Document:

Exhibit 4.1

 

 

LEGG MASON,
INC.

 

 

and

 

 

THE BANK OF
NEW YORK,

as Purchase
Contract Agent,

 

and

 

THE BANK OF
NEW YORK,

 

as
Collateral Agent, Custodial Agent and Securities Intermediary

 

 

PURCHASE CONTRACT AND PLEDGE AGREEMENT

 

 

Dated as of                    

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 1

  
	
  DEFINITIONS AND OTHER PROVISIONS OF GENERAL
  APPLICATION

  
	
   

  
	
  Section 1.01. Definitions

  	
   

  	
  1

  
	
  Section 1.02. Compliance
  Certificates and Opinions

  	
   

  	
  21

  
	
  Section 1.03. Form of Documents
  Delivered to Purchase Contract Agent

  	
   

  	
  22

  
	
  Section 1.04. Acts of Holders;
  Record Dates

  	
   

  	
  22

  
	
  Section 1.05. Notices

  	
   

  	
  23

  
	
  Section 1.06. Notice to Holders;
  Waiver

  	
   

  	
  24

  
	
  Section 1.07. Effect of Headings and
  Table of Contents

  	
   

  	
  24

  
	
  Section 1.08. Successors and Assigns

  	
   

  	
  24

  
	
  Section 1.09. Separability Clause

  	
   

  	
  24

  
	
  Section 1.10. Benefits of Agreement

  	
   

  	
  25

  
	
  Section 1.11. Governing Law

  	
   

  	
  25

  
	
  Section 1.12. Legal Holidays

  	
   

  	
  25

  
	
  Section 1.13. Counterparts

  	
   

  	
  26

  
	
  Section 1.14. Inspection of
  Agreement

  	
   

  	
  26

  
	
  Section 1.15. Appointment of
  Financial Institution as Agent for the Company

  	
   

  	
  26

  
	
  Section 1.16. No Waiver

  	
   

  	
  26

  
	
  Section 1.17. Tax Treatment

  	
   

  	
  26

  
	
  Section 1.18. Waiver Of Jury Trial

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
  CERTIFICATE FORMS

  
	
   

  
	
  Section 2.01. Forms of Certificates
  Generally

  	
   

  	
  27

  
	
  Section 2.02. Form of Purchase
  Contract Agent’s Certificate of Authentication

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
  THE UNITS

  
	
   

  	
   

  	
   

  
	
  Section 3.01. Amount; Form and
  Denominations

  	
   

  	
  27

  
	
  Section 3.02. Rights and Obligations
  Evidenced by the Certificates

  	
   

  	
  27

  
	
  Section 3.03. Execution,
  Authentication, Delivery and Dating

  	
   

  	
  28

  
	
  Section 3.04. Temporary Certificates

  	
   

  	
  29

  
	
  Section 3.05. Registration;
  Registration of Transfer and Exchange

  	
   

  	
  30

  
	
  Section 3.06. Book-Entry Interests

  	
   

  	
  31

  
	
  Section 3.07. Notices to Holders

  	
   

  	
  32

  
	
  Section 3.08. Appointment of
  Successor Depositary

  	
   

  	
  32

  
	
  Section 3.09. Definitive
  Certificates

  	
   

  	
  32

  
	
  Section 3.10. Mutilated, Destroyed,
  Lost and Stolen Certificates

  	
   

  	
  33

  
	
  Section 3.11. Persons Deemed Owners

  	
   

  	
  34

  

 

i

 

	
  Section 3.12. Cancellation

  	
   

  	
  35

  
	
  Section 3.13. Creation of Treasury
  Units by Substitution of Treasury Securities

  	
   

  	
  36

  
	
  Section 3.14. Recreation of
  Corporate Units

  	
   

  	
  38

  
	
  Section 3.15. Transfer of Collateral
  upon Occurrence of Termination Event

  	
   

  	
  40

  
	
  Section 3.16. No Consent to
  Assumption

  	
   

  	
  42

  
	
  Section 3.17. Substitutions

  	
   

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
  THE NOTES AND APPLICABLE OWNERSHIP

  
	
  INTERESTS IN THE TREASURY PORTFOLIO

  
	
   

  	
   

  	
   

  
	
  Section 4.01. Interest Payments;
  Rights to Interest Payments Preserved

  	
   

  	
  42

  
	
  Section 4.02. Principal Payments
  Prior to or on Purchase Contract Settlement Date

  	
   

  	
  44

  
	
  Section 4.03. Notice and Voting

  	
   

  	
  45

  
	
  Section 4.04. Special Event
  Redemption

  	
   

  	
  46

  
	
  Section 4.05. Payments to Purchase
  Contract Agent

  	
   

  	
  47

  
	
  Section 4.06. Payments Held in Trust

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
  THE PURCHASE CONTRACTS

  
	
   

  	
   

  	
   

  
	
  Section 5.01. Purchase of Shares of
  Common Stock

  	
   

  	
  48

  
	
  Section 5.02. Remarketing; Payment
  of Purchase Price

  	
   

  	
  50

  
	
  Section 5.03. Issuance of Shares of
  Common Stock

  	
   

  	
  58

  
	
  Section 5.04. Anti-Dilution
  Adjustments

  	
   

  	
  59

  
	
  Section 5.05. Notice of Adjustments
  and Certain Other Events

  	
   

  	
  70

  
	
  Section 5.06. Termination Event;
  Notice

  	
   

  	
  70

  
	
  Section 5.07. Early Settlement

  	
   

  	
  71

  
	
  Section 5.08. No Fractional Shares

  	
   

  	
  74

  
	
  Section 5.09. Charges and Taxes

  	
   

  	
  75

  
	
  Section 5.10. Contract Adjustment
  Payments

  	
   

  	
  75

  
	
  Section 5.11. Deferral of Contract
  Adjustment Payments

  	
   

  	
  80

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  
	
  RIGHTS AND REMEDIES OF HOLDERS

  
	
   

  	
   

  	
   

  
	
  Section 6.01. Unconditional Right of Holders to Receive Contract Adjustment
  Payments and to Purchase Shares of Common Stock

  	
   

  	
   

  83

  
	
  Section 6.02. Restoration of Rights
  and Remedies

  	
   

  	
  83

  
	
  Section 6.03. Rights and Remedies
  Cumulative

  	
   

  	
  83

  
	
  Section 6.04. Delay or Omission Not
  Waiver

  	
   

  	
  83

  
	
  Section 6.05. Undertaking for Costs

  	
   

  	
  84

  
	
  Section 6.06. Waiver of Stay or
  Extension Laws

  	
   

  	
  84

  

 

ii

 

	
  ARTICLE 7

  
	
  THE PURCHASE CONTRACT AGENT

  
	
   

  	
   

  	
   

  
	
  Section 7.01. Certain Duties and
  Responsibilities

  	
   

  	
  84

  
	
  Section 7.02. Notice of Default

  	
   

  	
  85

  
	
  Section 7.03. Certain Rights of
  Purchase Contract Agent

  	
   

  	
  85

  
	
  Section 7.04. Not Responsible for
  Recitals or Issuance of Units

  	
   

  	
  87

  
	
  Section 7.05. May Hold Units

  	
   

  	
  87

  
	
  Section 7.06. Money Held in Custody

  	
   

  	
  88

  
	
  Section 7.07. Compensation and
  Reimbursement

  	
   

  	
  88

  
	
  Section 7.08. Corporate Purchase
  Contract Agent Required; Eligibility

  	
   

  	
  88

  
	
  Section 7.09. Resignation and
  Removal; Appointment of Successor

  	
   

  	
  89

  
	
  Section 7.10. Acceptance of
  Appointment by Successor

  	
   

  	
  90

  
	
  Section 7.11. Merger, Conversion,
  Consolidation or Succession to Business

  	
   

  	
  91

  
	
  Section 7.12. Preservation of
  Information; Communications to Holders

  	
   

  	
  91

  
	
  Section 7.13. No Obligations of
  Purchase Contract Agent

  	
   

  	
  91

  
	
  Section 7.14. Tax Compliance

  	
   

  	
  92

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  
	
  SUPPLEMENTAL AGREEMENTS

  
	
   

  
	
  Section 8.01. Supplemental
  Agreements without Consent of Holders

  	
   

  	
  92

  
	
  Section 8.02. Supplemental
  Agreements with Consent of Holders

  	
   

  	
  93

  
	
  Section 8.03. Execution of Supplemental
  Agreements

  	
   

  	
  94

  
	
  Section 8.04. Effect of Supplemental
  Agreements

  	
   

  	
  95

  
	
  Section 8.05. Reference to
  Supplemental Agreements

  	
   

  	
  95

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER
  OR LEASE

  
	
   

  
	
  Section 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or Lease
  Property Except under Certain Conditions

  	
   

  	
   

  95

  
	
  Section 9.02. Rights and Duties of
  Successor Corporation

  	
   

  	
  96

  
	
  Section 9.03. Officers’ Certificate
  and Opinion of Counsel Given to Purchase Contract Agent

  	
   

  	
  96

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
  COVENANTS

  
	
   

  
	
  Section 10.01. Performance under
  Purchase Contracts

  	
   

  	
  96

  
	
  Section 10.02. Maintenance of Office
  or Agency

  	
   

  	
  97

  
	
  Section 10.03. Company to Reserve
  Common Stock

  	
   

  	
  97

  
	
  Section 10.04. Covenants as to Common
  Stock; Listing

  	
   

  	
  97

  
	
  Section 10.05. Statements of Officers
  of the Company as to Default

  	
   

  	
  98

  
	
  Section 10.06. ERISA

  	
   

  	
  98

  
	
  Section 10.07. Tax Treatment

  	
   

  	
  98

  

 

iii

 

	
  ARTICLE 11

  
	
  PLEDGE

  
	
   

  
	
  Section 11.01. Pledge

  	
   

  	
  98

  
	
  Section 11.02. Termination

  	
   

  	
  99

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
  ADMINISTRATION OF COLLATERAL

  
	
   

  	
   

  	
   

  
	
  Section 12.01. Initial Deposit of
  Notes

  	
   

  	
  99

  
	
  Section 12.02. Establishment of
  Collateral Account

  	
   

  	
  99

  
	
  Section 12.03. Treatment as Financial
  Assets

  	
   

  	
  100

  
	
  Section 12.04. Sole Control by
  Collateral Agent

  	
   

  	
  100

  
	
  Section 12.05. Jurisdiction

  	
   

  	
  100

  
	
  Section 12.06. No Other Claims

  	
   

  	
  100

  
	
  Section 12.07. Investment and Release

  	
   

  	
  100

  
	
  Section 12.08. Statements and
  Confirmations

  	
   

  	
  101

  
	
  Section 12.09. Tax Allocations

  	
   

  	
  101

  
	
  Section 12.10. No Other Agreements

  	
   

  	
  101

  
	
  Section 12.11. Powers Coupled with an
  Interest

  	
   

  	
  101

  
	
  Section 12.12. Waiver of Lien; Waiver
  of Set-off

  	
   

  	
  101

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
  RIGHTS AND REMEDIES OF THE COLLATERAL AGENT

  
	
   

  	
   

  	
   

  
	
  Section 13.01. Rights and Remedies of
  the Collateral Agent

  	
   

  	
  101

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  
	
  REPRESENTATIONS AND WARRANTIES TO

  
	
  COLLATERAL AGENT; HOLDER COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section 14.01. Representations and
  Warranties

  	
   

  	
  103

  
	
  Section 14.02. Covenants

  	
   

  	
  103

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15

  
	
  THE COLLATERAL AGENT, THE CUSTODIAL AGENT
  AND THE SECURITIES INTERMEDIARY

  
	
   

  	
   

  	
   

  
	
  Section 15.01. Appointment, Powers
  and Immunities

  	
   

  	
  104

  
	
  Section 15.02. Instructions of the
  Company

  	
   

  	
  105

  
	
  Section 15.03. Reliance by Collateral
  Agent, Custodial Agent and Securities Intermediary

  	
   

  	
  105

  
	
  Section 15.04. Certain Rights

  	
   

  	
  105

  
	
  Section 15.05. Merger, Conversion,
  Consolidation or Succession to Business

  	
   

  	
  106

  
	
  Section 15.06. Rights in Other
  Capacities

  	
   

  	
  106

  
	
  Section 15.07. Non-reliance on
  Collateral Agent, the Custodial Agent and Securities Intermediary

  	
   

  	
  107

  
	
  Section 15.08. Compensation and
  Indemnity

  	
   

  	
  107

  

 

iv

 

	
  Section 15.09. Failure to Act

  	
   

  	
  108

  
	
  Section 15.10. Resignation and
  Removal of Collateral Agent, the Custodial Agent and the Securities
  Intermediary

  	
   

  	
  108

  
	
  Section 15.11. Right to Appoint Agent
  or Advisor

  	
   

  	
  110

  
	
  Section 15.12. Survival

  	
   

  	
  110

  
	
  Section 15.13. Exculpation

  	
   

  	
  110

  
	
  Section 15.14. Expenses, Etc

  	
   

  	
  110

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 16.01. Security Interest
  Absolute

  	
   

  	
  111

  
	
  Section 16.02. Notice of Special
  Event, Special Event Redemption and Termination Event

  	
   

  	
  111

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  
	
   

  	
   

  	
   

  
	
  Exhibit A – Form of Corporate Units Certificate

  	
   

  	
   

  
	
  Exhibit B – Form of Treasury Units Certificate

  	
   

  	
   

  
	
  Exhibit C – Instruction to Purchase Contract Agent From Holder
  to Create Treasury Units or Corporate Units

  	
   

  	
   

  
	
  Exhibit D – Notice from Purchase Contract Agent to Holders Upon
  Termination Event

  	
   

  	
   

  
	
  Exhibit E – Notice to Settle by Separate Cash

  	
   

  	
   

  
	
  Exhibit F – Reserved

  	
   

  	
   

  
	
  Exhibit G – Instruction from Purchase Contract Agent to
  Collateral Agent (Creation of Treasury Units)

  	
   

  	
   

  
	
  Exhibit H – Instruction from the Collateral Agent to the
  Securities Intermediary (Creation of Treasury Units)

  	
   

  	
   

  
	
  Exhibit I – Instruction from Purchase Contract Agent to
  Collateral Agent (Recreation of Corporate Units)

  	
   

  	
   

  
	
  Exhibit J – Instruction from Collateral Agent to Securities
  Intermediary (Recreation of Corporate Units)

  	
   

  	
   

  
	
  Exhibit K – Notice of Cash Settlement from Collateral Agent to
  Purchase Contract Agent

  	
   

  	
   

  
	
  Exhibit L – Instruction to Custodial Agent Regarding Remarketing

  	
   

  	
   

  
	
  Exhibit M – Instruction to Custodial Agent Regarding Withdrawal from
  Remarketing

  	
   

  	
   

  

 

v

 

PURCHASE CONTRACT AND PLEDGE AGREEMENT, dated
as of                           ,
among LEGG MASON, INC., a Maryland corporation (the “Company”),
THE BANK OF NEW YORK, a New York banking corporation, acting as purchase
contract agent for, and for purposes of the Pledge created hereby as
attorney-in-fact of, the Holders from time to time of the Units (in such
capacities, together with its successors and assigns in such capacities, the “Purchase Contract Agent”), THE BANK OF NEW YORK, as
collateral agent hereunder for the benefit of the Company (in such capacity,
together with its successors in such capacity, the “Collateral
Agent”), as custodial agent (in such capacity, together with its
successors in such capacity, the “Custodial
Agent”), and as securities intermediary (as defined in Section 8-102(a)(14)
of the UCC) with respect to the Collateral Account (in such capacity, together
with its successors in such capacity, the “Securities
Intermediary”).

 

RECITALS

 

WHEREAS, the Company has duly authorized the
execution and delivery of this Agreement and the Certificates evidencing the
Units;

 

WHEREAS, all things necessary to make the
Purchase Contracts, when the Certificates are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Purchase
Contract Agent, as provided in this Agreement, the valid and legally binding
obligations of the Company, and to constitute these presents a valid and
legally binding agreement of the Company, in accordance with its terms, have
been done; and

 

WHEREAS, pursuant to the terms of this
Agreement and the Purchase Contracts, the Holders of the Units have irrevocably
authorized the Purchase Contract Agent, as attorney-in-fact of such Holders,
among other things, to execute and deliver this Agreement on behalf of such
Holders and to grant the Pledge provided herein of the Collateral to secure the
Obligations.

 

NOW, THEREFORE, the parties hereto agree as
follows:

 

ARTICLE 1

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 1.01.  Definitions.  For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:

 

(a)        the terms defined in this Article have
the meanings assigned to them in this Article and include the plural as
well as the singular, and nouns and pronouns of the masculine gender include
the feminine and neuter genders;

 

(b)        all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles in the United States;

 

1

 

(c)        the words “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section, Exhibit or other
subdivision;

 

(d)        the following terms which are defined in
the UCC shall have the meanings set forth therein: “certificated security,” “control,”
“financial asset,” “entitlement order,” “securities account” and “security entitlement”; and

 

(e)        the following terms have the meanings
given to them in this Section 1.01(e):

 

“Act” has the
meaning, with respect to any Holder, set forth in Section 1.04.

 

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

 

“Aggregate Market Capitalization”
means, for any date, the product of (i) the average of the daily Closing
Prices of Common Stock for the 20 consecutive Trading Days ending no later than
the earlier of the day in question and the day before the “ex date” preceding
such date and (ii) the number of shares of Common Stock outstanding on
such date.  For purposes of this
definition, “ex date,” when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on the
applicable exchange or in the applicable market without the right to receive
the issuance or distribution.

 

“Agreement”
means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more agreements supplemental hereto entered
into pursuant to the applicable provisions hereof.

 

“Applicable Market Value”
means the average of the Closing Price per share of Common Stock on each of the
20 consecutive Trading Days ending on the third Trading Day immediately
preceding the Purchase Contract Settlement Date.

 

“Applicable Ownership
Interest in Notes” means, a 1/20, or a 5%, undivided beneficial
ownership interest in $1,000 principal amount of Notes that is a component of a
Corporate Unit and “Applicable Ownership
Interests in Notes” means the aggregate of each Applicable Ownership
Interest in Notes that is a component of each Corporate Unit then Outstanding.

 

2

 

“Applicable Ownership
Interest in the Remarketing Treasury Portfolio” means, with respect
to a Corporate Unit and the U.S. Treasury Securities in a Treasury Portfolio: (i) a
1/20, or 5%, undivided beneficial ownership interest in $1,000 face amount of
U.S. Treasury Securities (or principal or interest strips thereof) included in
the Treasury Portfolio that matures on or prior to June 30, 2011, (ii) if
the Reset Effective Date occurs prior to March 30, 2011, with respect to
the originally scheduled quarterly Interest Payment Date on the Notes that
would have occurred on March 30, 2011, an undivided beneficial ownership
interest in a $1,000 interest or principal strip of a U.S. Treasury Security
that matures on or prior to March 30, 2011 in an amount equal to the
interest payment that would be due on March 30, 2011 on a 1/20, or 5%, beneficial
ownership interest in $1,000 principal amount of the Notes, assuming that (1) the
interest rate on the Notes had not been reset to the Reset Rate and (2) interest
on the Notes accrued from the Reset Effective Date to, but excluding, March 30,
2011 and (iii) with respect to the originally scheduled quarterly Interest
Payment Date on the Notes that would have occurred on June 30, 2011, an
undivided beneficial ownership interest in a $1,000 interest or principal strip
of a U.S. Treasury Security that matures on or prior to June 30, 2011 in
an amount equal to the interest payment that would be due on June 30, 2011
on a 1/20, or 5%, beneficial ownership interest in $1,000 principal amount of
the Notes, assuming that (1) the interest rate on the Notes had not been
reset to the Reset Rate and (2) interest on the Notes accrued from the
later of the Reset Effective Date and March 30, 2011 to, but excluding, June 30,
2011.

 

“Applicable Ownership
Interest in the Special Event Treasury Portfolio” means, with respect
to a Corporate Unit and the U.S. Treasury Securities in a Treasury Portfolio: (i) a
1/20, or 5%, undivided beneficial ownership interest in a $1,000 face amount of
U.S. Treasury Securities (or principal or interest strips thereof) included in
the Treasury Portfolio that matures on or prior to June 30, 2011, and (ii) for
each scheduled Interest Payment Date on the Notes that occurs after the Special
Event Redemption Date and on or prior to June 30, 2011, an undivided
beneficial ownership interest in a $1,000 principal or interest strip of a U.S.
Treasury Security that matures on or prior to that Interest Payment Date in an
amount equal to the interest payment that would be due on a 1/20, or 5%,
beneficial ownership interest in the principal amount of the Notes.

 

“Applicable Ownership
Interest in the Treasury Portfolio” means the Applicable Ownership
Interest in the Remarketing Treasury Portfolio or the Applicable Ownership Interest
in the Special Event Treasury Portfolio, collectively or individually, as the
case may be.

 

“Applicable Principal
Amount” means the aggregate principal amount of the Notes underlying
the Pledged Applicable Ownership Interests in Notes.

 

“Applicants” has
the meaning set forth in Section 7.12(b).

 

“Bankruptcy Code”
means Title 11 of the United States Code, or any other law of the United States
that from time to time provides a uniform system of bankruptcy laws.

 

3

 

“Beneficial Owner”
means, with respect to a Book-Entry Interest, a Person who is the beneficial
owner of such Book-Entry Interest as reflected on the books of the Depositary
or on the books of a Person maintaining an account with such Depositary
(directly as a Depositary Participant or as an indirect participant, in each case
in accordance with the rules of such Depositary).

 

“Board of Directors”
means the board of directors of the Company or a duly authorized committee of
that board.

 

“Board Resolution”
means one or more resolutions of the Board of Directors, a copy of which has
been certified by the Secretary or an Assistant Secretary of the Company, to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification and delivered to the Purchase Contract
Agent.

 

“Book-Entry Interest”
means a beneficial interest in a Global Certificate, registered in the name of
a Depositary or a nominee thereof, ownership and transfers of which shall be
maintained and made through book entries by such Depositary as described in Section 3.06.

 

“Business Day”
means any day other than a Saturday, Sunday or any other day on which banking
institutions and trust companies in the City of New York are authorized or
required by law or executive order to remain closed; provided that
for purposes of the second paragraph of Section 1.12 only, the term “Business Day” shall also be deemed to exclude any day on
which the Depositary is closed.

 

“Cash”
means any coin or currency of the United States as at the time shall be legal
tender for payment of public and private debts.

 

“Cash Settlement”
has the meaning set forth in Section 5.02(b)(i).

 

“Certificate”
means a Corporate Units Certificate or a Treasury Units Certificate, as the
case may be.

 

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

 

“Closing Price”
of the Common Stock on any date of determination means the closing sale price
(or, if no closing sale price is reported, the last reported sale price) of the
Common Stock on the NYSE on that date or, if the Common Stock is not listed for
trading on the NYSE on any such date, as reported in the composite transactions
for the principal United States securities exchange on which the Common Stock
is so listed. If the Common Stock is not so listed on a United States national
or regional securities exchange, the “Closing Price”
means the last closing sale price of the Common Stock as reported by the last
quoted bid price for the Common Stock in the over-the-counter market as
reported by the National Quotation Bureau or similar organization. If the bid
price is not available, the “Closing Price”
means the market value of the Common Stock on the date of

 

4

 

determination as determined by
a nationally recognized independent investment banking firm retained by the
Company for this purpose.

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Collateral”
means the collective reference to:

 

(i)            the Collateral
Account and all investment property and other financial assets from time to
time credited to the Collateral Account and all security entitlements with
respect thereto, including, without limitation, (A) the Applicable
Ownership Interests in Notes and security entitlements relating thereto that
are a component of the Corporate Units from time to time, (B) the
Applicable Ownership Interests in the Treasury Portfolio (as specified in
clause (i) of each of the definitions of Applicable Ownership Interest in
the Special Event Treasury Portfolio and Applicable Ownership Interest in the
Remarketing Treasury Portfolio) of the Holders with respect to the Treasury
Portfolio which are a component of the Corporate Units from time to time; (C) any
Treasury Securities and security entitlements relating thereto Transferred to
the Securities Intermediary from time to time in connection with the creation
of Treasury Units in accordance with Section 3.13 hereof and (D) payments
made by Holders pursuant to Section 5.02 hereof;

 

(ii)           all Proceeds of any
of the foregoing (whether such Proceeds arise before or after the commencement
of any proceeding under any applicable bankruptcy, insolvency or other similar
law, by or against the pledgor or with respect to the pledgor); and

 

(iii)          all powers and
rights now owned or hereafter acquired under or with respect to the Collateral.

 

“Collateral
Account” means the securities account of The Bank of New York, as Collateral Agent,  maintained on the books of the Securities
Intermediary and designated “The Bank of New York, as Collateral Agent of Legg
Mason, Inc., as pledgee of The Bank of New York, as the Purchase Contract
Agent on behalf of and as attorney-in-fact for the Holders.”

 

“Collateral Agent”
means the Person named as “Collateral Agent” in the preamble of this Agreement
until a successor Collateral Agent shall have become such pursuant to this
Agreement, and thereafter “Collateral Agent”
shall mean the Person who is then the Collateral Agent hereunder.

 

“collateral event of default”
has the meaning set forth in Section 13.01(b).

 

“Collateral Substitution”
means (i) with respect to the Corporate Units, (x) the substitution
of Pledged Applicable Ownership Interests in Notes that are a component of such
Corporate Units (if the Applicable Ownership Interests in the Treasury
Portfolio have not

 

5

 

replaced the Applicable
Ownership Interests in Notes as a component of the Corporate Units) with
Treasury Securities in an aggregate principal amount at maturity equal to the Applicable
Principal Amount, or (y) the substitution of Pledged Applicable Ownership
Interests in the Treasury Portfolio that are a component of such Corporate Unit
(if the Applicable Ownership Interests in the Treasury Portfolio have replaced
the Applicable Ownership Interests in Notes as a component of the Corporate
Units) with Treasury Securities in an amount at maturity equal to the Pledged
Applicable Ownership Interests in the Treasury Portfolio, or (ii) with
respect to Treasury Units, (x) the substitution of Pledged Treasury
Securities included in such Treasury Units (if the Applicable Ownership
Interests in the Treasury Portfolio have not replaced the Applicable Ownership
Interests in Notes as a component of the Corporate Units) with Notes in an
aggregate principal amount equal to the aggregate principal amount at stated
maturity of the Pledged Treasury Securities, or (y) the substitution of
Pledged Treasury Securities included in such Treasury Units (if the Applicable
Ownership Interests in the Treasury Portfolio have replaced the Applicable
Ownership Interests in Notes as a component of the Corporate Units) with the
appropriate Applicable Ownership Interests in the Treasury Portfolio (such that
the amount of the Pledged Applicable Ownership Interests in the Treasury
Portfolio equals the aggregate principal amount at maturity of such Pledged
Treasury Securities).

 

“Commission”
means the Securities and Exchange Commission.

 

“Common Stock”
means the common stock, par value $.10 per share, of the Company.

 

“Company” means
the Person named as the “Company” in the preamble of this Agreement until a
successor shall have become such pursuant to the applicable provision of this
Agreement, and thereafter “Company” shall
mean such successor.

 

“Contract Adjustment
Payment Date” means each March 30, June 30, September 30
and December 30 of each year, commencing on September 30, 2008.

 

“Contract Adjustment
Payments” means the payments payable by the Company on the Contract
Adjustment Payment Dates in respect of each Purchase Contract, at a rate per
year of 1.40% of the Stated Amount per Purchase Contract.

 

“Corporate Trust Office”
means the office of the Purchase Contract Agent at  which, at any particular time, its corporate
trust business shall be principally administered, which office at the date
hereof is located at 101 Barclay Street, Floor 8W, New York, New York 10286,
Attention: Corporate Trust Administration, Telephone: (212) 815-5995.

 

“Corporate Unit”
means the collective rights and obligations of a Holder of a Corporate Units
Certificate in respect of the Applicable Ownership Interests in Notes or the
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
subject in each case (except that the Applicable Ownership Interests in the
Treasury Portfolio as specified in clauses (ii) and (iii) of the
definition of Applicable Ownership Interest in the

 

6

 

Remarketing Treasury Portfolio
and clause (ii) of the definition of Applicable Ownership Interest in the
Special Event Treasury Portfolio shall not be subject to the Pledge) to the
Pledge thereof, and the related Purchase Contract.

 

“Corporate Units
Certificate” means a certificate evidencing the rights and obligations
of a Holder in respect of the number of Corporate Units specified on such
certificate.

 

“Current Market Price”
per share of Common Stock on any day means the average of the daily Closing
Prices on each of the five consecutive Trading Days ending the earlier of the
day in question and the day before the “ex date” with respect to the issuance
or distribution requiring the computation. For purposes of this definition, “ex
date,” when used with respect to any issuance or distribution, means the first
date on which the Common Stock trades regular way on the applicable exchange or
in the applicable market without the right to receive the issuance or
distribution.

 

“Custodial Agent”
means the Person named as “Custodial Agent” in the preamble of this Agreement
until a successor Custodial Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter “Custodial
Agent” shall mean the Person who is then the Custodial Agent
hereunder.

 

“Deferred Contract
Adjustment Payments” has the meaning set forth in Section 5.11.

 

“Depositary”
means a clearing agency registered under Section 17A of the Exchange Act
that is designated to act as Depositary for the Units as contemplated by
Sections 3.06 and 3.08.

 

“Depositary Participant”
means a broker, dealer, bank, other financial institution or other Person for
whom from time to time the Depositary effects book-entry transfers and pledges
of securities deposited with the Depositary.

 

“DTC” means The
Depository Trust Company.

 

“Early Settlement”
has the meaning set forth in Section 5.07(a).

 

“Early Settlement Amount”
has the meaning set forth in Section 5.07(b).

 

“Early Settlement Date”
has the meaning set forth in Section 5.07(b).

 

“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange Act”
means the Securities Exchange Act of 1934 and any statute successor thereto, in
each case as amended from time to time, and the rules and regulations
promulgated thereunder.

 

7

 

“Expiration Date”
has the meaning set forth in Section 1.04(e).

 

“Expiration Time”
has the meaning set forth in Section 5.04(a)(viii).

 

“Extension Period”
has the meaning set forth in Section 5.11.

 

“Failed Early Remarketing”
has the meaning set forth in Section 5.02(a).

 

“Failed Final Remarketing”
has the meaning set forth in Section 5.02(c)(ii).

 

“Failed Remarketing”
shall mean a Failed Early Remarketing or a Failed Final Remarketing, as the
case may be.

 

“Final Three-Business Day
Remarketing Period” means the Three-Business Day Remarketing Period
beginning on, and including, the fifth Business Day, and ending on, and
including, the third Business Day, immediately preceding the Purchase Contract
Settlement Date.

 

“First Supplemental
Indenture” means the Supplemental Indenture No. 1, dated as of
the date hereof, between the Company and the Indenture Trustee, pursuant to
which the Notes are issued.

 

“Fixed Settlement Rate”
means each of the Minimum Settlement Rate and the Maximum Settlement Rate,
collectively.

 

“Fundamental Change”
means the occurrence of any of the following:

 

(i)            a “person” or “group”
within the meaning of Section 13(d) of the Exchange Act has become
the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under
the Exchange Act, of Voting Stock representing more than 50% of the total
voting power of all outstanding Voting Stock of the Company (other than in
connection with a consolidation, merger or other transaction described in
clause (ii) below, in which case clause (ii) shall apply); or

 

(ii)           the Company is
involved in a consolidation with or merger into any other Person, or any merger
of another Person into the Company, or any transaction or series of related
transactions (other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of the Common
Stock), in each case in which 90% or more of the Common Stock is exchanged for
or converted into securities, cash or other property, 10% or more of which
consists of securities, cash or other property that is not (or will not be
immediately upon the effectiveness of such consolidation, merger or
transaction) common stock listed on the NYSE, the NASDAQ Global Select Market
or the NASDAQ Global Market; or

 

8

 

(iii)          the Common Stock
(or other common stock that is then the subject of the Purchase Contracts)
ceases to be listed or quoted on the NYSE, the NASDAQ Global Select Market or
the NASDAQ Global Market (other than in connection with a consolidation, merger
or other transaction described in clause (ii) above, in which case clause (ii) shall
apply); or

 

(iv)          the Company’s
shareholders vote for the Company’s liquidation, dissolution or termination.

 

“Fundamental Change Early Settlement”
has the meaning set forth in Section 5.04(b)(ii).

 

“Fundamental Change Early
Settlement Date” has the meaning set forth in Section 5.04(b)(ii).

 

“Fundamental Change Early
Settlement Rate” has the meaning set forth in Section 5.04(b)(ii).

 

“Global Certificate”
means a Certificate that evidences all or part of the Units and is registered
in the name of the Depositary or a nominee thereof.

 

“Holder” means,
with respect to a Unit, the Person in whose name the Unit evidenced by a
Certificate is registered in the Security Register; provided, however, that solely for the purpose of determining whether
the Holders of the requisite number of Units have voted on any matter (and not
for any other purpose hereunder), if the Unit remains in the form of one or
more Global Certificates and if the Depositary that is the registered holder of
such Global Certificate has sent an omnibus proxy assigning voting rights to
the Depositary Participants to whose accounts the Units are credited on the
record date, the term “Holder” shall
mean such Depositary Participant acting at the direction of the Beneficial
Owners.

 

“Indemnitees”
has the meaning set forth in Section 7.07(c).

 

“Indenture”
means the Indenture, dated as of May 12, 2008 between the Company and the
Indenture Trustee (including any provisions of the TIA that are deemed
incorporated therein), as heretofore amended and supplemented and as amended
and supplemented by the First Supplemental Indenture pursuant to which the
Notes will be issued.

 

“Indenture Trustee”
means The Bank of New York, as trustee under the Indenture, or any successor
thereto.

 

“Interest  Payment Date” means each scheduled interest payment date on
the Notes, initially March 30, June 30, September 30 and December 30
of each year, commencing on September 30, 2008.

 

9

 

“Issuer Order”
or “Issuer Request” means a written order
or request signed in the name of the Company by (i) either its Chief
Executive Officer, its Chief Financial Officer, its President or a Vice
President, and (ii) either its Corporate Secretary or one of its Assistant
Corporate Secretaries or its Treasurer or one of its Assistant Treasurers, and
delivered to the Purchase Contract Agent.

 

“Maximum Settlement Rate”
has the meaning set forth in Section 5.01(a).

 

“Minimum Settlement Rate”
has the meaning set forth in Section 5.01(a).

 

“Notes” means
the series of notes designated the Notes initially due on June 30, 2021 to
be issued by the Company under the Indenture.

 

“NYSE” means the
New York Stock Exchange.

 

“Obligations”
means, with respect to each Holder, all obligations and liabilities of such
Holder under such Holder’s Purchase Contract and this Agreement or any other
document made, delivered or given in connection herewith or therewith, in each
case whether on account of principal, interest (including, without limitation,
interest accruing before and after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to such Holder, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Company or the Collateral Agent or the Securities Intermediary that are
required to be paid by the Holder pursuant to the terms of any of the foregoing
agreements).

 

“Officers’ Certificate” means a certificate signed by (i) either
the Company’s Chief Executive Officer, it Chief Financial Officer, its
President or a Vice President, and (ii) either the Company’s Corporate
Secretary or one of its Assistant Corporate Secretaries or its Treasurer or one
of its Assistant Treasurers, and delivered to the Purchase Contract Agent.  Any Officers’ Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Agreement (other than the Officers’ Certificate provided for in Section 10.05)
shall include the information set forth in Section 1.02 of this Agreement.

 

“Opinion of Counsel”
means a written opinion of counsel, who may be counsel to the Company (and who
may be an employee of the Company).  An
opinion of counsel may rely on certificates as to matters of fact.

 

“Outstanding”
means, as of any date of determination, all Units evidenced by Certificates
theretofore authenticated, executed and delivered under this Agreement, except:

 

(i)            if
a Termination Event has occurred, (x) Corporate Units for which the
underlying Applicable Ownership Interests in Notes or Applicable Ownership
Interests in the Treasury Portfolio have been theretofore deposited with the

 

10

 

Purchase Contract Agent in trust for the
Holders of such Corporate Units and (y) Treasury Units for which Treasury
Securities have been deposited with the Purchase Contract Agent in trust for
the Holders of such Treasury Units;

 

(ii)           Units
evidenced by Certificates theretofore cancelled by the Purchase Contract Agent
or delivered to the Purchase Contract Agent for cancellation or deemed
cancelled pursuant to the provisions of this Agreement; and

 

(iii)          Units
evidenced by Certificates in exchange for or in lieu of which other
Certificates have been authenticated, executed on behalf of the Holder and
delivered pursuant to this Agreement, other than any such Certificate in
respect of which there shall have been presented to the Purchase Contract Agent
proof satisfactory to it that such Certificate is held by a protected purchaser
in whose hands the Units evidenced by such Certificate are valid obligations of
the Company;

 

provided, however, that in determining whether the Holders of the
requisite number of the Units have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Units owned by the Company or
any Affiliate of the Company shall be disregarded and deemed not to be
Outstanding Units, except that, in determining whether the Purchase Contract
Agent shall be authorized and protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Units that a
Responsible Officer of the Purchase Contract Agent actually knows to be so
owned shall be so disregarded. Units so owned that have been pledged in good
faith may be regarded as Outstanding Units if the pledgee establishes to the
satisfaction of the Purchase Contract Agent the pledgee’s right so to act with
respect to such Units and that the pledgee is not the Company or any Affiliate
of the Company.

 

“Period for Early
Remarketing” means the period beginning on December 27, 2010
and ending on June 17, 2011.

 

“Permitted
Investments” means any one of the following, in each case maturing
on the Business Day following the date of acquisition:

 

(i)            any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United States of America or any agency
or instrumentality thereof (provided
that the full faith and credit of the United States of America is pledged in
support of the timely payment thereof or such indebtedness constitutes a
general obligation of it);

 

(ii)           deposits,
certificates of deposit or acceptances with an original maturity of 365 days or
less of any institution which is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than $500
million at the time of deposit (and which may include the Collateral Agent);

 

11

 

(iii)          investments with an
original maturity of 365 days or less of any Person that is fully and
unconditionally guaranteed by a bank referred to in clause (ii) above;

 

(iv)          repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued or unconditionally guaranteed by the United States of
America or issued by any agency thereof and backed as to timely payment by the
full faith and credit of the United States of America;

 

(v)           investments in
commercial paper, other than commercial paper issued by the Company or its
affiliates, of any corporation incorporated under the laws of the United States
or any state thereof, which commercial paper has a rating at the time of
purchase at least equal to “A-1”
by Standard & Poor’s Ratings Services (“S&P”) or at least equal to “P-1” by Moody’s Investors Service, Inc. (“Moody’s”); and

 

(vi)          investments in money
market funds (including, but not limited to, money market funds managed by the
Collateral Agent or an affiliate of the Collateral Agent) registered under the
Investment Company Act of 1940, as amended, rated in the highest applicable
rating category by S&P or Moody’s.

 

“Person” means a
legal person, including any individual, corporation, estate, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof or any other entity of whatever nature.

 

“Plan” means an
employee benefit plan that is subject to ERISA, a plan or individual retirement
account that is subject to Section 4975 of the Code or any entity whose
assets are considered assets of any such plan.

 

“Pledge” means
the lien and security interest in the Collateral created by this Agreement.

