Document:

Exhibit 10.11

 

ABBOTT
LABORATORIES

1996
INCENTIVE STOCK PROGRAM

(as
amended and restated through the

6th
Amendment February 20, 2009)

 

1.             PURPOSE.  The purpose of the Abbott Laboratories 1996
Incentive Stock Program (the “Program”) is to attract and retain outstanding
directors, officers and other employees of Abbott Laboratories (the “Company”)
and its subsidiaries, and to furnish incentives to such persons by providing
opportunities to acquire common shares of the Company, or monetary payments
based on the value of such shares or the financial performance of the Company,
or both, on advantageous terms as herein provided and to further align such
persons’ interests with those of the Company’s other shareholders through
compensation that is based on the value of the Company’s common shares.

 

2.             ADMINISTRATION.  The Program will be administered by a
committee (the “Committee”) of at least two persons which shall be either the
Compensation Committee of the Board of Directors of the Company (the “Board of
Directors”) or such other committee comprised entirely of persons who are both:
(i) “disinterested persons” as defined in Rule 16b-3 of the
Securities and Exchange Commission; and (ii) “outside directors” as
defined under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), or any successor provision; as the Board of Directors may
from time to time designate.  The
Committee shall interpret the Program, prescribe, amend and rescind rules and
regulations relating thereto and make all other determinations necessary or
advisable for the administration of the Program. A majority of the members of
the Committee shall constitute a quorum and all determinations of the Committee
shall be made by a majority of its members. 
Any determination of the Committee under the Program may be made without
notice of meeting of the Committee by a writing signed by all of the Committee
members.  The Committee may, from time to
time, delegate any or all of its duties, powers and authority to any officer or
officers of the Company, except to the extent such delegation would be
inconsistent with Rule 16b-3 of the Securities and Exchange Commission or
other applicable law, rule or regulation. 
The Chief Executive Officer of the Company may grant Benefits under the
Program other than to persons subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect
to transactions involving equity securities of the Company at the time that
delegated authority is exercised. All such grants by the Chief Executive
Officer shall be reported annually to the Committee, however, the Committee is
not required to take any action with respect to such grants.

 

3.             PARTICIPANTS.  Participants in the Program will consist of
such officers and other employees of the Company and its subsidiaries as the
Committee in its sole discretion may designate from time to time to receive
Benefits hereunder.  The Committee’s
designation of a participant in any year shall not require the Committee to
designate such person to receive a Benefit in any other year.  The Committee shall consider such factors as
it deems pertinent in selecting participants and in determining the type and
amount of their respective Benefits, including without limitation (i) the
financial condition of the Company; (ii) anticipated profits for the
current or future years; (iii) contributions of participants to the
profitability and development of the Company; (iv) prior awards to
participants; and (v) other compensation 

 

 

provided to participants.  Non-Employee Directors shall also be
participants in the Program solely for purposes of receiving Restricted Stock
Awards and Restricted Stock Units under paragraph 13 and Non-qualified Stock
Options under paragraph 14.  The term “Non-Employee
Director” shall mean a member of the Board of Directors who is not a full-time
employee of the Company or any of its subsidiaries.

 

4.             TYPES OF BENEFITS.  Benefits under the Program may be granted in
any one of a combination of (a) Incentive Stock Options; (b) Non-qualified
Stock Options; (c) Stock Appreciation Rights; (d) Limited Stock
Appreciation Rights; (e) Restricted Stock Awards; (f) Restricted
Stock Units; (g) Performance Awards; and (h) Foreign Qualified
Benefits, all as described below.

 

5.             SHARES RESERVED UNDER THE
PROGRAM.  There is hereby reserved for
issuance under the Program: (i) an aggregate of Five Million (5,000,000)
common shares; plus (ii) an authorization for each calendar year (the “Annual
Authorization”) for the years 1996 through 1999, of seven-tenths of one percent
(0.7%) of the total common shares of the Company issued and outstanding as of
the first day of such calendar year and for the years from and including 2000,
one and a half percent (1.5%) of the total common shares of the Company issued
and outstanding as of the first day of such calendar year; which may be newly
issued or treasury shares.  The shares
hereby reserved are in addition to the shares previously reserved under the
Company’s 1981 Incentive Stock Program, 1986 Incentive Stock Program and 1991
Incentive Stock Program (the “Prior Programs”). 
Any common shares reserved for issuance under the Prior Programs in
excess of the number of shares as to which options or other Benefits have been
awarded on the date of shareholder approval of this Program, plus any such
shares as to which options or other Benefits granted under the Prior Programs
may lapse, expire, terminate or be canceled after such date, shall also be
reserved and available for issuance in connection with Benefits under this
Program. Any common shares reserved under the Program for any calendar year
under an Annual Authorization as to which options or other Benefits have not
been awarded as of the end of such calendar year shall be available for
issuance in connection with Benefits granted in subsequent years.

 

If there is a lapse,
expiration, termination or cancellation of any Benefit granted hereunder
without the issuance of shares or payment of cash thereunder, or if shares are
issued under any Benefit and thereafter are reacquired by the Company pursuant
to rights reserved upon the issuance thereof, or shares are reacquired pursuant
to the payment of the purchase price of shares under stock options by delivery
of other common shares of the Company, the shares subject to or reserved for
such Benefit, or so reacquired, may again be used for new options, rights or
awards of any sort authorized under this Program; provided, however, that in no
event may the number of common shares issued under this Program, and not reacquired
by the Company pursuant to rights reserved upon the issuance thereof or
pursuant to the payment of the purchase price of shares under stock options by
delivery of other common shares of the Company, exceed the total number of
shares reserved for issuance hereunder.

 

6.             INCENTIVE STOCK
OPTIONS.  Incentive Stock Options will
consist of options to purchase common shares at purchase prices not less than
One Hundred percent (100%) of the Fair Market Value of such common shares on
the date of grant. An Incentive Stock Option will not be exercisable after the
expiration of ten (10) years from the date such option is granted. In 

 

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the event of termination of
employment for any reason other than retirement, disability or death, the right
of the optionee to exercise an Incentive Stock Option shall terminate upon the
earlier of the end of the original term of the option or three (3) months
after the optionee’s last day of work for the Company and its subsidiaries.  In the event of termination of employment due
to retirement or disability, or if the optionee should die while employed, the
right of the optionee or his or her successor in interest to exercise an
Incentive Stock Option shall terminate upon the end of the original term of the
option.  If the optionee should die
within three (3) months after termination of employment for any reason
other than retirement or disability, the right of his or her successor in
interest to exercise an Incentive Stock Option shall terminate upon the earlier
of the end of the original term of the option or three (3) months after
the date of such death.  To the extent
the aggregate fair market value (determined as of the time the Option is
granted) of the common shares with respect to which any Incentive Stock Option
is exercisable for the first time by any individual during any calendar year
(under all option plans of the Company and its subsidiary corporations) exceeds
$100,000, the excess shall be treated as a Non-qualified Stock Option. An
Incentive Stock Option shall be exercisable as determined by the Committee, but
in no event earlier than six (6) months from its grant date.

 

7.             NON-QUALIFIED STOCK
OPTIONS.  Non-qualified Stock Options
will consist of options to purchase common shares at purchase prices not less
than One Hundred percent (100%) of the Fair Market Value of such common shares
on the date of grant.  A Non-qualified
Stock Option will not be exercisable after the expiration of ten (10) years
from the date such option is granted.  In
the event of termination of employment for any reason other than retirement,
disability or death, the right of the optionee to exercise a Non-qualified
Stock Option shall terminate upon the earlier of the end of the original term
of the option or three (3) months after the optionee’s last day of work
for the Company and its subsidiaries.  In
the event of termination of employment due to retirement or disability, or if
the optionee should die while employed, the right of the optionee or his or her
successor in interest to exercise a Non-qualified Stock Option shall terminate
upon the end of the original term of the option.  If the optionee should die within three (3) months
after termination of employment for any reason other than retirement or
disability, the right of his or her successor in interest to exercise a
Non-qualified Stock Option shall terminate upon the earlier of the end of the
original term of the option or three (3) months after the date of such
death.  A Non-qualified Stock Option
shall be exercisable as determined by the Committee, but in no event earlier
than six (6) months from its grant date.

 

8.             STOCK APPRECIATION
RIGHTS.  The Committee may, in its
discretion, grant a Stock Appreciation Right to the holder of any stock option
granted hereunder or under the Prior Programs. 
Such Stock Appreciation Rights shall be subject to such terms and
conditions consistent with the Program as the Committee shall impose from time
to time, including the following:

 

(a)                                  A Stock Appreciation Right may be granted with respect to a
stock option at the time of its grant or at any time thereafter up to six (6) months
prior to its expiration.

 

(b)                                 Stock Appreciation Rights will permit the holder to surrender
any related stock option or portion thereof which is then exercisable and to
elect to receive in exchange therefor cash in an amount equal to:

 

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(i)            The excess of the Fair Market Value on the date of such
election of one common share over the option price multiplied by

 

(ii)           The number of shares covered by such option or portion
thereof which is so surrendered.

 

(c)                                  A Stock Appreciation Right granted to a participant who is
subject to Section 16 of the Exchange Act may be exercised only after six (6) months
from its grant date (unless such exercise would not affect the exemption under Rule 16b-3
of the Securities and Exchange Commission).

 

(d)                                 A Stock Appreciation Right may be granted to a participant
regardless of whether such participant has been granted a Limited Stock
Appreciation Right with respect to the same stock option.  However, a Stock Appreciation Right may not
be exercised during any period that a Limited Stock Appreciation Right with
respect to the same stock option may be exercised.

 

(e)                                  In the event of the exercise of a Stock Appreciation Right,
the number of shares reserved for issuance hereunder shall be reduced by the
number of shares covered by the stock option or portion thereof surrendered.

 

9.             LIMITED STOCK APPRECIATION
RIGHTS.  The Committee may, in its
discretion, grant a Limited Stock Appreciation Right to the holder of any stock
option granted hereunder or under the Prior Programs.  Such Limited Stock Appreciation Rights shall
be subject to such terms and conditions consistent with the Program as the
Committee shall impose from time to time, including the following:

 

(a)                                  A Limited Stock Appreciation Right may be granted with
respect to a stock option at the time of its grant or at any time thereafter up
to six (6) months prior to its expiration.

 

(b)                                 A Limited Stock Appreciation Right will permit the holder to
surrender any related stock option or portion thereof which is then exercisable
and to receive in exchange therefor cash in an amount equal to:

 

(i)            The excess of the Fair Market Value on the date of such
election of one common share over the option price multiplied by

 

(ii)           The number of shares covered by such option or portion
thereof which is so surrendered.

 

(c)                                  A Limited Stock Appreciation Right granted to a participant
who is subject to Section 16 of the Exchange Act may be exercised only
after six (6) months from its grant date (unless such exercise would not
affect the exemption under Rule 16b-3 of the Securities and Exchange
Commission) and only during the sixty (60) day period commencing on the later
of:

 

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(i)            the day following the date of a Change in Control; or (ii) the
first date on which such exercise would be exempt under Rule 16b-3 of the
Securities and Exchange Commission.

 

(d)                                 A Limited Stock Appreciation Right may be granted to a
participant regardless of whether such participant has been granted a Stock
Appreciation Right with respect to the same stock option.

 

(e)                                  In the event of the exercise of a Limited Stock Appreciation
Right, the number of shares reserved for issuance hereunder shall be reduced by
the number of shares covered by the stock option or portion thereof
surrendered.

 

10.           RESTRICTED STOCK AWARDS AND
RESTRICTED STOCK UNITS

 

(a)                                  RESTRICTED STOCK AWARDS. 
Restricted Stock Awards will consist of common shares transferred to
participants without other payment therefor as additional compensation for
their services to the Company or any of its subsidiaries.  Restricted Stock Awards granted under this
paragraph 10 shall be satisfied from the Company’s available treasury
shares.  Restricted Stock Awards shall be
subject to such terms and conditions as the Committee determines appropriate,
including, without limitation, restrictions on the sale or other disposition of
such shares and rights of the Company to reacquire such shares upon termination
of the participant’s employment within specified periods.  Subject to such other restrictions as are
imposed by the Committee, the common shares covered by a Restricted Stock Award
granted to a participant who is subject to Section 16 of the Exchange Act
may be sold or otherwise disposed of only after six (6) months from the
grant date of the award (unless such sale would not affect the exemption under Rule 16b-3
of the Securities and Exchange Commission).

 

(b)                                 RESTRICTED STOCK UNITS. 
Restricted Stock Units will consist of an unfunded promise to deliver
shares of stock at some future date to participants without other payment
therefor as additional compensation for their services to the Company or any of
its subsidiaries.  Stock delivered under
this paragraph 10(b) shall be satisfied from the Company’s available
treasury shares.  Restricted Stock Units
granted under this paragraph 10(b) shall be subject to such terms and
conditions as the Committee determines appropriate, including, without
limitation, restrictions on the sale or other disposition of such stock units,
the rights of the Company to provide for the forfeiture of such stock units
upon termination of the participant’s employment within specified periods and
the right to receive dividend equivalent payments.

 

(c)                                  No more than ten percent (10%) of the total number of shares
available for grant in any calendar year may be granted as Restricted Stock
Units or Restricted Stock Awards (in the aggregate) under paragraphs 10 and 13
in that year.

 

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11.           PERFORMANCE AWARDS. 
Performance Awards in the form of Performance Units or Performance
Shares may be granted to any participant in the Program.  Performance Units shall consist of monetary
awards which may be earned in whole or in part if the Company achieves certain
goals established by the Committee over a designated period of time.  Performance Shares shall consist of common
shares or awards denominated in common shares which may be earned in whole or
in part if the Company achieves certain goals established by the Committee over
a designated period of time.  The goals
established by the Committee shall be based on any one, or combination of,
earnings per share, return on equity, return on assets, total shareholder
return, net operating income, cash flow, increase in revenue, economic value
added, increase in share price or cash flow return on investment. Partial
achievement of the goal(s) may result in a payment or vesting
corresponding to the degree of achievement. Payment of an award earned may be
in cash or in common shares or in a combination of both, and may be made when
earned, or may be vested and deferred, as the Committee in its sole discretion
determines.  The maximum amount which may
be granted under all Performance Awards for any one year for any one
participant shall be Five Million Dollars ($5,000,000).  This limit shall be applied to Performance
Shares by multiplying the number of Performance Shares granted by the fair
market value of one common share on the date of the award.  During the term of the Program, no more than
5 million shares of Abbott common stock may be granted in the form of Performance
Units and no more than 5 million shares of Abbott common stock may be granted
in the form of Performance Shares.  This
paragraph 11 is intended to comply with the performance-based compensation
requirements of Code Section 162(m), and shall be interpreted in
accordance with the rules and regulations thereunder.

 

12.           FOREIGN QUALIFIED BENEFITS.  Benefits under the Program may be granted to
such employees of the Company and its subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time
to time.  The Committee may adopt such
supplements to the Program as may be necessary to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable
treatment under such laws; provided, however, that no Benefit shall be granted
under any such supplement with terms or conditions which are inconsistent with
the provisions as set forth under the Program.

 

13.           RESTRICTED STOCK UNIT AWARDS FOR NON-EMPLOYEE
DIRECTORS.

 

(a)                                  Each year, on the date of the annual shareholders meeting,
each person who is elected a Non-Employee Director at the annual shareholders
meeting shall be awarded both:  (i) Restricted
Stock Units covering a number of common shares with a Fair Market Value on the date
of the award closest to, but not in excess of, an amount equal to six times the
monthly fee in effect under Section 3.1 of the Abbott Laboratories
Non-Employee Director’s Fee Plan on the date of the award and (ii) Restricted
Stock Units covering a number of common shares with a Fair Market Value on the
date of the award closest to, but not in excess of, Fifty Thousand Dollars
($50,000).

 

(b)                                 VESTING AND PAYMENT. 
The Restricted Stock Units granted under this paragraph 13 shall be
fully vested on the date of the award. 
The Non-Employee Director receiving the Restricted Stock Units shall be
entitled to 

 

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receive one
common share for each common share subject to the award upon the earliest of
the following events (the “Termination Event”):

 

(i)            The date the director terminates or retires from the Board;

 

(ii)           The date the director dies; or

 

(iii)          The date of occurrence of a Change in Control (as defined in
paragraph 2(c)) which also qualifies as a “change in control event,” as such
term is defined in Treasury Regulation §1.409A-3(i)(5).

 

(c)                                  DIVIDENDS.  The
Non-Employee Director receiving the Restricted Stock Units shall be entitled to
receive cash payments equal to the dividends and distributions paid on shares
of stock (other than dividends or distributions of securities of the Company
which may be issued with respect to its shares by virtue of any stock split,
combination, stock dividend or recapitalization) to the same extent as if each
Restricted Stock Unit was a share of stock, and those shares were not subject
to the restrictions imposed by this Program, provided that the record date with
respect to such dividend or distribution occurs within the period commencing
with the date of the award and ending upon the date of the Termination Event
(the “Restricted Period”).

 

(d)                                 RESTRICTIONS.  All
Restricted Stock Units granted under this paragraph 13 shall be subject to the
following restrictions during the Restricted Period:

 

(i)            The Restricted Stock Units may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of.

 

(ii)           Any additional common shares of the Company or other
securities or property issued with respect to shares covered by awards granted
under this paragraph 13 as a result of any stock split, combination, stock
dividend or recapitalization, shall be subject to the restrictions and other
provisions of this paragraph 13.

 

(iii)          A director shall not be entitled to receive any shares prior
to completion of all actions deemed appropriate by the Company to comply with
federal or state securities laws and stock exchange requirements.

 

(e)                                  Except in the event of conflict, all provisions of the
Program shall apply to this paragraph 13. 
In the event of any conflict between the provisions of the Program and
this paragraph 13, this paragraph 13 shall control.  Restricted Stock Units granted under this
paragraph 13 shall be satisfied from the Company’s available treasury shares.

 

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14.           NON-QUALIFIED STOCK OPTIONS
FOR NON-EMPLOYEE DIRECTORS.

 

(a)                                  Each Non-Employee Director may elect to receive any or all of
his or her fees earned during the second half of 1996 and each subsequent
calendar year under Section 3 of the Abbott Laboratories Non-Employee
Directors’ Fee Plan (the “Directors’ Fee Plan”) in the form of Non-qualified
Stock Options under this Section 14. 
Each such election shall be irrevocable, and must be made in writing and
filed with the Secretary of the Company by December 31, 1995 (for fees
earned in the second half of 1996) and (for fees earned in subsequent calendar
years) by June 30 of the calendar year preceding the calendar year in
which such fees are earned (or such later date as may be permissible under Rule 16b-3
of the Securities and Exchange Commission, but in no event later than December 31
of such preceding calendar year).

 

(b)                                 A Non-Employee Director may file a new election each calendar
year applicable to fees earned in the immediately succeeding calendar
year.  If no new election or revocation
of a prior election is received by June 30 of any calendar year (or such
later date as may be permissible under paragraph (a)), the election, if any, in
effect for such calendar year shall continue in effect for the immediately
succeeding calendar year.  Any election
made under this Section 14 shall take precedence over any election made by
the director for the same period, under the Directors’ Fee Plan, to the extent
necessary to resolve any conflict between such elections.  If a director does not elect to receive his
or her fees in the form of Non-qualified Stock Options, the fees due such
director shall be paid or deferred as provided in the Directors’ Fee Plan and
any applicable election thereunder by the director.

 

(c)                                  The number of common shares covered by each Non-qualified
Stock Option granted in any year under this Section 14 shall be determined
based on an independent appraisal for such year of the intrinsic value of
options granted hereunder and the amount of fees covered by the director’s
election for such year.  The number of
common shares covered by options granted in 1996 (as determined under this
procedure) shall be the number of whole shares equal to (i) the product of
three (3) times the amount of fees which the director has elected under
paragraph (a) to receive in the form of Non-qualified Stock Options,
divided by (ii) One Hundred percent (100%) of the Fair Market Value of one
common share on the grant date.  Any
fraction of a share shall be disregarded, and the remaining amount of the fees
corresponding to such option shall be paid as provided in the Directors’ Fee
Plan and any applicable election thereunder by the director.

