Document:

EX-10.5

 

Exhibit 10.5

ROCKWELL AUTOMATION

DEFERRED COMPENSATION PLAN

The purpose of this Plan is to provide certain specified benefits to a select group of
management and highly compensated employees who contribute materially to the continued growth,
development and future business success of Rockwell International Corporation and its affiliates.
This Plan is unfunded for tax purposes and for purposes of Title I of ERISA and is a successor to
the Rockwell Collins Deferred Compensation Plan, effective as of June 30, 2001 (the “Predecessor
Plan”). The Plan has been approved so as to continue the provision of such
specified benefits with respect to amounts earned and accrued by Participants on or after
January 1, 2005 and is intended to satisfy and be in compliance with the provisions of the Internal
Revenue Code of 1986 (the “Code”) as they relate to deferred compensation benefits, with particular
emphasis on §409(A) of the said Code.

To that end, the Plan is hereby amended and restated, effective as of January 1, 2006, subject to
the provisions set forth below:

ARTICLE I: DEFINITIONS

1.010 Account means one of the accounts established for the purpose of measuring and
determining a Participant’s interest in this Plan, such accounts being the Participant’s Deferral
Account and Company Match Account.

1.020 Account Balance means, with respect to each Participant, an account in the records of
the Company equal to the sum of the Participant’s:

	(a)	 	Deferral Account balance, and
	 
	(b)	 	Company Match Account balance.

The Account Balance (and each underlying balance making up such Account Balance) is a bookkeeping
entry only and will be utilized solely as a device for the measurement and determination of the
amounts to be paid to a Participant, or his designated Beneficiary, pursuant to this Plan.

1.030 Affiliate means:

	(a)	 	any corporation incorporated under the laws of one of the United States of America of which
the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting
power of all classes of stock or eighty percent (80%) or more of the total value of the shares
of all classes of stock (all within the meaning of Code §1563);

 

 

	(b)	 	any partnership or other business entity organized under such laws, of which the Company
owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty
percent (80%) or more of the total value (all within the meaning of Code §414(c)); and
	 
	(c)	 	any other company deemed to be an Affiliate by the Company’s Board of Directors.

1.040 Annual Company Match Amount for any Plan Year means the amount determined in
accordance with Section 3.030.

1.050 Annual Deferral Amount means that portion of a Participant’s Base Annual Salary
and/or Incentive Compensation which a Participant elects to have deferred, in accordance with
Article III, for any one Plan Year. In the event of a Participant’s Retirement, Disability (if
deferrals cease in accordance with Section 9.020), death or a Termination of Employment prior to
the end of a Plan Year, such year’s Annual Deferral Amount will be the actual amount withheld prior
to such event.

1.060 Annual Installment Method means a benefit payment method involving a series of annual
installment payments over the number of years selected by the Participant in accordance with this
Plan, which will be calculated in the manner set forth in this Section. The Account Balance of the
Participant will be determined as of the close of business on the last business day of the calendar
year. The annual installment will be calculated by multiplying this balance by a fraction, the
numerator of which is one (1), and the denominator of which is the remaining number of annual
payments due the Participant. (By way of example, if a Participant were to elect a 10-year payment
under the Annual Installment Method, the first payment would be one-tenth (1/10) of the Account
Balance, calculated as described in this definition. The following year, the payment would be
one-ninth (1/9) of the Account Balance, calculated as described in this definition.) Each annual
installment will be paid within the first sixty (60) days of the calendar year following the
applicable year.

1.070 Base Annual Salary means the annual cash compensation relating to services performed
during any calendar year, whether or not paid in such calendar year or included on the Federal
Income Tax Form W-2 for such calendar year, excluding bonuses, commissions, overtime, fringe
benefits, stock options, relocation expenses, incentive payments, non-monetary awards, directors
fees and other fees, automobile and other allowances (whether or not such allowances are included
in the Employee’s gross income) paid to a Participant for employment services rendered. Base Annual
Salary will be calculated before reduction for compensation voluntarily deferred or contributed by
the Participant pursuant to all qualified or non-qualified plans of the Company or any Affiliate
and will be calculated to include amounts not otherwise included in the Participant’s gross income
under Code §125, 402(e)(3), 402(h), or 403(b), pursuant to plans established by the Company or an
Affiliate; provided, however, that all such amounts will be included in compensation only to the
extent that, had there been no such plan, the amount would have been payable in cash to the
Participant.

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1.080 Beneficiary means one or more persons, trusts, estates or other entities, designated
in accordance with Article X who or which are entitled to receive benefits under this Plan upon the
death of a Participant.

1.090 Beneficiary Designation Form means the form established from time to time by the
Committee or its delegate that a Participant completes, signs and returns to the Committee or its
delegate, in order to designate one or more Beneficiaries.

1.100 Board of Directors means the Company’s Board of Directors.

	1.110	 	Change of Control means any of the following occurring at any time after June 29,
2001:

	(a)	 	The acquisition by any individual, entity or group (within the meaning of §13(d)(3) or
§14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (1) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of Control: (w) any
acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the Company,
Rockwell or any corporation controlled by the Company or Rockwell or (z) any acquisition
pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of
this Section 1.110; or
	 
	(b)	 	Individuals who, as of September 2, 1998, constitute the Board of Directors of the Company
(the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a director subsequent to that date
whose election, or nomination for election by the Company’s shareowners, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors; or
	 
	(c)	 	Consummation of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company or the acquisition of assets of another
entity (a “Company Transaction”), in each case, unless, following such Company Transaction,
(1) all or substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Company Transaction

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	 	 	beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Company Transaction (including,
without limitation, a corporation which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately prior
to such Company Transaction of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (excluding any employee benefit plan
(or related trust) of the Company, of Rockwell or of such corporation resulting from such
Company Transaction) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the Company corporation from
such Company Transaction or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed prior to the
Company Transaction and (3) at least a majority of the members of the board of directors of
the corporation resulting from such Company Transaction were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of the Board of
Directors, providing for such Company Transaction; or

	(d)	 	Approval by the Company’s shareowners of a complete liquidation or dissolution of the
Company.

1.120 Code means the Internal Revenue Code of 1986, as from time to time amended.

1.130 Committee means the Compensation and Management Development Committee of the Board of
Directors.

1.140 Company means Rockwell Automation, Inc., a Delaware corporation and its predecessor,
Rockwell International Corporation.

1.150 Company Match Account means:

	(a)	 	the sum of all of a Participant’s Annual Company Match Amounts,
	 
	(b)	 	adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the
provisions of Section 4.020(b), as such provisions relate to such Company Match Account, and
	 
	(c)	 	reduced by any amount debited thereon equal to the amount of all distributions made to the
Participant or his Beneficiary pursuant to this Plan which are related to such Company Match
Account.

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1.160 Deduction Limitation means the following described limitation on a benefit that may
otherwise be distributable pursuant to the provisions of this Plan. Except as otherwise provided,
this limitation will be applied to all distributions that are “subject to the Deduction Limitation”
under this Plan. If the Company determines in good faith prior to a Change of Control that there
is a reasonable likelihood that any compensation paid to a Participant for a taxable year of the
Company would not be deductible by the Company solely by reason of the limitation under Code
§162(m), then, to the extent deemed necessary by the Company to ensure that the entire amount of
any distribution to the Participant pursuant to this Plan prior to the Change of Control is
deductible, the Company may defer all or any portion of a distribution under this Plan. Any amounts
deferred pursuant to this limitation will continue to be credited/debited with additional amounts
in accordance with Section 4.020(b), even if such amount is being paid out in installments. The
amounts so deferred and amounts credited thereon will be distributed to the Participant or his
Beneficiary (in the event of the Participant’s death) at the earliest possible date, as determined
in good faith by the Company, on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Company during which the distribution is made will not be
limited by §162(m), or if earlier, the effective date of a Change of Control. Notwithstanding
anything to the contrary in this Plan, the Deduction Limitation will not apply to any distributions
made after a Change of Control.

1.170 Deferral Election means an election made pursuant to Article III by a Participant to
defer receipt of a part of his Base Annual Salary or to defer receipt of all or a part of his
Incentive Compensation.

1.180 Deferral Election Form means the form established from time to time by the Committee
or its delegate that a Participant completes, signs and returns to the Committee or its delegate to
make a Deferral Election pursuant to Article III, in order to defer receipt of a part of his Base
Annual Salary or to defer receipt of all or a part of his Incentive Compensation.

1.190 Determination Date which only has applicability with respect to the provisions of
Appendix A of this Plan, as such appendix applies to the interests of individuals who were
participants in a Predecessor Plan and as it defines the value from time to time of amounts
deferred under such Predecessor Plans prior to the Effective Date, means the last day of each
calendar year quarter (i.e., March 31st, June 30th, September 30th
and December 31st).

1.200 Disability means a period of disability during which a Participant qualifies for
permanent disability benefits under the Company’s or an Affiliate’s long-term disability plan, or,
if a Participant does not participate in such a plan, a period of disability during which the
Participant would have qualified for permanent disability benefits, if the Participant had been a
participant in such a plan, as determined. If the Company and its Affiliates do not sponsor such a
plan, or if they should discontinue sponsoring such a plan, Disability shall be determined by the
Committee or its delegate.

1.210 Effective Date means June 1, 2000 for this Plan.

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1.220 Eligible Employee means any Employee who is employed in the United States by the
Company or an Affiliate and whose Base Annual Salary as of the beginning of a Plan Year is equal to
or greater than One Hundred Thousand Dollars ($100,000.00); provided, however, that effective
January 1, 2006, such Base Annual salary requirement shall be One Hundred and Twenty-Five Thousand
Dollars ($125,000.00).

1.230 Employee means any person who is employed by the Company or by an Affiliate.

1.240 Employee Matters Agreement means the Employee Matters Agreement, dated as of June 29 , 2001, by and among Rockwell International Corporation, Rockwell Collins, Inc. and Rockwell
Scientific Company LLC.

1.250 ERISA means the Employee Retirement Income Security Act of 1974, as from time to time
amended.

1.260 Exchange Act means the Securities Exchange Act of 1934, as amended.

1.270 Incentive Compensation means any award payable to a Participant under an Incentive
Compensation Plan sponsored by the Company or an Affiliate which, but for a Deferral Election under
the Plan, would be paid to the Participant and considered to be “wages” for purposes of United
States federal income tax withholding.

1.280 Incentive Compensation Deferral means a deferral by a Participant of part or all of
his Incentive Compensation otherwise payable to him with respect to a particular fiscal year of the
Company.

1.290 Incentive Compensation Deferral Account means:

	(a)	 	the sum of all of a Participant’s Incentive Compensation Deferrals,
	 
	(b)	 	adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the
provisions of Section 4.020(b) which are related to such Incentive Compensation Deferral
Account, and
	 
	(c)	 	reduced by any amount debited thereon equal to the amount of all distributions made to the
Participant or his Beneficiary pursuant to this Plan which are related to such Incentive
Compensation Deferral Account.

1.300 Interest Rate. One-twelfth of the annual interest rate for quarterly compounding
that is one hundred and twenty percent (120%) of the “applicable Federal long-term rate” determined
by the Secretary of the Treasury pursuant to Code §1274(d), or any successor provision, as
applicable for each of the months in the three-month period ending on the last day of each
calendar year quarter.

1.310 Measurement Funds means the investment vehicles offered under this Plan which are
identified and described in Appendix B, each of whose purpose is to mirror, to the greatest extent

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reasonably possible, the investment performance of a particular benchmark mutual fund sponsored and
offered by Fidelity Investments, each of which benchmark mutual funds is also described in the said
Appendix B.

1.320 Named Fiduciary means the Committee, its delegates, the Trustee and, following the
occurrence of a Change of Control, the third-party fiduciary described in Section 13.020 of this
Plan.

1.330 Non-Qualified Savings Plan means the Rockwell Automation Non-Qualified Savings Plan,
as amended from time to time.

1.340 Participant means an Eligible Employee:

	(a)	 	who elects to participate in the Plan;
	 
	(b)	 	who signs a Participation Agreement Form and a Beneficiary Designation Form;
	 
	(c)	 	whose signed Participation Agreement Form and Beneficiary Designation Form are accepted by
the Committee or its delegate;
	 
	(d)	 	who commences participation in the Plan; and
	 
	(e)	 	who has not elected to terminate participation in the Plan.

A spouse or former spouse of a Participant will not be treated as a Participant in the Plan or have
an Account Balance under the Plan, even if the spouse or former spouse has an interest in the
Participant’s benefits under the Plan as a result of applicable law or property settlements
resulting from legal separation or divorce.

Notwithstanding any other provision of this Plan to the contrary, no Eligible Employee or any other
person, individual or entity shall become a Participant in this Plan on or after the day on which a
Change of Control occurs.

1.350 Participation Agreement means a written agreement, as may be amended from time to
time, which is provided by an Eligible Employee or Participant to Committee or its delegate and is
then accepted and approved by the said Committee or delegate. Each such Participation Agreement
will provide for the entire benefit to which such Participant is entitled under the Plan. The
Participation Agreement bearing the latest date of acceptance by the Committee or its delegate will
supersede all previous such Participation Agreements in their entirety and will govern the Eligible
Employee’s or Participant’s entitlement to benefits hereunder. The terms of any such Participation
Agreement may be different for a particular Participant and may provide additional benefits not set
forth in the Plan or may limit the benefits otherwise provided under the Plan; provided, however,
that any such additional benefits or benefit limitations must be agreed to by both the Committee or
its delegate and the Participant.

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1.360 Plan means this Rockwell Automation Deferred Compensation Plan, which is evidenced by
this instrument and by the forms associated with the said instrument, as they may be amended from
time to time.

1.370 Plan Year means each twelve-month period ending on the last day of December.

1.380 Predecessor Plan means the deferred compensation arrangements (namely the Rockwell
International Corporation Deferred Compensation Plan and the Allen-Bradley Company, Inc. Deferred
Compensation Plan) which were in effect and applicable to certain of the Participants hereunder
immediately prior to the Effective Date of this Plan, as such arrangements were administered during
the period preceding such Effective Date, it being specifically understood and herein provided that
such Predecessor Plans form parts of this Plan. To the extent a
Predecessor Plan remains in effect with respect to a Participant, it will be governed by the terms
of this Plan, except as otherwise provided in Appendix A.

1.390 Pre-Retirement Survivor Benefit means the benefit set forth in Article VII.

1.400 Qualified Savings Plan means the Rockwell Automation Retirement Savings Plan for
Salaried Employees, as amended from time to time.

1.410 Retirement, Retire(s) or Retired means, with respect to an Employee,
severance from employment with the Company and all of its Affiliates for any reason other than a
leave of absence, death or Disability on or after the attainment of his normal retirement or early
retirement age.

1.420 Retirement Benefit means the benefit set forth in Article VI.

1.430 Salary Deferral Account means:

	(a)	 	the sum of all of a Participant’s Annual Salary Deferral Amounts,
	 
	(b)	 	adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the
provisions of Section 4.020(b), as such provisions relate to such Salary Deferral Account, and
	 
	(c)	 	reduced by any amount debited thereon equal to the amount of all distributions made to the
Participant or his Beneficiary pursuant to this Plan which are related to such Salary Deferral
Account.

1.440 Short-Term Payout means the payout set forth in Section 5.010 of the Plan.

1.450 Termination Benefit means the benefit set forth in Article VIII.

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1.460 Termination of Employment means the severing of a Participant’s employment with the
Company and all Affiliates, voluntarily or involuntarily, for any reason other than Retirement,
Disability, death or an authorized leave of absence.

1.470 Third-Party Administrator means an independent third party selected by the Trustee
and approved by the individual who, immediately prior to a Change of Control, was the Company’s
Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the
“Ex-CEO”).

1.480 Trust means the master trust established by agreement between the Company and the
Trustee, which will be a grantor trust.

1.490 Trustee means Wells Fargo Bank N.A., or any successor trustee of the Trust described
in Section 1.480 of this Plan.

1.500 Unforeseeable Financial Emergency means an unanticipated emergency that is caused by
an event beyond the control of the Participant which would result in severe financial hardship to
the Participant and which itself results from:

	(a)	 	a sudden and unexpected illness or accident of the Participant or a dependent of the
Participant,
	 
	(b)	 	a loss of the Participant’s property due to casualty, or
	 
	(c)	 	such other extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant, all as determined in the discretion of the Committee or its
delegate.

ARTICLE II: PARTICIPATION

2.010 Select Group Defined. Since participation in the Plan is intended to be
limited to a select group of management and highly compensated Employees, the Plan is only
available to Eligible Employees of the Company and its Affiliates.

2.020 Commencement of Participation. As a condition to initial participation in this
Plan, each Eligible Employee who wishes to participate in the Plan will be required to complete,
execute and return to the Committee or its delegate a Participation Agreement Form and a
Beneficiary Designation Form.

	(a)	 	Prior to January 1, 2005, in the case of such an Eligible Employee’s initial election to
become a Participant in a particular Plan Year, such documentation must be provided by the
Eligible Employee to the Committee or its delegate within sixty (60) days following his being
notified of his status as an Eligible Employee. Effective on and
after January 1, 2005, such documentation must be provided by the Eligible Employee to the Committee

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	 	 	or its delegate
within thirty (30) days following his attaining the status of Eligible Employee.

	(b)	 	If an Eligible Employee has met all enrollment requirements set forth in this Plan and
required by the Committee or its delegate (including returning all required documents to the
Committee or its delegate) in the time frames described in the above subsections, that
Eligible Employee will become a Plan Participant on the first day of the month following the
month in which he completes all such enrollment requirements, except that, if an individual
becomes an Eligible Employee during the last three months of a calendar year, that Eligible
Employee will become a Plan Participant on the first day of the next calendar year.

If an Eligible Employee fails to meet all such requirements within the period required, in
accordance with subsection (a) of this Section, that Eligible Employee will not be entitled to
participate in the Plan until the first day of a subsequent Plan Year following the delivery to and
acceptance by the Committee or its delegate of the required documents. In addition, the
Committee or its delegate will establish from time to time such other enrollment requirements as it
determines in its sole discretion are necessary.

