(c) above shall become effective
immediately after the open of business on the Ex-Dividend Date for such distribution. If such
distribution is not so paid or made, the Conversion Rate shall be decreased to the Conversion Rate
that would then be in effect if such dividend or distribution had not been declared.
Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than
“SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall
receive, in respect of each $1,000 principal amount thereof, at the same time and upon the same
terms as holders of the Common Stock receive the Distributed Property, the amount and kind of
Distributed Property such Holder would have received if such Holder owned a number of shares of
Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution.
If the Board of Directors determines the “FMV” (as defined above) of any Distributed Property for
purposes of this Section 4.04(c) by reference to the actual or when-issued trading market for any
securities, it shall in doing so consider the prices in such market over the the 10 consecutive
Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend
Date for such distribution.

     With respect to an adjustment pursuant to this Section 4.04(c) where there has been a payment
of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or
series, or similar equity interest, of or relating to a Subsidiary or other business unit of the
Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national
securities exchange (a “Spin-Off”), the Conversion Rate shall be increased based on the following
formula:

40

 

	 	 	 	 	 	 	 

	 
	 	CR1 = CR0 x
	 	FMV0 + MP0
 

MP0
	 	 

	 	 	 	 	 

	where,
	 	 	 	 
	 
	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior
to the open of business on the Ex-Dividend Date
for such Spin-Off;
	 
	 	 	 	 
	CR1

	 	=
	 	the Conversion Rate in effect immediately after
the open of business on the Ex-Dividend Date for
such Spin-Off;
	 
	 	 	 	 
	FMV0

	 	=
	 	the average of the Last Reported Sale Prices of
the Capital Stock or similar equity interest
distributed to holders of the Common Stock
applicable to one share of the Common Stock
(determined by reference to the definition of
Last Reported Sale Price as set forth in Section
1.02 as if references therein to Common Stock
were to such Capital Stock or similar equity
interest) over the first 10 consecutive Trading
Day period after, and including, the Ex-Dividend
Date of the Spin-Off (the “Valuation Period”);
and
	 
	 	 	 	 
	MP0

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

The increase to the Conversion Rate under the preceding paragraph shall be determined on the last
Trading Day of the Valuation Period but shall be given effect immediately after the open of
business on the Ex-Dividend Date for the Spin-Off; provided that in respect of any conversion
during the Valuation Period, references in the portion of this Section 4.04(c) related to Spin-Offs
to 10 Trading Days shall be deemed to be replaced with such lesser number of Trading Days as have
elapsed between the Ex-Dividend Date of such Spin-Off and the relevant Conversion Date. If the
Ex-Dividend Date for the Spin-Off is less than 10 Trading Days prior to, and including, the end of
the Observation Period in respect of any conversion, references in the portion of this Section
4.04(c) related to Spin-Offs to 10 Trading Days shall be deemed replaced, for purposes of
calculating the daily Conversion Rates for such conversion, with such lesser number of Trading Days
as have elapsed from, and including, the Ex-Dividend Date for such Spin-Off to, and including, the
last Trading Day of such Observation Period.

     For purposes of this Section 4.04(c) (and subject in all respects to Section 4.10), rights,
options or warrants distributed by the Company to all holders of its Common Stock entitling them to
subscribe for or purchase shares of the Company’s Capital Stock, including Common Stock (either
initially or under certain circumstances), which rights, options or warrants, until the occurrence
of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with

41

 

such shares
of the Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of the Common Stock, shall be deemed not to have been distributed for purposes of this
Section 4.04(c) (and no adjustment to the Conversion Rate under this Section 4.04(c) will be
required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or
warrants shall be deemed to have been distributed and an appropriate adjustment (if any is
required) to the Conversion Rate shall be made under this Section 4.04(c). If any such right,
option or warrant are subject to events, upon the occurrence of which such rights, options or
warrants become exercisable to purchase different securities, evidences of indebtedness or other
assets, then the date of the occurrence of any and each such event shall be deemed to be the date
of distribution and Ex-Dividend Date
with respect to new rights, options or warrants with such rights (in which case the existing
rights, options or warrants shall be deemed to terminate and expire on such date without exercise
by any of the holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights, options or warrants, or any Trigger Event or other event (of the type
described in the immediately preceding sentence) with respect thereto that was counted for purposes
of calculating a distribution amount for which an adjustment to the Conversion Rate under this
Section 4.04(c) was made, (1) in the case of any such rights, options or warrants that shall all
have been repurchased without exercise by any Holders thereof, upon such final repurchase (x) the
Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and
(y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed
distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to
the per share repurchase price received by a holder or holders of Common Stock with respect to such
rights, options or warrants (assuming such holder had retained such rights, options or warrants),
made to all holders of Common Stock as of the date of such redemption or purchase, and (2) in the
case of such rights, options or warrants that shall have expired or been terminated without
exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options
and warrants had not been issued.

     For purposes of Section 4.04(a), Section 4.04(b) and this Section 4.04(c), if any dividend or
distribution to which this Section 4.04(c) is applicable also includes one or both of:

     (A) a dividend or distribution of shares of Common Stock to which Section 4.04(a) is
applicable (the “Clause A Distribution”); or

     (B) a dividend or distribution of rights, options or warrants to which Section 4.04(b) is
applicable (the “Clause B Distribution”),

then (1) such dividend or distribution, other than the Clause A Distribution and the Clause B
Distribution, shall be deemed to be a dividend or distribution to which this Section 4.04(c) is
applicable (the “Clause C Distribution”) and any

42

 

Conversion Rate adjustment required by this
Section 4.04(c) with respect to such Clause C Distribution shall then be made, and (2) the Clause A
Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C
Distribution and any Conversion Rate adjustment required by Section 4.04(a) and Section 4.04(b)
with respect thereto shall then be made, except that, if determined by the Company (I) the
“Ex-Dividend Date” of the Clause A Distribution and the Clause B Distribution shall be deemed to be
the Ex-Dividend Date of the Clause C Distribution and (II) any shares of Common Stock included in
the Clause A Distribution or Clause B Distribution shall be deemed not to be “outstanding
immediately prior to the open of business on such Ex-Dividend Date or effective date” within the
meaning of Section 4.04(a) or “outstanding immediately prior to the open of business on such
Ex-Dividend Date” within the meaning of Section 4.04(b).

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

	 	 	 	 	 	 	 

	 
	 	CR1 = CR0 x
	 	SP0
 

	 	 
	 
	 	 	SP0 — C	 	 

	 	 	 	 	 

	where,
	 	 	 	 
	 
	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to
the open of business on the Ex-Dividend Date for
such dividend or distribution;
	 
	 	 	 	 
	CR1

	 	=
	 	the Conversion Rate in effect immediately after
the open of business on the Ex-Dividend Date for
such dividend or distribution;
	 
	 	 	 	 
	SP0

	 	=
	 	the Last Reported Sale Price of the Common Stock
on the Trading Day immediately preceding the
Ex-Dividend Date for such dividend or
distribution; and
	 
	 	 	 	 
	C

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

Any increase pursuant to this Section 4.04(d) shall become effective immediately after the open of
business on the Ex-Dividend Date for such dividend or distribution. If such dividend or
distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the
Board of Directors determines not to make or pay such dividend or distribution, to the Conversion
Rate that would then be in effect if such dividend or distribution had not been declared.
Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than
“SP0” (as defined above), in lieu of the foregoing increase, each Holder of a

43

 

Note shall
receive, for each $1,000 principal amount of such Note, at the same time and upon the same terms as
holders of shares of the Common Stock, the amount of cash that such Holder would have received if
such Holder owned on the relevant record date a number of shares of Common Stock equal to the
Conversion Rate in effect on the Ex-Dividend Date for such cash dividend or distribution.

     (e) If the Company or any of its Subsidiaries makes a payment in respect of a tender or
exchange offer for the Common Stock and the cash and value of any other consideration included in
the payment per share of the Common Stock exceeds the Last Reported Sale Price of the Common Stock
on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant
to such tender or exchange offer, the Conversion Rate shall be increased based on the following
formula:

	 	 	 	 	 	 	 

	 
	 	CR1 = CR0 x
	 	AC + (SP1 x OS1)

 

OS0 x SP1
	 	 

	 	 	 	 	 

	where,
	 	 	 	 
	 
	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to
the open of business on the Trading Day next
succeeding the date such tender or exchange offer
expires;
	 
	 	 	 	 
	CR1

	 	=
	 	the Conversion Rate in effect immediately after
the open of business on the Trading Day next
succeeding the date such tender or exchange offer
expires;
	 
	 	 	 	 
	AC

	 	=
	 	the aggregate value of all cash and any other
consideration (as determined by the Board of
Directors) paid or payable for shares of Common
Stock purchased in such tender or exchange offer;
	 
	 	 	 	 
	OS0

	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to the date such tender or
exchange offer expires (prior to giving effect to
the purchase of all shares of Common Stock
accepted for purchase or exchange in such tender
or exchange offer);
	 
	 	 	 	 
	OS1

	 	=
	 	the number of shares of Common Stock outstanding
immediately after the date such tender or exchange
offer expires (after giving effect to the purchase
of all shares of Common Stock accepted for
purchase or exchange in such tender or exchange
offer); and
	 
	 	 	 	 
	SP1

	 	=
	 	the average of the Last Reported Sale Prices of
the Common Stock over the 10 consecutive Trading
Day period commencing on, and including, the
Trading Day next succeeding the date such tender
or exchange offer expires.

44

 

The increase to the Conversion Rate under this Section 4.04(e) shall be determined at the close of
business on the 10th Trading Day immediately following, and including, the Trading Day next
succeeding the date such tender or exchange offer expires but shall be given effect immediately
after the open of business on the Trading Day next succeeding the date such tender or exchange
offer expires; provided that in respect of any conversion within the 10 Trading Days immediately
following, and including, the Trading Day next succeeding the expiration date of any tender or
exchange offer, references in this Section 4.04(e) with respect to 10 Trading Days shall be deemed
replaced with such lesser number of Trading Days as have elapsed between the Trading Day next
succeeding the expiration date of such tender or exchange offer and the Conversion Date in
determining the Conversion Rate. If the Trading Day immediately following the date the tender or
exchange offer expires is less than 10 Trading Days prior to, and including, the end of the
Observation Period in respect of any conversion references in this Section 4.04(e) to 10 Trading
Days shall be deemed replaced, for purposes of calculating the affected daily
Conversion Rates for such conversion, with such lesser number of Trading Days as have elapsed from,
and including, the Trading Day immediately following the date such tender or exchange offer expires
to, and including, the last Trading Day of such Observation Period.

     (f) Notwithstanding this Section 4.04 or any other provision of the Indenture or the Notes, if
a Conversion Rate adjustment becomes effective on any Ex-Dividend Date, and a Holder that has
converted its Notes on or after such Ex-Dividend Date and on or prior to the related Record Date
(or such Holder’s nominee or nominees) would be treated as if such person were the record holder of
the shares of Common Stock as of the related Conversion Date for the purpose of participating in
the event giving rise to such Conversion Rate adjustment pursuant to Section 4.02(i) based on an
adjusted Conversion Rate for such Ex-Dividend Date, then, notwithstanding the Conversion Rate
adjustment provisions in Section 4.03 and this Section 4.04, the Conversion Rate adjustment
relating to such Ex-Dividend Date shall not be made for such converting Holder. Instead, such
Holder shall be treated as if such Holder were the record owner of the shares of Common Stock on an
unadjusted basis and participate in the related dividend, distribution or other event giving rise
to such adjustment.

     (g) In addition to those adjustments required by clauses (a), (b), (c), (d) and (e) of this
Section 4.04 and Section 4.03, and to the extent permitted by applicable law and subject to the
applicable rules of The NASDAQ Global Market and any other exchange on which any of the Company’s
securities are then listed (i) the Company from time to time may increase the Conversion Rate by
any amount for a period of at least 20 Business Days if the Board of Directors

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determines that such
increase would be in the Company’s best interest and (ii) the Company may (but is not required to)
increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or
rights to purchase shares of Common Stock in connection with a dividend or distribution of shares
(or rights to acquire shares) or similar event. Whenever the Conversion Rate is increased pursuant
to the preceding sentence, the Company shall mail to the Holder of each Note at its last address
appearing on the Security Register a notice of the increase at least 15 days prior to the date the
increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate
and the period during which it will be in effect.

     (h) All adjustments to the Conversion Rate and other calculations under this Article 4 with
respect to a number of shares shall be made to the nearest one ten-thousandth (1/10,000) of a
share.

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

     (j) For purposes of this Section 4.04, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company so long as the Company
does not pay any dividend or make any distribution on shares of Common Stock held in the treasury
of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu
of fractions of shares of Common Stock.

     Section 4.05. Adjustments of Prices. Whenever any provision of the Indenture requires the
Company to calculate Last Reported Sale Prices, Daily VWAPs, Daily Conversion Values or Daily
Settlement Amounts over a span of multiple days (including an Observation Period and the period, if
any, over which the Stock Price is determined for purposes of a Make-Whole Fundamental Change), the
Board of Directors as evidenced by a Board Resolution shall make appropriate adjustments to each to
account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an
adjustment to the

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Conversion Rate where the Ex-Dividend Date of such event occurs, at any time
during the period when such Last Reported Sale Prices, Daily VWAPs, Daily Conversion Values or
Daily Settlement Amounts are to be calculated.

     Section 4.06 . Effect of Recapitalizations, Reclassifications and Changes of the Common
Stock.

     (a) In the case of:

     (i) any recapitalization, reclassification or change of the Common Stock (other than
changes resulting from a subdivision or combination),

     (ii) any consolidation, merger or combination involving the Company,

     (iii) any sale, lease or other transfer to a third party of the consolidated assets
of the Company and the Company’s Subsidiaries substantially as an entirety, or

     (iv) any statutory share exchange,

in each case, as a result of which the Common Stock would be converted into, or exchanged for,
stock, other securities or other property or assets (including cash or any combination thereof)
(any such event, a “Merger Event”), then, at and after the effective time of such Merger Event, the
right to convert each $1,000 principal amount of Notes shall be changed into a right to convert
such principal amount of Notes into the kind and amount of shares of stock, other securities or
other property or assets (including cash or any combination thereof) that a holder of a number of
shares of Common Stock equal to the Conversion Rate immediately prior to such Merger Event would
have owned or been entitled to receive (the “Reference Property,” with each “unit of Reference
Property” meaning the kind and amount of Reference Property that a holder of one share of
Common Stock is entitled to receive) upon such Merger Event and, prior to or at the effective time
of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall
execute with the Trustee a supplemental indenture under Section 7.01(f) providing for such change
in the right to convert each $1,000 principal amount of Notes, which change is hereby deemed, for
purposes of Section 7.01(f), to not adversely affect the rights of any Holder; provided, however,
that at and after the effective time of such Merger Event (A) the Company shall continue to have
the right to determine the form of consideration to be paid or delivered, as the case may be, upon
conversion of Notes in accordance with Section 4.02 and (B) (I) any amount payable in cash upon
conversion of the Notes in accordance with Section 4.02 shall continue to be payable in cash, (II)
any shares of Common Stock that the Company would have been required to deliver upon conversion of
the Notes in accordance with

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 Section 4.02 shall instead be deliverable in the amount and type of
Reference Property that a holder of that number of shares of Common Stock would have been entitled
to receive in such Merger Event and (III) the Daily VWAP shall be calculated based on the value of
a unit of Reference Property.

