Document:

exv4w1

 

EXHIBIT 4.1

MEDTRONIC, INC.

1.25% Contingent Convertible Debentures, Series B due 2021

INDENTURE

Dated as of _________________, 2005

WELLS FARGO BANK, NATIONAL ASSOCIATION

TRUSTEE

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	Page	 
	ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Other Definitions
	 	 	4	 
	Section 1.3 Incorporation by Reference of Trust Indenture Act
	 	 	5	 
	Section 1.4 Rules of Construction
	 	 	6	 
	Section 1.5 Acts of Holders
	 	 	6	 
	 
	 	 	 	 
	ARTICLE TWO THE SECURITIES
	 	 	7	 
	 
	 	 	 	 
	Section 2.1 Form and Dating
	 	 	7	 
	Section 2.2 Execution and Authentication
	 	 	8	 
	Section 2.3 Registrar, Paying Agent, Conversion Agent and Calculation Agent
	 	 	8	 
	Section 2.4 Paying Agent to Hold Money and Securities in Trust
	 	 	9	 
	Section 2.5 Securityholder Lists
	 	 	9	 
	Section 2.6 Transfer and Exchange
	 	 	9	 
	Section 2.7 Replacement Securities
	 	 	10	 
	Section 2.8 Outstanding Securities; Determinations of Holders’ Action
	 	 	11	 
	Section 2.9 Temporary Securities
	 	 	12	 
	Section 2.10 Cancellation
	 	 	12	 
	Section 2.11 Persons Deemed Owners
	 	 	12	 
	Section 2.12 Global Securities
	 	 	13	 
	Section 2.13 CUSIP Numbers
	 	 	16	 
	Section 2.14 Ranking
	 	 	16	 
	 
	 	 	 	 
	ARTICLE THREE REDEMPTION AND PURCHASES
	 	 	16	 
	 
	 	 	 	 
	Section 3.1 Company’s Right to Redeem; Notices to Trustee
	 	 	16	 
	Section 3.2 Selection of Securities to Be Redeemed
	 	 	16	 
	Section 3.3 Notice of Redemption
	 	 	17	 
	Section 3.4 Effect of Notice of Redemption
	 	 	18	 
	Section 3.5 Deposit of Redemption Price
	 	 	18	 
	Section 3.6 Securities Redeemed in Part
	 	 	18	 
	Section 3.7 Purchase of Securities by the Company at Option of the Holder
	 	 	18	 
	Section 3.8 Purchase of Securities at Option of the Holder upon Change of Control
	 	 	19	 
	Section 3.9 Purchase with Cash of Purchase Price and Change of Control
Purchase Price
	 	 	23	 
	Section 3.10 Effect of Purchase Notice or Change of Control Purchase Notice
	 	 	24	 
	Section 3.11 Deposit of Purchase Price or Change of Control Purchase Price
	 	 	26	 
	Section 3.12 Securities Purchased in Part
	 	 	26	 
	Section 3.13 Covenant to Comply With Securities Laws Upon Purchase of Securities
	 	 	26	 
	Section 3.14 Repayment to the Company
	 	 	26	 

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	 	 	 	Page	 
	ARTICLE FOUR COVENANTS
	 	 	27	 
	 
	 	 	 	 
	Section 4.1 Payment of Securities
	 	 	27	 
	Section 4.2 SEC and Other Reports
	 	 	27	 
	Section 4.3 Compliance Certificate
	 	 	27	 
	Section 4.4 Further Instruments and Acts
	 	 	27	 
	Section 4.5 Maintenance of Office or Agency
	 	 	28	 
	Section 4.6 Delivery of Certain Information
	 	 	28	 
	Section 4.7 Tax Treatment of Securities
	 	 	28	 
	 
	 	 	 	 
	ARTICLE FIVE SUCCESSOR CORPORATION
	 	 	28	 
	 
	 	 	 	 
	Section 5.1 When Company May Merge or Transfer Assets
	 	 	28	 
	 
	 	 	 	 
	ARTICLE SIX DEFAULTS AND REMEDIES
	 	 	29	 
	 
	 	 	 	 
	Section 6.1 Events of Default
	 	 	29	 
	Section 6.2 Acceleration
	 	 	31	 
	Section 6.3 Other Remedies
	 	 	31	 
	Section 6.4 Waiver of Past Defaults
	 	 	32	 
	Section 6.5 Control by Majority
	 	 	32	 
	Section 6.6 Limitation on Suits
	 	 	32	 
	Section 6.7 Rights of Holders to Receive Payment
	 	 	33	 
	Section 6.8 Collection Suit by Trustee
	 	 	33	 
	Section 6.9 Trustee May File Proofs of Claim
	 	 	33	 
	Section 6.10 Priorities
	 	 	34	 
	Section 6.11 Undertaking for Costs
	 	 	34	 
	Section 6.12 Waiver of Stay, Extension or Usury Laws
	 	 	34	 
	 
	 	 	 	 
	ARTICLE SEVEN TRUSTEE
	 	 	34	 
	 
	 	 	 	 
	Section 7.1 Duties of Trustee
	 	 	34	 
	Section 7.2 Rights of Trustee
	 	 	36	 
	Section 7.3 Individual Rights of Trustee
	 	 	37	 
	Section 7.4 Trustee’s Disclaimer
	 	 	37	 
	Section 7.5 Notice of Defaults
	 	 	37	 
	Section 7.6 Reports by Trustee to Holders
	 	 	37	 
	Section 7.7 Compensation and Indemnity
	 	 	38	 
	Section 7.8 Replacement of Trustee
	 	 	38	 
	Section 7.9 Successor Trustee by Merger
	 	 	39	 
	Section 7.10 Eligibility; Disqualification
	 	 	39	 
	Section 7.11 Preferential Collection of Claims Against Company
	 	 	39	 
	 
	 	 	 	 
	ARTICLE EIGHT DISCHARGE OF INDENTURE
	 	 	40	 
	 
	 	 	 	 
	Section 8.1 Discharge of Liability on Securities
	 	 	40	 
	Section 8.2 Repayment to the Company
	 	 	40	 

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	 	 	 	Page	 
	ARTICLE NINE AMENDMENTS
	 	 	40	 
	 
	 	 	 	 
	Section 9.1 Without Consent of Holders
	 	 	40	 
	Section 9.2 With Consent of Holders
	 	 	41	 
	Section 9.3 Compliance with Trust Indenture Act
	 	 	42	 
	Section 9.4 Revocation and Effect of Consents, Waivers and Actions
	 	 	42	 
	Section 9.5 Notation on or Exchange of Securities
	 	 	42	 
	Section 9.6 Trustee to Sign Supplemental Indentures
	 	 	43	 
	Section 9.7 Effect of Supplemental Indentures
	 	 	43	 
	 
	 	 	 	 
	ARTICLE TEN CONVERSIONS
	 	 	43	 
	 
	 	 	 	 
	Section 10.1 Conversion Privilege
	 	 	43	 
	Section 10.2 Conversion Procedure; Conversion Price; Fractional Shares
	 	 	46	 
	Section 10.3 Adjustment of Conversion Price for Common Stock
	 	 	47	 
	Section 10.4 Consolidation or Merger of the Company
	 	 	56	 
	Section 10.5 Notice of Adjustment
	 	 	59	 
	Section 10.6 Notice in Certain Events
	 	 	59	 
	Section 10.7 Company To Reserve Stock; Registration; Listing
	 	 	60	 
	Section 10.8 Taxes on Conversion
	 	 	60	 
	Section 10.9 Conversion After Record Date
	 	 	61	 
	Section 10.10 Company Determination Final
	 	 	61	 
	Section 10.11 Responsibility of Trustee for Conversion Provisions
	 	 	61	 
	Section 10.12 Unconditional Right of Holders to Convert
	 	 	61	 
	 
	 	 	 	 
	ARTICLE ELEVEN MISCELLANEOUS
	 	 	62	 
	 
	 	 	 	 
	Section 11.1 Trust Indenture Act Controls
	 	 	62	 
	Section 11.2 Notices
	 	 	62	 
	Section 11.3 Communication by Holders with Other Holders
	 	 	63	 
	Section 11.4 Certificate and Opinion as to Conditions Precedent
	 	 	63	 
	Section 11.5 Statements Required in Certificate or Opinion
	 	 	63	 
	Section 11.6 Separability Clause
	 	 	63	 
	Section 11.7 Rules by Trustee; Paying Agent, Conversion Agent and Registrar
	 	 	63	 
	Section 11.8 Legal Holidays
	 	 	63	 
	Section 11.9 GOVERNING LAW
	 	 	64	 
	Section 11.10 No Recourse Against Others
	 	 	64	 
	Section 11.11 Successors
	 	 	64	 
	Section 11.12 Multiple Originals
	 	 	64	 

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EXHIBIT A            Form of Global Security

EXHIBIT B            Form of Certificated Security

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     INDENTURE dated as of ___, 2005 between MEDTRONIC, INC., a Minnesota corporation
(“Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Trustee”).

     Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Company’s 1.25% Contingent Convertible Debentures, Series B due 2021:

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

     Section 1.1 Definitions.

     “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.

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

     “Board of Directors” means either the board of directors of the Company or any duly authorized
committee of such board.

     “Board Resolution” means a resolution of the Board of Directors.

     “Business Day” means, with respect to any Security, a day that in the City of New York is not
a day on which banking institutions are authorized by law or regulation to close.

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

     “Certificated Securities” means Securities that are in the form of the Securities attached
hereto as Exhibit B.

     “Common Stock” shall mean the Common Stock, $0.10 par value per share, of the Company existing
on the date of this Indenture or any other shares of Capital Stock of the Company into which such
Common Stock shall be reclassified or changed.

     “Company” means the party named as the “Company” in the first Section of this Indenture until
a successor replaces it pursuant to the applicable provisions of this Indenture and,

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thereafter, shall mean such successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.

     “Company Request” or “Company Order” means a written request or order signed in the name of
the Company by any two Officers.

     “Conversion Price” means initially $61.81, subject to adjustment as set forth herein.

     “Corporate Trust Office” means the principal 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 Sixth
and Marquette, N9303-110 MAC, Minneapolis, MN 55479, Attention: Steven R. Gubrud, or such other
address as the Trustee may designate from time to time by notice to the Holders and the Company, or
the principal corporate trust office of any successor Trustee (or such other address as a successor
Trustee may designate from time to time by notice to the Holders and the Company).

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

     “Global Securities” means Securities that are in the form of the Securities attached hereto as
Exhibit A, and that are registered in the register of Securities in the name of a Depositary or a
nominee thereof.

     “Holder” or “Securityholder” means a person in whose name a Security is registered on the
Registrar’s books.

     “Indenture” means this Indenture, as amended or supplemented from time to time in accordance
with the terms hereof, including the provisions of the TIA that are deemed to be a part hereof.

     “Issue Date” of any Security means the date on which the Security was originally issued or
deemed issued as set forth on the face of the Security.

     “NYSE” means The New York Stock Exchange, Inc.

     “Officer” means the Chairman of the Board, the Vice Chairman, the Chief Executive Officer, the
President, any Executive Vice President, any Senior Vice President, the Treasurer, the Controller,
or the Secretary or any Assistant Treasurer or Assistant Secretary of the Company.

     “Officers’ Certificate” means a written certificate containing the information specified in
Sections 11.4 and 11.5, signed in the name of the Company by any two Officers, and delivered to the
Trustee. An Officers’ Certificate given pursuant to Section 4.3 shall be signed by an authorized
financial or accounting Officer of the Company but need not contain the information specified in
Sections 11.4 and 11.5.

     “Old Indenture” means the indenture relating to the Old Securities, as amended or supplemented
from time to time in accordance with the terms thereof, dated as of September 11,

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2001 between the Company and Wells Fargo Bank, National Association (formerly known as Wells Fargo Bank Minnesota,
National Association), as trustee.

     “Old Securities” means any of the Company’s 1.25% Contingent Convertible Debentures due 2021,
as amended or supplemented from time to time, issued under the Old Indenture.

     “Opinion of Counsel” means a written opinion containing the information specified in Sections
11.4 and 11.5, from legal counsel who is reasonably acceptable to the Trustee. The counsel may be
an employee of, or counsel to, the Company or the Trustee.

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

     “Redemption Date” or “redemption date” shall mean the date specified in a notice of redemption
on which the Securities may be redeemed in accordance with the terms of the Securities and this
Indenture.

     “Redemption Price” or “redemption price” shall have the meaning set forth in Section 5 of the
Securities.

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

     “Rule 144A” means Rule 144A under the Securities Act (or any successor provision), as it may
be amended from time to time.

     “SEC” means the Securities and Exchange Commission.

     “Securities” means any of the Company’s 1.25% Contingent Convertible Debentures, Series B due
2021, as amended or supplemented from time to time, issued under this Indenture.

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

     “Securityholder” or “Holder” means a person in whose name a Security is registered on the
Registrar’s books.

     “Stated Maturity”, when used with respect to any Security, means September 15, 2021.

     “Subsidiary” means any Person of which at least a majority of the outstanding Voting Stock
shall at the time directly or indirectly be owned or controlled by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries.

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     “TIA” means the Trust Indenture Act of 1939 as in effect on the date of this Indenture,
provided, however, that in the event the TIA is amended after such date, TIA means, to the extent
required by any such amendment, the TIA as so amended.

     “Trading Day” means a day during which trading in securities generally occurs on the NYSE or,
if the Common Stock is not listed on the NYSE, on the principal other national or regional
securities exchange on which the Common Stock then is listed or, if the Common Stock is not listed
on a national or regional securities exchange, on the National Association of Securities Dealers
Automated Quotation System or, if the Common Stock is not quoted on the National Association of
Securities Dealers Automated Quotation System, on the principal other market on which the Common
Stock is then traded.

     “Trustee” means the party named as the “Trustee” in the first paragraph of this Indenture
until a successor replaces it pursuant to the applicable provisions of this Indenture and,
thereafter, shall mean such successor. The foregoing sentence shall likewise apply to any
subsequent such successor or successors.

     “Voting Stock” of a person means Capital Stock of such person of the class or classes pursuant
to which the holders thereof have the general voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or trustees of such person (irrespective of
whether or not at the time Capital Stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).

     Section 1.2 Other Definitions.

	 	 	 	 	 
	Term Section:	 	Defined in:	 
	“Agent Members”
	 	 	2.12	(b)
	“beneficial owner”
	 	 	3.8	(a)
	“Change of Control”
	 	 	3.8	(a)
	“Change of Control Purchase Date”
	 	 	3.8	(a)
	“Change of Control Purchase Notice”
	 	 	3.8	(c)
	“Change of Control Purchase Price”
	 	 	3.8	(a)
	“Company Notice”
	 	 	3.9	(b)
	“Company Notice Date”
	 	 	3.9	(a)
	“Continuing Director”
	 	 	3.8	(a)
	“Conversion Agent”
	 	 	2.3	 
	“Conversion Determination Date”
	 	 	10.2	 
	“Conversion Rate”
	 	 	10.1	(b)
	“Conversion Value”
	 	 	10.2	(a)
	“Current Market Price”
	 	 	10.3	(g)
	“Depositary”
	 	 	2.1	(a)
	“Designated Subsidiary”
	 	 	6.1	 
	“Event of Default”
	 	 	6.1	 
	“Ex-Dividend Time”
	 	 	10.1	(b)
	“Excess Amount”
	 	 	10.3	(f)
	“Exchange Act”
	 	 	2.12	(b)

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	Term Section:	 	Defined in:	 
	“Exchange Property”
	 	 	10.4	(b)
	“Exchange Property Average Price”
	 	 	10.4	(c)
	“Exchange Property Value”
	 	 	10.4	(c)
	“Expiration Time”
	 	 	10.3	(f)
	“Fair Market Value”
	 	 	10.3	(g)
	“Five Day Average Price”
	 	 	10.2	(a)
	“Last Original Security Measurement Day”
	 	 	10.1	(d)
	“Legal Holiday”
	 	 	11.8	 
	“Net Exchange Property Amount”
	 	 	10.4	(d)
	“Net Share Amount”
	 	 	10.2	(b)
	“Net Shares”
	 	 	10.2	(b)
	“non-electing share”
	 	 	10.4	(b)
	“Notice of Default”
	 	 	6.1	 
	“Paying Agent”
	 	 	2.3	 
	“Principal Return”
	 	 	10.2	(b)
	“Protected Purchaser”
	 	 	2.7	 
	“Purchase Date”
	 	 	3.7	 
	“Purchase Notice”
	 	 	3.7	 
	“Purchase Price”
	 	 	3.7	 
	“Reference Period”
	 	 	10.3	(d)(2)
	“Registrar”
	 	 	2.3	 
	“Sale Price”
	 	 	3.9	(a)
	“Spin-Off”
	 	 	10.3	(d)(2)
	“Trading Price”
	 	 	10.1	(b)
	“Trading Price Conversion Value”
	 	 	10.1	(b)
	“Trigger Event”
	 	 	10.3	(d)(3)

     Section 1.3 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture
refers to a provision of the TIA, the provision is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the following meanings:

     “indenture securities” means the Securities.

     “indenture security holder” means a Securityholder.

     “indenture to be qualified” means this Indenture.

     “indenture trustee” or “institutional trustee” means the Trustee.

     “obligor” on the indenture securities means the Company.

     All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule have the meanings assigned to them by such
definitions.

5

 

     Section 1.4 Rules of Construction. Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles as in effect from time to time;

     (3) “or” is not exclusive;

     (4) “including” means including, without limitation; and

     (5) words in the singular include the plural, and words in the plural include the singular.

     Section 1.5 Acts of Holders. (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the Company, as described
in Section 11.2. Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act” of Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.

         (b) The fact and date of the execution by any person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to such officer the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer’s individual capacity, such
certificate or affidavit shall also constitute sufficient proof of such signer’s authority. The
fact and date of the execution of any such instrument or writing, or the authority of the person
executing the same, may also be proved in any other manner which the Trustee deems sufficient.

         (c) The principal amount and serial number of any Security and the ownership of Securities
shall be proved by the register for the Securities.

         (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of
the Holder of any Security shall bind every future Holder of the same Security and the Holder of
every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company
in reliance thereon, whether or not notation of such action is made upon such Security.

6

 

         (e) If the Company shall solicit from the Holders any request, demand, authorization,
direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to
a Board Resolution, fix in advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may, be given before or after such
record date, but only the Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the requisite proportion
of outstanding Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that purpose the
outstanding Securities shall be computed as of such record date; provided that no such
authorization, agreement or consent by the Holders on such record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture not later than
six-months after the record date.

ARTICLE TWO

THE SECURITIES

     Section 2.1 Form and Dating. The Securities and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibits A and B, which are a part of this
Indenture. The Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage (provided that any such notation, legend or endorsement required by usage is
in a form acceptable to the Company). The Company shall provide any such notations, legends or
endorsements to the Trustee in writing. Each Security shall be dated the date of its
authentication.

         (a) Global Securities. The Securities shall be issued in the form of one or more
permanent Global Securities substantially in the form of Exhibit A. Such Global Securities shall
be deposited with the Trustee at its Corporate Trust Office, as custodian for the Depositary (as
defined below) and registered in the name of The Depository Trust Company (“DTC”) or the nominee
thereof (DTC, or any successor thereto, and any such nominee being hereinafter referred to as the
“Depositary”), duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the Depositary as
hereinafter provided.

         (b) Global Securities in General. Each Global Security shall represent such of the
outstanding Securities as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time endorsed thereon and
that the aggregate amount of outstanding Securities represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges, redemptions, repurchases and
conversions.

     Any adjustment of the aggregate principal amount of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented thereby shall be made
by the Trustee in accordance with instructions given by the Holder thereof as

7

 

required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depositary.

         (c) Book-Entry Provisions. This Section 2.1(c) shall apply only to Global Securities
deposited with or on behalf of the Depositary.

     The Company shall execute and the Trustee shall, in accordance with this Section 2.1(c),
authenticate and deliver initially one or more Global Securities that (a) shall be registered in
the name of the Depositary, (b) shall be held by the Trustee as custodian for the Depositary and
(c) shall be substantially in the form of Exhibit A attached hereto.

         (d) Certificated Securities. Securities not issued as interests in the Global Securities
will be issued in certificated form substantially in the form of Exhibit B attached hereto.

     Section 2.2 Execution and Authentication. The Securities shall be executed on behalf of
the Company by any Officer. The signature of the Officer on the Securities may be manual or
facsimile.

     Securities bearing the manual or facsimile signatures of individuals who were at the time of
the execution of the Securities Officers shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of authentication of such
Securities.

     No Security shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose unless there appears on such Security a certificate of authentication substantially
in the form provided for herein duly executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder.

     The Trustee shall authenticate and deliver the Securities for original issue in an aggregate
principal amount of up to $1,973,146,000 upon one or more Company Orders without any further action
by the Company (other than as contemplated in Section 11.4 and Section 11.5 hereof). The aggregate
principal amount of the Securities due at the Stated Maturity thereof outstanding at any time may
not exceed the amount set forth in the foregoing sentence.