 

“Pledged Applicable
Ownership Interests in Notes” means the Applicable Ownership
Interests in Notes and security entitlements with respect thereto from time to
time credited to the Collateral Account and not then released from the Pledge.

 

“Pledged Applicable
Ownership Interests in the Treasury Portfolio” means the Applicable
Ownership Interests in the Remarketing Treasury Portfolio (as specified in
clause (i) of the definition of such term) or Applicable Ownership
Interests in the Special Event Treasury Portfolio (as specified in clause (i) of
the definition of such term), as applicable, and, in each case, security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.

 

12

 

“Pledged Securities”
means Pledged Applicable Ownership Interests in Notes, Pledged Applicable
Ownership Interests in the Treasury Portfolio and Pledged Treasury Securities,
collectively.

 

“Pledged
Treasury Securities” means Treasury Securities and security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.

 

“Predecessor Certificate”
means a Predecessor Corporate Units Certificate or a Predecessor Treasury Units
Certificate.

 

“Predecessor Corporate
Units Certificate” of any particular Corporate Units Certificate
means every previous Corporate Units Certificate evidencing all or a portion of
the rights and obligations of the Company and the Holder under the Corporate
Units evidenced thereby; and, for the purposes of this definition, any
Corporate Units Certificate authenticated and delivered under Section 3.10
in exchange for or in lieu of a mutilated, destroyed, lost or stolen Corporate
Units Certificate shall be deemed to evidence the same rights and obligations
of the Company and the Holder as the mutilated, destroyed, lost or stolen
Corporate Units Certificate.

 

“Predecessor Treasury Units
Certificate” of any particular Treasury Units Certificate means
every previous Treasury Units Certificate evidencing all or a portion of the
rights and obligations of the Company and the Holder under the Treasury Units
evidenced thereby; and, for the purposes of this definition, any Treasury Units
Certificate authenticated and delivered under Section 3.10 in exchange for
or in lieu of a mutilated, destroyed, lost or stolen Treasury Units Certificate
shall be deemed to evidence the same rights and obligations of the Company and
the Holder as the mutilated, destroyed, lost or stolen Treasury Units
Certificate.

 

“Primary Treasury Dealer”
shall mean a primary U.S. government securities dealer.

 

“Pro Rata” shall
mean pro rata to each Holder according to the aggregate Stated Amount of the
Units held by such Holder in relation to the aggregate Stated Amount of all
Units outstanding.

 

“Proceeds” has
the meaning ascribed thereto in the UCC and includes, without limitation, all
interest, dividends, cash, instruments, securities, financial assets and other
property received, receivable or otherwise distributed upon the sale
(including, without limitation, any Remarketing), exchange, collection or
disposition of any financial assets from time to time credited to the
Collateral Account.

 

“Prospectus”
means the prospectus relating to the delivery of shares or any securities in
connection with an Early Settlement pursuant to Section 5.07 or a
Fundamental Change Early Settlement of Purchase Contracts pursuant to Section 5.04(b)(ii),
in the form in which first filed, or transmitted for filing, with the
Commission

 

13

 

after the effective date of the
Registration Statement pursuant to Rule 424(b) under the Securities
Act, including the documents incorporated by reference therein as of the date
of such Prospectus.

 

“Purchase Contract”
means, with respect to any Unit, the contract forming a part of such Unit and
obligating the Company to (i) sell, and the Holder of such Unit to
purchase, not later than the Purchase Contract Settlement Date, a number of
shares of Common Stock equal to the applicable Settlement Rate, and (ii) pay
to the Holder thereof Contract Adjustment Payments, subject to the Company’s
right to defer Contract Adjustment Payments pursuant to Section 5.11, in
each case on the terms and subject to the conditions set forth in Article 5
hereof.

 

“Purchase Contract Agent”
means the Person named as the “Purchase Contract Agent” in the premable of this
Agreement until a successor Purchase Contract Agent shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter “Purchase Contract Agent” shall mean such Person or any
subsequent successor who is appointed pursuant to this Agreement.

 

“Purchase Contract
Settlement Date” means June 30, 2011.

 

“Purchase Contract
Settlement Fund” has the meaning set forth in Section 5.03.

 

“Purchase Price”
has the meaning set forth in Section 5.01(a).

 

“Purchased Shares”
has the meaning set forth in Section 5.04(a)(viii)(A).

 

“Put Right” has
the meaning set forth in Section 7.04(a) of the First Supplemental
Indenture.

 

“Quotation Agent”
means any Primary Treasury Dealer in the City of New York selected by the
Company.

 

“Record Date”
for any distribution and any Contract Adjustment Payment and any Deferred
Contract Adjustment Payment payable on any Contract Adjustment Payment Date means,
as to any Global Certificate or any other Certificate, the 15th business day
(whether or not a Business Day) of the calendar month in which the relevant
Contract Adjustment Payment Date falls; provided that
the Company may, at its option, select any other day as the Record Date for any
Contract Adjustment Payment Date so long as (i) such Record Date selected
is more than one Business Day but less than 60 Business Days prior to such
Contract Adjustment Payment Date and (ii) at least 10 Business Days prior
to the new Record Date for such Contract Adjustment Payment Date, and in each
case the Company notifies the Purchase Contract Agent in writing of the new
Record Date and instructs the Purchase Contract Agent to notify the Holders of
such Record Date.

 

“Redemption Amount”
has the meaning set forth in Section 1.02 of the First Supplemental
Indenture.

 

14

 

“Redemption Price”
has the meaning set forth in Section 1.02 of the First Supplemental
Indenture.

 

“Reference Dealer”
means a dealer engaged in trading of convertible securities.

 

“Reference Dividend”
has the meaning set forth in Section 5.04(a)(v).

 

“Reference Price”
has the meaning set forth in Section 5.01(a)(ii).

 

“Registration Statement”
means a registration statement under the Securities Act prepared by the Company
covering, inter alia, the delivery by the Company
of any securities in connection with an Early Settlement on the Early
Settlement Date or a Fundamental Change Early Settlement of Purchase Contracts
on the Fundamental Change Early Settlement Date under Section 5.04(b)(ii),
including all exhibits thereto and the documents incorporated by reference in
the prospectus contained in such registration statement, and any post-effective
amendments thereto.

 

“Relevant Period”
has the meaning set forth in Section 5.04(a)(iv).

 

“Remarketing”
means the remarketing of the Notes by the Remarketing Agent pursuant to the
Remarketing Agreement.

 

“Remarketing Agent”
has the meaning set forth in Section 1.02 of the First Supplemental
Indenture.

 

“Remarketing Agreement”
has the meaning set forth in Section 1.02 of the First Supplemental
Indenture.

 

“Remarketing Announcement”
has the meaning set forth in Section 7.01(c) of the First
Supplemental Indenture.

 

“Remarketing Announcement
Date” has the meaning set forth in Section 1.02 of the First
Supplemental Indenture.

 

“Remarketing Date(s)”
means one or more Business Days in a Three-Business Day Remarketing Period or
the Final Three-Business Day Remarketing Period, in each case selected by the
Company as a date on which the Remarketing Agent shall, in accordance with the
terms of the Remarketing Agreement, remarket the Notes.

 

“Remarketing Fee”
means the fee determined by mutual agreement between the Company and the
Remarketing Agent.

 

“Remarketing Per Note Price”
means an amount equal to the Remarketing Treasury Portfolio Purchase Price divided by the Applicable Principal Amount on any Successful
Remarketing Date during the Period for Early Remarketing.

 

15

 

“Remarketing Treasury
Portfolio” means (i) interest or principal strips of U.S.
Treasury Securities that mature on or prior to June 30, 2011 in an
aggregate amount equal to the principal amount of the Notes underlying the
Corporate Units; (ii) if the Reset Effective Date occurs prior to
March 30, 2011, with respect to the scheduled quarterly Interest Payment
Date on the Notes that would have occurred on March 30, 2011, interest or
principal strips of U.S. Treasury Securities that mature on or prior to
March 30, 2011 in an aggregate amount equal to the aggregate interest
payment that would be due on March 30, 2011 on the principal amount of the
Notes that would have been components of the Corporate Units assuming that
(A) there was no Remarketing, (B) the interest rate on the Notes had
not been reset to the Reset Rate and (C) interest on the Notes accrued
from the Reset Effective Date to, but excluding, March 30, 2011 and
(iii) with respect to the scheduled quarterly Interest Payment Date on the
Notes that would have occurred on June 30, 2011, interest or principal
strips of U.S. Treasury Securities that mature on or prior to June 30,
2011 in an aggregate amount equal to the aggregate interest payment that would
be due on June 30, 2011 on the principal amount of the Notes that would
have been components of the Corporate Units assuming that (A) there was no
Remarketing, (B) the interest rate on the Notes had not been reset to the
Reset Rate and (C) interest on the Notes accrued from the later of the
Reset Effective Date and March 30, 2011 to, but excluding, June 30,
2011.

 

“Remarketing Treasury
Portfolio Purchase Price” means the lowest aggregate ask-side price
quoted by a Primary Treasury Dealer in the City of New York to the Quotation
Agent on the third Business Day immediately preceding the Reset Effective Date
(or the Remarketing Date, if not the third Business Day immediately preceding
the Reset Effective Date) for the purchase of the Remarketing Treasury
Portfolio for settlement on the Reset Effective Date.

 

“Reorganization Event”
means any one or a combination of the following:

 

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

 

(ii)                                  any
sale, transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety;

 

(iii)                               any
statutory share exchange of the Company with another Person (other than in
connection with a merger or acquisition); or

 

(iv)                              any
liquidation, dissolution or termination of the Company other than as a result
of or after the occurrence of a Termination Event.

 

“Reset Effective Date”
has the meaning set forth in Section 1.02 of the First Supplemental
Indenture.

 

16

 

“Reset Rate” has
the meaning set forth in Section 1.02 of the First Supplemental Indenture.

 

“Responsible Officer”
means, when used with respect to the Purchase Contract Agent, any officer of
the Purchase Contract Agent within Corporate Trust Administration (or any
successor unit, department or division of the Purchase Contract Agent) located
at the Corporate Trust Office of the Purchase Contract Agent who has direct
responsibility for the administration of the Agreement and, for the purposes of
Section 7.01(b)(ii), also means, with respect to a particular corporate
trust matter, any other officer, trust officer or person performing similar
functions to whom such matter is referred because of his or her knowledge of
and familiarity of the particular subject and who shall have direct
responsibility for the administration of this Agreement.

 

“Restricted Period”
means the period commencing on, and including, the Business Day preceding any
Three-Business Day Remarketing Period and ending on, and including, the later
of the Reset Effective Date and the Business Day following the last Remarketing
Date during that Three-Business Day Remarketing Period.

 

“Rights” has the
meaning set forth in Section 5.04(a)(xii).

 

“Securities Act”
means the Securities Act of 1933 and any statute successor thereto, in each
case as amended from time to time, and the rules and regulations
promulgated thereunder.

 

“Securities Intermediary”
means the Person named as Securities Intermediary in the preamble of this
Agreement until a successor Securities Intermediary shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter “Securities Intermediary” shall mean such successor or any
subsequent successor.

 

“Security Register”
and “Security Registrar” have the respective
meanings set forth in Section 3.05.

 

“Senior Indebtedness”
means indebtedness of any kind of the Company unless the instrument under which
such indebtedness is incurred expressly provides that it is on a parity in
right of payment with or subordinate in right of payment to the Contract
Adjustment Payments.

 

“Separate
Notes” means Notes that have been released from the Pledge following
Collateral Substitution and are therefore no longer a component of Corporate
Units.

 

“Separate Notes Purchase
Price” means the amount in cash equal to the product of (i) the
Remarketing Per Note Price and (ii) the number of Separate Notes
remarketed in a Remarketing during the Period for Early Remarketing.

 

“Settlement Rate”
has the meaning set forth in Section 5.01(a).

 

17

 

“Special Event”
has the meaning set forth in Section 1.02 of the First Supplemental Indenture.

 

“Special Event Redemption”
means the redemption of the Notes pursuant to the Indenture following the
occurrence of a Special Event.

 

“Special Event Redemption
Date” means the date upon which a Special Event Redemption is
scheduled to occur pursuant to the Indenture.

 

“Special Event Treasury
Portfolio” means a portfolio of U.S. Treasury Securities (or
principal or interest strips thereof) that mature on or prior to June 30,
2011 in an aggregate amount at maturity equal to the Applicable Principal Amount
and with respect to each scheduled Interest Payment Date on the Notes that
occurs after the Special Event Redemption Date to, and including the Purchase
Contract Settlement Date, U.S. Treasury Securities (or principal or interest
strips thereof) that mature on or prior to the Business Day immediately
preceding such scheduled Interest Payment Date in an aggregate amount at
maturity equal to the aggregate interest payment (assuming no reset of the
interest rate) that would be due on the Applicable Principal Amount on such
date.

 

“Special Event Treasury
Portfolio Purchase Price” means the lowest aggregate price quoted by
a Primary Treasury Dealer in the City of New York to the Quotation Agent on the
third Business Day immediately preceding the Special Event Redemption Date for
the purchase of the Special Event Treasury Portfolio for settlement on the
Special Event Redemption Date.

 

“Spin-Off” has
the meaning set forth in Section 5.04(a)(iv).

 

“Stated Amount”
means $50.

 

“Successful Early
Remarketing” has the meaning set forth in Section 5.02(a)(i).

 

“Successful Final
Remarketing” has the meaning set forth in Section 5.02.

 

“Successful Remarketing”
means a Successful Early Remarketing or a Successful Final Remarketing.

 

“Termination Date”
means the date, if any, on which a Termination Event occurs.

 

“Termination Event”
means the occurrence of any of the following events:

 

(i)                                     at any time on or
prior to the Purchase Contract Settlement Date, a judgment, decree or order of
a court having jurisdiction over the Company shall have been entered adjudging
the Company to be bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization or liquidation of the Company under the
Bankruptcy Code or any other similar applicable Federal or

 

18

 

state law and if such judgment,
decree or order shall have been entered more than 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued
undischarged and unstayed for a period of 60 days;

 

(ii)                                  at any time on or
prior to the Purchase Contract Settlement Date, a judgment, decree or order of
a court having jurisdiction over the Company for the appointment of a receiver
or liquidator or trustee or assignee (or other similar official) in bankruptcy
or insolvency of the Company or all or substantially all of its property, or
for the winding up or liquidation of its affairs, shall have been entered and
if such decree or order shall have been entered more than 60 days prior to the
Purchase Contract Settlement Date, such decree or order shall have continued
undischarged and unstayed for a period of 60 days; or

 

(iii)                               at any time on or prior
to the Purchase Contract Settlement Date, the Company shall file a petition for
relief under the Bankruptcy Code, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization or liquidation under the Bankruptcy Code or any other
similar applicable federal or state law, or shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee (or other similar official) in bankruptcy or insolvency
of it or all or substantially all of its property, or shall make an assignment
for the benefit of creditors, or shall admit in writing its inability to pay
its debts generally as they become due.

 

“Three-Business Day
Remarketing Period” means a period occurring during the Period for
Early Remarketing, beginning on, and including, the first of three sequential
Remarketing Dates and ending on and including the third of such sequential
Remarketing Dates during which period the Notes will be remarketed in
accordance with the provisions of the Remarketing Agreement.

 

“Threshold Appreciation
Price” has the meaning set forth in Section 5.01.

 

“TIA” means the
Trust Indenture Act of 1939, as amended from time to time, or any successor
legislation.

 

“TRADES”
means the Treasury/Reserve Automated Debt Entry System maintained by the
Federal Reserve Bank of New York pursuant to the TRADES Regulations.

 

“TRADES
Regulations” means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, as amended from time to
time.  Unless otherwise defined herein,
all terms defined in the TRADES Regulations are used herein as therein defined.

 

“Trading Day”
means a day on which the Common Stock (i) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter

 

19

 

market at the close of business and
(ii) 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.  If
the Common Stock is not traded on a securities exchange or quoted in the
over-the-counter market, then “Trading Day” shall
mean Business Day.

 

“Transfer”
means (i) in the case of certificated securities in registered form,
delivery as provided in Section 8-301(a) of the UCC, indorsed to the
transferee or in blank by an effective endorsement; (ii) in the case of
Treasury Securities, registration of the transferee as the owner of such
Treasury Securities on TRADES; and (iii) in the case of security
entitlements, including, without limitation, security entitlements with respect
to Treasury Securities, a securities intermediary indicating by book-entry that
such security entitlement has been credited to the transferee’s securities
account.

 

“Treasury Portfolio”
means, as applicable, the Remarketing Treasury Portfolio or the Special Event
Treasury Portfolio.

 

“Treasury Portfolio
Purchase Price” means, as applicable, the Remarketing Treasury
Portfolio Purchase Price or the Special Event Treasury Portfolio Purchase
Price.

 

“Treasury Securities”
means zero-coupon U.S. treasury securities that mature on June 30, 2011
(CUSIP No. 912820NG8).

 

“Treasury Unit”
means, following the substitution of Treasury Securities for Pledged Applicable
Ownership Interests in Notes or Pledged Applicable Ownership Interests in the
Treasury Portfolio, as the case may be, as collateral to secure a Holder’s
obligations under the Purchase Contract, the collective rights and obligations
of a Holder of a Treasury Units Certificate in respect of such Treasury
Securities, subject to the Pledge thereof, and the related Purchase Contract.

 

“Treasury Units Certificate”
means a certificate evidencing the rights and obligations of a Holder in
respect of the number of Treasury Units specified on such certificate.

 

“UCC”
means the Uniform Commercial Code as in effect in the State of New York from
time to time.

 

“Underwriters”
means the underwriters identified in Schedule 1 to the Underwriting Agreement.

 

“Underwriting Agreement”
means the Underwriting Agreement, dated as of May 6, 2008, among the
Company and the Underwriters, relating to the issuance of Corporate Units by
the Company.

 

“Unit” means a
Corporate Unit or a Treasury Unit, as the case may be.

 

20

 

“Value”
means, with respect to any item of Collateral on any date, as to (1) Cash,
the amount thereof, (2) Treasury Securities, the aggregate principal
amount thereof at maturity and (3) Applicable Ownership Interests in the Treasury
Portfolio (as specified in clause (i) of the definition of each of
Applicable Ownership Interest in the Remarketing Treasury Portfolio and
Applicable Ownership Interest in the Special Event Treasury Portfolio), the
appropriate aggregate percentage of the aggregate principal amount at maturity
of the Treasury Portfolio.

 

“Vice President”
means any vice president, whether or not designated by a number or a word or
words added before or after the title “vice president.”

 

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

 

Section 1.02.  Compliance Certificates and
Opinions.  Except as otherwise
expressly provided by this Agreement, upon any application or request by the
Company to the Purchase Contract Agent to take any action in accordance with
any provision of this Agreement, the Company shall furnish to the Purchase
Contract Agent an Officers’ Certificate stating that all conditions precedent,
if any, provided for in this Agreement relating to the proposed action have
been complied with and, if requested by the Purchase Contract Agent, an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions precedent,
if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.

 

Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Agreement (other
than the Officers’ Certificate provided for in Section 10.05) shall include:

 

(i)                                     a
statement that each individual signing such certificate or opinion has read
such covenant or condition and the definitions herein relating thereto;

 

(ii)                                  a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

 

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

 

21

 

(iv)                              a
statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.

 

Section 1.03.  Form of Documents
Delivered to Purchase Contract Agent.  In
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents. Any certificate or
opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by,
counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which its certificate or opinion is based are erroneous.  Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.

 

Where any Person is required to make, give or
execute two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Agreement, they may, but need not, be
consolidated and form one instrument.

 

Section 1.04.  Acts of Holders; Record
Dates.  (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Purchase Contract Agent
and, where it is hereby expressly required, to the Company.  Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of the Holders signing such
instrument or instruments.  Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and (subject to Section 7.01)
conclusive in favor of the Purchase Contract Agent and the Company, if made in
the manner provided in this Section.

 

(b)                                 The
fact and date of the execution by any Person of any such instrument or writing
may be proved in any manner that the Purchase Contract Agent deems sufficient.

 

(c)                                  The
ownership of Units shall be proved by the Security Register.

 

(d)                                 Any
request, demand, authorization, direction, notice, consent, waiver or other Act
of the Holder of any Unit shall bind every future Holder of the same Unit and
the Holder of every Certificate evidencing such Unit  issued upon the registration of transfer

 

22

 

thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Purchase Contract Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Certificate.

 

(e)                                  The
Company may set any date as a record date for the purpose of determining the
Holders of Outstanding Units entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Agreement to be given, made or taken by
Holders.  If any record date is set
pursuant to this paragraph, the Holders of the Outstanding Corporate Units and
the Outstanding Treasury Units, as the case may be, on such record date, and no
other Holders, shall be entitled to take the relevant action with respect to
the Corporate Units or the Treasury Units, as the case may be, whether or not
such Holders remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken prior to or on the
applicable Expiration Date by Holders of the requisite number of Outstanding
Units on such record date.  Nothing
contained in this paragraph shall be construed to prevent the Company from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and be of no
effect), and nothing contained in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite number of Outstanding
Units on the date such action is taken. 
Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to
the Purchase Contract Agent in writing and to each Holder of Units in the
manner set forth in Section 1.06.

 

With respect to any record date set pursuant
to this Section 1.04(d), the Company may designate any date as the “Expiration Date” and from time to time may change the
Expiration Date to any earlier or later day; provided that
no such change shall be effective unless notice of the proposed new Expiration
Date is given to the Purchase Contract Agent in writing, and to each Holder of
Units in the manner set forth in Section 1.06, prior to or on the existing
Expiration Date. If an Expiration Date is not designated with respect to any
record date set pursuant to this Section 1.04, the Company shall be deemed
to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. 
Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.

 

Section 1.05.  Notices.  All notices, requests, consents
and other communications provided for herein (including, without limitation,
any modifications of, or waivers or consents under, this Agreement) shall be
given or made in writing (including, without limitation, by telecopy) delivered
to the intended recipient at the “Address for
Notices” specified below its name on the signature pages hereof
or, as to any party, at such other address as shall be designated by such party
in a notice to the other parties. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have

 

23

 

been duly
given when transmitted by telecopier or personally delivered or, in the case of
a mailed notice, upon receipt, in each case given or addressed as aforesaid.

 

The Purchase Contract Agent shall send to the
Indenture Trustee at the following address a copy of any notices in the form of
Exhibits C, D, E or F it sends or receives:

 

The Bank of New York

101 Barclay Street, Floor 8W

New York, New York 10286

Attention: 
Corporate Trust Administration

Telephone: 
(212) 815-5995

Facsimile: 
(212) 815-5704

 

Section 1.06.  Notice to Holders; Waiver.

 

Where this Agreement provides for notice to
Holders of any event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at its address as it appears in
the Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice.  In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.  Where
this Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed
with the Purchase Contract Agent, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

 

In case by reason of the suspension of
regular mail service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be made with the
approval of the Purchase Contract Agent shall constitute a sufficient
notification for every purpose hereunder.

 

Section 1.07.  Effect of Headings and Table
of Contents.  The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

 

Section 1.08.  Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent
and the Securities Intermediary, and the Holders from time to time of the
Units, by their acceptance of the same, shall be deemed to have agreed to be
bound by the provisions hereof and to have ratified the agreements of, and the
grant of the Pledge hereunder by, the Purchase Contract Agent.

 

Section 1.09.  Separability Clause.  In case any provision in this
Agreement or in the Units shall be invalid, illegal or unenforceable, the
validity, legality and enforceability

 

24

 

of the remaining provisions hereof and thereof shall not in any way be
affected or impaired thereby.

 

Section 1.10.  Benefits of Agreement.  Nothing contained in this
Agreement or in the Units, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder and, to the extent
provided hereby, the Holders, any benefits or any legal or equitable right,
remedy or claim under this Agreement. The Holders from time to time shall be
beneficiaries of this Agreement and shall be bound by all of the terms and
conditions hereof and of the Units evidenced by their Certificates by their
acceptance of delivery of such Certificates.

 

Section 1.11.  Governing Law.  THIS AGREEMENT AND THE UNITS SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE
EXTENT THAT THE APPLICATION OF A LAW OF A DIFFERENT JURISDICTION WOULD GOVERN
AS A RESULT.  The
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Holders from time to time of the Units, acting through the Purchase
Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City for the
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby. The Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Holders from time to time
of the Units, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.

 

Section 1.12.  Legal Holidays.  In any case where any Interest
Payment Date shall not be a Business Day (notwithstanding any other provision
of this Agreement or the Units), Contract Adjustment Payments or other
distributions shall not be paid on such date, but Contract Adjustment Payments
and Deferred Contract Adjustment Payments or such other distributions shall be
paid on the next succeeding Business Day, unless such Business Day is in the
next succeeding calendar year, in which case such Contract Adjustment Payments
or other distributions shall be paid on the immediately preceding Business Day,
in each case with the same force and effect as if made on such scheduled
Interest Payment Date; provided that
no interest shall accrue or be payable by the Company or to any Holder in
respect of such delay.

 

In any case where the Purchase Contract
Settlement Date or any Early Settlement Date or Fundamental Change Early
Settlement Date shall not be a Business Day (notwithstanding any other
provision of this Agreement or the Units), Purchase Contracts shall not be performed
and Early Settlement and Fundamental Change Early Settlement shall not be
effected on such date, but Purchase Contracts shall be performed or Early 

 

25

 

Settlement or Fundamental Change Early Settlement
shall be effected, as applicable, on the next succeeding Business Day with the
same force and effect as if made on such Purchase Contract Settlement Date,
Early Settlement Date or Fundamental Change Early Settlement Date, as
applicable.

 

Section 1.13.  Counterparts.  This Agreement may be executed in
any number of counterparts by the parties hereto, each of which, when so
executed and delivered, shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument.

 

Section 1.14.  Inspection of Agreement.  A copy of this Agreement shall be
available upon prior written request at all reasonable times during normal
business hours at the Corporate Trust Office for inspection by any Holder or
Beneficial Owner.

 

Section 1.15.  Appointment of Financial
Institution as Agent for the Company.  The
Company may appoint a financial institution (which may be the Collateral Agent)
to act as its agent in performing its obligations and in accepting and
enforcing performance of the obligations of the Purchase Contract Agent and the
Holders, under this Agreement and the Purchase Contracts, by giving notice of
such appointment in the manner provided in Section 1.05 hereof.  Any such appointment shall not relieve the
Company in any way from its obligations hereunder.

 

Section 1.16.  No Waiver.  No failure on the part of the
Company, the Purchase Contract Agent, the Collateral Agent, the Custodial
Agent, the Securities Intermediary or any of their respective agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary or any of their respective agents
of any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.  The remedies herein are cumulative and are
not exclusive of any remedies provided by law.

 

Section 1.17.  Tax Treatment.  The
Company agrees, and by acceptance of a Corporate Unit, each Holder of a
Corporate Unit will be deemed to have agreed, for all tax purposes (i) to treat
the acquisition of a Corporate Unit as the acquisition of the ownership
interest in the Note and the Purchase Contract constituting the Corporate Unit,
(ii) to treat the Note as indebtedness of the Company that is subject to the
rules applicable to contingent payment debt instruments under Treas. Reg. Sec. 1.1275-4
for U.S. federal, state and local income and franchise tax purposes and (iii)
to treat the Note and the Purchase Contracts as separate instruments. 

 

Section 1.18.  Waiver Of Jury Trial.  EACH OF THE COMPANY, THE PURCHASE
CONTRACT AGENT, THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES
INTERMEDIARY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE UNITS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

26

 

ARTICLE 2

CERTIFICATE FORMS

 

Section 2.01.  Forms of Certificates
Generally.  The Certificates
(including the form of Purchase Contract forming part of each Unit evidenced
thereby) shall be in substantially the form set forth in Exhibit A hereto
(in the case of Corporate Units Certificates) or Exhibit B hereto (in the
case of Treasury Units Certificates), with such letters, numbers or other marks
of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Units are listed or any Depositary therefor,
or as may, consistently herewith, be determined by the officers of the Company
executing such Certificates, as evidenced by their execution of the
Certificates.

 

The definitive Certificates shall be produced
in any manner as determined by the officers of the Company executing the Units
evidenced by such Certificates, consistent with the provisions of this
Agreement, as evidenced by their execution thereof.

 

Every Global Certificate authenticated,
executed on behalf of the Holders and delivered hereunder shall bear a legend
substantially in the form set forth in Exhibit A and Exhibit B for a
Global Certificate.

 

Section 2.02.  Form of Purchase Contract
Agent’s Certificate of Authentication.  The
form of the Purchase Contract Agent’s certificate of authentication of the
Units shall be substantially in the form set forth on the form of the
applicable Certificates.

 

ARTICLE 3

THE UNITS

 

Section 3.01.  Amount; Form and
Denominations.  The aggregate
number of Units evidenced by Certificates authenticated, executed on behalf of
the Holders and delivered hereunder is limited to 20,000,000 (or 23,000,000 if
the Underwriters exercise their over-allotment option to purchase additional
Units in full as set forth in the Underwriting Agreement), except for
Certificates authenticated, executed and delivered upon registration of
transfer of, in exchange for, or in lieu of, other Certificates pursuant to Section 3.04,
Section 3.05, Section 3.10, Section 3.13, Section 3.14 or Section 8.05.

 

The Certificates shall be issuable only in
registered form and only in denominations of a single Corporate Unit or
Treasury Unit and any integral multiple thereof.

 

Section 3.02.  Rights and Obligations
Evidenced by the Certificates.  Each
Corporate Units Certificate shall evidence the number of Corporate Units
specified therein, with each such Corporate Unit representing (i) the
ownership by the Holder thereof of an Applicable Ownership Interest in Notes or
an Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
subject to the Pledge of such Applicable Ownership Interest in Notes or
Applicable Ownership Interest in the Treasury Portfolio (as specified in clause
(i) of each of definitions of Applicable Ownership Interest in the
Remarketing Treasury Portfolio or the Applicable Ownership Interest in the
Special Event Treasury Portfolio, as the case may be), as the case may be, by
such Holder pursuant to this Agreement, and (ii) the rights and
obligations of the Holder thereof and the Company under one Purchase
Contract.  The Purchase Contract Agent is
hereby authorized, as attorney-in-fact for, and on behalf of, the Holder of
each Corporate Unit, to pledge, pursuant to Article 11 hereof, the
Applicable Ownership Interests in Notes or the Applicable Ownership Interests
in the Treasury Portfolio (as specified 

 

27

 

in clause (i) of
the definitions of each of Applicable Ownership Interest in the Remarketing
Treasury Portfolio or Applicable Ownership Interest in the Special Event
Treasury Portfolio, as the case may be) forming a part of such Corporate Unit,
to the Collateral Agent for the benefit of the Company, and to grant to the
Collateral Agent, for the benefit of the Company, a security interest in the
right, title and interest of such Holder in such Applicable Ownership Interests
in the Notes and or Applicable Ownership Interests in the Treasury Portfolio
(as specified in clause (i) of the definitions of each of Applicable
Ownership Interest in the Remarketing Treasury Portfolio or Applicable
Ownership Interest in the Special Event Treasury Portfolio, as the case may be)
to secure the obligation of the Holder under each Purchase Contract to purchase
shares of Common Stock.  To effect such
Pledge and grant such security interest, the Purchase Contract Agent, on behalf
of the Holders of Corporate Units has, on the date hereof, delivered to the
Collateral Agent the Notes underlying the Applicable Ownership Interests in
Notes.

 

Upon the formation of a Treasury Unit
pursuant to Section 3.13, each Treasury Unit Certificate shall evidence
the number of Treasury Units specified therein, with each such Treasury Unit
representing (i) the ownership by the Holder thereof of a 1/20, or 5%,
undivided beneficial interest in a Treasury Security with a principal amount
equal to $1,000, subject to the Pledge of such interest by such Holder pursuant
to this Agreement, and (ii) the rights and obligations of the Holder
thereof and the Company under one Purchase Contract.  The Purchase Contract Agent is hereby
authorized, as attorney-in-fact for, and on behalf of, the Holder of each
Treasury Unit, to pledge, pursuant to Article 11 hereof, such Holder’s
interest in the Treasury Security forming a part of such Treasury Unit to the
Collateral Agent, for the benefit of the Company, and to grant to the
Collateral Agent, for the benefit of the Company, a security interest in the
right, title and interest of such Holder in such Treasury Security to secure
the obligation of the Holder under each Purchase Contract to purchase shares of
Common Stock.

 

Prior to the purchase of shares of Common
Stock under each Purchase Contract, such Purchase Contract shall not entitle
the Holder of a Unit to any of the rights of a holder of shares of Common
Stock, including, without limitation, the right to vote or receive any
dividends or other payments or to consent or to receive notice as a shareholder
in respect of the meetings of shareholders or for the election of directors of
the Company or for any other matter, or any other rights whatsoever as a
shareholder of the Company.

 

Section 3.03.  Execution, Authentication,
Delivery and Dating.  Subject
to the provisions of Section 3.13 and Section 3.14 hereof, upon the
execution and delivery of this 

 

28

 

Agreement, and
at any time and from time to time thereafter, the Company may deliver
Certificates executed by the Company to the Purchase Contract Agent for
authentication, execution on behalf of the Holders and delivery, together with
its Issuer Order for authentication of such Certificates, and the Purchase
Contract Agent in accordance with such Issuer Order shall authenticate, execute
on behalf of the Holders and deliver such Certificates.

 

The Certificates shall be executed on behalf
of the Company by its Chairman of the Board of Directors, a Vice Chairman, its
Chief Executive Officer, its Chief Financial Officer, its President, its
Treasurer or a Vice President.  The
signature of any of these officers on the Certificates may be manual or
facsimile.

 

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

 

No Purchase Contract evidenced by a
Certificate shall be valid until such Certificate has been executed on behalf
of the Holder by the manual signature of an authorized officer of the Purchase
Contract Agent, as such Holder’s attorney-in-fact.  Such signature by an authorized officer of
the Purchase Contract Agent shall be conclusive evidence that the Holder of
such Certificate has entered into the Purchase Contract or Purchase Contracts
evidenced by such Certificate.

 

Each Certificate shall be dated the date of
its authentication.

 

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

 

Section 3.04.  Temporary Certificates.  Pending the preparation of
definitive Certificates, the Company may execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit A
or Exhibit B hereto, as the case may be, with such letters, numbers or
other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by the rules of
any securities exchange on which the Corporate Units or Treasury Units, as the
case may be, are listed, or as may, consistently herewith, be determined by the
officers of the Company executing such Certificates, as evidenced by their
execution of the Certificates.

 

29

 

If temporary Certificates are issued, the
Company shall cause definitive Certificates to be prepared without unreasonable
delay.  After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder.  Upon surrender for cancellation
of any one or more temporary Certificates, the Company shall execute and deliver
to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of like tenor and denominations
and evidencing a like number of Units as the temporary Certificate or
Certificates so surrendered.  Until so
exchanged, the temporary Certificates shall in all respects evidence the same
benefits and the same obligations with respect to the Units evidenced thereby
as definitive Certificates.

 

Section 3.05.  Registration; Registration of
Transfer and Exchange.  The
Purchase Contract Agent shall keep at the Corporate Trust Office a register
(the “Security Register”) in which, subject
to such reasonable regulations as it may prescribe, the Purchase Contract Agent
shall provide for the registration of Certificates and of transfers of
Certificates (the Purchase Contract Agent, in such capacity, the “Security Registrar”). 
The Security Registrar shall record separately the registration and transfer
of the Certificates evidencing Corporate Units and Treasury Units.

 

Upon surrender for registration of transfer
of any Certificate at the Corporate Trust Office, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the designated transferee or transferees,
and deliver, in the name of the designated transferee or transferees, one or
more new Certificates of any authorized denominations, of like tenor, and
evidencing a like number of Corporate Units or Treasury Units, as the case may
be.

 

At the option of the Holder, Certificates may
be exchanged for other Certificates, of any authorized denominations and
evidencing a like number of Corporate Units or Treasury Units, as the case may
be, upon surrender of the Certificates to be exchanged at the Corporate Trust
Office.  Whenever any Certificates are so
surrendered for exchange, the Company shall execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the Holder, and deliver the Certificates which the Holder making the
exchange is entitled to receive.

 

All Certificates issued upon any registration
of transfer or exchange of a Certificate shall evidence the ownership of the
same number of Corporate Units or Treasury Units, as the case may be, and be
entitled to the same benefits and subject to the same obligations under this
Agreement as the Corporate Units or Treasury Units, as the case may be, evidenced
by the Certificate surrendered upon such registration of transfer or exchange.

 

Every Certificate presented or surrendered
for registration of transfer or exchange shall (if so required by the Purchase
Contract Agent) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Purchase 

 

30

 

Contract Agent duly executed, by the Holder
thereof or its attorney duly authorized in writing.

 

No service charge shall be made for any
registration of transfer or exchange of a Certificate, but the Company and the
Purchase Contract Agent may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Certificates, other than any
exchanges pursuant to Section 3.04, Section 3.06 and Section 8.05
not involving any transfer.

 

Notwithstanding the foregoing, the Company
shall not be obligated to execute and deliver to the Purchase Contract Agent,
and the Purchase Contract Agent shall not be obligated to authenticate, execute
on behalf of the Holder and deliver any Certificate in exchange for any other
Certificate presented or surrendered for registration of transfer or for
exchange on or after the Business Day immediately preceding the earliest to
occur of any Early Settlement Date with respect to such Certificate, any
Fundamental Change Early Settlement Date with respect to such Certificate, the
Purchase Contract Settlement Date or the Termination Date.  In lieu of delivery of a new Certificate,
upon satisfaction of the applicable conditions specified above in this Section and
receipt of appropriate registration or transfer instructions from such Holder,
the Purchase Contract Agent shall:

 

(i)                                     if the Purchase
Contract Settlement Date, an Early Settlement Date or a Fundamental Change
Settlement Date with respect to such other Certificate has occurred, deliver
the shares of Common Stock issuable in respect of the Purchase Contracts
forming a part of the Units evidenced by such other Certificate; or

 

(ii)                                  if a Termination
Event, Early Settlement or Fundamental Change Early Settlement shall have
occurred prior to the Purchase Contract Settlement Date, or a Cash Settlement
shall have occurred, transfer the Notes, the Treasury Securities, or the
appropriate Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, underlying such Certificate, in each case subject to the
applicable conditions and in accordance with the applicable provisions of Section 3.15
and Article 5 hereof.

 

Section 3.06.  Book-Entry Interests.  The Certificates will be issued in
the form of one or more fully registered Global Certificates, to be delivered
to the Depositary or its custodian by, or on behalf of, the Company.  The Company hereby designates DTC as the
initial Depositary.  Such Global
Certificates shall initially be registered on the Security Register in the name
of Cede & Co., the nominee of the Depositary, and no Beneficial Owner
will receive a definitive Certificate representing such Beneficial Owner’s
interest in such Global Certificate, except as provided in Section 3.09.  The Purchase Contract Agent shall enter into
an agreement with the Depositary if so requested by the Company.  Following the issuance of such Global
Certificates and unless and until definitive, and fully registered Certificates
have been issued to Beneficial Owners pursuant to Section 3.09:

 

31

 

(i)                                     the
provisions of this Section 3.06 shall be in full force and effect;

 

(ii)                                  the
Company shall be entitled to deal with the Depositary for all purposes of this
Agreement (including, without limitation, making Contract Adjustment Payments
and receiving approvals, votes or consents hereunder) as the Holder of the
Units and the sole holder of the Global Certificates and shall have no
obligation to the Beneficial Owners; provided that a
Beneficial Owner may directly enforce against the Company, without any consent,
proxy, waiver or involvement of the Depositary of any kind, such Beneficial
Owner’s right to receive a definitive Certificate representing the Units
beneficially owned by such Beneficial Owner, as set forth in Section 3.09;

 

(iii)                               to
the extent that the provisions of this Section 3.06 conflict with any
other provisions of this Agreement, the provisions of this Section 3.06
shall control; and

 

(iv)                              except
as set forth in the proviso of clause (ii) of this Section 3.06, the
rights of the Beneficial Owners shall be exercised only through the Depositary
and shall be limited to those established by law and agreements between such
Beneficial Owners and the Depositary or the Depositary Participants.  The Depositary will make book-entry transfers
among Depositary Participants and receive and transmit payments of Contract
Adjustment Payments to such Depositary Participants.