     If the Merger Event causes the Common Stock to be converted into, or exchanged for, the right
to receive more than a single type of consideration (determined based in part upon any form of
stockholder election), then (i) the Reference Property into which the Notes will be convertible
(subject to the preceding sentence) shall be deemed to be the weighted average of the types and
amounts of consideration received by the holders of Common Stock that affirmatively make such an
election, and (ii) the unit of Reference Property for purposes of the immediately preceding
paragraph shall refer to the consideration referred to in clause (i) attributable to one share of
Common Stock. If the holders receive only cash in such Merger Event, then for all conversions that
occur after the effective date of such Merger Event (x) the consideration due upon conversion of
each $1,000 principal amount of Notes shall be solely cash in an amount equal to the Conversion
Rate in effect on the relevant Conversion Date (as may be increased by any Additional Shares
pursuant to Section 4.03), multiplied by the price paid per share of Common Stock in such Merger
Event and (y) the Company shall satisfy its Conversion Obligation with respect to each such
conversion by paying cash to converting Holders on the third Business Day immediately following the
relevant Conversion Date. The Company shall notify Holders, the Trustee and the Conversion Agent
(if other than the Trustee) of such weighted average as soon as practicable after such
determination is made.

     Such supplemental indenture described in the second immediately preceding paragraph shall
provide for adjustments that shall be as nearly equivalent as is possible to the adjustments
provided for in this Article 4. If, in the case of any Merger Event, the Reference Property
includes shares of stock, securities or other property or assets (including cash or any combination
thereof) of a Person other than the successor or purchasing corporation, as the case may be, in
such Merger Event, then such supplemental indenture shall also be executed by such other Person and
shall contain such additional provisions to protect the
interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary
by reason of the foregoing.

     (b) In the event the Company shall execute a supplemental indenture pursuant to subsection (a)
of this Section 4.06, the Company shall promptly file with the Trustee an Officer’s Certificate
briefly stating the reasons therefore, the kind or amount of cash, securities or property or assets
that will comprise the Reference Property after any such Merger Event, any adjustment to be made
with respect thereto and that all relevant conditions precedent have been complied with, and shall
promptly mail notice thereof to all Holders. The Company shall cause notice of the execution of
such supplemental indenture to be mailed to each

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Holder, at its address appearing on the Security
Register provided for in the Indenture, within 20 days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of such supplemental indenture.

     (c) None of the foregoing provisions shall affect the right of a holder of Notes to convert
its Notes into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as
applicable, as set forth in Section 4.01 and Section 4.02 prior to the effective date of such
Merger Event.

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

     Section 4.07. Certain Covenants. (a) The Company shall reserve, out of its authorized but
unissued shares or shares held in treasury, the maximum number of shares of Common Stock
potentially required to satisfy conversion of the Notes from time to time as Notes are presented
for conversion.

     (b) The Company covenants that all shares of Common Stock that may be issued upon conversion
of a Note will be newly issued shares or treasury shares, and will be duly authorized, fully paid
and non-assessable and free from all taxes, liens and charges (other than those created by the
Holder thereof).

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

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

     Section 4.08. Responsibility of Conversion Agent and Trustee. The Trustee and any other
Conversion Agent shall not at any time be under any duty
or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto)
or whether any facts exist that may require any adjustment (including any increase) of the
Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental indenture provided
to be employed, in making the same. The Bid Solicitation Agent shall be entitled to assume that
the Conversion Rate in effect on any date is equal to the Conversion Rate set forth in the most
recent Officer’s Certificate filed with the Trustee pursuant to Section 4.04(i) or, if no such
Officer’s Certificate has been filed, the

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Conversion Rate in effect on the date hereof. 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, property or cash
that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and
any other Conversion Agent and the Bid Solicitation Agent make no representations with respect
thereto. Neither the Trustee nor any Conversion Agent nor the Bid Solicitation 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 Article 4. The rights, privileges, protections, immunities and benefits
given to the Trustee, including without limitation its right to be compensated, reimbursed, and
indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, including its capacities as Conversion Agent and Bid Solicitation Agent.

     Section 4.09.
Notice to Holders Prior to Certain Actions. In case of any:

     (a) action by the Company or one of its Subsidiaries that would require an adjustment in the
Conversion Rate pursuant to Section 4.04 or Section 4.10;

     (b) Merger Event; or

     (c) voluntary or involuntary dissolution, liquidation or winding-up of the Company or any of
its Subsidiaries;

then, in each case (unless notice of such event is otherwise required pursuant to another provision
of the Indenture), the Company shall cause to be filed with the Trustee and the Conversion Agent
(if other than the Trustee) and to be mailed (at the Company’s expense) to each Holder at its
address appearing on the Security Register provided for in the Indenture, as promptly as possible
but in any event at least 20 days prior to the applicable date hereinafter specified, a notice
stating (i) the date on which a record is to be taken for the purpose of such action by the Company
or one of its Subsidiaries or, if a record is not to be taken, the date as of which the holders of
Common Stock of record are to be determined for the purposes of such action by the Company or one
of its Subsidiaries, or (ii) the date on which such Merger Event, dissolution, liquidation or
winding-up is expected to
become effective or occur, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their Common Stock for securities or other property
deliverable upon such Merger Event, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of such action by the
Company or one of its Subsidiaries, Merger Event, dissolution, liquidation or winding-up.

50

 

     Section 4.10. Stockholder Rights Plans. To the extent that the Company has a rights plan in
effect upon a conversion of the Notes to which Combination Settlement or Physical Settlement
applies, each share of Common Stock issued upon such conversion shall be entitled to receive the
appropriate number of rights, if any, and the certificates representing the Common Stock issued
upon such conversion shall bear such legends, if any, in each case as may be provided by the terms
of any such stockholder rights plan, as the same may be amended from time to time; provided that if
at the time of conversion, the rights have separated from the shares of Common Stock in accordance
with the provisions of the applicable stockholder rights plan so that the Holders would not be
entitled to receive any rights in respect of Common Stock issuable upon conversion of the Notes,
the Conversion Rate shall be increased pursuant to Section 4.04(c) at the time of separation as if
the Company distributed to all or substantially all holders of Common Stock shares of Capital Stock
of the Company, evidences of its indebtedness, other assets or property of the Company or rights,
options or warrants to acquire its Capital Stock or other securities, subject to readjustment in
the event of the expiration, termination or redemption of such rights.

     Section 4.11. Limit on Issuance of Shares of Common Stock Upon Conversion. Notwithstanding
anything to the contrary herein, if CHESS Depositary Interests representing the Common Stock are
then listed on the Australian Securities Exchange (the “ASX”), in the event of an increase in the
Conversion Rate pursuant to this Article 4 beyond the Share Cap or if the Company would otherwise
be required to deliver a number of shares of Common Stock per $1,000 principal amount of Notes in
respect of any Conversion Date in excess of the Share Cap, the Company shall, at its option, either
(I) obtain shareholder ratification for the issuance of the Notes and the Common Stock underlying
the Notes, in accordance with ASX listing rules, prior to such conversion, or (II) upon conversion
of the Notes, deliver an amount of cash in lieu of any shares of Common Stock otherwise deliverable
in excess of the Share Cap based on (x) the Daily VWAP on each Trading Day of the relevant
Observation Period, in the case of Combination Settlement, or (y) the Daily VWAP on the Conversion
Date, in the case of Physical Settlement. If the Company shall not have obtained shareholder
ratification as set forth above and reasonably expects that the number of shares of Common Stock it
would be required to deliver in respect of any conversion without regard to this Section 4.11 would
exceed the Share Cap, the Company shall, to the extent practicable either (1) elect Cash Settlement
pursuant to Section 4.02 with respect to such conversion or (2) elect Combination Settlement
pursuant to Section 4.02, and specify a Specified Dollar Amount with respect to such conversion
that the Company reasonably expects
will not cause the number of shares of Common Stock to be delivered upon conversion to exceed the Share Cap.
If the Company pays cash in lieu of shares of Common Stock pursuant to this Section 4.11 in respect
of its Conversion Obligation, the amount of such cash shall be the same, per $1,000 principal
amount of Notes, for all Notes surrendered for conversion on a single Conversion Date.

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ARTICLE 5

Events Of Default

     Section 5.01. Events of Default. Article Five of the Original Indenture shall not apply to
the Notes. Instead the events of default provisions set forth in this Article 5 shall, with
respect to the Notes, supersede in their entirety Article Five of the Original Indenture, and all
references in the Original Indenture to Article Five thereof and events of default provisions
therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this
Article 5 and events of default provisions set forth in this Article 5, respectively. In
particular, the reference to “clauses (1), (2) or (3) of Section 501” in Section 602(13) of the
Original Indenture shall be deemed to be a reference to clauses (a), (b) and (d) of this Section
5.01. Each of the following events is an “Event of Default” with respect to the Notes:

     (a) default by the Company in any payment of interest on any Note when due and payable, if
such default continues for a period of 30 days;

     (b) default by the Company in the payment of principal of any Note when due and payable;

     (c) failure by the Company to comply with its obligation to convert the Notes  in accordance with the Indenture upon exercise of a Holder’s conversion right in accordance
with Article 4, if such failure continues for a period of five Business Days;

     (d) failure by the Company to pay the Fundamental Change Repurchase Price of any Note when
due;

     (e) failure by the Company to provide a Fundamental Change Company Notice pursuant to Section
3.01(b) or notice of a specified corporate event required by Section 4.01(b)(ii) or Section
4.01(b)(iii) in accordance with the relevant Section, in each case if such failure continues for a
period of 10 days after the due date for such notice;

     (f) failure by the Company to comply with its obligations under Article 8;

     (g) failure by the Company for 75 days after written notice from the Trustee or the Holders of
at least 25% in principal amount of the Notes then
Outstanding has been received to comply with any of its other agreements contained in the
Notes or the Indenture;

     (h) default by the Company or any of the Company’s Subsidiaries with respect to any mortgage,
agreement or other instrument under which there may be outstanding, or by which there may be
secured or evidenced, any Indebtedness in

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excess of $25 million in the aggregate of the Company
and/or any such Subsidiary (it being understood that the amount of any Indebtedness shall be
determined after giving effect to any prior repayment thereof), whether such Indebtedness now
exists or shall hereafter be created (i) resulting in such Indebtedness becoming or being declared
due and payable, if such declaration of acceleration is not rescinded or annulled within 10 days
after the Company has received notice of such acceleration or (ii) constituting a failure to pay
the principal of or interest on any such Indebtedness when due and payable at its stated maturity,
upon required repurchase, upon declaration of acceleration or otherwise, if such default is not
cured or waived within 10 days after the date when the payment was due; provided that, in the case
of clause (i), if such declaration of acceleration is annulled or rescinded or, in the case of
clause (ii), if such default is cured or waived, the related Event of Default with respect to the
Notes shall be deemed to be cured for the purposes of the Indenture;

     (i) the Company or any Significant Subsidiary shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to the Company or any
such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of the Company or any such Significant Subsidiary or any substantial part of
its property, or shall consent to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or fails generally to pay its debts as they become
due;

     (j) an involuntary case or other proceeding shall be commenced against the Company or any
Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the
Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of the Company or such Significant Subsidiary or
any substantial part of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 30 consecutive days; or

     (k) a final judgment for the payment of $25 million or more (excluding any amounts covered by
insurance) rendered against the Company or any of its Subsidiaries, which judgment is not
discharged or stayed within 60 days after (i) the date on which the right to appeal thereof has
expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been
extinguished.

     Section 5.02. Acceleration; Rescission and Annulment. If an Event of Default shall have
occurred and be continuing (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or
order of any court or any

53

 

order, rule or regulation of any administrative or governmental body),
then, and in each and every such case (other than an Event of Default specified in Section 5.01(i)
or Section 5.01(j) with respect to the Company), unless the principal of all of the Notes shall
have already become due and payable, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then Outstanding, by notice in writing to the Company (and to the
Trustee if given by Holders), may declare 100% of the principal of, and any accrued and unpaid
interest on, all of the Notes to be due and payable immediately, and upon any such declaration the
same shall become and shall automatically be immediately due and payable, notwithstanding any
provision in the Indenture or in the Notes to the contrary. In the case of an Event of Default
specified in Section 5.01(i) or Section 5.01(j) with respect to the Company, 100% of the principal
of, and any accrued and unpaid interest on, all of the Notes shall automatically become immediately
due and payable.

     The immediately preceding paragraph, however, is subject to the conditions that if, at any
time after the principal of and interest on the Notes shall have been so declared due and payable,
and before any judgment or decree for the payment of the monies due shall have been obtained or
entered as hereinafter provided, (1) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay installments of accrued and unpaid interest upon all Notes and the principal of
any and all Notes that shall have become due otherwise than by acceleration (with interest on
overdue installments of accrued and unpaid interest to the extent that payment of such interest is
enforceable under applicable law, and on such principal, at the rate borne by the Notes at such
time) and amounts due to the Trustee pursuant to Section 606 of the Original Indenture, and (2)
rescission would not conflict with any order or decree of a court of competent jurisdiction and (3)
any and all existing Events of Default under the Indenture, other than the nonpayment of the
principal of and accrued and unpaid interest, if any, on Notes that shall have become due solely by
such acceleration, shall have been cured or waived pursuant to Section 5.09, then and in every such
case the Holders of a majority in aggregate principal amount of the Notes then Outstanding may, by
written notice to the Company and to the Trustee, rescind and annul any consequence of any such
Default or Event of Default with respect to any action taken on behalf of all of the Holders,
including, without limitation, acceleration of the obligations, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of the Indenture; but no such
rescission and annulment shall extend to or shall affect any subsequent Default or Event of
Default, or shall impair any right consequent thereon.