 

(d)                                 Effective on October 10, 1997, each Non-qualified Stock
Option due a director under this Section 14 prior to the 1998 annual
shareholders meeting shall be granted on October 10, 1997 at a purchase
price equal to One Hundred percent (100%) of the Fair Market Value of the
common shares covered by such option on the grant date.  Effective with the 1998 Annual Shareholders
Meeting, each Non-qualified Stock Option due a director under this Section 14
shall be granted annually, on the date of the annual shareholders meeting, at a
purchase price equal 

 

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to One
Hundred percent (100%) of the Fair Market Value of the common shares covered by
such option on the grant date.  Each such
option shall be immediately exercisable and nonforfeitable, and shall not be
exercisable after the expiration of ten (10) years from the date it is
granted.  Each such option shall contain
provisions allowing payment of the purchase price and, to the extent permitted,
any taxes due on exercise, by delivery of other common shares of the Company
(or, in the case of the payment of taxes, by withholding of shares).

 

(e)                                  All Non-qualified Stock Options granted under this Section 14
prior to       October 10, 1997,
shall be immediately exercisable and nonforfeitable, and shall not be
exercisable after the expiration of ten (10) years from the date granted.

 

15.           NONTRANSFERABILITY.  Except as provided by the Committee, each
stock option and stock appreciation right granted under this Program shall not
be transferable other than by will or the laws of descent and distribution, and
shall be exercisable, during the participant’s lifetime, only by the
participant or the participant’s guardian or legal representative.

 

16.           OTHER PROVISIONS.  The award of any Benefit under the Program
may also be subject to other provisions (whether or not applicable to the
Benefit awarded to any other participant) as the Committee determines
appropriate, including, without limitation, provisions for the purchase of
common shares under stock options in installments, provisions for the payment
of the purchase price of shares under stock options by delivery of other common
shares of the Company having a then market value equal to the purchase price of
such shares, restrictions on resale or other disposition, such provisions as
may be appropriate to comply with federal or state securities laws and stock
exchange requirements and understandings or conditions as to the participant’s
employment in addition to those specifically provided for under the Program.

 

In the case of a participant
who is subject to Section 16(a) and 16(b) of the Exchange Act,
the Committee may, at any time, add such conditions and limitations to any
Benefit granted to such participant, or any feature of any such Benefit, as the
Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or
16(b) and the rules and regulations thereunder or to obtain any
exemption therefrom.  A participant may
pay the purchase price of shares under stock options by delivery of a properly
executed exercise notice together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
to pay the purchase price.  To facilitate
the foregoing, the Company may enter into agreements for coordinated procedures
with one or more brokerage firms.

 

The Committee may, in its
discretion and subject to such rules as it may adopt, permit or require a
participant to pay all or a portion of the federal, state and local taxes,
including FICA and medicare withholding tax, arising in connection with the
following transactions: (a) the exercise of a Non-qualified Stock Option; (b) the
lapse of restrictions on common shares received as a Restricted Stock Award; or
(c) the receipt or exercise of any other Benefit; by (i) having the
Company withhold common shares, (ii) tendering back common shares received
in connection with such Benefit or (iii) delivering other previously
acquired common shares of the Company having a fair market value approximately
equal to the amount to be withheld.

 

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The
Committee may grant stock options under the Program (and, for stock options
granted prior to shareholder approval of this Program, under the Company’s 1991
Incentive Stock Program) that provide for the grant of replacement stock
options if all or any portion of the purchase price or taxes incurred in
connection with the exercise, are paid by delivery (or, in the case of payment
of taxes, by withholding of shares) of other common shares of the Company.  The replacement stock option shall cover the
number of common shares surrendered to pay the purchase price, plus the number
of shares surrendered or withheld to satisfy the participant’s tax liability,
shall have an exercise price equal to One Hundred percent (100%) of the Fair
Market Value of such common shares on the date such replacement stock option is
granted, shall first be exercisable six months from the date of grant of the
replacement stock option and shall have an expiration date equal to the
expiration date of the original stock option.

 

To the extent applicable, it
is intended that the Program comply with the provisions of Code Section 409A.  The Program will be administered and
interpreted in a manner consistent with this intent, and any provision that
would cause the Program to fail to satisfy Code Section 409A will have no
force and effect until amended to comply therewith (which amendment may be
retroactive to the extent permitted by Code Section 409A).  Notwithstanding anything contained herein to
the contrary, for all purposes of the Program, a participant shall not be
deemed to have had a termination of employment until the participant has
incurred a separation from service as defined in Treasury Regulation §1.409A-1(h) and,
to the extent required to avoid accelerated taxation and/or tax penalties under
Code Section 409A and applicable guidance issued thereunder, payment of
the amounts payable under the Program that would otherwise be payable during
the six-month period after the date of termination shall instead be paid on the
first business day after the expiration of such six-month period.  In addition, for purposes of the Program,
each amount to be paid and each installment payment shall be construed as a
separate identified payment for purposes of Code Section 409A.

 

17.           TERM OF PROGRAM AND
AMENDMENT, MODIFICATION, CANCELLATION OR ACCELERATION OF BENEFITS.  The Program shall continue in effect until
terminated by the Board of Directors, except that no Incentive Stock Option
shall be granted after October 13, 2005 and that no other Benefits shall
be granted after April 27, 2010. 
The terms and conditions applicable to any Benefits may at any time be
amended, modified or canceled by mutual agreement between the Committee and the
participant or such other persons as may then have an interest therein, so long
as any amendment or modification does not increase the number of common shares
issuable under this Program; and provided further, that the Committee may, at
any time and in its sole discretion, declare any or all stock options and stock
appreciation rights then outstanding under the Program or the Prior Programs to
be exercisable and any or all the then outstanding Restricted Stock Awards or
Restricted Stock Units to be vested, whether or not such options, rights or
awards are then otherwise exercisable or vested.  Notwithstanding the foregoing, except as
provided in paragraph 22, the Committee shall neither lower the purchase price
of any option granted under the Program nor grant any option under the Program
in replacement of a cancelled option which had previously been granted at a
higher purchase price, without shareholder approval.

 

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18.           AMENDMENT TO PRIOR
PROGRAMS.  No options or other Benefits
shall be granted under the Prior Programs on or after the date of shareholder
approval of this Program.

 

19.           INDIVIDUAL LIMIT ON OPTIONS
AND STOCK APPRECIATION RIGHTS; AGGREGATE LIMIT ON INCENTIVE STOCK OPTIONS.  The maximum number of shares with respect to
which Incentive Stock Options, Non-qualified Stock Options, Stock Appreciation
Rights and Limited Stock Appreciation Rights may be granted to any one
participant, in aggregate in any one calendar year, shall be Two Million
(2,000,000) shares. Incentive Stock Options with respect to no more than the
lesser of (i) One Hundred and Fifty Million (150,000,000) shares (plus any
shares acquired by the Company pursuant to payment of the purchase price of
shares under incentive stock options by delivery of other common shares of the
Company), or (ii) the total number of shares reserved under paragraph 5
may be issued under the Plan.

 

20.           TAXES.  The Company shall be entitled to withhold the
amount of any tax attributable to any amount payable or shares deliverable
under the Program after giving the person entitled to receive such amount or
shares notice as far in advance as practicable, and the Company may defer
making payment or delivery if any such tax may be pending unless and until
indemnified to its satisfaction.

 

21.           DEFINITIONS.

 

(a)                                  FAIR MARKET VALUE. 
Except as provided below, the Fair Market Value of the Company’s common
shares shall be determined by such methods or procedures as shall be
established by the Committee; provided that, in the case of any Limited Stock
Appreciation Right (other than a right related to an Incentive Stock Option),
the Fair Market Value shall be the higher of:

 

(i)            The
highest daily closing price of the Company’s common shares during the sixty
(60) day period following the Change in Control; or

 

(ii)           The
highest gross price paid or to be paid for the Company’s common shares in any
of the transactions described in paragraphs 21(c)(i) and 21(c)(ii).

 

(b)                                 SUBSIDIARY.  The term “subsidiary”
for all purposes other than the Incentive Stock Option provisions in paragraph
6, shall mean any corporation, partnership, joint venture or business trust,
fifty percent (50%) or more of the control of which is owned, directly or
indirectly, by the Company.  For
Incentive Stock Option purposes the term “subsidiary” shall be defined as provided
in Internal Revenue Code Section 424(f).

 

(c)                                  CHANGE IN CONTROL.  A “Change
in Control” shall be deemed to have occurred on the earliest of the following
dates:

 

(i)            the
date any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from 

 

11

 

the Company
or its Affiliates) representing 20% or more of the combined voting power of the
Company’s then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (a) of
paragraph (iii) below; or

 

(ii)           the
date the following individuals cease for any reason to constitute a majority of
the number of directors then serving: individuals who, on the date hereof,
constitute the Board of Directors and any new director (other than a director
whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination for election by
the Company’s shareholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; or

 

(iii)          the
date on which there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other corporation or
other entity, other than (a) a merger or consolidation (I) immediately
following which the individuals who comprise the Board of Directors immediately
prior thereto constitute at least a majority of the Board of Directors of the
Company, the entity surviving such merger or consolidation or, if the Company
or the entity surviving such merger or consolidation is then a subsidiary, the
ultimate parent thereof and (II) which results in the voting securities of
the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any subsidiary of
the Company, at least 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (b) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 20% or more of the combined voting
power of the Company’s then outstanding securities; or

 

(iv)          the
date the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an 

 

12

 

entity, at
least 50% of the combined voting power of the voting securities of which are
owned by shareholders of the Company, in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, in substantially the same
proportions as their ownership of the Company immediately prior to such sale.

 

Notwithstanding the
foregoing, a “Change in Control” shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of the
Company immediately prior to such transaction or series of transactions
continue to have  substantially the
same proportionate ownership in an entity which owns all or substantially all
of the assets of the Company immediately following such transaction or series
of transactions.

 

For purposes of this
Program: “Affiliate” shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act; “Beneficial Owner” shall
have the meaning set forth in Rule 13d-3 under the Exchange Act; and “Person”
shall have the meaning given in Section 3(a)(9) of the Exchange Act,
as modified and used in Sections 13(d) and 14(d) thereof, except that
such term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of stock of the
Company.

 

(d)                                 DISABILITY.  The term “disability”
for all purposes of the Program shall mean the participant’s disability as
defined in subsection 4.1(a) of the Abbott Laboratories Extended
Disability Plan for twelve (12) consecutive months.

 

22.           ADJUSTMENT PROVISIONS.

 

(a)                                  If the Company shall at any time change the number of issued
common shares without new consideration to the Company (such as by stock
dividends or stock splits), the total number of shares reserved for issuance
under this Program, the individual and aggregate limits described in paragraphs
11 and 19 on the number of shares that may be granted or issued (as the case
may be), the number of shares covered by each outstanding Benefit and the
purchase price of such shares shall be adjusted so that the aggregate
consideration payable to the Company and the value of each such Benefit shall
not be changed.  Subject to paragraph
22(c), the Committee shall also have the right to provide for the continuation
of Benefits or for other equitable adjustments after changes in the Company or
in the common shares resulting from reorganization, sale, merger,
consolidation, spin-off or similar occurrence.

 

13

 

(b)                                 Subject to paragraph 22(c), without affecting the number of
shares otherwise reserved or available hereunder, the Committee may authorize
the issuance or assumption of Benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it may deem appropriate.

 

(c)                                  Notwithstanding any other provision of this Program or the
Prior Programs including the terms of any Benefit granted hereunder, if the
outstanding common shares of the Company shall be combined, or be changed into,
or exchanged for, another kind of stock of the Company, into securities of
another corporation, or into property (including cash) whether through
recapitalization, reorganization, sale, merger, consolidation, spin-off,
business combination or a similar transaction (a “Transaction”), the Company
shall cause its successor, acquiror (or ultimate parent of any successor or
acquiror), as applicable, to assume each stock option, Stock Appreciation Right
and Limited Stock Appreciation Right outstanding immediately prior to the Transaction
(or to cause new options or rights to be substituted therefor).  Pursuant to such assumed or substituted
option or rights, participants shall thereafter be entitled to receive, upon
due exercise of any portion of the option or right, (a) in the event of a
Transaction in which the outstanding common shares of the Company are combined,
or changed into, or exchanged for, solely another kind of stock of the Company
or securities of another corporation (disregarding, for this purpose, cash paid
in lieu of fractional shares), the securities which that person would have been
entitled to receive for common shares acquired through exercise of the same
portion of such option or right immediately prior to the effective date of such
Transaction, and (b) in the event of a Transaction in which the
outstanding common shares of the Company are changed into, or exchanged for,
property (including cash) other than solely stock of the Company or securities
of another corporation (disregarding, for this purpose, cash paid in lieu of
fractional shares), securities the fair market value of which immediately
following the effective date of such Transaction (as determined by the
Committee) equals the fair market value (as determined by the Committee) of the
property which that person would have been entitled to receive for common
shares acquired through exercise of the same portion of such option or right
immediately prior to the effective date of such Transaction.  In each case such assumed or substituted
option or right shall continue to be subject to the same terms and conditions
(including, without limitation, with respect to any right to receive “replacement
options” upon option exercise) to which it was subject immediately prior to the
Transaction.

 

Notwithstanding the immediately
preceding paragraph, upon a Transaction in which the outstanding common shares
of the Company are changed into, or exchanged for, property (including cash)
other than solely stock of the Company or securities of another corporation
(disregarding, for this purpose, cash paid in lieu of fractional shares) and
which constitutes a Change in Control, each participant may elect to receive,
immediately following such Transaction in exchange for cancellation of any
stock option (other than an Incentive Stock Option granted prior to June 20,
2003), Stock Appreciation Right or Limited 

 

14

 

Appreciation Right held by
such participant immediately prior to the Transaction, a cash payment, with
respect to each common share subject to such option or right, equal to the
difference between the value of consideration (as determined by the Committee)
received by the shareholders for a common share of the Company in the
Transaction, less any applicable purchase price.

 

(d)                                 Notwithstanding any other provision of this Program or the
Prior Programs including the terms of any Benefit granted hereunder, upon the
occurrence of a Change in Control:

 

(i)            All
stock options then outstanding under this Program or the Prior Programs shall
become fully exercisable as of the date of the Change in Control, whether or
not then otherwise exercisable;

 

(ii)           All
Stock Appreciation Rights and Limited Stock Appreciation Rights then
outstanding shall become fully exercisable as of the date of the Change in
Control, whether or not then otherwise exercisable;

 

(iii)          All
terms and conditions of all Restricted Stock Awards then outstanding shall be
deemed satisfied as of the date of the Change in Control;

 

(iv)          All
terms and conditions of all Restricted Stock Units then outstanding shall be
deemed satisfied and all restrictions on those Restricted Stock Units will
lapse as of the date of the Change in Control; and

 

(v)           All
Performance Awards then outstanding shall be deemed to have been fully earned and
to be immediately payable, in cash, as of the date of the Change in Control.

 

Notwithstanding the
foregoing, with respect to each Benefit that is subject to Code Section 409A,
if a Change in Control would have occurred under the Program but such Change in
Control does not also qualify as a “change in control event” (within the
meaning of Treasury Regulation Section 1.409A-3(i)(5)), then each such
Benefit shall become vested and non-forfeitable; provided, however, that the
holder of such Benefit shall not be able to exercise the Benefit, and the
Benefit shall not become payable, except in accordance with the terms of such
Benefit or until such earlier time as the exercise and/or payment complies with
Code Section 409A.

 

23.           AMENDMENT AND TERMINATION OF
PROGRAM.  The Board of Directors may
amend the Program from time to time or terminate the Program at any time, but
no such action shall reduce the then existing amount of any participant’s
Benefit or adversely change the terms and conditions thereof without the
participant’s consent.  Notwithstanding
the foregoing, except as provided in paragraph 22, the Company shall neither
lower the purchase price of any option granted under the Program nor grant any
option under the Program in replacement of a cancelled 

 

15

 

option which had previously
been granted at a higher purchase price, without shareholder approval.  To the extent required for compliance with Rule 16b-3
of the Securities and Exchange Commission, paragraph 13 of the Program may not
be amended more frequently than once every six months other than to comport
with changes in the Code or the rules thereunder, and no amendment of the
Program shall result in any Committee member losing his or her status as a “disinterested
person” as defined in Rule 16b-3 of the Securities and Exchange Commission
with respect to any employee benefit plan of the Company or result in the
Program or awards thereunder losing their exempt status under said Rule 16b-3.

 

24.           EFFECTIVE DATE.  The Program was originally adopted by the
Board of Directors on October 13, 1995.

 

16Exhibit 4.2

 

 

 

TEXTRON
INC.

 

4.50%
Convertible Senior Notes due 2013

 

as Issuer

 

 

 

SUPPLEMENTAL
INDENTURE

 

Dated as
of May 5, 2009

 

to
Indenture

 

Dated as
of September 10, 1999

 

 

 

 

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

(as successor to The Bank of New York)

 

as
Trustee

 

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1
  Definitions and Other Provisions of General Application

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.   Scope of Supplemental Indenture

  	
   

  	
  2

  
	
  SECTION 1.02.   Definitions

  	
   

  	
  2

  
	
  SECTION 1.03.  
  Incorporation by Reference of Trust Indenture Act

  	
   

  	
  11

  
	
  SECTION 1.04.  
  Rules of Construction

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 The
  Notes

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.  
  Designation, Amount and Issuance of Notes

  	
   

  	
  11

  
	
  SECTION 2.02.  
  Form of the Notes

  	
   

  	
  12

  
	
  SECTION 2.03.  
  Date and Denomination of Notes; Payment at Maturity; Payment of Interest

  	
   

  	
  13

  
	
  SECTION 2.04.  
  Paying Agent to Hold Money in Trust

  	
   

  	
  15

  
	
  SECTION 2.05.   Outstanding Notes

  	
   

  	
  16

  
	
  SECTION 2.06.  
  Reporting Requirement

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3
  Repurchase of Notes

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.  
  Repurchase at Option of the Holder Upon a Fundamental Change

  	
   

  	
  16

  
	
  SECTION 3.02.  
  Withdrawal of Fundamental Change Repurchase Notice

  	
   

  	
  19

  
	
  SECTION 3.03.  
  Deposit of Fundamental Change Repurchase Price

  	
   

  	
  19

  
	
  SECTION 3.04.  
  Notes Repurchased in Part

  	
   

  	
  20

  
	
  SECTION 3.05.   Covenant to Comply
  with Securities Laws Upon Repurchase of Notes

  	
   

  	
  20

  
	
  SECTION 3.06.   Sinking Fund and
  Redemption

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4
  Covenants

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.  
  Existence

  	
   

  	
  20

  
	
  SECTION 4.02.  
  Further Instruments and Acts

  	
   

  	
  20

  
	
  SECTION 4.03.  
  Additional Interest

  	
   

  	
  20

  
	
  SECTION 4.04.  
  Waiver of Stay, Extension or Usury Laws

  	
   

  	
  21

  
	
  SECTION 4.05.  
  Repurchase and Cancellation

  	
   

  	
  21

  

 

i

 

	
  ARTICLE 5
  Successor Company

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.  
  When Company May Merge or Transfer Assets

  	
   

  	
  21

  
	
  SECTION 5.02.  
  Successor to Be Substituted

  	
   

  	
  22

  
	
  SECTION 5.03.  
  Opinion of Counsel to Be Given Trustee

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6
  Defaults and Remedies

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.  
  Events of Default

  	
   

  	
  22

  
	
  SECTION 6.02.  
  Rescission and Annulment

  	
   

  	
  24

  
	
  SECTION 6.03.  
  Waiver of Past Defaults

  	
   

  	
  24

  
	
  SECTION 6.04.   Failure to Comply
  with Reporting Covenant

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7
  Discharge

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.  
  Discharge of the Supplemental Indenture

  	
   

  	
  25

  
	