 

Transfers of securities
evidenced by Global Certificates shall be made through the facilities of the
Depositary, and any cancellation of, or increase or decrease in the number of,
such securities (including the creation of Treasury Units and the recreation of
Corporate Units pursuant to Section 3.13 and Section 3.14
respectively) shall be accomplished by making appropriate annotations on the
Schedule of Increases and Decreases set forth in such Global Certificate.

 

Section 3.07.  Notices to Holders.  Whenever a notice or other
communication to the Holders is required to be given under this Agreement, the
Company or the Company’s agent shall give such notices and communications to
the Holders and, with respect to any Units registered in the name of the
Depositary or the nominee of the Depositary, the Company or the Company’s agent
shall, except as set forth herein, have no obligations to the Beneficial
Owners.

 

Section 3.08.  Appointment of Successor
Depositary . If the Depositary elects to discontinue its services as
securities depositary with respect to the Units, the Company may, in its sole
discretion, appoint a successor Depositary with respect to the Units.

 

32

 

Section 3.09.  Definitive Certificates.

 

If:

 

(i)                                     the
Depositary notifies the Company that it is unwilling or unable to continue its
services as securities depositary with respect to the Units and no successor
Depositary has been appointed pursuant to Section 3.08 within 90 days
after such notice; or

 

(ii)                                  the
Depositary ceases to be a “clearing agency” registered under Section 17A
of the Exchange Act when the Depositary is required to be so registered to act
as the Depositary and so notifies the Company, and no successor Depositary has
been appointed pursuant to Section 3.08 within 90 days after such notice;
or

 

(iii)                               to
the extent permitted by the Depositary, the Company determines at any time that
the Units shall no longer be represented by Global Certificates and shall
inform such Depositary of such determination and participants in such
Depositary elect to withdraw their beneficial interests in the Units from such
Depositary, following notification by the Depositary of their right to do so;

 

then (x) definitive
Certificates shall be prepared by the Company with respect to such Units and
delivered to the Purchase Contract Agent and (y) upon surrender of the
Global Certificates representing the Units by the Depositary, accompanied by
registration instructions, the Company shall cause definitive Certificates to
be delivered to Beneficial Owners in accordance with instructions provided by
the Depositary.  The Company and the
Purchase Contract Agent shall not be liable for any delay in delivery of such
instructions and may conclusively rely on and shall be authorized and protected
in relying on, such instructions.  Each
definitive Certificate so delivered shall evidence Units of the same kind and
tenor as the Global Certificate so surrendered in respect thereof.

 

Section 3.10.  Mutilated, Destroyed, Lost and
Stolen Certificates.  If any
mutilated Certificate is surrendered to the Purchase Contract Agent, the
Company shall execute and deliver to the Purchase Contract Agent, and the
Purchase Contract Agent shall authenticate, execute on behalf of the Holder,
and deliver in exchange therefor, a new Certificate, evidencing the same number
of Corporate Units or Treasury Units, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.

 

If there shall be delivered to the Company
and the Purchase Contract Agent (i) evidence to their satisfaction of the
destruction, loss or theft of any Certificate, and (ii) such security or
indemnity as may be required by them to hold each of them and any agent of any
of them harmless, then, in the absence of notice to the Company or the Purchase
Contract Agent that such Certificate has been acquired by a protected
purchaser, the Company shall execute and deliver to the Purchase Contract
Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of
the Holder, and deliver to the Holder, in lieu of any such destroyed, lost or
stolen Certificate, a new Certificate, evidencing the same number of Corporate
Units or Treasury Units, as the case may be, and bearing a Certificate number
not contemporaneously outstanding.

 

33

 

Notwithstanding the foregoing, the Company
shall not be obligated to execute and deliver to the Purchase Contract Agent,
and the Purchase Contract Agent shall not be obligated to authenticate, execute
on behalf of the Holder, and deliver to the Holder, with respect to such lost,
stolen, destroyed or mutilated Certificate, a new Certificate, on or after the
Business Day immediately preceding the earliest of any Early Settlement Date,
any Fundamental Change Early Settlement Date, the Purchase Contract Settlement
Date or the Termination Date.  In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration of
transfer instructions from such Holder, the Purchase Contract Agent shall:

 

(i)                                     if
the Purchase Contract Settlement Date (including upon any Cash Settlement), an
Early Settlement Date or a Fundamental Change Early Settlement Date with
respect to such lost, stolen, destroyed or mutilated Certificate has occurred,
deliver the shares of Common Stock issuable in respect of the Purchase
Contracts forming a part of the Units evidenced by such Certificate; or

 

(ii)                                  if
a Fundamental Change Early Settlement or an Early Settlement with respect to
such lost, stolen, destroyed or mutilated Certificate or if a Termination Event
shall have occurred prior to the Purchase Contract Settlement Date or a
Fundamental Change Settlement shall have occurred, transfer the Notes, the
Treasury Securities or the Applicable Ownership Interests in the Treasury
Portfolio, as the case may be, underlying such Certificate, in each case
subject to the applicable conditions and in accordance with the applicable
provisions of Section 3.15 and Article 5 hereof.

 

Upon the issuance of any new Certificate
under this Section, the Company and the Purchase Contract Agent may require the
payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other fees
and expenses (including, without limitation, the fees and expenses of the
Purchase Contract Agent) connected therewith.

 

Every new Certificate issued pursuant to this
Section in lieu of any lost, stolen, destroyed or mutilated Certificate
shall constitute an original additional contractual obligation of the Company
and of the Holder in respect of the Units evidenced thereby, whether or not the
lost, stolen, destroyed or mutilated Certificate (and the Units evidenced
thereby) shall be at any time enforceable by anyone, and shall be entitled to
all the benefits and be subject to all the obligations of this Agreement
equally and proportionately with any and all other Certificates delivered
hereunder.

 

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

 

Section 3.11.  Persons Deemed Owners.  Prior to due presentment of a
Certificate for registration of transfer, the Company and the Purchase Contract
Agent, and any agent of the Company or the Purchase Contract Agent, may treat
the Person in whose name such

 

34

 

Certificate is registered as the owner of the Units
evidenced thereby for purposes of (subject to any applicable record date) any
payment or distribution with respect to the Applicable Ownership Interests in
Notes or of the Applicable Ownership Interests of the Treasury Portfolio (as
specified in clause (ii) of the definitions of each of Applicable
Ownership Interests in the Remarketing Treasury Portfolio and Applicable
Ownership Interests in the Special Event Treasury Portfolio) (if any), as
applicable, payment of Contract Adjustment Payments and performance of the
Purchase Contracts and for all other purposes whatsoever in connection with
such Units, whether or not such payment, distribution, or performance shall be
overdue and notwithstanding any notice to the contrary, and neither the Company
nor the Purchase Contract Agent, nor any agent of the Company or the Purchase
Contract Agent, shall be affected by notice to the contrary.

 

Notwithstanding the
foregoing, with respect to any Global Certificate, nothing contained herein
shall prevent the Company, the Purchase Contract Agent or any agent of the
Company or the Purchase Contract Agent, from giving effect to any written
certification, proxy or other authorization furnished by the Depositary (or its
nominee), as a Holder, with respect to such Global Certificate, or impair, as
between such Depositary and the related Beneficial Owner, the operation of
customary practices governing the exercise of rights of the Depositary (or its
nominee) as Holder of such Global Certificate. 
None of the Company, the Purchase Contract Agent or any agent of the
Company or the Purchase Contract Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of a Global Certificate or maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

 

Section 3.12. 
Cancellation.  All
Certificates surrendered for delivery of shares of Common Stock on or after the
Purchase Contract Settlement Date or in connection with an Early Settlement or
a Fundamental Change Early Settlement or for delivery of the Notes underlying
the appropriate Applicable Ownership Interests in Notes, the Applicable
Ownership Interests in the Treasury Portfolio or Treasury Securities, as the
case may be, after the occurrence of a Termination Event or pursuant to a Cash
Settlement, an Early Settlement or a Fundamental Change Early Settlement, or
upon the registration of transfer or exchange of a Unit, or a Collateral
Substitution or the recreation of Corporate Units shall, if surrendered to any
Person other than the Purchase Contract Agent, be delivered to the Purchase
Contract Agent along with appropriate written instructions regarding the cancellation
thereof and, if not already cancelled, shall be promptly cancelled by it.  The Company may at any time deliver to the
Purchase Contract Agent for cancellation any Certificates previously
authenticated, executed and delivered hereunder that the Company may have
acquired in any manner whatsoever, and all Certificates so delivered shall,
upon an Issuer Order, be promptly cancelled by the Purchase Contract
Agent.  No Certificates shall be
authenticated, executed on behalf of the Holder and delivered in lieu of or in
exchange for any Certificates cancelled as provided in this Section 3.12,
except as expressly permitted by this Agreement.  All cancelled Certificates held by the
Purchase Contract Agent shall be disposed of in accordance with its customary practices.

 

35

 

If the Company or any
Affiliate of the Company shall acquire any Certificate, such acquisition shall
not operate as a cancellation of such Certificate unless and until such
Certificate is delivered to the Purchase Contract Agent cancelled or for
cancellation.

 

Section 3.13.  Creation of
Treasury Units by Substitution of Treasury Securities.  (a) Unless Applicable
Ownership Interests in the Treasury Portfolio have replaced Applicable Ownership
Interests in Notes as a component of the Corporate Units, and subject to the
conditions set forth in this Agreement, a Holder of Corporate Units may, at any
time from and after the date of this Agreement and on or prior to the close of
business on the seventh Business Day immediately preceding the Purchase
Contract Settlement Date, effect a Collateral Substitution and separate the
Notes underlying the Applicable Ownership Interests in Notes in respect of such
Holder’s Corporate Units by substituting for such Applicable Ownership
Interests in Notes, Treasury Securities in an aggregate principal amount at
maturity equal to the aggregate principal amount of such Notes underlying the
Applicable Ownership Interests in Notes; provided
that (i) Holders may make Collateral Substitutions only in
integral multiples of 20 Corporate Units and (ii) no  Collateral Substitution shall be effected
during a Restricted Period.  To effect
such substitution, the Holder must:

 

(1)                                  Transfer to the Securities Intermediary,
for credit to the Collateral Account, Treasury Securities or security
entitlements with respect thereto having a Value equal to the aggregate
principal amount of Notes underlying the Pledged Applicable Ownership Interests
in Notes for which such Collateral Substitution is made; and

 

(2)                                  Transfer the related Corporate Units to
the Purchase Contract Agent accompanied by a notice to the Purchase Contract
Agent, substantially in the form of Exhibit C hereto, whereupon the
Purchase Contract Agent shall promptly provide an instruction to such effect to
the Collateral Agent, substantially in the form of Exhibit G hereto.

 

Upon confirmation that
the Treasury Securities described in clause (1) above or security
entitlements with respect thereto have been credited to the Collateral Account
and receipt of the instruction to the Collateral Agent described in clause (2) above,
the Collateral Agent shall release such Applicable Ownership Interest in Notes
from the Pledge and instruct the Securities Intermediary by a notice, substantially
in the form of Exhibit H hereto, to Transfer such Notes underlying the
Applicable Ownership Interests in Notes to the Purchase Contract Agent for
distribution to such Holder, free and clear of the Pledge created hereby.

 

Upon credit to the
Collateral Account of Treasury Securities or security entitlements with respect
thereto delivered by a Holder of Corporate Units and receipt of the related
instruction from the Collateral Agent, the Securities Intermediary shall
promptly Transfer the appropriate Notes underlying the appropriate Pledged
Applicable Ownership Interest in Notes to the Purchase Contract Agent for
distribution to such Holder, free and clear of the Pledge created hereby.

 

36

 

Upon receipt of the Notes
underlying such Applicable Ownership Interest in Notes, the Purchase Contract
Agent shall promptly:

 

(i)    cancel the related Corporate Units;

 

(ii)   Transfer the Notes to the Holder; and

 

(iii)  deliver Treasury Units in book-entry form, or
if applicable, authenticate, execute on behalf of such Holder and deliver
Treasury Units in the form of a Treasury Units Certificate executed by the
Company in accordance with Section 3.03 evidencing the same number of
Purchase Contracts as were evidenced by the cancelled Corporate Units.

 

Holders who elect to
separate the Notes from the related Purchase Contracts by substituting Treasury
Securities for such Applicable Ownership Interest in Notes shall be responsible
for any fees or expenses, (including, without limitation, fees and expenses
payable to the Collateral Agent), in respect of the substitution, and neither
the Company nor the Purchase Contract Agent shall be responsible for any such
fees or expenses.

 

(b)        Notwithstanding clause (a) of this Section 3.13,
if Applicable Ownership Interests in the Treasury Portfolio have replaced the
Notes underlying Applicable Ownership Interests in Notes as a component of
Corporate Units and subject to the conditions set forth in this Agreement, a
Holder may, at any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, substitute Treasury Securities
for the Pledged Applicable Ownership Interests in the Treasury Portfolio
underlying such Corporate Units, but only in integral multiples of 10,000
Corporate Units or such other number of Corporate Units as may be determined by
the Remarketing Agent upon a Successful Remarketing of the Notes if the Reset
Effective Date is not an Interest Payment Date. 
In such instance, the Holder shall Transfer Treasury Securities having a
Value equal to aggregate Value of the Pledged Applicable Ownership Interests in
the Treasury Portfolio for which substitution is being made to the Securities
Intermediary, for credit to the Collateral Account, and the Purchase Contract
Agent, Collateral Agent and Securities Intermediary shall (i) effect a
Collateral Substitution for the appropriate Pledged Applicable Ownership
Interests in the Treasury Portfolio in the manner set forth in clause (a) above
(except that the relevant request by the Holder and instruction by the Purchase
Contract Agent shall relate to the release of the relevant Pledged Applicable
Ownership Interests in the Treasury Portfolio) and (ii) release any
applicable portion of the interest payment the Company made on a Reset
Effective Date (if not a Quarterly Interest Payment Date) under the First
Supplemental Indenture, if such cash payment has not already been paid to
Holders of the Corporate Units.

 

(c)        In the event a Holder making a Collateral
Substitution pursuant to this Section 3.13 fails to effect a book-entry
transfer of the Corporate Units or fails to deliver Corporate Units
Certificates to the Purchase Contract Agent after depositing Treasury
Securities with the Securities Intermediary, any distributions on the Notes
underlying the Applicable Ownership Interests in Notes, or with respect to the
Applicable Ownership

 

37

 

Interests in the Treasury Portfolio, in each case
constituting a part of such Corporate Units, shall be held in the name of the
Purchase Contract Agent or its nominee in trust for the benefit of such Holder,
until such Corporate Units are so transferred or the Corporate Units
Certificate is so delivered, as the case may be, or such Holder provides
evidence satisfactory to the Company and the Purchase Contract Agent that such
Corporate Units Certificate has been destroyed, lost or stolen, together with
any indemnity that may be required by the Purchase Contract Agent and the
Company.

 

(d)        Except as described in Section 5.02
or in this Section 3.13 or in connection with a Cash Settlement, an Early
Settlement, a Fundamental Change Early Settlement or a Termination Event, for
so long as the Purchase Contract underlying a Corporate Unit remains in effect,
such Corporate Units shall not be separable into its constituent parts, and the
rights and obligations of the Holder in respect of the Applicable Ownership
Interests in Notes or Applicable Ownership Interests in the Treasury Portfolio,
as the case may be, and the Purchase Contract comprising such Corporate Units
may be acquired, and may be transferred and exchanged, only as a Corporate
Unit.

 

Section 3.14.  Recreation
of Corporate Units.  (a) Unless
Applicable Ownership Interests in the Treasury Portfolio have replaced
Applicable Ownership Interests in Notes as a component of the Corporate Units,
and subject to the conditions set forth in this Agreement, each Holder of
Treasury Units may recreate Corporate Units at any time on or prior to the
close of business on the seventh Business Day immediately preceding the
Purchase Contract Settlement Date; provided that
(i) Holders of Treasury Units may only recreate Corporate Units in
integral multiples of 20 Treasury Units and (ii) no Collateral
Substitution shall be effected during a Restricted Period.  To recreate Corporate Units, the Holder must:

 

(1)                                  Transfer to the Collateral Agent for
credit to the Collateral Account Notes or security entitlements with respect
thereto having an aggregate principal amount equal to the Value of the Treasury
Securities to be released; and

 

(2)                                  Transfer the related Treasury Units to
the Purchase Contract Agent accompanied by a notice to the Purchase Contract
Agent, substantially in the form of Exhibit C hereto, whereupon the
Purchase Contract Agent shall promptly provide an instruction to such effect to
the Collateral Agent, substantially in the form of Exhibit I hereto.

 

Upon confirmation that
the Notes described in clause (1) above or security entitlements with
respect thereto have been credited to the Collateral Account and receipt of the
instruction from the Purchase Contract Agent described in clause (2) above,
the Collateral Agent shall release such Pledged Treasury Securities from the
Pledge and shall instruct the Securities Intermediary by a notice substantially
in the form of Exhibit J hereto to Transfer such Pledged Treasury
Securities to the Purchase Contract Agent for distribution to such Holder, free
and clear of the Pledge created hereby.

 

38

 

Upon credit to the
Collateral Account of Notes or security entitlements with respect thereto
delivered by a Holder of Treasury Units and receipt of the related instruction
from the Collateral Agent, the Securities Intermediary shall promptly Transfer
the Treasury Securities to the Purchase Contract Agent for distribution to such
Holder, free and clear of the Pledge created hereby.

 

Upon receipt of such
Treasury Securities, the Purchase Contract Agent shall promptly:

 

(i)    cancel the related Treasury Units;

 

(ii)   Transfer the Treasury Securities to the
Holder; and

 

(iii)  deliver Corporate Units in book-entry form, or
if applicable, authenticate, execute on behalf of such Holder and deliver
Corporate Units in the form of a Corporate Units Certificate executed by the
Company in accordance with Section 3.03 evidencing the same number of
Purchase Contracts as were evidenced by the cancelled Treasury Units.

 

Holders who elect to
recreate Corporate Units shall be responsible for any fees or expenses,
(including, without limitation, fees and expenses payable to the Collateral
Agent), in respect of the recreation, and neither the Company nor the Purchase
Contract Agent shall be responsible for any such fees or expenses.

 

(b)   Notwithstanding clause (a) of this Section 3.14,
if Applicable Ownership Interests in the Treasury Portfolio have replaced
Applicable Ownership Interests in Notes as a component the Corporate Units and
subject to the conditions set forth in this Agreement, a Holder of Treasury
Units may at any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date substitute Applicable Ownership
Interests in the Treasury Portfolio for Treasury Securities included in such Treasury
Units, but only in integral multiples of 10,000 Treasury Units or such other
number of Treasury Units as may be determined by the Remarketing Agent
following a Successful Remarketing of the Notes if the Reset Effective Date is
not an Interest Payment Date.  In
addition, if the Corporate Units are reestablished following a Reset Effective
Date which is not also an Interest Payment Date but prior to the close of
business on the Record Date related to the Interest Payment Date next
succeeding such Reset Effective Date, the Holder shall deposit with the
Securities Intermediary for credit to the Collateral Account cash in an amount
equal to the interest accrued on the Notes that would have been a component of
the Corporate Units to be created from the Interest Payment Date next preceding
the Reset Effective Date to, but excluding, the Reset Effective Date (except
that the relevant request by the Holder and instruction by the Purchase
Contract Agent shall relate to the release of the relevant Pledged Applicable
Ownership Interests in the Treasury Portfolio). 
In such an event, the Holder shall Transfer the Applicable Ownership
Interests in the Treasury Portfolio having a Value equal to the aggregate Value
of the Treasury Securities for which substitution is being made to the
Securities Intermediary, for credit to the Collateral Account, and the Purchase
Contract Agent,

 

39

 

Collateral Agent and Securities Intermediary shall
effect a Collateral Substitution and release the Treasury Securities from the
Pledge in the manner set forth in clause (c) above.

 

(c)   Except as provided in Section 5.02 or in
this Section 3.14 or in connection with a Cash Settlement, an Early
Settlement, a Fundamental Change Early Settlement or a Termination Event, for
so long as the Purchase Contract underlying a Treasury Unit remains in effect,
such Treasury Unit shall not be separable into its constituent parts and the
rights and obligations of the Holder of such Treasury Unit in respect of the
interest in the Treasury Security and the Purchase Contract comprising such
Treasury Unit may be acquired, and may be transferred and exchanged, only as a
Treasury Unit.

 

Section 3.15.  Transfer of
Collateral upon Occurrence of Termination Event.  (a) Upon receipt by the Collateral Agent
of written notice pursuant to Section 5.06 hereof from the Company or the
Purchase Contract Agent that a Termination Event has occurred, the Collateral
Agent shall release all Collateral from the Pledge and shall promptly instruct
the Securities Intermediary to Transfer:

 

(i)    any Notes underlying Pledged Applicable
Ownership Interests in Notes or security entitlements with respect thereto or
Pledged Applicable Ownership Interests in the Treasury Portfolio;

 

(ii)   any Pledged Treasury Securities;

 

(iii)  any payments made by Holders (or the Permitted
Investments of such payments) pursuant to Section 5.02 hereof; and

 

(iv)  any Proceeds and all other payments the
Collateral Agent receives in respect of the foregoing;

 

to the Purchase Contract Agent for the benefit of the
Holders for distribution to such Holders, in accordance with their respective
interests, free and clear of the Pledge created hereby; provided, however,
that if any Holder shall be entitled to receive Notes in an aggregate principal
amount of less than $1,000, or greater than $1,000 but not in an integral
multiple of $1,000, the Purchase Contract Agent shall request, on behalf of
such Holder, pursuant to Section 2.03 of the Supplemental Indenture that
the Company issue Notes in denominations of $50, or integral multiples thereof,
in exchange for Notes in denominations of $1,000 or integral multiples thereof;
provided further that if any
Holder shall be entitled to receive less than $1,000 with respect to its Pledged
Applicable Ownership Interests in the Treasury Portfolio or its Pledged
Treasury Securities, the Purchase Contract Agent shall have the right (but not
the obligation) to dispose of such Pledged Applicable Ownership Interests in
the Treasury Portfolio or Pledged Treasury Securities for cash and deliver to
such Holder cash in lieu of delivering the Pledged Applicable Ownership
Interests in the Treasury Portfolio or Pledged Treasury Securities, as the case
may be.

 

40

 

(b)   Notwithstanding anything to the contrary in
clause (a) of this Section 3.15, if such Termination Event shall
result from the Company’s becoming a debtor under the Bankruptcy Code, and if
the Collateral Agent shall for any reason fail promptly to effectuate the
release and Transfer of all Notes underlying Pledged Applicable Ownership
Interests in Notes, Pledged Applicable Ownership Interests in the Treasury
Portfolio, Pledged Treasury Securities and payments by Holders (or the
Permitted Investments of such payments) pursuant to Section 5.02 and
Proceeds and all other payments received by the Collateral Agent in respect of
the foregoing, as the case may be, as provided by this Section 3.15, the
Purchase Contract Agent shall use its best efforts to obtain an opinion of a
nationally recognized law firm to the effect that, notwithstanding the Company’s
being the debtor in such a bankruptcy case, the Collateral Agent shall not be
prohibited from releasing or Transferring the Collateral as provided in this Section 3.15,
and shall deliver or cause to be delivered such opinion to the Collateral Agent
within 10 days after the occurrence of such Termination Event, and if (A) the
Purchase Contract Agent shall be unable to obtain such opinion within 10 days
after the occurrence of such Termination Event or (B) the Collateral Agent
shall continue, after delivery of such opinion, to refuse to effectuate the
release and Transfer of all Notes underlying Pledged Applicable Ownership
Interests in Notes, Pledged Applicable Ownership Interests in the Treasury
Portfolio, Pledged Treasury Securities and the payments by Holders (or the
Permitted Investments of such payments) pursuant to Section 5.02 hereof
and Proceeds and all other payments received by the Collateral Agent in respect
of the foregoing, as the case may be, as provided in this Section 3.15,
then the Purchase Contract Agent shall within 15 days after the occurrence of
such Termination Event commence an action or proceeding in the court having
jurisdiction of the Company’s case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Notes underlying Pledged Applicable Ownership Interests in Notes, Pledged
Applicable Ownership Interests in the Treasury Portfolio, Pledged Treasury
Securities and the payments by Holders (or the Permitted Investments of such
payments) pursuant to Section 5.02 hereof and Proceeds and all other
payments received by the Collateral Agent in respect of the foregoing, or as
the case may be, as provided by this Section 3.15.

 

(c)   Upon the occurrence of a Termination Event
and the Transfer to the Purchase Contract Agent of the Notes underlying Pledged
Applicable Ownership Interests in Notes, the appropriate Pledged Applicable Ownership
Interests in the Treasury Portfolio or the Pledged Treasury Securities, as the
case may be, pursuant to Section 3.15(a), the Purchase Contract Agent
shall request transfer instructions with respect to such Notes, Applicable
Ownership Interests in the Treasury Portfolio or Treasury Securities, as the
case may be, from each Holder by written request, substantially in the form of Exhibit D
hereto, mailed to such Holder at its address as it appears in the Security
Register.

 

(d)   Upon book-entry transfer of the Corporate
Units or the Treasury Units or delivery of a Corporate Units Certificate or
Treasury Units Certificate to the Purchase Contract Agent with such transfer
instructions, the Purchase Contract Agent shall transfer the Notes underlying
Pledged Applicable Ownership Interests in Notes, Pledged Applicable Ownership
Interests in the Treasury Portfolio or Pledged Treasury Securities,

 

41

 

as the case may be, that are a component of such
Corporate Units or Treasury Units, as the case may be, to such Holder by
book-entry transfer, or other appropriate procedures, in accordance with such
instructions and, in the case of the Notes underlying Pledged Applicable
Ownership Interests in Notes, in accordance with the terms of the First
Supplemental Indenture.  In the event a
Holder of Corporate Units or Treasury Units fails to effect such transfer or
delivery, the Notes underlying Pledged Applicable Ownership Interests in Notes,
Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged
Treasury Securities, as the case may be, and any distributions thereon, shall
be held in the name of the Purchase Contract Agent or its nominee in trust for
the benefit of such Holder, until the earlier to occur of:

 

(i)    the transfer of such Corporate Units or
Treasury Units or surrender of the Corporate Units Certificate or Treasury
Units Certificate or the receipt by the Company and the Purchase Contract Agent
from such Holder of satisfactory evidence that such Corporate Units Certificate
or Treasury Units Certificate has been destroyed, lost or stolen, together with
any indemnity that may be required by the Purchase Contract Agent and the
Company; and

 

(ii)   the expiration of the time period specified
by the applicable law governing abandoned property in the state in which the
Purchase Contract Agent holds such property.

 

Section 3.16.  No Consent
to Assumption.  Each Holder of
a Unit, by acceptance thereof, shall be deemed expressly to have withheld any
consent to the assumption under Section 365 of the Bankruptcy Code or
otherwise, of the Purchase Contract by the Company or its trustee, receiver,
liquidator or a person or entity performing similar functions in the event that
the Company becomes the debtor under the Bankruptcy Code or subject to other
similar state or federal law providing for reorganization or liquidation.

 

Section 3.17. 
Substitutions.  Whenever
a Holder has the right to substitute Treasury Securities, Notes underlying
Applicable Ownership Interests in Notes or Applicable Ownership Interests in
the Treasury Portfolio, as the case may be, or security entitlements for any of
them, for financial assets held in the Collateral Account, such substitution
shall not constitute a novation of the security interest created hereby.

 

ARTICLE 4

THE NOTES AND APPLICABLE OWNERSHIP

INTERESTS IN THE TREASURY PORTFOLIO

 

Section 4.01.  Interest
Payments; Rights to Interest Payments Preserved.  (a)  The Collateral Agent (if
the Notes underlying Pledged Applicable Ownership Interests in Notes are in the
name of the Collateral Agent) shall transfer all income and distributions
received by it on account of the Notes underlying Pledged Applicable Ownership
Interests in Notes, Pledged Applicable Ownership Interests in the Treasury
Portfolio or Permitted Investments

 

42

 

from time to time held in the Collateral Account
([                ],
ABA
#[                ],
Account No.:
[                ],
Account: Legg Mason Collateral Account) to the Purchase Contract Agent for
distribution to the applicable Holders as provided in this Agreement and the
Purchase Contracts.

 

(b)   Any payment on any Note underlying Pledged
Applicable Ownership Interests in Notes or any distribution on any Applicable
Ownership Interests in the Treasury Portfolio (as specified in clause (ii) of
the definition of Applicable Ownership Interest in the Special Event Treasury
Portfolio and clauses (ii) or (iii) of the definition of Applicable
Ownership Interest in the Remarketing Treasury Portfolio), as the case may be,
which is paid on any Interest Payment Date shall, subject to receipt thereof by
the Purchase Contract Agent from the Company or from the Collateral Agent as
provided in Section 4.01(a) above be paid to the Person in whose name
the Corporate Units Certificate (or one or more Predecessor Corporate Units
Certificates) of which such Applicable Ownership Interest in Notes or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
forms a part is registered at the close of business on the Record Date for such
Interest Payment Date.  Interest payable
on the Notes underlying the Applicable Ownership Interests in Notes on a Reset
Effective Date that falls on a day that is not an Interest Payment Date, as
well as any cash deposited with the Collateral Agent in accordance with the
provisions of Section 3.14(b), shall, in accordance with the provisions of
this Agreement, be released by the Collateral Agent to the Purchase Contract
Agent on the next succeeding Payment Date or on such earlier date falling prior
to the Record Date for such next succeeding Contract Adjustment Payment Date on
which (i) Corporate Units are transformed into Treasury Units pursuant to Section 3.13
by the Holder establishing Treasury Units, or (ii) Corporate Units are
settled early in accordance with the provisions of Section 5.07 by the
Holders exercising rights pursuant to such Section.  Amounts payable in accordance with the
preceding sentence shall be payable by the Purchase Contract Agent to the
Persons in whose names the Corporate Units Certificate is registered at the
close of business on the Record Date for the applicable Payment Date or to the
Holder of Corporate Units transforming Corporate Units into Treasury Units or
exercising an Early Settlement in accordance with Section 5.07.

 

(c)   Each Corporate Units Certificate evidencing
Applicable Ownership Interests in Notes or Applicable Ownership Interests in
the Treasury Portfolio delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of any other Corporate Units
Certificate shall carry the right to accrued and unpaid interest or
distributions, and to accrue interest or distributions, which were carried by
the Applicable Ownership Interests in Notes or Applicable Ownership Interests
in the Treasury Portfolio underlying such other Corporate Units Certificate.

 

(d)   In the case of any Corporate Unit with
respect to which (i) Cash Settlement of the underlying Purchase Contract
is properly effected pursuant to Section 5.02(b) or hereof, (ii) Early
Settlement of the underlying Purchase Contract is properly effected pursuant to
Section 5.07 hereof, (iii) Fundamental Change Early Settlement of the
underlying Purchase Contract is properly effected pursuant to Section 5.04(b)(ii) hereof,

 

43

 

(iv) a Collateral Substitution is properly
effected pursuant to Section 3.13, or (v) a Successful Early
Remarketing occurs with respect to the Note underlying Applicable Ownership
Interest in Notes as a component of a Corporate Unit, in each case on a date
that is after any Record Date and prior to or on the next succeeding Interest
Payment Date, interest on the Notes underlying Applicable Ownership Interests
in Notes or distributions on Applicable Ownership Interests in the Treasury
Portfolio, as the case may be, as a component of such Corporate Unit otherwise
payable on such Interest Payment Date shall be payable on such Interest Payment
Date notwithstanding such Cash Settlement, Early Settlement, Fundamental Change
Early Settlement, Collateral Substitution or Successful Early Remarketing, and
such payment or distributions shall, subject to receipt thereof by the Purchase
Contract Agent, be payable to the Person in whose name the Corporate Units
Certificate (or one or more Predecessor Corporate Units Certificates) was
registered at the close of business on the Record Date.

 

(e)   Except as otherwise expressly provided in Section 4.01(c) hereof,
in the case of any Corporate Units with respect to which Cash Settlement, Early
Settlement or Fundamental Change Early Settlement of the underlying Purchase
Contract is properly effected, or with respect to which a Collateral
Substitution has been effected, payments attributable to the Notes underlying
the Applicable Ownership Interests in the Notes or distributions on Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, that would
otherwise be payable or made after the Purchase Contract Settlement Date, Early
Settlement Date, Fundamental Change Early Settlement Date or the date of the
Collateral Substitution, as the case may be, shall not be payable hereunder to
the Holder of such Corporate Units; provided,
however, that to the extent that
such Holder continues to hold Separate Notes or Applicable Ownership Interests
in the Treasury Portfolio that formerly comprised a part of such Holder’s
Corporate Units, such Holder shall be entitled to receive interest on such
Separate Notes or distributions on such Applicable Ownership Interests in the
Treasury Portfolio.

 

Section 4.02.  Principal
Payments Prior to or on Purchase Contract Settlement Date.  (a) Subject to the provisions
of Section 5.02(a), Section 5.04(b)(ii) and Section 5.07,
and except as provided in Section 4.02(b) below, if no Termination
Event shall have occurred, all principal payments received by the Securities
Intermediary in respect of (1) the principal amount of Notes underlying
Pledged Applicable Ownership Interests in Notes, (2) the Pledged
Applicable Ownership Interests in the Treasury Portfolio and (3) the
Pledged Treasury Securities, shall be credited to the Collateral Account, to be
invested in Permitted Investments until the Purchase Contract Settlement Date,
and transferred to the Company on the Purchase Contract Settlement Date as
provided in Section 5.02 hereof. 
Any balance remaining in the Collateral Account shall be released from
the Pledge and transferred to the Purchase Contract Agent for the benefit of
the Holders of record on the Purchase Contract Settlement Date for distribution
to such Holders in accordance with their respective interests, free and clear
of the Pledge created hereby.  The
Company shall instruct the Collateral Agent in writing as to the specific

 

44

 

 

Permitted Investments in which
any payments made under this Section 4.02 shall be invested; provided, however,
that if the Company fails to deliver such instructions by 10:30 a.m., New
York City time, on the day such payments are received by the Securities
Intermediary, the Collateral Agent shall instruct the Securities Intermediary
to invest such payments in Permitted Investments of the type described in
clause (6) of the definition of Permitted Investments which have been
designated by the Company in writing from time to time in a standing
instruction to the Securities Intermediary which shall be effective until
revoked or superseded.  In no event shall
the Collateral Agent be liable for the selection of Permitted Investments or
for investment losses incurred thereon. 
Neither the Collateral Agent nor the Securities Intermediary shall have
any liability in respect of losses incurred as a result of the failure of the
Company to provide timely written investment direction.

 

(b)        All payments received by the Securities
Intermediary in respect of (1) the Notes, (2) the Applicable
Ownership Interests in the Treasury Portfolio and (3) the Treasury
Securities or security entitlements with respect thereto, that, in each case,
have been released from the Pledge hereunder shall be transferred to the
Purchase Contract Agent for the benefit of the applicable Holders for
distribution to such Holders in accordance with their respective interests.

 

Section 4.03.  Notice and Voting.  (a) Subject to Section 4.03(b) hereof,
the Purchase Contract Agent may exercise, or refrain from exercising, any and
all voting and other consensual rights pertaining to the Notes underlying
Pledged Applicable Ownership Interests in Notes or any part thereof for any
purpose not inconsistent with the terms of this Agreement; provided that the Purchase Contract Agent
shall not exercise or shall not refrain from exercising such right, as the case
may be, if, in the judgment of the Purchase Contract Agent, such action would
impair or otherwise have a material adverse effect on the value of all or any
of the Notes underlying Pledged Applicable Ownership Interests in Notes; and provided  further
that the Purchase Contract Agent shall give the Company and the Collateral
Agent at least four Business Days’ prior written notice of the manner in which
it intends to exercise, or its reasons for refraining from exercising, any such
right. Upon receipt of any notices and other communications in respect of any
Notes underlying Pledged Applicable Ownership Interests in Notes, including
either notice of any meeting at which holders of the Notes are entitled to vote
or the solicitation of consents, waivers or proxies of holders of the Notes,
the Collateral Agent shall use reasonable efforts to send promptly to the Purchase
Contract Agent such notice or communication, and as soon as reasonably
practicable after receipt of a written request therefor from the Purchase
Contract Agent, to execute and deliver to the Purchase Contract Agent such
proxies and other instruments in respect of such Notes underlying Pledged
Applicable Ownership Interests in Notes (in form and substance satisfactory to
the Collateral Agent) as are prepared by the Company and delivered to the
Purchase Contract Agent with respect to the Notes underlying Pledged Applicable
Ownership Interests in Notes.

 

(b)        Upon receipt of notice of any meeting at
which holders of Notes are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Notes, the

 

45

 

Purchase
Contract Agent shall, as soon as practicable thereafter, mail, first class,
postage pre-paid, to the Holders of Corporate Units a notice:

 

(i)            containing such information as is contained in the notice
or solicitation;

 

(ii)           stating that each Holder on the record date set by the
Purchase Contract Agent therefor (which, to the extent possible, shall be the
same date as the record date for determining the holders of Notes, as the case
may be, entitled to vote) shall be entitled to instruct the Purchase Contract
Agent as to the exercise of the voting rights pertaining to such Notes
underlying the Applicable Ownership Interests in Notes that are a component of
their Corporate Units; and

 

(iii)          stating
the manner in which such instructions may be given.

 

Upon the written request of the
Holders of Corporate Units on such record date received by the Purchase
Contract Agent at least six days prior to such meeting, the Purchase Contract
Agent shall endeavor insofar as practicable to vote or cause to be voted, in
accordance with the instructions set forth in such requests, the maximum
aggregate principal amount of Notes as to which any particular voting
instructions are received.  In the
absence of specific instructions from the Holder of Corporate Units, the
Purchase Contract Agent shall abstain from voting the Notes underlying Pledged
Applicable Ownership Interests in Notes that are a component of such Corporate
Units.  The Company hereby agrees, if
applicable, to solicit Holders of Corporate Units to timely instruct the
Purchase Contract Agent as to the exercise of such voting rights in order to
enable the Purchase Contract Agent to vote such Notes.

 

(c)                                  The
Holders of Corporate Units and the Holders of Treasury Units shall have no
voting or other rights in respect of Common Stock.