     Section 5.03. Additional Interest. Notwithstanding any provisions of the Indenture to the
contrary, if the Company so elects, the sole remedy during the first 270 days following an Event of
Default relating to (i) the Company’s failure
to file with the Trustee pursuant to Section 314(a)(1) of the Trust Indenture Act any
documents or reports that it is required to file with the SEC pursuant to

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Section 13 or 15(d) of
the Exchange Act or (ii) its failure to comply with its reporting obligations set forth in Section
2.04, shall consist exclusively of the right to receive additional interest on the Notes, as long
as such Event of Default is continuing, at a rate equal to (x) 0.25% per annum of the principal
amount of the Notes outstanding (“Additional Interest”) for each day during the 90-day period
beginning on, and including, the date on which such Event of Default first occurs and (y) 0.50% per
annum of the principal amount of the Notes outstanding during the 180-day period beginning on, and
including, the 91st day that such Event of Default is continuing. If the Company elects to pay
Additional Interest on account of such an Event of Default, such Additional Interest shall be
payable in the same manner and on the same dates as the stated interest payable on the Notes. On
the 271st day after such Event of Default occurs (if such Event of Default relating to reporting
obligations set forth in Section 2.04 is not cured or waived on or prior to such 271st day), the
Notes shall be subject to acceleration as provided in Section 5.02. This Section 5.03 shall not
affect the rights of Holders of Notes in the event of the occurrence of any other Event of Default.

     In order to elect to pay Additional Interest as the sole remedy during the first 270 days
after the occurrence of an Event of Default described in the immediately preceding paragraph, the
Company must give notice to all Holders of Notes, the Trustee and the Paying Agent of such election
prior to the beginning of such 270-day period. In the event the Company does not elect to pay
Additional Interest following an Event of Default in accordance with this Section 5.03 or the
Company elected to make such payments but does not pay the Additional Interest when due, the Notes
shall be subject to acceleration as provided in Section 5.02.

     Section 5.04. Payments of Notes on Default; Suit Therefor. If an Event of Default described
in clause (a), (b) or (d) of Section 5.01 shall have occurred, the Company shall, upon demand of
the Trustee, pay to it, for the benefit of the Holders of the Notes, the whole amount then due and
payable on the Notes for principal and interest, if any, with interest on any overdue principal
(including the Fundamental Change Repurchase Price, if applicable) and interest, if any, at the
rate borne by the Notes at such time, and, in addition thereto, such further amount as shall be
sufficient to cover any amounts due to the Trustee under Section 606 of the Original Indenture. If
the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name
and as trustee of an express trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce
the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the property of the Company or any other
obligor upon the Notes, wherever situated.

     In the event there shall be pending proceedings for the bankruptcy or for the reorganization
of the Company or any other obligor on the Notes under title

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11 of the United States Code, or any other applicable law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have
been appointed for or taken possession of the Company or such other obligor, the property of the
Company or such other obligor, or in the event of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be
due and payable as therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this Section 5.04, shall be
entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim
or claims for the whole amount of principal and accrued and unpaid interest, if any, in respect of
the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers
or documents and to take such other actions as it may deem necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in
such judicial proceedings relative to the Company or any other obligor on the Notes, its or their
creditors, or its or their property, and to collect and receive any monies or other property
payable or deliverable on any such claims, and to distribute the same after the deduction of any
amounts due the Trustee under Section 606 of the Original Indenture; and any receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby
authorized by each of the Holders to make such payments to the Trustee, as administrative expenses,
and, in the event that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for reasonable compensation, expenses, advances
and disbursements, including reasonable agents and counsel fees, and including any other amounts
due to the Trustee under Section 606 of the Original Indenture, incurred by it up to the date of
such distribution. To the extent that such payment of reasonable compensation, expenses, advances
and disbursements out of the estate in any such proceedings shall be denied for any reason, payment
of the same shall be secured by a lien on, and shall be paid out of, any and all distributions,
dividends, monies, securities and other property that the Holders of the Notes may be entitled to
receive in such proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.

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

     All rights of action and of asserting claims under the Indenture, or under any of the Notes,
may be enforced by the Trustee without the possession of any of

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the Notes, or the production
thereof at any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes.

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

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

     Section 5.05. Application of Monies Collected by Trustee. Any monies or property collected
by the Trustee pursuant to this Article 5 with respect to the Notes shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of such monies, upon
presentation of the several Notes, and stamping thereon the payment, if only partially paid, and
upon surrender thereof, if fully paid:

     First, to the payment of all amounts due the Trustee under Section 606 of the Original
Indenture;

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

     Third, in case the principal of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid to the payment of the whole amount (including, if applicable, the payment
of the Fundamental Change Repurchase Price and any cash due upon conversion) then owing and unpaid
upon the Notes for principal and interest, if any, with interest on the overdue principal

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of and, to the extent that such interest has been collected by the Trustee, upon overdue installments of
interest, to the extent permitted by applicable law, at the rate borne by the Notes at such time,
and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid
upon the Notes, then to the
payment of such principal (including, if applicable, the Fundamental Change Repurchase Price
and the cash due upon conversion) and interest without preference or priority of principal over
interest, or of interest over principal or of any installment of interest over any other
installment of interest, or of any Note over any other Note, ratably to the aggregate of such
principal (including, if applicable, the Fundamental Change Repurchase Price and any cash due upon
conversion) and accrued and unpaid interest; and

     Fourth, to the payment of the remainder, if any, to the Company or as otherwise directed by a
court of competent jurisdiction.

     Section 5.06. Proceedings by Holders. Except to enforce the right to receive payment of
principal (including, if applicable, the Fundamental Change Repurchase Price) or interest when due,
or the right to receive payment or delivery of the consideration due upon conversion, no Holder of
any Note shall have any right by virtue of or by availing itself of any provision of the Indenture
to institute any suit, action or proceeding in equity or at law upon or under or with respect to
the Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other
similar official, or for any other remedy hereunder, unless:

     (a) such Holder previously shall have given to the Trustee notice of an Event of Default and
of the continuance thereof, as herein provided;

     (b) Holders of at least 25% in aggregate principal amount of the Notes then Outstanding shall
have made written request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder;

     (c) such Holder or Holders shall have offered, and, if requested, provided, to the Trustee
such security or indemnity reasonably satisfactory to it against any loss, liability or expense to
be incurred therein or thereby; and

     (d) the Trustee shall not have complied with such request for 60 days after its receipt of
such notice, request and offer of security or indemnity and does not receive, during those 60 days,
from Holders of a majority in aggregate principal amount of the Notes then Outstanding, a direction
pursuant to Section 5.09 that is inconsistent with the request, it being understood and intended,
and being expressly covenanted by the taker and Holder of every Note with every other taker and
Holder and the Trustee that no one or more Holders shall have any right in any manner whatever by
virtue of or by availing of any provision of the Indenture to affect, disturb or prejudice the
rights of any other Holder, or to obtain or seek to obtain priority over or preference to any other
such Holder, or to

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enforce any right under the Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all Holders (except as otherwise provided herein).
For the protection and enforcement of this Section 5.06, each and every Holder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.

     Notwithstanding any other provision of the Indenture and any provision of any Note, the right
of any Holder to receive payment or delivery, as the case may be, of (x) the principal (including
the Fundamental Change Repurchase Price, if applicable) of, (y) accrued and unpaid interest, if
any, on, and (z) the consideration due upon conversion of, such Note, on or after the respective
due dates expressed or provided for in such Note or in the Indenture, or to institute suit for the
enforcement of any such payment or delivery, as the case may be, on or after such respective dates
against the Company shall not be impaired or affected without the consent of such Holder.

     Section 5.07. Proceedings by Trustee. In case of an Event of Default the Trustee may
proceed to protect and enforce the rights vested in it by the Indenture by such appropriate
judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in the Indenture or in aid of the exercise of
any power granted in the Indenture, or to enforce any other legal or equitable right vested in the
Trustee by the Indenture or by law.

     Section 5.08. Remedies Cumulative and Continuing. All powers and remedies given by this
Article 5 to the Trustee or to the Holders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies available to the
Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in the Indenture, and no delay
or omission of the Trustee or of any Holder of any of the Notes to exercise any right or power
accruing upon any Default or Event of Default shall impair any such right or power, or shall be
construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and,
subject to the provisions of Section 5.06, every power and remedy given by this Article 5 or by law
to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders.

     Section 5.09. Direction of Proceedings and Waiver of Defaults by Majority of Holders.
Subject to Section 602 of the Original Indenture, the Holders of a majority in aggregate principal
amount of the Notes then Outstanding shall have the right to (i) direct the Trustee to exercise any
remedy available to it with respect to the Notes and (ii) direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of

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exercising any trust or power conferred on the Trustee with respect to Notes; provided, however, that the Trustee may
refuse to follow any direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that would involve the
Trustee in personal liability. The Holders of a majority of the aggregate principal amount of the
Notes then Outstanding may on behalf of the Holders of all of the Notes, by written notice to the
Trustee and the Company, waive any Default or Event of Default hereunder except that no such waiver
shall be effective as to a Default or
Event of Default with respect to (i) the non-payment of the principal (including the
Fundamental Change Repurchase Price) of, or accrued and unpaid interest, if any, on the Notes, (ii)
a failure by the Company to pay or deliver, as the case may be, to converting Holders the
consideration due upon conversion of the Notes in accordance with the Indenture or (iii) any
provision of the Indenture that under Article 7 cannot be modified or amended without the consent
of the Holder of each Outstanding Note affected, in each case unless each affected Holder consents
Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to
their former positions and rights hereunder; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. Whenever any Default or
Event of Default hereunder shall have been waived as permitted by this Section 5.09, said Default
or Event of Default shall for all purposes of the Notes and the Indenture be deemed to have been
cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any right consequent thereon.

     Section 5.10. Notice of Defaults. The Trustee shall, within 90 days after the occurrence of
a Default or Event of Default of which a Responsible Officer has actual knowledge transmit to each
Holder at the address of such Holder on the Security Register, notice of all Defaults or Events of
Default known to any Responsible Officer, unless such Defaults or Events of Default shall have been
cured or waived before the giving of such notice; provided that, except in the case of a Default or
Event of Default in the payment of the principal (including the Fundamental Change Repurchase
Price, if applicable) of, or accrued and unpaid interest on, any of the Notes or a Default or Event
of Default in the payment or delivery, as the case may be, of the consideration due upon
conversion, the Trustee shall be protected in withholding such notice if and for so long as the
board of directors, the executive committee, a trust committee of directors or a
committee of Responsible Officers of the Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders. Section 601 of the Original Indenture shall not
apply to the Notes, and shall be superseded in its entirety by this Section 5.10.

     Section 5.11. Statements as to Defaults. Section 1004 of the Original Indenture shall not
apply to the Notes, and shall be superseded in its entirety by this Section 5.11. The Company shall
deliver to the Trustee in accordance with Section 105 of the Original Indenture, as soon as
practicable, and in any event

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within 30 days after an Officer of the Company first becomes aware of
the occurrence of any Event of Default or Default, an Officer’s Certificate setting forth the
details of such Event of Default or Default, its status and the action that the Company is taking
or proposes to take in respect thereof, and such Officer’s Certificate shall reference the
Indenture and the Notes. The Company shall also deliver to the Trustee, in accordance with Section
105 of the Original Indenture, within 120 days after the end of each fiscal year of the Company, an
Officer’s Certificate indicating whether the signers thereof know of any Default or Event of
Default that occurred in the previous year and, if so, specifying each such Default or Event of
Default and the nature thereof, and such Officer’s Certificate shall
reference the Indenture and the Notes. The provisions in the second paragraph of Section 102
of the Original Indenture shall not apply to any Officer’s Certificate delivered pursuant to this
Section 5.11.

     Section 5.12. Further Instruments and Acts. Upon request of the Trustee, the Company will
execute and deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purposes of the Indenture.

     Section 5.13. Undertaking to Pay Costs. All parties to the Indenture agree, and each Holder
of any Note by its acceptance thereof shall be deemed to have agreed, that any court may, in its
discretion, require, in any suit for the enforcement of any right or remedy under the Indenture or
the Notes, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that
such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the merits and good faith
of the claims or defenses made by such party litigant; provided that the provisions of this Section
5.13 (to the extent permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Notes at the time Outstanding, or to any suit instituted by any Holder for
the enforcement of the payment of the principal of or accrued and unpaid interest, if any, on any
Note (including, but not limited to, the Fundamental Change Repurchase Price with respect to the
Notes being purchased as provided in Article 3) on or after the due date expressed or provided for
in such Note or to any suit for the enforcement of the right to convert any Note in accordance with
the provisions of Article 4.

ARTICLE 6

Satisfaction and Discharge

     Section 6.01. Satisfaction and Discharge of the Supplemental Indenture. Articles Four and
Fourteen of the Original Indenture shall not apply to the Notes.

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Instead, the satisfaction and
discharge provisions set forth in this Article 6 shall, with respect to the Notes, supersede in
their entirety Articles Four and Fourteen of the Original Indenture and all references in the
Original Indenture to Article Four thereof and satisfaction and discharge provisions therein, as
the case may be, shall, with respect to the Notes, be deemed to be references to this Article 6 and
the satisfaction and discharge provisions set forth in this Article 6. The Indenture, with respect
to the Notes, shall upon request of the Company contained in an Officer’s Certificate cease to be
of further effect, and the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Supplemental Indenture, when (a) (i) all Notes
theretofore authenticated and delivered (other than Notes which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 2.06) have
been delivered to the Trustee for cancellation; or (ii) the Company has deposited with the
Trustee or delivered to Holders, as applicable, after the Notes have become due and payable,
whether at the Maturity Date, on any Fundamental Change Repurchase Date, upon conversion or
otherwise, cash or, solely to satisfy outstanding conversions, cash and/or shares of Common Stock,
as applicable, sufficient to pay all of the outstanding Notes or satisfy the Company’s Conversion
Obligation, as the case may be, and pay all other sums due and payable under this Supplemental
Indenture by the Company; and (b) the Company has delivered to the Trustee an Officer’s Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of the Indenture have been complied with. For the avoidance of
doubt, notwithstanding the satisfaction and discharge of the Indenture, the obligations of the
Company to the Trustee under Section 606 of the Original Indenture shall survive.

     Section 6.02.
 Deposited Monies and Shares of Common Stock to be Held in Trust by Trustee.
Subject to Section 1003 of the Original Indenture, all monies and shares of Common Stock, if any,
deposited with the Trustee pursuant to Section 6.01 shall be held in trust for the sole benefit of
the Holders of the Notes, and such monies and shares of Common Stock shall be applied by the
Trustee to the payment, either directly or through any Paying Agent (including the Company if
acting as its own Paying Agent), to the Holders of the particular Notes for the payment or
settlement of which such monies or shares of Common Stock have been deposited with the Trustee, of
all sums or amounts due and to become due thereon for principal and interest, if any, or to satisfy
the Company’s Conversion Obligation, as the case may be. Money so held in trust is subject to the
Trustee’s rights under Section 606 of the Original Indenture.