2.030 Termination of Participation and/or Deferrals. If the Committee or its delegate
determines in good faith that a Participant no longer qualifies as a member of a select group of
management or highly compensated employees, as membership in such group is determined in accordance
with ERISA §§201(2), 301(a)(3) and 401(a)(1), the Committee will have the right, in its sole
discretion, to:

	(a)	 	terminate any deferral election the Participant has made for the remainder of the Plan Year
in which the Participant’s membership status changes,
	 
	(b)	 	prevent the Participant from making future deferral elections and/or
	 
	(c)	 	immediately distribute the Participant’s then Account Balance as a Termination Benefit and
terminate the Participant’s participation in the Plan.

ARTICLE III: DEFERRAL AND COMPANY MATCH CREDITS

3.010 Base Annual Salary Deferral. Each Plan Participant will be permitted to make an
irrevocable election to defer (such Deferral Election to be made in whole percentages) receipt of
an amount equal to one percent (1%) through fifty percent (50%) of his Base Annual Salary.

	(a)	 	If an Eligible Employee first becomes a Participant after the first day of a Plan Year, the
Base Annual Salary Deferral will be for an amount equal to the percentage set forth above,
multiplied by a fraction, the numerator of which is the number of complete months remaining in
the Plan Year and the denominator of which is twelve (12), with the effect that the
Participant’s deferred Base Annual Salary would be limited to the amount of 

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	 	 	salary not yet
earned by the Participant as of the date the Participant submits a Participation Agreement
Form to the Company or an Affiliate for acceptance.

	(b)	 	For each succeeding Plan Year, a Participant, will be permitted, in his sole discretion, to
make a similar irrevocable election for the following Plan Year (and such other elections as
the Committee or its delegate deems necessary or desirable) and must deliver such Deferral
Election to the Company or an Affiliate on a new Deferral Election Form before December
1st of the Plan Year immediately preceding the Plan Year for which the deferral is
intended. If no such Deferral Election Form is timely delivered for a Plan Year, the Annual
Deferral Amount will be zero for that Plan Year.
	 
	(c)	 	During each Plan Year, the Base Annual Salary Deferral Amount will be withheld from each
regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time
for increases and decreases in Base Annual Salary.

3.020 Incentive Compensation Deferral. In addition to the Base Annual Salary deferral
described in the preceding Section, each Participant will be permitted to irrevocably elect to
defer receipt of an amount equal to one percent (1%) through one hundred percent (100%), such
Deferral Election to be made in whole percentages, of the amount of any Incentive Compensation
which he might be awarded. In general, such Deferral Election will be made on a Deferral Election
Form and will apply to Incentive Compensation to which the Participant might be entitled for the
fiscal year immediately following such Deferral Election.

The Incentive Compensation Deferral Amount will be withheld at the time the said Incentive
Compensation are or otherwise would be paid to the Participant, whether or not this occurs during
the Plan Year itself.

3.030 Annual Company Match Amount. A Participant’s Annual Company Match Amount for any
Plan Year will be equal to the amount that the Company would have contributed to the Participant’s
account in the Qualified Savings Plan as a matching contribution or other employer contribution to
that Plan or would have credited to such Participant’s account in the Non-Qualified Savings Plan as
a matching credit or other similar credit, but for the fact that the Participant elected to defer
Base Annual Salary pursuant to the provisions of Section 3.010 of this Plan. The Annual Company
Match Amount which is attributable to a Participant’s Annual Salary Deferral Amount for a
particular Plan Year will be calculated in the first month of the immediately succeeding Plan Year
and will be credited to the Participant’s Company Match Account no later than January
31st of such succeeding Plan Year.

	(a)	 	In the event of a Participant’s Retirement or death, the Participant’s Company Match Account
will be credited with the Annual Company Match Amount for the Plan Year in which he Retires or
dies.

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	(b)	 	If a Participant is not employed by the Company or an Affiliate as of the last day of a Plan
Year for any reason other than the Participant’s Retirement or death, the Annual Company Match
Amount for such Plan Year will be zero.

ARTICLE IV: PLAN ACCOUNTS

4.010 Vesting.

	(a)	 	A Participant will have a one hundred percent (100%) vested interest in his Deferral Account
and in his Company Match Account.
	 
	(b)	 	Notwithstanding anything to the contrary contained in this Plan from time to time, in the
event of a Change of Control, a Participant’s Deferral Account, Company March Account and any
other interest of his under this Plan at the time of the occurrence of the Change of Control
will remain one hundred percent (100%) vested, if such interest is already 100% vested at that
time and, if such interest is not one hundred percent (100%) vested at that time, will
immediately become one hundred (100%) vested.

4.020 Crediting/Debiting of Account Balances. In accordance with, and subject to, the
rules and procedures that are established from time to time by the Committee or its delegate, in
its sole discretion, amounts will be credited or debited to a Participant’s Account Balance in the
manner set forth in the provisions of this Section; provided, however, that the said provisions
will apply
individually to, and be administered separately for, on the one hand, the Participant’s Salary
Deferral and Company Match Accounts and, on the other hand, his Incentive Compensation Deferral
Account, with the intention that that the Participant will be permitted to make separate elections
with respect to each.

	(a)	 	Allocation to Measurement Funds. A Participant, in connection with his initial
Deferral Election in accordance with Section 3.010 or 3.020 above, will be permitted to also
elect to have one or more Measurement Funds used to determine the amounts to be credited to
his Account Balance and his election will continue to be in effect thereafter, unless it
should be changed in accordance with subsection (c).
	 
	(b)	 	Crediting or Debiting Method. The performance (either positive or negative) of each
elected Measurement Fund will be determined by the Committee or its delegate, based on the
performance of the Measurement Funds themselves. A Participant’s Account Balance will be
credited or debited on a daily basis based on the performance of each Measurement Fund
selected by the Participant, as determined by the Committee or its delegate in its sole
discretion, as though:

	 	(1)	 	a Participant’s Account Balance were actually invested in the Measurement
Fund(s) selected by the Participant as of the close of business on any business day, at
the closing price on that day;

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	 	(2)	 	the portion of the Annual Deferral Amount that was actually deferred during any
calendar quarter were invested in the Measurement Fund(s) selected by the Participant,
in the percentages applicable on such day, no later than the close of business on the
first business day after the day on which such amounts are actually deferred from the
Participant’s Base Annual Salary through reductions in his payroll, at the closing
price on such date; and
	 
	 	(3)	 	any distribution made to a Participant that decreases such Participant’s
Account Balance ceased being invested in the Measurement Fund(s), in the applicable
percentages, no earlier than one business day prior to the distribution, at the closing
price on such date.

(c) Transfers among Measurement Funds. The Participant will be permitted to change, on a
daily basis, any previous Measurement Fund election or elections he has made with regard to his
Account Balance. The elections and changes to such elections which a Participant makes pursuant to
this subsection will be made by means of any method (including any available telephonic or
electronic method which is acceptable to the Committee or its delegate at the time the election or
change is made by the Participant), and may be made at any time and will be effective as of the New
York Stock Exchange closing immediately following the making of that election or change; provided,
however, if it is determined by the Committee or its delegate that an investment election made by a
Participant is invalid or defective, the Participant’s election, until duly corrected by him, will
be deemed to have been made in favor of whatever short-term, money market vehicle is available
under the Plan at that time.

(d) No Actual Investment. Notwithstanding any other provision of this Plan that may be
interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only,
and a Participant’s election of any such Measurement Fund, the allocation to his Account Balance
thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a
Participant’s Account Balance will not be considered or construed in any manner as an actual
investment of his Account Balance in any such Measurement Fund. In the event that the Company or
the Trustee, in its own discretion, decides to invest funds in any or all of the Measurement Funds,
no Participant will have any rights in or to such investments themselves. Without limiting the
foregoing, a Participant’s Account Balance will at all times be a bookkeeping entry only and will
not represent any investment made on his behalf by the Company or the Trust. The Participant will
at all times remain an unsecured creditor of the Company.

(e) Company Reservation of Rights. Consistent with the preceding sentence, nothing to the
contrary in this Plan or any of its forms or communication material, nor in any document associated
with the Trust, should be interpreted or understood to provide Participants or their Beneficiaries
with any current, direct rights with respect to the assets held by the Trustee in the Trust.

13

 

4.030 Amounts Credited Pursuant to Predecessor Plans. Notwithstanding the provisions of
Section 4.020, in the case of amounts which were credited to any Predecessor Plan prior to the
Effective Date as incentive compensation plan deferrals, such amounts will be separately accounted
for hereunder and will continue to be adjusted and administered (specifically including
application, on a quarterly basis, of the Interest Rate to a Participant’s account in such
Predecessor Plan) in the manner previously in effect under such Predecessor Plan and as set forth
in Appendix A; provided, however, that, unless otherwise provided in the said Appendix A,
administration of such Predecessor Plan deferrals will be in accordance with the provisions of this
Plan as they apply to amounts deferred after the Effective Date.

4.040 FICA and Other Taxes.

	(a)	 	Annual Deferral Amounts. For each Plan Year in which an Annual Deferral Amount is
being withheld from a Participant, the Company or any Affiliate employing the Participant will
withhold from that portion of the Participant’s Base Annual Salary and Incentive Compensation
which is not being deferred the Participant’s share of FICA and other employment taxes on such
Annual Deferral Amount.
	 
	(b)	 	Company Match Amounts. When a participant becomes vested in a portion of his Company
Match Account, the Company or any Affiliate employing the Participant will withhold from the
Participant’s Base Annual Salary and/or Incentive compensation that is not deferred the
Participant’s share of FICA and other employment taxes.
	 
	(c)	 	Distributions. The Company or any Affiliate employing the Participant, or the
Trustee of the Trust, will withhold from any payments made to a Participant under this Plan
all federal, state and local income, employment and other taxes required to be withheld in
connection with such payments, in amounts and in a manner
to be determined in the sole discretion of the Company and
the trustee of the Trust.

ARTICLE V: SHORT-TERM PAYOUTS AND WITHDRAWALS

5.010 Short-Term Payouts. Effective with respect to Account Balances associated with
amounts deferred or credited hereunder prior to January 1, 2005 and in connection with each
election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive a
future Short-Term Payout from the Plan with respect to such Annual Deferral Amount.

	(a)	 	Subject to the Deduction Limitation, the said Short-Term Payout will be a lump sum payment in
an amount that is equal to the Annual Deferral Amount, as adjusted for amounts credited or
debited in the manner provided in Section 4.020 on that amount, determined at the time that
the Short-Term Payout becomes payable (rather than at the date of a Termination of
Employment).
	 
	(b)	 	Subject to the Deduction Limitation and the other terms and conditions of this Plan, each
Short-Term Payout elected will be paid out during a sixty (60) day period commencing

14

 

	 	 	immediately after the last day of any Plan Year designated by the Participant that is at least
three Plan Years after the Plan Year in which the Annual Deferral Amount is actually deferred.
By way of example, if a three-year Short-Term Payout is elected for Annual Deferral Amounts
that are deferred in the Plan Year commencing January 1, 2001, the three-year Short-Term
Payout would become payable during a sixty (60) day period commencing January 1, 2005.

	(c)	 	Should an event occur that triggers a benefit under Article VI or VII, any Annual Deferral
Amount, plus amounts credited or debited thereon, that is subject to a Short-Term Payout
election under this Section will not be paid in accordance with this Section, but will instead
be paid in accordance with the other applicable Article.
	 
	(d)	 	Notwithstanding any other provision in this Plan to the contrary, the Short-Term Payout
described in this Section will only be available with respect to Annual Deferral Amounts which
are deferred after the Effective Date and will specifically not be available to amounts which
were deferred by a Participant pursuant to the provisions of a Predecessor Plan.

The provisions of this Section will not be applicable with respect to amounts deferred or credited
hereunder after December 31, 2004

5.020 Withdrawal for Unforeseeable Financial Emergencies. In the event that any
Participant should encounter an Unforeseeable Financial Emergency, such Participant may:

	(a)	 	petition the Committee or its delegate to suspend any deferrals required to be made on his
behalf, and/or
	 
	(b)	 	petition the Committee or its delegate to permit him to receive a partial or full payout from
the Plan. Such a payout will not exceed the lesser of —

	 	(1)	 	the Participant’s Account Balance, calculated as if the Participant were
receiving a Termination Benefit, or
	 
	 	(2)	 	the amount reasonably needed to satisfy the Unforeseeable Financial Emergency.

If, subject to the sole discretion of the Committee or its delegate, the petition for a suspension
and/or payout is approved, suspension will take effect on the date of approval and any payout will
be made within sixty (60) days of the date of approval. The payment of any amount under this
Section will not be subject to the Deduction Limitation.

5.030 Withdrawal Election. With respect to Account Balances hereunder associated with Plan
Year’s prior to January 1, 2005, a Participant (or, after a Participant’s death, the Participant’s
Beneficiary) may elect, at any time, to withdraw some or all of the Participant’s Account Balance,
even though the Participant (or the Participant’s Beneficiary) has not encountered an

15

 

Unforeseeable
Financial Emergency at the time of such withdrawal, but the withdrawal will be subject to the
provisions of this Section.

	(a)	 	The amount of the withdrawal will be subject to imposition of a withdrawal penalty equal to
ten percent (10%) of such amount (the net amount being referred to in this Section as the
“Withdrawal Amount”).
	 
	(b)	 	Such an election may be made at any time, before or after the Participant’s Retirement,
Disability, death or Termination of Employment, and whether or not the Participant (or
Beneficiary) is in the process of being paid pursuant to an installment payment schedule.

The Participant (or his Beneficiary) will be required to make this election by giving the Committee
or its delegate advance written notice of the election in a form determined from time to time by
the Committee or its delegate. The Participant (or his Beneficiary) will be paid the Withdrawal
Amount within sixty (60) days of his election. Once a Withdrawal Amount has been paid, the
Participant’s participation in the Plan will be suspended and the Participant will not be eligible
to elect Base Annual Salary Deferrals and Incentive Compensation Deferrals, nor will he be eligible
to have Annual Company Match Amounts credited to his Company Match Account, during the three-year
period immediately following payment of the Withdrawal amount; provided, however, that such
Participant will be eligible to have a pro rata portion of the Company Match Amount attributable to
the portion of the Plan Year immediately prior to such a withdrawal credited to his Company Match
Account. The payment of this Withdrawal Amount will not be subject to the Deduction Limitation.

ARTICLE VI: RETIREMENT BENEFITS

6.010 Retirement Benefit. Subject to the Deduction Limitation, a Participant who
Retires will receive, as a Retirement Benefit, his Account Balance.

6.020 Payment of Retirement Benefit. A Participant, in connection with his commencement of
participation in the Plan, may elect in his Participation Agreement to receive the Retirement
Benefit in a lump sum or pursuant to an Annual Installment Method of periods of from two (2)
through fifteen (15) years. Subject to the provisions of Section 6.025, a Participant may change
any election he has previously made to a different payout period permitted hereunder, but only one
such a change may be made with respect to any single election. Such change will be accomplished
by the Participant submitting a new Participation Agreement to the Committee or its delegate, but
such change will not be valid, unless it has been submitted by the Participant and accepted by the
Committee or its delegate (in the Committee’s or delegate’s discretion) at least one (1) year prior
to the Participant’s Retirement. The Participation Agreement most recently accepted by the
Committee or its delegate shall govern the payout of the Retirement Benefit. If a Participant does
not make any election with respect to the payment of the Retirement Benefit, then such benefit
shall be payable in a lump sum. Any payment made shall be subject to the Deduction Limitation.

16

 

A lump sum payment may not be made, or nor may installment payments commence, herefrom earlier than
July 1st of the Plan Year following the Plan Year during which a Participant Retires.

6.025 Changes to Retirement Benefit Payment Methods. A Participant may change any election
he has previously made pursuant to Section 6.020, but; provided, however, that with respect to
amounts deferred or credited hereunder on or after January 1, 2005, any such change may not result
in acceleration of payments from this Plan and must at all times be in compliance with the
provisions of section 409A of the Code.

6.030 Death Prior to Completion of Retirement Benefit. If a Participant dies after
Retirement but before the Retirement Benefit is paid in full, the Participant’s unpaid Retirement
Benefit payments shall continue and shall be paid to the Participant’s Beneficiary:

	(a)	 	over the remaining number of years and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or
	 
	(b)	 	in a lump sum, if requested by the Beneficiary and allowed in the sole discretion of the
Committee or its delegate, which is equal to the Participant’s unpaid remaining Account
Balance.

ARTICLE VII: PRE-RETIREMENT SURVIVOR BENEFIT

7.010 Pre-Retirement Survivor Benefit. Subject to the Deduction Limitation, the
Participant’s Beneficiary shall receive a Pre-Retirement Survivor Benefit equal to the
Participant’s Account Balance if the Participant dies before he Retires, experiences a Termination
of Employment or suffers a Disability.

7.020 Payment of Pre-Retirement Survivor Benefit. A Participant, in connection with his
commencement of participation in the Plan, may elect in his Participation Agreement whether the
Pre-Retirement Survivor Benefit should be received by his Beneficiary in a lump sum or pursuant to
an Annual Installment Method of periods of from 2 through 15 years. The Participant may
annually change this election to an allowable alternative payout period by submitting a new
Participation Agreement to the Committee or its delegate. The Beneficiary Designation Form most
recently filed with the Committee or its delegate prior to the Participant’s death will govern the
payout of the Participant’s Pre-Retirement Survivor Benefit. If a Participant does not make any
election with respect to the payment of the Pre-Retirement Survivor Benefit, then such benefit will
be paid in a lump sum. Despite the foregoing, if the Participant’s Account Balance at the time of
his death is less than $25,000, payment of the Pre-Retirement Survivor Benefit may be made, in the
sole discretion of the Committee or its delegate, in a lump sum or pursuant to an Annual
Installment Method of not more than five (5) years. The lump sum payment will be made, or
installment payments will commence, no later than sixty (60) days after the last day of the Plan
Year in which the Committee or its delegate is provided with proof that is satisfactory to the
Committee or its delegate of the Participant’s death. Any payment made will be subject to the
Deduction Limitation.

17

 

ARTICLE VIII: TERMINATION BENEFIT

8.010 Termination Benefit. Subject to the Deduction Limitation, the Participant will
receive a Termination Benefit, which will be equal to the Participant’s Account Balance if a
Participant experiences a Termination of Employment prior to his Retirement, death or Disability.

8.020 Payment of Termination Benefit. The form of payment of a Participant’s Account
Balance, if such payment is due to the Participation’s Termination of Employment will in all cases
be a lump sum.