  SECTION 7.02.  
  Application of Trust Money

  	
   

  	
  25

  
	
  SECTION 7.03.  
  Repayment to Company

  	
   

  	
  26

  
	
  SECTION 7.04.  
  Reinstatement

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8
  Amendments

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.  
  Without Consent of Holders

  	
   

  	
  26

  
	
  SECTION 8.02.  
  With Consent of Holders

  	
   

  	
  27

  
	
  SECTION 8.03.   Revocation and Effect of Consents and
  Waivers

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 Conversion of Notes

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.   Right to Convert

  	
   

  	
  27

  
	
  SECTION 9.02.   Conversion
  Procedures; Settlement Upon Conversion; No Adjustment for Interest or
  Dividends; Cash Payments in Lieu of Fractional Shares

  	
   

  	
  30

  
	
  SECTION 9.03.   Increased Conversion
  Rate Applicable to Securities Converted in Connection With Make-Whole
  Fundamental Changes

  	
   

  	
  32

  
	
  SECTION 9.04.   Adjustment of
  Conversion Rate

  	
   

  	
  34

  
	
  SECTION 9.05.   Effect of
  Reclassification, Consolidation, Merger or Sale

  	
   

  	
  42

  
	
  SECTION 9.06.   Certain Covenants

  	
   

  	
  43

  
	
  SECTION 9.07.   Notice to Holders
  Prior to Certain Actions

  	
   

  	
  43

  
	
  SECTION 9.08.   Stockholder Rights
  Plans

  	
   

  	
  44

  

 

ii

 

	
  SECTION 9.09.   Responsibility of
  Trustee

  	
   

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10
  Inapplicable Provisions of the Original Indenture

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.  
  Limitation Upon Mortgages

  	
   

  	
  45

  
	
  SECTION 10.02.  
  Limitation Upon Sale and Leaseback Transactions

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11
  Miscellaneous

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  SECTION 11.01.  
  Trust Indenture Act Controls

  	
   

  	
  45

  
	
  SECTION 11.02.  
  Communication by Holders with Other Holders

  	
   

  	
  46

  
	
  SECTION 11.03.  
  Rules by Trustee, Paying Agent and Security Registrar

  	
   

  	
  46

  
	
  SECTION 11.04.   GOVERNING LAW

  	
   

  	
  46

  
	
  SECTION 11.05.  
  No Recourse Against Others

  	
   

  	
  46

  
	
  SECTION 11.06.  
  Multiple Originals

  	
   

  	
  46

  
	
  SECTION 11.07.  
  Severability Clause

  	
   

  	
  46

  
	
  SECTION 11.08.  
  Calculations

  	
   

  	
  46

  
	
  SECTION 11.09.  
  Recitals

  	
   

  	
  46

  
	
  SECTION 11.10.  
  Ratification of Original Indenture

  	
   

  	
  46

  

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  –

  	
   

  	
  Form of
  Note

  	
   

  	
  A-1

  
	
  Exhibit B

  	
   

  	
  –

  	
   

  	
  Form of
  Conversion Notice

  	
   

  	
  B-1

  
	
  Exhibit C

  	
   

  	
  –

  	
   

  	
  Form of
  Fundamental Change Repurchase Notice

  	
   

  	
  C-1

  
	
  Exhibit D

  	
   

  	
  –

  	
   

  	
  Form of
  Assignment

  	
   

  	
  D-1

  

 

iii

 

SUPPLEMENTAL INDENTURE dated as of May 5, 2009 between TEXTRON
INC., a Delaware corporation, as issuer (the “Company”),
and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A. (as successor to The Bank of New York), a national banking
association organized under the laws of the United States, as trustee (the “Trustee”) under the indenture dated as of September 10,
1999 between the Company and the Trustee (as amended and supplemented from time
to time in accordance with the terms thereof, the “Original
Indenture”).

 

RECITALS OF THE COMPANY

 

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

 

WHEREAS, Section 3.1 of the Original Indenture
provides for the Company to establish Securities of any series pursuant to an
indenture supplemental, and 9.1(6) of the Original Indenture provides for
the Company and the Trustee to enter into such indenture supplemental to
establish the form or terms of Securities of such series as permitted by
Sections 2.1 and 3.1 of the Original Indenture without the consent of any
Holders;

 

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

 

WHEREAS, pursuant to the terms of the Original
Indenture, the Company desires to provide for the establishment of a new series
of its Securities to be known as its “4.50% Convertible Senior Notes due 2013”
(the “Notes”), the form and substance of the
Notes and the terms, provisions and conditions thereof to be set forth as
provided in the Original Indenture and this Supplemental Indenture;

 

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

 

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

 

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

 

 

ARTICLE 1

 

Definitions and Other Provisions of
General Application

 

SECTION 1.01.  
Scope of Supplemental Indenture. 
The changes, modifications and supplements to the Original Indenture
effected by this Supplemental Indenture shall be applicable only with respect
to, and shall only govern the terms of, the Notes and shall not apply to any
other Securities that may be issued under the Original Indenture unless a
supplemental indenture with respect to such other Securities specifically
incorporates such changes, modifications and supplements.  The provisions of this Supplemental Indenture
shall supersede any corresponding provisions in the Original Indenture.

 

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

 

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

 

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

 

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

 

(iv)          all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly provided, the
term “generally accepted accounting principles” with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of this instrument; and

 

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

 

“Additional Shares”
has the meaning specified in Section 9.03.

 

“Adjustment Event”
has the meaning specified in Section 9.04(k).

 

“Agent Members”
has the meaning specified in Section 2.03(d)(v).

 

“Bid Solicitation Agent”
means the financial institution appointed by the Company to solicit bids for
the Trading Price of the Notes in accordance with Section 9.01(a)(2).  The Bid Solicitation Agent appointed by the
Company shall initially be the Trustee.

 

“Business Day” means, solely for purposes of the Indenture and notwithstanding the
definition thereof in Section 1.1 of the Original Indenture, each Monday,
Tuesday, 

 

2

 

Wednesday,
Thursday and Friday which is not a day on which banking institutions in New
York City are authorized or obligated by law or executive order to close.

 

“Capital
Lease,” as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.

 

“Capital Stock”
of any Person means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.

 

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

 

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

 

“Common Stock”
means the Common Stock, par value $0.125 per share, of the Company, or such
other Capital Stock into which the Company’s common stock is reclassified or
changed.

 

“Continuing
Director” means a director who either was a member of the Board of
Directors on April 29, 2009 or who becomes a member of the Board of
Directors subsequent to that date and whose election, appointment or nomination
for election by the stockholders of the Company, is duly approved by a majority
of the Continuing Directors on the Board of Directors at the time of such
approval, either by a specific vote or by approval of the proxy statement
issued by the Company on behalf of the entire Board of Directors in which such
individual is named as nominee for director. Solely for purposes of this
definition, the phrase “or any duly authorized committee of that board” in the
definition of “Board of Directors” shall be disregarded.

 

“Conversion
Agent” means the agency appointed by the Company to which Notes may
be presented for conversion.  The
Conversion Agent appointed by the Company shall initially be the Trustee.

 

“Conversion Date”
has the meaning specified in Section 9.02(a).

 

“Conversion Notice”
has the meaning specified in Section 9.02(a).

 

“Conversion Obligation”
has the meaning specified in Section 9.01(a).

 

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

 

“Conversion Rate”
has the meaning specified in Section 9.01(a).

 

3

 

“Conversion Value,”
for every $1,000 principal amount of a Note being converted, means an amount
equal to the sum of the Daily Conversion Values for each of the forty-five (45)
Settlement Period Trading Days in the Settlement Period.

 

“Current Market
Price” means the average of the Last Reported Sale Prices of the
Common Stock over the ten (10) consecutive Trading-Day period ending on
the Trading Day immediately preceding the declaration date for the distribution
requiring such computation.

 

“Daily Conversion Value”
for any Settlement Period Trading Day equals 1/45th of (x) the Conversion
Rate in effect on that Settlement Period Trading Day, multiplied
by (y) the VWAP of the Common Stock on that Settlement Period
Trading Day.

 

“declaration date”
and “date of declaration” shall mean, with
respect to a distribution by the Company to all or substantially all of its
holders of Common Stock, the date on which the distribution has been authorized
by the Board of Directors under applicable law.

 

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

 

“Depositary”
has the meaning set forth in the Original Indenture, which shall initially be
DTC until a successor shall have been appointed and become such pursuant to the
applicable provisions of the Indenture, and thereafter, “Depositary” shall mean such successor.

 

“Determination
Date” has the meaning specified in Section 9.04(k).

 

“Distributed Property”
has the meaning specified in Section 9.04(c).

 

“DTC”
means The Depository Trust Company.

 

“Effective Date”
has the meaning specified in Section 9.03.

 

“Event of Default”
has the meaning set forth in the Original Indenture, as supplemented by the
events set forth in Section 6.01 hereof.

 

“Ex-Dividend Date”
means, in respect of a dividend or distribution to holders of Common Stock, the
first date upon which a sale of the Common Stock does not automatically
transfer the right to receive the relevant dividend or distribution from the
seller of the Common Stock to its buyer.

 

“Expiration Date”
has the meaning specified in Section 9.04(e).

 

“Expiration Time”
has the meaning specified in Section 9.04(e).

 

“Fair Market Value”
means the amount that a willing buyer would pay to a willing seller in an arms’
length transaction, as determined by the Board of Directors.

 

“Fixed Cash Amount”
has the meaning specified in Section 9.02(b).

 

“Fixed Dollar Amount”
has the meaning specified in Section 9.02(b).

 

4

 

“Full Interest Period”  means a period of days during which interest accrues from,
and including, an Interest Payment Date to, but excluding, the next Interest
Payment Date.

 

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

 

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

 

(ii)           consummation of (A) any recapitalization, reclassification or change of the Common
Stock (other than changes resulting from a subdivision or combination) as a result
of which the Common Stock would be converted into, or exchanged for, stock,
other securities, other property or assets or (B) any share
exchange, consolidation or merger of the Company pursuant to which the Common
Stock will be converted into cash, securities or other property or any
conveyance, transfer, sale, lease or other disposition in one transaction or a
series of transactions of all or substantially all of the consolidated assets
of the Company and its Subsidiaries, taken as a whole, to any Person other than
one of the Company’s Subsidiaries; provided, however, that a transaction where the holders of more than 50% of
all classes of the Company’s Common Equity immediately prior to such
transaction own, directly or indirectly, more than 50% of all classes of Common
Equity of the continuing or surviving corporation or transferee immediately
after such event shall not be a Fundamental Change;

 

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

 

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

 

(v)           the Common Stock (or
other common stock into which the Notes are then convertible) ceases to be
listed on at least one national securities exchange;

 

provided, however, that a
Fundamental Change shall not be deemed to have occurred if at least 90% of the
consideration, excluding cash payments for fractional shares, in the
transaction or transactions constituting the Fundamental Change consists of shares
of Publicly Traded Securities and as a result of such transaction or
transactions the Notes become convertible into such Publicly Traded Securities
in accordance with Section 9.05, subject to the provisions of Section 9.02.

 

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

 

5

 

addition, solely for
purposes of clause (iii) above, the phrase “or any duly authorized
committee of that board” in the definition of “Board of Directors” shall be
disregarded.

 

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

 

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

 

“Fundamental
Change Repurchase Expiration Time” has the meaning specified in Section 3.01(a)(1).

 

“Fundamental
Change Repurchase Notice” has the meaning specified in Section 3.01(a)(1).

 

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

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board as in effect from time to time.

 

“Global Note”
means any Note that is a Global Security.

 

“Indebtedness”
for purposes of Section 6.01(c) hereof, as applied to any Person,
means, without duplication, (i) all indebtedness for borrowed money of
that Person, (ii) that portion of obligations with respect to Capital
Leases which is properly classified as a liability on a balance sheet of that
Person in conformity with GAAP, (iii) notes payable of that Person and
drafts accepted by that Person representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any obligation of that
Person owed for all or any part of the deferred purchase price of property or
services which purchase price is (A) due more than twelve months from the
date of incurrence of the obligation in respect thereof, or (B) evidenced
by a note or similar written instrument, (v) all non-contingent
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (vi) all
indebtedness secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person and (vii) any
guarantee of that Person, direct or indirect, of any indebtedness, note
payable, draft accepted, or obligation described in clauses (i)-(vi) above
of any other Person.

 

“Indenture”
means the Original Indenture, solely to the
extent it governs the Notes, as supplemented by this Supplemental
Indenture as originally executed or as it may from time to time be supplemented
or amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof, including, for all purposes of this
instrument and any such supplemental indenture, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this Supplemental
Indenture and any such supplemental indenture, respectively.

 

6

 

“Initial Dividend Threshold” has the meaning specified in Section 9.04(d).

 

“Interest Payment Date” has the meaning specified in Section 2.03(c).

 

“Last
Reported Sale Price” of the Common Stock on any date means:

 

(i)            the closing sale price per
share (or if no closing sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid and
the average ask prices) on that date as reported by the New York Stock
Exchange; or

 

(ii)           if the Common Stock is not
listed for trading on the New York Stock Exchange, the closing sale price per
share (or if no closing sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid and
the average ask prices) on that date as reported in composite transactions for
the principal U.S. national or regional securities exchange on which the Common
Stock is traded; or

 

(iii)          if the Common Stock is not
listed for trading on a U.S. national or regional securities exchange, the
closing price per share (or if no closing sale price is reported, the average
of the bid and ask prices or, if more than one in either case, the average of
the average bid and the average ask prices) for the Common Stock on that date as
reported by the OTC Bulletin Board (or successor thereto); or

 

(iv)          if not so reported by the
OTC Bulletin Board (or successor thereto), the last quoted bid price for the
Common Stock in the over-the-counter market on that date as reported by Pink
OTC Market Inc. or similar organization; or

 

(v)           if the Common Stock is not
so quoted by Pink OTC Market Inc. or similar organization, the average of the
mid-point of the last bid and ask prices for the Common Stock on the relevant
date from a nationally recognized independent investment banking firm selected
by the Company for this purpose.

 

The
Last Reported Sale Price of the Common Stock will be determined without
reference to extended or after-hours trading. 
If, during a period applicable for calculating the Last Reported Sale
Price of the Common Stock, an event occurs that requires an adjustment to the
Conversion Rate, the Last Reported Sale Price shall be calculated for such
period in a manner determined by the Company to appropriately reflect the
impact of such event on the price of the Common Stock during such period.

 

“Lien” means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement
to give any security interest).

 

“Make-Whole Fundamental Change” means any transaction or
event that constitutes a Fundamental Change pursuant to clause (i), (ii) (disregarding
the proviso in clause (ii)), (iv) and (v) under the definition
thereof.

 

7

 

“Market Disruption Event” means, if the Common Stock is
listed for trading on the New York Stock Exchange or listed on another U.S.
national or regional securities exchange, the occurrence or existence during
the one-half hour period ending on the scheduled close of trading on any
Trading Day of any material suspension or limitation imposed on trading (by
reason of movements in price exceeding limits permitted by the stock exchange
or otherwise) in the Common Stock or in any options, contracts or future
contracts relating to the Common Stock.

 

“Maturity Date” means May 1, 2013.

 

“Notes” has the meaning set forth in the fourth paragraph of
the recitals of this Supplemental Indenture.

 

“Officer” means the Chairman or Vice Chairman of the Board of
Directors, the President, any Vice President, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company.

 

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

 

“Paying Agent” has the meaning set forth in
the Original Indenture, which shall initially be the Trustee, and shall be the
Person authorized by the Company to pay the principal amount of, interest on,
or Fundamental Change Repurchase Price of, any Notes on behalf of the Company.

 

“Place of Payment” means, for purposes of the Notes, New
York, New York.

 

“Preferred Stock”, as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) that
is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.

 

“Publicly
Traded Securities” means shares of common stock listed on a national
securities exchange, which will be so listed when issued or exchanged in
connection with an event that would be a Fundamental Change but for the second
proviso in the definition of such term.

 

“Record Date” means, in respect of any dividend or
distribution, the date fixed for determination of stockholders entitled to
receive such distribution or, if earlier, the first date on which the shares of
the Common Stock trade on the applicable exchange or in the applicable market,
regular way, without the right to receive such dividend or distribution.

 

“Reference Property” has the meaning specified in Section 9.05.

 

“Regular Record Date”
means, with respect to any Interest Payment Date of the Notes, the April 15
and October 15 preceding the applicable May 1 and November 1
Interest Payment Date, respectively.

 

“Reorganization
Event” has the meaning specified in Section 9.05.

 

8

 

“Reporting
Additional Interest” has the meaning specified in Section 6.04.

 

“Schedule TO”  means a Tender
Offer Statement under Section 14(d)(1) or 13(e)(1) of the
Exchange Act.

 

“Scheduled Trading Day” means any day on which the primary
U.S. national securities exchange or market on which the Common Stock is listed
or admitted for trading is scheduled to be open for trading.

 

“Securities Act” means the Securities Act of
1933, as amended from time to time, and any successor legislation.

 

“Settlement Period” means the forty-five (45) consecutive
Settlement Period Trading Days:

 

(i)            with respect to Conversion
Dates occurring during the period beginning fifty (50) Scheduled Trading Days
preceding the Maturity Date, beginning on and including the forty-seventh
(47th) Scheduled Trading Day immediately preceding the Maturity Date; and

 

(ii)           in all other cases,
beginning on and including the third (3rd) Trading Day following the Conversion
Date.

 

“Settlement Period Market Disruption Event” means:

 

(i)            a
failure by the primary U.S. national securities exchange or market on which the
Common Stock is listed or admitted to trading to open for trading during its
regular trading session; or

 

(ii)           the
occurrence or existence prior to 1:00 p.m. on any Trading Day for the
Common Stock of an aggregate one half-hour period, of any suspension or
limitation imposed on trading (by reason of movements in price exceeding limits
permitted by the stock exchange or otherwise) in the Common Stock or in any
options, contracts or future contracts relating to the Common Stock.

 

“Settlement Period Trading Day” means a day during which:

 

(i)            trading
in the Common Stock generally occurs on the primary U.S. national securities
exchange or market on which the Common Stock is listed or admitted for trading;
and

 

(ii)           there
is no Settlement Period Market Disruption Event;

 

provided, however, that if on any Trading Day the
Common Stock is not traded on any market, then that Trading Day shall
nevertheless be a “Settlement Period Trading
Day” so long as the Company is able to obtain the market value per
share of the Common Stock on that Trading Day from a nationally recognized
independent investment banking firm retained by the Company for this purpose.

 

9

 

“Significant Subsidiary” means any Subsidiary of the Company
that would be a “significant subsidiary” of the Company within the meaning of Rule 1-02(w) under
Regulation S-X promulgated by the Commission.

 

“Spin-off” has the meaning specified in Section 9.04(c).

 

“Stock Price” means:

 

(i)            in
the case of a Make-Whole Fundamental Change in which holders of the Common
Stock receive only cash as consideration for their shares of Common Stock, the
amount of cash paid per share of the Common Stock in such Make-Whole
Fundamental Change; or

 

(ii)           in
the case of all other Make-Whole Fundamental Changes, the average of the Last
Reported Sale Prices of Common Stock over the five (5) consecutive
Trading-Day period ending on the Trading Day immediately preceding the
Effective Date of such Make-Whole Fundamental Change.

 

“Successor Company” has the meaning specified in Section 5.01(a).

 

“TFC” means Textron Financial Corporation, a Delaware
corporation.

 

“Trading Day” means a day during which:

 

(i)            the
New York Stock Exchange is open for trading, or if the Common Stock is not
listed for trading on the New York Stock Exchange, the principal U.S. national
or regional securities exchange on which the Common Stock is listed is open for
trading, or if the Common Stock is not so quoted or listed, any Business Day;
and

 

(ii)           there
is no Market Disruption Event.