     The Securities shall be issued only in registered form without coupons and only in
denominations of $1,000 of principal amount and any whole multiple of $1,000.

     Section 2.3 Registrar, Paying Agent, Conversion Agent and Calculation Agent. The Company
shall maintain an office or agency where Securities may be presented for registration of transfer
or for exchange (“Registrar”), an office or agency where Securities may be presented for purchase
or payment (“Paying Agent”) and an office or agency where Securities may be presented for
conversion (“Conversion Agent”). The Registrar shall keep a register of the Securities and of
their transfer and exchange. The Company may have one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term Paying Agent
includes any additional paying agent, including any named pursuant to Section 4.5.

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The term Conversion Agent includes any additional conversion agent, including any named pursuant to Section
4.5.

     The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent,
Conversion Agent, Calculation Agent or co-registrar (in each case, if such Registrar, agent or
co-registrar is a Person other than the Trustee). The agreement shall implement the provisions of
this Indenture that relate to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar, Paying Agent or
Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.7. The Company or any Subsidiary or an Affiliate of either of them
may act as Paying Agent, Registrar, Conversion Agent or co-registrar.

     The Company initially appoints the Trustee as Registrar, Conversion Agent, Calculation Agent
and Paying Agent in connection with the Securities.

     Section 2.4 Paying Agent to Hold Money and Securities in Trust. Except as otherwise
provided herein, on or prior to each due date of payments in respect of any Security, the Company
shall deposit with the Paying Agent a sum of money (in immediately available funds if deposited on
the due date) and shares of Common Stock, if any, sufficient to make such payments when so becoming
due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that
the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money
and shares of Common Stock, if any, held by the Paying Agent for the making of payments in respect
of the Securities and shall notify the Trustee of any default by the Company in making any such
payment. At any time during the continuance of any such default, the Paying Agent shall, upon the
written request of the Trustee, forthwith pay to the Trustee all money and shares of Common Stock,
if any, so held in trust. If the Company, a Subsidiary or an Affiliate of either of them acts as
Paying Agent, it shall segregate the money and shares of Common Stock, if any, held by it as Paying
Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money and shares of Common Stock, if any, held by it to the Trustee and to account for any
funds and Common Stock, if any, disbursed by it. Upon doing so, the Paying Agent shall have no
further liability for the money and shares of Common Stock, if any.

     Section 2.5 Securityholder Lists. The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall cause to be furnished to
the Trustee at least semiannually on March 1 and September 1 a listing of Securityholders dated
within 15 days of the date on which the list is furnished and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.

     Section 2.6 Transfer and Exchange. (a) Subject to Section 2.12 hereof, upon surrender for
registration of transfer of any Security, together with a written instrument of transfer
satisfactory to the Registrar duly executed by the Securityholder or such Securityholder’s attorney
duly authorized in writing, at the office or agency of the Company designated as Registrar or
co-registrar pursuant to Section 2.3, the company shall execute, and the Trustee shall

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authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of
any authorized denomination or denominations, of alike aggregate principal amount. The Company
shall not charge a service charge for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to pay all taxes, assessments or other governmental charges
that may be imposed in connection with the transfer or exchange of the Securities from the
Securityholder requesting such transfer or exchange.

     At the option of the Holder, Securities may be exchanged for other Securities of any
authorized denomination or denominations, of alike aggregate principal amount upon surrender of the
Securities to be exchanged, together with a written instrument of transfer satisfactory to the
Registrar duly executed by the Securityholder or such Securityholder’s attorney duly authorized in
writing, at such office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the
Holder making the exchange is entitled to receive.

     The Company shall not be required to make, and the Registrar need not register, transfers or
exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed
in part, the portion thereof not to be redeemed) or any Securities in respect of which a Purchase
Notice or Change of Control Purchase Notice has been given and not withdrawn by the Holder thereof
in accordance with the terms of this Indenture (except, in the case of Securities to be purchased
in part, the portion thereof not to be purchased) or any Securities for a period of 15 days before
the mailing of a notice of redemption of Securities to be redeemed.

         (b) Notwithstanding any provision to the contrary herein, so long as a Global Security
remains outstanding and is held by or on behalf of the Depositary, transfers of a Global Security,
in whole or in part, shall be made only in accordance with Section 2.12 and this Section 2.6(b).
Transfers of a Global Security shall be limited to transfers of such Global Security in whole or
in part, to the Depositary, to nominees of the Depositary or to a successor of the Depositary or
such successor’s nominee.

         (c) Successive registrations and registrations of transfers and exchanges as aforesaid may be
made from time to time as desired, and each such registration shall be noted on the register for
the Securities.

         (d) Any Registrar appointed pursuant to Section 2.3 hereof shall provide to the Trustee such
information as the Trustee may reasonably require in connection with the delivery by such
Registrar of Securities upon transfer or exchange of Securities.

         (e) No Registrar shall be required to make registrations of transfer or exchange of
Securities during any periods designated in the text of the Securities or in this Indenture as
periods during which such registration of transfers and exchanges need not be made.

     Section 2.7 Replacement Securities. If (a) any mutilated Security is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee
such security or indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been acquired by a

10

 

protected purchaser within the meaning of Article 8 of the Uniform Commercial Code as in effect from time to
time in the State of New York (a “Protected Purchaser”), the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor
and principal amount, bearing a certificate number not contemporaneously outstanding.

     In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, or is about to be purchased by the Company pursuant to Article Three
hereof, the Company in its discretion may, instead of issuing a new Security, pay or purchase such
Security, as the case may be.

     Upon the issuance of any new Securities under this Section 2.7, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.

     Every new Security issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.

     The provisions of this Section 2.7 are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Securities.

     Section 2.8 Outstanding Securities; Determinations of Holders’ Action. Securities outstanding at any time are all the Securities authenticated by the Trustee except
for those cancelled by it, those paid pursuant to Section 2.7, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding. A Security does not cease
to be outstanding because the Company or an Affiliate thereof holds the Security; provided,
however, that in determining whether the Holders of the requisite principal amount of
Securities have given or concurred in any request, demand, authorization, direction, notice,
consent, waiver, or other Act hereunder, Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent, waiver or other
Act, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall
be so disregarded. Subject to the foregoing, only Securities outstanding at the time of such
determination shall be considered in any such determination (including, without limitation,
determinations pursuant to Articles Six and Nine).

     If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by a Protected
Purchaser.

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     If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, or on the
Business Day following a Purchase Date or a Change of Control Purchase Date, or on Stated Maturity,
money sufficient to pay Securities payable on that date, then immediately after such Redemption
Date, Purchase Date, Change of Control Purchase Date or Stated Maturity, as the case may be, such
Securities shall cease to be outstanding and interest, including contingent interest, if any, on
such Securities shall cease to accrue; provided, that if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made.

     If a Security is converted in accordance with Article Ten, then from and after the time of
conversion on the date of conversion, such Security shall cease to be outstanding and interest,
including contingent interest, if any, shall cease to accrue on such Security.

     Section 2.9 Temporary Securities. Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities in lieu of which
they are issued and with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively evidenced by their
execution of such Securities.

     If temporary Securities are issued, the Company will cause definitive Securities to be
prepared without unreasonable delay. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose pursuant to Section
2.3, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all respects be entitled to
the same benefits under this Indenture as definitive Securities.

     Section 2.10 Cancellation. All Securities surrendered for payment, purchase by the Company
pursuant to Article Three, conversion, redemption or registration of transfer or exchange shall, if
surrendered to any person other than the Trustee, be delivered to the Trustee and shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee.
The Company may not issue new Securities to replace Securities it has paid or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to Article Ten. No Securities
shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All cancelled Securities held by the
Trustee shall be disposed of by the Trustee in accordance with the Trustee’s customary procedure.

     Section 2.11 Persons Deemed Owners. Prior to due presentment of a Security for
registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the person in whose name such Security is registered as the owner of such Security for

12

 

the purpose of receiving payment of principal of the Security or the payment of any Redemption Price,
Purchase Price or Change of Control Purchase Price in respect thereof, and interest thereon, for
the purpose of conversion and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

     Section 2.12 Global Securities. (a) Notwithstanding any other provisions of this Indenture
or the Securities, (A) transfers of a Global Security, in whole or in part, shall be made only in
accordance with Section 2.6 and Section 2.12(a)(i), (B) transfers of a beneficial interest in a
Global Security for a Certificated Security shall comply with Section 2.6, Section 2.12(a)(ii)
below and Section 2.12(b)(1) below, and (C) transfers of a Certificated Security shall comply with
Section 2.6 and Sections 2.12(a)(iii) and (iv) below.

            (i) Transfer of Global Security. A Global Security may not be transferred,
in whole or in part, to any person other than the Depositary or a nominee or any successor
thereof, and no such transfer to any such other person may be registered; provided that
this clause (i) shall not prohibit any transfer of a Security that is issued in exchange
for a Global Security but is not itself a Global Security. No transfer of a Security to
any person shall be effective under this Indenture or the Securities unless and until such
Security has been registered in the name of such person. Nothing in this Section
2.12(a)(i) shall prohibit or render ineffective any transfer of a beneficial interest
in a Global Security effected in accordance with the other provisions of this Section
2.12(a).

            (ii) Restrictions on Transfer of a Beneficial Interest in a Global Security for a
Certificated Security. A beneficial interest in a Global Security may not be
exchanged for a Certificated Security except upon satisfaction of the requirements set
forth below and in Section 2.12(b)(1) below. Upon receipt by the Trustee of a transfer of
a beneficial interest in a Global Security in accordance with Applicable Procedures for a
Certificated Security in the form satisfactory to the Trustee, together with written
instructions to the Trustee to make, or direct the Registrar to make, an adjustment on its
books and records with respect to such Global Security to reflect a decrease in the
aggregate principal amount of the Securities represented by the Global Security, such
instructions to contain information regarding the Depositary account to be credited with
such decrease. Thereafter, the Trustee shall cause, or direct the Registrar to cause, in
accordance with the standing instructions and procedures existing between the Depositary
and the Registrar, the aggregate principal amount of the Securities represented by the
Global Security to be decreased by the aggregate principal amount of the Certificated
Security to be issued, shall issue such Certificated Security and shall debit or cause to
be debited to the account of the person specified in such instructions a beneficial
interest in the Global Security equal to the principal amount of the Certificated Security
so issued.

            (iii) Transfer and Exchange of Certificated Securities. When Certificated Securities
are presented to the Registrar with a request:

               (A) to register the transfer of such Certificated Securities; or

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               (B) to exchange such Certificated Securities for an equal principal amount of
Certificated Securities of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met; provided, however,
that the Certificated Securities surrendered for transfer or exchange shall be duly endorsed
or accompanied by a written instrument of transfer in form reasonably satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.

            (iv) Restrictions on Transfer of a Certificated Security for a Beneficial Interest in
a Global Security. A Certificated Security may not be exchanged for a beneficial interest
in a Global Security except upon satisfaction of the requirements set forth below.

     Upon receipt by the Trustee of a Certificated Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee, together with written
instructions directing the Trustee to make, or to direct the Registrar to make, an adjustment on
its books and records with respect to such Global Security to reflect an increase in the aggregate
principal amount of the Securities represented by the Global Security, such instructions to
contain information regarding the Depositary account to be credited with such increase, then
the Trustee shall cancel such Certificated Security and cause, or direct the Registrar to cause, in
accordance with the standing instructions and procedures existing between the Depositary and the
Registrar, the aggregate principal amount of Securities represented by the Global Security to be
increased by the aggregate principal amount of the Certificated Security to be exchanged, and shall
credit or cause to be credited to the account of the person specified in such instructions a
beneficial interest in the Global Security equal to the principal amount of the Certificated
Security so cancelled. If no Global Securities are then outstanding, the Company shall issue and
the Trustee shall authenticate, upon written order of the Company in the form of an Officers’
Certificate, a new Global Security in the appropriate principal amount.

     (b) The provisions of clauses (1), (2), (3) and (4) below shall apply only to Global
Securities:

	 	(1)  	Notwithstanding any other provisions of this Indenture or the Securities, a
Global Security shall not be exchanged in whole or in part for a Security registered in
the name of any person other than the Depositary or one or more nominees thereof,
provided that a Global Security may be exchanged for Securities registered in the names
of any person designated by the Depositary in the event that (i) the Depositary has
notified the Company that it is unwilling or unable to continue as Depositary for such
Global Security or such Depositary has ceased to be a “clearing agency” registered
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a
successor Depositary is not appointed by the Company within 90 days or (ii) an Event of
Default has occurred and is continuing with respect to the Securities. Any Global
Security exchanged pursuant to clause (i) above shall be so exchanged in whole and not
in part, and any Global Security exchanged pursuant to clause (ii) above may be
exchanged in

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	 	   	whole or from time to time in part as directed by the Depositary. Any
Security issued in exchange for a Global Security or any portion thereof shall be a
Global Security; provided that any such Security so issued that is registered in the
name of a person other than the Depositary or a nominee thereof shall not be a Global
Security.
	 
	 	(2)  	Securities issued in exchange for a Global Security or any portion thereof
shall be issued in definitive, fully registered form, without interest coupons, shall
have an aggregate principal amount equal to that of such Global Security or portion
thereof to be so exchanged, shall be registered in such names and be in such authorized
denominations as the Depositary shall designate and shall bear the applicable legends
provided for herein. Any Global Security to be exchanged in whole shall be surrendered
by the Depositary to the Trustee, as Registrar. With regard to any Global Security to
be exchanged in part, either such Global Security shall be so surrendered for exchange
or, if the Trustee is acting as custodian for the Depositary or its nominee with
respect to such Global Security, the principal amount thereof shall be reduced, by an
amount equal to the portion thereof to be so exchanged, by means of an appropriate
adjustment made on the records of the Trustee. Upon any such surrender or adjustment,
the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the
Depositary or an authorized representative thereof.
	 
	 	(3)  	Subject to the provisions of clause (5) below, the registered Holder may grant
proxies and otherwise authorize any person, including Agent Members (as defined below)
and persons that may hold interests through Agent Members, to take any action which a
holder is entitled to take under this Indenture or the Securities.
	 
	 	(4)  	In the event of the occurrence of any of the events specified in clause (1)
above, the Company will promptly make available to the Trustee a reasonable supply, of
Certificated Securities in definitive, fully registered form, without interest coupons.
	 
	 	(5)  	Neither any members of, or participants in, the Depositary (collectively, the
“Agent Members”) nor any other persons on whose behalf Agent Members may act shall have
any rights under this Indenture with respect to any Global Security registered in the
name of the Depositary or any nominee thereof, or under any such Global Security, and
the Depositary or such nominee, as the case may be, may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner and holder of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or such nominee, as the case may be, or
impair, as between the Depositary, its Agent Members and any other person on whose
behalf an Agent Member may act, the operation of customary practices of such Persons
governing the exercise of the rights of a holder of any Security.

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     Section 2.13 CUSIP Numbers. The Company may issue the Securities with one or more “CUSIP”
numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed on the Securities or
as contained in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall not be affected by
any defect in or omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.

     Section 2.14 Ranking. The indebtedness of the Company arising under or in connection with
this Indenture and every outstanding Security issued under this Indenture from time to time
constitutes and will constitute a senior unsecured general obligation of the Company, ranking
equally with other existing and future senior unsecured Indebtedness of the Company and ranking
senior in right of payment to any future Indebtedness of the Company that is expressly made
subordinate to the Securities by the terms of such Indebtedness. For purposes of this Section 2.14 only, “Indebtedness” means,
without duplication, the principal or face amount of (i) all obligations for borrowed money, (ii)
all obligations evidenced by debentures, notes or other similar instruments, (iii) all obligations
in respect of letters of credit or bankers acceptances or similar instruments (or reimbursement
obligations with respect thereto), (iv) all obligations to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary course of business, (v)
all obligations as lessee which are capitalized in accordance with generally accepted accounting
principles, and (vi) all Indebtedness of others guaranteed by the Company or any of its
Subsidiaries or for which the Company or any of its Subsidiaries is legally responsible or liable
(whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).

ARTICLE THREE

REDEMPTION AND PURCHASES

     Section 3.1 Company’s Right to Redeem; Notices to Trustee. Prior to September 15, 2006,
the Securities will not be redeemable at the Company’s option. Beginning on September 15, 2006,
the Company, at its option, may redeem the Securities in accordance with the provisions of Section
5 of the Securities for cash at any time as a whole, or from time to time in part, at the
redemption prices set forth in Section 5 of the Securities, plus any accrued and unpaid interest,
including contingent interest, if any, on those Securities to the Redemption Date. If the Company
elects to redeem Securities pursuant to Section 5 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the principal amount of Securities to be redeemed and the
Redemption Price.

     The Company shall give the notice to the Trustee provided for in this Section 3.1 by a Company
Order, at least 40 days but not more than 70 days before the Redemption Date.

     Section 3.2 Selection of Securities to Be Redeemed. If less than all the Securities are to
be redeemed, unless the procedures of the Depositary provide otherwise, the Trustee shall select
the Securities to be redeemed by lot, on a pro rata basis or by another method the Trustee
considers fair and appropriate (so long as such method is not prohibited by the rules of any stock

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exchange on which the Securities are then listed). The Trustee shall, within five Business Days
after it receives the notice provided for in Section 3.1, make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for redemption portions of
the principal amount of Securities that have denominations larger than $1,000.

     Securities and portions of Securities that the Trustee selects shall be in principal amounts
of $1,000 or whole multiples of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for redemption. The Trustee
shall notify the Company promptly of the Securities or portions of the Securities to be redeemed.

     Securities and portions of Securities that are to be redeemed are convertible by the Holder
until the close of business on the second Business Day prior to the Redemption Date. If any
Security selected for partial redemption is converted in part before termination of the conversion
right with respect to the portion of the Security so selected, the converted portion of such
Security shall be deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed may be treated by the
Trustee as outstanding for the purpose of such selection.

     Section 3.3 Notice of Redemption. At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.

     The notice shall identify the Securities to be redeemed and shall state:

	 	(1)  	the Redemption Date;
	 
	 	(2)  	the Redemption Price;
	 
	 	(3)  	the Conversion Price;
	 
	 	(4)  	the name and address of the Paying Agent and Conversion Agent;
	 
	 	(5)  	that Securities called for redemption may be converted at any time before the
close of business on the second Business Day prior to the Redemption Date;
	 
	 	(6)  	that Holders who want to convert their Securities must satisfy the requirements
set forth in Section 8 of the Securities;
	 
	 	(7)  	that Securities called for redemption must be surrendered to the Paying Agent
to collect the Redemption Price;
	 
	 	(8)  	if fewer than all of the outstanding Securities are to be redeemed, the
certificate numbers, if any, and principal amounts of the particular Securities to be
redeemed;
	 
	 	(9)  	that, unless the Company defaults in making payment of such Redemption Price,
interest, including contingent interest, if any, on Securities called for redemption
will cease to accrue interest on and after the Redemption Date; and

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	 	(10)  	the CUSIP number(s) of the Securities.

     At the Company’s request, the Trustee shall give the notice of redemption in the Company’s
name and at the Company’s expense, provided that (1) the Company makes such request at least seven
Business Days prior to the date by which such notice of redemption must be given to Holders in
accordance with this Section 3.3, and (2) the Company provides to the Trustee the text of such
notice of redemption.

     Section 3.4 Effect of Notice of Redemption. Once notice of redemption is given, Securities
called for redemption become due and payable on the Redemption Date and at the Redemption Price
stated in the notice except for Securities which are converted in accordance with the terms of this
Indenture. Upon surrender to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice.

     Section 3.5 Deposit of Redemption Price. Prior to 10:00 a.m. (New York City time) on the
Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary
or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the Redemption Price of all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which on or prior thereto have been
delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent
shall as promptly as practicable return to the Company any money not required for payment of the
Redemption Price because of conversion of Securities pursuant to Article Ten. If such money is
then held by the Company in trust and is not required for payment of the Redemption Price it shall
be discharged from such trust.

     Section 3.6 Securities Redeemed in Part. Upon surrender of a Security that is redeemed in
part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new
Security in an authorized denomination equal in principal amount to the unredeemed portion of the
Security surrendered.

     Section 3.7 Purchase of Securities by the Company at Option of the Holder. Securities
shall be purchased by the Company pursuant to Section 6 of the Securities at the option of the
Holder on September 15, 2006, September 15, 2008, September 15, 2011 and September 15, 2016 (each,
a “Purchase Date”) for cash, at a purchase price equal to the principal amount of those Securities
plus accrued and unpaid interest, including contingent interest, if any, on such Purchase Date (the
“Purchase Price”), pursuant to Section 3.9. Purchases of Securities hereunder shall be made, at
the option of the Holder thereof, upon:

	 	(1)  	delivery to the Paying Agent by the Holder of a written notice of purchase (a
“Purchase Notice”) during the period beginning at any time from the opening of business
on the date that is 20 Business Days prior to the relevant Purchase Date until the
close of business on the third Business Day prior to such Purchase Date stating:

(A) the certificate number of the Security which the Holder will deliver to be
purchased or the appropriate Depositary procedures if Certificated Securities have
not been issued,

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(B) the portion of the principal amount of the Security which the Holder will
deliver to be purchased, which portion must be in principal amounts of $1,000 or a
whole multiple of $1,000, and

(C) that such Security shall be purchased by the Company as of the Purchase Date
pursuant to the terms and conditions specified in Section 6 of the Securities and in
this Indenture, and

	 	(2)  	delivery of such Security to the Paying Agent at any time after delivery of the
Purchase Notice (together with all necessary endorsements) at the offices of the Paying
Agent, such delivery being a condition to receipt by the Holder of the Purchase Price
therefor; provided, however, that such Purchase Price shall be so paid
pursuant to this Section 3.7 only if the Security so delivered to the Paying Agent
shall conform in all respects to the description thereof in the related Purchase
Notice.