     Section 6.03. Paying Agent to Repay Monies Held. Upon the satisfaction and discharge of the
Indenture, with respect to the Notes, all monies and shares of Common Stock, if any, then held by
the Trustee or any Paying Agent (if other than the Trustee) shall, upon written request of the
Company, be repaid or re-delivered to it or, in the case of a Paying Agent other than the Trustee,
paid or

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delivered to the Trustee, and thereupon such Paying Agent shall be released from all
further liability with respect to such monies and shares of Common Stock.

     Section 6.04. Reinstatement. If the Trustee or the Paying Agent is unable to apply any
money or shares of Common Stock in accordance with Section 6.02 by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company’s obligations under the Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 6.01 until such time as the
Trustee or the Paying Agent is permitted to apply all such money and shares of Common Stock in
accordance with Section 6.02; provided, however, that if the Company makes any payment of interest
on, principal of or payment or delivery in respect of any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive
such
payment or delivery from the money or shares of Common Stock, if any, held by the Trustee or
Paying Agent.

ARTICLE 7

Supplemental Indentures

     Section 7.01. Supplemental Indentures Without Consent of Holders. Article Nine of the
Original Indenture shall not apply to the Notes. Instead the provisions set forth in this Article
7 shall, with respect to the Notes, supersede in their entirety Article Nine of the Original
Indenture, and all references in the Original Indenture to Article Nine thereof and provisions
therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this
Article 7 and provisions set forth in this Article 7, respectively. The Company and the Trustee
may amend or supplement the Indenture or the Notes without notice to or the consent of any Holder
of the Notes to:

     (a) cure any ambiguity, omission, defect or inconsistency that does not adversely affect
Holders of the Notes;

     (b) provide for the assumption by a Successor Company of the obligations of the Company under
the Indenture and the Notes pursuant to Article 8;

     (c) add guarantees with respect to the Notes;

     (d) secure the Notes;

     (e) add to the covenants of the Company for the benefit of the Holders or surrender any right
or power conferred upon the Company;

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     (f) make any change that does not adversely affect the rights of any Holder;

     (g) comply with any requirement of the SEC in connection with the qualification of the
Indenture under the Trust Indenture Act; or

     (h) conform the provisions of the Indenture to the “Description of the notes” section of the
preliminary prospectus supplement dated December 9, 2010, as supplemented by the pricing term sheet
of the same date, relating to the offering and sale of the Notes.

     Section 7.02. Supplemental Indentures with Consent of Holders. The provisions set forth in
this Section 7.02 shall, with respect to the Notes, supersede in their entirety Section 1009 of the
Original Indenture. If authorized by the Board of the Directors as set forth in a Board Resolution,
the Company and the Trustee may amend or supplement this Supplemental Indenture or the Notes, and
compliance with any provision of the Indenture or the Notes may be waived, in each case with the
written consent of the Holders of at least a majority in aggregate principal amount of the Notes
then Outstanding (including, without limitation, consents obtained in connection with a repurchase
of, or tender or exchange offer for, Notes), at the expense of the Company; provided that no
amendment or supplemental indenture or waiver may without the written consent of the Holder of each
Note affected:

     (a) reduce the amount of Notes whose Holders must consent to an amendment;

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

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

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

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

     (f) make any Note payable in money other than that stated in the Note;

     (g) change the ranking of the Notes;

     (h) impair the right of any Holder to receive payment of principal of and interest on such
Holder’s Notes on or after the due dates therefor or to institute

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suit for the enforcement of any
payment on or with respect to such Holder’s Note; or

     (i) make any change in this proviso or in the waiver provisions in Section 5.09.

     Holders do not need under this Article 7 to approve the particular form of any proposed
amendment to the Indenture or any proposed supplemental indenture; it shall be sufficient if the
required number of Holders approve the substance thereof.

     Section 7.03. Notice of Amendment or Supplement. After an amendment or supplement under this
Article 7 becomes effective, the Company shall mail to the Holders a notice briefly describing such
amendment or supplement. However, the failure to give such notice to all the Holders, or any
defect in the notice, shall not impair or affect the validity of the amendment or supplement.

     Section 7.04. Execution of Supplemental Indentures. In executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by the Indenture, the Trustee shall receive, and shall be fully
protected in conclusively relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by the Indenture. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights,
duties or immunities under the Indenture or otherwise.

     Section 7.05. Effect of Supplemental Indentures. Upon the execution of any supplemental
indenture under this Article, the Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of the Indenture for all purposes; and every Holder
theretofore or thereafter authenticated and delivered hereunder  shall be bound thereby.

     Section 7.06. Conformity with Trust Indenture Act. Every supplemental indenture executed
pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in
effect.

     Section 7.07. Reference in Notes to Supplemental Indentures. Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form satisfactory to the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Company to the Indenture as amended
or supplemented by such supplemental indenture may be prepared and executed by the Company, and
authenticated and delivered by the Trustee in exchange for outstanding Notes.

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ARTICLE 8

Successor Company

     Section 8.01. Consolidation, Merger and Sale of Assets. Article Eight of the Original
Indenture shall not apply to the Notes. The provisions set forth in this Article 8 shall, with
respect to the Notes, supersede in their entirety Article Eight of the Original Indenture, and all
references in the Original Indenture to Article Eight thereof shall, with respect to the Notes, be
deemed to be references to this Article 8. The Company shall not consolidate with or merge with or
into, or sell, convey, transfer or lease all or substantially all of its properties and assets to,
another Person, unless:

     (a) the resulting, surviving or transferee Person (if not the Company) (the “Successor
Company”) is organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia and such Successor Company (if not the Company) expressly
assumes by supplemental indenture all of the Company’s obligations under the Notes and the
Indenture;

     (b) immediately after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing under the Indenture; and

     (c) the Company shall have delivered to the Trustee the Officer’s Certificate and Opinion of
Counsel pursuant to Section 8.03.

     For purposes of this Section 8.01, the sale, conveyance, transfer or lease of all or
substantially all of the properties and assets of one or more Subsidiaries of the Company to
another Person that is not a Subsidiary of the Company, which properties and assets, if held by the
Company instead of such Subsidiaries, would constitute all or substantially all of the properties
and assets of the Company on a consolidated basis, shall be deemed to be the sale, conveyance,
transfer or lease of all or substantially all of the properties and assets of the Company to
another Person.

     Section 8.02. Successor Person Substituted. Upon any such consolidation, merger, sale,
transfer, lease or other conveyance in which the Company is not the Successor Company and upon the
assumption by the Successor Company, by supplemental indenture, executed and delivered to the
Trustee, of the due and punctual payment of the principal of and interest on all of the Notes, and
the due and punctual performance and observance of all of the covenants and conditions of the
Indenture to be performed or satisfied by the Company, such Successor Company shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under the Indenture and
the Notes, with the same effect as if it had been named herein as the party of the first part, and
the Company shall be discharged from its obligations under the Notes and the Indenture, except in
the case of a lease of all or substantially all of the Company’s

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properties and assets. Such
Successor Company thereupon may cause to be signed, and may issue either in its own name or in the
name of the Company any
or all of the Notes issuable hereunder that theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the
Company and subject to all the terms, conditions and limitations in the Indenture prescribed, the
Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes
that previously shall have been signed and delivered by the Officers of the Company to the Trustee
for authentication, and any Notes that such Successor Company thereafter shall cause to be signed
and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have
the same legal rank and benefit under the Indenture as the Notes theretofore or thereafter issued
in accordance with the terms of the Indenture as though all of such Notes had been issued at the
date of the execution hereof. In the event of any such consolidation, merger, sale, transfer or
conveyance (but not in the case of a lease) upon compliance with this Article 8 the Person named as
the “Company” in the first paragraph of the Indenture or any successor that shall thereafter have
become such in the manner prescribed in this Article 8 may be dissolved, wound up and liquidated at
any time thereafter and such Person shall be discharged from its liabilities as obligor and maker
of the Notes and from its obligations under the Indenture.

     In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes
in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as
may be appropriate.

     Section 8.03. Opinion of Counsel to be Given to Trustee. Prior to execution of any
supplemental indenture pursuant to this Article 8, the Trustee shall receive an Officer’s
Certificate and an Opinion of Counsel that meets the requirements of Section 102 of the Original
Indenture as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or
lease and any such assumption complies with the provisions of this Article 8.

ARTICLE 9

Lists Of Holders

     Section 9.01. Lists of Holders. The Company covenants and agrees that it will furnish or
cause to be furnished to the Trustee, semi-annually, not more than 15 days after each June 1 and
December 1 in each year beginning with June 1, 2011, and at such other times as the Trustee may
request in writing, within 30 days after receipt by the Company of any such request (or such lesser
time as the Trustee may reasonably request in order to enable it to timely provide any notice to be
provided by it hereunder), a list in such form as the Trustee may reasonably require of the names
and addresses of the Holders as of a date not more than 15

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days (or such other date as the Trustee
may reasonably request in order to so provide any such notices) prior to the time such information
is furnished, except that no such list need be furnished so long as the Trustee is acting as
Security
Registrar. In addition, the Trustee and the Company shall comply with Section 312 of the Trust
Indenture Act.

     Section 9.02. Preservation and Disclosure of Lists. The Trustee shall preserve, in as current
a form as is reasonably practicable, all information as to the names and addresses of the Holders
contained in the most recent list furnished to it as provided in Section 9.01 or maintained by the
Trustee in its capacity as Security Registrar, if so acting. The Trustee may destroy any list
furnished to it as provided in Section 9.01 upon receipt of a new list so furnished.

ARTICLE 10

No Redemption

     Section 10.01. No Redemption. The Notes shall not be redeemable by the Company prior to the
Maturity Date, and no sinking fund is provided for the Notes. The provisions in Articles Eleven
and Twelve of the Original Indenture shall not apply to the Notes.

ARTICLE 11

Covenant to Comply with Australian Securities Exchange Listing Rules

     Section 11.01. Australian Securities Exchange. As long as CHESS Depositary Interests
representing the Common Stock are listed on the ASX, prior to February 1, 2012, the Company shall
not issue any shares of Common Stock (other than upon a conversion of Notes) or any securities
convertible into Common Stock unless either (x) the Company’s shareholders approve such proposed
issuance; (y) the Company’s shareholders ratify the issuance of the Notes and the Common Stock
underlying the Notes; or (z) ASX provides a waiver of the requirement to seek shareholder approval
for the issue of shares of common stock or securities convertible into common stock, in each case
within the meaning of applicable ASX rules and regulations.

ARTICLE 12

Miscellaneous

     Section 12.01. Governing Law. THE INDENTURE AND EACH OF THE NOTES, AND ANY CLAIM,
CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THE INDENTURE OR THE NOTES, SHALL BE

68

 

GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     Section 12.02. No Security Interest Created. Nothing in this Supplemental Indenture or in
the Notes, expressed or implied, shall be construed
to constitute a security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction.

     Section 12.03. Trust Indenture Act. The Indenture will be subject to, and governed by, the
provisions of the Trust Indenture Act that are required to be part of the Indenture and shall, to
the extent applicable, be governed by such provisions.

     Section 12.04. Benefits of the Indenture. Nothing in the Indenture or in the Notes, express
or implied, shall give to any Person, other than the parties to the Indenture, the Security
Registrar, any Paying Agent, any Authenticating Agent, Conversion Agent and any Bid Solicitation
Agent, any benefit or any legal or equitable right, remedy or claim under the Indenture.

     Section 12.05. Calculations. Except as otherwise provided in the Indenture, the Company
shall be responsible for making all calculations called for under the Indenture and the Notes.
These calculations include, but are not limited to, determinations of the Last Reported Sale Prices
of the Common Stock, accrued interest payable on the Notes and the Conversion Rate (including any
adjustments thereto). The Company shall make all these calculations in good faith, and, absent
manifest error, the Company’s calculations shall be final and binding on Holders of Notes. The
Company shall provide a schedule of its calculations to each of the Trustee and the Conversion
Agent (if other than the Trustee), and each of the Trustee and Conversion Agent (if other than the
Trustee) is entitled to rely conclusively upon the accuracy of the Company’s calculations without
independent verification. The Trustee will forward the Company’s calculations to any Holder of
Notes upon the request of such Holder at the sole cost and expense of the Company.

     Section 12.06. Effect of Headings and Table of Contents. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect the construction
hereof.

     Section 12.07. Execution in Counterparts. This Supplemental Indenture may be executed in any
number of counterparts, each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.

     Section 12.08. Separability Clause. In case any provision in the Indenture or in any Note or
coupon shall be invalid, illegal or unenforceable, the

69

 

validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     Section 12.09. Elections Under Original Indenture; Ratification of Original Indenture.

     (a) The following elections under Section 301 of the Original Indenture shall apply to the
Notes:

     (i) Except as provided in Article 3 or upon acceleration in accordance with Section
5.02, Holders may not cause the Company to repay the Notes prior to the Maturity Date, and
the provisions in Article Thirteen of the Original Indenture shall not apply to the Notes.

     (ii) The Notes shall be senior Securities, and shall not be subject to any
subordination provisions.

     (iii) No Additional Amounts shall be payable with respect to the Notes, and the
provisions in Section 1008 of the Original Indenture shall not apply to the Notes.

     (iv) Holders shall not have the option to receive payments on the Notes in any
Currency other than the Dollar, and the provisions in Sections 312 and 313 of the Original
Indenture shall not apply to the Notes.

     (b) Except as amended hereby with respect to the Notes, the Original Indenture, as amended and
supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this
Supplemental Indenture shall be deemed part of the Original Indenture in the manner and to the
extent herein and therein provided. For the avoidance of doubt, each of the Company and each
Holder of the Notes, by its acceptance of such Notes, acknowledges and agrees that all of the
rights, privileges, protections, immunities and benefits afforded to the Trustee under the Original
Indenture are deemed to be incorporated herein, and shall be enforceable by the Trustee, whether
acting as Trustee, Paying Agent, Security Registrar, Conversion Agent or Bid Solicitation Agent
hereunder, as if set forth herein in full.

     Section 12.10. The Trustee. The recitals in this Supplemental Indenture are made by the
Company only and not the Trustee, and the Trustee assumes no responsibility for their correctness.
All of the provisions contained in the Original Indenture in respect of the rights, privileges,
immunities, powers and duties of the Trustee shall be applicable in respect of the Notes and of
this Supplemental Indenture as fully and with like effect as set forth in full herein, except as
expressly modified hereby. The Trustee makes no representation as to the validity or sufficiency
of this Supplemental Indenture.

70

 

[Remainder of the page intentionally left blank]

71

 

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

	 	 	 	 	 
	 	HEARTWARE INTERNATIONAL, INC.

 	 
	 	By:  	/s/ Jeffrey M. Held 	 
	 	 	Name:  	Jeffrey M. Held	 
	 	 	Title:  	VP, General Counsel	 
	 

[Trustee Signature Follows]

 

 

	 	 	 	 	 
	 	WILMINGTON TRUST FSB, as Trustee

 	 
	 	By:  	/s/ Jane Schweiger	 
	 	 	Name:  	Jane Schweiger	 
	 	 	Title:  	Vice President	 
	 

 

 

EXHIBIT A

[FORM OF FACE OF NOTE]

     THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR
NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A
TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE
OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT
IN LIMITED CIRCUMSTANCES.

     UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY NOTE 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 HEREON 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.

A-1

 

3.50% Convertible Senior Note due 2017

			
	No. [                 ]
	 	Initially $[_______]

CUSIP No. 422368 AA8

     HEARTWARE INTERNATIONAL, INC., a Delaware corporation (herein called the “Company,” which term
includes any successor Person under the Indenture hereinafter referred to), for value received,
hereby promises to pay CEDE & CO., or registered assigns, [_________] MILLION DOLLARS ($[_______])
[(or such greater or lesser principal amount as shall be specified in the “Schedule of Exchanges of
Notes” attached hereto)]1 on the Maturity Date unless earlier converted or repurchased,
and to pay interest thereon as set forth in the manner, at the rates and to the Persons set forth
in the Indenture.

     This Note shall bear interest at a rate of 3.50% per annum from December 15, 2010 or from the
most recent date to which interest had been paid or provided to, but excluding, the next scheduled
Interest Payment Date, until the principal hereof shall be repaid. Interest on this Note will be
computed on the basis of a 360-day year composed of twelve 30-day months. Interest is payable
semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2011, to the
Person in whose name this Note (or one or more predecessor securities) is registered at the close
of business on the Regular Record Date for such interest. Additional Interest will be payable at
the option of the Company on the terms set forth in Section 5.03 of the within-mentioned
Supplemental Indenture, and any reference to interest on, or in respect of, any Note therein shall
be deemed to include Additional Interest if, in such context, Additional Interest is, was or would
be payable pursuant to such Section 5.03 and any express mention of the payment of Additional
Interest in any provision therein shall not be construed as excluding Additional Interest in those
provisions thereof where such express mention is not made.

     [The Company shall pay principal of and interest on this Note in immediately available funds
to the Depositary or its nominee, as the case may be, as the registered Holder of such
Note.]2 [As provided in and subject to the provisions of the Indenture, the Company
shall pay principal of any Notes at the office or agency designated by the Company for that
purpose.]3 The Company has initially designated the Trustee as its Paying Agent,
Security Registrar, Conversion Agent and Bid Solicitation Agent in respect of the Notes and its

 

			
	1	 	Insert for Global Note.
	 
	2	 	Insert for Global Note.
	 
	3	 	Insert for Physical Note.

A-2

 

agency in Minneapolis, Minnesota as a place where Notes may be presented for payment or for
registration of transfer.

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

     In the case of any conflict between this Note and the Indenture, the provisions of the
Indenture shall control. This Note, and any claim, controversy or dispute arising hereunder or
related hereto, shall be governed by and construed in accordance with the laws of the State of New
York.

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

[Remainder of page intentionally left blank]

A-3

 

     IN WITNESS WHEREOF, HEARTWARE INTERNATIONAL, INC. has caused this instrument to be signed
manually or by facsimile by one of its duly authorized Officers.

     Dated: [______________]

	 	 	 	 	 
	 	HEARTWARE INTERNATIONAL, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

A-4

 

	 	 	 	 	 

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated herein referred to in the
within-mentioned Indenture.

Dated: [__________]

	 	 	 	 	 
	 	WILMINGTON TRUST FSB, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

A-5

 

	 	 	 	 	 

[FORM OF REVERSE OF NOTE]

HEARTWARE INTERNATIONAL, INC.

3.50% Convertible Senior Note due 2017

     This Note is one of a duly authorized issue of Securities of the Company designated as its
3.50% Convertible Senior Notes due 2017 (herein called the “Notes”), issued under an Indenture
dated as of December 15, 2010 (the “Original Indenture”), as amended and supplemented by the First
Supplemental Indenture dated as of December 15, 2010 (herein called the “Supplemental Indenture”;
the Original Indenture, as amended and supplemented by the Supplemental Indenture, and as it may be
further amended or supplemented from time to time, the “Indenture”), by and between the Company and
Wilmington Trust FSB, herein called the “Trustee,” and reference is hereby made to the Indenture
for a statement of the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are,
and are to be, authenticated and delivered. Additional Notes may be issued in an unlimited
aggregate principal amount, subject to certain conditions specified in the Indenture.

     This Note is not subject to redemption prior to maturity. No sinking fund is provided for the
Note.

     The provisions in Articles Four, Five, Eight, Nine, Eleven, Twelve, Thirteen and Fourteen, and
Sections 112, 203, 304, 305, 306, 307, 309, 310, 312, 313, 601, 703(1), 1002, 1004, 1008 and 1009,
and the definitions of “Officer’s Certificate” and “Outstanding” in Section 101 of the Original Indenture shall not
apply to the Notes, and Article 5, Article 6, Article 7, Article 8, Section 2.01, Section 2.02,
Section 2.03, Section 2.04, Section 2.05, Section 2.06, Section 2.07, Section 2.10, Section
4.02(h), Section 5.10, Section 5.11, and the definition of “Officer’s Certificate” and
“Outstanding” in Section 1.02 of the Supplemental Indenture supersede the entirety thereof.

     As provided in and subject to the provisions of the Indenture, upon the occurrence of a
Fundamental Change, the Holder has the right, at such Holder’s option, to require the Company to
repurchase all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or
integral multiples thereof) on the Fundamental Change Repurchase Date at a price equal to the
Fundamental Change Repurchase Price.

     As provided in and subject to the provisions of the Indenture, the Holder hereof may not
convert this Note prior to February 1, 2011 under any circumstances. On or after February 1, 2011,
the Holder hereof has the right, at its option (i) during certain periods and upon the occurrence
of certain conditions specified in the Indenture, prior to June 15, 2017, and (ii) on or after June
15,

A-6

 

2017, at any time prior to the close of business on the Business Day immediately preceding the
Maturity Date, to convert this Note or a portion thereof that is $1,000 or an integral multiple
thereof, into cash, shares of Common Stock or a combination thereof, at the Company’s election, on
the terms specified in the Indenture.

     As provided in and subject to the provisions of the Supplemental Indenture, the Company shall
make all payments in respect of the Fundamental Change Repurchase Price and the principal amount on
the Fundamental Change Repurchase Date or the Maturity Date thereof, as the case may be, to the
Holder who surrenders a Note to the Paying Agent to collect such payments in respect of the Note.
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.

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

     As provided in and subject to certain exceptions and the provisions of the Indenture, in case
an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the
principal of and interest on all Notes may be declared due and payable, by either the Trustee or
Holders of not less than 25% in aggregate principal amount of Notes then Outstanding, and upon said
declaration shall become due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay or
deliver, as the case may be, the principal of, interest on and the consideration due upon
conversion of, this Note at the time, place and rate, and otherwise on the terms prescribed herein
and in the Indenture.

     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Note is registrable in the Security Register, upon

A-7

 

surrender of this Note for registration of transfer at the office or agency of the Company in
any place where the principal of and interest on this Note are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly authorized in writing,
and thereupon one or more new Notes of this series and of like tenor, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated transferee or
transferees.

     The Notes are issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Indenture and subject to certain limitations
therein set forth, the Notes are exchangeable for a like aggregate principal amount of Notes and of
like tenor of a different authorized denomination, as requested by the Holder surrendering the
same.

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any documentary, stamp or similar issue or
transfer tax payable in connection therewith to the extent provided in the Indenture.

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

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

A-8

 

ABBREVIATIONS

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

TEN COM = as tenants in common

UNIF GIFT MIN ACT = Uniform Gifts to Minors Act

CUST = Custodian

TEN ENT = as tenants by the entireties

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

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

A-9

 

SCHEDULE A4

SCHEDULE OF EXCHANGES OF NOTES

HEARTWARE INTERNATIONAL, INC.

3.50% Convertible Senior Notes due 2017

     The initial principal amount of this Global Note is [_________] DOLLARS ($[_________]). The
following exchanges, purchases or conversions of a part of this Global Note have been made:

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

 

			
	4	 	Insert for Global Note.

A-10

 

ATTACHMENT 1

[FORM OF NOTICE OF CONVERSION]

To: HeartWare International, Inc.

The undersigned owner of this Note hereby irrevocably exercises the option to convert this Note, or
a portion hereof (that is $1,000 principal amount or an integral multiple thereof) below
designated, into cash, shares of Common Stock or a combination thereof in accordance with the terms
of the Indenture referred to in this Note, and directs that any cash payable and any shares of
Common Stock issuable and deliverable upon conversion, together with any check in payment for
fractional shares of Common Stock, and any Notes representing any unconverted principal amount
hereof, be paid or issued and delivered, as the case may be, to the registered Holder hereof unless
a different name has been indicated below. Subject to certain exceptions set forth in the
Indenture, if this notice is being delivered on a date after the close of business on a Regular
Record Date and prior to the open of business on the related Interest Payment Date, this notice is
accompanied by payment of an amount equal to the interest payable on such Interest Payment Date
with respect to the principal of this Note to be converted. If any shares of Common Stock or
portion of this Note not converted are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect hereto as set forth
in Section 4.02(d) or Section 4.02(e) of the Supplemental Indenture. Any amount required to be
paid by the undersigned on account of interest accompanies this Note.

Principal amount to be converted (in an integral multiple of $1,000, if less than all):

	 	 	 	 	 

	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

Signature(s)
	 	 
	 
	 	 	 	 
	 

	 	Signature(s) must be guaranteed by an institution which is a member of one of
the following recognized signature Guarantee Programs:	 	 
	 
	 	 	 	 
	 

	 	(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion
Program (SEMP) or (iv) another guarantee program acceptable	 	 

1

 

	 	 	 	 	 

	 

	 	to the Trustee.	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

Signature(s)
	 	 

Fill in for registration of any shares of Common Stock and Notes if to be issued otherwise than to
the registered Holder.

	 	 	 

	 

(Name)

	 	 
	 
	 	 
	 

(Address)

	 	 
	 
	 	 
	Please print Name and Address (including zip code number)
	 	 
	 
	 	 
	Social Security or other Taxpayer Identification Number ________________
	 	 

2

 

ATTACHMENT 2

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

To: HeartWare International, Inc.

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

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

Dated: _____________________________

	 	 	 	 	 

	 

	 	Signature(s)	 	 
	 
	 	 	 	 
	

	 	 

Social Security or Other Taxpayer Identification Number

	 	 
	 

	 	principal amount to be repaid (if less than all): $__________, 000	 	 
	 
	 	 	 	 
	 

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

1

 

ATTACHMENT 3

[FORM OF ASSIGNMENT AND TRANSFER]

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

	 	 	 	 	 

	

	 	 

	 	 
	 
	 	 	 	 
	

	 	 

Signature(s)
	 	 
	 
	 	 	 	 
	 

	 	Signature(s) must be guaranteed by an institution which is a member of one of
the following recognized signature Guarantee Programs:	 	 
	 
	 	 	 	 
	 

	 	(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion
Program (SEMP) or (iv) another guarantee program acceptable to the Trustee.	 	 
	 
	 	 	 	 
	

	 	 

	 	 
	 
	 	 	 	 
	

	 	 

Signature Guarantee
	 	 

1exv10w31

Exhibit 10.31

COMMON STOCK PURCHASE AGREEMENT

     COMMON STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of December 14, 2010 by and
between CARDICA, INC., a Delaware corporation (the “Company”), and ASPIRE CAPITAL FUND, LLC, an
Illinois limited liability company (the “Buyer”). Capitalized terms used herein and not otherwise
defined herein are defined in Section 10 hereof.

     WHEREAS:

     Subject to the terms and conditions set forth in this Agreement, the Company wishes to sell to
the Buyer, and the Buyer wishes to buy from the Company, up to Ten Million Dollars ($10,000,000) of
the Company’s common stock, par value $0.001 per share (the “Common Stock”). The shares of Common
Stock to be purchased hereunder are referred to herein as the “Purchase Shares.”

     NOW THEREFORE, the Company and the Buyer hereby agree as follows:

     1. PURCHASE OF COMMON STOCK.

     Subject to the terms and conditions set forth in this Agreement, the Company has the right to
sell to the Buyer, and the Buyer has the obligation to purchase from the Company, Purchase Shares
as follows:

     (a) Commencement of Purchases of Common Stock. After the Commencement Date (as
defined below), the purchase and sale of Purchase Shares hereunder shall occur from time to time
upon written notices by the Company to the Buyer on the terms and conditions as set forth herein
following the satisfaction of the conditions (the “Commencement”) as set forth in Sections 6 and 7
below (the date of satisfaction of such conditions, the “Commencement Date”).

     (b) The Company’s Right to Require Purchases. Subject to the terms and conditions
set forth in this Agreement, on any given Business Day after the Commencement Date, the Company
shall have the right but not the obligation to direct the Buyer by its delivery to the Buyer of a
Purchase Notice from time to time, and the Buyer shall thereupon have the obligation, to buy (i) up
to 100,000 Purchase Shares on any Business Day on which the Closing Sale Price is greater than
$1.00 per share of Common Stock, (ii) up to 200,000 Purchase Shares on any Business Day on which
the Closing Sale Price is greater than $2.25 per share of Common Stock and (iii) up to 300,000
Purchase Shares on any Business Day on which the Closing Sale Price is greater than $3.50 per share
of Common Stock (each such purchase, a “Purchase”) at the Purchase Price on the Purchase Date. The
Company may deliver multiple Purchase Notices to the Buyer from time to time so long as the most
recent Purchase has been completed. Share amounts subject to purchase under this Section 1(b) and
the related dollar amounts shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction
after the date hereof.

     (c) Payment for Purchase Shares. In connection with any Purchase, the Buyer shall
pay to the Company an amount equal to the Purchase Amount with respect to such Purchase Shares as
full payment for such Purchase Shares via wire transfer of immediately available funds on the same
Business Day that the Buyer receives such Purchase Shares. All payments made under this Agreement
shall be

 

 

made in lawful money of the United States of America via wire transfer of immediately
available funds to such account as the Company may from time to time designate by written notice in
accordance with the provisions of this Agreement. Whenever any amount expressed to be due by the
terms of this Agreement is due on any day that is not a Business Day, the same shall instead be due
on the next succeeding day that is a Business Day.

     (d) Purchase Price Floor. The Company and the Buyer shall not effect any sales
under this Agreement on any Purchase Date where the Closing Sale Price is less than the Floor
Price. “Floor Price” means $1.00 per share of Common Stock, which shall be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or
other similar transaction after the date hereof.

     (e) Records of Purchases. The Buyer and the Company shall each maintain records
showing the remaining Available Amount at any given time and the dates and Purchase Amounts for
each purchase, or shall use such other method reasonably satisfactory to the Buyer and the Company
to reconcile the remaining Available Amount.