 

Section 4.04.  Special Event Redemption.  (a)  If the Company elects to
redeem the Notes following the occurrence of a Special Event as permitted by
the Indenture, it shall notify the Collateral Agent in writing that a Special
Event has occurred and that it intends to redeem the Notes on the Special Event
Redemption Date.  Upon the occurrence of
such Special Event Redemption while Notes are still credited to the Collateral
Account, the Collateral Agent shall, and is hereby authorized to, instruct the
Securities Intermediary to present the Notes underlying Pledged Applicable
Ownership Interests in Notes for payment as may be required by their respective
terms and to direct the Indenture Trustee to remit the Redemption Price to the
Securities Intermediary for credit to the Collateral Account, on or prior to
11:00 a.m., New York City time, on such Special Event Redemption Date, by
wire transfer of immediately available funds. 
Upon receipt of such funds by the Securities Intermediary and the credit
thereof to the Collateral Account, the Notes underlying Pledged Applicable
Ownership Interests in Notes shall be released from the Collateral Account and
promptly transferred to the Company. 
Upon the crediting of such funds to the Collateral Account, the
Collateral Agent, at the written direction of the Company, shall instruct the
Securities Intermediary to (i) apply an amount equal to the

 

46

 

Redemption Amount of such funds
to purchase the Special Event Treasury Portfolio from the Quotation Agent, (ii) credit
to the Collateral Account the Applicable Ownership Interests in the Treasury
Portfolio (as specified in clause (i) of the definition of Applicable
Ownership Interest in the Special Event Treasury Portfolio) and (iii) promptly
remit the remaining portion of such funds to the Purchase Contract Agent for
payment to the Holders of Corporate Units, in accordance with their respective
interests.

 

(b)           Upon the occurrence
of a Special Event Redemption, (i) the Applicable Ownership Interests in
the Treasury Portfolio (as specified in clause (i) of the definition of
Applicable Ownership Interest in the Special Event Treasury Portfolio) will be
substituted as Collateral for the Notes underlying Pledged Applicable Ownership
Interests in Notes and will be held by the Collateral Agent in accordance with
the terms hereof to secure the Obligation of each Holder of Corporate Units, (ii) the
Holders of Corporate Units and the Collateral Agent shall have such rights and
obligations, and the Collateral Agent shall have such security interest, with
respect to such Applicable Ownership Interests in the Treasury Portfolio (as
specified in clause (i) of the definition of Applicable Ownership Interest
in the Special Event Treasury Portfolio) as the Holders of Corporate Units and
the Collateral Agent had in respect of the Notes underlying Pledged Applicable
Ownership Interests in Notes, subject to the Pledge thereof, and (iii) any
reference herein to Applicable Ownership Interests in Notes shall be deemed to
be a reference to such Applicable Ownership Interests in the Treasury Portfolio.  The Company may cause to be made in any
Corporate Units Certificates thereafter to be issued such change in phraseology
and form (but not in substance) as may be appropriate to reflect the
substitution of the Applicable Ownership Interests in the Treasury Portfolio
(as specified in clause (i) of the definition of Applicable Ownership
Interest in the Special Event Treasury Portfolio) for Applicable Ownership
Interests in Notes as Collateral.

 

Section 4.05.  Payments to Purchase Contract
Agent.  The Securities
Intermediary shall use commercially reasonable efforts to deliver any payments
required to be made by it to the Purchase Contract Agent hereunder to the
account designated by the Purchase Contract Agent for such purpose not later
than 12:00 p.m., New York City time, on the Business Day such payment is
received by the Securities Intermediary; provided,
however, that if such payment is
received on a day that is not a Business Day or after 11:00 a.m., New York
City time, on a Business Day, then the Securities Intermediary shall use
commercially reasonable efforts to deliver such payment to the Purchase
Contract Agent no later than 10:30 a.m., New York City time, on the next
succeeding Business Day.

 

Section 4.06.  Payments Held in Trust.  If the Purchase Contract Agent or
any Holder shall receive any principal payments on account of financial assets
credited to the Collateral Account (other than interest on the Notes or
distributions on the Applicable Ownership Interests in the Treasury Portfolio
(as specified in clauses (ii) or (iii) of the definition of  Applicable Ownership Interest in the Special Event Treasury
Portfolio)) and not released therefrom in accordance with this Agreement, the
Purchase Contract Agent or such Holder shall hold such payments as trustee of
an express trust for the benefit of the

 

47

 

Company and, upon receipt of an
Officers’ Certificate of the Company so directing, promptly deliver such
payments to the Securities Intermediary for credit to the Collateral Account or
to the Company for application to the Obligations of the applicable Holder or
Holders, and the Purchase Contract Agent and Holders shall acquire no right,
title or interest in any such payments of principal amounts so received.  The Purchase Contract Agent shall have no
liability under this Section 4.06 unless and until it has been notified in
writing that such payment was delivered to it erroneously and shall have no
liability for any action taken, suffered or omitted to be taken prior to its
receipt of such notice.

 

ARTICLE 5

THE PURCHASE CONTRACTS

 

Section 5.01.  Purchase of Shares of Common
Stock.  (a) Each Purchase
Contract shall obligate the Holder of the related Units to purchase, and the
Company to sell, on the Purchase Contract Settlement Date at a price in cash
equal to the Stated Amount (the “Purchase Price”),
a number of newly issued shares of Common Stock (subject to Section 5.08)
equal to the Settlement Rate unless an Early Settlement, a Fundamental Change
Early Settlement or a Termination Event with respect to the Units of which such
Purchase Contract is a part shall have occurred.  The “Settlement Rate”
is equal to:

 

(i)            if the Applicable Market Value (as defined below) is
greater than or equal to $67.56 (the “Threshold Appreciation
Price”), the Settlement Rate shall be 0.7401 shares of Common Stock
(such Settlement Rate being referred to herein as the “Minimum
Settlement Rate”);

 

(ii)           if the Applicable Market Value is less than the Threshold
Appreciation Price but greater than $56.30 (the “Reference
Price”), the Settlement Rate shall be a number of shares of Common
Stock per Purchase Contact equal to the Stated Amount divided by
the Applicable Market Value; and

 

(iii)          if the Applicable Market Value is less than or equal to the
Reference Price, the Settlement Rate shall be 0.8881 shares of Common Stock
which is equal to the Stated Amount divided by the
Reference Price (such Settlement Rate being referred to herein as the “Maximum Settlement Rate”);

 

in each case subject to
adjustment as provided in Section 5.04 (and in each case rounded upward or
downward to the nearest 1/10,000th of a share).

 

(b)     Each
Holder of a Corporate Unit or a Treasury Unit, by its acceptance of such Unit
will be deemed to have:

 

(i)            duly appointed the Purchase Contract Agent to enter into
and perform the related Purchase Contract on its behalf and in its name as its
attorney-in-fact (including, without limitation, the execution of Certificates
on behalf of such Holder);

 

48

 

(ii)         irrevocably agreed to be bound by the
terms and provisions of such Unit, including but not limited to, the terms and
provisions of the Purchase Contract;

 

(iii)        covenanted and agreed to perform its
obligations under this Agreement and such Purchase Contract for so long as such
Holder remains a Holder of a Corporate Unit or a Treasury Unit;

 

(iv)        consented to the provisions hereof;

 

(v)         duly appointed the Purchase Contract
Agent to enter into and perform this Agreement on its behalf and in its name as
its attorney-in-fact;

 

(vi)        consented to, and agreed to be bound by,
the Pledge of such Holder’s right, title and interest in and to the Collateral
Account, including the Pledged Applicable Ownership Interests in Notes and the
Applicable Ownership Interests in the Treasury Portfolio or the Treasury
Securities pursuant to this Agreement and the delivery of the Notes underlying
such Applicable Ownership Interests in Notes by the Purchase Contract Agent to
the Collateral Agent; and

 

(vii)       for
all tax purposes, agreed (i) to treat the acquisition of a Corporate Unit as
the acquisition of the ownership interest in the Note and the Purchase Contract
constituting the Corporate Unit, (ii) to treat the Note as indebtedness of the
Company that is subject to the rules applicable to contingent payment debt
instruments under Treas. Reg. Sec. 1.1275-4 for U.S. federal, state and local
income and franchise tax purposes and (iii) to treat the Note and the Purchase
Contracts as separate instruments.

 

provided that
upon a Termination Event, the rights of the Holder of such Units under the
Purchase Contract may be enforced without regard to any other rights or
obligations.

 

(c)           Each Holder of a
Corporate Unit or a Treasury Unit, by its acceptance thereof, will be deemed to
have further covenanted and agreed that to the extent and in the manner
provided in Section 5.02 hereof, but subject to the terms thereof, on the
Purchase Contract Settlement Date, Proceeds of the Pledged Applicable Ownership
Interests in Notes, the Pledged Treasury Securities or the Pledged Applicable
Ownership Interests in the Treasury Portfolio, as applicable, equal to the
Purchase Price, shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder’s obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such Proceeds.

 

(d)           Upon registration of
transfer of a Certificate, the transferee shall be bound (without the necessity
of any other action on the part of such transferee) by the terms of this
Agreement and the Purchase Contracts underlying such Certificate and the
transferor

 

49

 

shall be
released from the obligations under this Agreement and the Purchase Contracts
underlying the Certificate so transferred. 
The Company covenants and agrees, and each Holder of a Certificate, by its
acceptance thereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.

 

Section 5.02.  Remarketing; Payment of
Purchase Price.  (i) Unless a Special Event Redemption has
occurred or will occur or a Successful Remarketing has already occurred, the
Company may, at its option and in its sole discretion, conduct a Remarketing
during the Period for Early Remarketing consisting of three successive
Remarketing Dates on each of which it shall cause the Remarketing Agent to
remarket, in whole (but not in part), (1) the Notes underlying Pledged
Applicable Ownership Interests in Notes that are a component of the Corporate
Units and (2) any Separate Notes of Holders who have elected to in the
manner set forth in clause (ii) below to have their Notes so
remarketed.  Promptly after 11:00 a.m.,
New York City time, on the Business Day immediately preceding the first
Remarketing Date of the applicable Three-Business Day Remarketing Period, the
Purchase Contract Agent shall notify the Remarketing Agent of the aggregate
principal amount of Notes underlying Pledged Applicable Ownership Interests in
Notes and the Custodial Agent shall notify the Remarketing Agent of the
aggregate principal amount of Separate Notes, if any, that are to be remarketed
pursuant to clause (ii) below. 
Concurrently, the Custodial Agent will present the Separate Notes for
Remarketing to the Remarketing Agent. 
Upon receipt of such notices from the Purchase Contract Agent and
Custodial Agent, and the Separate Notes for Remarketing from the Custodial
Agent, the Remarketing Agent shall, during the Three-Business Day Remarketing
Period, use its reasonable efforts to remarket (based on the Reset Rate) such
Notes underlying Pledged Applicable Ownership Interests in Notes and Separate
Notes at a price equal to the sum of (x) approximately 100.00% of the sum
of the Remarketing Treasury Portfolio Purchase Price plus
the Separate Notes Purchase Price and (y) the Remarketing Fee.  If the Remarketing Agent is able to remarket
the Notes underlying Pledged Applicable Ownership Interests in Notes and the
Separate Notes at a price equal to or greater than 100.00% of the Remarketing
Treasury Portfolio Purchase Price plus the Separate Notes Purchase Price (a “Successful Early Remarketing”), the Collateral Agent shall
instruct the Securities Intermediary to:

 

(A)             Transfer the Notes underlying Pledged Applicable
Ownership Interests in Notes to the Remarketing Agent upon confirmation of
deposit by the Remarketing Agent of the Proceeds of such Successful Remarketing
attributable to such Notes underlying Pledged Applicable Ownership Interests in
Notes (after deducting any Remarketing Fee) in the Collateral Account;

 

(B)              apply an amount equal to the Remarketing Treasury
Portfolio Purchase Price to purchase from the Quotation Agent the Remarketing
Treasury Portfolio;

 

50

 

(C)              credit the Applicable Ownership Interests in the
Remarketing Treasury Portfolio (as specified in clause (i) of the
definition of such term) to the Collateral Account; and

 

(D)              promptly remit the remaining portion of such Proceeds
to the Purchase Contract Agent for payment to the Holders of Corporate Units,
in accordance with their respective interests.

 

The Remarketing Agent may
deduct the Remarketing Fee from any amount of Proceeds therefrom in excess of
sum of the Remarketing Treasury Portfolio Purchase Price plus the Separate
Notes Purchase Price.  With respect to
Notes underlying Pledged Applicable Ownership Interests in Notes, any Proceeds
of the Remarketing attributable to such Notes underlying Pledged Applicable
Ownership Interests in Notes in excess of the sum of the Remarketing Treasury
Portfolio Purchase Price plus the Remarketing Fee with respect to such Notes
underlying Pledged Applicable Ownership Interests in Notes will be remitted to
the Purchase Contract Agent for payment to the Holders of the related Corporate
Units.  The Applicable Ownership
Interests in the Remarketing Treasury Portfolio will be substituted for the
Notes underlying Pledged Applicable Ownership Interests in Notes and the
appropriate Applicable Ownership Interests in the Remarketing Treasury
Portfolio (as specified in clause (i) of the definition of such term)
shall be held as Collateral to secure the Obligations of the Holders of
Corporate Units.  With respect to
Separate Notes upon a Successful Early Remarketing, any Proceeds of the
Remarketing attributable to such Separate Notes in excess of the Remarketing
Fee with respect to the Separate Notes will be remitted to the Custodial Agent
for payment to the holders of such Separate Notes on the Reset Effective
Date.  None of the Company, the Purchase
Contract Agent, or any Holders of Corporate Units or Holders of Separate Notes
whose Notes or Separate Notes are so remarketed shall otherwise be responsible
for the payment of any Remarketing Fee in connection therewith.

 

Following the
occurrence of a Successful Early Remarketing, the Holders of Corporate Units
and the Collateral Agent shall have such rights and obligations, and the
Collateral Agent shall have such security interest, with respect to the Pledged
Applicable Ownership Interests in the Remarketing Treasury Portfolio (as
specified in clause (i) of the definition of such term) as the Holder of
Corporate Units and the Collateral Agent had in respect of the Notes underlying
Pledged Applicable Ownership Interests in Notes, subject to the Pledge thereof,
and any reference herein or in the Certificates to the Applicable Ownership
Interests in Notes shall be deemed to be a reference to such Applicable
Ownership Interests in the Remarketing Treasury Portfolio (as specified in
clause (i) of the definition of such term) and any reference herein or in
the Certificates to interest in the Applicable Ownership Interests in Notes
shall be deemed to be a reference to corresponding distributions on such
Applicable Ownership Interests in the Remarketing Treasury Portfolio (as
specified in clause (i) of the definition of such term).  The Company may cause to be made in any Corporate
Units Certificates thereafter to be issued such change in phraseology and form
(but not in substance) as may be appropriate to reflect the substitution of
such Applicable Ownership Interests in the Remarketing Treasury Portfolio for
Applicable Ownership Interests in Notes.

 

51

 

If a Remarketing attempt on the first
Remarketing Date during the applicable Three-Business Day Remarketing Period is
not successful, the Remarketing Agent shall (unless impracticable), in
accordance with the Remarketing Agreement, remarket the Notes underlying
Pledged Applicable Ownership Interests in Notes on each of the next two
succeeding Remarketing Dates during such Three-Business Day Remarketing Period
until a Successful Remarketing occurs. 
If, despite of using its reasonable efforts, the Remarketing Agent
cannot remarket the Notes underlying Pledged Applicable Ownership Interests in
Notes and the Separate Notes, if any, during such Three-Business Day
Remarketing Period (other than to the Company) at a price not less than 100% of
the sum of the Remarketing Treasury Portfolio Purchase Price plus the Separate
Note Purchase Price or a condition precedent set forth in the Remarketing
Agreement is not fulfilled, the Remarketing will be deemed to have failed (a “Failed Early Remarketing”). 
Promptly following a Failed Early Remarketing, the Remarketing Agent
shall return, no later than the Business Day immediately following the end of
such Three-Business Day Remarketing Period, the Separate Notes delivered for
Remarketing to the Custodial Agent for delivery to the appropriate Holders of
the Separate Notes.

 

(ii)           On or prior to the close of business on the second
Business Day immediately preceding the first Remarketing Date of the applicable
Three-Business Day Remarketing Period, but no earlier than the close of
business on the fifth Business Day immediately preceding such first Remarketing
Date of the applicable Three-Business Day Remarketing Period, Holders of
Separate Notes may elect to have their Separate Notes remarketed under the
Remarketing Agreement by delivering their Separate Notes, along with a notice
of such election, substantially in the form of Exhibit L hereto, to the
Custodial Agent.  The Custodial Agent
shall hold the Separate Notes in an account separate from the Collateral
Account in which the Notes underlying Pledged Applicable Ownership Interests in
Notes shall be held.  Holders of Separate
Notes electing to have their Separate Notes remarketed will also have the right
to withdraw that election by written notice to the Custodial Agent,
substantially in the form of Exhibit M hereto, on or prior to the close of
business on the second Business Day immediately preceding the first Remarketing
Date of the relevant Three-Business Day Remarketing Period, upon which notice
the Custodial Agent shall return such Separate Notes to such Holder.  After such time, such election to remarket
shall become an irrevocable election to have such Separate Notes remarketed in
such Remarketing.  Promptly after 11:00 a.m.,
New York City time, on the Business Day immediately preceding the first
Remarketing Date of the relevant Three-Business Day Remarketing Period, the
Custodial Agent shall notify the Remarketing Agent of the aggregate principal
amount of the Separate Notes to be remarketed and shall deliver to the
Remarketing Agent for Remarketing all Separate Notes delivered to the Custodial
Agent pursuant to this Section 5.02(a)(ii) and not withdrawn pursuant
to the terms hereof prior to such date.

 

(iii)          The Company shall request, not less than 10 Business Days prior to
each Remarketing Announcement Date, that the Depositary (or any successor or
its

 

52

 

nominee) notify the
Depositary Participants holding Notes underlying Pledged Applicable
Ownership Interests in Notes of
such Remarketing and procedures to be followed in such Remarketing.  On the Remarketing Announcement Date, the
Company shall make a Remarketing Announcement regarding such proposed
Remarketing of the Notes underlying Pledged Applicable Ownership
Interests in Notes.

 

(iv)          The Company agrees to use its best efforts to ensure that,
if required by applicable law, a registration statement with regard to the full
amount of the Notes to be remarketed in the Remarketing during the Period for
Early Remarketing or the Final Three-Business Day Remarketing Period, as the
case may be, shall be effective with the Commission in a form that will enable
the Remarketing Agent to rely on it in connection with such Remarketing.

 

(v)           The Company shall cause a notice of a Failed Remarketing
to be published (with a copy of such notice to be provided to the Purchase
Contract Agent) on the Business Day immediately following the final Remarketing
Date of the applicable Three-Business Day Remarketing Period (which notice, in
the event of a Failed Final Remarketing (as defined below), shall be published
not later than 9:00 a.m. New York City time, and shall include the
procedures that must be followed if a Holder of Notes underlying Pledged
Applicable Ownership Interests in Notes wishes to exercise its Put Right) in
each case, by making a timely release to any appropriate news agency, including
Dow Jones News Service and Bloomberg Business News.

 

(b)     (i) Unless
a Special Event Redemption has occurred or will occur prior to the Final
Three-Business Day Remarketing Period, if no Successful Remarketing has
occurred prior to the Final Three-Business Day Remarketing Period, each Holder
shall have the right to satisfy such Holder’s Obligations on the Purchase
Contract Settlement Date in separate cash by notifying the Purchase Contract
Agent by use of a notice in substantially the form of Exhibit E hereto of
its intention to pay in cash (“Cash Settlement”)
prior to the close of business on the seventh Business Day immediately
preceding the Purchase Contract Settlement Date.  Promptly following the close of business on
the seventh Business Day immediately preceding the Purchase Contract Settlement
Date, the Purchase Contract Agent shall notify the Collateral Agent and the
Indenture Trustee of the receipt of such notices from Holders intending to make
a Cash Settlement.

 

(ii)           A Holder of a Corporate Unit (if the Treasury Portfolio
has not replaced the Notes underlying Pledged Applicable Ownership Interests in
Notes) who has so notified the Purchase Contract Agent of its intention to
effect a Cash Settlement shall pay the Purchase Price to the Securities
Intermediary for credit to the Collateral Account on or prior to 11:00 a.m.,
New York City time, on the sixth Business Day immediately preceding the
Purchase Contract Settlement Date in lawful money of the United States by wire
transfer, in each case in immediately available funds payable to or upon the
order of the Securities Intermediary.

 

53

 

(iii)          If a Holder of a Corporate Unit does not notify the
Purchase Contract Agent of its intention to make a Cash Settlement in
accordance with Section 5.02(b)(i) above, or does notify the Purchase
Contract Agent in accordance with Section 5.02(b)(i) above but fails
to make such payment as required by Section 5.02(b)(ii) above, such
Holder shall be deemed to have consented to the disposition of the Notes
underlying Pledged Applicable Ownership Interests in Notes pursuant to the
Remarketing during the Final Three-Business Day Remarketing Period as described
in Section 5.02(c) below.

 

(iv)          Promptly after 11:00 a.m., New York City time, on the
sixth Business Day preceding the Purchase Contract Settlement Date, the
Purchase Contract Agent, based on cash payments received by the Securities
Intermediary pursuant to Section 5.02(b)(ii) hereof, shall promptly
notify the Collateral Agent and the Indenture Trustee of the aggregate
principal amount of Notes underlying Pledged Applicable Ownership Interests in
Notes to be tendered for purchase in the Remarketing in a notice in the form of
Exhibit K hereto.

 

(v)           Upon (1) receipt by the Collateral Agent of a notice
from the Purchase Contract Agent promptly after the receipt by the Purchase
Contract Agent of a notice from a Holder of Corporate Units that such Holder
has elected, in accordance with Section 5.02(b)(i) to effect a Cash
Settlement and (2) the payment by such Holder of the Purchase Price in
accordance with Section 5.02(b)(ii) above then the Collateral Agent
shall:

 

(A)     instruct the Securities Intermediary promptly to invest any such
Cash in Permitted Investments;

 

(B)      release from the Pledge such Holder’s Notes underlying Pledged
Applicable Ownership Interests in Notes that are a component of the Corporate
Units as to which such Holder has effected a Cash Settlement; and

 

(C)      instruct the Securities Intermediary to Transfer all such Notes
to the Purchase Contract Agent for distribution to such Holder, in each case
free and clear of the Pledge created hereby.

 

The Company shall instruct the Collateral Agent in writing as to the
type of Permitted Investments in which any such Cash shall be invested; provided, however, that if the Company fails to deliver such
instructions by 10:30 a.m., New York City time, on the day such payments
are received by the Securities Intermediary, the Collateral Agent shall
instruct the Securities Intermediary to invest such payments in Permitted
Investments of the type described in clause (6) of the definition of
Permitted Investments which have been designated by the Company in writing from
time to time in a standing instruction to the Securities Intermediary which
shall be effective until revoked or superseded. 
In no event shall the Collateral Agent be liable for the selection of
Permitted Investments or for investment losses incurred thereon.  Neither the Collateral Agent nor the
Securities

 

54

 

Intermediary
shall have any liability in respect of losses incurred as a result of the
failure of the Company to provide timely written investment direction.

 

Upon maturity
of the Permitted Investments on the Purchase Contract Settlement Date, the
Collateral Agent shall, and is hereby authorized to, (A) instruct the
Securities Intermediary to remit to the Company on the Purchase Contract
Settlement Date such portion of the proceeds of such Permitted Investments as
is equal to the aggregate Purchase Price under all Purchase Contracts in
respect of which Cash Settlement has been affected as provided above to the
Company on the Purchase Contract Settlement Date, and (B) release any
amounts in excess of such aggregate Purchase Price earned from such Permitted Investments
to the Purchase Contract Agent for distribution to the Holders who have
effected Cash Settlement pro-rata in proportion to the amount paid by such
Holders under Section 5.02(b)(ii) above.

 

(c)        (i) Unless
a Special Event Redemption has occurred or will occur prior to the Final
Three-Business Day Remarketing Period, if a Successful Remarketing has not
occurred during the Period for Early Remarketing, the Notes underlying Pledged
Applicable Ownership Interests in Notes that are a component of Corporate Units
of Holders who have not notified the Purchase Contract Agent of their intention
to effect a Cash Settlement as provided in Section 5.02(b)(i) above,
or who have so notified the Purchase Contract Agent in accordance with Section 5.02(b)(i) above
but have failed to make such payment as required by Section 5.02(b)(ii) above,
and the Separate Notes of any Holder who has elected for its Separate Notes to
be remarketed pursuant to Section 5.02(a)(ii) will be remarketed by
the Remarketing Agent during the Final Three-Business Day Remarketing
Period.  In order to facilitate the
Remarketing during the Final Three-Business Day Remarketing Period, the
Purchase Contract Agent, based on the notice specified in Section 5.02(b)(iv),
and the Collateral Agent, based on the notice specified in Section 5.02(b)(ii),
shall notify the Remarketing Agent, by 11:00 a.m., New York City time, on
the sixth Business Day immediately preceding the Purchase Contract Settlement
Date, of the aggregate principal amount of Notes underlying Pledged Applicable
Ownership Interests in Notes and aggregate principal amount of Separate Notes
that are to be remarketed pursuant to Section 5.02(a)(ii), if any, to be
remarketed.  Concurrently, the Custodial
Agent will present for Remarketing the Separate Notes to the Remarketing Agent.

 

(ii)           Upon receipt of such
notices from the Purchase Contract Agent and the Collateral Agent and the
Separate Notes (if any) from the Custodial Agent, as set forth in clause (i) above,
the Remarketing Agent shall, during the Final Three-Business Day Remarketing
Period, use its reasonable efforts to remarket (based on the Reset Rate) such
Notes underlying Pledged Applicable Ownership Interests in Notes and Separate
Notes on such date at a price equal to the sum of (x) approximately
100.00% of the aggregate principal amount of such Notes underlying Pledged
Applicable Ownership Interests in Notes and Separate Notes and (y) the
Remarketing Fee.  If the Remarketing
Agent is able to remarket the Notes underlying Pledged Applicable Ownership
Interests in Notes and the

 

55

 

Separate Notes at a price equal
to or greater than 100.00% of the aggregate principal amount of the Notes
underlying Pledged Applicable Ownership Interests in Notes and the Separate
Notes (a “Successful Final Remarketing”), the
Collateral Agent shall:

 

(A)             instruct the
Securities Intermediary to Transfer the related Notes underlying Pledged
Applicable Ownership Interest in Notes to the Remarketing Agent upon
confirmation of deposit by the Remarketing Agent of the Proceeds of such
Remarketing attributable to such Notes underlying Pledged Applicable Ownership
Interests in Notes (after deducting the Remarketing Fee) in the Collateral
Account;

 

(B)              instruct the Securities
Intermediary to invest such Proceeds of the Remarketing in one or more of the
Permitted Investments; and

 

(C)              on the Purchase
Contract Settlement Date, in consultation with the Purchase Contract Agent,
instruct the Securities Intermediary to remit a portion of the Proceeds from
such Remarketing attributable to such Notes underlying Pledged Applicable
Ownership Interests in Notes equal to the aggregate principal amount of such
Notes underlying Pledged Applicable Ownership Interests in Notes to satisfy in
full such Holder’s Obligations to pay the Purchase Price to purchase the shares
of Common Stock under the related Purchase Contracts, less the amount of any
Deferred Contract Adjustment Payments payable to such Holder, and to remit the
balance of the Proceeds from the Remarketing, if any, to the Purchase Contract
Agent for distribution to such Holder.

 

The Company
shall instruct the Collateral Agent in writing as to the type of Permitted
Investments in which any such Proceeds shall be invested; provided, however,
that if the Company fails to deliver such instructions by 10:30 a.m., New
York City time, on the day such payments are received by the Securities
Intermediary, the Collateral Agent shall instruct the Securities Intermediary
to invest such payments in Permitted Investments of the type described in
clause (6) of the definition of Permitted Investments which have been
designated by the Company in writing from time to time in a standing
instruction to the Securities Intermediary which shall be effective until
revoked or superseded.  In no event shall
the Collateral Agent be liable for the selection of Permitted Investments or
for investment losses incurred thereon. 
Neither the Collateral Agent nor the Securities Intermediary shall have
any liability in respect of losses incurred as a result of the failure of the
Company to provide timely written investment direction.

 

The
Remarketing Agent may deduct the Remarketing Fee from Proceeds in excess of the
aggregate principal amount of the remarketed Notes underlying Pledged
Applicable Ownership Interests in Notes. 
With respect to Separate Notes, upon a Successful Final Remarketing, any
proceeds of the Remarketing in excess of the Remarketing Fee attributable to the
Separate Notes will be remitted to the Custodial Agent for payment to the
Holders of Separate Notes on the Reset Effective Date.

 

56

 

If a
Remarketing attempt on the first Remarketing Date during the Final
Three-Business Day Remarketing Period is not successful, the Remarketing Agent
shall, in accordance with the Remarketing Agreement, remarket the Notes on each
of the next two succeeding Remarketing Dates during the Final Three-Business
Day Remarketing Period until a Successful Remarketing occurs.  If, despite of using its reasonable efforts,
the Remarketing Agent cannot remarket the Notes underlying Pledged Applicable
Ownership Interests in Notes and the Separate Notes (if any) at a price not
less than 100.00% of the aggregate principal amount of the Notes underlying
Pledged Applicable Ownership Interests in Notes and the Separate Notes to be
remarketed during the Final Three-Business Day Remarketing Period (other than
to the Company) or a condition precedent in the Remarketing Agreement is not fulfilled,
the Remarketing shall be deemed to have failed (a “Failed Final
Remarketing”).  Following a
Failed Final Remarketing, as of the Purchase Contract Settlement Date, each
Holder of any Notes underlying Pledged Applicable Ownership Interests in Notes
that are subject to a Failed Final Remarketing, shall have the option to
exercise such Holder’s Put Right with respect to such Notes underlying Pledged
Applicable Ownership Interests in Notes. 
The Put Right shall be automatically exercised unless such Holder (1) prior
to 11:00 a.m., New York City time, on the second Business Day immediately
preceding the Purchase Contract Settlement Date, provides written notice of
their intention to settle the related Purchase Contract with separate Cash, and
(2) on or prior to the Business Day immediately preceding the Purchase
Contract Settlement Date, delivers to the Collateral Agent the Stated Amount
per Purchase Contract.  Unless a Holder
of Corporate Units has settled the related Purchase Contract with separate Cash
on or prior to the Purchase Contract Settlement Date, such Holder shall be
deemed to have elected to apply a portion of the Proceeds of the Put Right
price set-off against such Holder’s Obligations, thereby satisfying such
Obligations in full, and the Collateral Agent shall cause the Securities
Intermediary to release the Notes underlying Pledged Applicable Ownership
Interests in Notes from the Collateral Account and shall promptly transfer the
Notes underlying Pledged Applicable Ownership Interests in Notes to the
Company.  Thereafter, the Collateral
Agent shall promptly remit the remaining portion of the Proceeds of the
Holder’s exercise of the Put Right in excess of the aggregate Purchase Price,
less any Deferred Contract Adjustment Payments, for the shares of Common Stock
to be issued under such Purchase Contracts to the Purchase Contract Agent for
payment to the Holder of the Corporate Units to which such Notes relate.

 

(d)        In
the case of a Treasury Unit or a Corporate Unit (if the Treasury Portfolio has
replaced the Applicable Ownership Interests in Notes as a component of such
Corporate Unit), upon the maturity of the Pledged Treasury Securities or the
appropriate Pledged Applicable Ownership Interests in the Treasury Portfolio
held by the Securities Intermediary on or prior to the Business Day immediately
preceding the Purchase Contract Settlement Date, the principal amount of the
Pledged Treasury Securities or the appropriate Pledged Applicable Ownership
Interests in the Treasury Portfolio received by the Securities Intermediary
shall be invested promptly in Permitted Investments of the type described in
clause (6) of the definition of Permitted Investments which have been
designated by the Company in writing from time to time in a standing
instruction to the Securities Intermediary which shall be effective until
revoked or superseded.  On the

 

57

 

Purchase
Contract Settlement Date, an amount equal to the Purchase Price, less the
amount of any Deferred Contract Adjustment Payments payable to such Holders,
shall be remitted to the Company as payment of such Holder’s Obligations under
the related Purchase Contracts without receiving any instructions from the
Holder.  In the event the sum of the
Proceeds from the related Pledged Treasury Securities or related Pledged
Applicable Ownership Interests in the Treasury Portfolio and the Proceeds from
such Permitted Investments is in excess of the aggregate Purchase Price, less
the amount of any Deferred Contract Adjustment Payments payable to such
Holders, the Collateral Agent shall cause the Securities Intermediary to
distribute such excess to the Purchase Contract Agent for the benefit of the
Holder of the related Treasury Units or Corporate Units.

 

(e)        With
respect to the Notes to be distributed to Holders upon a Cash Settlement,
subject to the receipt thereof, the Purchase Contract Agent shall transfer such
Notes by book-entry transfer or other appropriate procedures in accordance with
written instructions provided by the Holder thereof or, if no such instructions
are given to the Purchase Contract Agent by the Holder, the Purchase Contract
Agent, subject to the applicable laws governing abandoned property, shall hold
such Notes, and any interest payment thereon, in the name of the Purchase
Contract Agent or its nominee in trust for the benefit of such Holder until the
expiration of the time period specified in the applicable laws governing
abandoned property of the state in which the Purchase Contract Agent holds such
property.  Distributions to Holders of
any other payments described above shall be payable at the office of the
Purchase Contract Agent in the City of New York maintained for that purpose or,
at the option of the Holder, by check mailed to the address of the Person
entitled thereto at such address as it appears on the Security Register.

 

(f)         The
obligations of the Holders to pay the Purchase Price are non-recourse
obligations and, except to the extent satisfied by Early Settlement,
Fundamental Change Early Settlement or Cash Settlement or terminated upon a
Termination Event, are payable solely out of the proceeds of any Collateral
pledged to secure the obligations of the Holders, and in no event will Holders
be liable for any deficiency between the proceeds of the disposition of
Collateral and the Purchase Price.

 

(g)        The
Company shall not be obligated to issue any shares of Common Stock in respect
of a Purchase Contract or deliver any certificates thereof to the Holder of the
related Units unless the Company shall have received payment for the Common
Stock to be purchased thereunder in the manner herein set forth.

 

Section 5.03.  Issuance of Shares of Common Stock.  (a) Unless a Termination
Event, an Early Settlement or a Fundamental Change Early Settlement shall have
occurred, subject to Section 5.04(b), on the Purchase Contract Settlement
Date upon receipt of the aggregate Purchase Price payable on all Outstanding
Units in accordance with Section 5.02 above, the Company shall issue and
deposit with the Purchase Contract Agent, for the benefit of the Holders of the
Outstanding Units, one or more certificates representing newly issued shares of
Common Stock registered in the name of the Purchase Contract Agent (or its
nominee) as custodian for the Holders (such certificates for shares of

 

58

 

Common Stock,
together with any dividends or distributions for which a record date and
payment date for such dividend or distribution has occurred after the Purchase
Contract Settlement Date, being hereinafter referred to as the “Purchase Contract Settlement Fund”) to which the Holders are
entitled hereunder.

 

(b)        Subject
to the foregoing, upon surrender of a Certificate to the Purchase Contract
Agent on or after the Purchase Contract Settlement Date, Early Settlement Date
or Fundamental Change Early Settlement Date, as the case may be, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive forthwith in exchange therefor a
certificate representing that number of newly issued whole shares of Common
Stock which such Holder is entitled to receive pursuant to the provisions of
this Article 5 (after taking into account all Units then held by such
Holder), together with cash in lieu of fractional shares as provided in Section 5.08
and any dividends or distributions with respect to such shares constituting
part of the Purchase Contract Settlement Fund, but without any interest
thereon, and the Certificate so surrendered shall forthwith be cancelled.  Such shares shall be registered in the name
of the Holder or the Holder’s designee as specified in the settlement
instructions provided by the Holder to the Purchase Contract Agent.  If any shares of Common Stock issued in
respect of a Purchase Contract are to be registered to a Person other than the
Person in whose name the Certificate evidencing such Purchase Contract is
registered (but excluding any Depositary or nominee thereof), no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Certificate evidencing
such Purchase Contract or has established to the satisfaction of the Company
that such tax either has been paid or is not payable.

 

Section 5.04.  Anti-Dilution Adjustments.  (a) Each Fixed Settlement
Rate will be subject to adjustment, without duplication, as follows:

 

(i)            In case the Company
shall pay a dividend or make any other distribution of Common Stock on the
outstanding shares of Common Stock, each Fixed Settlement Rate in effect at the
close of business on the record date for the determination of shareholders
entitled to receive such dividend or other distribution shall be increased by dividing each Fixed Settlement Rate by a fraction of which:

 

(A)           the numerator shall be
the sum of the number of shares of Common Stock outstanding at the close of
business on the record date for such determination plus
the total number of shares constituting such dividend or other distribution,
and

 

(B)            the denominator shall
be the number of shares of Common Stock outstanding at the close of business on
the record date for such determination;

 

such increase to become effective immediately
at the opening of business on the Business Day following the record date for
such determination.

 

59

 

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

 

(ii)           In case the Company
shall issue rights, warrants or options, other than pursuant to any dividend
reinvestment plans or share purchase plans, to all holders of its Common Stock
entitling them, for a period expiring within 45 days after the record date for
the determination of shareholders entitled to receive such rights, warrants or
options, to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Price per share of Common Stock on the date
of announcement of such issuance, each Fixed Settlement Rate in effect at the
close of business on the date of such announcement shall be increased by dividing such Fixed Settlement Rate by a fraction of which:

 

(A)           the numerator shall be
the number of shares of Common Stock outstanding at the close of business on
the record date for such determination plus the number
of shares of Common Stock so offered for subscription or purchase, and

 

(B)            the denominator shall
be the number of shares of Common Stock outstanding at the close of business on
the record date for such determination plus the number
of shares of Common Stock which the aggregate of the 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 Business Day following the date of such
announcement.  The Company agrees that it
shall notify the Purchase Contract Agent if any issuance of such rights,
warrants or options is cancelled or not completed following the announcement
thereof and each Fixed Settlement Rate shall thereupon be readjusted to the Fixed
Settlement Rate in effect immediately prior to the date of such
announcement.  For purposes of this
clause (ii), the number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Company but shall include any
shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock.  The
Company agrees that it shall not issue any such rights, warrants or options in
respect of shares of Common Stock held in the treasury of the Company.

 

(iii)          In case outstanding
shares of Common Stock shall be subdivided or split into a greater number of
shares of Common Stock, each Fixed Settlement Rate in effect at the close of
business on the day preceding the day upon which such subdivision or split
becomes effective shall be proportionately increased, and,

 

60

 

conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number of shares
of Common Stock, each Fixed Settlement Rate in effect at the close of business
on the day preceding the day upon which such combination becomes effective
shall be proportionately decreased, such increase or decrease, as the case may
be, to become effective immediately at the opening of business on the Business
Day following the day upon which such subdivision, split or combination becomes
effective.