     The Company shall purchase from the Holder thereof, pursuant to this Section 3.7, a portion of
a Security, if the principal amount of such portion is $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.

     Any purchase by the Company contemplated pursuant to the provisions of this Section 3.7 shall
be consummated by the delivery of the cash to be received by the Holder promptly following the
later of the Purchase Date and the time of delivery of the Security.

     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Purchase Notice contemplated by this Section 3.7 shall have the right to withdraw such Purchase
Notice at any time prior to the close of business on the Purchase Date by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 3.10.

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

     Section 3.8 Purchase of Securities at Option of the Holder upon Change of Control. (a) (1)
If a Change of Control occurs (subject to certain exceptions set forth below), the Securities not
previously purchased by the Company shall be purchased by the Company, at the option of the Holder
thereof for cash, at a purchase price specified in Section 6 of the Securities (the “Change of
Control Purchase Price”), as of the date that is 30 days after the date of a notice of Change of
Control delivered by the Company (the “Change of Control Purchase Date”), subject to satisfaction
by or on behalf of the Holder of the requirements set forth in Section 3.8(c) and pursuant to
Section 3.9.

     A “Change of Control” will be deemed to have occurred at such time after the Securities are
originally issued when any of the following events shall occur:

     (i) the acquisition by any person, including any syndicate or group deemed to be a
“person” under Section 13(d)(3) of the Exchange Act of beneficial ownership, directly or
indirectly through a purchase, merger or other acquisition transaction or series

19

 

of purchase, merger or other acquisition transactions, of shares of the Capital Stock of the
Company entitling that person to exercise 50% or more of the total voting power of all shares of the Capital Stock of the Company entitled to vote generally in elections of
directors, other than any acquisition by the Company, any of its subsidiaries or any of its employee benefit plans (except that any of those persons shall be deemed to have
beneficial ownership of all securities it has the right to acquire, whether the right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition)
or any underwriter temporarily holding securities pursuant to an offering of such securities; or

     (ii) the first day on which a majority of the members of the board of directors of the
Company are not Continuing Directors; or

     (iii) the Company consolidates or merges with or into any other person, any merger of
another person into the Company, or any conveyance, transfer, sale, lease or other
disposition of all or substantially all of the Company’s properties and assets to another
person, other than: (A) any transaction: (1) that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of the Company’s Capital Stock;
and (2) pursuant to which holders of the Company’s Capital Stock immediately prior to the
transaction have the entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of Capital Stock entitled to vote generally in elections of
directors of the continuing or surviving Person immediately after giving effect to such
issuance; and (B) any merger, share exchange, transfer of assets or similar transaction
solely for the purpose of changing the Company’s jurisdiction of incorporation and resulting
in a reclassification, conversion or exchange of outstanding shares of Common Stock, if at
all, solely into shares of common stock, ordinary shares, American Depositary Shares or
analogous securities of the surviving Person or a direct or indirect parent of the surviving
corporation.

      A “Continuing Director” shall mean:

     (i) An individual who was a member of the Board of Directors of the Company first
elected by the stockholders or by the Board of Directors prior to the date hereof or prior
to the time that any person becomes after the date hereof the holder of record of in excess
of 20% of the Capital Stock of the Company entitled to vote in the election of directors; or

     (ii) An individual designated (before such individual’s initial election as a director)
as a Continuing Director by a majority of the then Continuing Directors.

(2) Notwithstanding the provisions of Section 3.8(a)(1), the Company shall not be required to
purchase the Securities of the Holders upon a Change of Control pursuant to this Section 3.8 if

     (i) the Sale Price per share of Common Stock for any five Trading Days within
(1) the period of 10 consecutive Trading Days ending immediately after the later of
the Change of Control or the public announcement of the Change of Control, in the
case of a Change of Control under clause (i) or (ii) of the

20

 

definition of Change of Control above, or (2) the period of 10 consecutive Trading Days ending immediately
before the Change of Control, in the case of a Change of Control under clause (iii) of the definition of Change of Control above,
equals or exceeds 110% of the Conversion Price of the Securities in effect on each of those five Trading Days; or

     (ii) 100% of the consideration in the transaction or transactions (other than
cash payments for fractional shares and cash payments made in respect of dissenters’
appraisal rights) constituting a Change of Control consists of shares of common
stock, ordinary shares, American Depositary Shares or analogous securities traded or
to be traded immediately following a Change of Control on a national securities
exchange or the Nasdaq National Market, and, as a result of the transaction or
transactions, the Securities become convertible (i) based on the
value of such common stock, ordinary shares, American Depositary
Shares or such analogous securities (and any rights attached thereto)
and (ii) into cash and, with respect to the Net Share Amount, such
common stock, ordinary shares, American Depositary Shares or such
analogous securities (and any rights attached thereto), in each case,
in the same manner as described in Section 10.2.

For the purposes of this Section 3.8, (x) whether a person is a “beneficial owner” shall be
determined in accordance with Rule 13d-3 under the Exchange Act and (y) the term “person” includes
any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange
Act.

         (b) No later than 30 days after the occurrence of a Change of Control, the Company shall mail
a written notice of the Change of Control by first class mail to the Trustee and to each Holder
(and to beneficial owners as required by applicable law). The notice shall include a form of
Change of Control Purchase Notice to be completed by the Holder and shall state:

	 	(1)  	briefly, the events causing a Change of Control and the date of such Change of
Control;
	 
	 	(2)  	the date by which the Change of Control Purchase Notice pursuant to this
Section 3.8 must be delivered to the Paying Agent in order for a Holder to exercise the
repurchase rights;
	 
	 	(3)  	the Change of Control Purchase Date;
	 
	 	(4)  	the Change of Control Purchase Price;
	 
	 	(5)  	the name and address of the Paying Agent and the Conversion Agent;
	 
	 	(6)  	the Conversion Rate and any adjustments thereto;
	 
	 	(7)  	that the Securities as to which a Change of Control Purchase Notice has been
given may be converted if they are otherwise convertible pursuant to Article Ten hereof
only if the Change of Control Purchase Notice has been withdrawn in accordance with the
terms of this Indenture;
	 
	 	(8)  	that the Securities must be surrendered to the Paying Agent to collect payment;

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	 	(9)  	that the Change of Control Purchase Price for any Security as to which a Change
of Control Purchase Notice has been duly given and not withdrawn will be paid
promptly following the later of the Change of Control Purchase Date and the time of
surrender of such Security as described in (7);
	 
	 	(10)  	briefly, the procedures the Holder must follow to exercise rights under this
Section 3.8;
	 
	 	(11)  	briefly, the conversion rights, if any, of the Securities;
	 
	 	(12)  	the procedures for withdrawing a Change of Control Purchase Notice;
	 
	 	(13)  	that, unless the Company defaults in making payment of such Change of Control
Purchase Price, interest, if any, on Securities surrendered for purchase by the Company
will cease to accrue on and after the Change of Control Purchase Date; and
	 
	 	(14)  	the CUSIP number(s) of the Securities.

         (c) A Holder may exercise its rights specified in Section 3.8(a) upon delivery of a written
notice of purchase (a “Change of Control Purchase Notice”) to the Paying Agent at any time on or
prior to the close of business on the Business Day immediately preceding the Change of Control
Purchase Date:

	(1)  	the certificate number of the Security which the Holder will deliver to be
purchased or the appropriate depositary procedures if Certificated Securities have not
been issued;

	(2)  	the portion of the principal amount of the Security which the Holder will
deliver to be purchased, which portion must be $1,000 or a whole multiple of $1,000;
and

	(3)  	that such Security shall be purchased pursuant to the terms and conditions
specified in Section 6 of the Securities and in this Indenture.

     The delivery of such Security to the Paying Agent with the Change of Control Purchase Notice
(together with all necessary endorsements) at the offices of the Paying Agent shall be a condition
to the receipt by the Holder of the Change of Control Purchase Price therefor; provided,
however, that such Change of Control Purchase Price shall be so paid pursuant to this
Section 3.8 and Section 3.9 only if the Security so delivered to the Paying Agent shall conform in
all respects to the description thereof set forth in the related Change of Control Purchase Notice.

     The Company shall purchase from the Holder thereof, pursuant to this Section 3.8 and Section
3.9, a portion of a Security if the principal amount of such portion is $1,000 or a whole multiple
of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply
to the purchase of such portion of such Security.

22

 

     Any purchase by the Company contemplated pursuant to the provisions of this Section 3.8 and
Section 3.9 shall be consummated by the delivery of the consideration to be received by the Holder
on the Change of Control Purchase Date.

     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Change of Control Purchase Notice contemplated by this Section 3.8(c) shall have the right to
withdraw such Change of Control Purchase Notice at any time prior to the close of business on the
last Business Day immediately preceding the Change of Control Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent in accordance with Section 3.10.

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

     Section 3.9 Purchase with Cash of Purchase Price and Change of Control Purchase Price. (a)
The Securities to be purchased on any Purchase Date or Change of Control Purchase Date, as the case
may be, pursuant to Section 3.7 and Section 3.8(a), respectively, will be paid for, in cash equal
to the aggregate Purchase Price or Change of Control Purchase Price, as the case may be, of such
Securities. The Purchase Price or Change of Control Purchase Price, as the case may be, of
Securities in respect of which a Purchase Notice pursuant to Section 3.7 or Change of Control
Purchase Notice pursuant to Section 3.8(c), as the case may be, has been given shall, for all other
Purchase Dates or Change of Control Purchase Dates, as the case may be, be paid in cash. The
Company Notice, as provided in Section 3.9(b), shall be sent to Holders (and to beneficial owners
as required by applicable law) not less than 20 Business Days prior to such Purchase Date or Change
of Control Purchase Date, as the case may be (the “Company Notice Date”).

     The “Sale Price” of the shares of Common Stock on any date means the closing per share sale
price (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 on the NYSE or, if the shares of Common Stock are not listed on the NYSE, as reported on a
national securities exchange, or if not reported on a national securities exchange, as reported by
the Nasdaq system. In the absence of such quotations, the Company shall be entitled to determine
the sales price on the basis of such quotations as it considers appropriate.

     (b) Notice of Election. In connection with any purchase of Securities pursuant to Section 6
of the Securities, the Company shall give notice to Holders setting forth information specified in
this Section 3.9(b) (the “Company Notice”).

     Each Company Notice shall include a form of Purchase Notice or Change of Control Purchase
Notice, as the case may be, to be completed by a Holder and shall state:

     (i) the Purchase Price or Change of Control Purchase Price, as the case may be, and
the Conversion Rate;

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

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     (iii) that Securities as to which a Purchase Notice or Change of Control Purchase
Notice, as the case may be, has been given may be converted if they are otherwise
convertible only in accordance with Article Ten hereof and Section 8 of the
Securities if the applicable Purchase Notice or Change of Control Purchase Notice, as
the case may be, has been withdrawn in accordance with the terns of this Indenture;

     (iv) that Securities must be surrendered to the Paying Agent to collect payment;

     (v) that the Purchase Price or Change of Control Purchase Price, as the case may be,
for any security as to which a Purchase Notice or Change of Control Purchase Notice, as
the case may be, has been given and not withdrawn will be paid promptly following the
later of the Purchase Date or Change of Control Purchase Date, as the case may be, and the
time of surrender of such Security as described in (iv);

     (vi) the procedures the Holder must follow to exercise its purchase rights under
Section 3.7 or 3.8, as the case may be, and a brief description of those rights;

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

     (viii) the procedures for withdrawing a Purchase Notice or Change of Control Purchase
Notice, as the case may be (including, without limitation, for a conditional withdrawal
pursuant to the terms of Section 3.7, Section 3.8(c) or Section 3.10);

     (ix) that, unless the Company defaults in making payment on Securities for which a
Purchase Notice or Change of Control Purchase Notice, as the case may be, has been
submitted, interest, if any, on such Securities will cease to accrue on the Purchase Date
or Change of Control Purchase Date, as the case may be; and

     (x) the CUSIP number of the Securities.

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

     Section 3.10 Effect of Purchase Notice or Change of Control Purchase Notice. Upon receipt
by the Paying Agent of the Purchase Notice or Change of Control Purchase Notice specified in
Section 3.7 or Section 3.8(c), as applicable, the Holder of the Security in respect of which such
Purchase Notice or Change of Control Purchase Notice, as the case may be, was given shall (unless
such Purchase Notice or Change of Control Purchase Notice, as the case may be, is withdrawn as
specified in the following three paragraphs) thereafter be entitled to receive solely the Purchase
Price or Change of Control Purchase Price, as the case may be, with respect to such Security. Such
Purchase Price or Change of Control Purchase Price shall be paid to such Holder, subject to
receipts of funds by the Paying Agent, promptly following the later of (x) the Purchase Date or the
Change of Control Purchase Date, as the case may be, with respect to such Security (provided the
conditions in Section 3.7 or Section 3.8(c), as applicable, have been satisfied) and (y) the time
of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by
Section 3.7 or Section 3.8(c), as applicable. Securities in respect of

24

 

which a Purchase Notice or
Change of Control Purchase Notice has been given by the Holder thereof may not be converted
pursuant to Article Ten hereof on or after the date of the
delivery of such Purchase Notice or Change of Control Purchase Notice unless such Purchase Notice
or Change of Control Purchase Notice has first been validly withdrawn as specified in the following
two paragraphs.

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

	 	(1)  	the certificate number, if any, of the Security in respect of which such notice
of withdrawal is being submitted,
	 
	 	(2)  	the principal amount of the Security with respect to which such notice of
withdrawal is being submitted, and
	 
	 	(3)  	the principal amount, if any, of such Security which remains subject to the
original Purchase Notice or Change of Control Purchase Notice, as the case may be, and
which has been or will be delivered for purchase by the Company.

     A written notice of withdrawal of a Purchase Notice may be in the form set forth in the
preceding Section or may be in the form of (i) a conditional withdrawal contained in a Purchase
Notice pursuant to the terms of Section 3.7 or (ii) a conditional withdrawal containing the
information set forth in Section 3.7 and the preceding Section and contained in a written notice of
withdrawal delivered to the Paying Agent as set forth in the preceding paragraph.

     A written notice of withdrawal of a Change of Control Purchase Notice may be in the form set
forth in the preceding Section or may be in the form of (i) a conditional withdrawal contained in a
Purchase Notice pursuant to the terms of Section 3.8 or (ii) a conditional withdrawal containing
the information set forth in Section 3.8 and the preceding Section and contained in a written
notice of withdrawal delivered to the Paying Agent as set forth in the preceding paragraph.

     There shall be no purchase of any Securities pursuant to Section 3.7 or 3.8 if there has
occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Securities,
of the required Purchase Notice or Change of Control Purchase Notice, as the case may be) and is
continuing an Event of Default (other than a default in the payment of the Purchase Price or Change
of Control Purchase Price, as the case may be, with respect to such Securities). The Paying Agent
will promptly return to the respective Holders thereof any Securities (x) with respect to which a
Purchase Notice or Change of Control Purchase Notice, as the case may be, has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an Event of Default
(other than a default in the payment of the Purchase Price or Change of Control Purchase Price, as
the case may be, with respect to such Securities) in which case, upon such return, the Purchase
Notice or Change of Control Purchase Notice with respect thereto shall be deemed to have been
withdrawn.

25

 

     Section 3.11 Deposit of Purchase Price or Change of Control Purchase Price.
Prior to 10:00 a.m. (New York City Time) on the Business Day following the Purchase Date or
the Change of Control Purchase Date, as the case may be, the Company shall deposit with the Trustee
or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is
acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount
of cash (in immediately available funds if deposited on such Business Day) sufficient to pay the
aggregate Purchase Price or Change of Control Purchase Price, as the case may be, of all the
Securities or portions thereof which are to be purchased as of the Purchase Date or Change of
Control Purchase Date, as the case may be.

     Section 3.12 Securities Purchased in Part. Any Certificated Security which is to be
purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company
or the Trustee so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s
attorney duly authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge, a new Security or
Securities, 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 Security so
surrendered which is not purchased.

     Section 3.13 Covenant to Comply With Securities Laws Upon Purchase of Securities. When
complying with the provisions of Section 3.7 or 3.8 hereof (provided that such offer or purchase
constitutes an “issuer tender offer” for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act at the time of such offer or
purchase), and subject to any exemptions available under applicable law, the Company shall (i)
comply with Rule 13e-4 and Rule 14e-1 (or any successor provision) under the Exchange Act, (ii)
file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act,
and (iii) otherwise comply with all Federal and state securities laws so as to permit the rights
and obligations under Sections 3.7 or 3.8 to be exercised in the time and in the manner specified
in Sections 3.7 or 3.8.

     Section 3.14 Repayment to the Company. The Trustee and the Paying Agent shall return to
the Company any cash that remains unclaimed as provided in Section 12 of the Securities, together
with interest, if any, thereon (subject to the provisions of Section 7.1(f)), held by them for the
payment of the Purchase Price or Change of Control Purchase Price, as the case may be;
provided, however, that to the extent that the aggregate amount of cash deposited
by the Company pursuant to Section 3.11 exceeds the aggregate Purchase Price or Change of Control
Purchase Price, as the case may be, of the Securities or portions thereof which the Company is
obligated to purchase as of the Purchase Date or Change of Control Purchase Date, as the case may
be, then, unless otherwise agreed in writing with the Company, promptly after the Business Day
following the Purchase Date or Change of Control Purchase Date, as the case may be, the Trustee
shall return any such excess to the Company together with interest, if any, thereon (subject to the
provisions of Section 7.1(f)).

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ARTICLE FOUR

COVENANTS

     Section 4.1 Payment of Securities. The Company shall promptly make all payments in respect
of the Securities on the dates and in the manner provided in the Securities or pursuant to this
Indenture. Any amounts of cash to be given to the Trustee or Paying Agent, shall be deposited with
the Trustee or Paying Agent by 10:00 a.m., New York City time, by the Company. Principal amount
plus accrued interest, if any, including contingent interest , if any, Redemption Price, Purchase
Price, Change of Control Purchase Price and cash interest, if any, shall be considered paid on the
applicable date due if on such date (or, in the case of a Purchase Price or Change of Control
Purchase Price, on the Business Day following the applicable Purchase Date or Change of Control
Purchase Date, as the case may be) the Trustee or the Paying Agent holds, in accordance with this
Indenture, cash or securities, if permitted hereunder, sufficient to pay all such amounts then due.

     Section 4.2 SEC and Other Reports. The Company shall not be required to provide the
Trustee copies of its annual report and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which
the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act,
to the extent such reports, information, documents and other reports are available via the internet
to the general public. In the event the Company is at any time no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, it shall provide the Trustee with reports
containing substantially the same information as would have been required to be filed in its annual
and quarterly reports with the SEC had the Company continued to have been subject to such reporting
requirements. In such event, such reports shall be provided at the times the Company would have
been required to provide reports had it continued to have been subject to such reporting
requirements. The Company also shall comply with the other provisions of TIA Section 314(a).
Retrieval by the Trustee, or delivery of such reports, information and documents to the Trustee, is
for informational purposes only and the Trustee’s receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information contained therein,
including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely conclusively on Officers’ Certificates).

     Section 4.3 Compliance Certificate. The Company shall deliver to the Trustee within 120
days after the end of each fiscal year of the Company (beginning with the fiscal year ending on
April 26, 2005) an Officers’ Certificate, stating whether or not to the knowledge of the signers
thereof, the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of grace or requirement
of notice provided hereunder) and if the
Company shall be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

     Section 4.4 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 this Indenture.

27

 

     Section 4.5 Maintenance of Office or Agency. The Trustee will maintain (and the Company,
to the extent the Trustee is not also the Registrar, Paying Agent or Conversion Agent, will ensure
that the Registrar, Paying Agent and Conversion Agent maintain), in the Borough of Manhattan, the
City of New York, an office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent
where Securities may be presented or surrendered for payment, where Securities may be surrendered
for registration of transfer, exchange, purchase, redemption or conversion and where notices and
demands to or upon the Company in respect of the Securities and this Indenture may be served. The
office of Wells Fargo Bank, N.A., 45 Broadway, 12th Floor, MAC N2666-120, New York, NY 10006
(Attention: Corporate Trust Administration), shall initially be such office or agency for all of
the aforesaid purposes.