     (f) Taxes. The Company shall pay any and all transfer, stamp or similar taxes
that may be payable with respect to the issuance and delivery of any shares of Common Stock to the
Buyer made under this Agreement.

     (g) Compliance with Principal Market Rules. Notwithstanding anything in this
Agreement to the contrary, and in addition to the limitations set forth in Section 1(d), the number
of shares of Common Stock which may be issued under this Agreement, including the Commitment Shares
(as defined in Section 4(e) hereof), shall be limited to 4,930,747 shares of Common Stock, which is
less than 19.99% of the Company’s outstanding shares of Common Stock as of the date of this
Agreement.

     2. BUYER’S REPRESENTATIONS AND WARRANTIES.

     The Buyer represents and warrants to the Company that as of the date hereof and as of the
Commencement Date:

     (a) Investment Purpose. The Buyer is entering into this Agreement and acquiring
the Purchase Shares and Commitment Shares (as defined in Section 4(e) hereof) (in this Agreement,
the Purchase Shares and the Commitment Shares are collectively referred to herein as the
“Securities”), for its own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof; provided however, by making the
representations herein, the Buyer does not agree to hold any of the Securities for any minimum or
other specific term.

     (b) Accredited Investor Status. The Buyer is an “accredited investor” as that
term is defined in Rule 501(a)(3) of Regulation D.

     (c) Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and the Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

-2-

 

     (d) Information. The Buyer has been furnished with all materials relating to the
business, finances and operations of the Company and materials relating to the offer and sale of
the Securities that have been reasonably requested by the Buyer, including, without limitation, the
SEC Documents (as defined in Section 3(f) hereof). The Buyer understands that its investment in
the Securities involves a high degree of risk. The Buyer (i) is able to bear the economic risk of
an investment in the Securities including a total loss, (ii) has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and risks of the
proposed investment in the Securities and (iii) has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning the financial condition and business of
the Company and other matters related to an investment in the Securities. Neither such inquiries
nor any other due diligence investigations conducted by the Buyer or its representatives shall
modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties
contained in Section 3 below. The Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its acquisition of the
Securities.

     (e) No Governmental Review. The Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.

     (f) Transfer or Sale. The Buyer understands that except as provided in the
Registration Rights Agreement (as defined in Section 4(a) hereof): (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or
(B) an exemption exists permitting such Securities to be sold, assigned or transferred without such
registration; (ii) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register the
Securities under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

     (g) Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding agreement of the Buyer
enforceable against the Buyer in accordance with its terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

     (h) Residency. The Buyer is a resident of the State of Illinois.

     (i) No Prior Short Selling. The Buyer represents and warrants to the Company that
at no time prior to the date of this Agreement has any of the Buyer, its agents, representatives or
affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) “short
sale” (as such term is defined in Section 242.200 of Regulation SHO of the Securities Exchange Act
of 1934, as amended (the “1934 Act”)) of the Common Stock or (ii) hedging transaction, which
establishes a net short position with respect to the Common Stock.

-3-

 

     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company represents and warrants to the Buyer that as of the date hereof and as of the
Commencement Date:

     (a) Organization and Qualification. The Company and its “Subsidiaries” (which for
purposes of this Agreement means any entity in which the Company, directly or indirectly, owns 50%
or more of the voting stock or capital stock or other similar equity interests) are corporations
duly organized and validly existing in good standing under the laws of the jurisdiction in which
they are incorporated, and have the requisite corporate power and authority to own their properties
and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so qualified or be in
good standing could not reasonably be expected to have a Material Adverse Effect. As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on any of: (i) the business,
properties, assets, operations, results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or (ii) the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined in Section 3(b) hereof). The Company
has no Subsidiaries except as set forth on Schedule 3(a).

     (b) Authorization; Enforcement; Validity. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement and each of the other agreements entered into by the parties on the
Commencement Date and attached hereto as exhibits to this Agreement (collectively, the “Transaction
Documents”), and to issue the Securities in accordance with the terms hereof and thereof, (ii) the
execution and delivery of the Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby, including without limitation, the issuance of the
Commitment Shares and the reservation for issuance and the issuance of the Purchase Shares issuable
under this Agreement, have been duly authorized by the Company’s Board of Directors or duly
authorized committee thereof, do not conflict with the Company’s Certificate of Incorporation or
Bylaws, and do not require further consent, approval or authorization by the Company, its Board of
Directors or its shareholders, (iii) this Agreement has been, and each other Transaction Document
shall be on the Commencement Date, duly executed and delivered by the Company and (iv) this
Agreement constitutes, and each other Transaction Document upon its execution on behalf of the
Company, shall constitute, the valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and
remedies. The Board of Directors of the Company or duly authorized committee thereof has approved
the resolutions (the “Signing Resolutions”), substantially in the form previously provided to the
Buyer, to authorize this Agreement and the transactions contemplated hereby. The Signing
Resolutions are valid, in full force and effect without any amendment or supplement thereto as of
the Commencement Date.

     (c) Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (i) 65,000,000 shares of Common Stock, of which as of the date hereof,
25,384,511 shares are issued and outstanding, 66,227 are held as treasury shares, 4,279,745 shares
are reserved for future issuance or purchase pursuant to the Company’s stock option plans of which
only approximately

-4-

 

863,389 shares remain available for future option grants, restricted stock
grants, grants of restricted stock units and purchases pursuant to the Company’s equity incentive
plans and 4,646,393 shares are issuable and reserved for issuance pursuant to securities (other
than stock options issued pursuant to the Company’s equity incentive plans) exercisable or
exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000 shares of
Preferred Stock, $0.001 par value, none of which are issued and outstanding as of the date hereof.
All of such outstanding shares have been, or upon issuance will be, validly issued and are fully
paid and nonassessable. Except as disclosed in Schedule 3(c), as of the date of this Agreement,
(i) no shares of the Company’s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding debt securities, (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or
any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its Subsidiaries, (iv) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to register the sale
of any of their securities under the 1933 Act (except the Registration Rights Agreement), (v) there
are no outstanding securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement and (vii) the Company does not have any
stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
The Company has furnished or made available to the Buyer true and correct copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s Bylaws, as amended and as in effect on the date hereof (the
“Bylaws”), and summaries of the terms of all securities convertible into or exercisable for Common
Stock, if any, and copies of any documents containing the material rights of the holders thereof in
respect thereto.

     (d) Issuance of Securities. The Commitment Shares have been duly authorized and,
upon issuance in accordance with the terms hereof, the Commitment Shares shall be (i) validly
issued, fully paid and non-assessable and (ii) free from all taxes, liens and charges with respect
to the issue thereof. 4,635,180 shares of Common Stock have been duly authorized and reserved for
issuance upon purchase under this Agreement. Upon issuance and payment therefor in accordance with
the terms and conditions of this Agreement, the Purchase Shares shall be validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of Common Stock.

     (e) No Conflicts. Except as disclosed in Schedule 3(e), the execution, delivery
and performance of the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation, the reservation
for issuance and issuance of the Purchase Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the Bylaws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of

-5-

 

termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the rules and regulations
of the Principal Market applicable to the Company or any of its Subsidiaries) or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected, except in the
case of conflicts, defaults, terminations, amendments, accelerations, cancellations and violations
under clause (ii), which could not reasonably be expected to result in a Material Adverse Effect.
Except as disclosed in Schedule 3(e), neither the Company nor its Subsidiaries is in violation of
any term of or in default under its Certificate of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the Company or Bylaws or
their organizational charter or bylaws, respectively. Except as disclosed in Schedule 3(e),
neither the Company nor any of its Subsidiaries is in violation of any term of or is in default
under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries,
except for possible conflicts, defaults, terminations or amendments which would not reasonably be
expected to have a Material Adverse Effect. The business of the Company and its Subsidiaries is
not being conducted, and shall not be conducted, in violation of any law, ordinance, or regulation
of any governmental entity, except for possible violations, the sanctions for which either
individually or in the aggregate could not reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act,
the rules of the Principal Market or applicable state securities laws, the Company is not required
to obtain any consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by the Transaction
Documents in accordance with the terms hereof or thereof. Except as disclosed in Schedule 3(e) or
expressly contemplated herein, all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence shall be obtained or
effected on or prior to the Commencement Date. Except as disclosed in Schedule 3(e), since January
1, 2010 the Company has not received nor delivered any notices or correspondence from or to the
Principal Market. The Principal Market has not commenced any delisting proceedings against the
Company.

     (f) SEC Documents; Financial Statements. Except as disclosed in Schedule 3(f),
since January 1, 2010, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the reporting requirements of
the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein
and financial statements and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the “SEC Documents”). As of their respective dates (except as
they have been correctly amended), the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC (except as they may have been properly amended), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates (except as they have been properly amended), the
financial statements of the Company included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed
or

-6-

 

summary statements) and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
Except as disclosed in Schedule 3(f) or routine correspondence related to requests for confidential
treatment of certain provisions of the Company’s filed agreements or that is available on the SEC’s
EDGAR database as of the date hereof, the Company has received no notices or correspondence from
the SEC since January 1, 2010. The SEC has not commenced any enforcement proceedings against the
Company or any of its Subsidiaries.

     (g) Absence of Certain Changes. Except as disclosed in Schedule 3(g), since June
30, 2010, there has been no material adverse change in the business, properties, operations,
financial condition or results of operations of the Company or its Subsidiaries. The Company has
not taken any steps, and does not currently expect to take any steps, to seek protection pursuant
to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings.
The Company is financially solvent and is generally able to pay its debts as they become due.

     (h) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against
or affecting the Company, the Common Stock or any of the Company’s Subsidiaries or any of the
Company’s or the Company’s Subsidiaries’ officers or directors in their capacities as such, which
could reasonably be expected to have a Material Adverse Effect. A description of each material
action, suit, proceeding, inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body which, as of the date of this Agreement, is pending or
to the knowledge of the Company threatened in writing against or affecting the Company, the Common
Stock or any of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’
officers or directors in their capacities as such, is set forth in Schedule 3(h).

     (i) Acknowledgment Regarding Buyer’s Status. The Company acknowledges and agrees
that the Buyer is acting solely in the capacity of arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and thereby. The Company further
acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated
hereby and thereby and any advice given by the Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to the Buyer’s purchase of the Securities. The Company further represents to the
Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on
the independent evaluation by the Company and its representatives and advisors.

     (j) Intellectual Property Rights. The Company’s knowledge, the Company and its
Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights
(collectively, “Intellectual Property”) necessary to conduct their respective businesses as now
conducted, except as set forth in Schedule 3(j) or to the extent that the failure to own, possess,
license or otherwise hold adequate rights to use Intellectual Property would not, individually or
in the aggregate, have a Material Adverse Effect. Except as disclosed in Schedule 3(j), to the
Company’s knowledge, none of the Company’s material

-7-

 

trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual property rights have
expired or terminated, or, by the terms and conditions thereof, could expire or terminate within
two years from the date of this Agreement. The Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries of any material trademark, trade
name rights, patents, patent rights, copyrights, inventions, licenses, service names, service
marks, service mark registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by others and, except as
set forth on Schedule 3(j), there is no claim, action or proceeding being made or brought against,
or to the Company’s knowledge, being threatened against, the Company or its Subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license, service names,
service marks, service mark registrations, trade secret or other infringement, which could
reasonably be expected to have a Material Adverse Effect.

     (k) Environmental Laws. To the Company’s knowledge, the Company and its
Subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval, except where, in each of the three
foregoing clauses, the failure to so comply could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

     (l) Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each case free and clear
of all liens, encumbrances and defects except such as are described in Schedule 3(l) or such as do
not materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries. Any real property
and facilities held under lease by the Company and any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.

     (m) Insurance. The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or operations of the Company and
its Subsidiaries, taken as a whole.

     (n) Regulatory Permits. The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses as currently conducted, and
neither the Company nor any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit.

-8-

 

     (o) Tax Status. The Company and each of its Subsidiaries has made or filed all
federal and state income and all other material tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.

     (p) Transactions With Affiliates. Except as set forth on Schedule 3(p) and other
than in connection with the grant or exercise of stock options or the grant of restricted stock,
restricted stock units or similar equity awards, in each case issued for compensatory purposes as
disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any corporation, partnership, trust or other
entity in which any officer, director, or any such employee has an interest or is an officer,
director, trustee or partner.

     4. COVENANTS.

     (a) Filing of Form 8-K and Registration Statement. The Company agrees that it
shall, within the time required under the 1934 Act file a Report on Form 8-K disclosing this
Agreement and the transaction contemplated hereby. The Company shall also file within ten (10)
Business Days from the date hereof a new registration statement covering the sale of the Commitment
Shares and up to 4,635,180 Purchase Shares by the Buyer in accordance with the terms of the
Registration Rights Agreement between the Company and the Buyer, dated as of the date hereof (the
“Registration Rights Agreement”).

     (b) Blue Sky. The Company shall take such action, if any, as is reasonably
necessary in order to obtain an exemption for or to qualify (i) the initial sale of the Securities
to the Buyer under this Agreement and (ii) any subsequent sale of the Securities by the Buyer, in
each case, under applicable securities or “Blue Sky” laws of the states of the United States in
such states as is reasonably requested by the Buyer from time to time, and shall provide evidence
of any such action so taken to the Buyer.

     (c) Listing. The Company shall promptly secure the listing of all of the
Securities upon each national securities exchange and automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction Documents. The Company
shall maintain the Common Stock’s authorization for quotation on the Principal Market, and neither
the Company nor any of its Subsidiaries shall take any action that would be reasonably expected to
result in the delisting or suspension of the Common Stock on the Principal Market; provided that
nothing in this Section 4(c) shall prevent or inhibit the Company from causing its Common Stock to
be listed or quoted on a Principal Market that is

-9-

 

different from the Principal Market on the date
hereof. The Company shall pay all fees and expenses in connection with satisfying its obligations
under this Section.

     (d) Limitation on Short Sales and Hedging Transactions. The Buyer agrees that
beginning on the date of this Agreement and ending on the date of termination of this Agreement as
provided in Section 11(k), the Buyer and its agents, representatives and affiliates shall not in
any manner whatsoever enter into or effect, directly or indirectly, any (i) “short sale” (as such
term is defined in Section 242.200 of Regulation SHO of the 1934 Act) of the Common Stock or (ii)
hedging transaction, which establishes a net short position with respect to the Common Stock.

     (e) Issuance of Commitment Shares. Immediately upon the execution of this
Agreement, the Company shall issue to the Buyer, as consideration for the Buyer entering into this
Agreement, 295,567 shares of Common Stock (the “Commitment Shares”). The Commitment Shares shall
be issued in certificated form and (subject to Section 5 hereof) shall bear the following
restrictive legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL, IN A
CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.