 

“Trading
Price” per $1,000 principal amount of the Notes on any date of
determination shall be calculated based on the average of the secondary market
bid quotations obtained by the Bid Solicitation Agent for $5,000,000 aggregate
principal amount of Notes at approximately 3:30 p.m., New York City time,
on such determination date from three independent nationally recognized
securities dealers selected by the Company; provided that, if only two
such bids can reasonably be obtained, then the average of the two bids shall be
used, and if only one such bid can reasonably be obtained, then that one bid
shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least
one bid for $5,000,000 aggregate principal amount of the Notes, then the
Trading Price per $1,000 principal amount of Notes will be deemed to be less
than 98% of the product of the Last Reported Sale Price of the Common Stock and
the applicable Conversion Rate.

 

“Trading
Price Measurement Period” has the meaning specified in Section 9.01(a)(2).

 

“Trigger Event” has the meaning specified in
Section 9.04(c).

 

10

 

 “VWAP” for the
Common Stock means, with respect to any Settlement Period Trading Day during
the Settlement Period, the per share volume-weighted average price of the
Common Stock as displayed under the heading “Bloomberg VWAP” on Bloomberg page TXT.N
<equity> AQR in respect of the period from 9:30 a.m. to 4:00 p.m.,
New York City time, on such Settlement Period Trading Day; or if such
volume-weighted average price is unavailable, the market value per share of the
Common Stock on such Settlement Period Trading Day as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Company.

 

SECTION 1.03.  
Incorporation by Reference of Trust Indenture Act.  This Indenture is subject to the mandatory
provisions of the Trust Indenture Act, which are incorporated by reference in
and made a part of this Indenture.  The
following Trust Indenture Act terms have the following meanings:

 

“indenture
securities” means the Notes.

 

“indenture
security holder” means a Holder.

 

“indenture
to be qualified” means this Indenture.

 

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

 

“obligor”
on the indenture securities means the Company and any other obligor on the
indenture securities.

 

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

 

SECTION 1.04.  
Rules of Construction. 
Unless the context otherwise requires:

 

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

 

(2)           “or” is not
exclusive; and

 

(3)           “including”
means including without limitation.

 

ARTICLE
2

 

The Notes

 

SECTION 2.01.  
Designation, Amount and Issuance of Notes.  The Notes shall be designated as “4.50% Convertible Senior Notes due 2013.”  The Notes will initially not exceed the aggregate
principal amount of $600,000,000, except for Notes authenticated and delivered upon
registration of transfer of, in exchange for, or in lieu of, other Notes
pursuant to Section 3.04, 5.02 and 9.02(d) of this Supplemental
Indenture or Section 3.4, 3.5, 3.6 or 9.6 of the Original Indenture.  Upon the execution of this Supplemental
Indenture, or from time to time 

 

11

 

thereafter, Notes may be
executed by the Company and delivered to the Trustee for authentication.

 

SECTION 2.02.  
Form of the Notes.  The Notes
and the Trustee’s certificate of authentication to be borne by such Notes, the
Conversion Notice, Fundamental Change Repurchase Notice and Assignment shall be
substantially in the forms set forth in Exhibits A, B, C and D,
respectively, hereto.  The terms and
provisions contained in the form of Notes attached as Exhibit A hereto
shall constitute, and are hereby expressly made, a part of this Supplemental
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Supplemental Indenture, expressly agree to such
terms and provisions and to be bound thereby.

 

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

 

So
long as the Notes are eligible for book-entry settlement with the Depositary,
or unless otherwise required by law, or otherwise contemplated by Section 2.03(d),
all of the Notes will be represented by one or more Global Notes.  The transfer and exchange of beneficial
interests in any such Global Notes shall be effected through the Depositary in
accordance with the Indenture and the applicable procedures of the
Depositary.  Except as provided in Section 2.03(d),
beneficial owners of a Global Note shall not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form and will not be considered holders
of such Global Note.

 

Any
Global Notes shall represent such of the outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be increased or reduced to reflect repurchases, conversions, transfers or
exchanges permitted hereby.  Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the custodian for the Global Note, at the direction of the Trustee,
in such manner and upon instructions given by the holder of such Notes in
accordance with this Indenture.  Payment
of principal of, interest on and premium, if any, on any Global Notes shall be
made to the Depositary in immediately available funds.  The Company has initially designated the
Trustee as its Paying Agent and Security Registrar in respect of the Notes and
the Corporate Trust Office as a place where Notes may be presented for payment
or for registration of transfer.  The
Company may, however, change the Paying Agent or Security Registrar for the
Notes without prior notice to the Holders, and the Company may act as Paying
Agent or Security Registrar for the Notes.

 

12

 

SECTION 2.03.  
Date and Denomination of Notes; Payment at Maturity; Payment of Interest.

 

(a)           Date
and Denomination.  The Notes
initially shall be issued in the form of one or more Global Notes without
interest coupons in denominations of $1,000 principal amount and integral
multiples thereof (i) registered in the name of Cede & Co., as
nominee of the Depositary and (ii) delivered to the Trustee as custodian
for the Depositary.  Each Note shall be
dated the date of its authentication and shall bear interest from the date
specified on the face of the form of Notes attached as Exhibit A hereto.

 

(b)           Payment
at Maturity.  The Notes shall mature
on May 1, 2013, unless earlier converted or repurchased in accordance with
the provisions hereof.  On the Maturity
Date, each Holder shall be entitled to receive on such date $1,000 in cash for
each $1,000 principal amount of Notes, together with accrued and unpaid
interest to, but not including, the Maturity Date.  With respect to Global Notes, principal and
interest will be paid to the Depositary in immediately available funds.  With respect to any certificated Notes,
principal and interest will be payable at the Company’s office or agency in New
York City, which initially will be the Corporate Trust Office.  If the Maturity Date is not a Business Day,
payment shall be made on the next succeeding Business Day, and no additional
interest shall be accrue thereon.

 

(c)           Payment
of Interest.  Interest on the Notes
will accrue at the rate of 4.50% per annum, from May 5, 2009 until the
principal thereof is paid or made available for payment.  Interest shall be payable on May 1 and November 1
of each year (each, an “Interest Payment Date”),
commencing on November 1, 2009, to the Person in whose name any Note is
registered on the Security Register at the close of business on any Regular
Record Date with respect to the applicable Interest Payment Date, except that
the interest payable on the Maturity Date will be paid to the Person to whom
the principal amount is paid. 
Notwithstanding the foregoing, any Notes or portion thereof surrendered
for conversion after the close of business on the Regular Record Date for an
Interest Payment Date but prior to the applicable Interest Payment Date shall
be accompanied by payment, in immediately available funds or other funds
acceptable to the Company, of an amount equal to the interest otherwise payable
on such Interest Payment Date on the principal amount being converted; provided that no such payment
need be made:

 

(i) with respect to
Notes converted after the close of business on April 15, 2013;

 

(ii)  with respect
to Notes converted during the period commencing on the date the Company gives
notice of a Fundamental Change pursuant to Section 9.01(a)(4) to, and
including, the second Trading Day immediately preceding the Fundamental Change
Repurchase Date; or

 

(iii)  with respect
to any overdue interest, if overdue interest exists at the time of conversion
with respect to converted Notes.

 

Interest
on the Notes for a Full Interest Period will be computed on the basis of a
three hundred sixty (360)-day year comprised of twelve (12) thirty (30)-day
months.  Interest on the Notes for any
period other than a Full Interest Period will be computed on the basis of the
actual number of days elapsed during the period and a three hundred sixty-five
(365)-day year.

 

13

 

The
Company shall pay interest on:

 

(i)  any Global Notes by wire transfer of
immediately available funds to the account of the Depositary or its nominee;

 

(ii)  any Notes in certificated form having a
principal amount of less than $5,000,000, by check mailed to the address of the
Person entitled thereto as it appears in the Security Register, provided, however, on
the Maturity Date, interest will be payable as described in Section 2.03(b);
and

 

(iii)  any Notes in certificated form having a
principal amount of $5,000,000 or more, by wire transfer in immediately
available funds at the election of the Holders of such Notes duly delivered to
the Trustee at least five (5) Business Days prior to the relevant Interest
Payment Date, provided, however, on the Maturity Date, interest
will be payable as described in Section 2.03(b).

 

If
an Interest Payment Date is not a Business Day, payment shall instead be made
on the next succeeding Business Day, and no additional interest shall accrue
thereon.

 

All
references to “interest” in this Indenture shall be deemed to include Reporting
Additional Interest, if any, that accrues in connection with the Company’s
failure to comply with Section 2.06, if applicable, as provided by Section 6.04.

 

(d)           The
following provisions shall apply only to Global Notes:

 

(i)            Notwithstanding any other provision
in the Indenture, no Global Note may be exchanged in whole or in part for Notes
registered, and no transfer of a Global Note in whole or in part may be
registered, in the name of any Person other than the Depositary or a nominee
thereof unless (A) the Depositary (x) has notified the Company that
it is unwilling or unable to continue as Depositary for such Global Note or (y) has
ceased to be a clearing agency registered under the Exchange Act, and in each
case a successor Depositary has not been appointed by the Company within ninety
(90) calendar days, or (B) the Company, at its option, notifies the
Trustee in writing that it no longer wishes to have all the Notes represented
by Global Notes.  Any Global Note
exchanged pursuant to this Section 2.03(d)(i) shall be so exchanged
in whole and not in part.

 

(ii)           In addition, certificated Notes will
be issued in exchange for beneficial interests in a Global Note upon request by
or on behalf of the Depositary in accordance with customary procedures
following the request of a beneficial owner seeking to enforce its rights under
the Notes or the Indenture, including its rights following the occurrence of an
Event of Default.

 

(iii)          Notes issued in exchange for a Global
Note or any portion thereof pursuant to clause (i) or (ii) above
shall be issued in definitive, fully registered form, without interest coupons,
shall have an aggregate principal amount equal to that of such Global Notes or
portion thereof to be so exchanged, shall be registered in such names and be in
such authorized denominations as the 

 

14

 

Depositary shall
designate and shall bear any legends required hereunder.  Any Global Notes to be exchanged shall be
surrendered by the Depositary to the Trustee, as Registrar; provided
that pending completion of the exchange of a Global Note, the Trustee acting as
custodian for the Global Notes for the Depositary or its nominee with respect
to such Global Notes, shall reduce the principal amount thereof, 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 make available for delivery the Notes issuable on such exchange to or upon
the written order of the Depositary or an authorized representative thereof.

 

(iv)          In the event of the occurrence of any
of the events specified in clause (i) above or upon any request described
in clause (ii) above, the Company will promptly make available to the
Trustee a sufficient supply of certificated Notes in definitive, fully
registered form, without interest coupons.

 

(v)           Neither any members of, or
participants in, the Depositary (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 Notes
registered in the name of the Depositary or any nominee thereof, 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 Notes 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 Notes.

 

(vi)          At such time as all interests in a
Global Note have been repurchased, converted, cancelled or exchanged for Notes
in certificated form, such Global Note shall, upon receipt thereof, be canceled
by the Trustee in accordance with standing procedures and instructions existing
between the Depositary and the custodian for the Global Note.  At any time prior to such cancellation, if
any interest in a Global Note is repurchased, converted, cancelled or exchanged
for Notes in certificated form, the principal amount of such Global Note shall,
in accordance with the standing procedures and instructions existing between
the Depositary and the custodian for the Global Note, be appropriately reduced,
and an endorsement shall be made on such Global Note, by the Trustee or the
custodian for the Global Note, at the direction of the Trustee, to reflect such
reduction.

 

SECTION 2.04.  
Paying Agent to Hold Money in Trust. 
Notwithstanding Section 3.7 of the Original Indenture to the
contrary, prior to each due date of the principal and interest on any Note, the
Company shall deposit with the Paying Agent (or if the Company or a 

 

15

 

Subsidiary of the Company is
acting as Paying Agent, segregate and hold in trust for the benefit of the
Persons entitled thereto) a sum sufficient to pay such principal and interest
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 Holders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Notes and shall notify the Trustee of any Default by the Company in making
any such payment.  If the Company or a
Subsidiary of the Company acts as Paying Agent, it shall segregate the money
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 held by it to the Trustee and to account for any funds
disbursed by the Paying Agent.  Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.

 

SECTION 2.05.  
Outstanding Notes. 
Notwithstanding anything in the definition of “Outstanding” in Section 1.1
of the Original Indenture to the contrary, if the Paying Agent segregates and
holds in trust, in accordance with the Indenture, on a Fundamental Change
Repurchase Date or Maturity Date cash sufficient to pay all principal and
interest payable on that date with respect to the Notes (or portions thereof)
to be repurchased or maturing, as the case may be, and the Paying Agent is not
prohibited from paying such money to the Noteholders on that date pursuant to
the terms of the Indenture, then on and after that date such Notes (or portions
thereof) cease to be “Outstanding” for purposes of the Indenture and interest
on them ceases to accrue.

 

SECTION 2.06.  
Reporting Requirement.  Section 7.4
of the Original Indenture shall not apply to the Notes.  Instead, the Company shall deliver to the
Trustee, within fifteen (15) calendar days after it would have been required to
file them with the Commission (giving effect to any grace period provided by Rule 12b-25
under the Exchange Act), copies of the Company’s annual reports on Form 10-K
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may by rules and regulations
prescribe) which the Company is required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act.  Documents filed by the Company with the
Commission via its EDGAR system (or any successor thereto) will be deemed to be
filed with the Trustee as of the time such documents are so filed.  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, the Company shall continue to provide the Trustee with
reports containing substantially the same information as would have been
required to be filed with the Commission had it 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 the Company continued to have been subject to
such reporting requirements.  The Company
also shall comply with the other provisions of Section 314(a) of the
Trust Indenture Act.

 

ARTICLE 3

 

Repurchase of Notes

 

SECTION 3.01.  
Repurchase at Option of the Holder Upon a Fundamental Change.  (a)  If there shall occur a Fundamental
Change at any time prior to the Maturity Date, then each Holder shall have the
right, at such Holder’s option, to require the Company to 

 

16

 

repurchase for cash any or
all of such Holder’s Notes, or any portion of the principal amount thereof that
is equal to $1,000 or an integral multiple of $1,000, on a date (the “Fundamental Change Repurchase Date”) of the Company’s
choosing that is not less than twenty (20) Business Days or more than thirty-five
(35) Business Days after the date of the Fundamental Change Company Notice at a
repurchase price equal to 100% of the principal amount of the Notes to be
repurchased, plus accrued and unpaid interest thereon to, but excluding, the
Fundamental Change Repurchase Date (the “Fundamental Change
Repurchase Price”).  If such
Fundamental Change Repurchase Date falls between a Regular Record Date and on
or prior to the Interest Payment Date to which it relates, the Company shall
instead pay the full amount of accrued and unpaid interest payable on such
Interest Payment Date to the holder of record on the close of business on the
corresponding Regular Record Date and the Fundamental Change Repurchase Price
shall be equal to 100% of the principal amount of the Notes to be
repurchased.  Repurchases of Notes under
this Section 3.01 shall be made, at the option of the holder thereof,
upon:

 

(1)           delivery to the Paying Agent by a
Holder of a duly completed notice (the “Fundamental Change
Repurchase Notice”) in the form set forth on the reverse of the Note
by the close of business on the Business Day immediately preceding the
Fundamental Change Repurchase Date (the “Fundamental Change
Repurchase Expiration Time”); and

 

(2)           delivery or book-entry transfer of
the Notes to the Paying Agent by the Fundamental Change Repurchase Expiration
Time (together with all necessary endorsements) at the Corporate Trust Office
of the Paying Agent in New York City, such delivery being a condition to
receipt by the Holder of the Fundamental Change Repurchase Price therefor.

 

The Fundamental Change Repurchase Notice
shall state:

 

(i)            if certificated Notes have been
issued, the certificate numbers of the Notes to be delivered for repurchase, or
if certificated Notes have not been issued, such Fundamental Change Repurchase
Notice must comply with appropriate Depositary procedures;

 

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

 

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

 

Any purchase by the Company contemplated
pursuant to the provisions of this Section 3.01 shall be consummated by
the payment of the Fundamental Change Purchase Price to the relevant Holders
promptly following the later of the Fundamental Change Repurchase Date and the
time of the book-entry transfer or delivery of the Note.

 

All questions as to the validity, eligibility
(including time of receipt) and acceptance of any Notes for repurchase shall be
determined by the Company, whose determination shall be final and binding
absent manifest error.

 

17

 

Notwithstanding anything herein to the
contrary, any Holder delivering to the Paying Agent the Fundamental Change
Repurchase Notice contemplated by this Section 3.01 shall have the right
to withdraw, in whole or in part, such Fundamental Change Repurchase Notice at
any time prior to the close of business on the Business Day immediately
preceding the Fundamental Change Repurchase Date by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 3.02
below.

 

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

 

(b)           On or before the tenth (10th)
calendar day after the occurrence of a Fundamental Change, the Company shall
mail or cause to be mailed to all Holders of the Notes, and to beneficial
owners as required by applicable law, a notice (the “Fundamental
Change Company Notice”) of the occurrence of the Fundamental Change
and of the repurchase right at the option of the Holders arising as a result
thereof.  Such mailing shall be by first
class mail.  The Company shall also
deliver a copy of the Fundamental Change Company Notice to the Trustee, the Paying
Agent and the Conversion Agent. 
Simultaneously with providing such notice, the Company will issue a
press release containing the information set forth in the Fundamental Change
Company Notice and make this information available on its website.

 

Each
Fundamental Change Company Notice shall specify:

 

(i)            the events causing the Fundamental
Change;

 

(ii)           the date of the Fundamental Change;

 

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

 

(iv)          the Fundamental Change Repurchase
Price;

 

(v)           the Fundamental Change Repurchase
Date;

 

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

 

(vii)         that the Notes are eligible to be
converted, the applicable Conversion Rate and any adjustments to the applicable
Conversion Rate resulting from such Fundamental Change transaction and expected
changes in the cash, shares or other property deliverable upon conversion of
the Notes as a result of the occurrence of the Fundamental Change, and the
settlement method the Company has chosen to satisfy the related Conversion
Obligation, if any;

 

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

 

18

 

(ix)           that a Holder must exercise its
repurchase right by the Fundamental Change Repurchase Expiration Time;

 

(x)            that the Holder shall have the right
to withdraw any Notes tendered prior to the Fundamental Change Repurchase
Expiration Time;

 

(xi)           the CUSIP number of the Notes; and

 

(xii)          the procedures that Holders must
follow to require the Company to repurchase their Notes pursuant to this Article 3.

 

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

 

(c)           Notwithstanding the
foregoing, no Notes may be repurchased by the Company at the option of the
Holders upon a Fundamental Change if there has occurred and is continuing an
Event of Default other than an Event of Default that is cured by the payment of
the Fundamental Change Repurchase Price.

 

SECTION 3.02.  
Withdrawal of Fundamental Change Repurchase Notice.  A Fundamental Change Repurchase Notice
may be withdrawn by means of a written notice of withdrawal delivered to the
Corporate Trust Office of the Paying Agent in accordance with the Fundamental
Change Repurchase Notice at any time prior to the Fundamental Change Repurchase
Expiration Time, specifying:

 

(1)           if certificated Notes have been
issued, the certificate numbers of the Notes in respect of which such notice of
withdrawal is being submitted, or if certificated Notes have not been issued,
such notice of withdrawal must comply with appropriate Depositary procedures;

 

(2)           the principal amount of the Note with
respect to which such notice of withdrawal is being submitted, which portion
must be in principal amount of $1,000 or an integral multiple thereof; and

 

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

 

SECTION 3.03.  
Deposit of Fundamental Change Repurchase Price.  Prior to 10:00 a.m., New York City time,
on the Fundamental Change Repurchase Date, the Company shall deposit with the
Paying Agent or, if the Company or a Subsidiary of the Company is acting as the
Paying Agent, shall segregate and hold in trust as provided herein, an amount
of cash (in immediately available funds if deposited on the Fundamental Change
Repurchase Date), sufficient to pay the aggregate Fundamental Change Repurchase
Price of all the Notes or portions thereof that are to be repurchased as of the
Fundamental Change Repurchase Date.