 

(iv)          In case the Company
shall, by dividend or otherwise, distribute to all holders of outstanding
shares of Common Stock evidences of its indebtedness, shares of capital stock,
securities, case or property (excluding (A) any dividend  or distribution covered by clause (i) or
(ii) of this Section 5.04(a), (B) any dividend or distribution
paid exclusively in cash and (C) any Spin-Off as to which an adjustment
was effected under the provisions of clause (v) of this Section 5.04(a),
each Fixed Settlement Rate in effect at the close of business on the record
date for the determination of shareholders entitled to receive such
distribution shall be adjusted by dividing such
rate by a fraction of which:

 

(A)           the numerator shall be
the Current Market Price per share of Common Stock on the record date for such
determination, and

 

(B)            the denominator shall
be the Current Market Price per share of Common Stock on the record date for
such determination less the then
fair market value (as reasonably determined by the Board of Directors, whose
determination shall be conclusive and the basis for which shall be described in
a Board Resolution) of the portion of distribution applicable to one share of
Common Stock;

 

such adjustment to become effective at the
opening of business on the Business Day following the record date for the
determination of shareholders entitled to receive such distribution.  In the event that such dividend or
distribution is not so paid or made, each Fixed Settlement Rate shall again be
adjusted to be the Fixed Settlement Rate which would then be in effect if such
dividend or distribution had not been declared.

 

(v)           In case the Company
shall, by dividend or otherwise, make a distribution to all holders of its
Common Stock consisting of capital stock of, or similar equity interests in, a
subsidiary or other business unit of the Company (a “Spin-Off”)
that are, or when issued will be, traded on a U.S. securities exchange, each
Fixed Settlement Rate in effect at the close of business on the record date for
the determination of shareholders entitled to receive such distribution shall
be adjusted by dividing such rate by a fraction of which

 

(A)           the numerator shall be
the sum of (x) the average of the
closing prices of such capital stock or similar equity interests distributed to
holders of Common Stock applicable to one share of Common Stock over

 

61

 

the 10 consecutive Trading Day
period (the “Relevant Period”) commencing on
and including the third Trading Day after the date on which “ex-distribution
trading” commences for such distribution on the NYSE or such other national or
regional exchange or market on which such dividend or distribution is listed or
quoted and (y) the average of the Closing Prices of one share of Common
Stock over the Relevant Period, and

 

(B)            the denominator shall
be the average of the Closing Prices of one share of Common Stock over the
Relevant Period.

 

(vi)          In case the Company
shall make a distribution consisting exclusively of cash to all holders of
Common Stock (excluding any dividend or distribution in connection with a
liquidation, dissolution or termination of the Company) in an amount per share
of Common Stock that exceeds $0.24 per quarter (such per share amount, the “Reference Dividend”), then, in such case, each Fixed
Settlement Rate in effect at the close of business on the record date for the
determination of shareholders entitled to receive such distribution shall be
adjusted by dividing such rate by a fraction of
which:

 

(A)           the numerator shall be
the Current Market Price per share of Common Stock on such record date, and

 

(B)            the denominator shall
be the Current Market Price per share of Common Stock on such record date less the amount of cash per share of Common Stock so
distributed (and not excluded as provided above) in excess of the Reference
Dividend;

 

such increase to be effective at the opening
of business on the Business Day following the record date; provided, however, that in the event the portion of cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price per share of Common Stock on the record date, in lieu
of the foregoing adjustment, adequate provision shall be made so that each
Holder of a Unit shall have the right to receive upon settlement of the Units
the amount of cash such Holder would have received had such Holder settled each
Unit on the record date.  The Reference
Dividend shall be subject to an inversely proportional adjustment whenever each
Fixed Settlement Rate is adjusted under this clause (vi).  In the event that such dividend or
distribution is not so paid or made, each Fixed Settlement Rate shall again be
adjusted to be the Fixed Settlement Rate which would then be in effect if such
dividend or distribution had not been declared.

 

(vii)         The reclassification of
Common Stock into securities including securities other than Common Stock
(other than any reclassification upon a Reorganization Event to which Section 5.04(b) applies)
shall be deemed to involve:

 

62

 

(A)           a distribution of such
securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be “the record date
for the determination of shareholders entitled to receive such distribution”
and “the record date for such determination” within the meaning of paragraph (iv) of
this Section); and

 

(B)            a subdivision, split
or combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be “the day upon which such
subdivision or split becomes effective” or “the day upon which such combination
becomes effective”, as the case may be, and “the day upon which such
subdivision, split or combination becomes effective” within the meaning of
paragraph (iii) of this Section).

 

(viii)        In case the Company or any
subsidiary of the Company shall make a tender or exchange offer (other than any
odd-lot tender offer) for all or any portion of the Common Stock and upon
expiration of such tender or exchange offer (as amended upon the expiration
thereof), to the extent that the cash and the value of any other consideration
included in the payment per share of Common Stock (as reasonably determined by
the Board of Directors, whose determination shall be conclusive and the basis
for which shall be described in a Board Resolution) exceeds the average closing
price of the Common Stock for each of the five consecutive Trading Days next
succeeding the last date on which tenders or exchanges may be made under such
tender or exchange offer (the “Expiration Time”),
each Fixed Settlement Rate in effect at the Expiration Time shall be adjusted
by dividing such rate by a fraction of
which:

 

(A)           the numerator shall be
equal to the sum of (1) the fair market
value, as reasonably determined by the Board of Directors (whose determination
shall be conclusive and the basis for which shall be described in a Board
Resolution), of the aggregate consideration payable for all shares of Common
Stock that the Company or a subsidiary of the Company, as the case may be,
purchased in such tender or exchange offer (the “Purchased
Shares”) and (2) the product of (x) the number of shares
of Common Stock outstanding at the Expiration Time, less
any Purchased Shares, and (y) the Closing Price of the Common Stock on the
Trading Day next succeeding the Expiration Time, and

 

(B)            the denominator shall
be equal to the product of the number of shares of Common Stock outstanding at
the Expiration Time, including the Purchased Shares, and the Closing Price of
the Common Stock on the Trading Day next succeeding the Expiration Time;

 

63

 

such adjustment to become
effective at the opening of business on the Business Day following the date of
the Expiration Time.

 

(ix)           All adjustments to the
Fixed Settlement Rate shall be calculated to the nearest 1/10,000th of a share
of Common Stock (or if there is not a nearest 1/10,000th of a share, to the
next lower 1/10,000th of a share).  No
adjustment in the Fixed Settlement Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
thereof; provided, however, that (i) any
adjustments which by reason of this subclause are not required to be made shall
be carried forward and taken into account in any subsequent adjustment and (ii) that
effect shall be given to all anti-dilution adjustments no later than the close
of business on the Business Day immediately preceding the first Trading Day in
the 20 consecutive Trading Day period during which the Applicable Market Value
is determined (or, if earlier, the close of business on the Business Day
immediately preceding the date on which the Fundamental Change Early Settlement
Rate is determined).

 

(x)            If any adjustment is
made to each Fixed Settlement Rate pursuant to this Section 5.04(a), an
inversely proportional adjustment shall also be made to the Reference Price and
Threshold Appreciation Price.  In addition,
if any adjustment to each Fixed Settlement Rate is required to be made pursuant
to the occurrence of any of the events contemplated by this Section 5.04(a) during
the period taken into consideration for determining the Applicable Market
Value, the 20 individual Closing Prices used to determine the Applicable Market
Value shall be appropriately adjusted to account for the adjustment to each
Fixed Settlement Rate (as determined by the Board of Directors, whose
determination shall be conclusive and the basis for which shall be described in
a Board Resolution).

 

(xi)           The Company may, but
shall not be required to, make such increases in the Fixed Settlement Rate, in
addition to those required by this Section 5.04(a), as the Board of
Directors considers to be advisable in order to avoid or diminish any income
tax to any holders of shares of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax purposes
or for any other reason.  The Company may
make such a discretionary adjustment only if it makes the same proportionate
adjustment to each Fixed Settlement Rate.

 

(xii)          If the Company hereafter
adopts any stockholder rights plan involving the issuance of preference share
purchase rights or other similar rights (the “Rights”)
to all holders of the Common Stock, a Holder shall be entitled to receive upon
settlement of any Purchase Contract, in addition to the shares of Common Stock
issuable upon settlement of such Purchase Contract, the related Rights for the
Common Stock, unless such Rights under the future stockholder rights plan have
separated from the Common Stock at the time of conversion, in

 

64

 

which case
each Fixed Settlement Rate shall be adjusted as provided in
Section 5.04(iv) on the date such Rights separate from the Common
Stock.

 

(b)      Adjustment
for Consolidation, Merger or Other Reorganization Event.

 

(i)    In the event of
Reorganization Event that causes the Common Stock to be converted into the
right to receive other securities, cash or property, each Purchase Contract
then outstanding would, without the consent of the Holders of the underlying
Corporate Units or Treasury Units, as the case may be, become a contract to
purchase such other securities instead of the Common Stock. If such
Reorganization Event causes the Common Stock to be converted into the right to
receive more than a single type of consideration (determined based in part upon
any form of stockholder election), each Purchase Contract then outstanding
would become a contract to purchase the amount of other securities, cash and/or
property corresponding to the weighted average of the types and amounts of
consideration received by the holders of Common Stock that affirmatively make
such election. Upon the occurrence of any such transaction, on the Purchase
Contract Settlement Date, the Settlement Rate will be determined based on the
securities, cash or property a holder of Common Stock would have received when
such transaction occurred.

 

(ii)   If a Fundamental Change
occurs prior to the Purchase Contract Settlement Date, then each Holder of a
Unit shall have the right, to accelerate and settle (“Fundamental
Change Early Settlement”) the Purchase Contract contained in such
Unit upon the conditions set forth below at the Fundamental Change Early
Settlement Rate; provided that no Fundamental
Change Early Settlement will be permitted pursuant to this
Section 5.04(b)(ii) unless, at the time such Fundamental Change Early
Settlement is effected, there is an effective Registration Statement with
respect to any securities to be issued and delivered in connection with such
Fundamental Change Early Settlement, if such a Registration Statement is
required (in the view of counsel, which need not be in the form of a written
opinion, for the Company) under the Securities Act. If such a Registration
Statement is so required, the Company covenants and agrees to use its best
efforts to (x) have in effect a Registration Statement covering any
securities to be delivered in respect of the Purchase Contracts being settled
and (y) provide a Prospectus in connection therewith, in each case in a
form that may be used in connection with such Fundamental Change Early
Settlement. In the event that a Holder elects a Fundamental Change Early
Settlement and a Registration Statement is required to be effective in
connection with the exercise of such Fundamental Change Early Settlement but no
such Registration Statement is then effective, the Holder’s election shall be
void unless and until such a Registration Statement becomes effective.

 

If a Holder elects a Fundamental Change Early Settlement of some or all
of its Purchase Contracts, such Holder shall be entitled to receive, on the
Fundamental

 

65

 

Change Early
Settlement Date, the aggregate amount of any accrued and unpaid Contract
Adjustment Payments including and any Deferred Contract Adjustment Payments,
with respect to such Purchase Contracts. The Company shall pay such amount as a
credit against the amount otherwise payable by such Holder to effect such
Fundamental Change Early Settlement.

 

The “Fundamental Change Early
Settlement Rate” shall be determined by reference to the table set
forth below, based on the date on which the Fundamental Change occurs or
becomes effective (the “Effective Date”)
and the stock price (the “Stock Price”)
in the Fundamental Change, which means: (A) in the case of a Fundamental
Change described in clause (ii) of the definition of such term and holders
of the Common Stock receive only cash in the Fundamental Change, the Stock
Price shall be the cash amount paid per share; or (B) otherwise, the Stock
Price shall be the average of the Closing Prices of the Common Stock over the
five Trading Day period ending on the Trading Day preceding the Effective Date
of the Fundamental Change.

 

The following table sets forth the Stock
Price and Fundamental Change Early Settlement Rate per $50 of Stated Amount of
Units:

 

	
   

  	
   

  	
  Effective Date

  	
   

  
	
  Stock Price

  	
   

  	
  May 12, 2008

  	
   

  	
  June 30, 2009

  	
   

  	
  June 30, 2010

  	
   

  	
  June 29, 2011

  	
   

  
	
  $51.50

  	
   

  	
  0.9109

  	
   

  	
  0.8796

  	
   

  	
  0.8603

  	
   

  	
  0.8881

  	
   

  
	
  $54.80

  	
   

  	
  0.8949

  	
   

  	
  0.8644

  	
   

  	
  0.8439

  	
   

  	
  0.8881

  	
   

  
	
  $58.30

  	
   

  	
  0.8804

  	
   

  	
  0.8504

  	
   

  	
  0.8284

  	
   

  	
  0.8576

  	
   

  
	
  $62.05

  	
   

  	
  0.8672

  	
   

  	
  0.8377

  	
   

  	
  0.8140

  	
   

  	
  0.8058

  	
   

  
	
  $66.20

  	
   

  	
  0.8551

  	
   

  	
  0.8262

  	
   

  	
  0.8012

  	
   

  	
  0.7553

  	
   

  
	
  $70.30

  	
   

  	
  0.8451

  	
   

  	
  0.8170

  	
   

  	
  0.7913

  	
   

  	
  0.7401

  	
   

  
	
  $74.46

  	
   

  	
  0.8368

  	
   

  	
  0.8095

  	
   

  	
  0.7837

  	
   

  	
  0.7401

  	
   

  
	
  $81.90

  	
   

  	
  0.8252

  	
   

  	
  0.7996

  	
   

  	
  0.7748

  	
   

  	
  0.7401

  	
   

  
	
  $90.10

  	
   

  	
  0.8160

  	
   

  	
  0.7924

  	
   

  	
  0.7693

  	
   

  	
  0.7401

  	
   

  
	
  $99.10

  	
   

  	
  0.8087

  	
   

  	
  0.7871

  	
   

  	
  0.7660

  	
   

  	
  0.7401

  	
   

  
	
  $109.00

  	
   

  	
  0.8028

  	
   

  	
  0.7831

  	
   

  	
  0.7637

  	
   

  	
  0.7401

  	
   

  
	
  $119.90

  	
   

  	
  0.7979

  	
   

  	
  0.7798

  	
   

  	
  0.7618

  	
   

  	
  0.7401

  	
   

  

 

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

 

(A)      if the Stock Price on the
Effective Date is between two Stock Price amounts in the table or the Effective
Date is between two Effective Dates in the table, the Fundamental Change Early
Settlement Rate will be determined by a straight-line interpolation between the
number of shares set forth for the higher and lower Stock Price amount and the
earlier and later Effective Dates, as applicable, based on a 365-day year;

 

(B)      if the actual Stock Price
on the Effective Date exceeds $119.90 per share of Common Stock, subject to
adjustment as set forth

 

66

 

herein, the
Fundamental Change Early Settlement Rate will be the Minimum Settlement Rate;
and

 

(C)      if the actual Stock Price
on the Effective Date is less than $51.50 per share of Common Stock, subject to
adjustment as set forth herein, the Fundamental Change Early Settlement Rate
will be the Maximum Settlement Rate.

 

The Stock Prices set forth in the first
column of the table above shall be adjusted as of any date on which any Fixed
Settlement Rate is adjusted pursuant to Section 5.04 hereof. The adjusted
Stock Prices will equal the Stock Prices applicable immediately prior to such
adjustment multiplied by a fraction, the numerator of which is the applicable
Fixed Settlement Rate immediately prior to the adjustment giving rise to the
Stock Price adjustment and the denominator of which is the Fixed Settlement
Rate as so adjusted. The number of shares of Common Stock set forth in the
table above will be adjusted in the same manner as the Fixed Settlement Rate is
adjusted pursuant to Section 5.04 hereof.

 

Within 15 Business Days of the occurrence of
a Fundamental Change, the Company shall provide written notice to Holders of
Units of such Fundamental Change, which shall specify the deadline for
submitting the notice to settle early in cash pursuant to this
Section 5.04(b)(ii), the date on which such Fundamental Change Early
Settlement shall occur (which date shall be at least 10 days after the date of
such written notice by the Company, but which shall in no event be later than the
fifth Business Day immediately preceding the Purchase Contract Settlement Date)
(the “Fundamental Change Early Settlement Date”),
the applicable Fundamental Change Early Settlement Rate and the amount (per
share of Common Stock) of cash, securities and other consideration receivable
by the Holder, including the amount of Contract Adjustment Payments and
Deferred Contract Adjustment Payments receivable, upon settlement.

 

Corporate Units Holders and Treasury Units
Holders may only effect Fundamental Change Early Settlement pursuant to this
Section 5.04(b)(ii) in integral multiples of 20 Corporate Units or
Treasury Units, as the case may be. If the Treasury Portfolio has replaced the
Notes as a component of the Corporate Units, Corporate Unit Holders may only
effect Fundamental Change Early Settlement pursuant to this
Section 5.04(b)(ii) in multiples of 10,000 Corporate Units or such
other number of Corporate Units as may be determined by the Remarketing Agent
following a Successful Remarketing of the Notes if the Reset Effective Date is
not an Interest Payment Date. Other than the provisions relating to timing of
notice and settlement, which shall be as set forth above, the provisions of
Section 5.01 shall apply with respect to a Fundamental Change Early Settlement
pursuant to this Section 5.04(b)(ii).

 

In order to exercise the Fundamental Change
Early Settlement right with respect to any Purchase Contracts, the Holder of
the Certificate evidencing Units

 

67

 

shall deliver, no later than
the close of business on the third Business Day immediately preceding the
Fundamental Change Early Settlement Date, such Certificate to the Purchase
Contract Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of “Election to Settle Early” on the reverse
thereof duly completed and accompanied by payment (payable to the Company in
immediately available funds) in an amount equal to the sum of:

 

(i)            product of (A) the Stated
Amount and (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Fundamental Change Early Settlement, less

 

(ii)           the amount of any accrued and unpaid
Contract Adjustment Payments and any Deferred Contract Adjustment Payments.

 

Upon receipt
of such Certificate and payment of such funds, the Purchase Contract Agent
shall pay the Company from such funds the related Purchase Price pursuant to
the terms of the related Purchase Contracts, and notify the Collateral Agent
that all the conditions necessary for a Fundamental Change Early Settlement by
a Holder of Units have been satisfied pursuant to which the Purchase Contract
Agent has received from such Holder, and paid to the Company as confirmed in
writing by the Company, the related Purchase Price.

 

Upon receipt by the Collateral Agent of the
notice from the Purchase Contract Agent set forth in the preceding paragraph,
the Collateral Agent shall release from the Pledge, (1) the Notes
underlying Pledged Applicable Ownership Interests in Notes or the Pledged
Applicable Ownership Interests in the Treasury Portfolio in the case of a
Holder of Corporate Units or (2) Pledged Treasury Securities, in the case
of a Holder of Treasury Units, in each case with a Value equal to the product
of (x) the Stated Amount and (y) the number of Purchase Contracts as
to which such Holder has elected to effect Fundamental Change Early Settlement,
and shall instruct the Securities Intermediary to Transfer all such Pledged
Applicable Ownership Interests in the Treasury Portfolio, Notes underlying
Pledged Applicable Ownership Interests in Notes or Pledged Treasury Securities,
as the case may be, to the Purchase Contract Agent for distribution to such
Holder, in each case free and clear of the Pledge created hereby.

 

If a Holder properly effects a Fundamental
Change Early Settlement in accordance with the provisions of this
Section 5.04(b)(ii), the Company shall deliver (or shall cause the
Collateral Agent to deliver) to the Holder on the Fundamental Change Early
Settlement Date:

 

(A)      the kind and amount of
securities, cash and other property receivable upon such Fundamental Change by
a Holder of the number of shares of Common Stock issuable on account of each
Purchase Contract if the Purchase Contract Settlement Date had occurred
immediately prior to

 

68

 

such
Fundamental Change at the Fundamental Change Early Settlement Rate in addition
to accrued and unpaid Contract Adjustment Payments to the Fundamental Change
Early Settlement Date. For purposes of the foregoing, where a Fundamental
Change involves a transaction that causes the Common Stock to be converted into
the right to receive more than a single type of consideration (determined based
in part upon any form of stockholder election) and the Holder exercises a
Fundamental Early Change Settlement, the Company shall deliver to the Holder on
the Fundamental Change Early Settlement Date, the weighted average of the types
and amounts of consideration received by the holders of Common Stock that
affirmatively make such an election. For the avoidance of doubt, for the
purposes of determining the Applicable Market Value (in connection with
determining the appropriate Settlement Rate to be applied in the foregoing
sentence), the date of the closing of the Fundamental Change shall be deemed to
be the Purchase Contract Settlement Date;

 

(B)      the Notes, the Applicable
Ownership Interests in the Treasury Portfolio or Treasury Securities underlying
the Corporate Units or the Treasury Units, as the case may be; and

 

(C)      if so required under the
Securities Act, a Prospectus as contemplated by this Section 5.04(b)(ii).

 

(c)       All
calculations and determinations pursuant to this Section 5.04 shall be
made by the Company or its agent and the Purchase Contract Agent shall have no
responsibility with respect thereto.

 

(d)      The
Corporate Units or the Treasury Units of the Holders who do not elect
Fundamental Change Early Settlement in accordance with
Section 5.04(b) shall continue to remain outstanding and be subject
to settlement on the Purchase Contract Settlement Date in accordance with the
terms hereof.

 

(e)       Neither
Fixed Settlement Rate shall be adjusted under this Section 5.04 upon the
occurrence of any of the following:

 

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

 

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

 

69

 

(iii)  upon the issuance of any
shares of Common Stock pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of May 12, 2008;

 

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

 

(v)   for accumulated and unpaid
dividends.

 

Section 5.05. Notice of
Adjustments and Certain Other Events. (a) Whenever the Fixed
Settlement Rates are adjusted as herein provided, the Company shall within 10
Business Days following the occurrence of an event that requires an adjustment
to each Fixed Settlement Rate pursuant to Section 5.04 (or if the Company
is not aware of such occurrence, as soon as practicable after becoming so
aware):

 

(i)    compute each adjusted Fixed
Settlement Rate in accordance with Section 5.04 and prepare and transmit
to the Purchase Contract Agent an Officers’ Certificate setting forth each
Fixed Settlement Rate, the method of calculation thereof in reasonable detail,
and the facts requiring such adjustment and upon which such adjustment is
based; and

 

(ii)   provide a written notice to
the Holders of the Units of the occurrence of such event and a statement in
reasonable detail setting forth the method by which the adjustment to each
Fixed Settlement Rate was determined and setting forth each adjusted Fixed
Settlement Rate.

 

(b)           The
Purchase Contract Agent shall not at any time be under any duty or
responsibility to any Holder of Units to determine whether any facts exist
which may require any adjustment of each Fixed Settlement Rate, or with respect
to the nature or extent or calculation of any such adjustment when made, or
with respect to the method employed in making the same. The Purchase Contract
Agent shall be fully authorized and protected in relying on any Officers’
Certificate delivered pursuant to Section 5.05(a)(i) and any adjustment
contained therein and the Purchase Contract Agent shall not be deemed to have
knowledge of any adjustment unless and until it has received such certificate.
The Purchase Contract Agent shall not be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock, or of
any securities or property, which may at the time be issued or delivered with
respect to any Purchase Contract; and the Purchase Contract Agent makes no
representation with respect thereto. The Purchase Contract Agent shall not be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock pursuant to a Purchase Contract or to comply with any of
the duties, responsibilities or covenants of the Company contained in this
Article 5.

 

Section 5.06.
Termination Event; Notice. The Purchase Contracts and all
obligations and rights of the Company and the Holders thereunder, including,
without limitation, the rights of the Holders to receive and the obligation of
the Company to pay any Contract Adjustment Payments (including any accrued and
unpaid Contract

 

70

 

Adjustment Payments and any Deferred Contract
Adjustment Payments), and the rights and obligations of Holders to purchase
Common Stock, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Purchase Contract Agent or
the Company, if, prior to or on the Purchase Contract Settlement Date, a
Termination Event shall have occurred.

 

Upon and after
the occurrence of a Termination Event, the Units shall thereafter represent the
right to receive the Notes, the Treasury Securities or the Applicable Ownership
Interests in the Treasury Portfolio, as the case may be, forming part of such
Units, in accordance with the provisions of Section 3.15 hereof. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Purchase
Contract Agent, the Collateral Agent and the Holders, at their addresses as
they appear in the Security Register.

 

Section 5.07. Early
Settlement. (a) Subject to and upon compliance with the
provisions of this Section 5.07, at the option of the Holder thereof,
Purchase Contracts underlying Units may be settled early (“Early
Settlement”) at any time prior to the close of business on the
seventh Business Day immediately preceding the Purchase Contract Settlement
Date; provided that no Early Settlement will
be permitted pursuant to this Section 5.07 unless, at the time such Early
Settlement is effected, there is an effective Registration Statement with
respect to any securities to be issued and delivered in connection with such
Early Settlement, if such a Registration Statement is required (in the view of
counsel, which need not be in the form of a written opinion, for the Company)
under the Securities Act. If such a Registration Statement is so required, the
Company covenants and agrees to use best efforts to (i) have in effect a
Registration Statement covering any securities to be delivered in respect of
the Purchase Contracts being settled and (ii) provide a Prospectus in
connection therewith, in each case in a form that may be used in connection
with such Early Settlement (it being understood that if there is a material
business transaction or development with respect to the Company that has not
yet been publicly disclosed, the Company shall not be required to provide such
Prospectus and the Early Settlement right shall not be available until the
Company has publicly disclosed such transaction or development; provided that the Company shall use its best efforts to make
such disclosure as soon as it is commercially reasonable to do so). In the
event that a Holder of a Purchase Contract seeks to exercise its Early
Settlement right and a Registration Statement is so required but no such
Registration Statement is then effective, the Holder’s exercise of such right
shall be void unless and until such Registration Statement becomes effective.
Unless a Successful Remarketing of the Notes or a Special Event Redemption has
previously occurred, Holders of Corporate Units shall not be permitted to
effect Early Settlement (i) during a Restricted Period or
(ii) following the effectiveness of a Fundamental Change in which case the
provisions of Section 5.04(b)(ii) shall apply.

 

(b)           In
order to exercise the right to effect Early Settlement with respect to any
Purchase Contracts, the Holder of the Certificate evidencing Units shall
deliver, at any time prior to the close of business on the seventh Business Day
immediately preceding the

 

71

 

Purchase Contract Settlement Date, such Certificate to the Purchase
Contract Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of “Election to Settle Early” on the reverse
thereof duly completed and executed as indicated and accompanied by payment
(payable to the Company in immediately available funds) in an amount (the “Early Settlement Amount”) equal to the sum
of:

 

(i)    the product of (A) the
Stated Amount and (B) the number of Purchase Contracts with respect to
which the Holder has elected to effect Early Settlement, plus

 

(ii)   if such delivery is made
with respect to any Purchase Contracts during the period from the close of
business on any Record Date next preceding any Interest Payment Date to the
opening of business on such Payment Date, an amount equal to the Contract
Adjustment Payments and any Deferred Contract Adjustment Payments payable on
such Payment Date with respect to such Purchase Contracts.

 

Except as
provided in the immediately preceding sentence, no payment shall be made upon
Early Settlement of any Purchase Contract on account of any Contract Adjustment
Payments accrued on such Purchase Contract or on account of any dividends on
the Common Stock issued upon such Early Settlement. If the foregoing requirements
are first satisfied with respect to Purchase Contracts underlying any Units at
or prior to the close of business on a Business Day, such day shall be the “Early Settlement Date” with respect to such Units and if
such requirements are first satisfied after the close of business on a Business
Day or at any time on a day that is not a Business Day, the “Early Settlement Date” with respect to such Units shall be
the next succeeding Business Day.

 

Upon the
receipt of such Certificate and Early Settlement Amount from the Holder, the
Purchase Contract Agent shall pay to the Company such Early Settlement Amount,
the receipt of which payment the Company shall confirm in writing. The Purchase
Contract Agent shall then notify the Collateral Agent that (A) such Holder
has elected to effect an Early Settlement, which notice shall set forth the
number of such Purchase Contracts as to which such Holder has elected to effect
Early Settlement, (B) the Purchase Contract Agent has received from such
Holder, and paid to the Company as confirmed in writing by the Company, the
related Early Settlement Amount and (C) all conditions to such Early
Settlement have been satisfied.

 

Upon receipt
by the Collateral Agent of the notice from the Purchase Contract Agent set
forth in the preceding paragraph, the Collateral Agent shall release from the
Pledge, (1) the Notes underlying Pledged Applicable Ownership Interests in
Notes or the Pledged Applicable Ownership Interests in the Treasury Portfolio
the case of a Holder of Corporate Units or (2) Pledged Treasury
Securities, in the case of a Holder of Treasury Units, in each case with a
Value equal to the product of (x) the Stated Amount and (y) the
number of Purchase Contracts as to which such Holder has elected to effect
Early Settlement, and shall instruct the Securities Intermediary to Transfer
all such Pledged Applicable Ownership Interests in the Treasury Portfolio,
Notes underlying Pledged

 

72

 

Applicable
Ownership Interests in Notes or Pledged Treasury Securities, as the case may
be, to the Purchase Contract Agent for distribution to such Holder, in each
case free and clear of the Pledge created hereby.

 

Holders of
Corporate Units or Treasury Units may only exercise the Early Settlement right
pursuant to this Section 5.07 in integral multiples of 20 Corporate Units
or Treasury Units, as the case may be. If the Treasury Portfolio has replaced
the Notes underlying Pledged Applicable Ownership Interests in Notes, Holders
of Corporate Units may exercise the Early Settlement right pursuant to this
Section 5.07 only in integral multiples of 10,000 Corporate Units or such
other number of Corporate Units as may be determined by the Remarketing Agent
following a Successful Remarketing of the Notes if the Reset Effective Date is
not an Interest Payment Date.

 

Upon Early
Settlement of the Purchase Contracts, the rights of the Holders to receive and
the obligation of the Company to pay any Contract Adjustment Payments
(including any accrued and unpaid Contract Adjustment Payments) with respect to
such Purchase Contracts shall immediately and automatically terminate.

 

(c)            Upon
Early Settlement of Purchase Contracts by a Holder of the related Units, the
Company shall issue, and the Holder shall be entitled to receive, a number of
shares of Common Stock equal to the Minimum Settlement Rate for each Purchase
Contract as to which Early Settlement is effected.

 

(d)           No
later than the third Business Day after the applicable Early Settlement Date,
the Company shall cause the shares of Common Stock issuable upon Early
Settlement of Purchase Contracts to be issued and delivered, together with
payment in lieu of any fraction of a share, as provided in Section 5.08.

 

(e)            Upon
Early Settlement of any Purchase Contracts, and subject to receipt of shares of
Common Stock from the Company and the Notes, the Applicable Ownership Interests
in the Treasury Portfolio or Treasury Securities, as the case may be, from the
Securities Intermediary, as applicable, the Purchase Contract Agent shall, in
accordance with the instructions provided by the Holder thereof on the
applicable form of “Election to Settle Early” on the reverse of the Certificate
evidencing the related Units:

 

(i)    transfer to the Holder the
Notes, the Applicable Ownership Interests in the Treasury Portfolio or Treasury
Securities, as the case may be, related to such Units,

 

(ii)   deliver to the Holder a
certificate or certificates for the full number of shares of Common Stock
issuable upon such Early Settlement, together with payment in lieu of any
fraction of a share, as provided in Section 5.08, and

 

73

 

(iii)  the Company shall, if so
required under the Securities Act, deliver a Prospectus for the shares of
Common Stock issuable upon such Early Settlement as contemplated by
Section 5.07(a).

 

(f)            In
the event that Early Settlement is effected with respect to Purchase Contracts
underlying less than all the Units evidenced by a Certificate, upon such Early
Settlement the Company shall execute and the Purchase Contract Agent shall
execute on behalf of the Holder, authenticate and deliver to the Holder
thereof, at the expense of the Company, a Certificate evidencing the Units as
to which Early Settlement was not effected.

 

(g)           A
Holder of a Unit who effects Early Settlement may elect to have the Notes no
longer a part of a Corporate Unit remarketed in accordance with the provisions
of Section 5.02.

 

Section 5.08. No
Fractional Shares. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued or delivered upon settlement
on the Purchase Contract Settlement Date, or upon Early Settlement or
Fundamental Change Early Settlement of any Purchase Contracts. If Certificates
evidencing more than one Purchase Contract shall be surrendered for settlement
at one time by the same Holder, the number of full shares of Common Stock which
shall be delivered upon settlement shall be computed on the basis of the
aggregate number of Purchase Contracts evidenced by the Certificates so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Purchase Contracts on the
Purchase Contract Settlement Date, or upon Early Settlement or Fundamental
Change Early Settlement, the Company, through the Purchase Contract Agent,
shall make a cash payment in respect of such fractional interest in an amount
equal to the percentage of such fractional share multiplied by the Applicable
Market Value calculated as if the date of such settlement were the Purchase
Contract Settlement Date. The Company shall provide the Purchase Contract Agent
from time to time with sufficient funds to permit the Purchase Contract Agent
to make all cash payments required by this Section 5.08 in a timely
manner.

 

74

 

Section 5.09. Charges
and Taxes. The Company will pay all stock transfer and similar taxes
attributable to the initial issuance and delivery of the shares of Common Stock
pursuant to the Purchase Contracts; provided, however,
that the Company shall not be required to pay any such tax or taxes which may
be payable in respect of any exchange of or substitution for a Certificate
evidencing a Unit or any issuance of a share of Common Stock in a name other
than that of the registered Holder of a Certificate surrendered in respect of
the Units evidenced thereby, other than in the name of the Purchase Contract
Agent, as custodian for such Holder, and the Company shall not be required to
issue or deliver such share certificates or Certificates unless or until the Person
or Persons requesting the transfer or issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.

 

Section 5.10. Contract
Adjustment Payments. (a) Subject to Section 5.10(c) and
Section 5.11, the Company shall pay, on each Contract Adjustment Payment
Date, the Contract Adjustment Payments payable in respect of each Purchase
Contract to the Person in whose name a Certificate is registered at the close of
business on the Record Date relating to such Payment Date. The Contract
Adjustment Payments will be payable at the office of the Purchase Contract
Agent in the Borough of Manhattan, City of New York maintained for that
purpose. If the book-entry system for the Units has been terminated, the
Contract Adjustment Payments will be payable, at the option of the Company, by
check mailed to the address of the Person entitled thereto at such Person’s
address as it appears on the Security Register, or by wire transfer to the
account designated by such Person by a prior written notice to the Purchase
Contract Agent. If any date on which Contract Adjustment Payments are to be
made is not a Business Day, then payment of the Contract Adjustment Payments
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest in respect of any such delay); provided that if such Business Day is in the next succeeding
calendar year, then payment of the Contract Adjustment Payments will be made on
the Business Day immediately preceding such Business Day, in each case, with
the same force and effect as if made on such scheduled Payment Date. Contract
Adjustment Payments payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. The Contract Adjustment Payments will
accrue from May 12, 2008.

 

(b)      Upon
the occurrence of a Termination Event, the Company’s obligation to pay future
Contract Adjustment Payments (including any accrued Contract Adjustment Payments)
and any Deferred Contract Adjustment Payments shall cease.

 

(c)       Each
Certificate delivered under this Agreement upon registration of transfer of or
in exchange for or in lieu of (including as a result of a Collateral
Substitution or the recreation of Corporate Units) any other Certificate shall
carry the right to accrued and unpaid Contract Adjustment Payments and Deferred
Contract Adjustment Payments, that was carried by the Purchase Contracts
underlying such other Certificates.

 

75

 

(d)      In
the case of any Unit with respect to which Early Settlement or Fundamental
Change Early Settlement of the underlying Purchase Contract is effected on a
date that is after any Record Date and prior to or on the next succeeding
Contract Adjustment Payment Date, Contract Adjustment Payments and Deferred
Contract Adjustment Payments otherwise payable on such Contract Adjustment Payment
Date shall be payable on such Contract Adjustment Payment Date notwithstanding
such Early Settlement or Fundamental Change Early Settlement, and such Contract
Adjustment Payments and Deferred Contract Adjustment Payments shall be paid to
the Person in whose name the Certificate evidencing such Unit is registered at
the close of business on such Record Date. Except as otherwise provided in the
preceding sentence or in Section 5.04(b)(ii), in the case of any Unit with
respect to which Early Settlement or Fundamental Change Early Settlement of the
underlying Purchase Contract is effected, accrued and unpaid Contract
Adjustment Payments (but not, for the avoidance of doubt, Deferred Contract
Adjustment Payments) otherwise payable after the Early Settlement or
Fundamental Change Early Settlement Date with respect to such Purchase Contract
shall not be payable.

 

(e)       The
Company’s obligations with respect to Contract Adjustment Payments and Deferred
Contract Adjustment Payments, if any, will be subordinated and junior in right
of payment to the Company’s obligations under any Senior Indebtedness.

 

(f)       In
the event (x) of any payment by, or distribution of assets of, the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution, winding-up, liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, or (y) subject to the provisions of
Section 5.10(h) below, that (i) a default shall have occurred
and be continuing with respect to the payment of principal, interest or any other
monetary amounts due and payable on any Senior Indebtedness and such default
shall have continued beyond the period of grace, if any, specified in the
instrument evidencing such Senior Indebtedness (and the Purchase Contract Agent
shall have received written notice thereof from the Company or one or more
holders of Senior Indebtedness or their representative or representatives or
the trustee or trustees under any indenture pursuant to which any such Senior
Indebtedness may have been issued), or (ii) the maturity of any Senior
Indebtedness shall have been accelerated because of a default in respect of
such Senior Indebtedness (and the Purchase Contract Agent shall have received
written notice thereof from the Company or one or more holders of Senior Indebtedness
or their representative or representatives or the trustee or trustees under any
indenture pursuant to which any such Senior Indebtedness may have been issued),
then:

 

(i)    the holders of all Senior
Indebtedness shall first be entitled to receive, in the case of clause
(x) above, payment of all amounts due or to become due upon all Senior
Indebtedness and, in the case of subclauses (i) and (ii) of clause
(y) above, payment of all amounts due thereon, or provision shall be made for
such payment in money or money’s worth, before the Holders of any of the Units
are entitled to receive any Contract Adjustment Payments or Deferred Contract
Adjustment Payments on the Purchase Contracts underlying the Units;

 

76

 

(ii)           any payment by, or
distribution of assets of, the Company of any kind or character, whether in
cash, property or securities, to which the Holders of any of the Units would be
entitled except for the provisions of Section 5.10(e) through (q), including
any such payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of the Company being subordinated to
the payment of such Contract Adjustment Payments or Deferred Contract
Adjustment Payments on the Purchase Contracts underlying the Units, shall be
paid or delivered by the Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the representative or representatives of the holders of Senior Indebtedness
or to the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of such Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid after giving effect
to any concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness, before any payment or distribution is made
of such Contract Adjustment Payments or Deferred Contract Adjustment Payments
to the Holders of such Units; and

 

(iii)          in the event that,
notwithstanding the foregoing, any payment by, or distribution of assets of,
the Company of any kind or character, whether in cash, property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being subordinated
to the payment of Contract Adjustment Payments or Deferred Contract Adjustment
Payments on the Purchase Contracts underlying the Units, shall be received by
the Purchase Contract Agent or the Holders of any of the Units when such
payment or distribution is prohibited pursuant to
Section 5.10(e) through (q), such payment or distribution shall be
paid over to the representative or representatives of the holders of Senior
Indebtedness or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any such Senior Indebtedness may have been
issued, ratably as aforesaid, for application to the payment of all Senior
Indebtedness remaining unpaid until all such Senior Indebtedness shall have
been paid in full, after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of such Senior
Indebtedness.