     (f) Due Diligence. The Buyer shall have the right, from time to time as the Buyer
may reasonably deem appropriate, to perform reasonable due diligence on the Company during normal
business hours. The Company and its officers and employees shall provide information and
reasonably cooperate with the Buyer in connection with any reasonable request by the Buyer related
to the Buyer’s due diligence of the Company, including, but not limited to, any such request made
by the Buyer in connection with (i) the filing of the registration statement described in Section
4(a) hereof and (ii) the Commencement. Each party hereto agrees not to disclose any Confidential
Information of the other party to any third party and shall not use the Confidential Information
for any purpose other than in connection with, or in furtherance of, the transactions contemplated
hereby. Each party hereto acknowledges that the Confidential Information shall remain the property
of the disclosing party and agrees that it shall take all reasonable measures to protect the
secrecy of any Confidential Information disclosed by the other party.

     (g) Ownership. The Buyer agrees to take such action as shall be necessary at all
times to maintain its beneficial ownership of the Company’s Common Stock, as calculated under
Section 13(d) of the 1934 Act and related regulations, at a level below 20%. The Company will not
issue and the Buyer will not purchase, any Purchase Shares which, when aggregated with all other
shares of Common Stock then beneficially owned by the Buyer, would result in the beneficial
ownership by the Buyer of more than 19.99% of the then issued and outstanding Common Stock. The
Buyer will, upon the reasonable request of the Company, either (i) inform the Company of the number
of shares of Common Stock beneficially owned by it or (ii) confirm to the Company that its
beneficial ownership (as calculated above) at the time does not exceed 10%.

-10-

 

     5. TRANSFER AGENT INSTRUCTIONS.

     Immediately upon the execution of this Agreement, the Company shall deliver to the Transfer
Agent a letter in the form as set forth as Exhibit C attached hereto with respect to the
issuance of the Commitment Shares. On the Commencement Date, the Company shall cause any
restrictive legend on the Commitment Shares to be removed, subject to receipt of the share
certificate with respect thereto. All of the Purchase Shares to be issued under this Agreement
shall be issued without any restrictive legend unless the Buyer expressly consents otherwise. The
Company shall issue irrevocable instructions to the Transfer Agent, and any subsequent transfer
agent, to issue Purchase Shares in the name of the Buyer for the Purchase Shares (the “Irrevocable
Transfer Agent Instructions”). The Company warrants to the Buyer that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 5, will be given by the
Company to the Transfer Agent with respect to the Purchase Shares and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement, subject to the provisions of
Section 4(e) in the case of the Commitment Shares.

	 	6.	 	CONDITIONS TO THE COMPANY’S RIGHT TO COMMENCE SALES OF SHARES OF COMMON STOCK UNDER THIS AGREEMENT.

     The right of the Company hereunder to commence sales of the Purchase Shares is subject to the
satisfaction of each of the following conditions on or before the Commencement Date (the date that
the Company may begin sales):

     (a) The Buyer shall have executed each of the Transaction Documents and delivered the same
to the Company; and

     (b) A registration statement covering the sale of the Securities shall have been declared
effective under the 1933 Act by the SEC and no stop order with respect to the registration
statement shall be pending or threatened by the SEC.

	 	7.	 	CONDITIONS TO THE BUYER’S OBLIGATION TO MAKE PURCHASES OF SHARES OF COMMON STOCK.

     The obligation of the Buyer to buy Purchase Shares under this Agreement is subject to the
satisfaction of each of the following conditions on or before the Commencement Date (the date that
the Company may begin sales). Once such conditions have been initially satisfied, there shall not
be any ongoing obligation to satisfy such conditions after the Commencement has occurred:

     (a) The Company shall have executed each of the Transaction Documents and delivered the
same to the Buyer;

     (b) The Company shall have issued to the Buyer the Commitment Shares and, subject to
receipt of the share certificate with respect thereto, shall have removed the restrictive transfer
legend from the certificate representing the Commitment Shares;

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     (c) The Common Stock shall be authorized for quotation on the Principal Market, trading in
the Common Stock shall not have been within the last 365 days suspended by the SEC or the Principal
Market and the Securities shall be approved for listing upon the Principal Market;

     (d) The Buyer shall have received an opinion of the Company’s legal counsel dated as of
the Commencement Date in a mutually agreeable form;

     (e) The representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such representations and warranties
shall be true and correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct in all material respects as of such specific
date) and the Company shall have performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Commencement Date. The Buyer shall
have received a certificate, executed by the CEO, President or CFO of the Company, dated as of the
Commencement Date, to the foregoing effect in the form attached hereto as Exhibit A;

     (f) The Board of Directors of the Company or a duly authorized committee thereof shall
have adopted resolutions in substantially the form previously provided to the Buyer, which shall be
in full force and effect without any amendment or supplement thereto as of the Commencement Date;

     (g) As of the Commencement Date, the Company shall have reserved out of its authorized and
unissued Common Stock, solely for the purpose of effecting purchases of Purchase Shares hereunder,
4,635,180 shares of Common Stock;

     (h) The Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer, shall
have been delivered to and acknowledged in writing by the Company and the Company’s Transfer Agent;

     (i) The Company shall have delivered to the Buyer a certificate evidencing the
incorporation and good standing of the Company in the State of Delaware issued by the Secretary of
State of the State of Delaware as of a date within ten (10) Business Days of the Commencement Date;

     (j) The Company shall have delivered to the Buyer a certified copy of the Certificate of
Incorporation, as certified by the Secretary of State of the State of Delaware within ten (10)
Business Days of the Commencement Date;

     (k) The Company shall have delivered to the Buyer a secretary’s certificate executed by
the Secretary of the Company, dated as of the Commencement Date, in the form attached hereto as
Exhibit B;

     (l) A registration statement covering the sale of all of the Commitment Shares and
Purchase Shares shall have been declared effective under the 1933 Act by the SEC and no stop order
with respect to the registration statement shall be pending or threatened by the SEC. The Company
shall have prepared and delivered to the Buyer a final and complete form of prospectus, dated and
current as of the Commencement Date, to be used by the Buyer in connection with any sales of any
Securities, and to be filed by the Company one (1) Business Day after the Commencement Date. The

-12-

 

Company shall have made all filings under all applicable federal and state securities laws
necessary to consummate the issuance of the Commitment Shares and the Purchase Shares pursuant to
this Agreement in compliance with such laws;

     (m) No Event of Default has occurred, or any event which, after notice and/or lapse of
time, would become an Event of Default has occurred; and

     (n) The Company shall have provided the Buyer with the information reasonably requested by
the Buyer in connection with its due diligence requests made prior to, or in connection with, the
Commencement, in accordance with the terms of Section 4(f) hereof.

     8. INDEMNIFICATION.

     In consideration of the Buyer’s execution and delivery of the Transaction Documents and
acquiring the Securities hereunder and in addition to all of the Company’s other obligations under
the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Buyer
and all of its affiliates, shareholders, officers, directors, and employees and any of the
foregoing person’s agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective
of whether any such Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the Company in the
Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby, or (c) any cause of action, suit or claim brought or made against such Indemnitee by any
third party and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, other than with respect to Indemnified Liabilities which directly
and primarily result from (x) a material breach of any of Buyer’s representations and warranties,
covenants or agreements contained in the Transaction Documents, or (y) the gross negligence or
willful misconduct of the Indemnitee. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

-13-

 

     9. EVENTS OF DEFAULT.

     An “Event of Default” shall be deemed to have occurred at any time as any of the following
events occurs:

     (a) the effectiveness of any Registration Statement (as defined in the Registration Rights
Agreement) lapses for any reason (including, without limitation, the issuance of a stop order) or
is unavailable to the Buyer for sale of all of the Registrable Securities (as defined in the
Registration Rights Agreement) in accordance with the terms of the Registration Rights Agreement,
and such lapse or unavailability continues for a period of ten (10) consecutive Business Days or
for more than an aggregate of thirty (30) Business Days in any 365-day period;

     (b) the suspension from trading or failure of the Common Stock to be listed on the
Principal Market for a period of three (3) consecutive Business Days;

     (c) the delisting of the Common Stock from the Principal Market, provided that the Common
Stock is not immediately thereafter trading on the Nasdaq Global Select Market, the Nasdaq Capital
Market, the New York Stock Exchange, the NYSE Amex Equities or the OTC Bulletin Board;

     (d) the failure for any reason by the Transfer Agent to issue Purchase Shares to the Buyer
within five (5) Business Days after the applicable Purchase Date which the Buyer is entitled to
receive;

     (e) the Company breaches any covenant or other term or condition under any Transaction
Document if such breach could have a Material Adverse Effect and except, in the case of a breach of
a covenant which is reasonably curable, only if such breach continues for a period of at least five
(5) Business Days;

     (f) if any Person commences a proceeding against the Company pursuant to or within the
meaning of any Bankruptcy Law;

     (g) if the Company, pursuant to or within the meaning of any Bankruptcy Law: (A) commences
a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary
case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of its creditors, (E) becomes insolvent or
(F) is generally unable to pay its debts as the same become due; or

     (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law
that (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian of the
Company or for all or substantially all of its property or (C) orders the liquidation of the
Company or any Subsidiary.

In addition to any other rights and remedies under applicable law and this Agreement, including the
Buyer termination rights under Section 11(k) hereof, so long as an Event of Default has occurred
and is continuing, or if any event which, after notice and/or lapse of time, would become an Event
of Default, has occurred and is continuing, or so long as the Closing Sale Price is below the Floor
Price, the Company shall not direct the Buyer to purchase, and the Buyer shall not be obligated to
purchase, any shares of Common Stock under this Agreement. If pursuant to or within the meaning of
any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding
against the Company, a

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Custodian is appointed for the Company or for all or substantially all of
its property, or the Company makes a general assignment for the benefit of its creditors, (any of
which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h) hereof) this
Agreement shall automatically terminate without any liability or payment to the Company without
further action or notice by any Person. No such termination of this Agreement under Section
11(k)(i) shall affect the Company’s or the Buyer’s obligations under this Agreement with respect to
pending purchases and the Company and the Buyer shall complete their respective obligations with
respect to any pending purchases under this Agreement.

     10. CERTAIN DEFINED TERMS.

     For purposes of this Agreement, the following terms shall have the following meanings:

     (a) “1933 Act” means the Securities Act of 1933, as amended.

     (b) “Available Amount” means initially Ten Million Dollars ($10,000,000) in the aggregate
which amount shall be reduced by the Purchase Amount each time the Buyer purchases shares of Common
Stock pursuant to Section 1 hereof.

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

     (d) “Business Day” means any day on which the Principal Market is open for trading
including any day on which the Principal Market is open for trading for a period of time less than
the customary time.

     (e) “Closing Sale Price” means, the last closing trade price for the Common Stock on the
Principal Market as reported by the Principal Market.

     (f) “Confidential Information” means any information disclosed by either party to the
other party, either directly or indirectly, in writing, orally or by inspection of tangible objects
(including, without limitation, documents, prototypes, samples, plant and equipment), which is
designated as “Confidential,” “Proprietary” or some similar designation. Confidential Information
may also include information disclosed to a disclosing party by third parties. Confidential
Information shall not, however, include any information which (i) was publicly known and made
generally available in the public domain prior to the time of disclosure by the disclosing party;
(ii) becomes publicly known and made generally available after disclosure by the disclosing party
to the receiving party through no action or inaction of the receiving party; (iii) is already in
the possession of the receiving party at the time of disclosure by the disclosing party as shown by
the receiving party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such third party’s
obligations of confidentiality; (v) is independently developed by the receiving party without use
of or reference to the disclosing party’s Confidential Information, as shown by documents and other
competent evidence in the receiving party’s possession; or (vi) is required by law to be disclosed
by the receiving party, provided that the receiving party gives the disclosing party prompt written
notice of such requirement prior to such disclosure and assistance in obtaining an order protecting
the information from public disclosure.

     (g) “Custodian” means any receiver, trustee, assignee, liquidator or similar official
under any Bankruptcy Law.

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     (h) “Maturity Date” means the date that is twenty-four (24) months from the Commencement
Date.

     (i) “Person” means an individual or entity including any limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

     (j) “Principal Market” means the Nasdaq Global Market; provided however, that in the event
the Company’s Common Stock is ever listed or traded on the Nasdaq Global Select Market, the Nasdaq
Capital Market, the New York Stock Exchange, the NYSE Amex Equities or the OTC Bulletin Board, than
the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock
is then listed or traded.

     (k) “Purchase Amount” means, with respect to any particular purchase made hereunder, the
portion of the Available Amount to be purchased by the Buyer pursuant to Section 1 hereof as set
forth in a valid Purchase Notice which the Company delivers to the Buyer.

     (l) “Purchase Date” means with respect to any Purchase made hereunder, the Business Day of
receipt by the Buyer of a valid Purchase Notice that the Buyer is to buy Purchase Shares pursuant
to Section 1 hereof.

     (m) “Purchase Notice” shall mean an irrevocable written notice from the Company to the Buyer
directing the Buyer to buy Purchase Shares as specified by the Company therein at the applicable
Purchase Price on the Purchase Date.

     (n) “Purchase Price” means the lower of the (A) the lowest Sale Price of the Common Stock
on the Purchase Date and (B) the arithmetic average of the three (3) lowest Closing Sale Prices for
the Common Stock during the twelve (12) consecutive Business Days ending on the Business Day
immediately preceding such Purchase Date (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction).

     (o) “Sale Price” means any trade price for the shares of Common Stock on the Principal
Market as reported by the Principal Market.

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

     (q) “Transfer Agent” means the transfer agent of the Company as set forth in Section 11(f)
hereof or such other person who is then serving as the transfer agent for the Company in respect of
the Common Stock.

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     11. MISCELLANEOUS.

     (a) Governing Law; Jurisdiction; Jury Trial. As to matters of corporate law, this
Agreement will be governed by and construed in accordance with the corporate laws of the State of
Delaware and, as to matters other than corporate law, all questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other Transaction Documents
shall be governed by the internal laws of the State of Illinois, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of Illinois or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of Chicago, for the adjudication of any dispute
hereunder or under the other Transaction Documents or in connection herewith or therewith, or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such notices
to it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

     (b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an original, not a
facsimile signature.

     (c) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.

     (d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.

     (e) Entire Agreement. With the exception of the Mutual Nondisclosure Agreement
between the parties dated as of November 16, 2010, this Agreement supersedes all other prior oral
or written agreements between the Buyer, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this Agreement, the other Transaction
Documents and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. The Company acknowledges and agrees that is has not
relied on, in any manner whatsoever, any representations or statements, written or oral, other than
as expressly set forth in this Agreement.

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     (f) Notices. Any notices, consents or other communications required or permitted
to be given under the terms of this Agreement must be in writing and will be deemed to have been
delivered: (i) upon receipt when delivered personally; (ii) upon receipt when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file
by the sending party); or (iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:

     If to the Company:

Cardica, Inc.