     Section 4.6 Delivery of Certain Information. At any time when the Company is not
subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder or any beneficial
owner of Securities or holder or beneficial owner of shares of Common Stock issued upon conversion
thereof, or in accordance with Section 3.8(c), the Company will promptly furnish or cause to be
furnished Rule 144A Information (as defined below) to such Holder or any beneficial owner of
Securities or holder or beneficial owner of shares of Common Stock, or to a prospective purchaser
of any such security designated by any such holder, as the case may be, to the extent required to
permit compliance by such Holder or holder with Rule 144A under the Securities Act in connection
with the resale of any such security. “Rule 144A Information” shall be such information as in
specified pursuant to Rule 144A(d)(4) under the Securities Act. Whether a person is a beneficial
owner shall be determined by the Company to the Company’s reasonable satisfaction.

     Section 4.7 Tax Treatment of Securities. The Company agrees, and by acceptance of a
beneficial ownership interest in the Securities, each beneficial holder of Securities will be
deemed to have agreed, for United States federal income tax purposes, (i) to treat the Securities
as indebtedness that is subject to Section 1.1275-4 of the United States Treasury Regulations (the
“Contingent Debt Regulations”) and (ii) to treat the exchange of the Old Securities for the
Securities as not constituting a “significant modification” of the Old Securities within the
meaning of Treasury Regulation Section 1.1001-3(e). A holder of Securities may obtain the
comparable yield and projected payment schedule by submitting a written request for it to the
Company at the following address: Medtronic, Inc., 710 Medtronic Parkway, Minneapolis, MN 55432,
Attention: Treasury Department or telephoning (763) 514 4000.

ARTICLE FIVE

SUCCESSOR CORPORATION

     Section 5.1 When Company May Merge or Transfer Assets. The Company shall not consolidate
with or merge with or into any other Person or convey, transfer, sell, lease or otherwise dispose
of all or substantially all of its properties and assets to any Person, unless:

     (a) either (1) the Company shall be the continuing corporation or (2) the Person (if other
than the Company) formed by such consolidation or into which the Company is merged or the Person
which acquires by conveyance, transfer or lease all or substantially all of the properties and
assets of the Company substantially as an entirety (i) shall be organized and

28

 

validly existing
under the laws of (A) the United States or any State thereof or the District of Columbia or (B)
Bermuda or the Cayman Islands and (ii) shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all
of the obligations of the Company under the Securities and this Indenture;

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

     (c) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion
of Counsel, each stating that such (A) consolidation, merger, conveyance, transfer or lease and,
if a supplemental indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article Five and that all conditions precedent herein provided for
relating to such transaction have been satisfied and (B) in the case of a merger or consolidation
in which the Company is not the continuing corporation and in which the successor to the Company
is an entity organized under the laws of Bermuda or the Cayman Islands, that such merger will not
result in any material adverse consequences to any Holders of the Securities.

     For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the
properties and assets of one or more Subsidiaries (other than to the Company or another
Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially
all of the properties and assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.

     The successor Person formed by such consolidation or into which the Company is merged or the
successor Person to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor had been named as the Company herein; and thereafter, except
in the case of a lease and obligations the Company may have under a supplemental indenture, the
Company shall be discharged from all obligations and covenants under this Indenture and the
Securities. Subject to Section 9.6, the Company, the Trustee and the
successor Person shall enter into a supplemental indenture to evidence the succession and
substitution of such successor Person and such discharge and release of the Company.

ARTICLE SIX

DEFAULTS AND REMEDIES

     Section 6.1 Events of Default. So long as any Securities are outstanding, each of the
following shall be an “Event of Default”:

     (1) the Company fails to convert any portion of the principal amount of any Security following
the exercise by the Holder of the right to convert such Security pursuant to and in accordance with
Article Ten hereof;

29

 

     (2) the Company defaults in its obligation to repurchase any Security, or any portion thereof,
upon the exercise by the Holder of such Holder’s right to require the Company to purchase such
Securities pursuant to and in accordance with Section 3.7 and 3.8 hereof;

     (3) the Company defaults in its obligation to redeem any Security, or any portion thereof,
called for redemption by the Company pursuant to and in accordance with Section 3.1 hereof.

     (4) the Company defaults in the payment of the principal amount on any Security when the same
becomes due and payable at its Stated Maturity;

     (5) the Company defaults in the payment of any accrued and unpaid interest, including
contingent interest, if any, in each case, when due and payable, and continuance of such default
for a period of 30 days;

     (6) the Company fails to comply with any other term, agreement or covenant in the Securities
or this Indenture (other than those referred to in clause (1) through (5) above) and such failure
continues for 60 days after receipt by the Company of a Notice of Default;

     (7) a failure to pay when due at maturity or a default that results in the acceleration of
maturity of any indebtedness for borrowed money of the Company or any Designated Subsidiary in an
aggregate amount of $100.0 million or more, unless the acceleration is rescinded, stayed or
annulled within 30 days after written notice of default is given to the Company by the Trustee or
Holders of not less than 25% in aggregate principal amount of the Securities then outstanding;

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

     (9) the commencement by the Company of a voluntary case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by the Company to the entry of a decree or
order for relief in respect of the Company in an involuntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against the Company, or the filing by the Company
of a petition or answer or consent seeking reorganization or relief under any applicable law, or
the consent by the Company to the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or the making by the Company of
an assignment for the benefit of creditors, or the admission in

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writing by the Company of its
inability to pay its debts generally as they become due, or the taking of corporate action by the
Company expressly in furtherance of any such action.

     A Default under clause (6) above is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least 25% in aggregate principal amount of the Securities at the time
outstanding notify the Company and the Trustee, of the Default and the Company does not cure such
Default (and such Default is not waived) within the time specified in clause (6) above after actual
receipt of such notice. Any such notice must specify the Default, demand that it be remedied and
state that such notice is a “Notice of Default.”

     The Trustee shall, within 60 days of the occurrence of a Default, give to the Holders of the
Securities notice of all uncured Defaults known to it, the status of each such Default and what
action the Company is taking or proposes to take with respect thereto; provided,
however, the Trustee shall be protected in withholding such notice if it, in good faith,
determines that the withholding of such notice is in the best interest of such Holders, except in
the case of a Default in the payment of the principal of or interest on any of the Securities when
due or in the payment of any redemption or purchase obligation of the Company.

     Section 6.2 Acceleration. If an Event of Default (other than an Event of Default specified
in Section 6.1(8)or (9)) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding by
notice to the Company and the Trustee, may declare the principal amount plus accrued and unpaid
interest, including contingent interest, if any, on all the Securities to be immediately due and
payable. Upon such a declaration, such accelerated amount shall be due and payable immediately. If
an Event of Default specified in Section 6.1(8)or (9) occurs and is continuing, the principal
amount plus accrued and unpaid interest, including contingent interest, if any, on all the
Securities shall become and be immediately due and payable without any declaration or other act on
the part of the Trustee or any Securityholders. The Holders of a majority in aggregate principal
amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to
any other Securityholder) may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of the principal amount plus accrued and unpaid interest, including
contingent interest, if any, that have become due solely as a result of acceleration and if all
amounts due to the Trustee under Section 7.7 have been paid. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.

     Section 6.3 Other Remedies. If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of the principal amount plus accrued and
unpaid interest, including contingent interest, if any, on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.

     The Trustee may maintain a proceeding even if the Trustee does not possess any of the
Securities or does not produce any of the Securities in the proceeding. A delay or omission by the
Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of, or acquiescence in, the Event of
Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

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     Section 6.4 Waiver of Past Defaults. The Holders of a majority in aggregate principal
amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to
any other Securityholder), may waive an existing Default and its consequences except:

	 	(1)  	an Event of Default described in Section 6.1(1)or (2);
	 
	 	(2)  	a Default in respect of a provision that under Section 9.2 cannot be amended
without the consent of each Securityholder affected; or
	 
	 	(3)  	a Default which constitutes a failure to convert any Security in accordance
with the terms of Article Ten. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any consequent
right. This Section 6.4 shall be in lieu of Section 316(a)1(B) of the TIA and such
Section 316(a)1(B) is hereby expressly excluded from this Indenture, as permitted by
the TIA.

     Section 6.5 Control by Majority. The Holders of a majority in aggregate principal amount
of the Securities at the time outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or
this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of
other Securityholders or would involve the Trustee in personal liability unless the Trustee is
offered indemnity satisfactory to it. This Section 6.5 shall be in lieu of Section 316(a)1(A) of
the TIA and such Section 316(a)1(A) is hereby expressly excluded from this Indenture, as permitted
by the TIA.

     Section 6.6 Limitation on Suits. A Securityholder may not pursue any remedy with respect
to this Indenture or the Securities unless:

	 	(1)  	the Holder gives to the Trustee written notice stating that an Event of Default
is continuing;
	 
	 	(2)  	the Holders of at least 25% in aggregate principal amount of the Securities at
the time outstanding make a written request to the Trustee to pursue the remedy;
	 
	 	(3)  	such Holder or Holders offer to the Trustee security or indemnity satisfactory
to the Trustee against any loss, liability or expense;
	 
	 	(4)  	the Trustee does not comply with the request within 60 days after receipt of
such notice, request and offer of security or indemnity; and
	 
	 	(5)  	the Holders of a majority in aggregate principal amount of the Securities at
the time outstanding do not give the Trustee a direction inconsistent with the request
during such 60 day period.

     A Securityholder may not use this Indenture to prejudice the rights of any other
Securityholder or to obtain a preference or priority over any other Securityholder.

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     Section 6.7 Rights of Holders to Receive Payment. Notwithstanding any other provision of
this Indenture, the right of any Holder to receive payment of the principal amount, Redemption
Price, Purchase Price, Change of Control Purchase Price or interest, including contingent interest,
if any, in respect of the Securities held by such Holder, on or after the respective due dates
expressed in the Securities or any Redemption Date, and to convert the Securities in accordance
with Article Ten, or to bring suit for the enforcement of any such payment on or after such
respective dates or the right to convert, shall not be impaired or affected adversely without the
consent of such Holder.

     Section 6.8 Collection Suit by Trustee. If an Event of Default described in Section
6.1(2), (3) or (4) occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount owing with respect to the
Securities and the amounts provided for in Section 7.7.

     Section 6.9 Trustee May File Proofs of Claim. In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Securities or the
property of the Company or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal amount, Redemption Price, Purchase Price, Change of Control Purchase Price or
interest, including contingent interest, if any, in respect of the Securities 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 on the Company for the payment of any such amount) shall be entitled and empowered, by
intervention in such proceeding or otherwise,

     (a) to file and prove a claim for the whole amount of the principal amount, Redemption Price,
Purchase Price, Change of Control Purchase Price, or interest, including contingent interest, if
any, and to file such other papers or documents as may be 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 or any other amounts due the
Trustee under Section 7.7) and of the Holders allowed in such judicial proceeding, and

     (b) to collect and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 7.7.

     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 Securities 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.

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     Section 6.10 Priorities. If the Trustee collects any money pursuant to this Article Six,
it shall pay out the money in the following order:

     FIRST: to the Trustee for amounts due under Section 7.7;

     SECOND: to Securityholders for amounts due and unpaid on the Securities for the principal
amount, Redemption Price, Purchase Price, Change of Control Purchase Price or interest, including
contingent interest, if any, as the case may be, ratably, without preference or priority of any
kind, according to such amounts due and payable on the Securities; and

     THIRD: the balance, if any, to the Company.

     The Trustee may fix a record date and payment date for any payment to Securityholders pursuant
to this Section 6.10. At least 15 days before such record date, the Trustee shall mail to each
Securityholder and the Company a notice that states the record date, the payment date and the
amount to be paid.

     Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard
to the merits and good faith of the claims or defenses made by the party litigant. This Section
6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit
by Holders of more than 10% in aggregate principal amount of the Securities at the time
outstanding. This Section 6.11 shall be in lieu of Section 315(e) of the TIA and such Section
315(e) is hereby expressly excluded from this Indenture, as permitted by the TIA.

     Section 6.12 Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive
the Company from paying all or any portion of the principal amount, Redemption Price, Purchase
Price or Change of Control Purchase Price in respect of Securities, or any interest, including
contingent interest, if any, on such amounts, as contemplated herein, or which may affect the
covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will
not hinder, delay or impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE SEVEN

TRUSTEE

     Section 7.1 Duties of Trustee. (a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this Indenture and use

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the same
degree of care and skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.

     (b) Except during the continuance of an Event of Default:

	 	(1)  	the Trustee need perform only those duties that are specifically set forth in
this Indenture and no others; and
	 
	 	(2)  	in the absence of bad faith on its part, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture, but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture, but need not
confirm or investigate the accuracy of mathematical calculations or other facts
stated therein. This Section 7.1(b) shall be in lieu of Section 315(a) of the TIA
and such Section 315(a) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

     (c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:

	 	(1)  	this Section (c) does not limit the effect of Section (b) of this Section 7.1;
	 
	 	(2)  	the Trustee shall not be liable for any error of judgment made in good faith by
a Responsible Officer unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
	 
	 	(3)  	the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section
6.5.

     Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1), 315(d)(2) and
315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby expressly
excluded from this Indenture, as permitted by the TIA.

     (d) Every provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), (c) and (e) of this Section 7.1.

     (e) The Trustee may refuse to perform any duty or exercise any right or power or extend or
risk its own funds or otherwise incur any financial liability unless it receives indemnity
satisfactory to it against any loss, liability or expense.

     (f) Money held by the Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law. The Trustee (acting in any capacity hereunder) shall be
under no liability for interest on any money received by it hereunder unless otherwise agreed in
writing with the Company.

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     Section 7.2 Rights of Trustee. Subject to its duties and responsibilities under the TIA,

         (a) the Trustee may conclusively rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party or
parties;

         (b) whenever in the administration of this Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, conclusively rely upon an Officers’ Certificate;

         (c) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder;

         (d) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by
it in good faith which it believes to be authorized or within its rights or powers conferred under
this Indenture;

         (e) the Trustee may consult with counsel selected by it and any advice or Opinion of Counsel
shall be full and complete authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

         (f) the Trustee shall be under no obligation to exercise any of the rights or powers vested
in it by this Indenture at the request, order or direction of any of the Holders, pursuant to the
provisions of this Indenture, unless such Holders shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred
therein or thereby;

         (g) any request or direction of the Company mentioned herein shall be sufficiently evidenced
by a Company Request or Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;

         (h) the Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney at the sole cost of the Company and shall incur no
liability or additional liability of any kind by reason of such inquiry or investigation;

36

 

         (i) the Trustee shall not be deemed to have notice of any Default or Event of Default unless
a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any
event which is in fact such a default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Securities and this Indenture;

         (j) the rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and
other person employed to act hereunder; and

         (k) the Trustee may request that the Company deliver an Officers’ Certificate setting forth
the names of individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person
authorized to sign an Officers’ Certificate, including any person specified as so authorized in
any such certificate previously delivered and not superseded.

     Section 7.3 Individual Rights of Trustee. The Trustee in its individual or any other
capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not the Trustee. Any Paying Agent,
Registrar, Conversion Agent or co-registrar may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.

     Section 7.4 Trustee’s Disclaimer. The Trustee makes no representation as to the validity
or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use
or application of the proceeds from the Securities, it shall not be responsible for any statement
in any offering document for the Securities, this Indenture or the Securities (other than its
certificate of authentication), or the determination as to which beneficial owners are entitled to
receive any notices hereunder.

     Section 7.5 Notice of Defaults. If a Default occurs and if it is known to the Trustee, the
Trustee shall give to each Securityholder notice of the Default within 90 days after it occurs or,
if later, within 15 days after it is known to the Trustee, unless such Default shall have been
cured or waived before the giving of such notice. Notwithstanding the preceding sentence, except
in the case of a Default described in Section 6.1(1) or (2), the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines that withholding
the notice is in the interest of the Securityholders. The preceding sentence shall be in lieu of
the proviso to Section 315(b) of the TIA and such proviso is hereby expressly excluded from this
Indenture, as permitted by the TIA. The Trustee shall not be deemed to have knowledge of a Default
unless a Responsible Officer of the Trustee has received written notice of such Default, which
notice specifically references this Indenture and the Securities.

     Section 7.6 Reports by Trustee to Holders. Within 60 days after each August 15 beginning
with the August 15 following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such August 15 that complies with TIA Section 313(a), if
required by such Section 313(a). The Trustee also shall comply with TIA Section 313(b).

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     A copy of each report at the time of its mailing to Securityholders shall be filed with the
SEC and each securities exchange, if any, on which the Securities are listed. The Company agrees
to notify the Trustee promptly whenever the Securities become listed on any securities exchange and
of any delisting thereof.

     Section 7.7 Compensation and Indemnity. The Company agrees:

         (a) to pay to the Trustee from time to time such compensation as the Company and the Trustee
shall from time to time agree in writing for all services rendered by it hereunder (which
compensation shall not be limited (to the extent permitted by law) by any provision of law in
regard to the compensation of a trustee of an express trust);

         (b) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses, advances and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and

         (c) to indemnify the Trustee or any predecessor Trustee and their agents for, and to hold
them harmless against, any loss, damage, claim, liability, cost or expense (including attorney’s
fees and expenses, and taxes (other than taxes based upon, measured by or determined by the income
of the Trustee)) incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of its powers or duties
hereunder.

     To secure the Company’s payment obligations in this Section 7.7, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the Trustee, except that held
in trust to pay the principal amount, Redemption Price, Purchase Price, Change of Control Purchase
Price or interest, including contingent interest, if any, as the case may be, on particular
Securities.

     The Company’s payment obligations pursuant to this Section 7.7 shall survive the discharge of
this Indenture and the resignation or removal of the Trustee. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.1(8) or (9), the expenses including the
reasonable charges and expenses of its counsel, are intended to constitute expenses of
administration under any bankruptcy law.

     Section 7.8 Replacement of Trustee. The Trustee may resign by so notifying the Company;
provided, however, no such resignation shall be effective until a successor Trustee
has accepted its appointment pursuant to this Section 7.8. The Holders of a majority in aggregate
principal amount of the Securities at the time outstanding may remove the Trustee by so notifying
the Trustee and the Company. The Company shall remove the Trustee if

     (1) the Trustee fails to comply with Section 7.10;

     (2) the Trustee is adjudged bankrupt or insolvent;

38

 

     (3) a receiver or public officer takes charge of the Trustee or its property; or

     (4) the Trustee otherwise becomes incapable of acting.

     If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint, by resolution of its Board of Directors, a successor
Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company satisfactory in form and substance to the retiring Trustee and the
Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided for in Section 7.7.

     If a successor Trustee does not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate
principal amount of the Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company for the appointment of a successor Trustee.

     If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     Section 7.9 Successor Trustee by Merger. If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust business or assets to,
another corporation, the resulting, surviving or transferee corporation without any further act
shall be the successor Trustee.

     Section 7.10 Eligibility; Disqualification. The Trustee shall at all times satisfy the
requirements of TIA Sections 310(a)(1) and 310(b). The Trustee (or its parent holding company)
shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. Nothing herein contained shall prevent the Trustee from
filing with the SEC the application referred to in the penultimate paragraph of TIA Section 310(b).

     Section 7.11 Preferential Collection of Claims Against Company. The Trustee shall comply
with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A
Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.

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ARTICLE EIGHT

DISCHARGE OF INDENTURE

     Section 8.1 Discharge of Liability on Securities. When (i) the Company delivers to the
Trustee all outstanding Securities (other than Securities replaced or repaid pursuant to Section
2.7) for cancellation or (ii) all outstanding Securities have become due and payable and the
Company deposits with the Trustee cash sufficient to pay all amounts due and owing on all
outstanding Securities (other than Securities replaced pursuant to Section 2.7), and if in either
case the Company pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 7.7, cease to be of further effect. The Trustee shall join in the execution of
a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers’ Certificate and Opinion of Counsel and at the
cost and expense of the Company.

     Section 8.2 Repayment to the Company. The Trustee and the Paying Agent shall return to the
Company upon written request any money or securities held by them for the payment of any amount
with respect to the Securities that remains unclaimed for two years, subject to applicable
unclaimed property law. After return to the Company, Holders entitled to the money or securities
must look to the Company for payment as general creditors unless an applicable abandoned property
law designates another person and the Trustee and the Paying Agent shall have no further liability
to the Securityholders with respect to such money or securities for that period commencing after
the return thereof.