 

19

 

If on the Fundamental Change Repurchase Date the
Paying Agent holds cash sufficient to pay the Fundamental Change Repurchase
Price of the Notes that Holders have elected to require the Company to
repurchase in accordance with Section 3.01, then, on the Fundamental
Change Repurchase Date, such Notes will cease to be outstanding, interest will
cease to accrue (whether or not book-entry transfer of the Notes is made or the
Note is transferred or delivered to the Paying Agent, as the case may be) and
all other rights of the Holders of such Notes will terminate (other than the
right to receive the Fundamental Change Repurchase Price upon delivery or
book-entry transfer of the Notes).  This
will be the case whether or not book-entry transfer of the Notes has been made
or the Notes have been delivered to the Paying Agent.

 

SECTION 3.04.  
Notes Repurchased in Part.  Upon
presentation of any Notes repurchased only in part, the Company shall execute
and the Trustee shall authenticate and make available for delivery to the
Holder thereof, at the expense of the Company, a new Note or Notes, of any
authorized denomination, in aggregate principal amount equal to the
unrepurchased portion of the Notes presented.

 

SECTION 3.05.  
Covenant to Comply with Securities Laws Upon Repurchase of Notes.  The Company will, to the extent applicable,
comply with the provisions of Rule 13e-4 and any other tender offer rules under
the Exchange Act that may be applicable at the time of the offer to repurchase
the Notes, file the related Schedule TO or any other schedule required in
connection with any offer by the Company to repurchase the Notes and comply
with all other federal and state securities laws in connection with any offer
by the Company to repurchase the Notes.

 

SECTION 3.06.  
Sinking Fund and Redemption.  The
Notes are not subject to the provisions of Articles XI or XII of the Original
Indenture.

 

ARTICLE
4

 

Covenants

 

SECTION 4.01.  
Existence.  Subject to Article 5,
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and rights (charter and statutory);  provided
that the Company shall not be required to preserve any such right if the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the holders of Notes.

 

SECTION 4.02.  
Further Instruments and Acts.  The
Company shall execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Supplemental Indenture.

 

SECTION 4.03.  
Additional Interest.  If Reporting
Additional Interest is payable by the Company, the Company shall deliver to the
Trustee an Officers’ Certificate to that effect stating (i) the amount of
such Reporting Additional Interest that is payable and (ii) the date on
which such Reporting Additional Interest is payable.  Unless and until a Responsible Officer 

 

20

 

receives such a certificate,
the Trustee may assume without inquiry that no Reporting Additional Interest is
payable.

 

SECTION 4.04.   Waiver
of Stay, Extension or Usury Laws.  The Company covenants (to the extent it may
lawfully do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take benefit or advantage of, any stay, extension or usury
law or other law which would prohibit or forgive the Company from paying all or
any portion of the principal of or interest on the Notes as contemplated
herein, wherever enacted, now or at any time; the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, 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.

 

SECTION 4.05.  
Repurchase and Cancellation.  To
the extent permitted by law, the Company may repurchase any Notes in the open-market
or by tender offer at any price or by private agreement.  Neither the Company nor its Affiliates shall
resell such Notes unless such resale is registered under the Securities Act or
such resale is pursuant to an exemption from the registration requirements of
the Securities Act that results in such Notes not being “restricted securities,”
as such term is defined in Rule 144(a)(3) under the Securities
Act.  Any Notes repurchased by the
Company may, at the Company’s option, be surrendered to the Trustee for
cancellation as provided by Section 3.9 of the Original Indenture.  Any Notes surrendered for cancellation by the
Company shall not be reissued or resold.

 

ARTICLE
5

 

Successor Company

 

SECTION 5.01.  
When Company May Merge or Transfer Assets.  The Company shall not consolidate with or
merge with or into, or sell, convey, transfer or lease all or substantially all
of its properties and assets to, another Person, unless:

 

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

 

(b)   immediately
after giving effect to the transaction described above, no Default or Event of
Default, has occurred and is continuing under the Indenture;

 

(c)   if as a
result of such transaction, the Notes become convertible into common stock or
other securities issued by a third party, such third party fully and
unconditionally guarantees all obligations of the Company or the Successor Company, as applicable, under the Notes and the Indenture; and

 

(d)   the Company
has delivered to the Trustee the Officers’ Certificate and Opinion of Counsel
pursuant to Section 5.03.

 

21

 

SECTION 5.02.  
Successor to Be Substituted.  In
case of any such consolidation, merger, sale, conveyance, transfer or lease in
which the Company is not the surviving corporation and upon the assumption by
the Successor Company, by supplemental
indenture, executed and delivered to the Trustee, of the due and punctual
payment of the principal of and interest on all of the Notes, and the due and
punctual performance and observance of all of the covenants and conditions of
the Indenture to be performed or satisfied by the Company, except in the case
of a lease of all or substantially all of the Company’s properties and assets,
such Successor Company shall succeed to, and
be substituted for, and may exercise every right and power of, the Company,
with the same effect as if it had been named herein as the party of this first
part, and Textron Inc. shall be discharged from its obligations under the Notes
and the Indenture.  Such Successor Company thereupon may cause to be
signed, and may issue either in its own name or in the name of Textron Inc. any
or all of the Notes, issuable hereunder that theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
Successor Company instead of the Company and
subject to all the terms, conditions and limitations in the Indenture
prescribed, the Trustee shall authenticate and shall deliver, or cause to be
authenticated and delivered, any Notes that previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication,
and any Notes that such Successor Company
thereafter shall cause to be signed and delivered to the Trustee for that
purpose.  All the Notes so issued shall
in all respects have the same legal rank and benefit under the Indenture as the
Notes theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Notes had been issued at the date of the
execution hereof.  In the event of any
such consolidation, merger, sale, conveyance or transfer, upon compliance with
this Article 5 the Person named as the “Company” in the first paragraph of this Indenture or any successor
that shall thereafter have become such in the manner prescribed in this Article 5
may be dissolved, wound up and liquidated at any time thereafter and such
Person shall be discharged from its liabilities as obligor and maker of the
Notes and from its obligations under this Indenture.

 

SECTION 5.03.  
Opinion of Counsel to Be Given Trustee. 
Prior to execution of any supplemental indenture pursuant to this Article 5,
the Trustee shall receive an Officers’ Certificate and an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance,
transfer or lease and any such assumption complies with the provisions of this Article 5.

 

ARTICLE
6

 

Defaults and Remedies

 

SECTION 6.01.  
Events of Default.  In addition to
the Events of Default specified in Section 5.1 of the Original Indenture,
each of the following events shall be an “Event  of Default” with respect to the Notes:

 

(a)   the Company fails to pay or deliver, as the
case may be, cash, shares of Common Stock or a combination thereof in respect
of the Conversion Obligation, as required by Article 9, upon the
conversion of any Notes, and such failure continues for a period of five (5) calendar
days following the scheduled settlement date for such conversion;

 

22

 

(b)   the Company fails to provide notice of the
anticipated effective date or actual effective date of a Fundamental Change,
Make-Whole Fundamental Change or notice of specified corporate transactions, as
described in Sections 3.01(b), 9.01(a)(3) and 9.01(a)(4), in each case, on
a timely basis;

 

(c)   (i) failure by the Company or any of its
Subsidiaries (other than TFC or its Subsidiaries) to pay when due any principal
or interest on any Indebtedness in an individual principal amount of
$100,000,000 or more or items of Indebtedness with an aggregate principal
amount of $100,000,000 or more beyond the end of any period prior to which the
obligee thereunder is prohibited from accelerating payment thereunder or any
grace period after the maturity thereof or (ii) breach or default by the
Company or any of its Subsidiaries (other than TFC or its Subsidiaries) with
respect to any other term of: (y) any evidence of any Indebtedness in an
individual principal amount of $100,000,000 or more or items of Indebtedness
with an aggregate principal amount of $100,000,000 or more; or (z) any
loan agreement, mortgage, indenture or other agreement relating thereto, if
such failure, default or breach shall continue for more than the period of
grace, if any, specified therein and shall not at the time of acceleration
hereunder be cured or waived;

 

(d)   the entry by a court having jurisdiction in
the premises of (i) a decree or order for relief in respect of any
Significant Subsidiary of the Company (other than TFC or its Subsidiaries) in
an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (ii) a
decree or order adjudging any Significant Subsidiary of the Company (other than
TFC or its Subsidiaries) bankrupt or insolvent, or approving as properly filed
a petition seeking reorganization, arrangement, adjustment or composition of or
in respect of any Significant Subsidiary of the Company (other than TFC or its
Subsidiaries) under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of any Significant Subsidiary of the Company (other than TFC
or its Subsidiaries) 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 90 consecutive days; and

 

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

 

23

 

action by any Significant Subsidiary of the Company (other than TFC or
its Subsidiaries) in
furtherance of any such action.

 

SECTION 6.02.  
Rescission and Annulment.  After a
declaration of acceleration, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of a majority in
aggregate principal amount of the Notes, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:

 

(a)   the
conditions set forth in the second paragraph of Section 5.2 of the
Original Indenture are met;

 

(b)   rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction; and

 

(c)   such
declaration is not the result of (i) an Event of Default arising from the
Company’s failure to pay or deliver, as the case may be, cash, shares of Common
Stock or a combination thereof in respect of the Conversion Obligation, as
required by Article 9, upon conversion of any Notes, (ii) an Event of
Default arising from the Company’s failure to repurchase any Notes pursuant to Article 3
or (iii) an Event of Default with respect to a provision that cannot be
modified or amended without the consent of each affected Holder.

 

The provisions of Section 5.2 of the
Original Indenture shall otherwise remain applicable to the Notes.

 

SECTION 6.03.  
Waiver of Past Defaults.  Subject
to Section 5.13 of the Original Indenture, the Holders of not less than a
majority in principal amount of the Notes then Outstanding may, on behalf of
all Holders, waive any past Default under the Indenture and its consequences,
except:

 

(i)            a Default arising from the failure
of the Company to pay or deliver, as the case may be, cash, shares of Common
stock or a combination thereof in respect of the Conversion Obligation, as
required by Article 9, upon the conversion of any Notes; or

 

(ii)           a Default arising from the failure to
repurchase any Notes pursuant to Article 3.

 

The provisions of Section 5.13
of the Original Indenture shall otherwise remain applicable to the Notes.

 

SECTION 6.04.  
Failure to Comply with Reporting Covenant.  Notwithstanding anything to the contrary in
this Indenture, the sole remedy for an Event of Default relating to the Company’s
failure to perform or observe the covenants in Section 2.06 will for the
180 days after the occurrence of such an Event of Default consist exclusively
of the right to receive additional interest (the “Reporting
Additional Interest”) on the Notes at an annual rate equal to 0.50%
of the principal amount of the Notes. 
Reporting Additional Interest will be payable in the same manner and on
the same Interest Payment Dates as the stated interest payable on the
Notes.  Reporting Additional Interest
will accrue on all outstanding Notes from, and including, the date on which an
Event of Default relating to a failure by the Company to comply with its
obligations 

 

24

 

pursuant to Section 2.06
first occurs to, but not including, the one-hundred eightieth (180th) day
thereafter (or such earlier date on which the Event of Default relating to the
Company’s obligations pursuant to Section 2.06 shall have been cured or
waived).  On such one-hundred eightieth
(180th) day (or earlier, if an Event of Default relating to the Company’s
obligations pursuant to Section 2.06 is cured or waived prior to such
one-hundred eightieth (180th) day), such Reporting Additional Interest will
cease to accrue, and the Notes will be subject to acceleration as provided in Section 5.2
of the Original Indenture if such Event of Default is continuing.  A Holder’s right to receive Reporting
Additional Interest for an Event of Default relating to the Company’s failure
to perform or observe the covenant in Section 2.06 will not affect the
rights of the Holders in the event of an occurrence of any other Event of
Default.

 

ARTICLE
7

 

Discharge

 

SECTION 7.01.  
Discharge of the Supplemental Indenture. 
(a)  The satisfaction and discharge provisions set forth in this Article 7
shall, with respect to the Notes, supersede in their entirety Section 4.1
of the Original Indenture, and all references in the Original Indenture to Section 4.1
thereof and the satisfaction and discharge provisions therein, as the case may
be, shall, with respect to the Notes, be deemed to be references to this Article 7
and the satisfaction and discharge provisions set forth in this Article 7,
respectively.  When (i) the Company
delivers to the Trustee all outstanding Notes (other than Notes replaced
pursuant to Section 3.6 of the Original Indenture) for cancellation or (ii) all
outstanding Notes have become due and payable, whether on the Maturity Date,
upon a repurchase pursuant to Article 3 hereof, upon conversion pursuant
to Article 9 or otherwise, and the Company irrevocably deposits with the
Trustee money sufficient to pay on the Maturity Date or upon repurchase all
outstanding Notes, including interest thereon to the Maturity Date or the
relevant Fundamental Change Repurchase Date, as the case may be (other than
Notes replaced pursuant to Section 3.6 of the Original Indenture), and any
shares of Common Stock, cash or a combination of cash and shares of Common
Stock (or other property) due in respect of converted Notes, and if in each
such case the Company pays all other sums payable hereunder by the Company,
then this Supplemental Indenture shall, subject to Section 7.01(b), cease
to be of further effect.  The Trustee
shall acknowledge satisfaction and discharge of this Supplemental Indenture on
demand of the Company accompanied by an Officers’ Certificate and an Opinion of
Counsel as required by Section 1.2 of the Original Indenture and at the
cost and expense of the Company.

 

(b)   Notwithstanding
clause (a) above, the Company’s obligations in Sections 3.5, 3.6, 6.7,
6.10 and 7.1 of the Original Indenture, Sections 2.04 and 2.05 hereof and this Article 7
shall survive until the Notes have been paid in full.  Thereafter, the Company’s obligations in Section 6.7
of the Original Indenture shall survive such satisfaction and discharge.

 

(c)   Sections
4.2, 4.3 and 4.4 of the Original Indenture shall not apply to the Notes.

 

SECTION 7.02.  
Application of Trust Money.  The
Trustee shall hold in trust cash and any shares of Common Stock or other
property due in respect of converted Notes deposited with it pursuant to this Article 7.  It shall apply the deposited money through
the 

 

25

 

Paying Agent and in
accordance with the Indenture to the payment of principal of and interest on
the Notes or, in the case of any cash or shares of Common Stock (or other
property) due in respect of converted Notes, in accordance with the Indenture
in relation to the conversion of Notes pursuant to the terms hereof.

 

SECTION 7.03.  
Repayment to Company.  The Trustee
and the Paying Agent shall promptly turn over to the Company upon request any
excess money or securities held by them at any time after a full satisfaction
and discharge pursuant to the terms hereof.

 

Subject to any applicable abandoned property law,
the Trustee and the Paying Agent shall pay to the Company upon written request
any money held by them for the payment of principal or interest and any shares
of Common Stock or other property due in respect of converted Notes that
remains unclaimed for two years, and, thereafter, Holders entitled to the money
or securities must look to the Company for payment as general creditors.

 

SECTION 7.04.  
Reinstatement.  If the Trustee or
Paying Agent is unable to apply any cash or to pay or deliver, as the case may
be, cash or any shares of Common Stock (or other property) due in respect of
converted Notes in accordance with this Article 7 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company’s obligations under this Supplemental Indenture, the Original Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 7 until such time as the Trustee or Paying Agent
is permitted to apply all such cash and pay or deliver, as the case may be,
cash or any shares of Common Stock (or other property) due in respect of
converted Notes in accordance with this Article 7; provided, however,
that, if the Company has made any payment of interest on or principal of any
Notes because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.

 

ARTICLE
8

 

Amendments

 

SECTION 8.01.  
Without Consent of Holders.  In
addition to any permitted amendment or supplement to the Indenture pursuant to Section 9.1
of the Original Indenture, the Company and the Trustee may amend or supplement
the Indenture (to the extent applicable to the Notes) or the Notes without
notice to or the consent of any Holder:

 

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

 

(b)   to comply with any
requirements of the Commission in connection with qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act; or

 

(c)   to conform the
provisions of the Indenture and the form or terms of the Notes to the section
entitled “Description of notes” as set forth in the final prospectus supplement
related to the offering and sale of the Notes dated April 29, 2009.

 

26

 

SECTION 8.02.  
With Consent of Holders.  In
addition to the amendments or supplements to the Indenture pursuant to Section 9.2
of the Original Indenture that require the consent of the Holder of each
Outstanding Note affected thereby, without the consent of each Holder of an
Outstanding Note affected (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, the Notes), no amendment or
supplement may:

 

(a)          make any change
that impairs or adversely affect the right of a holder to convert any Notes
pursuant to Article 9;

 

(b)         reduce the Fundamental Change Repurchase Price,
change the time at which Holders may require any Notes to be repurchased by the
Company in connection with a Fundamental Change in accordance with Article 3
or amend or modify in any manner adverse to the Holders the Company’s
obligation to make such payments, whether through an amendment or waiver of
provisions in the covenants, definitions or otherwise;

 

(c)          make any Note
payable in a currency other than that stated in the Note;

 

(d)         impair the right
of any Holder to institute suit for the enforcement of any payment on or with
respect to such Holder’s Notes; or

 

(e)          change the ranking
of the Notes.

 

SECTION 8.03.  
Revocation and Effect of Consents and Waivers.  Notwithstanding Section 9.4 of the
Original Indenture, a consent to an amendment or a waiver by a Holder of a Note
shall bind the Holder and every subsequent Holder of that Note or portion of
the Note that evidences the same debt as the consenting Holder’s Note, even if
notation of the consent or waiver is not made on the Note.  However, any such Holder or subsequent Holder
may revoke the consent or waiver as to such Holder’s Note or portion of the
Note if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. 
An amendment or waiver becomes effective once both (i) the
requisite number of consents have been received by the Company or the Trustee
and (ii) such amendment or waiver has been executed by the Company and the
Trustee.

 

The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture.  If a record date is
fixed, then notwithstanding the immediately preceding paragraph, those Persons
who were Holders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date.  No such consent shall be valid or effective
for more than one-hundred twenty (120) calendar days after such record date.

 

ARTICLE
9

 

Conversion
of Notes

 

SECTION 9.01.  
Right to Convert.  (a) Subject
to and upon compliance with the provisions of this Article 9, a Holder
shall have the right, at such Holder’s option, to convert all

 

27

 

or any portion (if the
portion to be converted is $1,000 principal amount or multiple thereof) of such
Notes, at any time prior to the close of business on the second Scheduled
Trading Day immediately preceding the Maturity Date at an initial conversion
rate (the “Conversion Rate”) of 76.1905
shares of the Common Stock (subject to adjustments as provided in
Sections 9.03 and 9.04 of this Supplemental Indenture) per $1,000
principal amount of Notes (the “Conversion Obligation”)
only under the following circumstances:

 

(1)                                  Conversion Based on Common Stock
Price.  A Holder may surrender its Notes for
conversion during any calendar quarter commencing at any time after June 30,
2009, and only during such calendar quarter, if the Last Reported Sale Price
for the Common Stock for at least twenty (20) Trading Days during the thirty
(30) consecutive Trading-Day period ending on the last Trading Day of the
preceding calendar quarter is more than 130% of the applicable Conversion Price
in effect on the last day of such preceding calendar quarter.  Whenever the Notes shall become convertible
pursuant to this Section 9.01(a)(1), the Company shall notify all Holders,
the Trustee and the Conversion Agent promptly and, simultaneously with providing
such notice, the Company shall issue a press release containing the relevant
information and make this information available on its website.