900 Saginaw Drive

Redwood City, California 94063

Telephone: 650-364-9975

Facsimile: 650-364-3134

Attention: Robert Y. Newell, IV

     With a copy to:

Cooley LLP

3175 Hanover Street

Palo Alto, CA 94304

Telephone: 650-843-5000

Facsimile: 650-849-7400

Attention: Suzanne Sawochka Hooper, Esq.

     If to the Buyer:

Aspire Capital Fund, LLC

155 North Wacker Drive, Suite 1600

Chicago, IL 60606

Telephone: 312-658-0400

Facsimile: 312-658-4005

Attention: Steven G. Martin

     With a copy to:

O’Melveny & Myers LLP

1625 Eye Street, NW

Washington, DC 20006

Telephone: 202-383-5418

Facsimile: 202-383-5414

Attention: Martin P. Dunn, Esq.

     If to the Transfer Agent:

Computershare

655 Montgomery Street

Suite 1240

San Francisco, CA 94111

Telephone: 415-677-5000

Facsimile: 415-677-5014

Attention: Daniel Spengel

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or at such other address and/or facsimile number and/or to the attention of such other person
as the recipient party has specified by written notice given to each other party one (1) Business
Day prior to the effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, and recipient facsimile
number or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. Any
party to this Agreement may give any notice or other communication hereunder using any other means
(including messenger service, ordinary mail or electronic mail), but no such notice or other
communication shall be deemed to have duly given unless it actually is received by the party for
whom it is intended.

     (g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written consent of the
Buyer, including by merger or consolidation. The Buyer may not assign its rights or obligations
under this Agreement.

     (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other person.

     (i) Publicity. The Buyer shall have the right to approve before issuance any
press release, SEC filing or any other public disclosure made by or on behalf of the Company
whatsoever with respect to, in any manner, the Buyer, its purchases hereunder or any aspect of this
Agreement or the transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of the Buyer, to make any press release or other public
disclosure (including any filings with the SEC) with respect to such transactions as is required by
applicable law and regulations so long as the Company and its counsel consult with the Buyer in
connection with any such press release or other public disclosure at least two (2) Business Days
prior to its release. The Buyer must be provided with a copy thereof at least two (2) Business
Days prior to any release or use by the Company thereof.

     (j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

     (k) Termination. This Agreement may be terminated only as follows:

     (i) By the Buyer any time an Event of Default exists without any liability or
payment to the Company. However, if pursuant to or within the meaning of any Bankruptcy
Law, the Company commences a voluntary case or any Person commences a proceeding against the
Company, a Custodian is appointed for the Company or for all or substantially all of its
property, or the Company makes a general assignment for the benefit of its creditors, (any
of which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h) hereof)
this Agreement shall automatically terminate without any liability or payment to the Company
without further action

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or notice by any Person. No such termination of this Agreement under
this Section 11(k)(i) shall affect the Company’s or the Buyer’s obligations under this
Agreement with respect to pending purchases and the Company and the Buyer shall complete
their respective obligations with respect to any pending purchases under this Agreement.

     (ii) In the event that the Commencement shall not have occurred, the Company shall
have the option to terminate this Agreement for any reason or for no reason without any
liability whatsoever of any party to any other party under this Agreement except as set
forth in Section 11(k)(viii) hereof.

     (iii) In the event that the Commencement shall not have occurred on or before
February 28, 2011, due to the failure to satisfy the conditions set forth in Sections 6 and
7 above with respect to the Commencement, any party shall have the option to terminate this
Agreement at the close of business on such date or thereafter without liability of any party
to any other party except as set forth in Section 11(k)(viii) hereof; provided, however,
that the right to terminate this Agreement under this Section 11(k)(iii) shall not be
available to any party if such failure to satisfy any of the conditions set forth in Section
6 and/or Section 7 is the result of a breach of this Agreement by such party or the failure
of any representation or warranty made by such party in this Agreement to be true and
correct when made.

     (iv) At any time after the Commencement Date, the Company shall have the option to
terminate this Agreement for any reason or for no reason by delivering notice (a “Company
Termination Notice”) to the Buyer electing to terminate this Agreement without any liability
whatsoever of any party to any other party under this Agreement except as set forth in
Section 11(k)(viii) hereof. The Company Termination Notice shall not be effective until one
(1) Business Day after it has been received by the Buyer.

     (v) This Agreement shall automatically terminate on the date that the Company sells
and the Buyer purchases the full Available Amount as provided herein, without any action or
notice on the part of any party and without any liability whatsoever of any party to any
other party under this Agreement except as set forth in Section 11(k)(viii) hereof.

     (vi) If by the Maturity Date for any reason or for no reason the full Available
Amount under this Agreement has not been purchased as provided for in Section 1 of this
Agreement, this Agreement shall automatically terminate on the Maturity Date, without any
action or notice on the part of any party and without any liability whatsoever of any party
to any other party under this Agreement except as set forth in Section 11(k)(viii) hereof.
Notwithstanding the foregoing, in such case, the Buyer shall be required to immediately pay
to the Company a termination fee (the “Termination Fee”), equal to the number of Commitment
Shares multiplied by $1.68 multiplied by Unfunded Amount Percentage (as defined below). The
Termination Fee may, at the election of the Buyer, be paid in cash or in shares of Common
Stock valued at $1.68 per share. “Unfunded Amount Percentage” means the percentage of the
Aggregate Amount that the Company did not receive from the Buyer during the term of this
Agreement.

     (vii) Except as set forth in Sections 11(k)(i) (in respect of an Event of Default
under Sections 9(f), 9(g) and 9(h)), 11(k)(v) and 11(k)(vi), any termination of this
Agreement pursuant to this Section 11(k) shall be effected by written notice from the
Company to the Buyer, or the Buyer to the Company, as the case may be, setting forth the
basis for the termination hereof.

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     (viii) The representations and warranties of the Company and the Buyer contained in
Sections 2, 3 and 5 hereof, the indemnification provisions set forth in Section 8 hereof and
the agreements and covenants set forth in Section 11, shall survive the Commencement and any
termination of this Agreement. No termination of this Agreement shall affect the Company’s
or the Buyer’s rights or obligations (i) under the Registration Rights Agreement which shall
survive any such termination or (ii) under this Agreement with respect to pending purchases
and the Company and the Buyer shall complete their respective obligations with respect to
any pending purchases under this Agreement.

     (l) No Financial Advisor, Placement Agent, Broker or Finder. The Company
represents and warrants to the Buyer that it has not engaged any financial advisor, placement
agent, broker or finder in connection with the transactions contemplated hereby. The Buyer
represents and warrants to the Company that it has not engaged any financial advisor, placement
agent, broker or finder in connection with the transactions contemplated hereby. The Company shall
be responsible for the payment of any fees or commissions, if any, of any financial advisor,
placement agent, broker or finder engaged by the Company relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold the Buyer harmless against, any
liability, loss or expense (including, without limitation, attorneys’ fees and out of pocket
expenses) arising in connection with any such claim.

     (m) No Strict Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

     (n) Remedies, Other Obligations, Breaches and Injunctive Relief. Each party’s
remedies provided in this Agreement shall be cumulative and in addition to all other remedies
available to it under this Agreement, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy of either party contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein
shall limit either party’s right to pursue actual damages for any failure by the other party to
comply with the terms of this Agreement. Each party acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the other and that the remedy at law for any
such breach may be inadequate. Each party therefore agrees that, in the event of any such breach
or threatened breach, the other party shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of showing economic loss
and without any bond or other security being required.

     (o) Failure or Indulgence Not Waiver. No failure or delay in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privilege.

* * * * *

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     IN WITNESS WHEREOF, the Buyer and the Company have caused this Common Stock Purchase Agreement
to be duly executed as of the date first written above.

	 	 	 	 	 
	 	THE COMPANY:

CARDICA, INC.

 	 
	 	By:  	/s/ Robert Y. Newell
 	 
	 	 	Name:  	Robert Y. Newell 	 
	 	 	Title:  	CFO 	 
	 
	 	BUYER:

ASPIRE CAPITAL FUND, LLC

BY: ASPIRE CAPITAL PARTNERS, LLC

BY: SGM HOLDINGS CORP.

 	 
	 	By:  	/s/ Steven G. Martin
 	 
	 	 	Name:  	Steven G. Martin 	 
	 	 	Title:  	President 	 

-22-

 

	 	 	 	 	 

SCHEDULES

	 	 	 

	Schedule 3(a)

	 	Subsidiaries
	Schedule 3(c)

	 	Capitalization
	Schedule 3(e)

	 	Conflicts
	Schedule 3(f)

	 	1934 Act Filings
	Schedule 3(g)

	 	Material Changes
	Schedule 3(h)

	 	Litigation
	Schedule 3(j)

	 	Intellectual Property
	Schedule 3(l)

	 	Liens
	Schedule 3(p)

	 	Transactions with Affiliates

EXHIBITS

	 	 	 

	Exhibit A

	 	Form of Officer’s Certificate
	Exhibit B

	 	Form of Secretary’s Certificate
	Exhibit C

	 	Form of Letter to Transfer Agent

 

 

DISCLOSURE SCHEDULES

Schedule 3(a) – Subsidiaries

Schedule 3(c) — Capitalization

Schedule 3(e) — No Conflicts

Schedule 3(f) — 1934 Act Filings

Schedule 3(g) — Absence of Certain Changes

Schedule 3(h) — Litigation

Schedule 3(k) — Intellectual Property Rights

Schedule 3(m) — Title

Schedule 3(q) — Transactions with Affiliates

 

 

EXHIBIT A

FORM OF OFFICER’S CERTIFICATE

     This Officer’s Certificate (the “Certificate”) is being delivered pursuant to Section 7(e) of
that certain Common Stock Purchase Agreement dated as of December 14, 2010 (“Common Stock Purchase
Agreement”), by and between CARDICA, INC., a Delaware corporation (the “Company”), and ASPIRE
CAPITAL FUND, LLC (the “Buyer”). Terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Common Stock Purchase Agreement.

     The undersigned, ___________, ______________ of the Company, hereby certifies as follows:

     1. I am the _____________ of the Company and make the statements
contained in this Certificate;

     2. The representations and warranties of the Company set forth in Section 3
of the Common Stock Purchase Agreement are true and correct in all material respects
(except to the extent that any of such representations and warranties is already
qualified as to materiality in Section 3 of the Common Stock Purchase Agreement, in
which case, such representations and warranties are true and correct without further
qualification) as of the date when made and as of the Commencement Date as though
made at that time (except for representations and warranties that speak as of a
specific date, which are true and correct in all material respects as of such
specific date);

     3. The Company has performed, satisfied and complied in all material
respects with covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at or prior to
the Commencement Date.

     4. The Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

 

 

     IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of ___________.

______________________

Name:

Title:

     The undersigned as Secretary of CARDICA, INC., a Delaware corporation, hereby certifies that
___________ is the duly elected, appointed, qualified and acting ________ of _________ and that the
signature appearing above is his genuine signature.

___________________________________

Secretary

 

 

EXHIBIT B

FORM OF SECRETARY’S CERTIFICATE

     This Secretary’s Certificate (the “Certificate”) is being delivered pursuant to Section 7(k)
of that certain Common Stock Purchase Agreement dated as of December 14, 2010, (the “Common Stock
Purchase Agreement”), by and CARDICA, INC., a Delaware corporation (the “Company”) and ASPIRE
CAPITAL FUND, LLC (the “Buyer”), pursuant to which the Company may sell to the Buyer up to Ten
Million Dollars ($10,000,000) of the Company’s Common Stock, par value $0.001 per share (the
“Common Stock”). Terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Common Stock Purchase Agreement.

     The undersigned, Robert Y. Newell, Secretary of the Company, hereby certifies as follows:

     1. I am the Secretary of the Company and make the statements contained in
this Secretary’s Certificate.

     2. Attached hereto as Exhibit A and Exhibit B are true,
correct and complete copies of the Company’s bylaws (the “Bylaws”) and Certificate
of Incorporation (the “Certificate of Incorporation”), in each case, as amended
through the date hereof, and no action has been taken by the Company, its directors,
officers or shareholders, in contemplation of the filing of any further amendment
relating to or affecting the Bylaws or Certificate of Incorporation.

     3. Attached hereto as Exhibit C are true, correct and complete
copies of the resolutions duly adopted by [a duly authorized committee of] the Board
of Directors of the Company on _____________, [at which a quorum was present and
acting throughout] [by written consent]. Such resolutions have not been amended,
modified or rescinded and remain in full force and effect and such resolutions are
the only resolutions adopted by the Company’s Board of Directors, or any committee
thereof, or the shareholders of the Company relating to or affecting (i) the
entering into and performance of the Common Stock Purchase Agreement, or the
issuance, offering and sale of the Purchase Shares and the Commitment Shares and
(ii) and the performance of the Company of its obligation under the Transaction
Documents as contemplated therein.

     4. As of the date hereof, the authorized, issued and reserved capital stock
of the Company is as set forth on Exhibit D hereto.

     IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of ____________.

_________________________

Secretary

 

 

The undersigned as President of CARDICA, INC., a Delaware corporation, hereby certifies that Robert
Y. Newell is the duly elected, appointed, qualified and acting Secretary of CARDICA, INC., and that
the signature appearing above is his genuine signature.

___________________________________

Bernard A. Hausen, M.D., Ph.D.

President

 

 

EXHIBIT C

FORM OF LETTER TO THE TRANSFER AGENT FOR THE ISSUANCE OF THE COMMITMENTS SHARES AT

SIGNING OF THE PURCHASE AGREEMENT

[COMPANY LETTERHEAD]

[DATE]

Computershare

655 Montgomery Street

Suite 1240

San Francisco, CA 94111

Attention: Daniel Spengel

Re: Issuance of Common Shares to Aspire Capital Fund, LLC

Dear Ladies & Gentlemen,

On behalf of CARDICA, INC., (the “Company”), you are hereby instructed to issue as soon as
possible 295,567 shares of our common stock in the name of Aspire Capital Fund, LLC.
The share certificate should be dated December 14, 2010. I have included a true and correct copy
of resolutions adopted by the Board of Directors of the Company approving the issuance of these
shares. The shares should be issued subject to the following restrictive legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL, IN A CUSTOMARY FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

 

 

The share certificate should be sent as soon as possible via overnight mail to the
following address:

Aspire Capital Fund, LLC

155 North Wacker Drive, Suite 1600

Chicago, IL 60606

Attention: Steven G. Martin

Thank you very much for your help. Please call me at 650-364-9975 if you have any questions or
need anything further.

	 	 	 	 
	CARDICA, INC.

 	 
	By:  	 	 
	 	Robert Y. Newell 	 
	 	Chief Financial Officer

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