ARTICLE NINE

AMENDMENTS

     Section 9.1 Without Consent of Holders. The Company and the Trustee may amend this
Indenture or the Securities without the consent of any Securityholder to:

         (a) add to the covenants of the Company for the benefit of the Holders of Securities;

         (b) surrender any right or power herein conferred upon the Company;

         (c) provide for conversion rights of Holders of Securities if any reclassification or change
of the Common Stock or any consolidation, merger or sale of all or substantially all of the
Company’s assets occurs;

         (d) provide for the assumption of the Company’s obligations to the Holders of Securities in
the case of a merger, consolidation, conveyance, transfer or lease pursuant to Article Five
hereof;

         (e) reduce the Conversion Price; provided, however, that such reduction in
the Conversion Price shall not adversely affect the interests of the Holders of Securities (after
taking into account tax and other consequences of such reduction);

40

 

         (f) comply with the requirements of the SEC in order to effect or maintain the qualification
of this Indenture under the TIA;

         (g) cure any ambiguity or correct or supplement any provision herein which may be
inconsistent with any other provision herein or which is otherwise defective, or to make any other
provisions with respect to matters or questions arising under this Indenture which the Company may
deem necessary or desirable and which shall not be inconsistent with the provisions of this
Indenture; provided, however, that such action pursuant to this clause (g) either
(i) is consistent with the description of such provision or provisions contained in the Prospectus
dated January [        ], 2005 relating to the Securities or (ii) does not in good faith opinion of
the Chief Executive Officer of the Company and the Trustee adversely affect the interests of the
Holders of Securities in any material respect; and

         (h) add or modify any other provisions herein with respect to matters or questions arising
hereunder which the Company and the Trustee may deem necessary or desirable and which will not
adversely affect the interests of the Holders of Securities.

     Section 9.2 With Consent of Holders. Except as provided below in this Section 9.2, this
Indenture or the Securities may be amended, modified or supplemented, and noncompliance in any
particular instance with any provision of this Indenture or the Securities may be waived, in each
case with the written consent of the Holders of at least a majority of the principal amount of the
Securities at the time outstanding.

     Without the written consent or the affirmative vote of each Holder of Securities affected
thereby, an amendment or waiver under this Section 9.2 may not:

         (a) change the maturity of the principal amount of, or any installment of interest, including
contingent interest on, any Security;

         (b) reduce the principal amount of, or interest, including contingent interest, payable on
the Securities, or the Redemption Price, Purchase Price or Change of Control Purchase Price of any
Security;

         (c) impair or adversely affect the conversion rights of any Holder of Securities;

         (d) reduce the value of the Common Stock to which reference is made in determining whether an
interest adjustment will be made on the Securities, or change the method by which this value is
calculated;

         (e) change the currency of any amount owed or owing under the Security or any interest
thereon from U.S. Dollars or change the place of payment on any Security;

         (f) alter or otherwise modify the rate of interest, including contingent interest, on any
Security, or the manner of calculation thereof, or extend time for payment of any amounts due and
payable to the Holders of the Securities;

         (g) impair the right of any Holder to institute suit for the enforcement of any payment or
with respect to, or conversion of, any Security;

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         (h) except as otherwise permitted or contemplated by provisions concerning corporate
reorganizations, adversely affect the purchase right of the Holders of the Securities as provided
in Article Three or the right of the Holders of the Securities to convert any Security as provided
in Article Ten;

         (i) modify the provisions of Article Three in a manner adverse to the Holders of the
Securities;

         (j) modify any of the provisions of this Section, or reduce the principal amount of
outstanding Securities required to waive a Default, except to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Security affected thereby; or

         (k) reduce the percentage of the principal amount of the outstanding Securities the consent
of whose Holders is required for any such supplemental indenture or the consent of whose Holders
is required for any waiver provided for in this Indenture.

     It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the
particular form of any proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.

     After an amendment under this Section 9.2 becomes effective, the Company shall mail to each
Holder a notice briefly describing the amendment.

     Nothing in this Section 9.2 shall impair the ability of the Company and the Trustee to amend
this Indenture or the Securities without the consent of any Securityholder to provide for the
assumption of the Company’s obligations to the Holders of Securities in the case of a merger,
consolidation, conveyance, transfer or lease pursuant to Article Five hereof.

     Section 9.3 Compliance with Trust Indenture Act. Every supplemental indenture executed
pursuant to this Article shall comply with the TIA.

     Section 9.4 Revocation and Effect of Consents, Waivers and Actions. Until an amendment,
waiver or other action by Holders becomes effective, a consent thereto by a Holder of a Security
hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or
portion of the Security that evidences the same obligation as the
consenting Holder’s Security, even if notation of the consent, waiver or action is not made on the
Security. However, any such Holder or subsequent Holder may revoke the consent, waiver or action
as to such Holder’s Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment, waiver or action becomes effective. After an amendment,
waiver or action becomes effective, it shall bind every Securityholder.

     Section 9.5 Notation on or Exchange of Securities. Securities 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 approved by the Trustee as to any matter provided
for in such supplemental indenture. If the Company shall so determine, new Securities so modified
as to conform, in the opinion of the Trustee and the Board of Directors, to any such

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supplemental
indenture may be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for outstanding Securities.

     Section 9.6 Trustee to Sign Supplemental Indentures. The Trustee shall sign any
supplemental indenture authorized pursuant to this Article Nine if the amendment contained therein
does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it
does, the Trustee may, but need not, sign such supplemental indenture. In signing such
supplemental indenture the Trustee shall receive, and (subject to the provisions of Section 7.1)
shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.

     Section 9.7 Effect of Supplemental Indentures. Upon the execution of any supplemental
indenture under this Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

ARTICLE TEN

CONVERSIONS

     Section 10.1 Conversion Privilege. (a) Subject to and upon compliance with the provisions
of this Article Ten, a Holder of a Security shall have the right, at such Holder’s option, to
convert the principal amount of the Security or any portion (if the portion to be converted is
$1,000 or a whole multiple of $1,000) of such Security into cash and shares of Common Stock, if
any, based on the Conversion Price in effect on the date of conversion:

     (1) during any fiscal quarter or, commencing on August 2, 2021, on any Business Day, if
the Sale Price of the Common Stock was more than 110% of the Conversion Price for at least
(a) 20 Trading Days in the 30 consecutive Trading Days
ending on the last Trading Day of the immediately preceding fiscal quarter or (b) after
July 30, 2021 and prior to the conversion date, one Trading Day;

     (2) during any five Business Day period, if the Trading Prices of the Securities for
the 10 Consecutive Trading Day period ending on the Trading Day immediately prior to such
five Business Day period was less than 95% of the Trading Price Conversion Value of the
Securities on each day during that 10 Consecutive Trading Day period; provided,
however, that if on the conversion date of a Security pursuant to this paragraph (2)
the Sale Price of the Common Stock is greater than the Conversion Price, and the Securities
are not convertible pursuant to any other paragraph of this Section 10.1, upon conversion of
Securities pursuant to this sub-clause (2), the Company shall pay, in lieu of the
consideration described in Section 10.2, cash with a value as of the conversion date equal
to the principal amount of the Security to be converted, plus any accrued and unpaid
interest to the conversion date;

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     (3) at any time prior to the close of business on the second Business Day preceding the
Redemption Date, if such Security has been called for redemption pursuant to Article Three
hereof; or

     (4) as provided in section (b) of this Section 10.1.

     The Conversion Agent shall, on behalf of the Company, determine on a daily basis whether the
Securities shall be convertible as a result of the occurrence of an event specified in clause (1)
above, clause (2) above, clause (c) below or clause (d) below and, if the Securities shall be so
convertible, the Conversion Agent shall promptly deliver to the Company and the Trustee written
notice thereof. Whenever the Securities shall become convertible pursuant to this Section 10.1,
the Company or, at the Company’s request, the Trustee in the name and at the expense of the
Company, shall notify the Holders of the event triggering such convertibility in the manner
provided in Section 11.2, and the Company shall also publicly announce such information and publish
it on the Company’s Web site. Any notice so given shall be conclusively presumed to have been duly
given, whether or not the Holder receives such notice.

     (b) In addition, in the event that:

     (1) (A) the Company distributes to all holders of its shares of Common Stock rights or
warrants entitling them (for a period expiring within 60 days of the Record Date for such
distribution) to subscribe for or purchase shares of Common Stock, at a price per share less
than the Sale Price of the Common Stock on the Business Day immediately preceding the
announcement of such distribution, or (B) the Company distributes to all holders of its
shares of Common Stock, cash or other assets, debt securities or rights or warrants to
purchase its securities, where the Fair Market Value (as determined by the Board of
Directors) of such distribution per share of Common Stock exceeds 15% of the Sale Price of a
share of Common Stock on the Business Day immediately preceding the date of declaration of
such distribution, then, in either case, the Securities may be surrendered for conversion at
any time on and after the date that the Company gives notice to the Holders of such right,
which shall be not less than 20 days prior to the Ex-Dividend Time for such distribution,
until the earlier of the close of business on the
Business Day immediately preceding the Ex-Dividend Time or the date the Company
announces that such distribution will not take place; provided that, no adjustment
to the Conversion Price or the ability of a Holder of a Security to convert will be made if
the Holder will otherwise participate in such distribution without conversion; or

     (2) the Company consolidates with or merges into another corporation, or is a party to
a binding share exchange pursuant to which the shares of Common Stock would be converted
into cash, securities or other property as set forth in Section 10.4 hereof, then the
Securities may be surrendered for conversion at any time from and after the date which is 15
days prior to the date announced by the Company as the anticipated effective time of such
transaction until 15 days after the actual date of such transaction.

     “Trading Price Conversion Value”, on any day, means the product of the Sale Price for the
Common Stock multiplied by the then-current Conversion Rate.

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     “Ex-Dividend Time” means, with respect to any issuance or distribution on shares of Common
Stock, the first date on which the shares of Common Stock trade regular way on the principal
securities market on which the shares of Common Stock are then traded without the right to receive
such issuance or distribution.

     The “Trading Price” of the Securities, on any date of determination, means the average of the
secondary market bid quotations per Security obtained by the Calculation Agent for $10,000,000
principal amount at maturity of Securities at approximately 3:30 p.m., New York City time, on such
determination date from three independent nationally recognized securities dealers selected by the
Company, provided that if at least three such bids cannot reasonably be obtained by the Calculation
Agent, but two such bids are obtained, then the average of the two bids shall be used, and if only
one such bid can reasonably be obtained by the Calculation Agent, this one bid shall be used. If
the Calculation Agent cannot reasonably obtain at least one bid for $10,000,000 principal amount at
maturity of Securities from a nationally recognized securities dealer or in the reasonable judgment
of the Company, the bid quotations are not indicative of the secondary market value of the
Securities, then the trading price of the Securities will equal (a) the then applicable Conversion
Rate multiplied by (b) the Sale Price of the Common Stock on such determination date.

     The “Conversion Rate”, at any time, shall equal (A) $1,000 divided by the
Conversion Price at such time, rounded to four decimal places (rounded up if the fifth decimal
place thereof is 5 or more and otherwise rounded down).

         (c) If the Issue Date for the Securities occurs during a fiscal quarter in which the Old
Securities are convertible into the Common Stock pursuant to the provision in the Old Indenture
corresponding to the provision described in Section 10.1(a)(1), then the Securities shall be
convertible pursuant to Section 10.1(a)(1) for the remainder of such fiscal quarter. If the Issue
Date for the Securities occurs during the 30 consecutive Trading Day period ending on the last
Trading Day of any fiscal quarter, each Trading Day occurring during such 30 Trading Day period
and on or prior to the Issue Date for the Securities shall be considered in determining whether
the condition for convertibility set forth in Section 10.1(a)(1) has been met.

         (d) If the Securities are issued during a period in which the Old Securities are convertible
into the Common Stock pursuant to the provision in the Old Indenture corresponding to the
provision described in Section 10.1(a)(2), then the Securities shall be convertible pursuant to
Section 10.1(a)(2) for the remainder of the five Business Day period during which the Old
Securities would have been convertible had they not been exchanged for the Securities. If the
Trading Price per $1,000 principal amount of Old Securities on the Trading Day prior to the day on
which the Securities are issued (the “Last Original Security Measurement Day”) was less than
ninety-five percent (95%) of the Trading Price Conversion Value of the Old Securities on such
Trading Day, then the Last Original Security Measurement Day, and any of the four previous Trading
Days on which the Trading Price per $1,000 principal amount of Old Securities was less than
ninety-five percent (95%) of the Trading Price Conversion Value of the Old Securities on such
Trading Day, will be deemed to be Trading Days on which the Trading Price per $1,000 principal
amount of the Securities was less than ninety-five percent (95%) of the Trading Price Conversion
Value of the Securities on such

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Trading Day for purposes of determining whether the condition for
convertibility set forth in Section 10.1(a)(2) has been met.

     Section 10.2 Conversion Procedure; Conversion Price; Fractional Shares.

         (a) Upon conversion of any Security, subject to this Section 10.2 and 10.4, the Company shall
satisfy its obligation per each $1,000 principal amount of Securities with respect to such
converted Security by payment and delivery of cash and, if applicable, shares of Common Stock, the
value (the “Conversion Value”) of which shall be equal to the product of:

     (i) the then applicable Conversion Rate; and

     (ii) the average of the Sale Prices of Common Stock for each of the five (5)
consecutive Trading Days (appropriately adjusted to take into account the occurrence
during such period of stock splits and similar events) beginning on the second Trading Day
immediately following the day the Securities are tendered for conversion (the “Five Day
Average Price”).

         (b) The Company shall deliver the Conversion Value to converting holders as follows:

     (i) an amount in cash (the “Principal Return”) equal to the lesser of (A) the
Conversion Value of the Securities to be converted and (B) the aggregate principal amount
of the Securities to be converted;

     (ii) if the Conversion Value of the Securities to be converted is greater than the
Principal Return, an amount in whole shares of Common Stock (the “Net Shares”), determined
as set forth below, equal to such aggregate Conversion Value less the Principal Return
(the “Net Share Amount”); and

     (iii) an amount in cash, in lieu of any fractional shares of Common Stock as set
forth below.

The number of Net Shares to be paid shall be determined by dividing the Net Share Amount by the
Five Day Average Price. Holders of Securities will not receive fractional shares upon conversion
of Securities. In lieu of fractional shares, holders will receive cash for the value of the
fractional shares, which cash payment shall be based on the Five Day Average Price.

         (c) The Conversion Value, Principal Return, number of Net Shares and Net Share Amount shall
be determined by the Company at the end of the five consecutive Trading Day period beginning on
the second Trading Day immediately following the day the Securities are tendered for conversion
(the “Conversion Determination Date”).

         (d) Before any Holder of a Security shall be entitled to convert the same as set forth above,
such Holder shall, in the case of Securities issued in global form, comply with the procedures of
the Depositary in effect at that time, and in the case of definitive Securities, surrender such
Securities, duly endorsed to the Company or in blank, at the office of the Conversion Agent, and
shall give written notice to the Company at said office or place that

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such Holder elects to
convert the same and shall state in writing therein the principal amount of Securities to be
converted and the name or names (with addresses) in which such Holder wishes the certificate or
certificates for the Net Shares, if any, to be issued.

     Before any such conversion, a Holder also shall pay all funds required, if any, relating to
interest on the Securities, as provided in Section 10.9, and all taxes or duties, if any, as
provided in Section 10.8.

     If more than one Security shall be surrendered for conversion at one time by the same Holder,
the amount of cash and number of Net Shares, if any, which shall be deliverable upon conversion
shall be computed on the basis of the aggregate principal amount of the Securities (or specified
portions thereof to the extent permitted thereby) so surrendered. Subject to the next succeeding
sentence, the Company will, as soon as practicable thereafter, issue and deliver at said office or
place to such Holder of a Security, or to such Holder’s nominee or nominees, certificates for the
number of any Net Shares to which such Holder shall be entitled as aforesaid, together, subject to
Section (a) above, with cash in lieu of any fraction of a share to which such Holder would
otherwise be entitled. The Company shall not be required to deliver certificates for any Net
Shares while the stock transfer books for such stock or the security register are duly closed for
any purpose, but certificates for any Net Shares shall be issued and delivered as soon as
practicable after the opening of such books or security register.

         (e) A Security shall be deemed to have been converted as of the close of business on the date
of the surrender of such Securities for conversion as provided above, and the person or persons
entitled to receive cash and the Net Shares, if any, issuable upon such conversion shall be
treated for all purposes as the record Holder or Holders of such Net Shares, if any, as of the
close of business on the Conversion Determination Date.

         (f) In case any Security 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 Security so surrendered, without charge to such Holder (subject to the provisions of
Section 10.8 hereof), a new Security or Securities in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Securities.

     Section 10.3 Adjustment of Conversion Price for Common Stock.

     The Conversion Price shall be adjusted from time to time as follows:

         (a) In case the Company shall, at any time or from time to time while any of the Securities
are outstanding, pay a dividend or make a distribution in shares of Common Stock to all holders of
its outstanding shares of Common Stock, then the Conversion Price in effect at the opening of
business on the date following the record date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction:

     (1) the numerator of which shall be the number of shares of Common Stock outstanding at
the close of business on the Record Date fixed for such determination; and

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     (2) the denominator of which shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution.

     Such reduction shall become effective immediately after the opening of business on the day
following the Record Date fixed for such determination. If any dividend or distribution of the
type described in this Section 10.3(a) is declared but not so paid or made, the Conversion Price
shall again be adjusted to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.

         (b) In case the Company shall, at any time or from time to time while any of the Securities
are outstanding, subdivide its outstanding shares of Common Stock into a greater number of shares
of Common Stock, then the Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be proportionately reduced,
and conversely, in case the Company shall, at any time or from time to time while any of the
Securities are outstanding, combine its outstanding shares of Common Stock into a smaller number
of shares of Common Stock, then the Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be proportionately
increased.

     Such reduction or increase, as the case may be, shall become effective immediately after the
opening of business on the day following the day upon which such subdivision or combination becomes
effective.

         (c) In case the Company shall, at any time or from time to time while any of the Securities
are outstanding, issue rights or warrants (other than any rights or warrants referred to in
Section 10.3(d)) to all holders of its shares of Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible into shares of Common Stock) at a price
per share (or having a conversion price per share) less than the Sale Price on the Business Day
immediately preceding the date of the announcement of such issuance (treating the conversion price
per share of the securities convertible into Common Stock as equal to (x) the sum of (i) the price
for a unit of the security convertible into Common Stock and (ii) any additional consideration
initially payable upon the conversion of such security into Common
Stock divided by (y) the number of shares of Common Stock initially underlying such
convertible security), then the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect at the opening of business on
the date after such date of announcement by a fraction:

     (1) the numerator of which shall be the number of shares of Common Stock outstanding on
the close of business on the date of announcement, plus the number of shares or securities
which the aggregate offering price of the total number of shares or securities so offered
for subscription or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Sale Price of the Common Stock; and

     (2) the denominator of which shall be the number of shares of Common Stock outstanding
at the close of business on the date of announcement, plus the total number of

48

 

	   	additional shares of Common Stock so offered for subscription or purchase (or into which the
convertible securities so offered are convertible);

provided that no adjustment for a transaction referred to in this Section 10.3(c) shall be
made if the Holders of the Securities may participate in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of the basis and notice
on which holders of shares of the Company’s Common Stock may participate in the transaction.

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

         (d) In case the Company shall, at any time or from time to time while any of the Securities
are outstanding, by dividend or otherwise, distribute to all holders of its shares of Common Stock
(including any such distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation and the Common Stock is not changed or exchanged), shares of
its capital stock (other than any dividends or distributions to which Section 10.3(a) applies),
evidences of its Indebtedness or other assets, including securities, but excluding (i) any rights
or warrants referred to in Section 10.3(c), (ii) dividends or distributions of stock, securities
or other property or assets (including cash) in connection with a reclassification, change,
merger, consolidation, statutory share exchange, combination,
sale or conveyance to which Section 10.4 applies and (iii) dividends and distributions paid
exclusively in cash (such capital stock, evidence of its indebtedness, cash, other assets or
securities being distributed hereinafter in this Section 10.3(d) called the “distributed assets”),
then, in each such case, subject to the third and fourth succeeding paragraphs, the Conversion
Price shall be reduced so that the same shall be equal to the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the Record Date with
respect to such distribution by a fraction:

     (1) the numerator of which shall be the Current Market Price of the Common Stock, less
the Fair Market Value on such date of the portion of the distributed assets so distributed
applicable to one share of Common Stock (determined on the basis of the number of shares of
Common Stock outstanding on the Record Date) on such date; and

     (2) the denominator of which shall be such Current Market Price;

49

 

provided that no adjustment for a transaction referred to in this Section 10.3(d) shall be
made if all Holders of the Securities may participate in the transaction.

     Such reduction shall become effective immediately prior to the opening of business on the day
following the Record Date for such distribution. In the event that such dividend or distribution
is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not been declared.

     If the Board of Directors determines the Fair Market Value of any distribution for purposes of
this Section 10.3(d) by reference to the actual or when issued trading market for any distributed
assets comprising all or part of such distribution, it must in doing so consider the prices in such
market over the same period (the “Reference Period”) used in computing the Current Market Price
pursuant to Section 10.3(g) to the extent possible, unless the Board of Directors determines in
good faith that determining the Fair Market Value during the Reference Period would not be in the
best interest of the Holders.

     In the event any such distribution consists of shares of capital stock of, or similar equity
interests in, one or more of the Company’s Subsidiaries (a “Spin-Off”), the Fair Market Value of
the securities to be distributed shall equal the average of the closing sale prices of such
securities on the principal securities market on which such securities are traded for the five
consecutive Trading Days commencing on and including the sixth day of trading of those securities
after the effectiveness of the Spin-Off, and the Current Market Price shall be measured for the
same period. In the event, however, that an underwritten initial public offering of the securities
in the Spin-Off occurs simultaneously with the Spin-Off, Fair Market Value of the securities
distributed in the Spin-Off shall mean the initial public offering price of such securities and the
Current Market Price shall mean the Sale Price for the Common Stock on the same Trading Day.