 

(g)           For
purposes of Section 5.10(e) through (q), the words “cash, property or
securities” shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other Person
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in
Section 5.10(e) through (q) with respect to such Contract
Adjustment Payments or Deferred Contract Adjustment Payments on the Units to
the payment of all Senior Indebtedness which may at the time be outstanding; provided that (i) the indebtedness or guarantee of
indebtedness, as the case may be, that constitutes Senior

 

77

 

Indebtedness is assumed by the Person, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of the
Senior Indebtedness are not, without the consent of each such holder adversely
affected thereby, altered by such reorganization or readjustment;

 

(h)      Any
failure by the Company to make any payment on or perform any other obligation
under Senior Indebtedness, other than any indebtedness incurred by the Company
or assumed or guaranteed, directly or indirectly, by the Company for money
borrowed (or any deferral, renewal, extension or refunding thereof) or any
indebtedness or obligation as to which the provisions of Section 5.10(e) through
(q) shall have been waived by the Company in the instrument or instruments
by which the Company incurred, assumed, guaranteed or otherwise created such
indebtedness or obligation, shall not be deemed a default or event of default
if (i) the Company shall be disputing its obligation to make such payment
or perform such obligation and (ii) either (A) no final judgment
relating to such dispute shall have been issued against the Company which is in
full force and effect and is not subject to further review, including a
judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, and (B) in the event a
judgment that is subject to further review or appeal has been issued, the
Company shall in good faith be prosecuting an appeal or other proceeding for
review and a stay of execution shall have been obtained pending such appeal or
review.

 

(i)        Subject
to the irrevocable payment in full of all Senior Indebtedness, the Holders of
the Units shall be subrogated (equally and ratably with the holders of all
obligations of the Company which by their express terms are subordinated to
Senior Indebtedness of the Company to the same extent as payment of the
Contract Adjustment Payments and Deferred Contract Adjustment Payments in
respect of the Purchase Contracts underlying the Units is subordinated and
which are entitled to like rights of subrogation) to the rights of the holders
of Senior Indebtedness to receive payments or distributions of cash, property
or securities of the Company applicable to the Senior Indebtedness until all
such Contract Adjustment Payments and Deferred Contract Adjustment Payments
owing on the Units shall be paid in full, and as between the Company, its
creditors other than holders of such Senior Indebtedness and the Holders, no
such payment or distribution made to the holders of Senior Indebtedness by
virtue of Section 5.10(e) through (q) that otherwise would have been
made to the Holders shall be deemed to be a payment by the Company on account
of such Senior Indebtedness, it being understood that the provisions of
Section 5.10(e) through (q) are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and
the holders of Senior Indebtedness, on the other hand.

 

(j)        Nothing
contained in Section 5.10(e) through (q) or elsewhere in this
Agreement or in the Units is intended to or shall impair, as among the Company,
its creditors other than the holders of Senior Indebtedness and the Holders,
the obligation of the Company, which is absolute and unconditional, to pay to
the Holders such Contract Adjustment Payments and Deferred Contract Adjustment
Payments on the Units as and when the same shall become due and payable in
accordance with their terms, or is intended

 

78

 

to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Purchase Contract Agent or any Holder from
exercising all remedies otherwise permitted by applicable law upon default
under this Agreement, subject to the rights, if any, under
Section 5.10(e) through (q), of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.

 

(k)      Upon
payment or distribution of assets of the Company referred to in
Section 5.10(e) through (q), the Purchase Contract Agent and the
Holders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any such dissolution, winding up, liquidation
or reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or Purchase Contract Agent or other
person making any payment or distribution, delivered to the Purchase Contract
Agent or to the Holders, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to these Section 5.10(e) through
(q).

 

(l)       The
Purchase Contract Agent shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee or representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or representative on behalf of any such holder or holders. In the
event that the Purchase Contract Agent determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
Section 5.10(e) through (q), the Purchase Contract Agent may request
such Person to furnish evidence to the reasonable satisfaction of the Purchase
Contract Agent as to the amount of Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
Section 5.10(e) through (q), and, if such evidence is not furnished,
the Purchase Contract Agent may defer payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

 

(m)     Nothing
contained in Section 5.10(e) through (q) shall affect the
obligations of the Company to make, or prevent the Company from making, payment
of the Contract Adjustment Payments and Deferred Contract Adjustment Payments,
except as otherwise provided in these Section 5.10(e) through (q).

 

(n)      Each
Holder of Units, by its acceptance thereof, authorizes and directs the Purchase
Contract Agent on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in
Section 5.10(e) through (q) and appoints the Purchase Contract
Agent its attorney-in-fact, as the case may be, for any and all such purposes.

 

79

 

(o)           The
Company shall give prompt written notice to the Purchase Contract Agent of any
fact known to the Company that would prohibit the making of any payment of
moneys to or by the Purchase Contract Agent in respect of the Units pursuant to
the provisions of this Section. Notwithstanding the provisions of
Section 5.10(e) through (q) or any other provisions of this
Agreement, the Purchase Contract Agent shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
moneys to or by the Purchase Contract Agent, or the taking of any other action
by the Purchase Contract Agent, unless and until the Purchase Contract Agent
shall have received written notice thereof mailed or delivered to the Purchase
Contract Agent at its Institutional Trust Services department from the Company,
any Holder, or the holder or representative of any Senior Indebtedness; provided that if at least two Business Days prior to the
date upon which by the terms hereof any such moneys may become payable for any
purpose, the Purchase Contract Agent shall not have received with respect to
such moneys the notice provided for in this Section, then, anything herein
contained to the contrary notwithstanding, the Purchase Contract Agent shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received and shall not be affected by any
notice to the contrary that may be received by it within two Business Days
prior to or on or after such date.

 

(p)           The
Purchase Contract Agent in its individual capacity shall be entitled to all the
rights set forth in this Section with respect to any Senior Indebtedness
at the time held by it, to the same extent as any other holder of Senior
Indebtedness and nothing in this Agreement shall deprive the Purchase Contract
Agent of any of its rights as such holder.

 

(q)           No
right of any present or future holder of any Senior Indebtedness to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Company or by any noncompliance
by the Company with the terms, provisions and covenants of this Agreement,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with.

 

(r)            Nothing
in this Section 5.10 shall apply to claims of, or payments to, the
Purchase Contract Agent under or pursuant to Section 7.07.

 

(s)           With
respect to the holders of Senior Indebtedness, (i) the duties and
obligations of the Purchase Contract Agent shall be determined solely by the
express provisions of this Agreement; (ii) the Purchase Contract Agent
shall not be liable to any such holders if it shall, acting in good faith,
mistakenly pay over or distribute to the Holders or to the Company or any other
Person cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Section 5.10 or otherwise;
(iii) no implied covenants or obligations shall be read into this
Agreement against the Purchase Contract Agent; and (iv) the Purchase
Contract Agent shall not be deemed to be a fiduciary as to such holders.

 

Section 5.11. Deferral
of Contract Adjustment Payments. (a)  The Company has the right
at any time, and from time to time, to defer payment of all or part of the
Contract Adjustment Payments in respect of each Purchase Contract by extending
the period for

 

80

 

payment of Contract Adjustment Payments to
any subsequent Payment Date (an “Extension Period”),
but not beyond the Purchase Contract Settlement Date (or, with respect to Purchase
Contracts for which an effective Early Settlement or Fundamental Change Early
Settlement has occurred, the Early Settlement Date or Fundamental Change Early
Settlement Date, as the case may be). Prior to the expiration of any Extension
Period, the Company may further extend such Extension Period to any subsequent
Payment Date, but not beyond the Purchase Contract Settlement Date (or any
applicable Early Settlement Date or Fundamental Change Early Settlement Date).

 

If the Company
so elects to defer Contract Adjustment Payments, the Company shall pay
additional Contract Adjustment Payments on such deferred installments of
Contract Adjustment Payments at a rate equal to 5.60% per annum, compounding on
each succeeding Payment Date, until such deferred installments are paid in full
(such deferred installments of Contract Adjustment Payments together with the
accrued additional Contract Adjustment Payments thereon, being referred to
herein as the “Deferred Contract Adjustment Payments”).

 

At the end of
each Extension Period, including as the same may be extended as provided above,
or, in the event of an effective Early Settlement or Fundamental Change Early
Settlement, on the Early Settlement Date or Fundamental Change Early Settlement
Date, as the case may be, the Company shall pay all Deferred Contract
Adjustment Payments then due in the manner set forth in
Section 5.10(a) (in the case of the end of an Extension Period), in
the manner set forth in Section 5.07(b) (in the case of an Early Settlement)
or in the manner set forth in Section 5.04(b)(ii) (in the case of a
Fundamental Change Early Settlement) to the extent such amounts are not
deducted from the amount otherwise payable by the Holder in the case of a Cash
Settlement, any Early Settlement or any Fundamental Change Early Settlement. In
the event of an Early Settlement, the Company shall pay all Deferred Contract
Adjustment Payments due on the Purchase Contracts being settled early through
the Interest Payment Date immediately preceding the applicable Early Settlement
Date. In the event of a Fundamental Change Early Settlement, the Company shall
pay all Deferred Contract Adjustment Payments due on the Purchase Contracts
being settled on the Fundamental Change Early Settlement Date to but excluding
such Fundamental Change Early Settlement Date.

 

Upon
termination of any Extension Period and the payment of all Deferred Contract
Adjustment Payments and all accrued and unpaid Contract Adjustment Payments
then due, the Company may commence a new Extension Period; provided
that such Extension Period, together with all extensions thereof, may not
extend beyond the Purchase Contract Settlement Date (or any applicable Early
Settlement Date or Fundamental Change Early Settlement Date). Except in the
case of an Early Settlement or Fundamental Change Early Settlement, no Contract
Adjustment Payments shall be due and payable during an Extension Period except
at the end thereof, except that prior to the end of such Extension Period, the
Company, at its option, may prepay on any Interest Payment Date all or any
portion of the Deferred Contract Adjustment Payments accrued during the then
elapsed portion of such Extension Period.

 

81

 

(b)           The
Company shall give written notice to the Purchase Contract Agent (and the
Purchase Contract Agent shall give notice thereof to Holders of Purchase
Contracts) of its election to extend any period for the payment of Contract
Adjustment Payments, the expected length of any such Extension Period and any
extension of any Extension Period, at least five Business Days before the
earlier of (i) the Record Date for the Interest Payment Date on which
Contract Adjustment Payments would have been payable except for the election to
begin or extend the Extension Period or (ii) the date the Purchase
Contract Agent is required to give notice to any securities exchange or to
Holders of Purchase Contracts of such Record Date or such Payment Date.

 

(c)           The
Company shall give written notice to the Purchase Contract Agent (and the
Purchase Contract Agent shall give notice thereof to Holders of Purchase
Contracts) of the end of an Extension Period or its election to pay any portion
of the Deferred Contract Adjustment Payments on an Interest Payment Date prior
to the end of an Extension Period, at least five Business Days before the
earlier of (i) the Record Date for the Interest Payment Date on which such
Extension Period shall end or such payment of Deferred Contract Adjustment
Payments shall be made or (ii) the date the Purchase Contract Agent is
required to give notice to any securities exchange or to Holders of Purchase
Contracts of such Record Date or such Payment Date.

 

(d)           In
the event the Company exercises its option to defer the payment of Contract
Adjustment Payments, then, until all Deferred Contract Adjustment Payments have
been paid, the Company shall not, and shall not permit any of its subsidiaries
to, declare or pay any dividends on, or make any distributions on, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any shares
of capital stock; provided that the foregoing does
not apply to:

 

(i)    any repurchase, redemption
or other acquisition of shares of the Company’s capital stock in connection
with (1) any employment contract, benefit Plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors, consultants or independent contractors, (2) a dividend
reinvestment or stockholder purchase Plan, or (3) the issuance of the Company’s
capital stock, or securities convertible into or exercisable for such capital
stock, as consideration in an acquisition transaction entered into prior to the
applicable event of default, default or Extension Period, as the case may be;

 

(ii)   any exchange, redemption or
conversion of any class or series of the Company’s capital stock, or the
capital stock of one of the Company’s subsidiaries, for any other class or
series of the Company’s capital stock, or of any class or series of the
Company’s indebtedness for any class or series of the Company’s capital stock;

 

(iii)  any purchase of, or payment
of cash in lieu of, fractional interests in shares of the Company’s capital
stock pursuant to the conversion or exchange provisions of such capital stock
or the securities being converted or exchanged; and

 

82

 

(iv)          any declaration of a
dividend in connection with any rights plan, or the issuance of rights, stock
or other property under any rights plan, or the redemption or repurchase of
rights pursuant thereto; or any dividend in the form of stock, warrants,
options or other rights where the dividend stock or stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks equally with or junior to such stock.

 

ARTICLE 6

RIGHTS AND REMEDIES OF HOLDERS

 

Section 6.01.
Unconditional Right of Holders to Receive Contract Adjustment Payments and to
Purchase Shares of Common Stock. Each Holder of a Unit shall have
the right, which is absolute and unconditional, (i) subject to
Article 5, to receive each Contract Adjustment Payment and Deferred
Contract Adjustment Payment with respect to the Purchase Contract comprising
part of such Unit  on the respective Payment
Date for such Unit and (ii) except upon and following a Termination Event,
to purchase shares of Common Stock pursuant to such Purchase Contract and, in
each such case, to institute suit for the enforcement of any such right to
receive Contract Adjustment Payments and the right to purchase shares of Common
Stock, and such rights shall not be impaired without the consent of such
Holder.

 

Section 6.02.
Restoration of Rights and Remedies. If any Holder has instituted any
proceeding to enforce any right or remedy under this Agreement and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to such Holder, then and in every such case, subject to
any determination in such proceeding, the Company and such Holder shall be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of such Holder shall continue as though no
such proceeding had been instituted.

 

Section 6.03. Rights and
Remedies Cumulative. Except as otherwise provided with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates
in the last paragraph of Section 3.10, no right or remedy herein conferred
upon or reserved to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

 

Section 6.04. Delay or
Omission Not Waiver. No delay or omission of any Holder to exercise
any right upon a default or remedy upon a default shall impair any such right
or remedy or constitute a waiver of any such right. Every right and remedy
given by this Article 6 or by law to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by such Holders.

 

83

 

Section 6.05.
Undertaking for Costs. All parties to this Agreement agree, and each
Holder of a Unit, by its acceptance of such Unit  shall be deemed to have agreed, that any court
of competent jurisdiction may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Purchase Contract Agent for any action taken, suffered or omitted by it as
Purchase Contract Agent, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees and
costs against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section shall not
apply to any suit instituted by the Purchase Contract Agent, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% of the Outstanding Units, or to any suit instituted by any Holder for
the enforcement of interest on any Notes or Contract Adjustment Payments on or
after the respective Payment Date therefor in respect of any Unit held by such
Holder, or for enforcement of the right to purchase shares of Common Stock
under the Purchase Contracts constituting part of any Unit held by such Holder.

 

Section 6.06. Waiver of
Stay or Extension Laws. The Company covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Agreement; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Purchase Contract Agent
or the Holders, but will suffer and permit the execution of every such power as
though no such law had been enacted.

 

ARTICLE 7

THE PURCHASE CONTRACT AGENT

 

Section 7.01. Certain
Duties and Responsibilities. (a) The Purchase Contract Agent:

 

(i)            undertakes to
perform, with respect to the Units, such duties and only such duties as are
specifically set forth in this Agreement and the Remarketing Agreement to be
performed by the Purchase Contract Agent and no implied covenants or
obligations shall be read into this Agreement or the Remarketing Agreement
against the Purchase Contract Agent; and

 

(ii)           in the absence of
bad faith or gross negligence on its part, may, with respect to the Units,
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Purchase Contract Agent and conforming to the requirements of this Agreement or
the Remarketing Agreement, as applicable, but in the case of any

 

84

 

certificates or opinions
which by any provision hereof are specifically required to be furnished to the
Purchase Contract Agent, the Purchase Contract Agent shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Agreement or the Remarketing Agreement, as applicable (but need not
confirm or investigate the accuracy of the mathematical calculations or other
facts stated therein).

 

(b)   No
provision of this Agreement or the Remarketing Agreement shall be construed to
relieve the Purchase Contract Agent from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

 

(i)         this Section 7.01(b) shall
not be construed to limit the effect of Section 7.01(a);

 

(ii)        the Purchase Contract Agent shall not be
liable for any error of judgment made in good faith by a Responsible Officer,
unless it shall be conclusively determined by a court of competent jurisdiction
that the Purchase Contract Agent was negligent in ascertaining the pertinent
facts; and

 

(iii)       no provision of this Agreement or the
Remarketing Agreement shall require the Purchase Contract Agent to expend or
risk its own funds or otherwise incur any liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers if
it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.

 

(c)   Whether or
not therein expressly so provided, every provision of this Agreement and the
Remarketing Agreement relating to the conduct or affecting the liability of or
affording protection to the Purchase Contract Agent shall be subject to the
provisions of this Section 7.01.

 

(d)   The
Purchase Contract Agent is authorized to execute and deliver the Remarketing
Agreement in its capacity as Purchase Contract Agent.

 

Section 7.02.  Notice of Default.  Within 30 days after the
occurrence of any default by the Company hereunder of which a Responsible
Officer of the Purchase Contract Agent has actual knowledge, the Purchase
Contract Agent shall transmit by mail to the Company and the Holders of Units,
as their names and addresses appear in the Security Register, notice of such
default hereunder, unless such default shall have been cured or waived.

 

Section 7.03.  Certain Rights of Purchase Contract
Agent.  Subject to the
provisions of Section 7.01:

 

(a)   the
Purchase Contract Agent may, in the absence of bad faith, conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order,

 

85

 

bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

 

(b)   any request
or direction of the Company mentioned herein shall be sufficiently evidenced by
an Officers’ Certificate, Issuer Order or Issuer Request, and any resolution of
the Board of Directors of the Company may be sufficiently evidenced by a Board
Resolution;

 

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

 

(d)   the
Purchase Contract Agent may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;

 

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

 

(f)    the
Purchase Contract Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents, attorneys, custodians
or nominees or an Affiliate of the Purchase Contract Agent and the Purchase
Contract Agent shall not be responsible for any misconduct or negligence on the
part of any agent, attorney, custodian or nominee or an Affiliate appointed
with due care by it hereunder;

 

(g)   the
Purchase Contract Agent shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Holders pursuant to this Agreement, unless such Holders shall have
offered to the Purchase Contract Agent security or indemnity satisfactory to the
Purchase Contract Agent against the costs, expenses and liabilities which might
be incurred by it in compliance with such request or direction;

 

(h)   the
Purchase Contract Agent shall not be liable for any action taken, suffered, or
omitted to be taken by it in the absence of bad faith or negligence by it and
believed by

 

86

 

it to
be authorized within the discretion or rights or powers conferred upon it by
this Agreement;

 

(i)    the
Purchase Contract Agent shall not be deemed to have notice of any adjustment to
the Fixed Settlement Rate, the occurrence of a Termination Event or any default
hereunder unless a Responsible Officer of the Purchase Contract Agent has
actual knowledge thereof or unless written notice of any such adjustment,
occurrence or event which is in fact such a default is received by a
Responsible Offer at the Corporate Trust Office of the Purchase Contract Agent,
and such notice references the Units or this Agreement;

 

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

 

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

 

(l)    the
Purchase Contract Agent shall not be required to initiate or conduct any
litigation or collection proceedings hereunder and shall have no
responsibilities with respect to any default hereunder except as expressly set
forth herein.

 

Section 7.04.  Not Responsible for Recitals or Issuance of
Units.  The recitals contained
herein, in the Remarketing Agreement and in the Certificates shall be taken as
the statements of the Company, and the Purchase Contract Agent assumes no
responsibility for their accuracy or validity. 
The Purchase Contract Agent makes no representations as to the validity
or sufficiency of either this Agreement or of the Units or the Pledge or the
Collateral and shall have no responsibility for perfecting or maintaining the
perfection of any security interest in the Collateral. The Purchase Contract
Agent shall not be accountable for the use or application by the Company of the
proceeds in respect of the Units or the Purchase Contracts.

 

Section 7.05.  May Hold Units.  Any Security Registrar or any
other agent of the Company, or the Purchase Contract Agent and its Affiliates,
in their individual or any other capacity, may become the owner or pledgee of
Units and may otherwise deal with the Company, the Collateral Agent or any
other Person with the same rights it would have if it were not Security
Registrar or such other agent, or the Purchase Contract Agent.  The Company may become the owner or pledgee
of Units.

 

87

 

Section 7.06.  Money Held in Custody.  Money held by the Purchase
Contract Agent in custody hereunder need not be segregated from the Purchase
Contract Agent’s other funds except to the extent required by law or provided
herein.  The Purchase Contract Agent
shall be under no obligation to invest or pay interest on any money received by
it hereunder except as otherwise provided hereunder or agreed in writing with
the Company.

 

Section 7.07. 
Compensation and Reimbursement.  The Company agrees: (a) to pay to the
Purchase Contract Agent compensation for all services rendered by it hereunder
and under the Remarketing Agreement as the Company and the Purchase Contract
Agent shall from time to time agree in writing;

 

(b)   except as
otherwise expressly provided for herein, to reimburse the Purchase Contract
Agent upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Purchase Contract Agent in accordance with any
provision of this Agreement and the Remarketing Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel) in
connection with the negotiation, preparation, execution and delivery and
performance of this Agreement and the Remarketing Agreement and any
modification, supplement or waiver of any of the terms thereof, except any such
expense, disbursement or advance as shall have been caused by its gross
negligence, willful misconduct or bad faith; and

 

(c)   to
indemnify the Purchase Contract Agent and any predecessor Purchase Contract
Agent (and each of its directors, officers, agents and employees) (collectively
with the Purchase Contract Agent, the “Indemnitees”)
for, and to hold each Indemnitee harmless against, any loss, claim, damage,
fine, penalty, liability, fee or expense (including reasonable fees and
expenses of counsel) incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or
administration of its duties hereunder and the Remarketing Agreement, including
the Indemnitees’ reasonable costs and expenses of defending themselves against
any claim (whether asserted by the Company, a Holder or any other Person) or
liability in connection with the exercise or performance of any of the Purchase
Contract Agent’s powers or duties hereunder or thereunder.

 

In addition, and without
prejudice to the rights provided to the Purchase Contract Agent hereunder, when
the Purchase Contract Agent incurs expenses or renders services after a
Termination Event occurs, the expense and the compensation for the services
(including the fees and expenses of its counsel) are intended to constitute
expenses of administration under any applicable federal or state bankruptcy
law.

 

The provisions of this Section shall survive the
resignation and removal of the Purchase Contract Agent, the satisfaction and
discharge of the Units and the termination of this Agreement.

 

Section 7.08.  Corporate Purchase Contract Agent Required;
Eligibility.  There shall at
all times be a Purchase Contract Agent hereunder which shall be a Person
organized and doing business under the laws of the United States of America,
any State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having (or being a member of a bank holding
company having) a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by Federal or State authority and having a
corporate trust office in the Borough of Manhattan, the City of New York, if
there be such a Person in the Borough of Manhattan, New York City, qualified
and eligible under this Article and willing to act on reasonable
terms.  If such Person publishes

 

88

 

or files reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published or filed.  If at any time the
Purchase Contract Agent shall cease to be eligible in accordance with the
provisions of this Section 7, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article 7.

 

Section 7.09.  Resignation and Removal; Appointment of
Successor.  (a)  No
resignation or removal of the Purchase Contract Agent and no appointment of a
successor Purchase Contract Agent pursuant to this Article 7 shall become
effective until the acceptance of appointment by the successor Purchase
Contract Agent in accordance with the applicable requirements of Section 7.10.

 

(b)   The
Purchase Contract Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation.  If the instrument of acceptance by a
successor Purchase Contract Agent required by Section 7.10 shall not have
been delivered to the Purchase Contract Agent within 30 days after the giving
of such notice of resignation, the resigning Purchase Contract Agent may
petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor Purchase Contract Agent.

 

(c)   The
Purchase Contract Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Units delivered to the Purchase Contract
Agent and the Company.  If the instrument
of acceptance by a successor Purchase Contract Agent required by Section 7.10
shall not have been delivered to the Purchase Contract Agent within 30 days
after such Act, the Purchase Contract Agent being removed may petition at the
expense of the Company any court of competent jurisdiction for the appointment
of a successor Purchase Contract Agent.

 

(d)   If at any
time:

 

(i)         the Purchase Contract Agent fails to
comply with Section 310(b) of the TIA, as if the Purchase Contract
Agent were an indenture trustee under an indenture qualified under the TIA, and
shall fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Unit for at least six months;

 

(ii)        the Purchase Contract Agent shall cease
to be eligible under Section 7.08 and shall fail to resign after written
request therefor by the Company or by any such Holder; or

 

(iii)       the Purchase Contract Agent shall become
incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver
of the Purchase Contract Agent or of its property shall be appointed or any
public officer shall take charge or

 

89

 

control of the Purchase Contract Agent or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,

 

then, in any such case, (i) the Company by a
Board Resolution may remove the Purchase Contract Agent, or (ii) any
Holder who has been a bona fide Holder of a Unit for at least six months may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Purchase Contract Agent and the
appointment of a successor Purchase Contract Agent.

 

(e)    If the
Purchase Contract Agent shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Purchase Contract Agent for any
cause, the Company, by a Board Resolution, shall promptly appoint a successor
Purchase Contract Agent and shall comply with the applicable requirements of Section 7.10.  If no successor Purchase Contract Agent shall
have been so appointed by the Company and accepted appointment in the manner
required by Section 7.10, any Holder who has been a bona fide Holder of a
Unit for at least six months, on behalf of itself and all others similarly
situated, or the Purchase Contract Agent may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.

 

(f)    The
Company shall give, or shall cause such successor Purchase Contract Agent to
give, notice of each resignation and each removal of the Purchase Contract
Agent and each appointment of a successor Purchase Contract Agent by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the applicable Security
Register. Each notice shall include the name of the successor Purchase Contract
Agent and the address of its Corporate Trust Office.

 

Section 7.10.  Acceptance of Appointment by Successor.  (a)  In case of the
appointment hereunder of a successor Purchase Contract Agent, every such
successor Purchase Contract Agent so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Purchase Contract Agent an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Purchase Contract Agent shall become effective and such
successor Purchase Contract Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Purchase Contract Agent; but, on the request of the Company or the
successor Purchase Contract Agent, such retiring Purchase Contract Agent shall,
upon payment of amounts owed to it pursuant to Section 7.07, execute and
deliver an instrument transferring to such successor Purchase Contract Agent
all the rights, powers and trusts of the retiring Purchase Contract Agent and
duly assign, transfer and deliver to such successor Purchase Contract Agent all
property and money held by such retiring Purchase Contract Agent hereunder.

 

(b)   Upon
request of any such successor Purchase Contract Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and

 

90

 

confirming
to such successor Purchase Contract Agent all such rights, powers and agencies
referred to in clause (a) of this Section 7.10.

 

(c)   No
successor Purchase Contract Agent shall accept its appointment unless at the
time of such acceptance such successor Purchase Contract Agent shall be
qualified and eligible under this Article 7.

 

Section 7.11.  Merger, Conversion, Consolidation or
Succession to Business.  Any
Person into which the Purchase Contract Agent may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Purchase Contract Agent shall be a
party, or any Person succeeding to all or substantially all the corporate trust
business of the Purchase Contract Agent, shall be the successor of the Purchase
Contract Agent hereunder; provided
that such Person shall be otherwise qualified and eligible under this Article 7,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.  In case any
Certificates shall have been authenticated and executed on behalf of the
Holders, but not delivered, by the Purchase Contract Agent then in office, any
successor by merger, conversion or consolidation to such Purchase Contract
Agent may adopt such authentication and execution and deliver the Certificates
so authenticated and executed with the same effect as if such successor
Purchase Contract Agent had itself authenticated and executed such Units.

 

Section 7.12.  Preservation of Information; Communications
to Holders.  (a)  The
Purchase Contract Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Purchase
Contract Agent in its capacity as Security Registrar.

 

(b)   If three or
more Holders (herein referred to as “Applicants”)
apply in writing to the Purchase Contract Agent, and furnish to the Purchase
Contract Agent reasonable proof that each such Applicant has owned a Unit for a
period of at least six months preceding the date of such application, and such
application states that the Applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Units and is
accompanied by a copy of the form of proxy or other communication which such
Applicants propose to transmit, then the Purchase Contract Agent shall mail to
all the Holders copies of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Purchase Contract Agent of the materials to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.

 

Section 7.13.  No Obligations of Purchase Contract
Agent.  Except to the extent
otherwise expressly provided in this Agreement, the Purchase Contract Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Remarketing Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Unit thereunder.  The Company agrees, and each Holder of a
Certificate, by its acceptance thereof, shall be deemed to have agreed, that
the Purchase Contract Agent’s execution of the Certificates on behalf of the
Holders shall be solely as agent and attorney-in-fact for the

 

91

 

Holders, and that
the Purchase Contract Agent shall have no obligation to perform such Purchase
Contracts on behalf of the Holders, except to the extent expressly provided in Article 5
hereof.  Anything contained in this
Agreement to the contrary notwithstanding, in no event shall the Purchase Contract
Agent or its officers, directors, employees or agents be liable under this
Agreement or the Remarketing Agreement for (i) indirect, incidental,
special, punitive, or consequential loss or damage of any kind whatsoever,
including lost profits, whether or not the likelihood of such loss or damage
was known to the Purchase Contract Agent and regardless of the form of action;
or (ii) any failure or delay in the performance of its obligations under
this Agreement arising out of or caused directly or indirectly, by acts of God;
earthquake; fires; floods; wars; civil or military disturbances; terrorist
acts; sabotage; epidemics; riots; interruptions, loss or malfunctions of
utilities; accidents; labor disputes; and acts of civil or military authority
or governmental actions; it being understood that the Purchase Contract Agent
shall use reasonable efforts which are consistent with accepted practices in
the banking industry to resume performance as soon as practicable under the
circumstances.

 

Section 7.14.  Tax Compliance.  (a)  The Purchase Contract
Agent, on its own behalf and on behalf of the Company, will comply with all
applicable certification, information reporting and withholding (including “backup”
withholding) requirements imposed by applicable tax laws, regulations or
administrative practice with respect to (i) any payments made with respect
to the Units or (ii) the issuance, delivery, holding, transfer, redemption
or exercise of rights under the Units. 
Such compliance shall include, without limitation, the preparation and
timely filing of required returns and the timely payment of all amounts
required to be withheld to the appropriate taxing authority or its designated
agent.

 

(b)   The
Purchase Contract Agent shall comply in accordance with the terms hereof with
any written direction received from the Company with respect to the execution
or certification of any required documentation and the application of such
requirements to particular payments or Holders or in other particular
circumstances, and may for purposes of this Agreement conclusively rely on any
such direction in accordance with the provisions of Section 7.01(a) hereof.

 

(c)   The
Purchase Contract Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.

 

ARTICLE 8

SUPPLEMENTAL AGREEMENTS

 

Section 8.01.  Supplemental Agreements without Consent of
Holders.  Without the consent
of any Holders, the Company, when authorized by a Board Resolution, the
Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the
Securities

 

92

 

Intermediary at
any time and from time to time, may enter into one or more agreements
supplemental hereto, in form satisfactory to the Company and the Purchase
Contract Agent, to:

 

(a)   evidence
the succession of another Person to the Company, and the assumption by any such
successor of the covenants of the Company herein and in the Certificates;

 

(b)   evidence
and provide for the acceptance of appointment hereunder by a successor Purchase
Contract Agent, Collateral Agent, Securities Intermediary or Custodial Agent;

 

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

 

(d)   make
provision with respect to the rights of Holders pursuant to the requirements of
Section 5.04(b); or

 

(e)   except as
provided for in Section 5.04, cure any ambiguity (or formal defect), or
correct or supplement any provisions herein that may be inconsistent with any
other provisions herein or to make such other provisions in regard to such
matters or questions arising under this Agreement; provided that such action shall not materially adversely
affect the interests of the Holders; provided
further that any amendment made
solely to conform the provisions of this Agreement to the description of the
Units and the Purchase Contracts contained in the final prospectus supplement
dated May 7, 2007, relating to the Units under the sections entitled “Description
of the Equity Units,” “Description of the Purchase Contracts,” “Certain
Provisions of the Purchase Contract and Pledge Agreement” or “Description of
the Notes” shall be deemed not to adversely affect the interests of the
Holders.

 

Section 8.02.  Supplemental Agreements with Consent of
Holders.  With the consent of
the Holders of not less than a majority of the Outstanding Units voting
together as one class, including without limitation the consent of the Holders
obtained in connection with a tender or an exchange offer, by Act of said
Holders delivered to the Company, the Purchase Contract Agent, the Company, the
Collateral Agent, the Securities Intermediary and the Custodial Agent, as the
case may be, when authorized by a Board Resolution, may enter into an agreement
or agreements supplemental hereto for the purpose of modifying in any manner
the terms of the Purchase Contracts, or the provisions of this Agreement or the
rights of the Holders in respect of the Units; provided,
however, that, except as contemplated herein, no such supplemental
agreement shall, without the unanimous consent of the Holders of each outstanding
Purchase Contract affected thereby,

 

(a)   change any
Contract Adjustment Payment Date;

 

(b)   change the
amount or type of Collateral required to be Pledged to secure a Holder’s
obligations under the Purchase Contract (except for the rights of Holders of

 

93

 

Corporate
Units to substitute Treasury Securities for the Notes underlying the Pledged
Applicable Ownership Interests in Notes or the Pledged Applicable Ownership
Interests in the Treasury Portfolio, as the case may be, or the rights of
Holders of Treasury Units to substitute Notes underlying the Pledged Applicable
Ownership Interests in Notes or the Applicable Ownership Interests in the
Treasury Portfolio (as specified in clause (i) in each of the definitions
of Applicable Ownership Interest in the Special Event Treasury Portfolio and
Applicable Ownership Interest in the Remarketing Treasury Portfolio), as
applicable, for the Pledged Treasury Securities), impair the right of the
Holder of any Purchase Contract to receive distributions on the related
Collateral or otherwise adversely affect the Holder’s rights in or to such
Collateral;

 

(c)   impair the
Holders’ right to institute suit for the enforcement of any Purchase Contract
or any Contract Adjustment Payments or any Deferred Contract Adjustment
Payments;

 

(d)   reduce the
number of shares of Common Stock or the amount of any other property to be
purchased pursuant to any Purchase Contract, increase the price to purchase
shares of Common Stock or any other property upon settlement of any Purchase
Contract or change the Purchase Contract Settlement Date or the right to Early
Settlement or Fundamental Change Early Settlement or otherwise adversely affect
the Holder’s rights under the Purchase Contract;

 

(e)   reduce any
Contract Adjustment Payments or any Deferred Contract Adjustment Payments or
change any place where, or the coin or currency in which, any Contract
Adjustment Payment is payable; or

 

(f)    reduce the
percentage of the outstanding Purchase Contracts the consent of whose Holders
is required for any modification or amendment to the provisions of this
Agreement or the Purchase Contracts;

 

provided that if any amendment or proposal
referred to above would adversely affect only the Corporate Units or the
Treasury Units, then only the affected class of Holders as of the record date
for the Holders entitled to vote thereon will be entitled to vote on such
amendment or proposal, and such amendment or proposal shall not be effective
except with the consent of Holders of not less than a majority of such class;
and provided, further, that the
unanimous consent of the Holders of each outstanding Purchase Contract of such
class affected thereby shall be required to approve any amendment or proposal
specified in clauses (a) through (f) of this Section 8.02.

 

It shall not be necessary for any Act of Holders under
this Section 8.02 to approve the particular form of any proposed
supplemental agreement, but it shall be sufficient if such Act shall approve
the substance thereof.

 

Section 8.03.  Execution of Supplemental Agreements.  In executing, or accepting the
additional agencies created by, any supplemental agreement permitted by this Article or
the modifications thereby of the agencies created by this Agreement, the
Purchase

 

94

 

Contract
Agent, the Collateral Agent, the Securities Intermediary and the Custodial
Agent shall be provided, and (subject to Section 7.01 with respect to the
Purchase Contract Agent) shall be fully authorized and protected in relying
upon, an Officers’ Certificate and an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement and that any and all conditions precedent to the execution and
delivery of such supplemental agreement have been satisfied.  The Purchase Contract Agent, the Collateral
Agent, the Securities Intermediary and the Custodial Agent may, but shall not
be obligated to, enter into any such supplemental agreement which affects their
own rights, duties or immunities under this Agreement or otherwise.

 

Section 8.04.  Effect of
Supplemental Agreements.  Upon
the execution of any supplemental agreement under this Article 8, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Holder of Certificates theretofore or thereafter authenticated, executed on
behalf of the Holders and delivered hereunder, shall be bound thereby.

 

Section 8.05.  Reference to
Supplemental Agreements.  Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any supplemental agreement pursuant to this Article 8 may,
and shall if required by the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent as to any matter provided for in such
supplemental agreement.  If the Company
shall so determine, new Certificates so modified as to conform, in the opinion
of the Purchase Contract Agent and the Company, to any such supplemental
agreement may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in exchange for outstanding Certificates.

 

ARTICLE 9

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 

Section 9.01.  Covenant Not
to Consolidate, Merge, Convey, Transfer or Lease Property Except under Certain
Conditions.  The Company
covenants that it will not merge with or into, consolidate with or convert into
any other Person or sell, assign, transfer, lease or convey all or
substantially all of its properties and assets to any Person, unless:

 

(a)    either the Company shall be the surviving
Person, or the successor Person (if other than the Company) shall be an entity
organized and existing under the laws of the United States of America or a
state thereof or the District of Columbia and such Person shall expressly
assume all the obligations of the Company under the Purchase Contracts, this
Agreement (including the Pledge provided for herein) and the Remarketing Agreement
by one or more supplemental agreements in form reasonably satisfactory to the
Purchase Contract Agent and the Collateral Agent, executed and delivered to the
Purchase Contract Agent and the Collateral Agent by such Person; and

 

95

 

(b)   the Company or such successor Person, as the
case may be, shall not, immediately after such merger, consolidation,
conversion, sale, assignment, transfer, lease or conveyance, be in default of
payment obligations under the Purchase Contracts, this Agreement or the
Remarketing Agreement or in material default in the performance of any other
covenants under any of the foregoing agreements.

 

Section 9.02.  Rights and
Duties of Successor Corporation.  In
case of any such merger, consolidation, conversion, sale, assignment, transfer,
lease or conveyance and upon any such assumption by a successor Person in
accordance with Section 9.01, such successor Person shall succeed to and
be substituted for the Company with the same effect as if it had been named
herein as the Company and the Company shall be relieved of any of their
Obligations under this Agreement and under the Units.  Such successor Person thereupon may cause to
be signed, and may issue either in its own name or in the name of Legg Mason, Inc.
any or all of the Certificates evidencing Units issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Purchase Contract Agent; and, upon the order of such surviving Person, instead
of the Company, and subject to all the terms, conditions and limitations in
this Agreement prescribed, the Purchase Contract Agent shall authenticate and
execute on behalf of the Holders and deliver any Certificates which previously
shall have been signed and delivered by the officers of the Company to the
Purchase Contract Agent for authentication and execution, and any Certificate
evidencing Units which such successor Person thereafter shall cause to be
signed and delivered to the Purchase Contract Agent for that purpose.  All the Certificates issued shall in all
respects have the same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Certificates had been issued at the date
of the execution hereof.

 

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

 

Section 9.03.  Officers’
Certificate and Opinion of Counsel Given to Purchase Contract Agent.  The Purchase Contract Agent,
subject to Section 7.01 and Section 7.03, shall receive an Officers’
Certificate and an Opinion of Counsel as conclusive evidence that any such
merger, consolidation, conversion, sale, assignment, transfer, lease or
conveyance, and any such assumption, complies with the provisions of this Article 7
and that all conditions precedent to the consummation of any such merger,
consolidation, conversion, sale, assignment, transfer, lease or conveyance have
been met.