 

(2)                                  Conversion Upon Satisfaction of
Trading Price Condition.  A Holder may surrender its
Notes for conversion during the five (5) Business Day period after any ten
(10) consecutive Trading Day period (the “Trading
Price  Measurement Period”) in which the
Trading Price per $1,000 principal amount of Notes, as determined following a
request by a Holder in accordance with the procedures set forth in this Section 9.01(a)(2),
for each Trading Day in the Trading Price Measurement Period was less than 98%
of the product of the Last Reported Sale Price of the Common Stock and the
applicable Conversion Rate.  In
connection with any conversion in accordance with this Section 9.01(a)(2),
the Bid Solicitation Agent shall have no obligation to determine the Trading
Price of the Notes unless requested by the Company; and the Company shall have
no obligation to make such request unless a Holder provides the Company with
reasonable evidence that the Trading Price per $1,000 principal amount of Notes
would be less than 98% of the product of the Last Reported Sale Price of the
Common Stock and the applicable Conversion Rate.  At such time, the Company shall instruct the
Bid Solicitation Agent to determine the Trading Price of the Notes beginning on
the next Trading Day and on each successive Trading Day until the Trading Price
per $1,000 principal amount of Notes is greater than or equal to 98% of the
product of the Last Reported Sale Price of the Common Stock and the applicable
Conversion Rate.  Whenever the Notes
shall become convertible pursuant to this Section 9.01(a)(2), the Company
shall notify all Holders, the Trustee and the Conversion Agent promptly and,
simultaneously with providing such notice, the Company shall issue a press
release containing the relevant information and make this information available
on its website.

 

(3)                                  Conversion Upon Specified
Distributions to Holders of Common Stock.  If the
Company elects to:

 

(i)                                     distribute to all or substantially all
holders of its Common Stock rights entitling them to purchase, for a period
expiring within sixty (60) calendar 

 

28

 

days after the date of
the distribution, shares of the Common Stock at a price per share less than the
average Last Reported Sale Prices of the Common Stock over the ten (10) consecutive
Trading Day period ending on the Trading Day immediately preceding the declaration
date for such distribution; or

 

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

 

then,
in either case, the Company shall notify all Holders, the Trustee and the
Conversion Agent at least fifty-five (55) Business Days prior to the
Ex-Dividend Date for such distribution. 
Simultaneously with providing such notice, the Company shall issue a
press release containing the relevant information, including, but not limited
to, the declaration date, and make this information available on its
website.  Once the Company has given such
notice, a Holder may surrender its Notes for conversion at any time until the
earlier of the close of business on the Business Day immediately prior to such
Ex-Dividend Date for such distribution or the Company’s announcement that such
distribution will not take place.  A
Holder may not convert any of its Notes pursuant to this Section 9.01(a)(3) if
such Holder will otherwise participate in the distribution without conversion
as a result of holding the Notes on a basis equivalent to a holder of a number
of shares of Common Stock equal to the principal amount of such Notes, divided by the applicable Conversion Price.

 

(4)                                  Conversion Upon a Fundamental Change or a Make-Whole Fundamental Change.  In the event
of a Fundamental Change or a Make-Whole Fundamental Change, a Holder may
surrender its Notes for conversion at any time beginning on the Business Day
following the effective date of such Fundamental
Change or Make-Whole Fundamental Change until (a) the close of business
on the second Scheduled Trading Day immediately preceding the Fundamental
Change Repurchase Date corresponding to such Fundamental Change or (b) the
close of business on the thirty-fifth (35th) Trading Day after the effective
date of the Make-Whole Fundamental Change in the case of a Make-Whole
Fundamental Change that is not a Fundamental Change.  The Company shall notify all Holders, the
Trustee and the Conversion Agent of the anticipated occurrence of such a
Fundamental Change or Make-Whole Fundamental Change no later than five (5) Business
Days prior to the anticipated effective date of such Fundamental Change or
Make-Whole Fundamental Change. 
Simultaneously with providing such notice, the Company shall issue a
press release containing the relevant information and make this information
available on its website.

 

(5)                                  Conversion During the Period
Commencing on February 19, 2013 to Maturity. 
Notwithstanding anything herein to the contrary, a Holder may surrender
all or a portion of its Notes for conversion at any time on or after February 19,
2013 until the close of business on the second Scheduled Trading Day
immediately preceding the Maturity Date.

 

29

 

SECTION 9.02.   Conversion Procedures; Settlement
Upon Conversion; No Adjustment for Interest or Dividends; Cash Payments in Lieu
of Fractional Shares.  (a)       In
order to exercise the conversion right with respect to any Notes in
certificated form, a Holder must (A) complete and manually sign an
irrevocable notice of conversion in the form entitled “Form of Conversion
Notice” attached to the reverse of such certificated Note (or a facsimile
thereof) (a “Conversion Notice”), (B) deliver
such Conversion Notice and certificated Note to the Conversion Agent at the
office of the Conversion Agent, (C) to the extent any shares of Common
Stock issuable upon conversion are to be issued in a name other than the Holder’s,
furnish appropriate endorsements and transfer documents as may be required by
the Conversion Agent, (D) if required pursuant to Section 9.02(f),
pay all transfer or similar taxes or duties and (E) if required pursuant
to Section 2.03(c), pay funds equal to interest payable on the next
Interest Payment Date.

 

In
order to exercise the conversion right with respect to any interest in a Global
Note, a Holder must (A) comply with the Depositary’s procedures for
converting a beneficial interest in a Global Note, (B) to the extent any
shares of Common Stock issuable upon conversion are to be issued in a name
other than the Holder’s, furnish appropriate endorsements and transfer
documents as may be required by the Conversion Agent; (C) if required
pursuant to Section 9.02(f), pay all transfer or similar taxes or duties;
and (D) if required pursuant to Section 2.03(c), pay funds equal to
interest payable on the next Interest Payment Date.

 

The
date that the Holder satisfies the foregoing requirements is the “Conversion Date.”

 

If a
Holder has submitted any Notes for repurchase pursuant to Section 3.01,
such Notes may be converted only if the Holder submits a withdrawal notice in
accordance with Section 3.02 prior to the close of business on the second
Scheduled Trading Day immediately preceding the Fundamental Change Repurchase
Date and, if such Notes are evidenced by a Global Note, the Holder complies
with appropriate Depositary procedures.

 

(b)         Except
as provided below, the Company may elect to pay or deliver, as the case may be,
shares of its Common Stock, cash or a combination of cash and shares of Common
Stock in respect of the Conversion Obligation upon conversion of any Notes.

 

The
Company shall from time to time make an election with respect to the method it
chooses in respect of the Conversion Obligation upon conversion of any
Notes.  Such election shall be effective
until the Company provides notice of an election of a different method of
settlement.  The Company may not elect a
different method of settlement after the fifty-first (51st) Scheduled Trading
Day preceding the Maturity Date.  The
Company shall provide to all Holders, the Trustee and the Conversion Agent a
notice of the newly chosen method of settlement and the effective date of such
newly chosen method; provided, however, that in no event shall
the Company notify a Holder who has submitted its Notes for conversion of a
settlement method applicable to such conversion after the second Trading Day
immediately following the related Conversion Date (or, if earlier, February 15,
2013).  Simultaneously with providing
such notice, the Company shall issue a press release containing the relevant
information and make this information available on its website.

 

30

 

If
the Company elects to deliver cash in respect of the Conversion Obligation upon
conversion of any Notes, the Company shall specify in such notice the fixed
dollar amount per $1,000 principal amount of the Notes to be paid in cash (the “Fixed Dollar Amount”); provided the Fixed Dollar
Amount due upon conversion shall in no event exceed the Conversion Value.  If, in respect of any conversion, the Company has not
previously made an election with respect to the settlement method it chooses in
respect of any Conversion Obligation upon conversion of any Notes and does not
timely make such an election, the Company shall be deemed to have elected to
settle such conversion in the manner set forth in Section 9.01(b)(3) with
a Fixed Dollar Amount equal to $1,000 per $1,000 principal amount of Notes.

 

Settlement of conversions (x) solely in
shares of Common Stock (other than cash in lieu of fractional shares) shall
occur on the third (3rd) Trading Day following the final Settlement Period
Trading Day of the Settlement Period that would be applicable if settlement
were in cash or a combination of cash and shares of Common Stock, and (y) in
cash or in a combination of cash and shares of Common Stock shall occur on the
third (3rd) Trading Day following the final Settlement Period Trading Day of
the applicable Settlement Period.

 

The number of shares of Common Stock, the
amount of cash, or the number of shares of Common Stock and amount of cash, as
the case may be, due upon conversion of any Notes shall be computed as follows:

 

(1)                                  if upon conversion of any Notes, the
Company has elected to deliver solely shares of Common Stock in respect of the
related Conversion Obligation, the Company shall deliver to each converting
Holder, for each $1,000 principal amount of Notes converted, a number of shares
of Common Stock equal to the Conversion Rate in effect on the final Settlement
Period Trading Day of the Settlement Period that would be applicable if
settlement were in cash or a combination of cash and shares of Common Stock,
plus cash in lieu of fractional shares, if applicable, as set forth in Section 9.02(i);

 

(2)                                  if upon conversion of any Notes, the
Company has elected to pay solely cash in respect of the related Conversion
Obligation, the Company shall deliver to each converting Holder, for each
$1,000 principal amount of Notes converted, cash in an amount equal to the
Conversion Value; and

 

(3)                                  if upon conversion of any Notes, the
Company has elected (or is deemed to have elected) to pay and deliver, as the
case may be, a combination of cash and shares of Common Stock in respect of the
related Conversion Obligation, the Company shall pay or deliver, as the case
may be, to each converting Holder, for each $1,000 principal amount of Notes
converted:  (A) the Fixed Dollar
Amount per $1,000 principal amount of the Notes of the Conversion Obligation to
be satisfied in cash specified in the notice regarding the Company’s chosen
method of settlement or, if lower, the Conversion Value in cash (the “Fixed Cash Amount”) and (B) a number of shares of
Common Stock equal to the sum, for each of the forty-five (45) Settlement
Period Trading Days in the Settlement Period, of 1/45th of (a) the
Conversion Rate then in effect minus (b) the quotient of (x) the
Fixed Cash Amount divided by (y) the VWAP of the Common Stock on
that Settlement Period Trading Day (plus cash in lieu of fractional shares, if
applicable, as set forth in Section 9.02(i)).

 

31

 

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

 

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

 

(e)          Upon the conversion of an interest in a
Global Note, the Trustee and the Depositary
shall reduce the principal amount of such Global Note in their records.

 

(f)            The issuance of stock certificates on
conversions of Notes shall be made without charge to the converting holder of
Notes for any documentary, stamp or similar issue or transfer tax in respect of
the issue thereof.  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 and delivery of stock in any name other
than that of the holder of any Notes converted, and the Company shall not be
required to issue or deliver any such stock certificate unless and until the
Person or Persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

 

(g)         Upon conversion, accrued and unpaid
interest to the Conversion Date with respect to the converted Notes shall be
deemed to be paid in full rather than cancelled, extinguished or forfeited.

 

(h)         If the Company’s Conversion Obligation is
satisfied in Common Stock or a combination of cash and Common Stock, the Holder
that has converted its Notes (or if such Person designated another Person to
whom such Common Stock shall be issued and delivered, such Person) shall be treated
as a holder of record of such Common Stock as of the close of business on the
final Settlement Period Trading Day of the applicable Settlement Period.

 

(i)             No fractional shares of Common Stock
shall be issued upon conversion of any Note or Notes.  If any fractional shares of Common Stock
would be issuable upon the conversion of any Note or Notes, the Company shall
instead deliver cash with respect to the fractional share calculated by
multiplying the daily VWAP of the Common Stock on the final Settlement Period
Trading Day of the applicable Settlement Period, by the fractional amount and
rounding the product to the nearest cent. 
If the Company has elected to satisfy the entire Conversion Obligation
in Common Stock only, the applicable Settlement Period used to calculate the
cash payment under this Section 9.02(i) shall be the Settlement
Period that would be applicable if settlement of the Conversion Obligation were
in cash or a combination of cash and shares of Common Stock.

 

SECTION 9.03.  
Increased Conversion Rate Applicable to Securities Converted in Connection
With Make-Whole Fundamental Changes. 
If a Holder elects to convert its Notes at any time during the period
permitted for conversion in the event of a Make-Whole 

 

32

 

Fundamental Change, the
Conversion Rate applicable to each Note that is surrendered for conversion in
accordance with this Article 9 shall
be increased by an additional number of shares of Common Stock (the “Additional Shares”) determined pursuant to this Section 9.03.

 

Any conversion will be deemed to have
occurred in connection with a Make-Whole Fundamental Change only if such Notes
are surrendered for conversion at a time when the Notes would be convertible in
light of the occurrence of the Make-Whole Fundamental Change and
notwithstanding the fact that a Note may then be convertible because another
condition to conversion has been satisfied.

 

The number of Additional Shares shall be
determined by reference to the table below, based on the date on which such
Make-Whole Fundamental Change occurs or becomes effective (the “Effective Date”) and the Stock Price paid per share for the
Common Stock in such Make-Whole Fundamental Change.  The Stock Prices set forth in the first row
of the table below (i.e., the
column headers) shall be adjusted as of any date on which the Conversion Rate
is adjusted to equal the Stock Prices applicable immediately prior to such
adjustment, multiplied by a fraction, the numerator
of which shall be the Conversion Rate immediately prior to the adjustment and
the denominator of which shall be the Conversion Rate as so adjusted.  The number of Additional Shares in the table
will be adjusted in the same manner and at the same time as the Conversion Rate
as set forth in Section 9.04.

 

The following table sets forth the number of
Additional Shares by which the Conversion Rate shall be increased based on the
Stock Price and Effective Date of the Make-Whole Fundamental Change:

 

	
   

  	
   

  	
  Stock
  Price

  	
   

  
	
  Effective Date

  	
   

  	
  $ 10.50

  	
   

  	
  $ 11.00

  	
   

  	
  $ 12.00

  	
   

  	
  $ 14.00

  	
   

  	
  $ 16.00

  	
   

  	
  $ 18.00

  	
   

  	
  $ 20.00

  	
   

  	
  $ 22.00

  	
   

  	
  $ 24.00

  	
   

  	
  $ 26.00

  	
   

  	
  $ 30.00

  	
   

  	
  $ 40.00

  	
   

  	
  $ 50.00

  	
   

  	
  $ 60.00

  	
   

  	
  $ 80.00

  	
   

  	
  $ 100.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May 5, 2009

  	
   

  	
  19.0476

  	
   

  	
  17.5421

  	
   

  	
  14.6253

  	
   

  	
  10.6336

  	
   

  	
  8.1267

  	
   

  	
  6.4612

  	
   

  	
  5.3008

  	
   

  	
  4.4544

  	
   

  	
  3.8158

  	
   

  	
  3.3145

  	
   

  	
  2.5816

  	
   

  	
  1.5316

  	
   

  	
  0.9661

  	
   

  	
  0.6172

  	
   

  	
  0.2334

  	
   

  	
  0.0570

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2010

  	
   

  	
  19.0476

  	
   

  	
  16.5446

  	
   

  	
  13.4495

  	
   

  	
  9.3539

  	
   

  	
  6.8968

  	
   

  	
  5.3392

  	
   

  	
  4.3069

  	
   

  	
  3.5805

  	
   

  	
  3.0469

  	
   

  	
  2.6387

  	
   

  	
  2.0538

  	
   

  	
  1.2237

  	
   

  	
  0.7718

  	
   

  	
  0.4891

  	
   

  	
  0.1752

  	
   

  	
  0.0314

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2011

  	
   

  	
  19.0476

  	
   

  	
  15.5067

  	
   

  	
  12.0861

  	
   

  	
  7.7414

  	
   

  	
  5.3405

  	
   

  	
  3.9464

  	
   

  	
  3.0900

  	
   

  	
  2.5287

  	
   

  	
  2.1401

  	
   

  	
  1.8525

  	
   

  	
  1.4494

  	
   

  	
  0.8764

  	
   

  	
  0.5548

  	
   

  	
  0.3491

  	
   

  	
  0.1163

  	
   

  	
  0.0072

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2012

  	
   

  	
  19.0476

  	
   

  	
  14.7186

  	
   

  	
  10.3462

  	
   

  	
  5.4842

  	
   

  	
  3.2037

  	
   

  	
  2.1239

  	
   

  	
  1.5838

  	
   

  	
  1.2832

  	
   

  	
  1.0933

  	
   

  	
  0.9579

  	
   

  	
  0.7652

  	
   

  	
  0.4717

  	
   

  	
  0.2979

  	
   

  	
  0.1833

  	
   

  	
  0.0480

  	
   

  	
  0.0000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2013

  	
   

  	
  19.0476

  	
   

  	
  14.7186

  	
   

  	
  7.1429

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  

 

provided, however, that:

 

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

 

(2)                                  (a) if the actual Stock Price is
greater than $100.00 per share (subject to adjustment in the same manner as the
Stock Prices set forth in the first row of the table above pursuant to this Section 9.03),
then the Conversion Rate will not be increased, or (b) if the actual Stock
Price is less than $10.50 per share (subject to adjustment in the 

 

33

 

same manner as the Stock
Prices set forth in the first row of the table above pursuant to this Section 9.03),
then the Conversion Rate will not be increased.

 

Notwithstanding the foregoing, in no event
will the Conversion Rate as adjusted exceed 95.2381 per $1,000 principal amount
of Notes, subject to adjustment in the same manner as the Conversion Rate
pursuant to Section 9.04.

 

SECTION 9.04.  
Adjustment of Conversion Rate. 
The Conversion Rate shall be adjusted from time to time by the Company
as follows:

 

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

 

 

where

 

	
  CR0

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect at the close of business on the Record Date for such dividend or
  distribution or the effective date of such share split or share combination;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CR’

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect immediately after the Record Date for such dividend or distribution or
  the effective date of such share split or share combination;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OS0

  	
   

  	
  =

  	
   

  	
  the number of shares of
  the Common Stock that are outstanding  at the
  close of business on the Record Date for such dividend or distribution or the
  effective date of such share split or share combination; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OS’

  	
   

  	
  =

  	
   

  	
  the number of shares of
  the Common Stock that are outstanding immediately after, and solely as a
  result of, such event.

  

 

Such adjustment shall become effective immediately after (x) the
Record Date for such dividend or distribution or (y) the effective date of
such share split or share combination. 
If any dividend or distribution of the type described in this Section 9.04(a) is
declared but not so paid or made, the Conversion Rate shall be readjusted to
the Conversion Rate that would then be in effect if such dividend or
distribution had not been declared.

 

(b)         If the Company shall issue to all or
substantially all holders of its Common Stock any rights or warrants entitling
them for a period of not more than sixty (60) calendar days to subscribe for or
purchase shares of the Common Stock, at a price per share less than the Current
Market Price of the Common Stock, the Conversion Rate shall be adjusted based
on the following formula:

 

34

 

 

where

 

	
  CR0

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect at the close of business on the Record Date for such distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CR’

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect immediately after the Record Date for such distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OS0

  	
   

  	
  =

  	
   

  	
  the number of shares of
  the Common Stock that are outstanding at the close of business on the Record
  Date for such distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X

  	
   

  	
  =

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Y

  	
   

  	
  =

  	
   

  	
  the number of shares of
  the Common Stock equal to the aggregate price payable to exercise such rights
  or warrants divided by the Current Market Price.

  

 

Such adjustment shall become effective immediately after the Record
Date for such distribution.  In the event
that such rights or warrants described in this Section 9.04(b) are
not so distributed, the Conversion Rate shall be readjusted to the Conversion
Rate that would then be in effect if the Record Date for such distribution had
not occurred. To the extent that such rights or warrants are not exercised
prior to their expiration or shares of the Common Stock are otherwise not
delivered pursuant to such rights or warrants upon the exercise of such rights
or warrants, the Conversion Rate shall be readjusted to the Conversion Rate
that would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of the delivery of only the number of
shares of the Common Stock actually delivered. In determining the aggregate
price payable for such shares of the Common Stock, there shall be taken into
account any consideration received for such rights or warrants and the value of
such consideration if other than cash to be determined by the Board of
Directors.