     Rights or warrants distributed by the Company to all holders of its shares of Common Stock
entitling them to subscribe for or purchase shares of the Company’s capital stock (either initially
or under certain circumstances), which rights or warrants, until the occurrence of a specified
event or events (“Trigger Event”), (i) are deemed to be transferred with such shares of
Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future
issuances of shares of Common Stock, shall be deemed not to have been distributed for purposes of
this Section 10.3(d) (and no adjustment to the Conversion Price under this Section 10.3(d) will be
required) until the occurrence of the earliest Trigger Event. If such right or warrant is subject
to subsequent events, upon the occurrence of which such right or warrant shall become exercisable
to purchase different distributed assets, evidences of indebtedness or other assets, or entitle the
holder to purchase a different number or amount of the foregoing or to purchase any of the
foregoing at a different purchase price, then the occurrence of each such event shall be deemed to
be the date of issuance and Record Date with respect to a new right or warrant (and a termination
or expiration of the existing right or warrant without exercise by the holder thereof). In
addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any
Trigger Event or other event (of the type described in the preceding sentence) with respect
thereto, that resulted in an adjustment to the Conversion Price under this Section 10.3(d):

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     (1) in the case of any such rights or warrants which shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of shares of Common Stock with
respect to such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of shares of Common Stock as of the date of such redemption
or repurchase; and

     (2) in the case of such rights or warrants which shall have expired or been terminated
without exercise, the Conversion Price shall be readjusted as if such rights and warrants
had never been issued.

     For purposes of this Section 10.3(d), Sections 10.3(a), 10.3(b) and 10.3(c), any dividend or
distribution to which this Section 10.3(d) is applicable that also includes (i) shares of Common
Stock, (ii) a subdivision or combination of shares of Common Stock to which Section 10.3(b) applies
or (iii) rights or warrants to subscribe for or purchase shares of Common Stock to which Section
10.3(c) applies (or any combination thereof), shall be deemed instead to be:

     (1) a dividend or distribution of the evidences of indebtedness, assets, shares of
capital stock, rights or warrants, other than such shares of Common Stock, such subdivision
or combination or such rights or warrants to which Sections 10.3(a), 10.3(b) and 10.3(c)
apply, respectively (and any Conversion Price reduction required by this Section 10.3(d)
with respect to such dividend or distribution shall then be made), immediately followed by

     (2) a dividend or distribution of such shares of Common Stock, such subdivision or
combination or such rights or warrants (and any further Conversion Price reduction required
by Sections 10.3(a), 10.3(b) and 10.3(c) with respect to such dividend or distribution shall
then be made), except:

         (A) the Record Date of such dividend or distribution shall be substituted as
(i) “the record date fixed for the determination of stockholders
entitled to receive such dividend or other distribution,” “Record Date fixed
for such determination” and “Record Date” within the meaning of Section 10.3(a),
(ii) “the day upon which such subdivision becomes effective” and “the day upon which
such combination becomes effective” within the meaning of Section 10.3(b), and (iii)
as “the date fixed for the determination of stockholders entitled to receive such
rights or warrants,” “the Record Date fixed for the determination of the
stockholders entitled to receive such rights or warrants” and “Record Date” within
the meaning of Section 10.3(c); and

         (B) any shares of Common Stock included in such dividend or distribution shall
not be deemed “outstanding at the close of business on the date fixed for such
determination” within the meaning of Section 10.3(a) and any reduction or increase
in the number of shares of Common Stock resulting from

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	   	such subdivision or
combination shall be disregarded in connection with such dividend or distribution.

         (e) In case the Company shall, at any time or from time to time while any of the Securities
are outstanding, by dividend or otherwise, distribute to all holders of its shares of Common
Stock, cash (excluding any cash that is distributed upon a reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance to which Section 10.4
applies or as part of a distribution referred to in Section 10.3(d)), in an aggregate amount that,
combined together with:

     (1) the aggregate amount of any other such distributions to all holders of shares of
Common Stock made exclusively in cash within the 12 months preceding the date of payment of
such distribution, and in respect of which no adjustment pursuant to this Section 10.3(e)
has been made; and

     (2) the aggregate amount of any cash, plus the Fair Market Value (as determined by the
Board of Directors) of consideration payable in respect of any tender offer by the Company
or any of its Subsidiaries for all or any portion of the shares of Common Stock concluded
within the 12 months preceding the date of such distribution, and in respect of which no
adjustment pursuant to Section 10.3(f) has been made;

exceeds 15% of the product of the Current Market Price of the Common Stock on the Record Date with
respect to such distribution, times the number of shares of Common Stock outstanding on such date,
then, and in each such case, immediately after the close of business on such date, the Conversion
Price shall be reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on such Record Date by a
fraction:

     (1) the numerator of which shall be equal to the Current Market Price on the Record
Date, less an amount equal to the quotient of (x) the excess of such combined amount over
such 15% and (y) the number of shares of Common Stock outstanding on the Record Date; and

     (2) the denominator of which shall be equal to the Current Market Price on such date.

     In the event that such dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in effect if such dividend
or distribution had not been declared.

         (f) In case a tender offer made by the Company or any of its Subsidiaries for all or any
portion of the shares of Common Stock shall expire and such tender offer (as amended upon the
expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any
maximum specified in the terms of the tender offer) of shares tendered) of an aggregate
consideration having a Fair Market Value (as determined by the Board of Directors) that combined
together with:

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     (1) the aggregate amount of the cash, plus the Fair Market Value (as determined by the
Board of Directors), as of the expiration of such tender offer, of consideration payable in
respect of any other tender offers by the Company or any of its Subsidiaries for all or any
portion of the shares of Common Stock expiring within the 12 months preceding the expiration
of such tender offer and in respect of which no adjustment pursuant to this Section 10.3(f)
has been made; and

     (2) the aggregate amount of any distributions to all holders of shares of Common Stock
made exclusively in cash within 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to Section 10.3(e) has been made;

exceeds 15% of the product of the Current Market Price of the Common Stock as of the last time (the
“Expiration Time”) tenders could have been made pursuant to such tender offer (as it may be
amended), times the number of shares of Common Stock outstanding (including any tendered shares) on
the Expiration Time (such excess, the “Excess Amount”), then, and in each such case, immediately
prior to the opening of business on the day after the date of the Expiration Time, the Conversion
Price shall be adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the date of the Expiration
Time by a fraction:

     (1) the numerator of which shall be (x) the product of (i) the number of shares of
Common Stock outstanding (including any tendered shares) at the Expiration Time and (ii) the
Current Market Price of the Common Stock at the Expiration Time, less (y) the Excess Amount;
and

     (2) the denominator of which shall be the product of the number of shares of Common
Stock outstanding (including any tendered shares) at the Expiration Time and the Current
Market Price of the Common Stock at the Expiration Time.

     Such reduction (if any) shall become effective immediately prior to the opening of business on
the day following the Expiration Time. In the event that the Company is obligated to purchase
shares pursuant to any such tender offer, but the Company is permanently prevented by applicable
law from effecting any such purchases or all or a portion of such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such (or such portion of the) tender offer had not been made. If the
application of this Section 10.3(f) to any tender offer would result in an increase in the
Conversion Price, no adjustment shall be made for such tender offer under this Section 10.3(f).

     Pursuant to rights issued under the Company’s preferred share purchase rights plan, if holders
of the Securities exercising the right of conversion attaching after the date the rights separate
from the underlying Common Stock are not entitled to receive the rights that would otherwise be
attributable to the shares of Common Stock received upon conversion, the Conversion Price will be
adjusted as though the rights were being distributed to holders of Common Stock on the date of such
separation. If such an adjustment is made and the rights are later redeemed, invalidated or
terminated, then a corresponding reversing adjustment will be made to the conversion price on an
equitable basis.

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         (g) For purposes of this Article Ten, the following terms shall have the meanings indicated:

     “Current Market Price” on any date means the average of the daily Sale Prices per share of
Common Stock for the ten consecutive Trading Days immediately prior to such date; provided,
however, that if:

     (1) the “ex” date (as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 10.3(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive
Trading Days, the Sale Price for each Trading Day prior to the “ex” date for such other
event shall be adjusted by dividing such Sale Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such other event;

     (2) the “ex” date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price pursuant to Section
10.3(a), (b), (c), (d), (e) or (f) occurs on or after the “ex” date for the issuance or
distribution requiring such computation and prior to the day in question, the Sale Price for
each Trading Day on and after the “ex” date for such other event shall be adjusted by
dividing such Sale Price by the reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such other event; and

     (3) the “ex” date for the issuance or distribution requiring such computation is prior
to the day in question, after taking into account any adjustment required pursuant to clause
(1) or (2) of this proviso, the Sale Price for each Trading Day on or after such “ex” date
shall be adjusted by adding thereto the amount of any cash and the Fair Market Value (as
determined by the Board of Directors in a manner consistent with any determination of such
value for purposes of Section 10.3(d), (e) or (f)) of the evidences of Indebtedness, shares
of capital stock or assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such “ex” date.

For purposes of any computation under Section 10.3(f), if the “ex” date for any event (other than
the tender offer requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 10.3(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration Time for
the tender or exchange offer requiring such computation and prior to the day in question, the Sale
Price for each Trading Day on and after the “ex” date for such other event shall be adjusted by
dividing such Sale Price by the reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event. For purposes of this paragraph, the term
“ex” date, when used:

     (1) with respect to any issuance or distribution, means the first date on which the
shares of Common Stock trade regular way on the relevant exchange or in the relevant market
from which the Sale Price was obtained without the right to receive such issuance or
distribution;

     (2) with respect to any subdivision or combination of shares of Common Stock, means the
first date on which the shares of Common Stock trade regular way on

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         such exchange or in such
market after the time at which such subdivision or combination becomes effective; and

     (3) with respect to any tender or exchange offer, means the first date on which the
shares of Common Stock trade regular way on such exchange or in such market after the
Expiration Time of such offer.

Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called
for pursuant to this Section 10.3, such adjustments shall be made to the Current Market Price as
may be necessary or appropriate to effectuate the intent of this Section 10.3 and to avoid unjust
or inequitable results as determined in good faith by the Board of Directors.

     “Fair Market Value” shall mean the amount which a willing buyer would pay a willing seller in
an arm’s length transaction (as determined by the Board of Directors, whose determination shall be
conclusive).

     “Record Date” shall mean, with respect to any dividend, distribution or other transaction or
event in which the holders of shares of Common Stock have the right to receive any cash, securities
or other property or in which the shares of 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 or by statute, contract or otherwise).

         (h) The Company shall be entitled to make such additional reductions in the Conversion Price,
in addition to those required by Sections 10.3(a), (b), (c), (d), (e) and (f), as shall be
necessary, as determined by the Board of Directors, in order that any dividend or distribution of
Common Stock, any subdivision, reclassification or combination of shares of Common Stock or any
issuance of rights or warrants referred to above shall not be taxable to the holders of Common
Stock for United States Federal income tax purposes.

         (i) To the extent permitted by applicable law, the Company may, from time to time, reduce the
Conversion Price by any amount for any period of time, if such period is at least 20 days and the
reduction is irrevocable during the period. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail to the Trustee
and each Holder at the address of such Holder as it appears in the register of the Securities
maintained by the Registrar, at least 10 days prior to the date the reduced Conversion Price takes
effect, a notice of the reduction stating the reduced Conversion Price and the period during which
it will be in effect.

         (j) [Reserved.]

         (k) All calculations under this Section 10.3 shall be made to the nearest cent or one
hundredth of a share, with one-half cent and 0.005 of a share, respectively, being rounded upward.
Notwithstanding any other provision of this Section 10.3, the Company shall not be required to
make any adjustment of the Conversion Price unless such adjustment would require an increase or
decrease of at least 1% of such price. Any lesser adjustment shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment

55

 

which, together with any
adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least
1% in such price. Any adjustments under this Section 10.3 shall be made successively whenever an
event requiring such an adjustment occurs.

         (l) In the event that at any time, as a result of an adjustment made pursuant to this Section
10.3, the Holder of any Securities thereafter surrendered for conversion shall become entitled to
receive as Net Shares, if any, any shares of stock of the Company other than shares of Common
Stock originally receivable as Net Shares, if any, the Conversion Price of such other shares so
receivable as Net Shares, if any, upon conversion, of any such Security shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in subparagraphs (a) through (k) of this Section
10.3, and the provision of Sections 10.1, 10.2 and 10.4 through 10.9 with respect to the Common
Stock shall apply on like or similar terms to any such other shares and the determination of the
Board of Directors as to any such adjustment shall be conclusive.

         (m) No adjustment shall be made pursuant to this Section 10.3(i) if the effect thereof would
be to reduce the Conversion Price below the par value (if any) of the Common Stock or (ii) if the
Holders of the Securities may participate without conversion in the transaction that would
otherwise give rise to an adjustment pursuant to this Section 10.3.

     Section 10.4 Consolidation or Merger of the Company If any of the following events occurs,
namely (i) any reclassification or change of the outstanding Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (ii) any merger, consolidation, statutory share exchange or
combination of the Company with another corporation as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets (including cash) or any
combination thereof with respect to or in exchange for such Common Stock; or (iii) any sale or
conveyance of the properties and assets of the Company as, or substantially as, an entirety to any
other corporation as a result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) or any combination thereof with respect to
or in exchange for such Common Stock;

     (a) the Company or the successor or purchasing corporation, as the case may be, shall execute
with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in
force at the date of execution of such supplemental indenture if such supplemental indenture is
then required to so comply) providing for the conversion and settlement of the Securities as set
forth in this Indenture. Such supplemental indenture shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in this Article Ten.
If, in the case of any such reclassification, change, merger, consolidation, statutory share
exchange, combination, sale or conveyance, the Exchange Property includes shares of stock, other
securities and assets of a corporation other than the successor or purchasing corporation, as the
case may be, in such reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the interests of the
Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason
of the foregoing, including to

56

 

the extent practicable the provisions providing for the
repurchase rights set forth in Article Three hereof.

     (b) Notwithstanding the provisions of Section 10.2, the Conversion Value with respect to each $1,000 principal amount of Securities converted
following the effective date of any such transaction, shall be calculated (as provided in clause
(d) below based on the kind and amount of stock, securities, other property, assets or cash
received upon such reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance by a holder of Common Stock holding, immediately prior to the
transaction, a number of shares of Common Stock equal to the Conversion Rate immediately prior to
such transaction (the “Exchange Property”), assuming such holder of Common Stock did not exercise
his rights of election, if any, as to the kind or amount of stock, securities, other property,
assets or cash receivable upon such reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance (provided that, if the kind or amount of stock,
securities, other property, assets or cash receivable upon such reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance is not the same for each
share of Common Stock in respect of which such rights of election shall not have been exercised
(“non-electing share”), then for the purposes of this Section 10.4 the kind and amount of stock,
securities, other property, assets or cash receivable upon such reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares).

     (c) The Conversion Value in respect of any Securities converted following the effective date
of any such transaction shall be equal to the average of the daily values of the Exchange Property
pertaining to such Securities as determined in the next sentence (the “Exchange Property Value”)
for each of the five (5) consecutive Trading Days (appropriately adjusted to take into account the
occurrence during such period of stock splits and similar events) beginning on the later of (A)
the second Trading Day immediately following the day the Securities are tendered for conversion
and (B) the effective date of such transaction (the “Exchange Property Average Price”). For the
purpose of determining the value of any Exchange Property:

     (i) any shares of common stock of the successor or purchasing Person or any other
Person that are included in the Exchange Property shall be valued as set forth in Section
10.4 as if such shares were “Common Stock” using the procedures set forth in the
definition of “Sale Price” in Section 3.9(a); and

     (ii) any other securities, property or assets (other than cash) included in the
Exchange Property shall be valued in good faith by the Board of Directors or by a New York
Stock Exchange member firm selected by the Board of Directors.

     (d) The Company shall deliver such Conversion Value to holders of Securities so converted as
follows:

     (i) An amount of cash equal to the Principal Return, determined as set forth in
Section 10.2(b)(i); and

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     (ii) If the Conversion Value of the Securities so converted is greater than the
Principal Return, an amount of Exchange Property, determined as set forth below, equal to
such aggregate Conversion Value less the Principal Return (the “Net Exchange Property
Amount”).

     The amount of Exchange Property to be delivered shall be determined by dividing the Net
Exchange Property Amount by the Exchange Property Average Price. If the Exchange Property includes
more than one kind of property, the amount of Exchange Property of each kind to be delivered shall
be in the proportion that the Exchange Property Value of such kind of Exchange Property bears to
the Exchange Property Value of all the Exchange Property. If the foregoing calculations would
require the Company to deliver a fractional share or unit of Exchange Property to a holder of
Securities being converted, the Company shall deliver cash in lieu of such fractional share or unit
based on its Exchange Property Average Price.

     (e) Notwithstanding clauses (b), (c) and (d) above, if the Securities are tendered for
conversion prior to the effective date of any such transaction pursuant to Section 10.4 above, and
the Principal Return and Net Shares, if any, have been determined as of the effective date of such
transaction, then the Company shall (i) pay the Principal Return in cash and (ii) instead of
delivering Net Shares, if applicable, deliver an amount of Exchange Property that a holder of
Common Stock, holding, immediately prior to the transaction, a number of shares of Common Stock
equal to the Net Shares, would receive, assuming such holder of Common Stock did not exercise his
rights of election, if any, as to the kind or amount of stock, securities, other property, assets
or cash receivable reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance (provided that, if the kind or amount of stock, securities, other
property, assets or cash receivable upon such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance is not the same for each non-electing
share, then for the purposes of this Section 10.4 the kind and amount of stock, securities, other
property, assets or cash receivable upon such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance for each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the non-electing
shares). If the foregoing calculations would require the Company to deliver a fractional share or
unit of Exchange Property to a holder of Securities being converted, the Company shall deliver cash in lieu of such fractional share or unit based on
the Exchange Property Value (as so determined).

     (f) [Reserved.]

     (g) The Company shall cause notice of the execution of such supplemental indenture to be
mailed to each Holder, at the address of such Holder as it appears on the register of the
Securities maintained by the Registrar, within 20 days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of such supplemental indenture.

     (h) The above provisions of this Section shall similarly apply to successive
reclassifications, mergers, consolidations, statutory share exchanges, combinations, sales and
conveyances.

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     Section 10.5 Notice of Adjustment.

     Whenever an adjustment in the Conversion Price with respect to the Securities is required:

     (1) the Company shall forthwith place on file with the Trustee and any Conversion Agent
for such securities a certificate of the Treasurer of the Company, stating the adjusted
Conversion Price determined as provided herein and setting forth in reasonable detail such
facts as shall be necessary to show the reason for and the manner of computing such
adjustment; and

     (2) a notice stating that the Conversion Price has been adjusted and setting forth the
adjusted Conversion Price shall forthwith be given by the Company or, at the Company’s
request, by the Trustee in the name and at the expense of the Company, to each Holder in the
manner provided in Section 11.2. Any notice so given shall be conclusively presumed to have
been duly given, whether or not the Holder receives such notice.

     Section 10.6 Notice in Certain Events.

     In case:

     (1) of a consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the sale or conveyance to another
Person or entity or group of Persons or entities acting in concert as a partnership, limited
partnership, syndicate or other group (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of all or substantially all of the property and assets of
the Company; or

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

     (3) of any action triggering an adjustment of the Conversion Price referred to in
clauses (x) or (y) below;

then, in each case, the Company shall cause to be filed with the Trustee and the Conversion Agent,
and shall cause to be given, to the Holders of the Securities in the manner provided in Section
11.2, at least 15 days prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of any distribution or grant of rights or
warrants triggering an adjustment to the Conversion Price pursuant to this Article Ten, or, if a
record is not to be taken, the date as of which the holders of record of Common Stock entitled to
such distribution, rights or warrants are to be determined, or (y) the date on which any
reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up
triggering an adjustment to the Conversion Price pursuant to this Article Ten is expected to become
effective, and the date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger sale, conveyance, dissolution, liquidation or winding up.

59

 

     Failure to give such notice or any defect therein shall not affect the legality or validity of
the proceedings described in clause (1), (2) or (3) of this Section 10.6.

     Section 10.7 Company To Reserve Stock; Registration; Listing.

     (a) The Company shall, in accordance with the laws of the State of Minnesota, at all times
reserve and keep available, free from preemptive rights, out of its authorized but unissued shares
of Common Stock, for the purpose of effecting the conversion of the Securities, such number of its
duly authorized shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all Securities then outstanding into the number of shares of Common Stock, if any,
issuable upon conversion at any time (assuming that, at the time of the computation of such number
of shares or securities, all such Securities would be held by a single Holder); provided,
however, that nothing contained herein shall preclude the Company from satisfying its
obligations in respect of the conversion of the Securities pursuant to Article 10 by delivery of
purchased shares of Common Stock which are then held in the treasury of the Company. The Company
covenants that all shares of Common Stock which may be issued upon conversion of Securities will
upon issue be fully paid and nonassessable and free from all liens and charges and, except as
provided in Section 10.8, taxes with respect to the issue thereof.