ARTICLE IX: DISABILITY WAIVER AND BENEFIT

9.010 Disability Waiver.

	(a)	 	Waiver of Deferral. A Participant who is determined by the Committee or its delegate
to be suffering from a Disability will be excused from fulfilling that portion of the Annual
Deferral Amount commitment that would otherwise have been withheld from his Base Annual Salary
and/or Incentive Compensation for the Plan Year during which he first suffers a Disability.
During the period of Disability, such Participant will not be permitted to make any additional
deferral elections, but will continue to be considered a Participant for all other purposes of
this Plan.
	 
	(b)	 	Return to Work. If a Participant returns to employment after a Disability ceases,
the Participant may elect to defer an Annual Deferral Amount for the Plan Year following his
return to employment or service and for every Plan Year thereafter while he is a Participant
in the Plan.

9.020 Continued Eligibility; Disability Benefit. A Participant suffering a Disability
will, for benefit purposes under this Plan, continue to be considered to be employed and will be
eligible for the benefits provided for hereunder. Notwithstanding the above, the Committee or its
delegate will have the right to, in its sole and absolute discretion and for purposes of this Plan
only, and must in the case of a Participant who is otherwise eligible to Retire, deem the
Participant to have experienced a Termination of Employment, or in the case of a Participant who is
eligible to Retire, to have Retired, at any time (or in the case of a Participant who is eligible
to Retire, as soon as practicable) after such Participant is determined to be suffering a
Disability, in which case the Participant will receive a Disability Benefit equal to his Account
Balance at the time of the Committee’s or its delegate’s determination; provided, however, that
should the Participant otherwise have been eligible to Retire, he or she will be paid in accordance
with Article VI. The Disability Benefit will be paid in a lump sum within sixty (60) days of the
Committee’s or its delegate’s exercise of such right. Any payment made will be subject to the
Deduction Limitation.

18

 

ARTICLE X: BENEFICIARY DESIGNATION

10.010 Beneficiary. Each Participant will have the right, at any time, to designate
his Beneficiary or Beneficiaries (both primary and contingent) to receive any benefits payable
under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under
this Plan may be the same as or different from the Beneficiary designation under any other plan of
an Employer in which the Participant participates.

10.020 Beneficiary Designation or Change of Designation. A Participant will be permitted
to designate his Beneficiary by completing and signing the Beneficiary Designation Form, and
returning it to the Committee or its delegate. A Participant will have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary
Designation Form and the Committee’s or its delegate’s rules and procedures, as in effect from time
to time. Upon the acceptance by the Committee or its delegate of a new Beneficiary Designation
Form, all Beneficiary designations previously filed will be canceled. The Committee or its
delegate will be entitled to rely on the last Beneficiary Designation Form filed by the Participant
and accepted by the Committee or its delegate prior to the Participant’s death.

10.030 Spousal Consent Required. If a Participant names someone other than his spouse as a
Beneficiary, a spousal consent, in the form designated by the Committee or its delegate, must be
signed by that Participant’s spouse and returned to the Committee or its delegate.

10.040 Acknowledgment. No designation or change in designation of a Beneficiary will be
effective until received and acknowledged in writing by the Committee or its delegate.

10.050 Absence of Valid Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in the preceding Sections or, if all designated Beneficiaries predecease
the Participant or die prior to complete distribution of the Participant’s benefits, then the
Participant’s designated Beneficiary will be deemed to be his surviving spouse. If the Participant
has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary will be
payable to the executor or personal representative of the Participant’s estate.

10.060 Doubt as to Beneficiary. If the Committee or its delegate has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee or its delegate will
have the
right, exercisable in its discretion, to withhold such payments until this matter is resolved to
the Committee’s or the delegate’s satisfaction.

10.070 Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary
will fully and completely discharge the Company and all of its Affiliates and the Committee from
all further obligations under this Plan with respect to the Participant, and that Participant’s
participation in this Plan will terminate upon such full payment of benefits.

19

 

ARTICLE XI: LEAVE OF ABSENCE

11.010 Paid Leave of Absence. If a Participant is authorized by the Company or the
Affiliate employing the Participant for any reason to take a paid leave of absence, the Participant
will continue to be considered to be an Employee and the Annual Deferral Amount will continue to be
withheld during such paid leave of absence.

11.020 Unpaid Leave of Absence. If a Participant is authorized by the Company or the
Affiliate employing the Participant to take an unpaid leave of absence, the Participant will
continue to be considered to be an Employee and the Participant will be excused from making
deferrals until the earlier of the date the leave of absence expires or the Participant returns to
a paid employment status. Upon such expiration or return, deferrals will resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based on the deferral election,
if any, made for that Plan Year. If no election was made for that Plan Year, no deferral will be
withheld.

ARTICLE XII: TERMINATION, AMENDMENT OR MODIFICATION

12.010 Termination. Although the Company and each Affiliate anticipates that it will
continue the Plan for an indefinite period of time, there is no guarantee that the Company or any
such Affiliate will continue the Plan or will not terminate the Plan at any time in the future.
Accordingly, the Company reserves the right to discontinue sponsorship of the Plan and/or to
terminate the Plan at any time with respect to any or all of its participating Employees, by action
of the Board of Directors. Upon the termination of the Plan, the participation of affected
Participants will terminate and their Account Balances, determined as if they had experienced a
Termination of Employment on the date of Plan termination or, if Plan termination occurs after the
date upon which a Participant was eligible to Retire, then with respect to that Participant as if
he had Retired on the date of Plan termination, will be paid to the Participants as follows:

Prior to a Change of Control, if the Plan is terminated with respect to all of its Participants,
the Company will have the right, in its sole discretion, and notwithstanding any elections made by
the Participant, to pay such benefits in a lump sum or pursuant to an Annual Installment Method of
up to 15 years, with amounts credited and debited during the installment period as provided herein.
If the Plan is terminated with respect to less than all of its Participants, the Company or the
Affiliate employing an affected Participant will be required to pay such benefits in a lump sum.

12.020 Amendment. The Company may, at any time, amend or modify the Plan in whole or in
part by action of the Board of Directors; provided, however, that:

	(a)	 	no amendment or modification shall be effective to decrease or restrict the value of a
Participant’s Account Balance in existence at the time the amendment or modification is made,
calculated as if the Participant had experienced a Termination of Employment as of the
effective date of the amendment or modification or, if the amendment or modification 

20

 

	 	 	occurs
after the date upon which the Participant was eligible to Retire, the Participant had Retired
as of the effective date of the amendment or modification;

	(b)	 	no amendment or modification of this Section 12.020 Plan shall be effective; and
	 
	(c)	 	the amendment or modification of the Plan shall not affect any Participant or Beneficiary who
has become entitled to the payment of benefits under the Plan as of the date of the amendment
or modification

12.030 Amendment of Individual Participation Agreement Forms. Despite the provisions of
Sections 12.010 and 12.020, if a Participant’s Participation Agreement Form contains benefits or
limitations that are not contained in this Plan document, the Company or Affiliate may only amend
or terminate such provisions with the consent of the Participant.

12.040 Effect of Payment. The full payment of all applicable benefits hereunder shall
completely discharge all obligations to a Participant and his Beneficiaries under this Plan.

ARTICLE XIII: ADMINISTRATION

13.010 Committee Duties. Except as otherwise provided in this Article, this Plan will
be administered by the Committee and its delegates. Members of the Committee may be Participants
under this Plan. The Committee will also have the discretion and authority to:

	(a)	 	make, amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Plan, and
	 
	(b)	 	decide or resolve any and all questions including interpretations of this Plan, as may arise
in connection with the Plan.

Any individual serving on the Committee who is a Participant will not be permitted to vote or act
on any matter relating solely to himself or herself. When making a determination or calculation,
the Committee will be entitled to rely on information furnished by a Participant or the Company.

13.020 Administration Upon Change of Control. Notwithstanding any other provision of this
Plan to the contrary, upon and after the occurrence of a Change of Control, the Plan will be
administered by the Third-Party Administrator. The Third-Party Administrator so selected will have
the discretionary power to determine all questions arising in connection with the administration of
the Plan and the interpretation of the Plan and Trust including, but not limited, to benefit
entitlement determinations; provided, however, upon and after the occurrence of a
Change of Control, such administrator will have no power to direct the investment of Plan or Trust
assets or select any investment manager or custodial firm for the Plan or Trust.

Upon and after the occurrence of a Change of Control, the Company will be required to:

21

 

	(a)	 	pay all reasonable administrative expenses and fees of the Third-Party Administrator;
	 
	(b)	 	indemnify the Third-Party Administrator against any costs, expenses and liabilities
including, without limitation, attorney’s fees and expenses arising in connection with the
performance of such administrator hereunder, except with respect to matters resulting from the
gross negligence or willful misconduct of the said administrator or its employees or agents;
and
	 
	(c)	 	supply full and timely information to the Third-Party Administrator on all matters relating
to the Plan, the Trust, the Participants and their Beneficiaries, the Account Balances of the
Participants, the date of circumstances of the Retirement, Disability, death or Termination of
Employment of the Participants, and such other pertinent information as the Third-Party
Administrator may reasonably require.

Upon and after a Change of Control, the Third-Party Administrator may not be terminated by the
Company and may only be terminated (and a replacement appointed) by the Trustee, but only with the
approval of the Ex-CEO.

13.030 Agents. In the administration of this Plan, the Committee may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with counsel who may be
counsel to any Employer. The Company’s Vice President, Compensation will at all times, unless
otherwise determined by the Committee, be deemed to be and shall be specifically referred to herein
as the Committee’s delegate for all purposes herein.

13.040 Binding Effect of Decisions. The decision or action of the Committee or its
delegate with respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations promulgated hereunder will
be final and conclusive and binding upon all persons having any interest in the Plan.

13.050 Indemnity of Committee. The Company and its Affiliates shall indemnify and hold
harmless the members of the Committee, any Employee to whom the duties of the Committee may be
delegated, and the Committee or its delegate against any and all claims, losses, damages, expenses
or liabilities arising from any action or failure to act with respect to this Plan, except in the
case of willful misconduct by the Committee, any of its members, or such Employee.

13.060 Employer Information. To enable the Committee and its delegates to perform their
functions, the Company will supply full and timely information to the Committee and delegates on
all matters relating to the compensation of its Participants, the date and circumstances of the
Retirement, Disability, death or circumstances of the Retirement, Disability, death or
Termination of Employment of its Participants, and such other pertinent information as the
Committee or its delegate may reasonably require.

22

 

ARTICLE XIV: OTHER BENEFITS AND AGREEMENTS

14.010 Coordination with Other Benefits. The benefits provided for a Participant and
Participant’s Beneficiary under the Plan are in addition to any other benefits available to such
Participant under any other plan or program for employees of the Company and its Affiliates. The
Plan will supplement and will not supersede, modify or amend any other such plan or program except
as may otherwise be expressly provided.

ARTICLE XV: CLAIMS PROCEDURE

15.010 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver
to the Committee or its delegate a written claim for a determination with respect to the amounts
distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within sixty (60) days after such notice was
received by the Claimant. All other claims must be made within one hundred and eighty (180) days of
the date on which the event that caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.

15.020 Notification of Decision. The Committee or its delegate will consider a Claimant’s
claim within a reasonable time, and will notify the Claimant in writing:

	(a)	 	that the Claimant’s requested determination has been made, and that the claim has been
allowed in full; or
	 
	(b)	 	that the Committee or its delegate has reached a conclusion contrary, in whole or in part, to
the Claimant’s requested determination, and such notice must set forth in a manner calculated
to be understood by the Claimant;
	 
	(c)	 	the specific reason(s) for the denial of the claim, or any part of it;

	 	(1)	 	specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;
	 
	 	(2)	 	a description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or information
is necessary; and
	 
	 	(3)	 	an explanation of the claim review procedure set forth in Section 15.030 below.

15.030 Review of a Denied Claim. Within sixty (60) days after receiving a notice from the
Committee or its delegate that a claim has been denied, in whole or in part, a Claimant (or the
Claimant’s duly authorized representative) may file with the Committee or its delegate a written

23

 

request for a review of the denial of the claim. Thereafter, but not later than thirty (30) days
after the review procedure began, the Claimant (or the Claimant’s duly authorized representative):

	(a)	 	may review pertinent documents;
	 
	(b)	 	may submit written comments or other documents; and/or
	 
	(c)	 	may request a hearing, which the Committee or its delegate, in its sole discretion, may
grant.

15.040 Decision on Review. The Committee or its delegate will render any decision on
review promptly, and not later than 60 days after the filing of a written request for review of the
denial, unless a hearing is held or other special circumstances require additional time, in which
case the Committee’s or its delegate’s decision must be rendered within one hundred and twenty
(120) days after such date. Such decision must be written in a manner calculated to be understood
by the Claimant, and it must contain:

	(a)	 	specific reasons for the decision;
	 
	(b)	 	specific reference(s) to the pertinent Plan provisions upon which the decision was based; and
	 
	(c)	 	such other matters as the Committee or its delegate deems relevant.

15.050 Legal Action. A Claimant’s compliance with the foregoing provisions of this Article
14 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to
any claim for benefits under this Plan.

ARTICLE XVI: TRUST

16.010 Establishment of the Trust. The Company shall establish the Trust (which may
be referred to herein as a “Rabbi Trust”). The Trust shall become irrevocable upon a Change of
Control (to the extent not then irrevocable). After the Trust has become irrevocable with respect
to the Plan, except as otherwise provided in Section 12 of the Trust, the Trust shall remain
irrevocable with respect to the Plan until all benefits due under this Plan and benefits and
account balances due to participants and beneficiaries under any other plan covered by the trust
have been paid in full. Upon establishment of the Trust, the Company shall provide for funding of
the Trust in accordance with the terms of the Trust.

16.020 Interrelationship of the Plan and the Trust. The provisions of the Plan and each
Participant’s Participation Agreement Form will govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Trust will govern the rights of the
Company and its Affiliates, Participants and the creditors of the Company and its Affiliates to the

24

 

assets transferred to the Trust. The Company and each of its Affiliates employing any Participant
will at all times remain liable to carry out their obligations under the Plan.

16.030 Distributions From the Trust. The Company’s and each of its Affiliate’s obligations
under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust,
and any such distribution will reduce their obligations under this Plan.

16.040 Rabbi Trust. The Rabbi Trust shall:

	(a)	 	be a non-qualified grantor trust which satisfies in all material respects the requirement of
Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable
authority);
	 
	(b)	 	become irrevocable upon a Change of Control (to the extent not then irrevocable); and
	 
	(c)	 	provide that any successor trustee shall be a bank trust department or other party that may
be granted corporate trustee powers under state law.

ARTICLE XVII: MISCELLANEOUS

17.010 Status of Plan. The Plan is intended to be a plan that is not qualified within
the meaning of Code §401(a) and that “is unfunded and is maintained by an employer primarily for
the purpose of providing deferred compensation for a select group of management or highly
compensated employee” within the meaning of ERISA §§201(2), 301(a)(3) and 401(a)(1). The Plan will
be administered and interpreted to the extent possible in a manner consistent with that intent.

17.020 Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors
and assigns shall have no legal or equitable rights, interests or claims in any property or assets
of the Company or its Affiliates. For purposes of the payment of benefits under this Plan, any and
all of the Company’s or Affiliate’s assets shall be, and remain, the general, unpledged
unrestricted assets of the Company or Affiliate. The Company or Affiliate’s obligation under the
Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.

17.030 Company Liability. The Company’s or an Affiliate’s liability for the payment of
benefits will be defined only by the Plan and the Participant’s specific Participation Agreement
Form. The Company and its Affiliates will have no obligation to a Participant under the Plan,
except as expressly provided in the Plan and the Participant’s Participation Agreement Form.

17.040 Nonassignability. Neither a Participant nor any other person will have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are expressly declared to be,
unassignable and non-transferable. No part of the amounts payable will, prior to actual payment,

25

 

be subject to seizure, attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other person, be
transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy
or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

17.050 Not a Contract of Employment. The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between the Company or any of its Affiliates and the
Participant. Such employment is hereby acknowledged to be an “at will” employment relationship
that can be terminated at any time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment agreement. Nothing in this Plan
shall be deemed to give a Participant the right to be retained in the service of any the Company or
an Affiliate or to interfere with the right of the Company or an Affiliate to discipline or
discharge the Participant at any time.

17.060 Furnishing Information. A Participant or his Beneficiary will cooperate with the
Committee or its delegate by furnishing any and all information requested by the Committee or its
delegate and take such other actions as may be requested in order to facilitate the administration
of the Plan and the payments of benefits hereunder, including but not limited to taking such
physical examinations as the Committee or its delegate may deem necessary.

17.070 Terms. Whenever any words are used herein in the masculine, they should be
construed as though they were in the feminine in all cases where they would so apply; and whenever
any words are used herein in the singular or in the plural, they should be construed as though they
were used in the plural or the singular, as the case may be, in all cases where they would so
apply.

17.080 Captions. The captions of the articles, sections and paragraphs of this Plan are
for convenience only and do not control or affect the meaning or construction of any of its
provisions.

17.090 Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and
interpreted according to the laws of the State of Wisconsin.

17.100 Notice. Any notice or filing required or permitted to be given to the Committee
under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or
certified mail, to the address below:

Vice President, Compensation

Rockwell Automation, Inc.

Firstar Center

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

26

 

Such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant under this Plan shall be
sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the
Participant.

17.110 Successors. The provisions of this Plan shall bind and inure to the benefit of the
Company and its successors and assigns and the Participant and the Participant’s designated
Beneficiaries.

17.120 Spouse’s Interest. The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant will automatically pass to the Participant and will
not be transferable by such spouse in any manner, including but not limited to such spouse’s will,
nor will such interest pass under the laws of intestate succession.

17.130 Validity. In case any provision of this Plan should be found to be illegal or
invalid for any reason, said illegality or invalidity will not affect the remaining parts hereof,
but this Plan should be construed and enforced as if such illegal or invalid provision had never
been inserted herein.

17.140 Minors, Incompetent Persons, etc. If the Committee or its delegate determines that
a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person
incapable of handling the disposition of that person’s property, the Committee or its delegate may
direct payment of such benefit to the guardian, legal representative or person having the care and
custody of such minor, incompetent or incapable person. The Committee or its delegate may require
proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to
distribution of the benefit. Any payment of a benefit shall be a payment for the account of the
Participant and the Participant’s Beneficiary, as the case may be, and will be a complete discharge
of any liability under the Plan for such payment amount.