 

ARTICLE 10

COVENANTS

 

Section 10.01.  Performance
under Purchase Contracts.  The
Company covenants and agrees for the benefit of the Holders from time to time
of the Units that it will duly and 

 

96

 

punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.

 

Section 10.02.  Maintenance
of Office or Agency.  The
Company will maintain in the Borough of Manhattan, City of New York, New York,
an office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Purchase Contracts
on the Purchase Contract Settlement Date or upon Early Settlement or
Fundamental Change Early Settlement and for transfer of Collateral upon
occurrence of a Termination Event, where Certificates may be surrendered for
registration of transfer or exchange, for a Collateral Substitution or
recreation of Corporate Units and where notices and demands to or upon the
Company in respect of the Units and this Agreement may be served.  The Company will give prompt written notice
to the Purchase Contract Agent of the location, and any change in the location,
of such office or agency.  The Company
initially designates the Corporate Trust Office of the Purchase Contract Agent
as such office of the Company.  If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Purchase Contract Agent with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Company hereby appoints the Purchase
Contract Agent as its agent to receive all such presentations, surrenders,
notices and demands.

 

The Company may also from
time to time designate one or more other offices or agencies where Certificates
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the Borough of Manhattan, City of New York, New
York for such purposes.  The Company will
give prompt written notice to the Purchase Contract Agent of any such
designation or rescission and of any change in the location of any such other
office or agency.  The Company hereby
designates as the place of payment for the Units the Corporate Trust Office and
appoints the Purchase Contract Agent at its Corporate Trust Office as paying
agent in such city.

 

Section 10.03.  Company to
Reserve Common Stock.  The
Company shall at all times prior to the Purchase Contract Settlement Date
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock the full number of shares of Common Stock issuable
against tender of payment in respect of all Purchase Contracts constituting a
part of the Units evidenced by Outstanding Certificates.

 

Section 10.04.  Covenants as
to Common Stock; Listing.  (a) The
Company covenants that all shares of Common Stock which may be issued against
tender of payment in respect of any Purchase Contract constituting a part of
the Outstanding Units will, upon issuance, be duly authorized, validly issued,
fully paid and nonassessable.

 

The Company further
covenants that, if at any time the Common Stock shall be listed on the NYSE or
any other national securities exchange or automated quotation system, the
Company will, if permitted by the rules of such exchange or automated

 

97

 

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 Settlement of
Purchase Contracts; provided, however, that if the rules of such
exchange or automated quotation system permit the Company to defer the listing
of such Common Stock until the date on which any Purchase Contract is first
settled in accordance with the provisions of this Agreement, the Company
covenants to list such Common Stock issuable upon settlement of the Purchase
Contracts in accordance with the requirements of such exchange or automated
quotation system at such time.

 

Section 10.05.  Statements
of Officers of the Company as to Default. 
The Company will deliver to the Purchase Contract Agent,
within 120 days after the end of each fiscal year of the Company (which as of
the date hereof is December 31) ending after the date hereof, an Officers’
Certificate, stating whether or not to the knowledge of the signers thereof,
the Company is in default in the performance and observance of any of the
terms, provisions and conditions of this Agreement, and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

 

Section 10.06.  ERISA.  Each Holder from time to time of
the Units that is a Plan or who used assets of a Plan to purchase Units hereby
represents that either (i) no portion of the assets used by such Holder to
acquire the Corporate Units constitutes assets of the Plan or (ii) the
purchase or holding of the Corporate Units by such purchaser or transferee will
not constitute a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4973 of the Code or similar violation under any
applicable laws.

 

Section 10.07.  Tax Treatment.  The Company covenants and agrees for
all tax purposes (i) to treat the acquisition of a Corporate Unit as the
acquisition of the ownership interest in the Note and the Purchase Contract
constituting the Corporate Unit, (ii) to treat the Note as indebtedness of the
Company that is subject to the rules applicable to contingent payment debt
instruments under Treas. Reg. Sec. 1.1275-4 for U.S. federal, state and local
income and franchise tax purposes and (iii) to treat the Note and the Purchase
Contracts as separate instruments. 

 

ARTICLE 11

PLEDGE

 

Section 11.01.  Pledge.  Each Holder, acting through the
Purchase Contract Agent as such Holder’s attorney-in-fact, and the Purchase
Contract Agent, acting solely as such attorney-in-fact, hereby pledges and
grants to the Collateral Agent, as agent of and for the benefit of the Company,
a continuing first priority security interest in and to, and a lien upon and
right of set-off against, all of such Person’s right, title and interest in and
to the Collateral to secure the prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the
Obligations.  The Collateral Agent shall
have all of the rights, remedies and recourses with respect to the Collateral
afforded a 

 

98

 

secured party by the UCC, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded to the Collateral Agent by this Agreement.

 

Section 11.02. 
Termination.  As to
each Holder, the Pledge created hereby shall terminate upon the satisfaction of
such Holder’s Obligations.  Upon such
termination, the Collateral Agent shall instruct the Securities Intermediary to
Transfer such portion of the Collateral attributable to such Holder to the
Purchase Contract Agent for distribution to such Holder, free and clear of the
Pledge created hereby.

 

ARTICLE 12

ADMINISTRATION OF COLLATERAL

 

Section 12.01.  Initial
Deposit of Notes.  (a) Prior
to or concurrently with the execution and delivery of this Agreement, the
Purchase Contract Agent, on behalf of the initial Holders of the Corporate
Units, shall Transfer to the Securities Intermediary, for credit to the
Collateral Account, the Applicable Ownership Interests in Notes and the Notes
underlying such Applicable Ownership Interests in Notes or security
entitlements relating thereto and the Securities Intermediary shall indicate by
book-entry that a securities entitlement with respect to such Applicable
Ownership Interests in Notes has been credited to the Collateral Account.

 

(b)   The Collateral Agent may, at any time or from
time to time, in its sole discretion, cause any or all securities or other
property underlying any financial assets credited to the Collateral Account to
be registered in the name of the Securities Intermediary, the Collateral Agent
or their respective nominees; provided,
however, that unless any Event of Default (as defined in the
Indenture) shall have occurred and be continuing, the Collateral Agent agrees
not to cause any Notes to be so re-registered.

 

Section 12.02. 
Establishment of Collateral Account. 
The Securities Intermediary hereby confirms that:

 

(a)   the Securities Intermediary has established
the Collateral Account;

 

(b)   the Collateral Account is a securities
account;

 

(c)   subject to the terms of this Agreement, the
Securities Intermediary shall identify in its records the Collateral Agent as
the entitlement holder entitled to exercise the rights that comprise any
financial asset credited to the Collateral Account;

 

(d)   all property delivered to the Securities
Intermediary pursuant to this Agreement, including any Applicable Ownership
Interests in the Treasury Portfolio (as specified in clause (i) of each of
the definitions Applicable Ownership Interest in the Special Event Treasury
Portfolio and Applicable Ownership Interest in the Remarketing Treasury
Portfolio) or Treasury Securities and the Permitted Investments, will be
credited promptly to the Collateral Account; and

 

99

 

(e)   all securities or other property underlying
any financial assets credited to the Collateral Account shall be (i) registered
in the name of the Purchase Contract Agent and indorsed to the Securities
Intermediary or in blank, (ii) registered in the name of the Securities
Intermediary or (iii) credited to another securities account maintained in
the name of the Securities Intermediary.

 

In no case will any
financial asset credited to the Collateral Account be registered in the name of
the Purchase Contract Agent (in its capacity as such) or any Holder or
specially indorsed to the Purchase Contract Agent (in its capacity as such) or
any Holder, unless such financial asset has been further indorsed to the
Securities Intermediary or in blank.

 

Section 12.03.  Treatment as
Financial Assets.  Each item
of property (whether investment property, financial asset, security, instrument
or cash) credited to the Collateral Account shall be treated as a financial
asset.

 

Section 12.04.  Sole Control
by Collateral Agent.  Except
as provided in Section 15.01, at all times prior to the termination of the
Pledge, the Collateral Agent shall have sole control of the Collateral Account,
and the Securities Intermediary shall take instructions and directions, and
comply with entitlement orders, with respect to the Collateral Account or any
financial asset credited thereto solely from the Collateral Agent. If at any
time the Securities Intermediary shall receive an entitlement order issued by
the Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent
by the Purchase Contract Agent or any Holder or any other Person.  Except as otherwise permitted under this
Agreement, until termination of the Pledge, the Securities Intermediary will
not comply with any entitlement orders issued by the Purchase Contract Agent or
any Holder.

 

Section 12.05. 
Jurisdiction.  The
Collateral Account, and the rights and obligations of the Securities
Intermediary, the Collateral Agent, the Purchase Contract Agent and the Holders
with respect thereto, shall be governed by the laws of the State of New
York.  Regardless of any provision in any
other agreement, the Securities Intermediary’s jurisdiction is the State of New
York.

 

Section 12.06.  No Other
Claims.  Except for the claims
and interest of the Collateral Agent and of the Purchase Contract Agent and the
Holders in the Collateral Account, the Securities Intermediary (without having
conducted any investigation) does not know of any claim to, or interest in, the
Collateral Account or in any financial asset credited thereto.  If any Person asserts any lien, encumbrance
or adverse claim (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process) against the Collateral Account or in
any financial asset carried therein, the Securities Intermediary will promptly
notify the Collateral Agent and the Purchase Contract Agent.

 

Section 12.07.  Investment
and Release.  All proceeds of
financial assets from time to time credited to the Collateral Account shall be
invested and reinvested as provided in this Agreement.  At all times prior to termination of the
Pledge, no property shall be 

 

100

 

released from the Collateral
Account except in accordance with this Agreement or upon written instructions
of the Collateral Agent.

 

Section 12.08.  Statements
and Confirmations.  The
Securities Intermediary will promptly send copies of all statements, confirmations
and other correspondence concerning the Collateral Account and any financial
assets credited thereto simultaneously to each of the Purchase Contract Agent
and the Collateral Agent at their addresses for notices under this Agreement.

 

Section 12.09.  Tax
Allocations.  The Purchase
Contract Agent shall report all items of income, gain, expense and loss
recognized in the Collateral Account, to the extent such reporting is required
by law, to the Internal Revenue Service authorities in the manner required by
law.  Neither the Securities Intermediary
nor the Collateral Agent shall have any tax reporting duties hereunder.

 

Section 12.10.  No Other
Agreements.  The Securities
Intermediary has not entered into, and prior to the termination of the Pledge will
not enter into, any agreement with any other Person relating to the Collateral
Account or any financial assets credited thereto, including, without
limitation, any agreement to comply with entitlement orders of any Person other
than the Collateral Agent.

 

Section 12.11.  Powers
Coupled with an Interest.  The
rights and powers granted in this Purchase Contract and Pledge Agreement to the
Collateral Agent have been granted in order to perfect its security interests
in the Collateral Account, are powers coupled with an interest and will be
affected neither by the bankruptcy of the Purchase Contract Agent or any Holder
nor by the lapse of time. The obligations of the Securities Intermediary under
this Purchase Contract and Pledge Agreement shall continue in effect until the
termination of the Pledge.

 

Section 12.12.  Waiver of
Lien; Waiver of Set-off.  The
Securities Intermediary waives any security interest, lien or right to make
deductions or set-offs that it may now have or hereafter acquire in or with respect
to the Collateral Account, any financial asset credited thereto or any security
entitlement in respect thereof.  Neither
the financial assets credited to the Collateral Account nor the security
entitlements in respect thereof will be subject to deduction, set-off, banker’s
lien, or any other right in favor of any person other than the Company.

 

ARTICLE 13

RIGHTS AND REMEDIES OF THE COLLATERAL AGENT

 

Section 13.01.  Rights and
Remedies of the Collateral Agent.  (a) In
addition to the rights and remedies set forth herein or otherwise available at
law or in equity, after an collateral event of default (as specified in Section 13.01(b) below)
hereunder, the Collateral Agent shall have all of the rights and remedies with
respect to the Collateral of a secured party under the UCC (whether or not the
UCC is in effect in the jurisdiction where 

 

101

 

the rights and remedies are
asserted) and the TRADES Regulations and such additional rights and remedies to
which a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted. Without limiting the
generality of the foregoing, such remedies may include, to the extent permitted
by applicable law, (1) retention of the Notes underlying Pledged
Applicable Ownership Interests in Notes, the Pledged Treasury Securities or the
Pledged Applicable Ownership Interests in the Treasury Portfolio in full
satisfaction of the Holders’ obligations under the Purchase Contracts and the
Purchase Contract Agreement or (2) sale of the Notes underlying Pledged
Applicable Ownership Interests in Notes, Pledged Treasury Securities or the
Pledged Applicable Ownership Interests in the Treasury Portfolio in one or more
public or private sales.

 

(b)   Without limiting any rights or powers
otherwise granted by this Agreement to the Collateral Agent, in the event the
Collateral Agent is unable to make payments to the Company on account of the
Proceeds of the Notes underlying Pledged Applicable Ownership Interest in
Notes, the Pledged Applicable Ownership Interests in the Treasury Portfolio or
the Pledged Treasury Securities as provided in this Agreement in satisfaction
of the Obligations of the Holder of the Units of which such applicable Pledged
Applicable Ownership Interests in the Treasury Portfolio or such Pledged
Treasury Securities, as applicable, are a part under the related Purchase
Contracts, the inability to make such payments shall constitute a “collateral  event of default” hereunder and the Collateral Agent shall
have and may exercise, with reference to such Notes underlying Pledged
Applicable Ownership Interests in Notes, Pledged Treasury Securities or Pledged
Applicable Ownership Interests in the Treasury Portfolio, as applicable, any
and all of the rights and remedies available to a secured party under the UCC
and the TRADES Regulations after default by a debtor, and as otherwise granted
herein or under any other law.

 

(c)   Without limiting any rights or powers
otherwise granted by this Agreement to the Collateral Agent, the Collateral
Agent is hereby irrevocably authorized to receive, collect and apply to the
satisfaction of the Obligations all payments of (i) the principal amount
of the Notes underlying Pledged Applicable Ownership Interests in Notes, (ii) the
principal amount of the Pledged Treasury Securities and (iii) the Pledged
Applicable Ownership Interests in the Treasury Portfolio (as specified in
clause (i) of each of the definitions Applicable Ownership Interest in the
Special Event Treasury Portfolio and Applicable Ownership Interest in the
Remarketing Treasury Portfolio), subject, in each case, to the provisions of
this Agreement, and as otherwise provided herein.

 

(d)   The Purchase Contract Agent and each Holder
of Units agrees that, from time to time, upon the written request of the
Collateral Agent, the Purchase Contract Agent on behalf of such Holder, shall
execute and deliver such further documents and do such other acts and things as
the Collateral Agent may reasonably request in order to maintain the Pledge,
and the perfection and priority thereof, and to confirm the rights of the
Collateral Agent hereunder. The Purchase Contract Agent shall have no liability
to any Holder for executing any documents or taking any such acts requested by
the Collateral Agent

 

102

 

hereunder, except for
liability for its own negligent acts, its own negligent failure to act or its
own willful misconduct.

 

ARTICLE 14

REPRESENTATIONS AND WARRANTIES TO

COLLATERAL AGENT; HOLDER COVENANTS

 

Section 14.01. 
Representations and Warranties.  Each
Holder from time to time, acting through the Purchase Contract Agent as
attorney-in-fact (it being understood that the Purchase Contract Agent shall
not be liable for any representation or warranty made by or on behalf of a
Holder), hereby represents and warrants to the Collateral Agent (with respect
to such Holder’s interest in the Collateral), which representations and
warranties shall be deemed repeated on each day a Holder effects a Transfer of
Collateral, that:

 

(a)   such Holder has the power to grant a security
interest in and lien on the Collateral;

 

(b)   such Holder is the sole beneficial owner of
the Collateral and, in the case of Collateral delivered in physical form, is
the sole holder of such Collateral and is the sole beneficial owner of, or has
the right to Transfer, the Collateral it Transfers to the Collateral Agent for
credit to the Collateral Account, free and clear of any security interest, lien,
encumbrance, call, liability to pay money or other restriction other than the
security interest and lien granted under Article 11 hereof;

 

(c)   upon the Transfer of the Collateral to the
Securities Intermediary for credit to the Collateral Account, the Collateral
Agent, for the benefit of the Company, will have a valid and perfected first
priority security interest therein (assuming that any central clearing
operation or any securities intermediary or other entity not within the control
of the Holder involved in the Transfer of the Collateral, including the
Collateral Agent and the Securities Intermediary, gives the notices and takes
the action required of it hereunder and under applicable law for perfection of
that interest and assuming the establishment and exercise of control pursuant
to Article 12 hereof); and

 

(d)   the execution and performance by the Holder
of its obligations under this Agreement will not result in the creation of any
security interest, lien or other encumbrance on the Collateral other than the
security interest and lien granted under Article 11 hereof or violate any
provision of any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking to which it is a
party or which is binding on it or any of its assets.

 

Section 14.02. 
Covenants.  The
Purchase Contract Agent and the Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being understood that the
Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent and the Company
that for so long as the Collateral remains subject to the Pledge:

 

103

 

(a)   neither the Purchase Contract Agent nor such
Holders will create or purport to create or allow to subsist any mortgage,
charge, lien, pledge or any other security interest whatsoever over the
Collateral or any part of it other than pursuant to this Agreement; and

 

(b)   neither the Purchase Contract Agent nor such
Holders will sell or  otherwise dispose
(or attempt to dispose) of the Collateral or any part of it except for the
beneficial interest therein, subject to the Pledge hereunder, transferred in
connection with a Transfer of the Units.

 

ARTICLE 15

THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES INTERMEDIARY

 

Section 15.01.  Appointment,
Powers and Immunities.  The
Collateral Agent, the Custodial Agent and the Securities Intermediary shall act
as agent for the Company hereunder with such powers as are specifically vested
in the Collateral Agent, the Custodial Agent and the Securities Intermediary,
as the case may be, by the terms of this Agreement.  The Collateral Agent, the Custodial Agent and
Securities Intermediary shall:

 

(a)   have no duties or responsibilities except
those expressly set forth in this Agreement and no implied covenants or
obligations shall be inferred from this Agreement against the Collateral Agent,
the Custodial Agent or the Securities Intermediary, nor shall the Collateral
Agent, the Custodial Agent or the Securities Intermediary be bound by the
provisions of any agreement by any party hereto beyond the specific terms
hereof;

 

(b)   not be responsible for any recitals contained
in this Agreement, or in any certificate or other document referred to or
provided for in, or received by it under, this Agreement or the Units, or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement (other than as against the Collateral Agent, the Custodial
Agent or the Securities Intermediary, as the case may be), the Units, any
Collateral or any other document referred to or provided for herein or therein
or for any failure by the Company or any other Person (except the Collateral
Agent, the Custodial Agent or Securities Intermediary, as the case may be) to
perform any of its obligations hereunder or thereunder or, except as expressly
required hereby, for the perfection, priority or maintenance of any security interest
created hereunder;

 

(c)   not be required to initiate or conduct any
litigation or collection proceedings hereunder (except pursuant to directions
furnished under Section 15.02 hereof, subject to Section 15.08
hereof);

 

(d)   not be responsible for any action taken or
omitted to be taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith or therewith,
except for its own gross negligence or willful misconduct; and

 

104

 

(e)        not be required to advise
any party as to selling or retaining, or taking or refraining from taking any
action with respect to, any securities or other property deposited hereunder.

 

Subject to the foregoing, during the term of this
Agreement, the Collateral Agent, the Custodial Agent and the Securities
Intermediary shall take all reasonable action in connection with the
safekeeping and preservation of the Collateral hereunder as determined by
industry standards.

 

No provision of this Agreement shall require the
Collateral Agent, the Custodial Agent or the Securities Intermediary to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent, the Custodial Agent or the Securities Intermediary be liable for any
amount in excess of the Value of the Collateral.

 

Section 15.02.  Instructions of the
Company.  The Company shall
have the right, by one or more written instruments executed and delivered to
the Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by
this Agreement; provided, however, that (i) such direction
shall not conflict with the provisions of any law or of this Agreement or
involve the Collateral Agent in personal liability and (ii) the Collateral
Agent shall be indemnified to its satisfaction as provided herein. Nothing
contained in this Section 15.02 shall impair the right of the Collateral
Agent in its discretion to take any action or omit to take any action which it
deems proper and which is not inconsistent with such direction.  None of the Collateral Agent, the Custodial
Agent or the Securities Intermediary has any obligation or responsibility to
file UCC financing statements.

 

Section 15.03.  Reliance by Collateral Agent,
Custodial Agent and Securities Intermediary. 
Each of the Securities Intermediary, the Custodial Agent and
the Collateral Agent shall be entitled to rely conclusively upon any
certification, order, judgment, opinion, notice or other written communication
(including, without limitation, any thereof by electronic mail or similar
electronic means, telecopy, telex or facsimile) believed by it in good faith to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons (without being required to determine the correctness
of any fact stated therein) and consult with and conclusively rely upon advice,
opinions and statements of legal counsel and other experts selected by the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be. As to any matters not expressly provided for by this Agreement,
the Collateral Agent, the Custodial Agent and the Securities Intermediary shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Company in accordance
with this Agreement.

 

Section 15.04.  Certain Rights.  (a) Whenever in the
administration of the provisions of this Agreement the Collateral Agent, the
Custodial Agent or the Securities

 

105

 

Intermediary shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering any action to be taken hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Collateral Agent, the
Custodial Agent or the Securities Intermediary, be deemed to be conclusively
proved and established by a certificate signed by one of the Company’s
officers, and delivered to the Collateral Agent, the Custodial Agent or the
Securities Intermediary and such certificate, in the absence of gross
negligence or bad faith on the part of the Collateral Agent, the Custodial
Agent or the Securities Intermediary, shall be full warrant to the Collateral
Agent, the Custodial Agent or the Securities Intermediary for any action taken,
suffered or omitted by it under the provisions of this Agreement upon the faith
thereof.

 

(b)        The Collateral Agent, the
Custodial Agent or the Securities Intermediary shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, entitlement
order, approval or other paper or document.

 

Section 15.05.  Merger, Conversion,
Consolidation or Succession to Business. 
Any corporation or national association into which the
Collateral Agent, the Custodial Agent or the Securities Intermediary may be
merged or converted or with which it may be consolidated, or any corporation or
national association resulting from any merger, conversion or consolidation to
which the Collateral Agent, the Custodial Agent or the Securities Intermediary
shall be a party, or any corporation or national association succeeding to all
or substantially all of the corporate trust business of the Collateral Agent,
the Custodial Agent or the Securities Intermediary shall be the successor of
the Collateral Agent, the Custodial Agent or the Securities Intermediary
hereunder without the execution or filing of any paper with any party hereto or
any further act on the part of any of the parties hereto except where an
instrument of transfer or assignment is required by law to effect such
succession, anything herein to the contrary notwithstanding.

 

Section 15.06.  Rights in Other
Capacities.  The Collateral
Agent, the Custodial Agent and the Securities Intermediary and their affiliates
may (without having to account therefor to the Company) accept deposits from,
lend money to, make their investments in and generally engage in any kind of
banking, trust or other business with the Purchase Contract Agent, any other
Person interested herein and any Holder of Units (and any of their respective
subsidiaries or affiliates) as if it were not acting as the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case may be, and the
Collateral Agent, the Custodial Agent, the Securities Intermediary and their
affiliates may accept fees and other consideration from the Purchase Contract
Agent and any Holder of Units without having to account for the same to the
Company; provided that each of
the Collateral Agent, the Custodial Agent and the Securities Intermediary
covenants and agrees with the Company that it shall not accept, receive or
permit there to be created in favor of itself and shall take no affirmative
action to permit there to be created in favor of any other Person, any security
interest, lien or other encumbrance of any kind in or upon the Collateral other
than the lien created by the Pledge.

 

106

 

Section 15.07.  Non-reliance on Collateral
Agent, the Custodial Agent and Securities Intermediary.  None of the Collateral Agent, the
Custodial Agent or the Securities Intermediary shall be required to keep itself
informed as to the performance or observance by the Purchase Contract Agent or
any Holder of Units of this Agreement, the Units or any other document referred
to or provided for herein or therein or to inspect the properties or books of
the Purchase Contract Agent or any Holder of Units.  None of the Collateral Agent, the Custodial
Agent or the Securities Intermediary shall have any duty or responsibility to provide
the Company with any credit or other information concerning the affairs,
financial condition or business of the Purchase Contract Agent or any Holder of
Units (or any of their respective affiliates) that may come into the possession
of the Collateral Agent, the Custodial Agent or the Securities Intermediary or
any of their respective affiliates.

 

Section 15.08.  Compensation and
Indemnity.  The Company agrees
to:

 

(a)        pay the Collateral Agent,
the Custodial Agent and the Securities Intermediary from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, for all services rendered by them hereunder;

 

(b)        indemnify and hold harmless
the Collateral Agent, the Custodial Agent, the Securities Intermediary and each
of their respective directors, officers, agents and employees (for purposes of
this Section 15.08, the “Indemnitees”),
from and against any and all claims, liabilities, losses, damages, fines,
penalties and expenses (including reasonable fees and expenses of counsel)
(collectively, “Losses” and individually, a “Loss”) that may be imposed on, incurred by,
or asserted against, the Indemnitees or any of them for following any
instructions or other directions upon which any of the Collateral Agent, the
Custodial Agent or the Securities Intermediary is entitled to rely pursuant to
the terms of this Agreement, provided
that the Collateral Agent, the Custodial Agent or the Securities Intermediary
has not acted with negligence or engaged in willful misconduct or bad faith
with respect to the specific Loss against which indemnification is sought; and

 

(c)        in addition to and not in
limitation of clause (b) of this Section 15.08, indemnify and hold
the Indemnitees and each of them harmless from and against any and all Losses
that may be imposed on, incurred by or asserted against, the Indemnitees or any
of them in connection with or arising out of the Collateral Agent’s, the
Custodial Agent’s or the Securities Intermediary’s acceptance or performance of
its powers and duties under this Agreement, provided
the Collateral Agent, the Custodial Agent or the Securities Intermediary has
not acted with negligence or engaged in willful misconduct or bad faith with
respect to the specific Loss against which indemnification is sought.

 

The provisions of this Section and Section 15.14
shall survive the resignation or removal of the Collateral Agent, the Custodial
Agent or the Securities Intermediary and the termination of this Agreement.

 

107

 

Section 15.09.  Failure to Act.  In the event that, in the good
faith belief of the Collateral Agent, the Custodial Agent or the Securities
Intermediary, an ambiguity in the provisions of this Agreement arises or any
actual dispute between or conflicting claims by or among the parties hereto or
any other Person with respect to any funds or property deposited hereunder has
been asserted in writing, then at its sole option, each of the Collateral
Agent, the Custodial Agent and the Securities Intermediary shall be entitled,
after prompt notice to the Company and the Purchase Contract Agent, to refuse
to comply with any and all claims, demands or instructions with respect to such
property or funds so long as such dispute or conflict shall continue, and the
Collateral Agent, the Custodial Agent and the Securities Intermediary, as the
case may be, shall not be or become liable in any way to any of the parties
hereto for its failure or refusal to comply with such conflicting claims,
demands or instructions. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall be entitled to refuse to act until either:

 

(a)        such conflicting or adverse
claims or demands shall have been finally determined by a court of competent
jurisdiction or settled by agreement between the conflicting parties as
evidenced in a writing satisfactory to the Collateral Agent, the Custodial
Agent or the Securities Intermediary; or

 

(b)        the Collateral Agent, the
Custodial Agent or the Securities Intermediary shall have received security or
an indemnity satisfactory to it sufficient to save it harmless from and against
any and all loss, liability or reasonable out-of-pocket expense which it may
incur by reason of its acting.

 

The Collateral Agent, the
Custodial Agent and the Securities Intermediary may in addition elect to
commence an interpleader action or seek other judicial relief or orders as the
Collateral Agent, the Custodial Agent or the Securities Intermediary may deem
necessary.  Notwithstanding anything
contained herein to the contrary, none of the Collateral Agent, the Custodial
Agent or the Securities Intermediary shall be required to take any action that
is in its opinion contrary to law or to the terms of this Agreement, or which
would in its opinion subject it or any of its officers, employees or directors
to liability.

 

Section 15.10.  Resignation and Removal of
Collateral Agent, the Custodial Agent and the Securities Intermediary.  (a)  Subject to the
appointment and acceptance of a successor Collateral Agent, Custodial Agent or
Securities Intermediary as provided below:

 

(i)    the Collateral Agent, the Custodial Agent or the
Securities Intermediary may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent as attorney-in-fact for the Holders of
Units;

 

(ii)   the Collateral Agent, the Custodial Agent or the
Securities Intermediary may be removed at any time by the Company; and

 

(iii)  if the Collateral Agent, the Custodial Agent or the
Securities Intermediary fails to perform any of its material obligations
hereunder in any

 

108

 

material respect for a period of not less than 20 days after receiving
written notice of such failure by the Purchase Contract Agent and such failure
shall be continuing, the Collateral Agent, the Custodial Agent and the
Securities Intermediary may be removed by the Purchase Contract Agent, acting
at the direction of the Holders of Units.

 

The Purchase Contract Agent shall promptly notify
the Company upon the transmission of notice as contemplated by clause (iii) of
this Section 15.10(a) and any removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary pursuant to clause (iii) of
this Section 15.10(a).  Upon any
such resignation or removal, the Company shall have the right to appoint a
successor Collateral Agent, Custodial Agent or Securities Intermediary, as the
case may be, which shall not be an Affiliate of the Purchase Contract
Agent.  If no successor Collateral Agent,
Custodial Agent or Securities Intermediary shall have been so appointed and
shall have accepted such appointment within 45 days after the retiring
Collateral Agent’s, Custodial Agent’s or Securities Intermediary’s giving of
notice of resignation or the Company’s or the Purchase Contract Agent’s giving
notice of such removal, then the retiring or removed Collateral Agent,
Custodial Agent or Securities Intermediary may petition any court of competent
jurisdiction, at the expense of the Company, for the appointment of a successor
Collateral Agent, Custodial Agent or Securities Intermediary. The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall each be a bank
or a national banking association which has an office (or an agency office) in
the City of New York, New York, with a combined capital and surplus of at least
$50,000,000.  Upon the acceptance of any
appointment as Collateral Agent, Custodial Agent or Securities Intermediary
hereunder by a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, such successor Collateral Agent, Custodial
Agent or Securities Intermediary, as the case may be, shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the
case may be, and the retiring Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, shall take all appropriate action, subject to
payment of any amounts then due and payable to it hereunder, to transfer any
money and property held by it hereunder (including the Collateral) to such
successor.  The retiring Collateral
Agent, Custodial Agent or Securities Intermediary shall, upon such succession,
be discharged from its duties and obligations as Collateral Agent, Custodial
Agent or Securities Intermediary hereunder. 
After any retiring Collateral Agent’s, Custodial Agent’s or Securities
Intermediary’s resignation hereunder as Collateral Agent, Custodial Agent or
Securities Intermediary, the provisions of this Article 15 shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as the Collateral Agent, the Custodial Agent or
the Securities Intermediary.  Any
resignation or removal of the Collateral Agent, the Custodial Agent or the
Securities Intermediary hereunder, at a time when such Person is also acting as
the Collateral Agent, the Custodial Agent or the Securities Intermediary, as
the case may be, shall be deemed for all purposes of this Agreement as the
simultaneous resignation or removal of the Collateral Agent, the Securities
Intermediary or the Custodial Agent, as the case may be.

 

109

 

(b)        Because The Bank of New York
is serving as the Collateral Agent hereunder and also as the Purchase Contract
Agent hereunder, if an event of default or collateral event of default occurs
hereunder The Bank of New York will resign as the Collateral Agent, Custodial
Agent and the Securities Intermediary, but continue to act as the Purchase
Contract Agent.  A successor Collateral
Agent, Custodial Agent and Securities Intermediary will be appointed in accordance
with the terms of this Article 15.

 

Section 15.11.  Right to Appoint Agent or
Advisor.  The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of
its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of, such agents or
advisors selected in good faith.  The
appointment of agents pursuant to this Section 15.11 shall be subject to
prior written consent of the Company, which consent shall not be unreasonably
withheld.

 

Section 15.12.  Survival.  The provisions of this Article 15
shall survive termination of this Agreement and the resignation or removal of
the Collateral Agent, the Custodial Agent or the Securities Intermediary.

 

Section 15.13.  Exculpation.  Anything contained in this
Agreement to the contrary notwithstanding, in no event shall the Collateral
Agent, the Custodial Agent or the Securities Intermediary or their officers,
directors, employees or agents be liable under this Agreement for indirect,
special, punitive, or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, whether or not the likelihood of
such loss or damage was known to the Collateral Agent, the Custodial Agent or
the Securities Intermediary, or any of them and regardless of the form of
action.

 

Section 15.14.  Expenses, Etc.  The Company agrees to reimburse
the Collateral Agent, the Custodial Agent and the Securities Intermediary for:

 

(a)        all reasonable costs, fees
and expenses of the Collateral Agent, the Custodial Agent and the Securities
Intermediary (including, without limitation, the reasonable fees and expenses
of counsel to the Collateral Agent, the Custodial Agent and the Securities
Intermediary), in connection with (i) the negotiation, preparation,
execution and delivery or performance of this Agreement and (ii) any
modification, supplement or waiver of any of the terms of this Agreement;

 

(b)        all reasonable costs and
expenses of the Collateral Agent, the Custodial Agent and the Securities Intermediary
(including, without limitation, reasonable fees and expenses of counsel) in
connection with (i) any enforcement or proceedings resulting or incurred
in connection with causing any Holder of Units to satisfy its obligations under
the Purchase Contracts forming a part of the Units and (ii) the
enforcement of this Section 15.14;

 

(c)        all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any other document
referred to herein and all costs, expenses, taxes, assessments and other

 

110

 

charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby;

 

(d)        all reasonable fees and
expenses of any agent or advisor appointed by the Collateral Agent and
consented to by the Company under Section 15.11 of this Agreement; and

 

(e)        any other out-of-pocket
costs and expenses reasonably incurred by the Collateral Agent, the Custodial
Agent and the Securities Intermediary in connection with the performance of
their duties hereunder.

 

ARTICLE
16

MISCELLANEOUS

 

Section 16.01.  Security Interest
Absolute.  All rights of the
Collateral Agent and security interests hereunder, and all obligations of the
Holders from time to time hereunder, shall be absolute and unconditional
irrespective of:

 

(a)        any lack of validity or
enforceability of any provision of the Purchase Contracts or the Units or any
other agreement or instrument relating thereto;

 

(b)        any change in the time,
manner or place of payment of, or any other term of, or any increase in the
amount of, all or any of the obligations of Holders of the Units under the
related Purchase Contracts, or any other amendment or waiver of any term of, or
any consent to any departure from any requirement of, the Purchase Contract
Agreement or any Purchase Contract or any other agreement or instrument
relating thereto; or

 

(c)        any other circumstance which
might otherwise constitute a defense available to, or discharge of, a borrower,
a guarantor or a pledgor.

 

Section 16.02.  Notice of Special Event,
Special Event Redemption and Termination Event. 
Upon the occurrence of a Special Event, a Special Event
Redemption or a Termination Event, the Company shall deliver written notice to
the Purchase Contract Agent, the Collateral Agent and the Securities
Intermediary.  Upon the written request
of the Collateral Agent or the Securities Intermediary, the Company shall
inform such party whether or not a Special Event, a Special Event Redemption or
a Termination Event has occurred.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

111

 

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

 

	
  LEGG MASON, INC.

  	
   

  	
  THE BANK OF NEW YORK, as Purchase 

  Contract Agent and as attorney-in-fact of the 

  Holders from time to time of the Units

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   Name:

  	
   

  	
   

  	
   

  	
   Name:

  	
   

  
	
   

  	
   Title:

  	
   

  	
   

  	
   

  	
   Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  
	
  Legg Mason, Inc.

  100 Light Street

  Baltimore, Maryland 21202

  Attention: Corporate Secretary

  	
   

  	
  The Bank of New York

  101 Barclay Street, Floor 8W

  New York, New York 10286

  Attention: Corporate Trust Administration

  

 

 

	
  THE BANK OF NEW YORK

  as Collateral Agent, Custodial Agent and 

  Securities Intermediary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The Bank of New York

  101 Barclay Street, Floor 8W

  New York, New York 10286

  Attention: Corporate Trust Administration

  	
   

  	
   

  

 

 

EXHIBIT A

 

(FORM OF FACE OF CORPORATE UNIT CERTIFICATE)

 

[For inclusion in Global
Certificates only - THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE PURCHASE CONTRACT AND PLEDGE AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF CEDE & CO., AS THE NOMINEE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”),
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AND PLEDGE AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE
(OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.

 

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

 

	
  No.

  	
   

  	
  CUSIP No. 524901 303

  	 

	 
	
  Number of Corporate Units:

  	
   

  	
   

  
							

 

LEGG
MASON, INC.

Corporate Units

 

This Corporate Units
Certificate certifies that Cede & Co. is the registered Holder of the
number of Corporate Units set forth above [For inclusion in Global Certificates
only – or such other number of Corporate Units reflected in the Schedule of
Increases or Decreases in Global Certificate attached hereto], which number
shall not exceed 20,000,000. Each Corporate Unit consists of
(i) beneficial ownership by the Holder of either (A) prior to the
occurrence of a Special Event Redemption (1) an Applicable Ownership
Interest in Notes, or (2) on and after the Reset Effective Date, (x) an
Applicable Ownership Interest in the Remarketing Treasury Portfolio, subject to
the Pledge of such Applicable Ownership Interest in the Remarketing Treasury
Portfolio by the Holder pursuant to the Purchase Contract and Pledge Agreement
(except that only the Pledged Applicable Ownership Interest in

 

A-1

 

the Treasury Portfolio shall
be subject to the Pledge), and (y) if the Reset Effective Date occurs on a
date that is not also an Interest Payment Date, prior to the Interest Payment
Date next following the Reset Effective Date (assuming a Remarketing of the
Notes had not occurred), the right to receive the interest accrued on the 1/20, or 5.00%, undivided beneficial ownership interest in $1,000 principal
amount of Notes from and including the Interest Payment Date immediately
preceding the Reset Effective Date to, but excluding, the Reset Effective Date
(assuming the interest rate had not been reset), or (B) on or after the
occurrence of a Special Event Redemption but prior to the Purchase Contract
Settlement Date, an Applicable Ownership Interest in the Special Event Treasury
Portfolio, subject to the Pledge of such Applicable Ownership Interest in the
Special Event Treasury Portfolio by the Holder pursuant to the Purchase
Contract and Pledge Agreement (except that the Applicable Ownership Interest in
the Special Event Treasury Portfolio specified in clause (ii) of the
definition thereof shall not be subject to the Pledge), and (ii) the
rights and obligations of the Company and the Holder under one Purchase
Contract. All capitalized terms used herein that are defined in the Purchase
Contract and Pledge Agreement (as defined on the reverse hereof) have the
meaning set forth therein.

 

Pursuant to the Purchase
Contract and Pledge Agreement, the Applicable Ownership Interest in Notes or
the Applicable Ownership Interests in the Treasury Portfolio, as the case may
be, constituting part of each Corporate Unit evidenced hereby have been pledged
to the Collateral Agent, for the benefit of the Company, to secure the
obligations of the Holder under the Purchase Contract comprising part of such
Corporate Unit.