 

(c)          If the Company shall distribute shares of
its Capital Stock, evidences of its indebtedness or other of its assets or
property to all or substantially all holders of its Common Stock, excluding (v) any
dividends or distributions referred to in Section 9.04(a); (w) any
rights or warrants referred to in Section 9.04(b); (x) any dividends
or distributions covered by Section 9.04(d); (y) any dividends and
distributions in connection with a Reorganization Event covered by Section 9.05;
and (z) any Spin-Off to which the provisions set forth below in this Section 9.04(c) shall
apply (any of such shares of Capital Stock, evidences of indebtedness, or other
assets or property, “Distributed Property”),
then, in each such case, the Conversion Rate shall be adjusted based on the
following formula:

 

 

 

35

 

where

 

	
  CR0

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect at the close of business on the Record Date for such distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CR’

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect immediately after the Record Date for such distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SP0

  	
   

  	
  =

  	
   

  	
  the Current Market Price;
  and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FMV

  	
   

  	
  =

  	
   

  	
  the Fair Market Value, on
  the Record Date for such distribution, of the Distributed Property, expressed
  as an amount per share of the Common Stock.

  

 

With respect to an adjustment pursuant to this Section 9.04(c) where
there has been a payment of a dividend or other distribution on the Common
Stock of shares of Capital Stock of any class or series of, or similar equity
interest in, a Subsidiary or other business unit of the Company (a “Spin-Off”), that are, or, when issued, will be, quoted or
listed on the New York Stock Exchange, the NASDAQ Global Select Market, NASDAQ
Global Market or any other national or regional securities exchange or market,
the Conversion Rate will instead be adjusted based on the following formula:

 

 

where

 

	
  CR0

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect at the close of business on the Record Date for such dividend or
  distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CR’

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect immediately after the Record Date for such dividend or distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FMV0

  	
   

  	
  =

  	
   

  	
  the average of the Last
  Reported Sale Prices of the Capital Stock or similar equity interest
  distributed to holders of the Common Stock applicable to one share of the
  Common Stock over the ten (10) consecutive Trading-Day period commencing
  on, and including, the effective date of the Spin-Off; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MP0

  	
   

  	
  =

  	
   

  	
  the average of the Last
  Reported Sale Prices of the Common Stock over the ten (10) consecutive
  Trading-Day period commencing on, and including, the effective date of the
  Spin-Off.

  

 

Such adjustment shall become effective immediately after the Record
Date for such dividend or distribution. 
If such dividend or distribution is not so made, the Conversion Rate
shall be readjusted to be the Conversion Rate that would then be in effect if
such dividend or distribution had not been declared.

 

36

 

For the purposes of this Section 9.04(c) (and
subject in all respects to Section 9.08), rights or warrants distributed
by the Company to all holders of its Common Stock entitling them to subscribe
for or purchase shares of the Company’s capital stock (either initially or
under certain circumstances), which rights or warrants, until the occurrence of
a specified event or events (a “Trigger Event”):  (1) are deemed to be transferred with
such shares of Common Stock; (2) are not exercisable; and (3) are
also issued in respect of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 9.04(c), (and no adjustment to
the Conversion Rate under this Section 9.04(c) will be required)
until the occurrence of the earliest Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate adjustment
(if any is required) to the Conversion Rate shall be made under this Section 9.04(c).  If any such right or warrant, including any
such existing rights or warrants distributed prior to the date of this
Supplemental Indenture, are subject to events, upon the occurrence of which
such rights or warrants become exercisable to purchase different securities,
evidences of indebtedness or other assets, then the date of the occurrence of
any and each such event shall be deemed to be the date of distribution and
Record Date of such deemed distribution (in which case the original rights or
warrants shall be deemed to terminate and expire on such date without exercise
by any of the holders).  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 was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Rate under this Section 9.04(c) was
made, (1) in the case of any such rights or warrants which shall all have
been redeemed or purchased without exercise by any Holders thereof, upon such
final redemption or repurchase (x) the Conversion Rate shall be readjusted
as if such rights or warrants had not been issued and (y) the Conversion
Rate shall then again be readjusted to give effect to such distribution, deemed
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or purchase price received by
holders of Common Stock with respect to such rights or warrants (assuming each
such holder had retained such rights or warrants), made to all holders of
Common Stock as of the date of such redemption or purchase, and (2) in the
case of such rights or warrants which shall have expired or been terminated
without exercise by any holders thereof, the Conversion Rate shall be
readjusted as if such rights and warrants had not been issued.

 

For the purposes of this Section 9.04(c) and
subsections (a) and (b) of this Section 9.04, any dividend or
distribution to which this Section 9.04(c) applies which also includes
one or both of:

 

(A)                              a dividend or distribution
of shares of Common Stock to which Section 9.04(a) applies; and

 

(B)                                a dividend or distribution of rights or
warrants to which Section 9.04(b) applies,

 

then (1) such dividend or distribution, other than the dividend or
distribution of shares of Common Stock to which Section 9.04(a) applies
and the dividend or
distribution of rights or warrants to which Section 9.04(b) applies, shall be
deemed to be a dividend or distribution to which this Section 9.04(c) applies
and any Conversion Rate adjustment required by this Section 9.04(c) with
respect thereto shall then be made, and (2) the dividend or distribution
of shares of Common Stock to which Section 9.04(a) applies and the
dividend or distribution of shares of 

 

37

 

Common Stock to which Section 9.04(b) applies shall be deemed
to immediately follow such dividend or distribution to which this Section 9.04(c) applies
and any Conversion Rate adjustment required by Section 9.04(a) and Section 9.04(b) with
respect thereto shall then be made, except that, if determined by the Company, (I) the
“Record Date” of the dividend or distribution of shares of Common Stock to
which Section 9.04(a) applies and the dividend or distribution of
shares of Common Stock to which Section 9.04(b) applies shall be
deemed to be the Record Date of such dividend or distribution to which this Section 9.04(c) applies
and (II) any shares of Common Stock included in the dividend or distribution
of shares of Common Stock to which Section 9.04(a) applies or the dividend or distribution
of shares of Common Stock to which Section 9.04(b) applies shall be deemed not to be “outstanding at
the close of business on the Record Date for such dividend or distribution or
the effective date of such share split or share combination” within the meaning of Section 9.04(a) or
“outstanding at the close of business on the Record Date for such
distribution” within
the meaning of Section 9.04(b).

 

(d)         If the Company pays any cash dividend or
distribution to all or substantially all holders of its Common Stock, other
than a regular, quarterly cash dividend that does not exceed $0.02 (the “Initial Dividend Threshold”), the Conversion Rate shall be
adjusted based on the following formula:

 

 

where

 

	
  CR0

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect at the close of business on the Record Date for such dividend or
  distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CR’

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect immediately after the Record Date for such dividend or distribution;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SP0

  	
   

  	
  =

  	
   

  	
  the Current Market Price;
  and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  =

  	
   

  	
  the amount in cash per
  share of Common Stock the Company distributes to holders of its Common Stock
  in excess of the Initial Dividend Threshold; provided that if the
  dividend or distribution is not a regular, quarterly cash dividend, the
  Initial Dividend Threshold shall be deemed to be zero.

  

 

Such adjustment shall become effective immediately after the Record
Date for such dividend or distribution. 
In the event that any such dividend or distribution is not so made, the
Conversion Rate shall be readjusted to be the Conversion Rate that would then
be in effect if such dividend or distribution had not been declared.

 

The Initial Dividend Threshold shall be adjusted in a manner inversely
proportional to adjustments to the Conversion Rate; provided that no
adjustment shall be made to the Initial Dividend Threshold for any adjustment
made to the Conversion Rate pursuant to this Section 9.04(d).

 

38

 

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

 

 

where

 

	
  CR0

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect at the close of business on the Expiration Date;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CR’

  	
   

  	
  =

  	
   

  	
  the Conversion Rate in
  effect immediately after the Expiration Date;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FMV

  	
   

  	
  =

  	
   

  	
  the Fair Market Value, on
  the Expiration Date, of the aggregate value of all cash and any other
  consideration paid or payable for shares validly tendered or exchanged and
  not withdrawn as of the Expiration Date;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OS’

  	
   

  	
  =

  	
   

  	
  the number of shares of
  Common Stock outstanding immediately after the last time tenders or exchanges
  may be made pursuant to such tender offer or exchange offer (the “Expiration Time”);

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OS0

  	
   

  	
  =

  	
   

  	
  the number of shares of
  Common Stock outstanding immediately prior to the Expiration Time; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SP’

  	
   

  	
  =

  	
   

  	
  the average of the Last
  Reported Sale Prices of Common Stock over the ten (10) consecutive
  Trading Day period commencing on the Trading Day immediately following the
  Expiration Date.

  

 

Such adjustment shall become effective immediately prior to the open of
business on the Trading Day immediately following the Expiration Date.  In the event the Company or one of its
Subsidiaries is obligated to purchase shares of the Common Stock pursuant to
any such tender offer or exchange offer, but the Company or such Subsidiary of
the Company is permanently prevented by applicable law from effecting any such
purchases, or all such purchases are rescinded, the Conversion Rate shall be
readjusted to be the Conversion Rate that would then be in effect if such
tender offer or exchange offer had not been made.  Except as set forth in the preceding
sentence, if the application of this clause (e) to any tender offer or
exchange offer would result in a decrease in the Conversion Rate, no adjustment
shall be made for such tender offer or exchange offer under this Section 9.04(e).

 

(f)            Except with respect to a Spin-Off, in
cases where the Fair Market Value of assets, debt securities or certain rights,
warrants or options to purchase the Company’s securities, 

 

39

 

or the amount of the cash dividend or distribution applicable to one
share of Common Stock, distributed to all or substantially all stockholders:

 

(i)                                     equals or
exceeds the average Last Reported Sale Prices of Common Stock over the ten (10) consecutive
Trading Day period ending on the Trading Day immediately preceding the
declaration date for such distribution; or

 

(ii)                                  such average
Last Reported Sale Prices exceeds the Fair Market Value of such assets, debt
securities or rights, warrants or options, or the amount of cash so distributed
by less than $1.00,

 

rather than being entitled to an adjustment
in the Conversion Rate, the Holder of a Note will be entitled to receive upon
conversion, in addition to the shares of Common Stock, cash or a combination of
cash and shares of Common Stock, the kind and amount of assets, debt securities
or rights, warrants or options, or cash comprising the distribution, if any,
that such Holder would have received if such Holder had held a number of shares
of Common Stock equal to the principal amount of the Notes held, divided by the Conversion Price in effect immediately prior
to the Record Date for determining the stockholders entitled to receive the
distribution.

 

(g)         To the extent permitted by applicable law
and subject to the applicable rules of the New York Stock Exchange, the
Company from time to time may increase the Conversion Rate by any amount for a
period of at least twenty (20) Business Days if the increase is irrevocable
during the period and the Board of Directors shall have made a determination
that such increase would be in the Company’s best interest, which determination
shall be conclusive.  Whenever the
Conversion Rate is increased pursuant to the preceding sentence, the Company
shall mail to holders of record of the Notes a notice of the increase, which
notice will be given at least fifteen (15) calendar days prior to the
effectiveness of any such increase, and such notice shall state the increased
Conversion Rate and the period during which it will be in effect.

 

(h)         In addition, the Company may (but is not
required to) increase the Conversion Rate to avoid or diminish any income tax
to holders of Common Stock or rights to purchase shares of Common Stock in
connection with a dividend or distribution of shares (or rights to acquire
shares) or similar event.

 

(i)             All calculations and other determinations
under this Article 9 shall be made by the Company and shall be made to the
nearest one-ten thousandth (1/10,000th) of a share.  No adjustment pursuant to this Section 9.04
shall be made to the Conversion Rate unless such adjustment would require a
change of at least 1% in the Conversion Rate then in effect at such time.  However, any adjustments that are less than
1% of the Conversion Rate shall be carried forward and taken into account in
any subsequent adjustment, regardless of whether the aggregate adjustment is
less than 1% within one year of the first adjustment carried forward, upon a
Fundamental Change, upon a Make-Whole Fundamental Change, and on each day
beginning with the forty-seventh (47th) Scheduled Trading Day and ending on and
including the second (2nd) Scheduled Trading Day prior to the Maturity Date.

 

(j)             Whenever the Conversion Rate is adjusted
as herein provided, the Company will issue a press release containing the
relevant information, including, but not limited to, any 

 

40

 

applicable declaration date, and make this information available on its
website.  In addition, the Company shall
promptly file with the Trustee and any Conversion Agent other than the Trustee
an Officers’ Certificate setting forth any applicable declaration date and the
Conversion Rate after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. 
Unless and until a Responsible Officer of the Trustee shall have
received such Officers’ Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Rate and may assume without
inquiry that the last Conversion Rate of which it has knowledge is still in
effect.  Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Rate setting forth the adjusted Conversion Rate and the date on
which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Rate to the Holder of each Note at its last
address appearing on the Security Register within twenty (20) calendar days of
the effective date of such adjustment. 
Failure to deliver such notice shall not affect the legality or validity
of any such adjustment.

 

(k)          In any case in which this Section 9.04
provides that an adjustment shall become effective immediately after (i) a
Record Date for a dividend or distribution described in Section 9.04(a),
9.04(b), 9.04(d), (ii) the effective date for a share split or share
combination of the Common Stock described in Section 9.04(a), (iii) a
Record Date for the determination of stockholders entitled to receive rights or
warrants pursuant to Section 9.04(b), or (iv) the expiration date for
any tender or exchange offer pursuant to Section 9.04(e), (each, a “Determination Date”), the Company may elect
to defer until the occurrence of the applicable Adjustment Event (as
hereinafter defined) (x) issuing to the holder of any Notes converted
after such Determination Date and before the occurrence of such Adjustment
Event, the additional shares of Common Stock or other securities issuable upon
such conversion by reason of the adjustment required by such Adjustment Event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (y) paying to such holder any amount in cash
in lieu of any fractional share pursuant to Section 9.04.  For purposes of this Section 9.04(k),
the term “Adjustment Event” shall
mean:

 

(1)                                  in any case referred to in
clause (i) hereof, the date any such dividend or distribution is paid or
made;

 

(2)                                  in any case referred to in
clause (ii) hereof, the occurrence of such event;

 

(3)                                  in any case referred to in
clause (iii) hereof, the date of expiration of such rights or warrants;
and

 

(4)                                  in any case referred to in
clause (iv) hereof, the date a sale or exchange of Common Stock pursuant
to such tender or exchange offer is consummated and becomes irrevocable.

 

(l)                         Notwithstanding any of the foregoing
clauses in this Section 9.04, the applicable Conversion Rate will not be
adjusted pursuant to this Section 9.04 if the Holders of the Notes will
participate in the transaction that would otherwise give rise to adjustment
pursuant to this Section 9.04 without conversion of such Holder’s Notes on
a basis equivalent to a holder of a number of shares of Common Stock equal to
the principal amount of the Notes held by the Holder divided by the
applicable Conversion Price.  In no event
will the Company adjust the 

 

41

 

Conversion Rate to the extent that the adjustment would reduce the Conversion
Price below the par value per share of Common Stock.  In addition, the applicable Conversion Rate
will not be adjusted:

 

(1)                                  for the issuance of shares of Common
Stock, including in connection with satisfaction of the Company’s Conversion
Obligation in a combination of cash and shares of Common Stock, or any
securities convertible into or exchangeable for shares of Common Stock or the
right to purchase shares of Common Stock or such convertible or exchangeable
securities;

 

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

 

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

 

(4)                                  for a change in the par value of the
Common Stock.

 

(m)                   For purposes of this Section 9.04,
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock.  The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

 

(n)                     Whenever any provision of this Article 9
requires a calculation of a number of shares of Common Stock equal to a sum or
an average of the VWAPs or the Last Reported Sale Prices over a span of
multiple days, the Company will make appropriate adjustments (determined by the
Board of Directors) to account for any adjustment to the Conversion Rate that
becomes effective, or any event requiring an adjustment to the Conversion Rate
where the Ex-Dividend Date of the event occurs, at any time during the period
from which the sum or average is to be calculated.

 

SECTION 9.05.  
Effect of Reclassification, Consolidation, Merger or Sale.

 

(a)                                  In the event of:

 

(1)                                  any reclassification of the outstanding
Common Stock (other than a change in par value or as a result of a share split
or share combination to which Section 9.04(a) applies);

 

(2)                                  any share exchange, consolidation or
merger involving the Company; or

 

(3)                                  any conveyance, transfer, sale, lease or
other disposition to another Person of all or substantially all of the Company’s
assets,

 

42

 

in which holders
of Common Stock received cash, securities or other property (the “Reference Property”) in exchange for such
Common Stock (any such event or transaction, a “Reorganization Event”), in each case, the Company or the
Successor Company, 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 that the Notes
shall, and the Notes shall, without the consent of any Holder, become
convertible based on the type and amount of consideration that the holders of a
number of shares of Common Stock equal to the principal amount of Notes divided
by the Conversion Price would have received in such Reorganization
Event.  If the Reorganization Event
causes the Common Stock to be exchanged for more than a single type of
consideration (determined based in part upon any form of stockholder election),
the Reference Property into which the Notes will be convertible will be deemed
to be the weighted average of the types and amounts of consideration received
by the holders of Common Stock that affirmatively made such an election.  In all cases, the provisions under Section 9.02
shall continue to apply with respect to the calculation of the Conversion
Obligation and the method of settlement. 
The Company hereby agrees not to become a party to any such transaction
unless its terms are consistent with the foregoing.  Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as practicable to the
adjustments provided for in this Article 9.

 

(b)                                 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 Security Register of the Notes
maintained by the Security Registrar, within twenty (20) calendar days after
execution thereof.  Failure to deliver
such notice shall not affect the legality or validity of such supplemental
indenture.

 

SECTION 9.06.   Certain Covenants.    (a)                        The Company shall, prior to the issuance
of any Notes hereunder, and from time to time as may be necessary, reserve out
of its authorized but unissued Common Stock or shares of Common Stock held in
treasury, a sufficient number of shares of Common Stock, free of preemptive
rights, to permit the conversion of the Notes.

 

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

 

(c)          The Company shall endeavor promptly to
comply with all federal and state securities laws regulating the issuance and
delivery of shares of Common Stock upon the conversion of Notes, if any, and
shall cause to have listed or quoted and shall keep listed or quoted all such
shares of Common Stock on each U.S. national securities exchange or automatic
quotation system or over-the-counter or other domestic market on which the
Common Stock is then listed or quoted.

 

SECTION 9.07.  
Notice to Holders Prior to Certain Actions.  Except where notice is required pursuant to Section 9.01,
in case:

 

43

 

(a)          the Company shall declare a dividend (or
any other distribution) on its Common Stock that would require an adjustment in
the Conversion Rate pursuant to Section 9.04; or

 

(b)         the Company shall authorize the granting
to all or substantially all of the holders of its Common Stock of rights or
warrants to subscribe for or purchase any share of any class or any other
rights or warrants that would require an adjustment in the Conversion Rate
pursuant to Section 9.04; or

 

(c)          of any reclassification of the Common
Stock of the Company (other than a share split or share combination of its
outstanding Common Stock, or a change in par value), or of any share exchange,
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 conveyance, transfer,
sale, lease or other disposition of all or substantially all of the
consolidated assets of the Company; or

 

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

 

the Company shall cause to be filed with the
Trustee and to be mailed to each Holder at its address appearing on the
Security Register, as promptly as possible but in any event at least twenty
(20) calendar days prior to the applicable date hereinafter specified, a notice
stating (x) the declaration date of the dividend or other distribution, (y) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, or (z) the date on
which such reclassification, share exchange, consolidation, merger, conveyance,
transfer, sale, lease or other disposition, dissolution, liquidation or winding
up is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.  Failure to
give such notice, or any defect therein, shall not affect the legality or
validity of such dividend, distribution, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up.

 

SECTION 9.08.  
Stockholder Rights Plans.  If the
rights provided for in any rights plan adopted by the Company have not
separated from the shares of Common Stock in accordance with the provisions of
the applicable stockholder rights agreement, upon conversion of Notes, the
converting Holder will receive, in addition to shares of Common Stock, if any,
the rights under the applicable stockholders rights agreement.  If such rights have separated from the Common
Stock, the Conversion Rate will be adjusted as provided in Section 9.04(c) at
the time of separation as if the Company distributed to all holders of the
Common Stock, shares of the Company’s Capital Stock, evidences of indebtedness
or assets, subject to readjustment in the event of the expiration, termination
or redemption of such rights.