17.150 Court Order. The Committee or its delegate is authorized to make any payments
directed by court order in any action in which the Plan or the Committee has been named as a party.
In addition, if a court determines that a spouse or former spouse of a Participant has an interest
in the Participant’s benefits under the Plan in connection with a property settlement or otherwise,
the Committee or its delegate, in its sole discretion, will have the right, notwithstanding any
election made by a Participant, to immediately distribute the spouse’s or former spouse’s interest
in the Participant’s benefits under the Plan to that spouse or former spouse.

17.160 Distribution in the Event of Taxation.

	(a)	 	In General. If, for any reason, all or any portion of a Participant’s benefits under
this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the

27

 

	 	 	Committee or its delegate before a Change of Control, or the Trustee of the Trust after a
Change of Control, for a distribution of that portion of his benefit that has become taxable.
Upon the grant of such a petition, which grant should not be unreasonably withheld (and, after
a Change of Control, must be granted), the Company or, as applicable, its Affiliate will
distribute to the Participant immediately available funds in an amount equal to the taxable
portion of his benefit (which amount will not exceed a Participant’s unpaid Account Balance
under the Plan). If the petition is granted, the tax liability distribution will be made
within 90 days of the date when the Participant’s
petition is granted. Such a distribution will affect and reduce the benefits to be paid
under this Plan.

	(b)	 	Trust. If the Trust terminates in accordance with provisions thereof and benefits
are distributed from the Trust to a Participant in accordance therewith, the Participant’s
benefits under this Plan will be reduced to the extent of such distributions.

17.170 Insurance. The Company, on its own behalf or on behalf of the trustee of the Trust,
and, in its discretion, may apply for and procure insurance on the life of the Participant, in such
amounts and in such forms as the Trust may choose. The Company or the trustee of the Trust, as the
case may be, will be the sole owner and beneficiary of any such insurance. The Participant will
have no interest whatsoever in any such policy or policies, and at the request of the Company will
submit to medical examinations and supply such information and execute such documents as may be
required by the insurance company or companies to which the Company has applied for insurance.

17.180 Legal Fees To Enforce Rights After Change of Control. The Company is aware that
upon the occurrence of a Change of Control, the Board of Directors (which might then be composed of
new members) or a shareholder of the Company or of any successor corporation might then cause or
attempt to cause the Company, an Affiliate or such successor to refuse to comply with its
obligations under the Plan and might cause or attempt to cause the Company or the Affiliate to
institute, or may institute, litigation seeking to deny Participants the benefits intended under
the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if,
following a Change of Control, it should appear to any Participant that the Company, an Affiliate
of the Company or any successor corporation has failed to comply with any of its obligations under
the Plan or any agreement thereunder or, if the Company, such Affiliate or any other person takes
any action to declare the Plan void or unenforceable or institutes any litigation or other legal
action designed to deny, diminish or to recover from any Participant the benefits intended to be
provided, then the Company irrevocably authorizes such Participant to retain counsel of his choice
at the expense of the Company to represent such Participant in connection with the initiation or
defense of any litigation or other legal action, whether by or against the Company, one or more of
its Affiliates or any director, officer, shareholder or other person affiliated with the Company,
any such Affiliate any successor thereto in any jurisdiction.

17.190 Requirement for Release. Any payment to any Participant or a Participant’s present,
future or former spouse or Beneficiary in accordance with the provisions of this Plan will, to the
extent thereof, be in full satisfaction of all claims against the Plan, the Trustee and the
Company, and the Trustee may require such Participant or Beneficiary, as a condition precedent to
such payment to execute a receipt and release to such effect.

28

 

Appendix A

PREDECESSOR PLAN PROVISIONS

The following provisions shall apply with respect to the Participants, as applicable, in the
Rockwell Predecessor Plans.

	I.	 	Accounts.

With respect to a Participant’s incentive compensation deferrals under one of the Predecessor Plans
for periods prior to the Effective Date, the value of any such Participant’s account will be
determined as of the last day of a calendar year quarter (the “Determination Date”) and will be
equal to the total of the Participant’s Lump Sum Payment and Installment Payment Sub-Accounts.

The value of each such Sub-Account will consist of:

	 	(1)	 	the balance of such Sub-Account as of the last preceding Determination Date,
plus
	 
	 	(2)	 	any Deferred Compensation credited to such Sub-Account since the last preceding
Determination date, plus
	 
	 	(3)	 	the sum of the three (3) monthly amounts determined by multiplying the average
daily balance of such Sub-Account during each of the three calendar months since the
last preceding Determination Date by the Interest Rate applicable to such month, minus
	 
	 	(4)	 	the amount of all Plan Benefits, if any, paid during the period since the last
preceding Determination Date.

Interest, determined as provided in (3) above, will be credited to each such Sub-Account as of the
Determination Date as of which such Sub-Account is valued.

	II.	 	Retirement Distributions and Withdrawals of Predecessor Plan Accounts.

	(a)	 	With respect to the provisions of the Predecessor Plans which were in effect immediately
prior to the Effective Date of this Plan as they regard benefits payable at retirement or
employment termination to a Participant, or at the time of a Participant’s death, to his
Beneficiary, such provisions shall remain in effect hereunder, but only with respect to
amounts deferred prior to the Effective Date of this Plan (and earnings thereon pursuant to
the preceding Section of this Appendix).
	 
	(b)	 	No Plan Benefit shall be payable to a Participant in one of the Predecessor Plans prior to
his termination of employment, except that, in the case of the Rockwell Predecessor Plan, the
Committee or its delegate may permit a Participant or, after a Participant’s death, a
Participant’s Beneficiary or other person or entity entitled to receive such Predecessor Plan
benefit to withdraw from his Account prior to his termination of employment:

 

 

	 	(1)	 	an amount necessary to meet a financial hardship, or
	 
	 	(2)	 	his entire Account balance

Either type of withdrawal shall be requested by written notice to the Committee or its delegate and
the amount of the withdrawal shall be paid within forty-five (45) days after receipt of the written
notice.

	III.	 	Funding of Rabbi Trust for Account Balances upon Change of Control.

The Company shall fund the Trust in immediately available funds for the benefit of each
Participant, surviving spouse, joint annuitant or beneficiary with respect to Accounts under the
Predecessor Plans in accordance with the terms of the Trust. Such trust, as it regards such
Predecessor Plan amounts, shall:

	(a)	 	be a non-qualified grantor trust which satisfies in all material respects the requirement of
Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable
authority);
	 
	(b)	 	become irrevocable upon a change of Control (to the extent not then irrevocable); and
	 
	(c)	 	provide that any successor trustee shall be a bank trust department or other party that may
be granted corporate trustee powers under state law.

2

 

Appendix B

MEASUREMENT FUNDS

Measurement Funds (and their underlying benchmark mutual funds) are listed below in
alphabetical order:

	•	 	Balanced Fund

Fidelity Puritan Fund

The objective of this balanced mutual fund is to obtain income and capital growth consistent with
reasonable risk.

This fund invests approximately 60% of its assets in stocks and other equity securities and the
remainder in investment grade bonds and other investment grade debt securities, including medium
and high quality debt securities. The fund will invest at least 25% of total assets in fixed-income
senior securities (including debt securities and preferred stock). The fund may invest in domestic
and foreign issuers.

	•	 	Blue Chip Growth Fund

Fidelity Blue Chip Growth Fund

The objective of this growth mutual fund is to increase the value of investments over the long term
through capital growth.

The fund invests primarily in common stocks of well-known and established companies. Normally at
least 65% of the fund’s total assets are invested in blue chip companies. The fund may also invest
in companies with above-average growth potential that the fund’s manager believes are positioned to
become the blue chips of the future.

	•	 	Capital & Income Fund

Fidelity Capital & Income Fund

The objective of this income mutual fund is to obtain a combination of current income and capital
growth.

This fund invests in equity and debt securities, including defaulted securities, with an emphasis
on lower-quality debt securities. The fund may also invest in securities of domestic and foreign
issuers. This fund carries a “short-term trading fee” which is charged to discourage short-term
buying and selling of fund shares. If shares are sold after being held for less than 365 days, the
fund will deduct a short-term trading fee equal to 1.5% of the value of the shares sold.

 

 

	•	 	Diversified International Fund

Fidelity Diversified International Fund

The objective of this growth mutual fund, which invests overseas, is to increase the value of
investments over the long term through capital growth.

This fund normally invests at least 65% of total assets in foreign securities. In selecting
securities the fund employs computer-aided quantitative analysis supported by fundamental research.
This fund will carry a “short-term trading fee” which will be charged to discourage short-term
buying and selling of fund shares. If shares are sold after being held for less than 30 days, the
fund will deduct a short-term trading fee from your account equal to 1.0% of the value of the
shares sold.

	•	 	Equity Income Fund

Fidelity Equity Income Fund

The objective of this growth and income mutual fund is to obtain reasonable income to while
considering the potential for capital appreciation. It seeks to provide a yield that exceeds the
yield of the securities in the Standard & Poors 500 Index.

The fund normally invests at least 65% of total assets in income-producing equity securities, which
tend to lead to investments in large cap stocks. The fund potentially invests in other types of
equity and debt securities, including lower-quality debt securities. The fund may invest in
securities of domestic and foreign issuers.

	•	 	Fidelity Fund

Fidelity Fund

This growth and income mutual fund strives to obtain long-term capital growth.

The fund invests primarily in common stocks. It potentially invests a portion of its assets in
bonds, including lower-quality debt securities. The fund invests in domestic and foreign issuers.

	•	 	Investment Grade Bond Fund

Fidelity Investment Grade Bond Fund

The objective of this income mutual fund is to obtain high current income.

This fund normally invests in U.S. dollar-denominated investment-grade bonds (those of medium and
high quality). The fund is managed to have similar overall interest rate risk to the Lehman

2

 

Brothers Aggregate Bond Index. Assets are allocated across different market sectors and
maturities.

	•	 	Market Index Fund

SpartanÒ 500Market Index Fund

This mutual fund seeks to obtain investment results that correspond to the total return (i.e. the
combination of capital changes and income) of common stocks publicly traded in the United States,
as represented by the Standard & Poors 500 Index (S&P 500Ò), while keeping
transaction costs and other expenses low.

The fund normally invests at least 80% of its assets in common stock included in the

S&P 500. The fund may lend securities to earn income for the fund. This fund carries a
“short-term trading fee” which is charged to discourage short-term buying and selling of fund
shares. If shares are sold after being held for less than 90 days, the fund will deduct a
short-term trading fee from your account equal to 0.50% of the value of the shares sold.

	•	 	Mid-Cap Stock Fund

Fidelity Mid-Cap Stock Fund 

The objective of this growth mutual fund is to increase the value of investments over the long term
through capital growth.

The fund normally invests at least 65% of total assets in common stocks of companies with medium
market capitalizations (those with market capitalizations similar to companies in the S&P MidCap
400). The fund may invest in companies with smaller or larger market capitalizations. The fund
may also invest in domestic and foreign issuers.

	•	 	Small Cap Fund

Fidelity Small Cap Selector

This mutual fund seeks to obtain capital appreciation.

This fund normally invests at least 65% of total assets in securities of companies with small
market capitalizations (those with market capitalizations similar to companies in the Russell 2000®
Index). The fund will primarily invest in common stock. The fund may also invest in domestic and
foreign issuers. This fund carries a “short-term trading fee” which is charged to discourage
short-term buying and selling of fund shares. If shares are sold after being held for less than 90
days, the fund will deduct a short-term trading fee from your account equal to 1.5% of the value of
the shares sold.

	•	 	US Govt. Money Market Fund

Spartan US Government Money Market Fund

The objective of this fund is to obtain as high a level of current income as is consistent with
preservation of capital and liquidity.

This fund invests in U.S. Government securities and repurchase agreements for those securities, and
enters reverse repurchase agreements. The fund invests in compliance with industry-standard
requirements for money market funds for the quality, maturity and diversification of investments.

3

 

ROCKWELL AUTOMATION

DEFERRED COMPENSATION PLAN

Restated as of January 1, 2006EX-4.1

 

Exhibit 4.1

NRG ENERGY, INC.

CERTIFICATE OF DESIGNATIONS

establishing the

Voting Powers, Designations, Preferences, Limitations,

Restrictions and Relative Rights of

5.750% Mandatory Convertible Preferred Stock

 

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

 

 

 

          NRG ENERGY, INC., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the “Issuer”), does hereby certify that (i) pursuant to authority conferred
upon the Board of Directors of the Issuer by its Amended and Restated Certificate of Incorporation,
as amended to date, and pursuant to the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors authorized the creation and issuance of the Issuer’s
5.750% Mandatory Convertible Preferred Stock (the “Preferred Stock”), and (ii) the following
resolution fixing the designations, preferences and rights of such Preferred Stock, which was duly
adopted by the Board of Directors, on January 25, 2006, remains in full force and effect. Certain
capitalized terms used herein are defined in Section 19.

          NOW THEREFORE IT IS RESOLVED, that pursuant to Section 151 of the General Corporation Law of
Delaware and the authority expressly granted to and vested in the Board of the Issuer by the
provisions of the Amended and Restated Certificate of Incorporation (the “Certificate of
Incorporation”) of the Issuer, the Board hereby creates a series of Preferred Stock, par value
$0.01 per share, to consist initially of 2,300,000 shares, with the designations, preferences and
relative, participating, optional or other special rights, and the qualifications, limitations and
restrictions as set forth in this Certificate of Designations:

1. Designation and Number of Shares.

          1.1 The series will be known as the “5.750% Mandatory Convertible Preferred Stock.”

          1.2 The Preferred Stock will be a series consisting of 2,300,000 shares with a Liquidation
Preference of $250 per share of the authorized but unissued preferred stock of the Issuer.

2. Dividends.

          2.1 Dividends on the Preferred Stock will be payable quarterly in arrears in cash when, as and
if declared by the Board, or a duly authorized committee thereof, when the Issuer is legally
permitted to do so, on each Dividend Payment Date, at the annual rate of $14.375 per share, subject
to adjustment as provided for in Section 14.6. The initial dividend on the Preferred Stock for the
first Dividend Period, commencing on the date of first issuance of the Preferred Stock (assuming a
date of first issuance of February 2, 2006), to but excluding March 15, 2006, will be $1.7170 per
share, and when, as and if declared, will be payable on March 15, 2006; provided that the Issuer is
legally permitted to pay such dividends at such time. The dividend for each subsequent Dividend
Period on the Preferred Stock, when, as and if declared, will be $3.59375 per share, subject to
adjustment as provided for in Section 14.6. Dividends payable, when, as and if declared, on a
Dividend Payment Date will be payable to Record Holders for the applicable Dividend Payment Date,
except as otherwise provided in Section 6.1.

          2.2 The amount of dividends payable on each share of Preferred Stock for each Dividend Period
will be computed as specified above. The amount of dividends payable for any other period that is
shorter or longer than a full Dividend Period will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Dividends on the Preferred Stock shall

 

 

accrue and cumulate if the Issuer fails to declare one or more dividends on the Preferred
Stock in any amount, whether or not the Issuer is then legally permitted to pay such dividends.

          2.3 No interest or sum of money in lieu of interest shall be payable in respect of any
dividend not paid on a Dividend Payment Date or any other late payment. The Issuer will also not
be obligated to pay Holders of the Preferred Stock any dividend in excess of the full dividends on
the Preferred Stock that are payable as described above.

          2.4 Dividends in arrears on the Preferred Stock not declared for payment or not paid on any
Dividend Payment Date may later be declared by the Board, or a duly authorized committee thereof,
and paid on any date fixed by the Board, or a duly authorized committee thereof, whether or not a
Dividend Payment Date, to the Record Holders as they appear on the stock register of the Issuer on
a record date selected by the Board, or a duly authorized committee thereof, which shall (i) not
precede the date the Board, or an authorized committee thereof, declares the dividend payable and
(ii) not be more than 60 days prior to the date the dividend is paid.

3. Payment Restrictions 

          3.1 For so long as any Preferred Stock is outstanding, unless all accrued, cumulated and
unpaid dividends on the Preferred Stock for all prior Dividend Periods have been paid, the Issuer
may not:

               (a) declare, pay or set apart funds for the payment of any dividend, or make any distribution
of assets, on any Junior Securities or Parity Securities;

               (b) redeem, purchase or otherwise acquire for consideration any Junior Securities or pay or
make any monies available for a sinking fund for Junior Securities; or

               (c) redeem, purchase or otherwise acquire for consideration any Parity Securities or pay or
make any monies available for a sinking fund for Parity Securities; provided that the Issuer may
redeem, purchase or otherwise acquire Parity Securities pursuant to a purchase offer or exchange
offer made on similar terms to all holders of the Preferred Stock and such other Parity Securities.

4. Ranking.

          4.1 The Preferred Stock will rank, with respect to dividend distributions and distributions
upon the liquidation, winding up or dissolution of the Issuer:

               (a) senior to all classes of Common Stock and each other class of Capital Stock or series of
preferred stock issued by the Issuer, the terms of which expressly provide that such class or
series will rank junior to the Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding up or dissolution of the Issuer (collectively, with the Common Stock,
referred to as the “Junior Securities”);

               (b) on a parity with the Issuer’s 4% Convertible Perpetual Preferred Stock, the Issuer’s
3.625% Convertible Perpetual Preferred Stock, and any class or series of the

2

 

capital stock issued by the Issuer, the terms of which expressly provide that such class or
series will rank on a parity with the Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding up or dissolution of the Issuer (collectively, with the
Issuer’s 4% Convertible Perpetual Preferred Stock and 3.625% Convertible Perpetual Preferred Stock,
referred to as “Parity Securities”); and

               (c) junior to each class of capital stock of the Issuer other than (i) the Common Stock, (ii)
any other class or series of capital stock, the terms of which expressly provide that such class or
series will rank junior to the Preferred Stock and (iii) any other class or series of capital stock
of the Issuer that has terms that provide that such class or series will rank on a parity with the
Preferred Stock, as to dividend distributions and distributions upon liquidation, winding up or
dissolution of the Issuer (collectively referred to as “Senior Securities”);

in each case, whether now outstanding or to be issued in the future.

5. Voting Rights.

          5.1 General. Except as otherwise required by law, the Certificate of Incorporation or
as set forth in this Section 5, Holders of the Preferred Stock are not entitled to any voting
rights and their consent shall not be required for the taking of any corporate action.