     (b) If any shares of Common Stock which would be issuable upon conversion of Securities
hereunder require registration with or approval of any governmental authority before such shares
or securities may be issued upon such conversion, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares or securities to be duly registered or
approved, as the case may be. The Company further covenants that so long as the Common Stock shall be listed on the New York Stock Exchange, the Company will, if permitted
by the rules of such exchange, list and keep listed all Common Stock, if any, issuable upon
conversion of the Securities, and the Company will endeavor to list the shares of Common Stock, if
any, required to be delivered upon conversion of the Securities prior to such delivery upon any
other national securities exchange upon which the outstanding Common Stock is listed at the time
of such delivery.

     Section 10.8 Taxes on Conversion.

     The issue of stock certificates, if any, on conversion of Securities shall be made without
charge to the converting Holder for any documentary, stamp or similar issue or transfer taxes in
respect of the issue thereof, and the Company shall pay any and all documentary, stamp or similar
issue or transfer taxes that may be payable in respect of the issue or delivery of shares of Common
Stock, if any, on conversion of Securities pursuant hereto. The Company shall not, however, be
required to pay any such tax which may be payable in respect of any transfer involved in the issue
or delivery of shares of Common Stock, if any, or the portion, if any, of the Securities which are
not so converted in a name other than that in which the Securities so converted were registered,
and no such issue or delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of such tax or has established to the satisfaction of the Company
that such tax has been paid.

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     Section 10.9 Conversion After Record Date.

     Except as provided below, if any Securities are surrendered for conversion on any day other
than an Interest Payment Date, the Holder of such Securities shall not be entitled to receive any
interest that has accrued on such Securities since the prior Interest Payment Date. By delivery to
the Holder of the cash and the number of shares of Common Stock, if any, or other consideration
issuable upon conversion in accordance with this Article Ten, any accrued and unpaid interest on
such Securities will be deemed to have been paid in full.

     If any Securities are surrendered for conversion subsequent to the Record Date preceding an
Interest Payment Date but on or prior to such Interest Payment Date, the Holder of such Securities
at the close of business on such Record Date shall receive the interest payable on such Securities
on such Interest Payment Date notwithstanding the conversion thereof. Securities surrendered for
conversion during the period from the close of business on any Record Date preceding any Interest
Payment Date to the opening of business on such Interest Payment Date shall (except in the case of
Securities which have been called for redemption on a Redemption Date within such period) be
accompanied by payment by Holders, for the account of the Company, in New York Clearing House funds
or other funds of an amount equal to the interest payable on such Interest Payment Date on the
Securities being surrendered for conversion. Except as provided in this Section 10.9, no
adjustments in respect of payments of interest on Securities surrendered for conversion or any
dividends or distributions or interest on the Common Stock issued upon conversion shall be made
upon the conversion of any Securities.

     Section 10.10 Company Determination Final.

     Any determination that the Company or the Board of Directors must make pursuant to this
Article Ten shall be conclusive if made in good faith and in accordance with the provisions of this
Article, absent manifest error, and set forth in a Board Resolution.

     Section 10.11 Responsibility of Trustee for Conversion Provisions.

     The Trustee has no duty to determine when an adjustment under this Article Ten should be made,
how it should be made or what it should be. The Trustee makes no representation as to the validity
or value of any securities or assets issued upon conversion of Securities. The Trustee shall not
be responsible for any failure of the Company to comply with this Article Ten. Each Conversion
Agent other than the Company shall have the same protection under this Section 10.11 as the
Trustee.

     The rights, privileges, protections, immunities and benefits given to the Trustee under the
Indenture including, without limitation, its rights to be indemnified, are extended to, and shall
be enforceable by, the Trustee in each of its capacities hereunder, and each Paying Agent or
Conversion Agent acting hereunder.

     Section 10.12 Unconditional Right of Holders to Convert.

     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to convert its Security in accordance with

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this
Article Ten and to bring an action for the enforcement of any such right to convert, and such
rights shall not be impaired or affected without the consent of such Holder.

ARTICLE ELEVEN

MISCELLANEOUS

     Section 11.1 Trust Indenture Act Controls. If any provision of this Indenture limits,
qualifies, or conflicts with another provision which is required to be included in this Indenture
by the TIA, the required provision shall control.

     Section 11.2 Notices. Any request, demand, authorization, notice, waiver, consent or
communication shall be in writing and delivered in person or mailed by first class mail, postage
prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by guaranteed overnight courier) to the
following facsimile numbers:

if to the Company:

Medtronic, Inc.

710 Medtronic Parkway

Minneapolis, MN 55432

Attn: General Counsel and Secretary

Facsimile No. (763) 572 5459

if to the Trustee:

Wells Fargo Bank

National Association

Corporate Trust Services

Sixth and Marquette

MAC N9303 110

Minneapolis, MN 55479

Telephone No. (612) 667-9090

Facsimile No. (612) 667 2160

Attention: Steven R. Gubrud

     The Company or the Trustee by notice given to the other in the manner provided above may
designate additional or different addresses for subsequent notices or communications.

     Any notice or communication given to a Securityholder shall be mailed to the Securityholder,
by first-class mail, postage prepaid, at the Securityholder’s address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed within the time
prescribed.

     Failure to mail a notice or communication to a Securityholder or any defect in it shall not
affect its sufficiency with respect to other Securityholders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not received by the addressee.

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     If the Company mails a notice or communication to the Securityholders, it shall mail a copy to
the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar.

     Section 11.3 Communication by Holders with Other Holders. Securityholders may communicate
pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section 312(c).

     Section 11.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:

     (1) an Officers’ Certificate stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed action have been
complied with; and

     (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

     Section 11.5 Statements Required in Certificate or Opinion. Each Officers’ Certificate or
Opinion of Counsel with respect to compliance with a covenant or condition provided for in this
Indenture shall include:

     (1) a statement that each person making such Officers’ Certificate or Opinion of Counsel has
read such covenant or condition;

     (2) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such Officers’ Certificate or Opinion of Counsel are
based;

     (3) a statement that, in the opinion of each such person, he has made such examination or
investigation as is necessary to enable such person to express an informed opinion as to whether or
not such covenant or condition has been complied with; and

     (4) a statement that, in the opinion of such person, such covenant or condition has been
complied with.

     Section 11.6 Separability Clause. In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

     Section 11.7 Rules by Trustee; Paying Agent, Conversion Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Securityholders. The Registrar, the
Conversion Agent and the Paying Agent may make reasonable rules for their functions.

     Section 11.8 Legal Holidays. A “Legal Holiday” is any day other than a Business Day. If
any specified date (including a date for giving notice) is a Legal Holiday, the action shall be

63

 

taken on the next succeeding day that is not a Legal Holiday, and, if the action to be taken on
such date is a payment in respect of the Securities, no interest, if any, shall accrue for the
intervening period.

     Section 11.9 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     Section 11.10 No Recourse Against Others. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder shall waive and
release all such liability. The waiver and release shall be part of the consideration for the
issue of the Securities.

     Section 11.11 Successors. All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.

     Section 11.12 Multiple Originals. The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.

64

 

     IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture
on behalf of the respective parties hereto as of the date first above written.

	 	 	 	 	 
	 	 	MEDTRONIC, INC.
	 	 	
By:
	 	 

Name:

Title:

65

 

	 	 	 	 	 
	 	 	WELLS FARGO BANK, N .A. As Trustee
	 	 	
By:
	 	 

Name:

Title:

66

 

EXHIBIT A

[FORM OF FACE OF GLOBAL SECURITY]

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

     TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY
TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE.

     PURSUANT TO SECTION 4.7 OF THE INDENTURE, MEDTRONIC, INC. AGREES, AND BY ACCEPTANCE OF A
BENEFICIAL OWNERSHIP INTEREST IN THE SECURITY, EACH BENEFICIAL HOLDER OF THE SECURITIES WILL BE
DEEMED TO HAVE AGREED, FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, TO TREAT THE SECURITIES AS
INDEBTEDNESS THAT IS SUBJECT TO SECTION 1.1275 4 OF THE UNITED STATES TREASURY REGULATIONS (THE
“CONTINGENT DEBT REGULATIONS”). YOU MAY OBTAIN THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE,
YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE FOR THE SECURITY BY TELEPHONING
THE MEDTRONIC, INC. TREASURY DEPARTMENT AT (763) 514 4000 OR SUBMITTING A WRITTEN REQUEST FOR SUCH
INFORMATION TO: MEDTRONIC, INC., 710 MEDTRONIC PARKWAY, MINNEAPOLIS, MINNESOTA 55432, ATTENTION:
TREASURY RELATIONS DEPARTMENT.

A-1

 

MEDTRONIC, INC.

1.25% Contingent Convertible Debentures, Series B due 2021

	 	 	 
	No.

	 	CUSIP:
	Issue Date: January ___, 2005

	 	Principal Amount: $______

     MEDTRONIC, INC., a Minnesota corporation, promises to pay to Cede & Co. or registered assigns,
the principal amount of [______dollars ($_________)] on September 15, 2021.

     Interest Payment Dates: March 15 and September 15, commencing March 15, 2005.

     Record Dates: March l and September 1.

     Reference is hereby made to the further provisions of this Security set forth on the reverse
side of this Security, which further provisions shall for all purposes have the same effect as if
set forth at this place.

A-2

 

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

	 	 	 	 	 
	Dated: ______________, 2005	 	MEDTRONIC, INC.
	 	 	
By:	 	 

	 	 	Title:
	 	 

A-3

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

WELLS FARGO BANK

NATIONAL ASSOCIATION

as Trustee, certifies that this is one

of the Securities referred to in the

within-mentioned Indenture.

	 	 	 	 	 
	By:	 	
	 	 
	 	 	Authorized Signatory	 	 

Dated: ______________ 2005

 

 

[FORM OF REVERSE OF GLOBAL SECURITY]

1.25% Contingent Convertible Debentures, Series B due 2021

     This Security is one of a duly authorized issue of 1.25% Contingent Convertible Debentures,
Series B due 2021 (the “Securities”) of Medtronic, Inc., a Minnesota corporation (including any
successor corporation under the Indenture hereinafter referred to, the “Company”), issued under an
Indenture, dated as of January ___, 2005 (the “Indenture”), between the Company and Wells Fargo
Bank, National Association, as trustee (the “Trustee”). The terms of the Security include those
stated in the Indenture, those made part of the Indenture by reference to the Trust Indenture Act
of 1939, as amended (“TIA”), and those set forth in this Security. This Security is subject to all
such terms, and Holders are referred to the Indenture and the TIA for a statement of all such
terms. To the extent permitted by applicable law, in the event of any inconsistency between the
terms of this Security and the terms of the Indenture, the terms of the Indenture shall control.
Capitalized terms used but not defined herein have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

1. Interest

     General. The Company promises to pay interest on the principal amount of the
Securities plus accrued and unpaid interest, if any, including contingent interest, if any, at the
interest rate specified herein (the “Interest Rate”) until repayment in full at September 15, 2021,
redemption or purchase. The Company will pay Interest on this Security semi-annually in arrears on
March 15 and September 15 of each year (each, an “interest payment date”), commencing March 15,
2005.

     (a) The Securities shall bear interest from September 15, 2004 until the principal amount
thereof is paid or made available for payment, or until such date on which the Securities are
converted, redeemed or purchased as provided herein at a rate of 1.25% per annum.

     (b) Interest on the Securities shall be computed (i) for any full six-month period for which a
particular Interest Rate is applicable, on the basis of a 360 day year of twelve 30 day months and
(ii) for any period for which a particular Interest Rate is applicable for less than a full
semiannual period for which Interest is calculated, on the basis of a 30 day month and, for such
periods of less than a month, the actual number of days elapsed over a 30 day month. For purposes
of determining the Interest Rate, the Trustee may assume that the Trading Price Condition has not
been satisfied and that Reset Rate is not in effect unless the Trustee has received an Officers’
Certificate stating that the Trading Price Condition has been satisfied and specifying the Reset
Rate then in effect.

     (c) The Interest Rate on this Security will increase to the Reset Rate for any six-month
period commencing on September 15, 2006, September 15, 2008, September 15, 2011 or September 15,
2016, each of which shall be referred to as a “Reset Rate Determination Date”, if the Trading Price
Condition for that six-month period is satisfied. The “Trading Price Condition” shall be satisfied
for any six-month period if the Sale Price of the Common Stock for any 20 out of the last 30
Trading Days ending three days prior to the then applicable Reset Rate Determination Date is less
than or equal to 50% of the Conversion Price of the Security in effect

A-1

 

for each of those 20 Trading Days. Such interest payable at the Reset Rate is sometimes
referred to herein as “contingent interest.”

     Following a change to the Reset Rate, the Interest Rate on the Security will remain the Reset
Rate until the first day of the first subsequent six-month period for which the Trading Price
Condition is not satisfied, at which time the Interest Rate on the Security will revert to 1.25%
per annum and will remain at such rate unless and until the Trading Price Condition is satisfied
for a six-month period commencing on a subsequent Reset Rate Determination Date.

     If the Reset Rate is in effect for a particular six-month period, the Company will pay cash
interest at an annualized rate per annum equal to the Reset Rate. The “Reset Rate” determined as
of each Reset Rate Determination Date will be equal to the rate that would, in the sole judgment of
the Reset Rate Agent, result in a trading price of par of a hypothetical issue of senior,
nonconvertible, noncontingent, fixed rate debt securities of the Company with (i) a final maturity
corresponding to the next date on which Holders of the Securities are entitled to require the
Company to repurchase their Securities pursuant to Section 3.7 of the Indenture; (ii) an aggregate
principal amount equal to the aggregate principal amount of all Securities then outstanding; and
(iii) covenants and other provisions that are, insofar as would be practicable for an issue of
senior, nonconvertible, noncontingent, fixed rate debt securities of the Company, substantially
identical to those of this Security, but which are not subject to repurchase by the Company at the
option of the Holder. In no case, however, will the Reset Rate ever be greater than 12% or less
than 1.50%. Also, if the Reset Rate Agent has not established the Reset Rate for the applicable
six-month period, or if the Reset Rate Agent determines in its sole judgment that there is no
suitable reference rate from which the Reset Rate may be determined, the Reset Rate for that period
will be the Reset Rate most recently determined (except if there is no Reset Rate most recently
determined, in which case the Reset Rate shall be a rate mutually agreed upon by the Reset Rate
Agent and the Company reflecting current market conditions), and such Reset Rate shall remain in
effect until the Reset Rate Agent shall determine a new Reset Rate.

     The Company will appoint a Reset Rate Agent, which shall not be the Company or any Affiliate
or employee of the Company. For the determination of the Reset Rate, the Reset Rate Agent will
seek indicative reference rates from three nationally-recognized investment banks, and the Reset
Rate shall be the average of such three indicative reference rates, provided that if at least three
such indicative reference rates cannot reasonably be obtained by the Reset Rate Agent, but two such
indicative reference rates are obtained, then the average of the two indicative reference rates
shall be used, and if only one such indicative reference rate can reasonably be obtained by the
Reset Rate Agent, this one indicative reference rate shall be used. The determination of any Reset
Rate will be conclusive and binding upon the Reset Rate Agent, the Company, the Trustee and the
Holders of the Security, in the absence of manifest error. The Company may remove the Reset Rate
Agent and appoint a successor Reset Rate Agent at any time.

     The “sale price” of the Common Stock on any date means the closing per share sale price (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 asked prices) on that date as reported
on the New York Stock Exchange or, if the Common Stock is not listed on the New

A-2

 

York Stock Exchange, then as reported on the principal U.S. securities exchange in which the
Common Stock is traded or by the Nasdaq system, as the case may be.

     In the event contingent interest is payable, the Company will disseminate a press release
through Dow Jones & Company, Inc. or Bloomberg Business News containing this information or publish
the information on the Company’s Web site or through such other public medium as the Company may
use at that time.

     (d) If this Security is redeemed or the Holder elects to require the Company to purchase this
Security pursuant to Section 6 of this Security, on a date that is after the record date and prior
to the corresponding interest payment date, interest, including contingent interest, if any,
accrued and unpaid hereon to but not including the applicable Redemption Date, Purchase Date or
Change of Control Purchase Date as the case may be will be paid to the same Holder to whom the
Company pays the principal of this Security.

     Except as provided below, if any Securities are surrendered for conversion on any day other
than an interest payment date, the Holder of such Securities shall not be entitled to receive any
interest that has accrued on such Securities since the prior interest payment date. By delivery to
the Holder of the cash and the number of shares of Common Stock, if any, or other consideration
issuable upon conversion in accordance with Article 10 of the Indenture, any accrued and unpaid
interest on such Securities will be deemed to have been paid in full.

     Interest on Securities converted after a record date but prior to the corresponding interest
payment date will be paid to the Holder of the Securities on the record date but, upon conversion,
the Holder must pay the Company the interest, including contingent interest, which has accrued and
will be paid on such interest payment date. No such payment need be made with respect to
Securities which will be redeemed after a record date and prior to the corresponding interest
payment date.

     If the principal amount hereof or any portion of such principal amount or any interest,
including contingent interest, if any, on any Security is not paid when due (whether upon
acceleration pursuant to Section 6.2 of the Indenture, upon the date set for payment of the
Redemption Price pursuant to Section 5 hereof or the Purchase Price or Change of Control Purchase
Price pursuant to Section 6 hereof or upon the Stated Maturity of this Security), then in each such
case the overdue amount shall, to the extent permitted by law, bear interest at the applicable
Interest Rate, compounded semi-annually, which interest shall accrue from the date of such overdue
amount was originally due to the date of payment of such amount, including interest thereon, has
been made or duly provided for. All such interest shall be payable on demand.

2. Method of Payment.

     Except as provided below, interest will be paid (i) on the Global Securities to DTC in
immediately available funds, (ii) on any definitive Securities having an aggregate principal amount
of $5,000,000 or less, by check mailed to the Holders of such Securities; and (iii) on any
definitive Securities having an aggregate principal amount of more than $5,000,000, by wire
transfer in immediately available funds at the election of the Holders of these Securities:

A-3

 

     At Stated Maturity the Company will pay interest on definitive Securities at the Company’s
office or agency in New York City, which initially will be the Corporate Trust Office of the
trustee in New York City.

     Principal on definitive Securities will be payable, upon Stated Maturity or when due, at the
office or agency of the Company in New York City, maintained for such purpose, initially the
Corporate Trust Office of the Trustee in New York City.

     Subject to the terms and conditions of the Indenture, the Company will make payments in cash
in respect of Redemption Prices, Purchase Prices, Change of Control Purchase Prices and at Stated
Maturity to Holders who surrender Securities to a Paying Agent to collect such payments in respect
of the Securities. The Company will pay cash amounts in money of the United States that at the
time of payment is legal tender for payment of public and private debts. However, the Company may
make such cash payments by check payable in such money.

3. Paying Agent, Conversion Agent and Registrar.

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

4. Indenture.

     The Securities are general unsecured obligations of the Company limited to $1,973,146,000
aggregate principal amount. The Indenture does not limit other indebtedness of the Company,
secured or unsecured.

5. Redemption at the Option of the Company.

     No sinking fund is provided for the Securities. The Securities are redeemable for cash at the
option of the Company, in whole or in part, at any time or from time to time on, or after September
15, 2006 upon not less than 30 nor more than 60 days’ notice by mail for a redemption price equal
to the following:

	 	 	 	 	 
	 	 	Redemption	 
	Period	 	Price	 
	Beginning on September 15, 2006 and ending on September 14, 2007
	 	 	100.625	%
	Beginning on September 15, 2007 and ending on September 14, 2008
	 	 	100.500	%
	Beginning on September 15, 2008 and ending on September 14, 2009
	 	 	100.375	%
	Beginning on September 15, 2009 and ending on September 14, 2010
	 	 	100.250	%
	Beginning on September 15, 2010 and ending on September 14, 2011
	 	 	100.125	%
	Beginning on September 15, 2011 and thereafter
	 	 	100.000	%

A-4

 

plus accrued and unpaid interest, including contingent interest, if any, up to the Redemption Date
(the “Redemption Price”).

6. Purchase By the Company at the Option of the Holder.

     Subject to the terms and conditions of the Indenture, the Company shall become obligated to
purchase, at the option of the Holder, all or any portion of the Securities held by such Holder on
September 15, 2006, September 15, 2008, September 15, 2011 and September 15, 2016 in whole
multiples of $1,000 at a Purchase Price equal to the principal amount of those Securities plus
accrued and unpaid interest, including contingent interest, if any, of such Security on the
Purchase Date. To exercise such right, a Holder shall deliver to the Company a Purchase Notice
containing the information set forth in the Indenture, at any time from the opening of business on
the date that is 20 Business Days prior to such Purchase Date until the close of business on the
third Business Day prior to such Purchase Date, and shall deliver the Securities to the Paying
Agent as set forth in the Indenture.