 

SECTION 9.09.  
Responsibility of Trustee.  The
Trustee and any other Conversion Agent shall not at any time be under any duty
or responsibility to any Holder of Notes to determine the Conversion Rate or
whether any facts exist that may require any 

 

44

 

adjustment (including any
increase) of the Conversion Rate, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed,
in making the same.  The Trustee and any
other Conversion Agent shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities, property or cash that may at any time be issued or delivered upon
the conversion of any Note; and the Trustee and any other Conversion Agent make
no representations with respect thereto. 
Neither the Trustee nor any Conversion Agent shall be responsible for
any failure of the Company to issue, transfer or deliver any shares of Common
Stock or stock certificates or other securities or property or cash upon the
surrender of any Note for the purpose of conversion or to comply with any of
the duties, responsibilities or covenants of the Company contained in this Article 9.  Without limiting the generality of the
foregoing, neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 9.05 relating
either to the kind or amount of shares of stock or securities or property
(including cash) receivable by Holders of the Notes upon the conversion of
their Notes after any event referred to in such Section 9.05 or to any
adjustment to be made with respect thereto, but, subject to the provisions of Section 8.01,
may accept as conclusive evidence of the correctness of any such provisions,
and shall be protected in relying upon, the Officers’ Certificate (which the
Company shall be obligated to file with the Trustee prior to the execution of
any such supplemental indenture) with respect thereto.  Neither the Trustee nor the Conversion Agent
shall be responsible for determining whether any event contemplated by Section 9.01
has occurred that makes the Notes eligible for conversion or no longer eligible
therefor until the Company has delivered to the Trustee and the Conversion
Agent the notices referred to in Section 9.01 with respect to the
commencement or termination of such conversion rights, on which notices the
Trustee and the Conversion Agent may conclusively rely, and the Company agrees
to deliver such notices to the Trustee and the Conversion Agent immediately
after the occurrence of any such event or at such other times as shall be
provided for in Section 9.01.

 

ARTICLE
10

 

Inapplicable Provisions of the Original
Indenture

 

SECTION 10.01.  
Limitation Upon Mortgages.  The
provisions of Section 10.4 of the Original Indenture shall not apply to
the Notes.

 

SECTION 10.02.  
Limitation Upon Sale and Leaseback Transactions.  The provisions of Section 10.5 of the
Original Indenture shall not apply to the Notes.

 

ARTICLE
11

 

Miscellaneous

 

SECTION 11.01.  
Trust Indenture Act Controls. 
This Supplemental Indenture is hereby made subject to, and shall be governed
by, the provisions of the Trust Indenture Act required to be part of and to
govern indentures qualified under the Trust Indenture Act. If any provision of
this Supplemental Indenture limits, qualifies or conflicts with another
provision 

 

45

 

hereof or the Original
Indenture that is required to be included in an indenture qualified under the
Trust Indenture Act, the required provision shall control.

 

SECTION 11.02.  
Communication by Holders with Other Holders.  Holders may communicate pursuant to Trust
Indenture Act § 312(b) with other Holders with respect to their
rights under this Indenture or the Notes. 
The Company, the Trustee, the Security Registrar and anyone else shall
have the protection of Trust Indenture Act § 312(c).

 

SECTION 11.03.  
Rules by Trustee, Paying Agent and Security Registrar.  The Trustee may make reasonable rules for
action by or a meeting of Holders.  The
Security Registrar and the Paying Agent may make reasonable rules for their
functions.

 

SECTION 11.04.  
GOVERNING LAW.  THIS SUPPLEMENTAL INDENTURE AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.

 

SECTION 11.05.  
No Recourse Against Others.  No
director, officer, employee, incorporator, stockholder or partner of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes, the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. 
Each Holder by accepting a Note waives and releases all such
liability.  The waiver and release shall
be part of the consideration for the issuance of the Notes.  The waiver may not be effective to waive
liabilities under the federal securities laws.

 

SECTION 11.06.  
Multiple Originals.  The parties
may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  One signed copy is enough to prove this
Supplemental Indenture.

 

SECTION 11.07.  
Severability Clause.  In case any
provision in the Indenture 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 and such provision shall be ineffective
only to the extent of such invalidity, illegality or unenforceability.

 

SECTION 11.08.  
Calculations.  Except as otherwise
provided in this Supplemental Indenture, the Company will be responsible for
making all calculations called for under the Indenture and the Notes. The
Company will make all such calculations in good faith and, absent manifest
error, its calculations will be final and binding on Holders.  The Company upon request will provide a
schedule of its calculations to each of the Trustee and the Conversion Agent,
and each of the Trustee and Conversion Agent is entitled to rely conclusively
upon the accuracy of the Company’s calculations without independent
verification. The Trustee will deliver a copy of such schedule to any Holder
upon the request of such Holder.

 

SECTION 11.09.  
Recitals.  The recitals herein are
deemed to be those of the Company and not of the Trustee.

 

SECTION 11.10.  
Ratification of Original Indenture. 
The Original Indenture, as supplemented by this Supplemental Indenture,
is in all respects ratified and confirmed, and this 

 

46

 

Supplemental Indenture shall
be deemed part of the Original Indenture in the manner and to the extent herein
and therein provided.

 

47

 

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

 

	
   

  	
  TEXTRON INC.,

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary F. Lovejoy

  
	
   

  	
   

  	
  Name: Mary F. Lovejoy

  
	
   

  	
   

  	
  Title: Vice President &
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vaneta I. Bernard

  
	
   

  	
   

  	
  Name: Vaneta I. Bernard

  
	
   

  	
   

  	
  Title: Vice President

  

 

48

 

EXHIBIT A

 

[FORM OF
FACE OF NOTE]

 

[Global
Note Legend]

 

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

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

A-1

 

	
  No.

  	
  Initially
  $[              ]

  

 

4.50%
Convertible Senior Note due 2013

 

CUSIP No.: 883203 BN0

ISIN:  US883203BN06

 

TEXTRON INC., a Delaware corporation, promises to pay
to [CEDE & CO.](1), or its registered assigns, the principal sum of
[            ]
MILLION DOLLARS
($            )
[(or such lesser principal amount as shall be specified in the “Schedule of
Exchanges of Securities” attached hereto)](2), on May 1, 2013, and to pay
interest thereon from May 5, 2009, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for,
semi-annually on May 1 and November 1 of each year, commencing on November 1,
2009, at the rate of 4.50% per annum, until the principal hereof is paid or
made available for payment or converted. 
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered
at 5:00 p.m., New York City time, on the Regular Record Date for such
interest, which shall be April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.

 

Interest on the Notes for a Full Interest Period
will be computed on the basis of a three hundred sixty (360)-day year comprised
of twelve (12) thirty (30)-day months. 
Interest on the Notes for any period other than a Full Interest Period will
be computed on the basis of the actual number of days elapsed during the period
and a three hundred sixty-five (365)-day year. If an Interest Payment Date is
not a Business Day, payment shall instead be made on the next succeeding
Business Day, and no additional interest shall accrue thereon.

 

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

 

In the case of any conflict between this Note and
the Indenture, the provisions of the Indenture shall control.  This Note shall be deemed to be a contract
made under the laws of the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of said State.

 

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

 

(1)                                  Use bracketed
language only if Global Note.

 

A-2

 

Dated:

 

	
   

  	
  TEXTRON INC.,

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

TRUSTEE’S CERTIFICATE OF 
   AUTHENTICATION

 

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

 

	
  Dated:

  	
   

  	
   

  

 

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

as Trustee

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  

 

A-3

 

[FORM OF
REVERSE SIDE OF NOTE]

 

4.50%
Convertible Senior Note due 2013

 

TEXTRON INC., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the “Company”),
issued this Note under an Indenture dated as of September 10, 1999 (herein
called the “Original Indenture”), as
supplemented by the Supplemental Indenture dated as of May 5, 2009 (herein
called the “Supplemental Indenture” and the
Original Indenture, as supplemented by the Supplemental Indenture, the “Indenture”), between the Company and The Bank of New York
Mellon Trust Company, N.A. (as successor to The Bank of New York, herein called
the “Trustee”), as Trustee, to which
reference is hereby made for a statement of the respective rights, obligations,
duties and immunities thereunder of the Company, the Trustee and the Holders
and of the terms upon which the Notes are, and are to be, authorized and
delivered.  All terms used in this Note
that are defined in the Indenture shall have the meaning assigned to them in
the Indenture.

 

1.                                       Method of Payment

 

The Company will pay interest on the Notes
(except Defaulted Interest, which will be payable as provided in Section 3.7
of the Original Indenture) to the Persons who are registered holders of Notes
at 5:00 p.m., New York City time, on the April 15 and October 15
next preceding the Interest Payment Date even if Notes are canceled after the
Regular Record Date and on or before the Interest Payment Date, except as
otherwise provided in the Indenture. Holders must surrender Notes to a Paying
Agent to collect principal payments.  The
Company will pay principal and interest in money of the United States of
America that at the time of payment is legal tender for payment of public and
private debts.

 

The Company shall pay interest on:

 

(i)  any Global Notes by wire transfer of immediately available
funds to the account of the Depositary or its nominee;

 

(ii)  any Notes in certificated form having a principal amount of
less than $5,000,000, by check mailed to the address of the Person entitled
thereto as it appears in the Security Register; provided, however, on the Maturity Date, interest will be payable as
described in Section 2.03(b) of the Supplemental Indenture; and

 

(iii)  any Notes in certificated form having a principal amount of
$5,000,000 or more, by wire transfer in immediately available funds at the
election of the Holders of such Notes duly delivered to the Trustee at least
five (5) Business Days prior to the relevant Interest Payment Date; provided,
however, on the Maturity Date, interest will be payable as described in Section 2.03(b) of
the Supplemental Indenture.

 

2.                                       Paying Agent, Security Registrar,
Conversion Agent and Bid Solicitation Agent

 

Initially, the Trustee will act as Paying Agent,
Security Registrar, Conversion Agent and Bid Solicitation Agent.  The Company may appoint and change any Paying
Agent, 

 

A-4

 

Security Registrar or
co-registrar, Conversion Agent or Bid Solicitation Agent without notice.  The Company may act as Paying Agent, Security
Registrar or co-registrar.

 

3.                                       Sinking Fund and Redemption

 

The Notes are not subject to the provisions of
Articles XI or XII of the Original Indenture.

 

4.                                       Repurchase of Notes at the Option of
Holders

 

If there shall occur a
Fundamental Change at any time prior to the Maturity Date, then each Holder
shall have the right, at such Holder’s option, to require the Company to
repurchase for cash any or all of such Holder’s Notes in accordance with the
terms of the Indenture.

 

5.                                       Conversion

 

Subject to and upon
compliance with the provisions of the Indenture, the Holder hereof has the
right, at its option, during certain periods and upon the occurrence of certain
conditions specified in the Indenture and prior to 5:00 p.m. (New York
City time) on the second Scheduled Trading Day immediately preceding the
Maturity Date, to convert any Notes or portion thereof that is $1,000 or
multiples thereof at a Conversion Rate specified in the Indenture, as adjusted
from time to time as provided in the Indenture, upon surrender of this Note,
together with a Conversion Notice as provided in the Indenture and this Note,
to the Company at the office or agency of the Company maintained for that
purpose in New York City and, unless the shares issuable on conversion are to
be issued in the same name as this Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the Holder or by its duly authorized attorney. 
Except as provided in the Supplemental
Indenture, the Company may elect to pay or deliver, as the case may be, shares
of its Common Stock, cash or a combination of cash and shares of Common Stock
in respect of the Conversion Obligation upon conversion of any Notes.  The Company may elect, in accordance with the
Indenture, a different settlement method pursuant to the terms of the
Indenture.  If, in respect of any
conversion, the Company has not previously made an election with respect to the
settlement method it chooses in respect of any Conversion Obligation upon
conversion of any Notes and does not timely make such an election, the Company
shall be deemed to have elected to settle such conversion in the manner set forth
in Section 9.01(b)(3) of the Supplemental Indenture with a Fixed
Dollar Amount equal to $1,000 per $1,000 principal amount of Notes. The initial
Conversion Rate shall be 76.1905 shares of Common Stock for each $1,000
principal amount of Notes.  No fractional
shares of Common Stock will be issued upon conversion of any Note or Notes, but
instead cash will be paid to the Holder as provided in Section 9.02(i) of
the Supplemental Indenture.  No
adjustment shall be made for dividends or any shares issued upon conversion of
such Note except as provided in the Indenture.

 

6.                                       Denominations, Transfer, Exchange

 

The Notes are in Global Form without
coupons in denominations of $1,000 and whole multiples of $1,000.  A Holder may transfer or exchange Notes in
accordance with the Indenture.  Upon any
transfer or exchange, the Security Registrar and the Trustee may require a 

 

A-5

 

Holder, among other things,
to furnish appropriate endorsements or transfer documents and to pay any taxes
required by law or permitted by the Indenture.

 

7.                                       Persons Deemed Owners

 

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

 

8.                                       Unclaimed Money

 

Subject to any applicable abandoned property law,
the Trustee and the Paying Agent shall pay to the Company upon written request
any money held by them for the payment of principal or interest and any shares
of Common Stock or other property due in respect of converted Notes that
remains unclaimed for two years, and, thereafter, Holders entitled to the money
or securities must look to the Company for payment as general creditors.

 

9.                                       Amendment, Waiver

 

Subject to certain exceptions, the Indenture
contains provisions permitting an amendment of the Indenture or the Notes with
the written consent of the Holders of at least a majority in principal amount
of the then outstanding Notes and the waiver of any Event of Default or
noncompliance with any provision with the written consent of the Holders of a
majority in principal amount of the then outstanding Notes.

 

In
addition, the Indenture permits an amendment of the Indenture or the Notes
without the consent of any Holder under circumstances specified in the
Indenture.

 

10.                                 Defaults and Remedies

 

Under certain circumstances specified in the
Indenture, after a declaration of acceleration with respect to the Notes, the
Holders of a majority in principal amount of the Outstanding Notes may rescind
and annul such declaration with respect to the Notes and its consequences.

 

Subject to certain
conditions in the Indenture, the Holders of not less than a majority in
principal amount of the Notes then Outstanding may, on behalf of the Holders of
all the Notes, waive certain past Defaults under the Indenture and its
consequences.

 

11.                                 Trustee Dealings with the
Company

 

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

 

A-6

 

12.                                 No Recourse Against Others

 

No director, officer, employee, incorporator,
stockholder or partner of the Company, as such, shall have any liability for
any obligations of the Company under the Notes, the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their
creation.  Each Holder by accepting a
Note waives and releases all such liability. 
The waiver and release shall be part of the consideration for the
issuance of the Notes.  The waiver may
not be effective to waive liabilities under the federal securities laws.

 

13.                                 Authentication

 

This Note shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Note.

 

14.                                 Abbreviations

 

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

 

15.                                 GOVERNING LAW

 

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

 

16.                                 CUSIP and ISIN Numbers

 

Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP and ISIN numbers to be printed on the Notes and has directed the Trustee
to use CUSIP and ISIN numbers in notices of repurchase as a convenience to
Holders.  No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice of repurchase and reliance may be placed only on the other
identification numbers placed thereon.

 

The Company will furnish to any
Holder upon written request and without charge to the Holder a copy of the
Indenture which has in it the text of this Note.

 

A-7

 

SCHEDULE A

 

SCHEDULES OF EXCHANGES OF SECURITIES

 

TEXTRON INC.

 

4.50% Convertible Senior Notes due 2013

 

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

 

	
  Date of 

  Exchange

  	
   

  	
  Amount of decrease in

  principal amount of this

  Global Security

  	
   

  	
  Amount of increase in

  principal amount of

  this Global Security

  	
   

  	
  Principal amount of this

  Global Security

  following such decrease

  or increase

  	
   

  	
  Signature of

  authorized signatory

  of Trustee or

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-8

 

EXHIBIT B

 

[FORM OF CONVERSION NOTICE]

 

	
  TO:

  	
   

  	
  TEXTRON INC.

  
	
   

  	
   

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

  

 

The undersigned registered
owner of this Note hereby irrevocably exercises the option to convert this
Note, or the portion thereof (which is $1,000 or a multiple thereof) below
designated in accordance with the terms of the Indenture referred to in this
Note, and directs that the shares of Common Stock, cash or a combination of
cash and shares of Common Stock deliverable or payable upon such conversion and
any Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below.  Capitalized terms used herein
but not defined shall have the meanings ascribed to such terms in the
Indenture.  If shares or any portion of
this Note not converted are to be issued in the name of a person other than the
undersigned, the undersigned will provide the appropriate information below and
pay all transfer taxes payable with respect thereto.  Any amount required to be paid by the
undersigned on account of interest accompanies this Note.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s) must be guaranteed by an “eligible guarantor
  institution” meeting the requirements of the Security Registrar, which
  requirements include membership or participation in the Security Transfer
  Agent Medallion Program (“STAMP”) or such other “signature guarantee program”
  as may be determined by the Security Registrar in addition to, or in
  substitution for, STAMP, all in accordance with the Securities Exchange Act
  of 1934, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee

  

 

B-1

 

Fill in the registration of
shares of Common Stock, if any, if to be issued, and Notes if to be delivered,
and the person to whom cash, if any, and payment for fractional shares is to be
made, if to be made, other than to and in the name of the registered holder:

 

	
  Please print name and
  address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Name)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Street Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (City, State and Zip Code)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Principal amount to be
  converted

  	
   

  
	
  (if less than all):

  	
   

  
	
   

  	
   

  
	
  $

  	
   

  
	
   

  	
   

  
	
  Social Security or Other
  Taxpayer

  	
   

  
	
  Identification Number:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

NOTICE: 
The signature on this Conversion Notice must correspond with the name as
written upon the face of the Notes in every particular without alteration or
enlargement or any change whatever.

 

B-2

 

EXHIBIT C

 

[FORM OF FUNDAMENTAL CHANGE REPURCHASE
NOTICE]

 

	
  TO:

  	
   

  	
  TEXTRON INC.

  
	
   

  	
   

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

  

 

The undersigned registered
owner of this Note hereby irrevocably acknowledges receipt of a notice from
Textron Inc. (the “Company”)
describing the right of Holders to elect to require the Company to repurchase
the Notes and requests and instructs the Company to pay the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture at the price of 100% of such entire principal amount or portion
thereof, together with accrued and unpaid interest to, but excluding, the
Fundamental Change Repurchase Date to the registered holder hereof; provided,
however, that if the Fundamental Change Repurchase Date falls after a
Regular Record Date and on or prior to the Interest Payment Date to which it
relates, the Company will instead pay the full amount of accrued and unpaid
interest payable on such Interest Payment Date to the holder of record on the
close of business on the corresponding Regular Record Date and the Company will
pay only 100% of the principal amount of the Notes to be repurchased to the
Holder surrendering this Note for repurchase. 
Capitalized terms used herein but not defined shall have the meanings
ascribed to such terms in the Indenture. 
The Notes shall be repurchased by the Company as of the Fundamental
Change Repurchase Date pursuant to the terms and conditions specified in the
Indenture.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature(s):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

NOTICE:  The above signatures of the holder(s) hereof
must correspond with the name as written upon the face of the Notes in every
particular without alteration or enlargement or any change whatever.

 

	
  Notes Certificate Number
  (if applicable):

  	
   

  
	
   

  
	
  Principal amount to be
  repurchased (if less than all, must be $1,000 or whole multiples thereof):

  	
   

  
	
   

  
	
  Social Security or Other
  Taxpayer Identification Number:

  	
   

  
				

 

C-1

 

EXHIBIT D

 

[FORM OF ASSIGNMENT]

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s) must be guaranteed
  by an “eligible guarantor institution” meeting the requirements of the
  Security Registrar, which requirements include membership or participation in
  the Security Transfer Agent Medallion Program (“STAMP”) or such other
  “signature guarantee program” as may be determined by the Security Registrar
  in addition to, or in substitution for, STAMP, all in accordance with the
  Securities Exchange Act of 1934, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee

  

 

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

 

D-1

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