          5.2 Amendments to Preferred Stock Terms. So long as any shares of Preferred Stock are
outstanding, the Issuer will not, without the consent of the Holders of at least two-thirds of the
shares of Preferred Stock then outstanding, voting as a class with all other series of preferred
stock upon which like voting rights have granted, given in person or by proxy either at an annual
meeting or at a special meeting called for that purpose, amend, alter or repeal (by merger,
consolidation, combination, reclassification or otherwise) any of the provisions of the Certificate
of Incorporation so as to affect adversely the rights, preferences or voting powers of the Holders
of the Preferred Stock or otherwise; provided that any amendment of the provisions of the
Certificate of Incorporation so as to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or evidencing a right to purchase,
any Parity Securities or Junior Securities shall be deemed not to affect adversely the rights,
preferences or voting powers of the Holders of the Preferred Stock. Notwithstanding anything in
this Section 5 to the contrary, any amendment, alteration or repeal of any of the provisions of the
Issuer’s Certificate of Incorporation occurring in connection with any merger or consolidation of
the Issuer of the type described in Section 14.5(a) or any statutory exchange of securities of the
Issuer with another Person (other than in connection with a merger or acquisition) of the type
described in Section 14.5(d) shall be deemed not to adversely affect the rights, preferences or
voting power of the Holders of the Preferred Stock.

          5.3 Preferred Stock Directors.

               (a) If, at any time, dividends on the then outstanding shares of Preferred Stock or any other
class or series of Parity Securities with respect to payment of dividends in an amount equivalent
to six quarterly dividends, whether or not consecutive, shall not have been:

	 	(i)	 	paid, or

3

 

	 	(ii)	 	(A) declared and (B) a sum
sufficient for the payment thereof set aside,

the Holders, voting separately as a single class with holders of Parity Securities that contain
similar voting rights which are then exercisable (shares of such Parity Securities, together with
shares of Preferred Stock, the “Preferred Shares”), and not any holders of Common Stock or any
other class or series of the Issuer’s capital stock, shall be entitled to increase the authorized
number of directors on the Board by two and elect such two directors (the “Preferred Stock
Directors”) at the next annual or special meeting of the shareholders.

               (b) At any such annual or special meeting of the shareholders, or any adjournment thereof, if
the holders of at least a majority of the Preferred Shares then outstanding shall be present or
represented by proxy, then:

	 	(i)	 	by vote of the holders of at
least a majority of the Preferred Shares, voting as a class,
then present or so represented, the authorized number of
directors of the Issuer shall be increased by two, and
	 
	 	(ii)	 	at such meeting the holders of
the Preferred Shares, voting as a class, shall be entitled to
elect the Preferred Stock Directors by vote of the holders of at
least a majority of the Preferred Shares then present or so
represented.

               (c) Such right of the holders of the Preferred Shares to elect the Preferred Stock Directors
may be exercised until all dividends in default on such Preferred Shares shall have been (i) paid
in full or (ii)(A) declared and (B) a sum sufficient for the payment thereof set aside. When so
paid or provided for, (i) the right of the holders of Preferred Shares to elect the Preferred Stock
Directors shall cease, (ii) the terms of all of the Preferred Stock Directors shall terminate, and
(iii) the authorized number of directors of the Issuer shall be reduced accordingly. Not later
than 40 days after such entitlement arises, the Board will convene a special meeting of
shareholders for the above purpose. If the Board fails to convene such meeting within such 40-day
period, the holders of 10% of the outstanding Preferred Shares, considered as a single class, will
be entitled to convene such meeting to elect the Preferred Stock Directors. Any director who shall
have been elected by the holders of Preferred Shares as a class pursuant to this Section 5 may be
removed at any time, either for or without cause by, and only by, the affirmative vote of the
Record Holders of a majority of the outstanding Preferred Shares given at a special meeting of such
shareholders called for such purpose by the Issuer or at the annual meeting of shareholders, and
any vacancy created by such removal may also be filled at such meeting. Any vacancy caused by the
death or resignation of a director who shall have been elected by the holders of Preferred Shares
as a class pursuant to this Section 5 may be filled only by the holders of outstanding Preferred
Shares at a meeting called for such purpose by the Issuer. The provisions of the Certificate of
Incorporation and By-laws of the Issuer relating to the convening and conduct of special meetings
of shareholders and the nomination of directors will apply with respect to any special meeting of
the holders of Preferred Shares; provided that the notice of the nomination need only be delivered
to the Secretary of the Issuer not more than 10 days after the Issuer (or the holders of 10% of the
outstanding Preferred Shares, if applicable)

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has notified the holders of Preferred Shares of the date of the special meeting to elect the
initial Preferred Stock Directors.

          5.4 Protective Provisions. So long as any of the Preferred Stock is outstanding, the
Issuer will not, without the approval of the Holders of at least two-thirds of the shares of
Preferred Stock then outstanding and any class or series of Parity Securities then outstanding that
contain like voting rights that are then exercisable, voting together as a single class, given in
person or by proxy either at an annual meeting or at a special meeting called for that purpose or
otherwise:

               (a) reclassify any of the Issuer’s authorized shares into any shares of any class, or any
obligation or security convertible into or evidencing a right to purchase such shares, ranking
senior to the Preferred Stock as to payment of dividends or distribution of assets upon the
dissolution, liquidation or winding up of the Issuer; or

               (b) issue or increase the authorized amount of, or issue or authorize any obligation or
security convertible into or evidencing a right to purchase, any stock of any class or series
ranking senior to the Preferred Stock as to payment of dividends or distribution of assets upon the
dissolution, liquidation or winding up of the Issuer; provided that the Issuer may issue, authorize
or increase the authorized amount of, or issue or authorize any obligation or security convertible
into or evidencing a right to purchase, any shares of capital stock ranking on a parity with or
junior to the Preferred Stock as to payment of dividends or distribution of assets upon the
dissolution, liquidation or winding up of the Issuer without the vote of the Holders of the
Preferred Stock.

          5.5 Votes Per Share. In exercising the voting rights set forth in this Section 5,
each share of Preferred Stock shall have one vote per share. In any case where the Holders of the
Preferred Stock are entitled to vote as a class with holders of Parity Securities or other classes
or series of Preferred Shares, each class or series shall have a number of votes proportionate to
the aggregate liquidation preference of its outstanding shares.

6. Liquidation, Dissolution or Winding Up.

          6.1 General. In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Issuer, subject to the rights of holders of any shares of capital stock of the
Issuer then outstanding ranking senior to or pari passu with the Preferred Stock in respect of
distributions upon liquidation, dissolution or winding up of the Issuer and before any amount shall
be paid or distributed with respect to holders of any shares of capital stock of the Issuer then
outstanding ranking junior to the Preferred Stock in respect of distributions upon liquidation,
dissolution or winding up of the Issuer, the Holders of the Preferred Stock at the time outstanding
will be entitled to receive, out of the net assets of the Issuer legally available for distribution
to shareholders, a liquidating distribution in the amount of $250 per share, subject to adjustment
as provided for in Section 14.6, plus an amount equal to the sum of all accrued, cumulated and
unpaid dividends, whether or not declared, for the portion of the then-current Dividend Period
until the payment date and all prior Dividend Periods and such Holders shall be deemed to be the
Record Holders for such Dividend Periods or portions thereof. After the payment to the Holders of
the Preferred Stock of the full amounts provided for in this Section

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6.1, the Holders of the Preferred Stock will have no right or claim to any of the Issuer’s
remaining assets.

          6.2 Liquidation, Dissolution Or Winding Up. For the purpose of this Section 6, none
of the following shall constitute or be deemed to constitute a voluntary or involuntary
liquidation, dissolution or winding up of the Issuer:

               (a) the voluntary sale, conveyance, exchange or transfer for cash shares of stock, securities
or other consideration of all or substantially all of the Issuer’s property or assets;

               (b) the consolidation, merger or amalgamation of the Issuer with or into any other Person; or

               (c) the consolidation, merger or amalgamation of any other Person with or into the Issuer.

          6.3 Distributions. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Issuer, the amounts payable with respect to the Preferred Stock then outstanding
are not paid in full as provided in Section 6.1 hereof, no distribution shall be made on account of
any securities ranking pari passu with the Preferred Stock as to the distribution of assets upon
such liquidation, dissolution or winding up, unless a pro rata distribution is made on the
Preferred Stock. The Holders of the Preferred Stock then outstanding and the holders of any such
securities then outstanding shall share ratably in any distribution of assets upon such
liquidation, dissolution or winding up. The amount allocable to each series of such securities
then outstanding will be based on the proportion of their full respective liquidation preference
(including all accumulated and unpaid dividends) to the aggregate liquidation preference (including
all accumulated and unpaid dividends) of the outstanding shares of each such series.

          6.4 Notice. Written notice of any voluntary or involuntary liquidation, dissolution
or winding up of the Issuer, stating the payment date or dates when, and the place or places where,
the amounts distributable to holders of Preferred Stock in such circumstances shall be payable,
shall be given by first-class mail, postage prepaid, mailed not less than twenty calendar days
prior to any payment date stated therein, to the Holders of Preferred Stock, at the address shown
on the books of the Issuer or the Transfer Agent; provided, however, that a failure to give notice
as provided above or any defect therein shall not affect the Issuer’s ability to consummate a
voluntary or involuntary liquidation, dissolution or winding up of the Issuer.

7. Mandatory Conversion on the Mandatory Conversion Date.

          7.1 Each share of Preferred Stock will automatically convert (unless previously converted at
the option of the Holder in accordance with Section 8 or 10 hereof or converted at the option of
the Issuer pursuant to Section 9 hereof) on the Mandatory Conversion Date, into a number of shares
of Common Stock equal to the Conversion Rate.

          7.2 The “Conversion Rate” shall be as follows:

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               (a) if the Applicable Market Value of the Common Stock is equal to or greater than $60.45 (the
“Threshold Appreciation Price”), then the Conversion Rate shall be equal to 4.1356 shares of Common
Stock per share of Preferred Stock (the “Minimum Conversion Rate”);

               (b) if the Applicable Market Value of the Common Stock is less than the Threshold Appreciation
Price, but greater than $48.75 (the “Initial Price”), then the Conversion Rate shall be equal to
$250 divided by the Applicable Market Value of the Common Stock; and

               (c) if the Applicable Market Value of the Common Stock is less than or equal to the Initial
Price, then the Conversion Rate shall be equal to 5.1282 shares of Common Stock per share of
Preferred Stock (the “Maximum Conversion Rate”).

The Minimum Conversion Rate, the Maximum Conversion Rate, the Threshold Appreciation Price and the
Initial Price are each subject to adjustment in accordance with the provisions of Section 14
hereof.

          7.3 The Holders of Preferred Stock on the Mandatory Conversion Date shall have the right to
receive an amount in cash equal to all accrued, cumulated and unpaid dividends on the Preferred
Stock, whether or not declared prior to that date, for the then current Dividend Period until the
Mandatory Conversion Date and all prior Dividend Periods (other than previously declared dividends
on the Preferred Stock payable to Record Holders as of a prior date); provided that the Issuer is
legally permitted to pay such dividends at such time.

8. Early Conversion at the Option of the Holder.

          8.1 Conversion at the Option of the Holder. Shares of the Preferred Stock are
convertible, in whole or in part, at the option of the Holder thereof (“Early Conversion”), at any
time prior to the Mandatory Conversion Date, into shares of Common Stock at the Minimum Conversion
Rate, subject to adjustment as set forth in Section 14 hereof.

          8.2 Conversion Notice. Any written notice of conversion pursuant to Section 8 hereof
shall be duly executed by the Holder, and specify:

               (a) the number of shares of Preferred Stock to be converted;

               (b) the name(s) in which such Holder desires the shares of Common Stock issuable upon
conversion to be registered and whether such shares of Common Stock are to be issued in book-entry
or certificated form (subject to compliance with applicable legal requirements if any of such
certificates are to be issued in a name other than the name of the Holder);

               (c) if certificates are to be issued, the address to which such Holder wishes delivery to be
made of such new certificates to be issued upon such conversion; and

               (d) any other transfer forms, tax forms or other relevant documentation required and specified
by the Transfer Agent, if necessary, to effect the conversion.

7

 

          If specified by the Holder in the notice of conversion that shares of Common Stock issuable
upon conversion of the Preferred Stock shall be issued to a Person other than the Holder
surrendering the shares of Preferred Stock being converted, the Holder shall pay or cause to be
paid any transfer or similar taxes payable in connection with the shares of Common Stock so issued.

               (e) Issuance of Shares of Common Stock. Upon receipt by the Transfer Agent of a
completed and duly executed notice of conversion as set forth in Section 8.2 and upon surrender of
a certificate representing share(s) of Preferred Stock to be converted (if held in certificated
form), together with evidence of payment of transfer or other taxes, if applicable, the Issuer
shall, within three Business Days or as soon as practicable thereafter, issue and shall instruct
the Transfer Agent to register the number of shares of Common Stock to which such Holder shall be
entitled upon conversion in the name(s) specified by such Holder in the notice of conversion. If a
Holder elects to hold its shares of Common Stock issuable upon conversion of the Preferred Stock in
certificated form, the Issuer shall promptly send or cause to be sent, by hand delivery (with
receipt to be acknowledged) or by first-class mail, postage prepaid, to the Holder thereof, at the
address designated by such Holder in the written notice of conversion, a certificate or
certificates representing the number of shares of Common Stock to which such Holder shall be
entitled upon conversion. In the event that there shall have been surrendered a certificate or
certificates representing shares of Preferred Stock, only part of which are to be converted, the
Issuer shall issue and deliver to such Holder or such Holder’s designee in the manner provided in
the immediately preceding sentence a new certificate or certificates representing the number of
shares of Preferred Stock that shall not have been converted.

               (f) Effective Date of Issuance. The issuance by the Issuer of shares of Common Stock
upon a conversion of shares of Preferred Stock in accordance with the terms hereof shall be deemed
effective immediately prior to the close of business on the day of receipt by the Transfer Agent of
the notice of conversion and other documents, if any, set forth in Section 8.2, and the surrender
by such Holder or such Holder’s designee of the certificate or certificates representing the shares
of Preferred Stock to be converted (if held in certificated form), duly assigned or endorsed for
transfer to the Issuer (or accompanied by duly executed stock powers relating thereto).

               (g) Rights to Accrued Dividends. A Holder of a share of Preferred Stock on the Early
Conversion Date with respect to such share shall have the right to receive all accrued, cumulated
and unpaid dividends, whether or not declared, for the portion of the then-current Dividend Period
until the Early Conversion Date and all prior Dividend Periods (other than previously declared
dividends on the Preferred Stock payable to Record Holders as of a prior date); provided that the
Issuer is then legally permitted to pay such dividends. Except as described above, upon any
optional conversion of the Preferred Stock, the Issuer will make no payment or allowance for unpaid
dividends on the Preferred Stock.

9. Provisional Conversion.

          9.1 Conversion by the Issuer. Prior to the Mandatory Conversion Date, if the Closing
Price of the Common Stock has exceeded 150% of the Threshold Appreciation Price for at least 20
Trading Days within a period of 30 consecutive Trading Days ending on the Trading

8

 

Day prior to the date (the “Provisional Conversion Notice Date”) on which the Issuer notifies
the Holders (pursuant to Section 9.2 below) that it is exercising its option to cause the
conversion of the Preferred Stock pursuant to this Section 9, the Issuer may, at its option, cause
the conversion of all, but not less than all, the shares of Preferred Stock then outstanding into
shares of Common Stock at the Minimum Conversion Rate for each share of Preferred Stock, subject to
adjustment as set forth in Section 14. The Issuer shall be able to cause this conversion only if,
in addition to issuing the Holders shares of Common Stock, the Issuer is then legally permitted to,
and does, pay the Holders in cash (i) an amount equal to any accrued, cumulated and unpaid
dividends on the shares of Preferred Stock then outstanding, whether or not declared (other than
previously declared dividends on the Preferred Stock payable to Record Holders as of a prior date),
plus (ii) the present value of all remaining future dividend payments on the shares of Preferred
Stock then outstanding through and including the Mandatory Conversion Date. The present value of
the remaining future dividend payments will be computed using a discount rate equal to the Treasury
Yield.

          9.2 Provisional Conversion Notice. A written notice (the “Provisional Conversion
Notice”) shall be sent by or on behalf of the Issuer, by first-class mail, postage prepaid, to the
Record Holders as they appear on the stock register of the Issuer on the Provisional Conversion
Notice Date (i) notifying such Holders of the election of the Issuer to convert and of the
Provisional Conversion Date (as defined below), which date shall not be less than 30 days nor be
more than 60 days after the Provisional Conversion Notice Date, and (ii) stating the Corporate
Trust Office of the Transfer Agent at which the shares of Preferred Stock called for conversion
shall, upon presentation and surrender of the certificate(s) (if such shares are held in
certificated form) evidencing such shares, be converted, and the Minimum Conversion Rate to be
applied thereto. The Issuer shall also issue a press release containing such information and
publish such information on its website on the World Wide Web; provided that failure to issue such
press release or publish such information on the Issuer’s website shall not act to prevent or delay
conversion pursuant to this Section 9.

          9.3 Mechanics of Conversion. The Issuer shall deliver to the Transfer Agent written
instructions authorizing the Transfer Agent, on behalf and at the expense of the Issuer, to cause
the Provisional Conversion Notice to be duly mailed as soon as practicable after receipt of such
instructions from the Issuer and in accordance with the above provisions. The shares of Common
Stock to be issued upon conversion of the Preferred Stock pursuant to this Section 9 and all funds
necessary for the payment in cash of (i) an amount equal to any accrued, cumulated and unpaid
dividends on the shares of Preferred Stock then outstanding, whether or not declared (other than
previously declared dividends on the Preferred Stock payable to Record Holders as of a prior date),
plus (ii) the present value of all remaining future dividend payments on the shares of Preferred
Stock then outstanding through and including the Mandatory Conversion Date, shall be deposited with
the Transfer Agent in trust at least one Business Day prior to the Provisional Conversion Date, for
the pro rata benefit of the Record Holders as they appear on the stock register of the Issuer, so
as to be and continue to be available therefor. Neither failure to mail such Provisional
Conversion Notice to one or more such Holders nor any defect in such Provisional Conversion Notice
shall affect the sufficiency of the proceedings for conversion as to other Holders.