     The Purchase Price will be paid in cash, subject to the terms and conditions of the Indenture.

     At the option of the Holder and subject to the terms and conditions of the Indenture, the
Company shall become obligated to offer to purchase the Securities held by such Holder within 30
days (which purchase shall occur 30 days after the date of such offer) after the occurrence of a
Change of Control of the Company for a Change of Control Purchase Price equal to the principal
amount plus accrued and unpaid interest, including contingent interest, if any, of such Security on
the Change of Control Purchase Date. The Change of Control Purchase Price will be paid in cash,
subject to the terms and conditions of the Indenture.

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

     If cash sufficient to pay the Purchase Price or Change of Control Purchase Price, as the case
may be, of all Securities or portions thereof to be purchased as of the Purchase Date or the Change
of Control Purchase Date, as the case may be, is deposited with the Paying Agent, on the Business
Day following the Purchase Date or the Change of Control Purchase Date, interest will cease to
accrue on such Securities (or portions thereof) immediately after such Purchase Date or Change of
Control Purchase Date, and the Holder thereof shall have no other rights as such other than the
right to receive the Purchase Price or Change of Control Purchase Price upon surrender of such
Security.

7. Notice of Redemption.

     Notice of redemption pursuant to Section 5 of this Security will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at
the Holder’s registered address. If money sufficient to pay the Redemption Price of all Securities
(or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent
prior to or on the Redemption Date, immediately after such Redemption Date interest ceases to
accrue on such Securities or portions thereof. Securities in denominations

A-5

 

larger than $1,000 of principal amount may be redeemed in part but only in whole multiples of
$1,000 of principal amount.

8. Conversion.

     Subject to and in compliance with the provisions of the Indenture (including, without
limitation, the conditions to conversion of this Security set forth in Section 10.1 thereof), a
Holder is entitled, at such Holder’s option, to convert the Holder’s Security (or any portion of
the principal amount thereof that is $1,000 or a whole multiple of $1,000), into cash and fully
paid and nonassessable shares of Common Stock, if any, issuable upon conversion at the Conversion
Price in effect at the time of conversion in accordance with the terms of the Indenture.

     The Company will notify Holders of any event triggering the right to convert the Securities as
specified above in accordance with the Indenture.

     A Security in respect of which a Holder has delivered a Purchase Notice or Change of Control
Purchase Notice, as the case may be, exercising the option of such Holder to require the Company to
purchase such Security may be converted only if such Purchase Notice or Change of Control Purchase
Notice, as the case may be, is withdrawn in accordance with the terns of the Indenture.

     The initial Conversion Price is $61.81, subject to adjustment in certain events described in
the Indenture.

     To surrender a Security for conversion, a Holder must (1) complete and manually sign the
conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such
notice to the Conversion Agent, (2) surrender the Security to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents and (4) pay any transfer or similar tax, if
required.

     No fractional shares of Common Stock shall be issued upon conversion of any Security. Instead
of any fractional share of Common Stock that would otherwise be issued upon conversion of such
Security, the Company shall pay a cash adjustment as provided in the Indenture.

     No payment or adjustment will be made for dividends on the shares of Common Stock, except as
provided in the Indenture.

     If the Company (i) is a party to a consolidation, merger or binding share exchange (ii)
reclassifies the Common Stock or (iii) conveys, transfers or leases its properties and assets
substantially as an entirety to any Person, the right to convert a Security into cash and shares of
Common Stock, if any, may be changed into a right to convert it into securities, cash or other
assets of the Company or such other Person, in each case in accordance with the Indenture.

9. Conversion Arrangement on Call for Redemption.

     Any Securities called for redemption, unless surrendered for conversion before the close of
business on the day that is two Business Days prior to the Redemption Date, may be deemed

A-6

 

to be purchased from the Holders of such Securities at an amount not less than the Redemption
Price, by one or more investment bankers or other purchasers who may agree with the Company to
purchase such Securities from the Holders, to convert them into cash and shares of Common Stock, if
any, and to make payment for such Securities to the Trustee in trust for such Holders.

10. Denominations; Transfer: Exchange.

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

11. Persons Deemed Owners.

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

12. Unclaimed Money or Securities.

     The Trustee and the Paying Agent shall return to the Company upon written request any money or
securities held by them for the payment of any amount with respect to the Securities that remains
unclaimed for two years, subject to applicable unclaimed property law. After return to the
Company, Holders entitled to the money or securities must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another person.

13. Amendment, Waiver.

     Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities
may be amended with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities and (ii) certain Defaults may be waived with the
written consent of the Holders of a majority in aggregate principal amount of the outstanding
Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the Securities (i) to add to
the covenants of the Company for the benefit of the Holders of Securities, (ii) to surrender any
right or power conferred upon the Company in the Indenture, (iii) to provide for conversion rights
of Holders of Securities if any reclassification or change of the Company’s Common Stock or any
consolidation, merger or sale of all or substantially all of the Company’s assets occurs, (iv) to
provide for the assumption of the Company’s obligations to the Holders of Securities in the case of
a merger, consolidation, conveyance, transfer or lease pursuant to Article Five of the Indenture,
(v) to reduce the Conversion Price; provided, however, that such reduction in the

A-7

 

Conversion Price shall not adversely affect the interest of the Holders of Securities (after
taking into account tax and other consequences of such reduction), (vi) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the Indenture under the
TIA, (vii) to cure any ambiguity, or correct or supplement any provision in the Indenture which may
be inconsistent with any other provision therein or which is otherwise defective, or to make any
other provisions with respect to matters or questions arising under the Indenture which the Company
may deem necessary or desirable and which shall not be inconsistent with the provisions of the
Indenture; provided, however, that such action pursuant to this clause either (a) is consistent
with the description of such provision or provisions contained in the Prospectus dated January
___, 2005 relating to the Securities or (b) does not, in the good faith opinion of the Chief
Executive Officer of the Company and the Trustee, adversely affect the interests of the Holders of
Securities in any material respect, and (vii) to add or modify any other provisions in the
Indenture with respect to matters or questions arising hereunder which the Company and the Trustee
may deem necessary or desirable and which will not adversely affect the interests of the Holders of
Securities.

14. Defaults and Remedies.

     If any Event of Default with respect to Securities shall occur and be continuing, the
principal of all the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.

15. Trustee Dealings with the Company.

     Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities and may otherwise
deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

16. Calculations in Respect of Securities.

     The Company or its agents will be responsible for making all calculations called for under the
Securities including, but not limited to, determination of the market prices for the Securities and
of the Common Stock and the amounts of interest and contingent payments, if any, on the Securities.
Any calculations made in good faith and without manifest error will be final and binding on
Holders of the Securities. The Company or its agents will be required to deliver to the Trustee a
schedule of its calculations and the Trustee will be entitled to conclusively rely upon the
accuracy of such calculations without independent verification.

17. No Recourse Against Others.

     A director, officer, employee or shareholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.

A-8

 

18. Authentication.

     This Security shall not be valid until an authorize signatory of the Trustee manually signs
the Trustee’s Certificate of Authentication on the other side of this Security.

19. Abbreviations.

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

20. GOVERNING LAW.

     THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS SECURITY.

     The Company will furnish to any Securityholder upon written request and without charge a copy
of the Indenture which has in it the text of this Security in larger type. Requests may be made
to:

	 	 	 
	 	 	MEDTRONIC, INC. 
	 	 	710 Medtronic Parkway 
	 	 	Minneapolis, MN 55432 
	 	 	Attn: General Counsel and Secretary 
	 	 	Facsimile No. (763) 572 5459 

A-9

 

	 	 	 	 	 	 	 
	ASSIGNMENT FORM

	 	 	 
	 	 	CONVERSION NOTICE
	 	 	 	 	 	 	 
	To assign this Security, fill in the

form below:

	 	 	 	 	 	To convert this Security into cash
and Common Stock, if any, of the
Company, check the box [  ]
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	I or we assign and transfer this Security to

                                                  

                                                  

	 	 	 	 	 	To convert only part of this
Security, state the principal amount
to be converted (which must be
$1,000 or a whole multiple of
$1,000):
 
	(Insert assignee’s soc. sec. Or tax ID no.)

                                                  

                                                  

	 	 	 	 	 	If you want the stock certificate,

if any, made out in another person’s

name fill in the form below:
	                                                  
	 	 	 	 	 	 
	(Print or type assignee’s name, address and zip code)

and irrevocably appoint

	 	 	 	 	 	                                                  

                                                  

(Insert the other person’s soc. sec. tax ID no.)
	                    agent to transfer
this Security on the books of the
Company. The agent may substitute
another to act for him.

	 	 	 	 	 	
                                                  

                                                  

                                                  

                                                  

                                                  

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

	 	 	 
	Date:                                                   

	 	Your Signature:                                                   

A-10

 

	 	 	 	 	 
	
	 	 
	(Sign exactly as your name appears on the other side of this Security)	 	 
	 
	 	 	 	 
	Signature Guaranteed	 	 
	 
	 	 	 	 
	
	 	 
	Participant in a Recognized Signature	 	 
	Guarantee Medallion Program	 	 
	 
	 	 	 	 
	By:

	 	
	 	 
	

	 	               Authorized Signatory	 	 

A-11

 

SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY

Initial Principal Amount of Global Security: ___________ ($ ___________).

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Amount of Increase	 	 	 	 	 	 	 	Principal Amount of	 	 	 
	 	 	 	in Principal	 	 	Amount of Decrease	 	 	Global Security	 	 	Notation by
	 	 	 	Amount of	 	 	in Principal Amount	 	 	After Increase or	 	 	Registrar or
	Date	 	 	Global Security	 	 	of Global Security	 	 	Decrease	 	 	Security Custodian
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

A-12

 

EXHIBIT B

[FORM OF FACE OF CERTIFICATED SECURITY]

     PURSUANT TO SECTION 4.7 OF THE INDENTURE, MEDTRONIC, INC. AGREES, AND BY ACCEPTANCE OF A
BENEFICIAL OWNERSHIP INTEREST IN THE SECURITY, EACH BENEFICIAL HOLDER OF THE SECURITIES WILL BE
DEEMED TO HAVE AGREED, FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, TO TREAT THE SECURITIES AS
INDEBTEDNESS THAT IS SUBJECT TO SECTION 1.1275 4 OF THE UNITED STATES TREASURY REGULATIONS (THE
“CONTINGENT DEBT REGULATIONS”). YOU MAY OBTAIN THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE,
YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE FOR THE SECURITY BY TELEPHONING
THE MEDTRONIC, INC. TREASURY DEPARTMENT AT (763) 514 4000 OR SUBMITTING A WRITTEN REQUEST FOR SUCH
INFORMATION TO: MEDTRONIC, INC., 710 MEDTRONIC PARKWAY, MINNEAPOLIS, MINNESOTA 55432, ATTENTION:
TREASURY DEPARTMENT.

B-1

 

MEDTRONIC, INC.

1.25% Contingent Convertible Debentures, Series B due 2021

	 	 	 
	No.

	 	CUSIP: [___]
	Issue Date: January ___, 2005
	 	 
	Issue Price: $1,000
	 	 

     MEDTRONIC, INC., a Minnesota corporation, promises to pay to ___, or registered
assigns, the principal amount of [           ($           )] on
September 15, 2021.

     Interest Payment Dates: March 15 and September 15, commencing March 15, 2005.

     Record Dates: March 1 and September 1.

     Reference is hereby made to the further provisions of this Security set forth on the reverse
side of this Security, which further provisions shall for all purposes have the same effect as if
set forth at this place.

B-2

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

	 	 	 	 	 
	Dated:	 	MEDTRONIC, INC.
	 	 	
By:
	 	 

Title:

B-3

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

WELLS FARGO BANK,

NATIONAL ASSOCIATION,

as Trustee, certifies that this

is one of the Securities referred

to in the within-mentioned Indenture.

	 	 	 	 	 
	By:

	 	

	 	 
	

	 	Authorized Signatory	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 

B-4

 

[FORM OF REVERSE OF CERTIFICATED SECURITY IS IDENTICAL TO EXHIBIT A]

B-1exv10w1

 

EXHIBIT 10.1

Restricted Stock Agreement

(Tax Vesting Option)

SCPRS NO. B-_________

     Shares of restricted stock are awarded by Emmis Communications Corporation (the “Company”) to
the Participant named below (the “Participant”) upon the following terms and conditions:

     1. Definitions. For purposes of this Agreement and any amendments hereto, the terms
defined in the Company’s 2005 Stock Compensation Program which establishes the terms and conditions
of certain Awards (the “Program”) under the Company’s 2004 Equity Compensation Plan (such Plan, as
supplemented by the Program, the “Plan”), when capitalized, shall have the same meanings as the
meanings ascribed to them for purposes of the Plan, unless a different meaning is set forth herein,
or unless a different meaning is plainly required by the context. For purposes of this Agreement
and any amendments hereto, the following terms, when capitalized, have the following meanings,
unless a different meaning is plainly required by the context:

	 	 	 	 
	 
	 	 	 
	Participant:
	 	 	 
	 

	 	_____________________________________________	 
	Address:
	 	 	 
	

	 	_____________________________________________	 
	 
	 	 	 
	

	 	_____________________________________________	 
	 
	 	 	 
	Restricted Stock Participation Percentage

	 	___%	 
	 
	 	 	 
	Number of Shares Issued

	 	_______________	 
	 
	 	 	 
	Date of Issuance of Shares

	 	February ___, 2005	 
	 
	 	 	 
	Date of Award:

	 	January 1, 2005	 
	 
	 	 	 
	Restricted Period:

	 	The period beginning with the
Date of Award and ending on the
earlier of (A) January 1, 2006
or (B) the date of termination
of the Participant’s employment
by the Company for any reason
other than for Cause or (C) such
earlier date as the Committee
may determine pursuant to
Section 4.

     2. Reference to Plan. The Restricted Shares are awarded pursuant to the Plan, the
terms and conditions of which are incorporated herein by reference. No amendment of the Plan
adopted after the Date of Award shall apply to the Restricted Shares unless, by its express
provisions, it is effective retroactive to the Date of Award or some earlier date. No such
retroactive amendment may, without the consent of the Participant, adversely affect the rights of
the Participant under this Agreement.

     3. Share Award. The Company has awarded to the Participant, subject to the terms and
conditions of the Plan and subject to the terms and conditions of this Agreement, shares of Emmis
Stock with a value equal to the sum of (i) the Participant’s Base Restricted Stock Amount divided
by 90% of the Initial Value (rounded up to the nearest full share), and (ii) the Participant’s
Excess Restricted Stock Amount, if any, divided by 80% of the Initial Value (rounded up to the
nearest full share). The Number of Shares Issued is based upon the Participant’s estimated Program
Compensation for the Award Year, but the actual Share Award shall be based upon the Participant’s
actual Program Compensation. For purposes of determining the amount of Restricted Stock in which a
Participant is vested upon a termination of employment (other than for Cause) within the first 44
business days of an Award Year, the Company shall use only the VWAP on the applicable date under
clause (i) of the definition of Initial Value. On the Date of Issuance the Company issued a
certificate for the Number of Shares Issued and shall maintain custody of the certificate pursuant
to Section 4.

     4. Restrictions on Transfer. Prior to the expiration of the Restricted Period, the
Participant may not sell, assign or transfer the Restricted Shares, except as hereinafter provided.
The Company shall hold all Restricted Stock issued to the Participant prior to the expiration of
the Restricted Period The Compensation Committee shall have the authority, in its discretion, to
waive the provisions of Section 5 and to shorten the Restricted Period as to any or all of the
Restricted Shares and thereby to cause ownership of such Restricted Shares to vest in the
Participant at an earlier date, whenever the Compensation Committee may determine that such action
is appropriate by reason of changes in applicable tax or other laws or by reason of other changes
and circumstances occurring after the Date of Award.

     5. Vesting and Forfeiture.

     (a) On the first day of each pay period during the Award Year, a portion of the Participant’s
Restricted Stock shall vest and not be subject to the forfeiture provisions, except as provided
under Paragraph (b). The amount of Restricted Stock that vests each pay period shall equal the
Participant’s Pay Period Compensation divided by the applicable percentage of the Initial Value.
If a Participant’s actual Program Compensation for the Award Year exceeds the estimated Program Compensation used to issue
Shares under Section 3, Emmis will issue additional Restricted Stock to the Participant in
accordance with Subsection 7(b) and 7(c) of the Program no later than 30

 

 

days after the end of the
Award Year. If a Participant’s actual Program Compensation for the Award Year is less than the
estimated Program Compensation, the Participant will forfeit any Restricted Stock that was issued
and not previously vested under this Subsection. Such forfeited shares will be returned to the
Company.

     (b) To the extent a Participant’s shares did not vest under (a) above, as of the last day of
the Award Year, any shares of Restricted Shares previously issued shall be forfeited and returned
to the Company. If the Participant is terminated for Cause then all Restricted Shares, including
vested shares, shall be forfeited. The provisions of this section shall not be deemed to limit the
authority of the Compensation Committee under Section 4 to declare ownership of the Restricted
Shares fully vested in the Participant due to a change in applicable laws or other circumstances,
notwithstanding the failure of any of such conditions to be satisfied.

     6. Rights as Stockholder. Upon issuance of the Restricted Shares, during the
Restricted Period, the Participant shall have the rights of a stockholder in respect of the
Restricted Shares.

     7. Delivery of Shares Upon Expiration of Restricted Period. As soon as reasonably
practicable after the earlier of the end of the applicable Award Year or the Participant’s
termination, and subject to Section 10, the Company shall transfer a certificate in respect to the
vested Restricted Shares in the name of the Participant. Such certificate shall be free from any
restrictive legend.

     8. Adjustments for Changes in Capitalization of the Company. In the event of any
change in the outstanding shares of Emmis Stock subsequent to the Date of Award by reason of any
reorganization, recapitalization, stock split, stock dividend, reverse stock split, share
combination, reclassification, merger, consolidation, asset spin-off or similar event of or by the
Company, the number and class of Restricted Shares awarded pursuant to this Agreement shall be
equitably adjusted by the Compensation Committee, whose determination shall be conclusive. Any
shares of Emmis Stock or other securities received by the Participant, as a result of any of the
foregoing, with respect to Restricted Shares that are subject to the restrictions contained in
Sections 4 and 5 shall also be subject to such restrictions, and the certificates or other
instruments representing or evidencing such shares or securities shall bear the legend and be
deposited with the Company as provided in Section 6.

     9. Delivery and Registration of Shares of Stock. The Company’s obligation to deliver
shares of Emmis Stock hereunder shall, if the Compensation Committee so requests, be conditioned
upon the receipt of a representation as to the investment intention of the Participant or any other
person to whom such shares are to be delivered, in such form as the Compensation Committee shall
determine to be necessary or advisable to comply with the provisions of the Securities Act of 1933,
as amended, or any other federal, State or local securities legislation. In requesting any such
representation, it may be provided that such representation requirement shall become inoperative
upon a registration of such shares or other action eliminating the necessity of such representation
under such Securities Act or other securities legislation. The Company shall not be required to
deliver any shares under this Agreement prior to (i) the admission of such shares to listing on any
stock exchange on which the shares of Emmis Stock may then be listed, and (ii) the completion of
such registration or other qualification of such shares under any state or federal law, rule or
regulation, as the Compensation Committee shall determine to be necessary or advisable.

     10. Withholding Tax. Each pay period during the calendar year in which the
Restricted Stock is issued Emmis will include the portion of the Participant’s Restricted Stock
that vested as non-cash compensation and will withhold taxes on that amount from the cash portion
of the Participant’s paycheck. Prior to the delivery of any certificates pursuant to Section 7,
the Company shall have the right to require the Participant or other person receiving the
Restricted Shares to pay the Company the amount of any taxes which the Company is required to
withhold with respect to the Restricted Shares or, in lieu thereof, to retain, or sell without
notice, a sufficient number of the Restricted Shares held by it to cover the amount required to be
withheld. The Company shall have the right to deduct from all dividends paid with respect to the
Restricted Shares the amount of any taxes which the Company or any Affiliate is required to
withhold with respect to such dividend payments.

     11. Notices. All notices hereunder to the Company shall be delivered or mailed to it
addressed to the Secretary, Emmis Communications Corporation, One Emmis Plaza, 140 Monument Circle,
Suite 700, Indianapolis, Indiana 46204. All notices hereunder to the Participant shall be
delivered personally or mailed to the Participant’s address noted above. Such addresses for the
service of notices may be change at any time provided written notice of the change is furnished in
advance to the other party.

     12. Plan and Plan Interpretations as Controlling. The Restricted Shares and the
terms and conditions herein set forth are subject in all respects to the terms and conditions of
the Plan, which are controlling. All determinations and interpretations of the Compensation
Committee shall be binding and conclusive upon the Participant or his legal representatives with
regard to any question arising hereunder or under the Plan.

     13. Participant’s Service. Nothing in this Agreement shall limit the right of the
Company or any of its affiliates to terminate the Participant’s service as a director, officer or
employee, or otherwise impose upon the Company or any of its affiliates any obligation to employ or
accept the services of the Participant.

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