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          9.4 Rights of Holders. If a Provisional Conversion Notice shall have been given as
hereinbefore provided, then each Holder shall be entitled to all preferences and relative,
participating, optional and other special rights accorded by this Certificate of Designations until
and including the Provisional Conversion Date. From and after the Provisional Conversion Date,
upon delivery by the Issuer of the Common Stock and payment of the funds to the Transfer Agent as
described in Section 9.3 above, the Preferred Stock shall no longer be deemed to be outstanding,
and all rights of such Holders shall cease and terminate, except the right of the Holders, upon
surrender of certificates therefor, to receive Common Stock and any amounts to be paid hereunder.

          9.5 Deposit With Transfer Agent. The deposit of monies in trust with the Transfer
Agent up to the amount necessary for the Provisional Conversion shall be irrevocable except that
the Issuer shall be entitled to receive from the Transfer Agent the interest or other earnings, if
any, earned on any monies so deposited in trust, and the Holders of the shares converted shall have
no claim to such interest or other earnings, and any balance of monies so deposited by the Issuer
and unclaimed by the Holders entitled thereto at the expiration of two years from the Provisional
Conversion Date shall be repaid, together with any interest or other earnings thereon, to the
Issuer, and after any such repayment, the Holders of the shares entitled to the funds so repaid to
the Issuer shall look only to the Issuer for such payment without interest.

10. Conversion Upon Cash Acquisition.

          10.1 Cash Acquisition Conversion. Subject to Section 10.8 below, in the event of a
Cash Acquisition, the Holders of the Preferred Stock shall have the right to convert their shares
of Preferred Stock during a period that begins on a date that is 15 days prior to the anticipated
effective time of such acquisition and ending on a date that is 15 days after the actual effective
date, which period must end prior to the Mandatory Conversion Date and the Provisional Conversion
Notice Date (such right of the Holders to convert their shares pursuant to this Section 10.1 being
the “Cash Acquisition Conversion”) at the Cash Acquisition Conversion Rate (as adjusted pursuant to
the definition of “Cash Acquisition Conversion Rate” and Section 14.3).

          10.2 Cash Acquisition Conversion Notice. On or before the twentieth day prior to the
date on which the Issuer anticipates consummating the Cash Acquisition, a written notice (the “Cash
Acquisition Conversion Notice”) shall be sent by or on behalf of the Issuer, by first-class mail,
postage prepaid, to the Record Holders as they appear on the stock register of the Issuer. Such
notice shall contain:

               (i) the date on which the Cash Acquisition is anticipated to be effected;

               (ii) whether Holders will have Cash Acquisition Conversion rights in connection with
such Cash Acquisition, or whether the Issuer has made a Public Acquirer Election pursuant to
Section 10.8 below;

10

 

               (iii) if Holders have Cash Acquisition Conversion rights in connection with such Cash
Acquisition, the date, which shall be 15 days after the actual effective date of the Cash
Acquisition, by which the Cash Acquisition Conversion right must be exercised;

               (iv) if Holders have Cash Acquisition Conversion rights in connection with such Cash
Acquisition, the Cash Acquisition Conversion Rate applicable to such Cash Acquisition;

               (v) if Holders have Cash Acquisition Conversion rights in connection with such Cash
Acquisition, whether the Issuer will elect to pay any amount payable pursuant to Section
10.3 below in shares of Common Stock, cash or a combination cash and Common Stock; and

               (vi) the instructions a Holder must follow to exercise the Cash Acquisition Conversion
right, if any, in connection with such Cash Acquisition.

          10.3 Cash Acquisition Make-Whole Amount. Upon any conversion pursuant to Section
10.1, in addition to issuing the Holders shares of Common Stock at the Cash Acquisition Conversion
Rate, the Issuer shall either,

               (a) pay the Holders in cash (i) an amount equal to any accrued, cumulated and unpaid dividends
on the shares of Preferred Stock then outstanding, whether or not declared (other than previously
declared dividends on the Preferred Stock payable to Record Holders as of a prior date), plus (ii)
the present value of all remaining future dividend payments on the shares of Preferred Stock then
outstanding through and including the Mandatory Conversion Date; provided that at such time the
Corporation is then legally permitted to pay such dividends (the present value of the remaining
future dividend payments will be computed using a discount rate equal to the Treasury Yield plus
8.65%), or

               (b) increase the number of shares of Common Stock issuable upon conversion of the Preferred
Stock by an amount equal to (i) the amount set forth in Section 10.3(a) above, divided by (ii) the
average of the Closing Prices for each of the 10 consecutive Trading Days (appropriately adjusted
to take into account the occurrence during such period of stock splits and similar events) ending
on the effective date of the Cash Acquisition.

          10.4 Exercise of Cash Acquisition Conversion Right. To exercise a Cash Acquisition
Conversion right, a Holder shall deliver to the Transfer Agent at its Corporate Trust Office, no
earlier than 15 days prior to the anticipated effective date of the Cash Acquisition, and no later
than 5:00 p.m., New York City time on or before the date by which the Cash Acquisition Conversion
right must be exercised as specified in the notice, the certificate(s) (if such shares are held in
certificated form) evidencing the shares of Preferred Stock with respect to which the Cash
Acquisition Conversion right is being exercised, duly assigned or endorsed for transfer to the
Issuer, or accompanied by duly executed stock powers relating thereto, or in blank, with a written
notice to the Issuer stating the Holder’s intention to convert early in connection with the Cash
Acquisition containing the information set forth in Section 8.2 and providing the Issuer with
payment instructions.

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          10.5 Reorganizations. If a Holder does not elect to exercise the Cash Acquisition
Conversion right pursuant to this Section 10 in connection with a Reorganization Event, in lieu of
shares of Common Stock, the Issuer shall deliver to such Holder on the Mandatory Conversion Date,
the Provisional Conversion Date or an Early Conversion Date, such cash, securities and other
property as determined in accordance with Section 14.5 hereof.

          10.6 Delivery. Upon a Cash Acquisition Conversion, the Transfer Agent shall, in
accordance with the instructions provided by the Holder thereof in the written notice provided to
the Issuer as set forth above, deliver to the Holder such cash and securities issuable upon such
Cash Acquisition Conversion, together with payment in lieu of any fraction of a share, as provided
herein. Such delivery shall take place upon, and only to the extent of, the consummation of such
Cash Acquisition Conversion.

          10.7 Certificates. In the event that a Cash Acquisition Conversion is effected with
respect to shares of Preferred Stock representing less than all the shares of Preferred Stock held
by a Holder, upon such Cash Acquisition Conversion the Issuer shall execute and the Transfer Agent
shall countersign and deliver to the Holder thereof, at the expense of the Issuer, a certificate
evidencing the shares of Preferred Stock as to which Cash Acquisition Conversion was not effected.

          10.8 Public Acquirer Change of Control.

               (a) Public Acquirer Election. Notwithstanding anything to the contrary in this
Section 10, in the event of a Cash Acquisition that constitutes a Public Acquirer Change of
Control, the Issuer may, by delivery of notice pursuant to Section 10.2, elect to cause the
Preferred Stock to be convertible into Acquirer Common Stock (the “Public Acquirer Election”). If
the Issuer makes a Public Acquirer Election, Holders will not have the Cash Acquisition Conversion
rights set forth above.

               (b) Adjustments to Fixed Conversion Rates. Immediately after the effective date of
such Public Acquirer Change of Control, each Fixed Conversion Rate shall equal the product of,

               (i) such Fixed Conversion Rate in effect immediately prior to such effective date,
multiplied by

               (ii) the average of the quotients obtained, for each Trading Day in the 10 consecutive
Trading Day period commencing on the Trading Day next succeeding such effective date (the
“Valuation Period”), by dividing,

                    (1) the Public Acquirer Acquisition Value on each such Trading Day in the Valuation
Period, by

                    (2) the Closing Price of the Acquirer Common Stock on each such Trading Day in the
Valuation Period.

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11. Conversion Procedures.

          11.1 Conversion Date. Upon issuance and delivery to the Transfer Agent of
certificates representing shares of the Common Stock to be delivered upon conversion of the shares
of Preferred Stock on the Mandatory Conversion Date, the Early Conversion Date, the Provisional
Conversion Date, or the Cash Acquisition Conversion Date (each, a “Conversion Date”), dividends on
any shares of Preferred Stock converted to Common Stock shall cease to accrue and cumulate, and
such shares of Preferred Stock shall cease to be outstanding, in each case, subject to the right of
Holders of such shares to receive any accrued, cumulated and unpaid dividends on such shares to
which they are otherwise entitled pursuant to Section 7, 8, 9 or 10 hereof, as applicable.

          11.2 Record Holders. The Person or Persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the Record Holder(s) of such
shares of Common Stock as of the close of business on the applicable Conversion Date. No allowance
or adjustment, except as set forth in Section 14, shall be made in respect of dividends payable to
holders of Common Stock of record as of any date prior to such effective date. Prior to such
effective date, shares of Common Stock issuable upon conversion of any shares of Preferred Stock
shall not be deemed outstanding for any purpose, and Holders of shares of Preferred Stock shall
have no rights with respect to the Common Stock (including voting rights, rights to respond to
tender offers for the Common Stock and rights to receive any dividends or other distributions on
the Common Stock) by virtue of holding shares of Preferred Stock.

          11.3 Status of Converted Preferred Stock. Shares of Preferred Stock duly converted in
accordance with this Certificate of Designations, or otherwise reacquired by the Issuer, will
resume the status of authorized and unissued Preferred Stock, undesignated as to series and
available for future issuance.

          11.4 Registration of Shares. In the event that a Holder of shares of Preferred Stock
shall not by written notice designate the name in which shares of Common Stock to be issued upon
conversion of such shares should be registered or the address to which the certificate or
certificates representing such shares and any related payment should be sent, the Issuer shall be
entitled to register such shares, and make such payment, in the name of the Holder of such
Preferred Stock as shown on the records of the Issuer and to send the certificate or certificates
representing such shares and such payment to the address of such Holder shown on the records of the
Issuer.

12. Reservation of Common Stock.

          12.1 Obligation to Reserve Shares. The Issuer shall at all times reserve and keep
available out of its authorized and unissued Common Stock or shares held in the treasury of the
Issuer, solely for issuance upon the conversion of shares of Preferred Stock as herein provided,
free from any preemptive or other similar rights, such number of shares of Common Stock as shall
from time to time be issuable upon the conversion of all the shares of Preferred Stock then
outstanding on the Mandatory Conversion Date, subject to the adjustments described in Section 14.
For purposes of this Section 12.1, the number of shares of Common Stock that shall be

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deliverable upon the conversion of all outstanding shares of Preferred Stock shall be computed
as if at the time of computation all such outstanding shares were held by a single Holder.

          12.2 Issuance of Treasury Shares. Notwithstanding the foregoing, the Issuer shall be
entitled to deliver upon conversion of shares of Preferred Stock, as herein provided, shares of
Common Stock reacquired and held in the treasury of the Issuer (in lieu of the issuance of
authorized and unissued shares of Common Stock), so long as any such treasury shares are free and
clear of all liens, charges, security interests or encumbrances (other than liens, charges,
security interests and other encumbrances created by the Holders).

          12.3 Due Authorization. All shares of Common Stock delivered upon conversion of the
Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and
clear of all liens, claims, security interests and other encumbrances (other than liens, charges,
security interests and other encumbrances created by the Holders).

          12.4 Compliance with Law. Prior to the delivery of any securities that the Issuer
shall be obligated to deliver upon conversion of the Preferred Stock, the Issuer shall use its
reasonable best efforts to comply with all federal and state laws and regulations thereunder
requiring the registration of such securities with, or any approval of or consent to the delivery
thereof by, any governmental authority.

          12.5 Listing. The Issuer hereby covenants and agrees that, if at any time the Common
Stock shall be listed on the New York Stock Exchange or any other national securities exchange or
automated quotation system, the Issuer will, if permitted by the rules of such exchange or
automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on
such exchange or automated quotation system, all Common Stock issuable upon conversion of the
Preferred Stock; provided, however, that if the rules of such exchange or automated quotation
system permit the Issuer to defer the listing of such Common Stock until the first conversion of
Preferred Stock into Common Stock in accordance with the provisions hereof, the Issuer covenants to
list such Common Stock issuable upon conversion of the Preferred Stock in accordance with the
requirements of such exchange or automated quotation system at such time.

13. Fractional Shares.

          13.1 No Fractional Shares. No fractional shares of Common Stock will be issued as a
result of any conversion of shares of Preferred Stock.

          13.2 Cash In Lieu of Fractional Shares. In lieu of any fractional share of Common
Stock otherwise issuable on any Conversion Date, the Issuer shall pay an amount in cash (computed
to the nearest cent) equal to the same fraction of:

               (a) in the case of a conversion pursuant to Section 7 or Section 9 hereof or a Cash
Acquisition Conversion pursuant to Section 10, the Current Market Price; or

               (b) in the case of an Early Conversion pursuant to Section 8 hereof, the Closing Price of the
Common Stock determined as of the second Trading Day immediately preceding the effective date of
conversion.

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          13.3 Aggregation. If more than one share of the Preferred Stock is surrendered for
conversion at one time by or for the same Holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares
of the Preferred Stock so surrendered.

14. Anti-Dilution Adjustments to the Fixed Conversion Rates.

          14.1 Anti-Dilution Adjustments. Each Fixed Conversion Rate and the number of shares
of Common Stock to be delivered upon conversion shall be subject to the following adjustments.

               (a) Stock Dividends and Distributions. In case the Issuer shall pay or make a
dividend or other distribution on the Common Stock in shares of Common Stock, each Fixed Conversion
Rate, as in effect at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other distribution, shall be
increased by dividing such Fixed Conversion Rate by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares of Common Stock
outstanding and the total number of shares of Common Stock constituting such dividend or other
distribution, such increase to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes of this sub-section (a), the
number of shares of Common Stock at the time outstanding shall not include shares held in the
treasury of the Issuer but shall include any shares issuable in respect of any scrip certificates
issued in lieu of fractions of shares of Common Stock. The Issuer will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the Issuer.

               (b) Subdivisions, Splits and Combinations of the Common Stock. In case outstanding
shares of Common Stock shall be subdivided or split into a greater number of shares of Common
Stock, each Fixed Conversion Rate in effect at the opening of business on the day following the day
upon which such subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, such Fixed Conversion Rate in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be proportionately
reduced, such increase or reduction, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision, split or combination
becomes effective.

               (c) Issuance of Stock Purchase Rights. In case the Issuer shall issue rights or
warrants to all holders of its Common Stock (other than rights or warrants issued pursuant to a
dividend reinvestment plan or share purchase plan or other similar plans), entitling such holders,
for a period of up to 45 days from the date of issuance of such rights or warrants, to subscribe
for or purchase shares of Common Stock at a price per share less than the Current Market Price on
the date fixed for the determination of shareholders entitled to receive such rights or warrants,
each Fixed Conversion Rate in effect at the opening of business on the day following the date fixed
for such determination shall be increased by multiplying such Fixed Conversion Rate by a fraction,
the numerator of which shall be the number of shares of Common

15

 

Stock outstanding at the close of business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or purchase and the denominator of
which shall be the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered for subscription or
purchase would purchase at such Current Market Price, such increase to become effective immediately
after the opening of business on the day following the date fixed for such determination. For the
purposes of this clause (c), the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Issuer but shall include any shares issuable in respect
of any scrip certificates issued in lieu of fractions of shares of Common Stock. The Issuer shall
not issue any such rights or warrants in respect of shares of Common Stock held in the treasury of
the Issuer. Such increase shall be subsequently adjusted for any shares of Common Stock not so
subscribed.

               (d) Debt or Asset Distribution.

               (i) In case the Issuer shall, by dividend or otherwise, distribute to all holders of
its Common Stock evidences of its indebtedness, shares of capital stock, securities, cash or
other assets (excluding any dividend or distribution referred to in Section 14.1(a) or
Section 14.1(b) hereof, any rights or warrants referred to in Section 14.1(c) hereof, any
dividend or distribution paid exclusively in cash, any consideration payable in connection
with a tender or exchange offer made by the Issuer or any subsidiary of the Issuer, and any
dividend of shares of capital stock of any class or series, or similar equity interests, of
or relating to a subsidiary or other business unit in the case of a Spin-Off referred to in
Section 14.1(d)(ii) below), each Fixed Conversion Rate shall be adjusted so that it shall
equal the rate determined by multiplying such Fixed Conversion Rate in effect immediately
prior to the close of business on the date fixed for the determination of shareholders
entitled to receive such distribution by a fraction, the numerator of which shall be the
Current Market Price per share of the Common Stock on the date fixed for such determination
and the denominator of which shall be such Current Market Price per share of the Common
Stock less the then Fair Market Value of the portion of the evidences of indebtedness,
shares of capital stock, securities, cash or other assets so distributed applicable to one
share of Common Stock, such adjustment to become effective immediately prior to the opening
of business on the day following the date fixed for the determination of shareholders
entitled to receive such distribution. In any case in which this clause (d)(i) is
applicable, clause (d)(ii) of this Section 14.1 shall not be applicable.

               (ii) In the case of a Spin-Off each Fixed Conversion Rate in effect immediately before
the close of business on the record date fixed for determination of shareholders entitled to
receive that distribution will be increased by multiplying each Fixed Conversion Rate by a
fraction, the numerator of which is the Current Market Price per share of the Common Stock
plus the Fair Market Value of the portion of those shares of capital stock or similar equity
interests so distributed applicable to one share of Common Stock and the denominator of
which is the Current Market Price per share of the Common Stock. Any adjustment to the
Conversion Rate under this clause (d)(ii) of

16

 

this Section 14.1 will occur on the 15th Trading Day from, but excluding, the “ex-date”
with respect to the Spin-Off.

               (e) Cash Distributions. In case the Issuer shall distribute cash to all holders of
the Common Stock, immediately after the close of business on such date for determination each Fixed
Conversion Rate will be adjusted by multiplying such Fixed Conversion Rate in effect immediately
prior to the close of business on the date fixed for determination of the shareholders of the
Issuer entitled to receive such distribution by a fraction, the numerator of which will be the
Current Market Price of the Common Stock on the date fixed for such determination and the
denominator of which will be the Current Market Price of the Common Stock on the date fixed for
such determination minus the amount per share of such dividend or distribution; provided, that no
adjustment will be made to either Fixed Conversion Rate for (i) any cash that is distributed in a
Reorganization Event to which Section 14.5 applies or as part of a distribution referred to in
paragraph (d) of this Section 14.1, (ii) any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Issuer, or (iii) any consideration payable in
connection with a tender or exchange offer made by the Issuer or any subsidiary of the Issuer.

               (f) Self Tender Offers and Exchange Offers. In case a tender or exchange offer made
by the Issuer or any subsidiary of the Issuer for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the
payment to shareholders (based on the acceptance, up to any maximum specified in the terms of the
tender or exchange offer, of Purchased Shares (as defined below in this Section)) of an aggregate
consideration per share of Common Stock having a Fair Market Value that exceeds the Current Market
Price per share of the Common Stock on the seventh Trading Day next succeeding the last date on
which (the “Expiration Time”) tenders or exchanges could have been made pursuant to such tender or
exchange offer (as it may be amended), then, and in each such case, immediately prior to the
opening of business on the eighth Trading Day after the date of the Expiration Time, each Fixed
Conversion Rate shall be adjusted so that the same shall equal the rate determined by dividing such
Fixed Conversion Rate in effect immediately prior to the opening of business on the eighth Trading
Day after the Expiration Time by a fraction (A) the numerator of which shall be equal to (x) the
product of (I) the Current Market Price per share of the Common Stock on the seventh Trading Day
after the Expiration Time and (II) the number of shares of Common Stock outstanding (including any
shares validly tendered and not withdrawn) at the Expiration Time less (y) the amount of cash plus
the Fair Market Value of the aggregate consideration payable to shareholders in the tender or
exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or
exchange offer, of Purchased Shares), and (B) the denominator of which shall be equal to the
product of (x) the Current Market Price per share of the Common Stock on the seventh Trading Day
after the Expiration Time and (y) the number of shares of Common Stock outstanding (including any
shares validly tendered and not withdrawn) as of the Expiration Time less the number of all shares
validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the “Purchased Shares”).

               (g) Rights Plans. To the extent that the Issuer has a rights plan in effect on any
Conversion Date, upon conversion of any Preferred Stock, Holders shall receive, in

17

 

addition to the Common Stock, the rights under such rights plan, unless, prior to such
Conversion Date, the rights have separated from the Common Stock, in which case each Fixed
Conversion Rate will be adjusted at the time of separation of such rights as if the Issuer made a
distribution to all holders of the Common Stock as described in clause (d)(i) above, subject to
readjustment in the event of the expiration, termination or redemption of such rights.

          14.2 Adjustment for Tax Reasons. The Issuer may make such increases in each Fixed
Conversion Rate, in addition to any other increases required by this Section 14, if the Board deems
it advisable to avoid or diminish any income tax to holders of the Common Stock resulting from any
dividend or distribution of shares (or issuance of rights or warrants to acquire shares) or from
any event treated as such for income tax purposes or for any other reasons; provided that the same
proportionate adjustment must be made to each Fixed Conversion Rate.

          14.3 Calculation of Adjustments; Adjustments to Threshold Appreciation Price, Initial
Price, and Cash Acquisition Stock Price.

               (a) All adjustments to the Conversion Rate shall be calculated to the nearest 1/10,000th of a
share (or, if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a
share) of Common Stock. Prior to December 15, 2008, no adjustment in the Conversion Rate shall be
required unless such adjustment would require an increase or decrease of at least one percent
therein; provided, that any adjustments which by reason of this subparagraph are not required to be
made shall be carried forward and taken into account in any subsequent adjustment; provided further
that on the earlier of Mandatory Conversion Date and the date on which the Issuer consummates a
Cash Acquisition, adjustments to the Conversion Rate will be made with respect to any such
adjustment carried forward and which has not been taken into account before such date.

               (b) If an adjustment is made to the Conversion Rate pursuant to Sections 14.1(a), 14.1(b),
14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or 10.8(b), an inversely proportional adjustment shall be
made to the Threshold Appreciation Price and the Initial Price for purposes of determining which of
clauses (a), (b) and (c) of Section 7.2 will apply on the Conversion Date. Such adjustment shall
be made by dividing each of the Threshold Appreciation Price and the Initial Price by a fraction,
the numerator of which shall be the Conversion Rate immediately after such adjustment pursuant to
Sections 14.1(a), 14.1(b), 14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or 10.8(b) and the denominator
of which shall be the Conversion Rate immediately before such adjustment; provided, that if such
adjustment to the Conversion Rate is required to be made pursuant to the occurrence of any of the
events contemplated by Sections 14.1(a), 14.1(b), 14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or
10.8(b) during the period taken into consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the Conversion Rate.

               (c) If an adjustment is made to the Minimum Conversion Rate pursuant to Sections 14.1(a),
14.1(b), 14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.2, or 10.8(b), a proportional adjustment shall be
made to each Cash Acquisition Stock Price set forth in the table included in the definition of
“Cash Acquisition Conversion Rate.” Such adjustment shall be made by multiplying each Cash
Acquisition Stock Price included in such table by a fraction, the

18

 

numerator of which is the Minimum Conversion Rate immediately prior to such adjustment and the
denominator of which is the Minimum Conversion Rate immediately after such adjustment.

               (d) No adjustment to the Conversion Rate need be made if Holders may participate in the
transaction that would otherwise give rise to an adjustment, so long as the distributed assets or
securities the Holders would receive upon conversion of the Preferred Stock, if convertible,
exchangeable, or exercisable, are convertible, exchangeable or exercisable, as applicable, without
any loss of rights or privileges for a period of at least 45 days following conversion of the
Preferred Stock. The applicable Conversion Rate shall not be adjusted:

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

               (ii) upon the issuance of any shares of the Common Stock or rights or warrants to
purchase those shares pursuant to any present or future employee, director or consultant
benefit plan or program of or assumed by the Issuer or any of its subsidiaries;

               (iii) upon the issuance of any shares of the Common Stock pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security outstanding as of the
date shares of the Preferred Stock were first issued;

               (iv) for a change in the par value or no par value of the Common Stock; or

               (v) for accrued, cumulated and unpaid dividends.

          The Issuer shall have the power to resolve any ambiguity or correct any error in this Section
14 and its action in so doing, as evidenced by a resolution of the Board, or a duly authorized
committee thereof, shall be final and conclusive.

          14.4 Notice of Adjustment. Whenever a Fixed Conversion Rate or the Cash Acquisition
Conversion Rate is to be adjusted, the Issuer shall:

               (a) compute such adjusted Fixed Conversion Rate or the Cash Acquisition Conversion Rate, as
applicable, and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth
such adjusted Fixed Conversion Rate or the Cash Acquisition Conversion Rate, as applicable, the
method of calculation thereof in reasonable detail, and the facts requiring such adjustment and
upon which such adjustment is based;

               (b) as soon as practicable following the occurrence of an event that requires an adjustment to
a Fixed Conversion Rate or the Cash Acquisition Conversion Rate, as applicable, or if the Issuer is
not aware of such occurrence, as soon as practicable after becoming so aware, provide, or cause to
be provided, a written notice to the Holders of the Preferred Stock of the occurrence of such
event; and

19

 

               (c) as soon as practicable following the determination of a revised Fixed Conversion Rate or
the Cash Acquisition Conversion Rate, as applicable, provide, or cause to be provided, a written
statement to the Holders of the Preferred Stock setting forth in reasonable detail the method by
which the adjustment to such Fixed Conversion Rate was determined and setting forth such revised
Fixed Conversion Rate.

          14.5 Reorganization Events. Subject to Section 10, in the event of:

               (a) any consolidation or merger of the Issuer with or into another Person (other than a merger
or consolidation in which the Issuer is the continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities
or other property of the Issuer or another Person);

               (b) any sale, transfer, lease or conveyance to another Person of all or substantially all of
the property and assets of the Issuer;

               (c) any reclassification of Common Stock into securities including securities other than
Common Stock; or

               (d) any statutory exchange of securities of the Issuer with another Person (other than in
connection with a merger or acquisition);

          (any such event specified in this Section 14.5, a “Reorganization Event”) each share of Preferred
Stock outstanding immediately prior to such Reorganization Event shall, after such Reorganization
Event, be convertible into the kind of securities, cash and other property receivable in such
Reorganization Event (without any interest thereon and without any right to dividends or
distribution thereon which have a record date that is prior to the Conversion Date) per share of
Common Stock (the “Exchange Property”) by a holder of Common Stock that (1) is not a Person with
which the Issuer consolidated or into which the Issuer merged or which merged into the Issuer or to
which such sale or transfer was made, as the case may be (any such Person, a “Constituent Person”),
or an Affiliate of a Constituent Person to the extent such Reorganization Event provides for
different treatment of Common Stock held by Affiliates of the Issuer and non-Affiliates, and (2)
failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such Reorganization Event (provided that if the kind or amount of
securities, cash and other property receivable upon such Reorganization Event is not the same for
each share of Common Stock held immediately prior to such Reorganization Event by other than a
Constituent Person or an Affiliate thereof and in respect of which such rights of election shall
have been exercised (an “Electing Share”), then, for the purpose of this Section 14.5 the kind and
amount of securities, cash and other property receivable upon such Reorganization Event by each
Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of
the Electing Shares). The amount of Exchange Property receivable upon conversion of any Preferred
Stock in accordance with Section 7, 8 or 9 hereof shall be determined based upon the Conversion
Rate in effect on such Conversion Date. The applicable Conversion Rate shall be (x) the Minimum
Conversion Rate, in the case of an Early Conversion Date or a Provisional Conversion Date, and (y)
determined based upon the definition of Conversion Rate set forth in Section 7 and the Applicable
Market Value at such time, in the case of the Mandatory Conversion Date. The Board, if it finds it

20

 

appropriate and equitable, may make corresponding changes to the Fixed Conversion Rates, the
initial Price and Threshold Appreciation Price.

          For purposes of this Section 14.5, “Applicable Market Value” shall be deemed to refer to the
Applicable Market Value of the Exchange Property and such value shall be determined (A) with
respect to any publicly traded securities that compose all or part of the Exchange Property, based
on the Closing Price of such securities, (B) in the case of any cash that composes all or part of
the Exchange Property, based on the amount of such cash, and (C) in the case of any other property
that composes all or part of the Exchange Property, based on the value of such property, as
determined by the Board, whose determination shall be final and conclusive. For purposes of this
Section 14.5, the term “Closing Price” shall be deemed to refer to the closing sale price, last
quoted bid price or mid-point of the last bid and ask prices, as the case may be, of any publicly
traded securities that comprise all or part of the Exchange Property. For purposes of this Section
14.5, references to Common Stock in the definition of “Trading Day” shall be replaced by references
to any publicly traded securities that comprise all or part of the Exchange Property.

          The above provisions of this Section 14.5 shall similarly apply to successive Reorganization
Events and the provisions of Section 14 shall apply to any shares of capital stock of the Issuer
(or any successor) received by the holders of Common Stock in any such Reorganization Event.

          The Issuer (or any successor) shall, within 20 days of the occurrence of any Reorganization
Event, provide written notice to the Holders of such occurrence of such event and of the kind and
amount of the cash, securities or other property that constitutes the Exchange Property. Failure
to deliver such notice shall not affect the operation of this Section 14.5.

          14.6 Adjustments of Liquidation Preference and Dividend Rate. The Liquidation
Preference and the annual dividend rate set forth herein each shall be subject to equitable
adjustment whenever there shall occur a stock split, combination, reclassification or other similar
event involving the Preferred Stock. Such adjustments shall be determined in good faith by the
Board and submitted by the Board to the Transfer Agent.

15. Replacement Stock Certificates.

          15.1 Mutilated, Lost, Stolen and Destroyed Certificates. If physical certificates are
issued, and any of the Preferred Stock certificates shall be mutilated, lost, stolen or destroyed,
the Issuer shall, at the expense of the Holder, issue, in exchange and in substitution for and upon
cancellation of the mutilated Preferred Stock certificate, or in lieu of and substitution for the
Preferred Stock certificate lost, stolen or destroyed, a new Preferred Stock certificate of like
tenor and representing an equivalent amount of shares of Preferred Stock, but only upon receipt of
evidence of such loss, theft or destruction of such Preferred Stock certificate and indemnity, if
requested, satisfactory to the Issuer and the Transfer Agent.

          15.2 Delivery After Conversion. The Issuer is not required to issue any certificates
representing the Preferred Stock on or after the Mandatory Conversion Date or any Provisional
Conversion Date. In lieu of the delivery of a replacement certificate following the

21

 

Mandatory Conversion Date or any Provisional Conversion Date, the Transfer Agent, upon
delivery of the evidence and indemnity described above, will deliver the shares of Common Stock
issuable pursuant to the terms of the Preferred Stock formerly evidenced by the certificate.

16. Transfer Agent, Registrar and Paying Agent.

          The duly appointed Transfer Agent, Registrar and Paying Agent for the Preferred Stock shall be
The Bank of New York. The Issuer may, in its sole discretion, remove the Transfer Agent in
accordance with the agreement between the Issuer and the Transfer Agent; provided that the Issuer
shall appoint a successor transfer agent who shall accept such appointment prior to the
effectiveness of such removal. Upon any such removal or appointment, the Issuer shall send notice
thereof by first-class mail, postage prepaid, to the Holders of the Preferred Stock.

17. Form.

          17.1 Global Shares. Preferred Stock shall be issued in the form of one or more
permanent global shares of Preferred Stock in definitive, fully registered form with the global
legend (the “Global Shares Legend”), as set forth on the form of Preferred Stock certificate
attached hereto as Exhibit A (each, a “Global Preferred Share”), which is hereby
incorporated in and expressly made a part of this Certificate of Designations. The Global
Preferred Share may have notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Issuer is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Issuer). The Global Preferred Share shall be
deposited on behalf of the holders of the Preferred Stock represented thereby with the Registrar,
at its New York office, as custodian for DTC or a Depositary, and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Issuer and countersigned and
registered by the Registrar as hereinafter provided. The aggregate number of shares represented by
each Global Preferred Share may from time to time be increased or decreased by adjustments made on
the records of the Registrar and the Depositary or its nominee as hereinafter provided. This
Section 17.1 shall apply only to a Global Preferred Share deposited with or on behalf of the
Depositary. The Issuer shall execute and the Registrar shall, in accordance with this Section,
countersign and deliver initially one or more Global Preferred Shares that (i) shall be registered
in the name of Cede & Co. or other nominee of the Depositary and (ii) shall be delivered by the
Registrar to Cede & Co. or pursuant to instructions received from Cede & Co. or held by the
Registrar as custodian for the Depositary pursuant to an agreement between the Depositary and the
Registrar. Members of, or participants in, the Depositary (“Agent Members”) shall have no rights
under this Certificate with respect to any Global Preferred Share held on their behalf by the
Depositary or by the Registrar as the custodian of the Depositary or under such Global Preferred
Share, and the Depositary may be treated by the Issuer, the Registrar and any agent of the Issuer
or the Registrar as the absolute owner of such Global Preferred Share for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Registrar or any agent
of the Issuer or the Registrar from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Preferred Share. The Holder of the
Preferred Shares may grant proxies or otherwise authorize any Person

22

 

to take any action that a Holder is entitled to take pursuant to the Preferred Shares, this
Certificate of Designations or the Certificate of Incorporation. Owners of beneficial interests in
Global Preferred Shares shall not be entitled to receive physical delivery of certificated shares
of Preferred Stock, unless (x) the Depositary is unwilling or unable to continue as Depositary for
the Global Preferred Share and the Issuer does not appoint a qualified replacement for the
Depositary within 90 days, (y) the Depositary ceases to be a “clearing agency” registered under the
Exchange Act and the Issuer does not appoint a qualified replacement for the Depositary within 90
days or (z) the Issuer decides to discontinue the use of book-entry transfer through the
Depositary. In any such case, the Global Preferred Share shall be exchanged in whole for
definitive shares of Preferred Stock in registered form, with the same terms and of an equal
aggregate Liquidation Preference. Definitive shares of Preferred Stock shall be registered in the
name or names of the Person or Person specified by the Depositary in a written instrument to the
Registrar.

          17.2 Execution of Global Preferred Share. An Officer shall sign the Global Preferred
Share for the Issuer, in accordance with the Issuer’s bylaws and applicable law, by manual or
facsimile signature.

          If an Officer whose signature is on a Global Preferred Share no longer holds that office at
the time the Transfer Agent countersigned the Global Preferred Share, the Global Preferred Share
shall be valid nevertheless.

          A Global Preferred Share shall not be valid until an authorized signatory of the Transfer
Agent manually countersigns Global Preferred Share. Each Global Preferred Share shall be dated the
date of its countersignature.

18. Miscellaneous.

          18.1 Notices. All notices referred to herein shall be in writing, and, unless
otherwise specified herein, all notices hereunder shall be deemed to have been given upon the
earlier of receipt thereof or three Business Days after the mailing thereof if sent by registered
or certified mail (unless first-class mail shall be specifically permitted for such notice under
the terms of this Certificate of Designations) with postage prepaid, addressed: (i) if to the
Issuer, to its office at 211 Carnegie Center, Princeton, NJ 08540 (Attention: the Secretary) or to
the Transfer Agent at its Corporate Trust Office, or other agent of the Issuer designated as
permitted by this Certificate of Designations, or (ii) if to any Holder of the Preferred Stock or
holder of shares of Common Stock, as the case may be, to such Holder at the address of such Holder
as listed in the stock record books of the Issuer (which may include the records of any transfer
agent for the Preferred Stock or Common Stock, as the case may be), or (iii) to such other address
as the Issuer or any such Holder, as the case may be, shall have designated by notice similarly
given.

          18.2 Taxes. The Issuer shall pay any and all stock transfer and documentary stamp
taxes that may be payable in respect of any issuance or delivery of shares of Preferred Stock or
shares of Common Stock or other securities issued on account of Preferred Stock pursuant hereto or
certificates representing such shares or securities. The Issuer shall not, however, be required to
pay any such tax that may be payable in respect of any transfer involved

23

 

in the issuance or delivery of shares of Preferred Stock or Common Stock or other securities
in a name other than that in which the shares of Preferred Stock with respect to which such shares
or other securities are issued or delivered were registered, or in respect of any payment to any
Person other than a payment to the registered holder thereof, and shall not be required to make any
such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance,
delivery or payment has paid to the Issuer the amount of any such tax or has established, to the
satisfaction of the Issuer, that such tax has been paid or is not payable.

19. Definitions.

          Unless otherwise defined herein, capitalized terms used in this Certificate of Designations
shall have the following meanings:

          “Affiliate” shall have the meaning given to that term in Rule 405 of the Securities Act of
1933, as amended, or any successor rule thereunder.

          “Agent Members” shall have the meaning set forth in Section 17.1 hereof.

          “Applicable Market Value” means the average of the Closing Prices per share of the Common
Stock on each of the 20 consecutive Trading Days ending on the third Trading Day immediately
preceding the Mandatory Conversion Date.

          “Bankruptcy Law” means Title 11, United States Code, or any similar federal or state law for
the relief of debtors, as amended from time to time.

          “Board” means the Board of Directors of the Issuer.

          “Business Day” means any day other than a Saturday or Sunday or any other day on which banks
in The City of New York are authorized or required by law or executive order to close.

          “Cash Acquisition” means the consummation of any acquisition (whether by means of a
liquidation, share exchange, tender offer, consolidation, recapitalization, reclassification,
merger of the Issuer, or any sale, lease or other transfer of the consolidated assets of the Issuer
and its subsidiaries) or a series of related transaction or events pursuant to which all or
substantially all of the Issuer’s Common Stock is exchanged for, converted into or constitutes
solely the right to receive cash, securities or other property more than 10% of which consists of
cash or securities or other property that are not, or upon issuance will not be, traded on the New
York Stock Exchange or quoted on the Nasdaq National Market.

          “Cash Acquisition Conversion” shall have the meaning set forth in Section 10.1 hereof.

          “Cash Acquisition Conversion Date” means the effective date of any early conversion of
Preferred Stock pursuant to Section 10 hereof.

          “Cash Acquisition Conversion Notice” shall have the meaning set forth in Section 10.2 hereof.

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          “Cash Acquisition Conversion Rate” means the Conversion Rate set forth in the table below for
the applicable effective date of the Cash Acquisition and the applicable Cash Acquisition Stock
Price on such effective date (as such Cash Acquisition Stock Prices are adjusted pursuant to
Section 14 hereof):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Price on Effective Date
	Date
	 	$	35.00	 	 	$	40.00	 	 	$	45.00	 	 	$	48.75	 	 	$	55.00	 	 	$	60.45	 	 	$	70.00	 	 	$	80.00	 	 	$	100.00	 	 	$	125.00	 	 	$	150.00	 
	1/25/2006
	 	 	4.5630	 	 	 	4.4614	 	 	 	4.3776	 	 	 	4.3263	 	 	 	4.2603	 	 	 	4.2189	 	 	 	4.1724	 	 	 	4.1464	 	 	 	4.1272	 	 	 	4.1239	 	 	 	4.1251	 
	3/15/2007
	 	 	4.7351	 	 	 	4.6098	 	 	 	4.4967	 	 	 	4.4237	 	 	 	4.3267	 	 	 	4.2649	 	 	 	4.1961	 	 	 	4.1590	 	 	 	4.1333	 	 	 	4.1287	 	 	 	4.1292	 
	3/15/2008
	 	 	4.9471	 	 	 	4.8153	 	 	 	4.6671	 	 	 	4.5595	 	 	 	4.4066	 	 	 	4.3079	 	 	 	4.2044	 	 	 	4.1572	 	 	 	4.1338	 	 	 	4.1319	 	 	 	4.1324	 
	3/16/2009
	 	 	5.1282	 	 	 	5.1282	 	 	 	5.1282	 	 	 	5.1282	 	 	 	4.5455	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 	 	 	4.1356	 

          If the Cash Acquisition Stock Price is in excess of the highest Cash Acquisition Stock
Price set forth in the table above (as such amount is adjusted from time to time), then the Cash
Acquisition Conversion Rate will be the Minimum Conversion Rate. If the Cash Acquisition Stock
Price is less than the lowest Cash Acquisition Stock Price set forth in the table above (as such
amount is adjusted from time to time), then the Cash Acquisition Conversion Rate will be the
Maximum Conversion Rate (as such amount is adjusted from time to time).

          If the effective date falls between the dates set forth under the heading “Effective Date of
Cash Acquisition” in the table above, or if the Cash Acquisition Stock Price falls between two
amounts set forth in the table above the Cash Acquisition Conversion Rate will be determined by
straight-line interpolation between the Cash Acquisition Conversion Rates set forth for the higher
and lower Cash Acquisition Stock Prices and effective dates, as applicable, based on a 365 day
year.

          “Cash Acquisition Stock Price” means the consideration paid per share of Common Stock in a
Cash Acquisition. If such consideration consists only of cash, the Cash Acquisition Stock Price
shall equal the amount of cash paid per share. If such consideration consists of any property
other than cash, the Cash Acquisition Stock Price shall be the average Closing Price per share of
our Common Stock on the 10 Trading Days up to, but not including, the effective date of the Cash
Acquisition.

          “Certificate of Designations” means this Certificate of Designations of the Certificate of
Incorporation dated January 26, 2006.

          “Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of
the Issuer, as amended.

          “Closing Price” means, as of any date of determination, the closing sale price or, if no
closing sale price is reported, the last reported sale price, of the Common Stock, Acquirer Common
Stock, or any securities distributed in a Spin-Off, as the case may be, on the New York Stock
Exchange on that date. If the Common Stock or any such securities distributed in a Spin-Off, as
the case may be, is not then traded on the New York Stock Exchange on any date of determination,
the Closing Price of the Common Stock or such securities on any date of determination means the
closing sale price as reported in the composite transactions for the

25

 

principal U.S. national or regional securities exchange on which the Common Stock or such
securities is so listed or quoted, or if the Common Stock or such securities is not so listed or
quoted on a U.S. national or regional securities exchange, as reported by the Nasdaq stock market,
or, if no closing price for the Common Stock or such securities is so reported, the last quoted bid
price for the Common Stock or such securities in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, or, if that bid price is not available, the
market price of the Common Stock or such securities on that date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the Issuer.

          “Common Stock” means the Issuer’s Common Stock, par value $0.01 per share, as the same exists
at the date of filing of this Certificate of Designations relating to the Preferred Stock, or any
other class of stock resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or from no par value
to par value. However, subject to the provisions of Section 10 and Section 14.5, shares of Common
Stock issuable on conversion of shares of Preferred Stock shall include only shares of the class
designated as Common Stock of the Issuer at the date of the filing of this Certificate of
Designations with the Secretary of State of the State of Delaware or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Issuer and which are not subject to redemption by the
Issuer; provided that if at any time there shall be more than one such resulting class, the shares
of each such class then so issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to the total number of
shares of all classes resulting from all such reclassifications.

          “Conversion Date” shall have the meaning set forth in Section 11.1 hereof.

          “Conversion Rate” shall have the meaning set forth in Section 7.2 hereof.

          “Corporate Trust Office” means the principal corporate trust office of the Transfer Agent at
which, at any particular time, its corporate trust business shall be administered.

          “Current Market Price” per share of Common Stock on any date means the average of the daily
Closing Prices for the five consecutive Trading Days preceding the earlier of the day preceding the
date in question and the day before the “ex date” with respect to the issuance or distribution
requiring such computation. The term “ex date,” when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades without the right to receive
the issuance or distribution. For the purposes of determining the adjustment to the Conversion
Rate for the purposes of Section 14.1(d)(ii) hereof the Current Market Price per share of Common
Stock means the average of the Closing Prices over the first ten Trading Days commencing on and
including the fifth Trading Day following the “ex-date” for such distribution.

          “Depositary” means DTC or its nominee or any successor appointed by the Issuer.

26

 

          “Dividend Payment Date” means (i) the 15th calendar day of March, June, September
and December of each year, or the following Business Day if such day is not a Business Day, prior
to the Mandatory Conversion Date and (ii) the Mandatory Conversion Date.

          “Dividend Period” means the period ending on the day before a Dividend Payment Date and
beginning on the preceding Dividend Payment Date or, if there is no preceding Dividend Payment
Date, on the first date of issuance of the Preferred Stock.

          “DTC” means The Depository Trust Company.

          “Early Conversion” shall have the meaning set forth in Section 8.1 hereof.

          “Early Conversion Date” means the effective date of any early conversion of Preferred Stock
pursuant to Section 8 hereof.

          “Electing Share” shall have the meaning set forth in Section 14.5 hereof.

          “Exchange Property” shall have the meaning set forth in Section 14.5 hereof.

          “Fair Market Value” means (a) in the case of any Spin-Off, the fair market value of the
portion of those shares of capital stock or similar equity interests so distributed applicable to
one share of Common Stock as of the fifteenth Trading Day after the “ex-date” for such Spin-Off,
and (b) in all other cases the fair market value as determined in good faith by the Board, whose
determination shall be conclusive and described in a resolution of the Board.

          “Fixed Conversion Rates” means the Maximum Conversion Rate and the Minimum Conversion Rate.

          “Global Preferred Share” shall have the meaning set forth in Section 17.1 hereof.

          “Global Shares Legend” shall have the meaning set forth in Section 17.1 hereof.

          “Holder” means the Person in whose name the shares of the Preferred Stock are registered,
which may be treated by the Issuer and the Transfer Agent as the absolute owner of the shares of
Preferred Stock for the purpose of making payment and settling conversions and for all other
purposes.

          “Issuer” means NRG Energy, Inc., a Delaware corporation.

          “Initial Price” shall have the meaning set forth in Section 7.2 hereof.

          “Junior Securities” shall have the meaning set forth in Section 4.1(a) hereof.

          “Liquidation Preference” means, as to the Preferred Stock, $250 per share.

          “Mandatory Conversion Date” means March 16, 2009.

27

 

          “Maximum Conversion Rate” shall have the meaning set forth in Section 7.2(c) hereof.

          “Minimum Conversion Rate” shall have the meaning set forth in Section 7.2(a) hereof.

          “Officer” means the Chief Executive Officer, the Chief Financial Officer, any Executive Vice
President, any Vice President, the Treasurer, or the Secretary of the Issuer.

          “Officer’s Certificate” means a certificate of the Issuer, signed by any duly authorized
Officer of the Issuer.

          “Parity Securities” shall have the meaning set forth in Section 4.1(b) hereof.

          “Person” means a legal person, including any individual, corporation, estate, partnership,
joint venture, association, joint-stock company, limited liability company or trust.

          “Preferred Stock” means the Issuer’s 5.750% Mandatory Convertible Preferred Stock.

          “Preferred Stock Director” shall have the meaning set forth in Section 5.3(a) hereof.

          “Provisional Conversion Date” means the date fixed for conversion of shares of Preferred Stock
into shares of Common Stock pursuant to Section 9 above unless the Issuer shall default in the cash
payment of (1) an amount equal to any accrued, cumulated and unpaid dividends on the shares of
Preferred Stock then outstanding, whether or not declared (other than previously declared dividends
on the Preferred Stock payable to Record Holders as of a prior date), plus (2) the present value of
all remaining future dividend payments on the shares of Preferred Stock then outstanding, through
and including the Mandatory Conversion Date, in each case, when the Issuer is legally permitted to
and makes such payment.

          “Provisional Conversion Notice” shall have the meaning set forth in Section 9.2 hereof.

          “Provisional Conversion Notice Date” shall have the meaning set forth in Section 9.1 hereof.

          “Public Acquirer Acquisition Value” means, for each Trading Day in the Valuation Period, the
value of the consideration paid per share of Common Stock in connection with a Public Acquirer
Change of Control, which shall equal (a) the face amount of cash included in such consideration,
(b) the Closing Price of such Acquirer Common Stock on each such Trading Day, and (c) the fair
market value of any other security, asset or property on each such Trading Day, as determined by
two independent nationally recognized investment banks selected by the Transfer Agent for such
purpose. If the kind or amount of securities, cash and other property receivable upon such Public
Acquirer Change of Control is not the same for each share of Common Stock held immediately prior to
such Public Acquirer Change of Control by other than a Constituent Person or an Affiliate thereof
and in respect of which such rights of

28

 

election shall have been exercised, then the kind and amount of securities, cash and other
property receivable upon such Public Acquirer Change of Control by each Electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of the Electing Shares.

          “Public Acquirer Change of Control” means a Cash Acquisition in which the Person acquiring a
majority of the Issuer’s Common Stock or the Person formed by or surviving such Cash Acquisition,
or any entity that is a direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act) of more than 50% of the total voting power of all shares of such Person’s capital
stock that are entitled to vote generally in the election of directors, but in each case other than
the Issuer, has a class of common stock traded on the New York Stock Exchange or quoted on the
Nasdaq national Market (such class of common stock, the “Acquirer Common Stock”).

          “Public Acquirer Election” shall have the meaning set forth in Section 10.8 hereof.

          “Purchased Shares” shall have the meaning set forth in Section 14.1(f) hereof.

          “Record Date” means the later of (i) the 1st calendar day (or the following Business Day if
the 1st calendar day is not a Business Day) of the calendar month in which the applicable Dividend
Payment Date falls and (ii) the day on which the Board, or an authorized committee of the Board,
declares the dividend payable pursuant to Section 2.4.

          “Record Holder” means each Holder of record of the Preferred Stock as it appears on the stock
register of the Issuer at the close of business on a Record Date.

          “Reorganization Event” shall have the meaning set forth in Section 14.5 hereof.

          “Senior Securities” shall have the meaning set forth in Section 4.1(c) hereof.

          “Spin-Off” means a dividend or other distribution of shares of capital stock of any class or
series, or similar equity interests, of or relating to a subsidiary or other business unit of the
Issuer.

          “Threshold Appreciation Price” shall have the meaning set forth in Section 7.2(a) hereof.

          “Trading Day” means a day on which the Common Stock:

               (a) is not suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business; and

               (b) has traded at least once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common Stock.

29

 

          “Transfer Agent” means The Bank of New York acting as transfer agent, registrar and paying
agent for the Preferred Stock, and its successors and assigns.

          “Treasury Yield” means the yield to maturity at the time of computation of U.S. Treasury
securities with a constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two Business Days prior
to the Provisional Conversion Date (or, if such Statistical Release is no longer published, any
publicly available source for similar market data)) most nearly equal to the then remaining term to
the Mandatory Conversion Date; provided, however, that if the then remaining term to the Mandatory
Conversion Date is not equal to the constant maturity of a U.S. Treasury security for which a
weekly average yield is given, the Treasury Yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields of U.S. Treasury
securities for which such yields are given, except that if the then remaining term to the Mandatory
Conversion Date is less than one year, the weekly average yield on actually traded U.S. Treasury
securities adjusted to a constant maturity of one year shall be used.

          “Valuation Period” shall have the meaning set forth in Section 10.8 hereof.

30

 

          IN WITNESS WHEREOF, the Issuer has caused this Certificate of Designations to be duly executed
by the undersigned this 26th day of January, 2006.

	 	 	 	 	 
	 	NRG ENERGY, INC.

 	 
	 	By:  	/s/ George P. Schaefer
 	 
	 	 	Name:  	George P. Schaefer 	 
	 	 	Title:  	Vice President and Treasurer 	 

 

 

	 	 	 	 	 

EXHIBIT A

FORM OF 5.750% MANDATORY CONVERTIBLE PREFERRED STOCK

SEE REVERSE

FOR LEGEND

Number: [Ÿ]

			
	[_]% Mandatory Convertible Preferred Stock
	 	[Ÿ] Shares          

	 	 	 	 	 
	 

	 	NRG ENERGY, INC.
	 	CUSIP NO.: 629377870
	 
	 	 	 	 
	 

	 	FACE OF SECURITY	 	 

          This certifies that Cede & Co. is the owner of fully paid and non-assessable shares of the
5.750% Mandatory Convertible Preferred Stock, par value $.01 each of NRG Energy, Inc. (hereinafter
called the Issuer), transferable on the books of the Issuer by the holder hereof in person or by
duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate
and the shares represented hereby are issued and shall be held subject to all the provisions of the
Certificate of Incorporation of the Issuer and all amendments thereto (copies of which are on file
at the office of the Transfer Agent) to all of which the holder of this Certificate by acceptance
hereof assents. This Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.

          Witness the facsimile seal of the Issuer and the facsimile signatures of its duly authorized
officers.

	 	 	 
	Dated

	 	Countersigned and Registered
	 

	 	[                              ]
	 

	 	Transfer Agent and Registrar

	 	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Authorized Signature
	 	Secretary
	 	Chairman and Chief
	 

	 	 	 	 	 	 	 	Executive Officer

 

 

REVERSE OF SECURITY

NRG ENERGY, INC.

     The shares of 5.750% Mandatory Convertible Preferred Stock (the “Preferred Stock”) will
automatically convert on March 16, 2009 into a number of common stock, par value $0.01 per share,
of the Issuer (the “Common Stock”) as provided in the Certificate of Designations of the Issuer
relating to the Preferred Stock (the “Certificate of Designations”). The shares of the Preferred
Stock are also convertible at the option of either the holder or the Issuer, respectively, into
Common Shares at any time prior to March 16, 2009 as provided in the Certificate of Designations.
The preceding description is qualified in its entirety by reference to the Certificate of
Designations, a copy of which will be furnished by the Issuer to any shareholder without charge
upon request addressed to the Secretary of the Issuer at its principal office in Princeton, New
Jersey, or to the Transfer Agent named on the face of this certificate.

          The Issuer will furnish to any shareholders, upon request, and without charge, a full
statement of the designations, relative rights, preferences and limitations of the shares of each
class and series authorized to be issued so far as the same have been determined and of the
authority of the Board to divide the shares into classes or series and to determine and change the
relative rights, preferences and limitations of any class or series. Any such request should be
addressed to the Secretary of the Issuer at its principal office in Princeton, New Jersey, or to
the Transfer Agent named on the face of this certificate.

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR THE TRANSFER AGENT NAMED ON THE FACE OF
THIS CERTIFICATE, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS
MUCH 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 CERTIFICATE OF DESIGNATIONS. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER
TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.

 

 

ASSIGNMENT

For value received,                                         hereby sell, assign and transfer unto

Please Insert Social Security or

Other Identifying Number of Assignee

 

 

(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)

 

 

 

shares of the capital stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint

 

Attorney to transfer the said stock on the books of the within named Issuer with full power of
substitution in the premises.

	 	 	 
	Dated 	 	 

	 	 	 	 	 
	 	 	 	 	 
	NOTICE:	 	The Signature to this Assignment Must Correspond with
the Name As Written Upon the Face of the Certificate in Every
Particular, Without Alteration or Enlargement or Any Change
Whatever.

SIGNATURE GUARANTEED

	 	 	 
	 	 	 
	(Signature Must Be Guaranteed by a Member

	 	 
	of a Medallion Signature Program)

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