 

All payments of the
principal amount with respect to the Notes underlying the Pledged Applicable
Ownership Interests in Notes or all payments with respect to the Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, or payments
of interest on the Pledged Applicable Ownership Interests in Notes or
distributions with respect to the Applicable Ownership Interests in the
Treasury Portfolio, as the case may be, constituting part of the Corporate
Units shall be paid on the dates and in the manner set forth in the Purchase
Contract and Pledge Agreement. Interest on the Notes underlying the Applicable
Ownership Interests in Notes and distributions on the Applicable Ownership
Interests in the Treasury Portfolio, as the case may be, forming part of the
Corporate Units, evidenced hereby, which are payable on each Contract
Adjustment Payment Date, shall, subject to receipt thereof by the Purchase
Contract Agent, be paid to the Person in whose name this Corporate Units
Certificate (or Predecessor Corporate Units Certificate) is registered at the
close of business on the Record Date for such Contract Adjustment Payment Date.

 

Each Purchase Contract
evidenced hereby obligates the Holder of this Corporate Units Certificate to
purchase, and the Company to sell, on the Purchase Contract  Settlement Date at a Purchase Price equal
to the Stated Amount, a number of newly issued shares of Common Stock, of the
Company, equal to the Settlement Rate, unless on or prior to the Purchase
Contract Settlement Date there shall have occurred a Termination Event or an
Early Settlement or Fundamental Change Early Settlement with respect to such
Purchase Contract, all as provided in the Purchase Contract and Pledge
Agreement. The Purchase Price for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid
on the Purchase Contract Settlement Date by application of payment received in
the Remarketing of the Notes underlying Pledged Applicable Ownership Interests
in Notes or the Pledged Applicable Ownership Interests in the Treasury
Portfolio, as the case may be, pledged to

 

A-2

 

secure the obligations under such Purchase
Contract of the Holder of the Corporate Units of which such Purchase Contract
is a part.

 

Each Purchase Contract evidenced hereby
obligates the Holder to agree, for all tax purposes (i) to treat the
acquisition of a Corporate Unit as the acquisition of the ownership interest in
the Note and the Purchase Contract constituting the Corporate Unit,
(ii) to treat the Note as indebtedness of the Company that is subject to
the rules applicable to contingent payment debt instruments under Treas.
Reg. Sec. 1.1275-4 and (iii) to treat the Note and the Purchase Contracts
as separate instruments.

 

The Company shall pay, on each Contract
Adjustment Payment Date, in respect of each Purchase Contract forming part of a
Corporate Unit evidenced hereby, an amount (the “Contract
Adjustment Payments”) equal to 1.40% per year of the Stated Amount,
computed on the basis of a 360-day year consisting of twelve 30-day months.
Such Contract Adjustment Payments shall be payable to the Person in whose name
this Corporate Units Certificate is registered at the close of business on the
Record Date for such Payment Date. The Company may, at its option, defer such
Contract Adjustment Payments as described in the Purchase Contract and Pledge
Agreement.

 

Interest on the Notes, distributions on the
Applicable Ownership Interest in the Remarketing Portfolio or the Applicable
Ownership Interest in the Special Event Treasury Portfolio, as the case may be,
and the Contract Adjustment Payments will be payable at the office of the
Purchase Contract Agent in the City of New York. If the book-entry system for
the Corporate Units has been terminated, the Contract Adjustment Payments will
be payable, at the option of the Company, by check mailed to the address of the
Person entitled thereto at such Person’s address as it appears on the Security
Register, or by wire transfer to the account designated by such Person by a
prior written notice to the Purchase Contract Agent.

 

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

 

Unless the certificate of authentication
hereon has been executed by the Purchase Contract Agent by manual signature,
this Corporate Units Certificate shall not be entitled to any benefit under the
Purchase Contract and Pledge Agreement or be valid or obligatory for any
purpose.

 

A-3

 

IN WITNESS WHEREOF, the Company and the
Holder specified above have caused this instrument to be duly executed.

 

	
   

  	
  LEGG MASON, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the
  Purchase Contracts)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  THE BANK OF NEW YORK, not individually but solely as attorney-in-fact
  of such Holder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-4

 

CERTIFICATE OF
AUTHENTICATION

OF PURCHASE CONTRACT AGENT

 

This is one of the Corporate Units
Certificates referred to in the within mentioned Purchase Contract and Pledge
Agreement.

 

 

	
   

  	
  THE BANK OF NEW YORK

  as Purchase Contract Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  

 

A-5

 

(FORM OF
REVERSE OF CORPORATE UNIT CERTIFICATE)

 

Each Purchase Contract evidenced hereby is
governed by a Purchase Contract and Pledge Agreement, dated as of May 12,
2008 (as may be supplemented from time to time, the “Purchase
Contract and Pledge Agreement”), between the Company and The Bank of
New York, as Collateral Agent, as Custodial Agent, as Securities Intermediary,
as Purchase Contract Agent and as attorney-in-fact for the Holders of Corporate
Units and Treasury Units from time to time, to which Purchase Contract and Pledge
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Purchase Contract Agent, the Company,
and the Holders and of the terms upon which the Corporate Units Certificates
are, and are to be, executed and delivered.

 

Each Purchase Contract evidenced hereby
obligates the Holder of this Corporate Units Certificate to purchase, and the
Company to sell, on the Purchase Contract Settlement Date at a price equal to
the Stated Amount, a number of shares of Common Stock equal to the Settlement
Rate, unless an Early Settlement, a Fundamental Change Early Settlement or a
Termination Event with respect to the Units of which such Purchase Contract is
a part shall have occurred.

 

No fractional shares of Common Stock will be
issued upon settlement of Purchase Contracts, as provided in Section 5.08 of
the Purchase Contract and Pledge Agreement.

 

Each Purchase Contract evidenced hereby that
is settled through Early Settlement or Fundamental Change Early Settlement
shall obligate the Holder of the related Corporate Units to purchase at the
Purchase Price, and the Company to sell, a number of newly issued shares of
Common Stock equal to the Minimum Settlement Rate (in the case of an Early
Settlement) or applicable Settlement Rate (in the case of a Fundamental Change
Early Settlement).

 

In accordance with the terms of the Purchase
Contract and Pledge Agreement, unless a Termination Event shall have occurred,
the Holder of this Corporate Units Certificate shall pay the Purchase Price for
the shares of Common Stock purchased pursuant to each Purchase Contract
evidenced hereby by effecting a Cash Settlement, an Early Settlement or, if
applicable, a Fundamental Change Early Settlement or from the proceeds of the
Pledged Applicable Ownership Interest in the Treasury Portfolio or a
Remarketing of the Notes underlying Pledged Applicable Ownership Interests in
Notes. Unless the Applicable Ownership Interests in the Treasury Portfolio have
replaced the Notes underlying the Applicable Ownership Interests in Notes as a
component of the Corporate Units, a Holder of Corporate Units who (1) does
not, on or prior to the close of business on the seventh Business Day
immediately preceding the Purchase Contract Settlement Date, notify the
Purchase Contract Agent of its intention to effect a Cash Settlement, or who
does so notify the Purchase Contract Agent but fails to make an effective Cash
Settlement prior to 11:00 a.m., New York City time, on the sixth Business
Day immediately preceding the Purchase Contract Settlement Date, or (2) on
or prior to the close of business on the seventh Business Day prior to the
Purchase Contract Settlement Date, does not make an effective Early Settlement,
shall pay the Purchase Price, less the amount of any Deferred Contract
Adjustment Payments payable to such Holder, for the shares of Common Stock to
be delivered under the related Purchase Contract from the proceeds of the sale
of the

 

A-6

 

Notes underlying Pledged Applicable Ownership
Interests in Notes held by the Collateral Agent in the Remarketing unless the
Holder has previously made a Fundamental Change Early Settlement. If the Treasury
Portfolio has replaced the Notes as a component of Corporate Units, a Holder of
Corporate Units shall pay the Purchase Price for the shares of Common Stock to
be delivered under the related Purchase Contract from the proceeds at maturity
of the Applicable Ownership Interests in the Treasury Portfolio.

 

As provided in the Purchase Contract and
Pledge Agreement, upon the occurrence of a Failed Final Remarketing, as of the
Purchase Contract Settlement Date, each Holder of any Pledged Applicable
Ownership Interests in Notes, unless such Holder has elected Cash Settlement
and delivered Cash in accordance with Section 5.02(c) of the Purchase
Contract and Pledge Agreement, shall be deemed to have exercised such Holder’s
Put Right with respect to the Notes underlying such Pledged Applicable
Ownership Interests in Notes and to have the Proceeds of the Put Right set-off
against such Holder’s obligation to pay the aggregate Purchase Price for shares
of Common Stock to be issued under the related Purchase Contracts in full
satisfaction of such Holder’s obligations under such Purchase Contracts.

 

The Company shall not be obligated to issue
any shares of Common Stock in respect of a Purchase Contract or deliver any
certificates therefor to the Holder unless it shall have received payment of
the aggregate Purchase Price, less any Deferred Contract Adjustment Payments,
for the shares of Common Stock to be purchased thereunder in the manner set
forth in the Purchase Contract and Pledge Agreement.

 

The Purchase Contracts and all obligations
and rights of the Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the obligation of the
Company to pay any Contract Adjustment Payments, shall terminate without the
necessity of any notice or action by the Holder, the Purchase Contract Agent or
the Company, if, on or prior to the Purchase Contract Settlement Date a
Termination Event shall have occurred. Upon the occurrence of a Termination
Event, the Company shall give written notice to the Purchase Contract Agent and
to the Holders, at their addresses as they appear in the Security Register.
Upon and after the occurrence of a Termination Event, the Collateral Agent
shall release the Notes underlying Pledged Applicable Ownership Interests in
Notes or the Applicable Ownership Interests in the Treasury Portfolio forming a
part of each Corporate Unit from the Pledge. A Corporate Unit shall thereafter
represent the right to receive the Senior Note or the appropriate Applicable
Ownership Interests in the Treasury Portfolio forming a part of such Corporate
Units in accordance with the terms of the Purchase Contract and Pledge
Agreement.

 

Under the terms of the Purchase Contract and
Pledge Agreement, the Purchase Contract Agent will be entitled to exercise the
voting and any other consensual rights pertaining to the Notes underlying
Pledged Applicable Ownership Interests in Notes, but only to the extent
instructed in writing by the Holders. Upon receipt of notice of any meeting at
which holders of Notes are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Notes, the Purchase Contract Agent
shall, as soon as practicable thereafter, mail, first class, postage pre-paid,
to the Corporate Units Holders the notice required by the Purchase Contract and
Pledge Agreement.

 

A-7

 

Upon the occurrence of a Special Event
Redemption, the Collateral Agent shall surrender the Notes underlying Pledged
Applicable Ownership Interests in Notes against delivery of an amount equal to
the aggregate Redemption Price of such Notes and shall deposit the funds in the
Collateral Account in exchange for such Notes. Thereafter, the Collateral Agent
shall cause the Securities Intermediary to apply an amount equal to the
aggregate Redemption Amount of such funds to purchase, on behalf of the Holders
of Corporate Units, the Special Event Treasury Portfolio.

 

Upon the occurrence of a Successful
Remarketing of the Notes underlying Pledged Applicable Ownership Interests in
Notes during the Period for Early Remarketing, pursuant to the terms of the
Remarketing Agreement, the Remarketing Agent will apply an amount equal to the
Remarketing Treasury Portfolio Purchase Price to purchase on behalf of the
Holders of Corporate Units, the Remarketing Treasury Portfolio.

 

Following the occurrence of (i) a
Special Event Redemption prior to the Purchase Contract Settlement Date, or
(ii) a Successful Remarketing of the Notes on or prior to the ninth
Business Day prior to the Purchase Contract Settlement Date, the Holders of
Corporate Units and the Collateral Agent shall have such security interest
rights with respect to the Applicable Ownership Interests in the Treasury
Portfolio as the Collateral Agent had in respect of the Applicable Ownership
Interests in Notes and the underlying Notes as provided in the Purchase
Contract and Pledge Agreement and any reference herein to the Notes or
Applicable Ownership Interests in Notes shall be deemed to be a reference to
such Treasury Portfolio or the Applicable Ownership Interests in the Treasury
Portfolio, as the case may be.

 

The Corporate Units Certificates are issuable
only in registered form and only in denominations of a single Corporate Unit
and any integral multiple thereof. The transfer of any Corporate Units
Certificate will be registered and Corporate Units Certificates may be
exchanged as provided in the Purchase Contract and Pledge Agreement. A Holder
who elects to substitute a Treasury Security for a Note underlying the
Applicable Ownership Interests in Notes or Applicable Ownership Interests in
the Treasury Portfolio, as the case may be, thereby creating Treasury Units,
shall be responsible for any fees or expenses payable in connection therewith.
Except as provided in the Purchase Contract and Pledge Agreement, such
Corporate Units shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Corporate Units in respect of the
Applicable Ownership Interests in Notes or Applicable Ownership Interests in
the Treasury Portfolio, as the case may be and Purchase Contract constituting
such Corporate Units may be transferred and exchanged only as a Corporate Unit.

 

Subject to, and in compliance with, the terms
and conditions set forth in the Purchase Contract and Pledge Agreement, a
Holder of Corporate Units may effect a Collateral Substitution. From and after
such Collateral Substitution, each Unit for which Pledged Treasury Securities
secure the Holder’s obligations under the Purchase Contract shall be referred
to as a “Treasury Unit.”  A Holder may make such Collateral
Substitution only in integral multiples of 20 Corporate Units.

 

If Applicable Ownership Interests in the
Treasury Portfolio have replaced the Applicable Ownership Interests in Notes as
a component of the Corporate Units, a Holder may substitute Treasury Securities
for the Applicable Ownership Interests in the Treasury Portfolio, but only in

 

A-8

 

integral multiples of 10,000 Corporate Units
or such other number of Corporate Units as may be determined by the Remarketing
Agent following a Successful Remarketing of the Notes if the Reset Effective
Date is not an Interest Payment Date.

 

Subject to and upon compliance with the provisions of the Purchase
Contract and Pledge Agreement at the option of the Holder thereof, Purchase
Contracts underlying Units may be settled early by effecting an Early
Settlement as provided in the Purchase Contract and Pledge Agreement.

 

Upon Early Settlement of Purchase Contracts
by a Holder of the related Units, the Notes underlying Pledged Applicable
Ownership Interests in Notes or the Applicable Ownership Interests in the
Treasury Portfolio, as the case may be, underlying such Units shall be released
from the Pledge as provided in the Purchase Contract and Pledge Agreement and
the Holder shall be entitled to receive a number of shares of Common Stock on
account of each Purchase Contract forming part of a Corporate Unit as to which
Early Settlement is effected equal to the Minimum Settlement Rate.

 

Upon the occurrence of a Fundamental Change,
a Holder of Corporate Units may effect Fundamental Change Early Settlement of
the Purchase Contract underlying such Corporate Units pursuant to the terms of Section
5.04(b)(ii) of the Purchase Contract and Pledge Agreement. Upon Fundamental
Change Early Settlement of Purchase Contracts by a Holder of the related
Corporate Units, the Notes underlying Pledged Applicable Ownership Interests in
Notes or the Pledged Applicable Ownership Interests in the Treasury Portfolio,
as the case may be, underlying such Corporate Units shall be released from the
Pledge as provided in the Purchase Contract and Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Purchase Contract forming part of a Corporate Unit as to which Fundamental
Change Early Settlement is effected equal to the applicable Settlement Rate.

 

Upon registration of transfer of this
Corporate Units Certificate, the transferee shall be bound (without the
necessity of any other action on the part of such transferee, except as may be
required by the Purchase Contract Agent pursuant to the Purchase Contract and
Pledge Agreement), under the terms of the Purchase Contract and Pledge
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contracts evidenced by this
Corporate Units Certificate. The Company covenants and agrees, and the Holder,
by its acceptance hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.

 

The Holder of this Corporate Units
Certificate, by its acceptance hereof, authorizes the Purchase Contract Agent
to enter into and perform the related Purchase Contracts forming part of the
Corporate Units evidenced hereby on its behalf as its attorney-in-fact,
expressly withholds any consent to the assumption (i.e., affirmance) of the
Purchase Contracts by the Company or its trustee in the event that the Company
becomes the subject of a case under the Bankruptcy Code, agrees to be bound by
the terms and provisions thereof, covenants and agrees to perform its
obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract and Pledge Agreement, authorizes the Purchase Contract Agent
to enter into and perform the Purchase Contract and Pledge Agreement on its
behalf as its attorney-in-fact, and consents to the

 

A-9

 

Pledge of the Applicable Ownership Interests
in Notes or the Applicable Ownership Interests in the Treasury Portfolio, as
the case may be, underlying this Corporate Units Certificate pursuant to the
Purchase Contract and Pledge Agreement. The Holder further covenants and agrees
that, to the extent and in the manner provided in the Purchase Contract and
Pledge Agreement, but subject to the terms thereof, any payments with respect
to the aggregate principal amount of the Notes underlying Pledged Applicable Ownership
Interests in Notes (other than interest payments thereon) or the Proceeds of
the Applicable Ownership Interests in the Treasury Portfolio (as specified in
clause (i) of each of the definitions of Applicable Ownership Interest in
the Special Event Treasury Portfolio and Applicable Ownership Interest in the
Remarketing Treasury Portfolio), as the case may be, on the Purchase Contract
Settlement Date less any Deferred Contract Adjustment Payments shall be paid by
the Collateral Agent to the Company in satisfaction of such Holder’s
obligations under the related Purchase Contracts and such Holder shall acquire
no right, title or interest in such payments.

 

Subject to certain exceptions, the provisions
of the Purchase Contract and Pledge Agreement may be amended with the consent
of the Holders of a majority of the Purchase Contracts.

 

The Purchase Contracts shall be governed by,
and construed in accordance with, the laws of the State of New York, without
giving effect to the conflicts of law provisions thereof to the extent that the
application of a law of a different jurisdiction would govern as a result.

 

Prior to due presentment of this Certificate
for registration of transfer, the Company, the Purchase Contract Agent and its
Affiliates and any agent of the Company or the Purchase Contract Agent may
treat the Person in whose name this Corporate Units Certificate is registered
as the owner of the Corporate Units evidenced hereby for the purpose of
receiving payments of interest payable on the Notes underlying the Applicable
Ownership Interests in Notes, receiving payments of Contract Adjustment
Payments (subject to any applicable record date), performance of the Purchase
Contracts and for all other purposes whatsoever, whether or not any payments in
respect thereof be overdue and notwithstanding any notice to the contrary, and
neither the Company, the Purchase Contract Agent nor any such agent shall be
affected by notice to the contrary.

 

The Purchase Contracts shall not, prior to
the settlement thereof, entitle the Holder to any of the rights of a holder of
shares of Common Stock.

 

A copy of the Purchase Contract and Pledge
Agreement is available for inspection at the offices of the Purchase Contract
Agent.

 

A-10

 

ABBREVIATIONS

 

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

 

	
  TEN COM

  	
   

  	
  as tenants in common

  
	
  UNIF GIFT MIN ACT:

  	
   

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
   (cust)                                         (minor)
  

  
	
   

  	
   

  	
  Under Uniform Gifts to Minors Act of

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  as tenants by the entireties

  
	
   

  	
   

  	
   

  
	
  JT TEN:

  	
   

  	
  as joint tenants with right of survivorship and not as tenants in
  common

  
							

 

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

 

	
   

  	
  FOR VALUE
  RECEIVED, the undersigned hereby sell(s), assign(s) and
  transfer(s) unto

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

	
   

  	
  (Please insert Social
  Security or Taxpayer I.D. or other Identifying Number of Assignee)

  
	
   

  	
   

  
	
   

  	
   

  

 

 

(Please
Print or Type Name and Address Including Postal Zip Code of Assignee)

 

the within
Corporate Units Certificates and all rights thereunder, hereby irrevocably
constituting and appointing attorney _________________________, to transfer said
Corporate Units Certificates on the books of Legg Mason, Inc., with full
power of substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NOTICE: The
  signature to this assignment must correspond with the name as it appears upon
  the face of the within Corporate Units Certificates in every particular,
  without alteration or enlargement or any change whatsoever.

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
								

 

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

 

A-11

 

SETTLEMENT
INSTRUCTIONS

 

The undersigned Holder directs that a
certificate for shares of Common Stock deliverable upon settlement on or after
the Purchase Contract Settlement Date of the Purchase Contracts underlying the
number of Corporate Units evidenced by this Corporate Units Certificate be
registered in the name of, and delivered, together with a check in payment for
any fractional share, to the undersigned at the address indicated below unless
a different name and address have been indicated below. If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  
	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
  (if assigned to another person)

  

 

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

 

 

	
  If shares are to be registered in the name of and delivered to a
  Person other than the Holder, please (i) print such Person’s name and
  address and (ii) provide a guarantee of your signature:

  	
   

  	
  REGISTERED HOLDER

  

  Please print name and address of Registered Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
  Social
  Security or other

  	
   

  	
  DTC
  Participant #:

  	
   

  
	
  Taxpayer
  Identification

  Number, if any

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

A-12

 

ELECTION TO SETTLE EARLY/EARLY SETTLEMENT 

UPON A FUNDAMENTAL CHANGE

 

The
undersigned Holder of this Corporate Units Certificate hereby irrevocably
exercises the option to effect [Early Settlement] [Fundamental Change Early
Settlement] in accordance with the terms of the Purchase Contract and Pledge
Agreement with respect to the Purchase Contracts underlying the number of
Corporate Units evidenced by this Corporate Units Certificate specified below.
The option to effect [Early Settlement] [Fundamental Change Early Settlement]
may be exercised only with respect to Purchase Contracts underlying Corporate
Units in multiples of 20 Corporate Units or an integral multiple thereof; provided that if Applicable Ownership Interest in the
Treasury Portfolio have replaced Applicable Ownership Interests in the Notes as
a component of Corporate Units, Corporate Unit Holders may only effect [Early
Settlement] [Fundamental Change Early Settlement] in multiples of 10,000
Corporate Units. The undersigned Holder directs that a certificate for shares
of Common Stock or other securities deliverable upon such [Early Settlement]
[Fundamental Change Early Settlement] be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Corporate Units Certificate representing any Corporate Units evidenced hereby
as to which [Early Settlement] [Fundamental Change Early Settlement] of the
related Purchase Contracts is not effected, to the undersigned at the address
indicated below unless a different name and address have been indicated below.
Notes underlying Pledged Applicable Ownership Interests in Notes or the
appropriate Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, deliverable upon such [Early Settlement] [Fundamental Change Early
Settlement] will be transferred in accordance with the transfer instructions
set forth below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee:

  	
   

  

 

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

 

	
  DTC Participant #:

  	
   

  	
   

  	
   

  

 

A-13

 

Number of
Units evidenced hereby as to which [Early Settlement] [Fundamental Change Early
Settlement] of the related Purchase Contracts is being elected:

 

	
  If shares of Common Stock or Corporate
  Units Certificates are to be registered in the name of and delivered to and
  Notes underlying Pledged Applicable Ownership Interests in Notes or the
  Applicable Ownership Interests in the Treasury Portfolio, as the case may be,
  are to be transferred to a Person other than the Holder, please print such
  Person’s name and address:

  	
   

  	
  REGISTERED HOLDER

  

  

  

  

  Please print name and address of

  Registered Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DTC Participant
  #:

  	
   

  
	
  Social
  Security or other

  Taxpayer Identification

  Number, if any 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

A-14

 

Transfer
Instructions for Notes underlying Pledged Applicable Ownership Interests in
Notes or the Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, transferable upon [Early Settlement] [Fundamental Change Early
Settlement]:

 

	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

 

 

 

A-15

 

[TO BE ATTACHED TO GLOBAL CERTIFICATES]

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

 

The initial
number of Corporate Units evidenced by this Global Certificate is 20,000,000.
The following increases or decreases in this Global Certificate have been made:

 

	
  Date

  	
   

  	
  Amount of increase in

  Number of Corporate

  Units evidenced by the

  Global Certificate

  	
   

  	
  Amount of decrease in

  Number of Corporate

  Units evidenced by the

  Global Certificate

  	
   

  	
  Number of Corporate Units

  evidenced by this Global

  Certificate following such

  decrease or increase

  	
   

  	
  Signature of authorized

  signatory of Purchase

  Contract Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-16

 

EXHIBIT B

 

(FORM OF FACE OF TREASURY UNIT
CERTIFICATE)

 

[For inclusion in Global Certificate only -
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AND PLEDGE AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (THE “DEPOSITARY”),
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AND PLEDGE AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE
(OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.

 

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

 

	
  No.

  	
   

  	
   

  	
  CUSIP
  No. 524901 402

  
	
  Number of Treasury Units:

  	
   

  	
   

  	
   

  
						

 

LEGG MASON, INC.

Treasury Units

 

This Treasury Units Certificate certifies
that Cede & Co. is the registered Holder of the number of Treasury
Units set forth above [For inclusion in Global Certificates only - or such
other number of Treasury Units reflected in the Schedule of Increases or
Decreases in Global Certificate attached hereto], which number shall not exceed
20,000,000. Each Treasury Unit consists of (i) a 1/20, or 5.00%, undivided
beneficial ownership interest in a Treasury Security having a principal amount
at maturity equal to $1,000, subject to the Pledge of such Treasury Security by
such Holder pursuant to the Purchase Contract and Pledge Agreement, and
(ii) the rights and obligations of the Holder under one Purchase Contract.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Purchase Contract and Pledge Agreement (as defined on the reverse
hereof).

 

B-1

 

Pursuant to the Purchase Contract and Pledge
Agreement, the Treasury Securities constituting part of each Treasury Unit
evidenced hereby have been pledged to the Collateral Agent, for the benefit of
the Company, to secure the obligations of the Holder under the Purchase
Contract comprising part of such Treasury Unit.

 

Each Purchase Contract evidenced hereby
obligates the Holder of this Treasury Units Certificate to purchase, and the
Company, to sell, on the Purchase Contract Settlement Date, at a Purchase Price
equal to the Stated Amount, a number of newly issued shares of Common Stock, of
the Company, equal to the Settlement Rate, unless prior to or on the Purchase
Contract Settlement Date there shall have occurred a Termination Event, an
Early Settlement or a Fundamental Change Early Settlement with respect to such
Purchase Contract, all as provided in the Purchase Contract and Pledge
Agreement. The Purchase Price for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid
on the Purchase Contract Settlement Date by application of the proceeds from
the Treasury Securities at maturity pledged to secure the obligations under
such Purchase Contract of the Holder of the Treasury Units of which such
Purchase Contract is a part.

 

Each Purchase Contract evidenced hereby
obligates the Holder to agree, for all tax purposes (i) to treat the
acquisition of the Treasury Unit as the ownership interest in the Treasury
Securities and the Purchase Contract constituting the Treasury Unit and
(ii) to treat the Treasury Securities and the Purchase Contracts as
separate instruments.

 

The Company shall pay, on each Contract
Adjustment Payment Date, in respect of each Purchase Contract forming part of a
Treasury Unit evidenced hereby, an amount (the “Contract
Adjustment Payments”) equal to 1.40% per year of the Stated Amount,
computed on the basis of a 360-day year of twelve 30-day months. Such Contract
Adjustment Payments shall be payable to the Person in whose name this Treasury
Units Certificate is registered at the close of business on the Record Date for
such Payment Date. The Company may, at its option, defer such Contract
Adjustment Payments, as described in the Purchase Contract and Pledge
Agreement.

 

Contract Adjustment Payments will be payable
at the office of the Purchase Contract Agent in the Borough of Manhattan, The
City of New York. If the book-entry system for the Corporate Units has been
terminated, the Contract Adjustment Payments will be payable, at the option of
the Company, by check mailed to the address of the Person entitled thereto at
such Person’s address as it appears on the Security Register, or by wire
transfer to the account designated by such Person by a prior written notice to
the Purchase Contract Agent.

 

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

 

Unless the certificate of authentication
hereon has been executed by the Purchase Contract Agent by manual signature,
this Treasury Units Certificate shall not be entitled to any benefit under the
Purchase Contract and Pledge Agreement or be valid or obligatory for any
purpose.

 

B-2

 

IN WITNESS WHEREOF, the Company and the
Holder specified above have caused this instrument to be duly executed.

 

 

	
   

  	
  LEGG MASON, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the
  Purchase Contracts)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  THE BANK OF NEW YORK, not individually but solely as attorney-in-fact
  of such Holder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

B-3

 

CERTIFICATE OF
AUTHENTICATION OF

PURCHASE CONTRACT AGENT

 

This is one of the Treasury Units referred to
in the within-mentioned Purchase Contract and Pledge Agreement.

 

 

	
   

  	
  THE BANK OF NEW YORK

  as Purchase Contract Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   Authorized Officer

  

 

 

	
  Dated:

  	
   

  	
   

  

 

B-4

 

(REVERSE OF
TREASURY UNIT CERTIFICATE)

 

Each Purchase Contract evidenced hereby is
governed by a Purchase Contract and Pledge Agreement, dated as of May 12,
2008 (as may be supplemented from time to time, the “Purchase
Contract and Pledge Agreement”), between the Company and The Bank of
New York, as Collateral Agent, as Custodial Agent, as Securities Intermediary,
as Purchase Contract Agent and as attorney-in-fact for the Holders of Corporate
Units and Treasury Units from time to time, to which Purchase Contract and
Pledge Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Purchase Contract Agent, the Company,
and the Holders and of the terms upon which the Treasury Units Certificates
are, and are to be, executed and delivered.

 

Each Purchase Contract evidenced hereby
obligates the Holder of this Treasury Units Certificate to purchase, and the
Company to sell, on the Purchase Contract Settlement Date at a price equal to
the Stated Amount, a number of newly issued shares of Common Stock equal to the
Settlement Rate, unless an Early Settlement, a Fundamental Change Early
Settlement or a Termination Event with respect to the Unit of which such
Purchase Contract is a part shall have occurred.

 

No fractional shares of Common Stock will be
issued upon settlement of Purchase Contracts, as provided in Section 5.08 of the Purchase Contract
and Pledge Agreement.

 

Each Purchase Contract evidenced hereby that
is settled through Early Settlement or Fundamental Change Early Settlement
shall obligate the Holder of the related Treasury Units to purchase at the
Purchase Price, and the Company to sell, a number of newly issued shares of Common
Stock equal to the Minimum Settlement Rate (in the case of an Early Settlement)
or applicable Settlement Rate (in the case of a Fundamental Change Early
Settlement).

 

In accordance with the terms of the Purchase
Contract and Pledge Agreement, the Holder of this Treasury Unit shall pay the
Purchase Price for the shares of the Common Stock to be purchased pursuant to
each Purchase Contract evidenced hereby either by effecting an Early Settlement
or, if applicable, a Fundamental Change Early Settlement of each such Purchase
Contract or by applying the proceeds of the Pledged Treasury Securities
underlying such Holder’s Treasury Unit equal to the Purchase Price for such
Purchase Contract to the purchase of the Common Stock. A Holder of Treasury
Units who (1) on or prior to the close of business on the seventh Business
Day prior to the Purchase Contract Settlement Date, does not make an effective
Early Settlement, or (2) on or prior to the close of business on the
second Business Day prior to the Purchase Contract Settlement Date, does not
make an effective Cash Settlement, shall pay the Purchase Price, less the
amount of any Deferred Contract Adjustment Payments payable to such Holder, for
the shares of Common Stock to be issued under the related Purchase Contract
from the proceeds of the Pledged Treasury Securities.

 

The Company shall not be obligated to issue
any shares of Common Stock in respect of a Purchase Contract or deliver any
certificates therefor to the Holder unless it shall have received payment of
the aggregate Purchase Price, less any Deferred Contract Payments for the
shares of

 

B-5

 

Common Stock to be purchased thereunder in
the manner set forth in the Purchase Contract and Pledge Agreement.

 

The Purchase Contract and all obligations and
rights of the Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the obligation of the
Company to pay any Contract Adjustment Payments, shall immediately and automatically
terminate without the necessity of any notice or action by any Holder, the
Purchase Contract Agent or the Company, if, or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence
of a Termination Event, the Company shall promptly give written notice to the
Purchase Contract Agent and the Holders, at their addresses as they appear in
the Security Register. Upon and after the occurrence of a Termination Event,
the Collateral Agent shall release the Pledged Treasury Securities underlying
each Treasury Unit. A Treasury Unit shall thereafter represent the right to
receive the Treasury Security underlying such Treasury Unit, in accordance with
the terms of the Purchase Contract and Pledge Agreement.

 

The Treasury Units Certificates are issuable
only in registered form and only in denominations of a single Treasury Unit and
any integral multiple thereof. The transfer of any Treasury Units Certificate
will be registered and Treasury Units Certificates may be exchanged as provided
in the Purchase Contract and Pledge Agreement. A Holder who elects to
substitute a Note or Applicable Ownership Interest in the Treasury Portfolio,
as the case may be, for Treasury Securities, thereby recreating Corporate Units,
shall be responsible for any fees or expenses payable in connection therewith.
Except as provided in the Purchase Contract and Pledge Agreement, such Treasury
Unit shall not be separable into its constituent parts, and the rights and
obligations of the Holder of such Treasury Unit in respect of the Treasury
Security and the Purchase Contract constituting such Treasury Unit may be
transferred and exchanged only as a Treasury Unit.

 

Subject to,
and in compliance with, the terms and conditions set forth in the Purchase
Contract and Pledge Agreement, a Holder of Treasury Units may effect a
Collateral Substitution. From and after such Collateral Substitution, each Unit
for which Pledged Applicable Ownership Interests in Notes, or Pledged
Applicable Ownership Interests in the Treasury Portfolio, as the case may be,
secure the Holder’s obligations under the Purchase Contract shall be referred
to as a “Corporate Unit.”  A Holder may
make such Collateral Substitution only in multiples of 20 Treasury Units. If
Applicable Ownership Interests in the Treasury Portfolio have replaced the
Applicable Ownership Interests in Notes as a component of the Corporate Units,
a Holder of Treasury Units may substitute Applicable Ownership Interests in the
Treasury Portfolio for Treasury Securities only in multiples of 10,000 Treasury
Units or such other number of Treasury Units as may be determined by the
Remarketing Agent upon a Successful Remarketing of the Notes if the Reset
Effective Date is not an Interest Payment Date.

 

Subject to and upon compliance with the
provisions of the Purchase Contract and Pledge Agreement, at the option of the
Holder thereof, Purchase Contracts underlying Units may be settled early by
effecting an Early Settlement as provided in the Purchase Contract and Pledge
Agreement.

 

B-6

 

Upon Early Settlement of Purchase Contracts
by a Holder of the related Units, the Pledged Treasury Securities underlying
such Units shall be released from the Pledge as provided in the Purchase
Contract and Pledge Agreement and the Holder shall be entitled to receive a
number of shares of Common Stock on account of each Purchase Contract forming
part of a Treasury Unit as to which Early Settlement is effected equal to the
Minimum Settlement Rate.

 

Upon the occurrence of a Fundamental Change,
a Holder of Treasury Units may effect Fundamental Change Early Settlement of
the Purchase Contract underlying such Treasury Units pursuant to the terms of Section 5.04(b)(ii) of the Purchase
Contract and Pledge Agreement. Upon Fundamental Change Early Settlement of
Purchase Contracts by a Holder of the related Treasury Units, the Pledged
Treasury Securities underlying such Treasury Units shall be released from the
Pledge as provided in the Purchase Contract and Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Purchase Contract forming part of a Treasury Unit as to which Fundamental
Change Early Settlement is effected equal to the applicable Settlement Rate.

 

Upon registration of transfer of this
Treasury Units Certificate, the transferee shall be bound (without the
necessity of any other action on the part of such transferee, except as may be
required by the Purchase Contract Agent pursuant to the Purchase Contract and
Pledge Agreement), under the terms of the Purchase Contract and Pledge
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contracts evidenced by this
Treasury Units Certificate. The Company covenants and agrees, and the Holder,
by its acceptance hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.

 

The Holder of this Treasury Units
Certificate, by its acceptance hereof, authorizes the Purchase Contract Agent
to enter into and perform the related Purchase Contracts forming part of the
Treasury Units evidenced hereby on its behalf as its attorney-in-fact,
expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the
event that the Company becomes the subject of a case under the Bankruptcy Code,
agrees to be bound by the terms and provisions thereof, covenants and agrees to
perform its obligations under such Purchase Contracts, consents to the
provisions of the Purchase Contract and Pledge Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract and
Pledge Agreement on its behalf as its attorney-in-fact, and consents to the
Pledge of the Treasury Securities underlying this Treasury Units Certificate
pursuant to the Purchase Contract and Pledge Agreement. The Holder further
covenants and agrees, that, to the extent and in the manner provided in the
Purchase Contract and Pledge Agreement, but subject to the terms thereof,
payments in respect to the aggregate principal amount at maturity of the
Pledged Treasury Securities on the Purchase Contract Settlement Date less any
Deferred Contract Adjustment Payments equal to the aggregate Purchase Price for
the related Purchase Contracts shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder’s obligations under such Purchase
Contracts and such Holder shall acquire no right, title or interest in such
payments.

 

Subject to certain exceptions, the provisions
of the Purchase Contract and Pledge Agreement may be amended with the consent
of the Holders of a majority of the Purchase Contracts.

 

B-7

 

The Purchase Contracts shall for all purposes
be governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to the conflicts of law provisions thereof to the
extent that the application of a law of a different jurisdiction would govern
as a result.

 

Prior to due presentment of this Certificate
for registration or transfer, the Company, the Purchase Contract Agent and its
Affiliates and any agent of the Company or the Purchase Contract Agent may
treat the Person in whose name this Treasury Units Certificate is registered as
the owner of the Treasury Units evidenced hereby for the purpose of receiving
payments of Contract Adjustment Payments (subject to any applicable record
date), performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the
Purchase Contract Agent nor any such agent shall be affected by notice to the
contrary.

 

The Purchase Contracts shall not, prior to
the settlement thereof, entitle the Holder to any of the rights of a holder of
shares of Common Stock.

 

A copy of the Purchase Contract and Pledge
Agreement is available for inspection at the offices of the Purchase Contract
Agent.

 

B-8

 

ABBREVIATIONS

 

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

 

	
  TEN COM:

  	
   

  	
  as tenants
  in common

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UNIF GIFT
  MIN ACT:

  	
   

  	
   

  	
  Custodian

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (cust) 

  	
  (minor)

  	
   

  	
   

  
	
   

  	
   

  	
  Under
  Uniform Gifts to Minors Act of

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  as tenants
  by the entireties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JT TEN:

  	
   

  	
  as joint
  tenants with right of survivorship and not as tenants in common

  	
   

  	
   

  
										

 

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

 

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

 

 

	
  (Please
  insert Social Security or Taxpayer I.D. or other Identifying Number of
  Assignee)

  

 

 

	
  (Please
  Print or Type Name and Address Including Postal Zip Code of Assignee)

  

 

the within Treasury Units
Certificates and all rights thereunder, hereby irrevocably constituting and
appointing attorney ___________, to transfer said Treasury Units Certificates
on the books of Legg Mason, Inc., with full power of substitution in the
premises.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NOTICE: The
  signature to this assignment must 

  correspond with the name as it appears upon the face of the 

  within Treasury Units Certificates in every particular, 

  without alteration or enlargement or any change 

  whatsoever.

  

 

	
  Signature Guarantee:

  	
   

  	
   

  

 

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

 

B-9

 

SETTLEMENT
INSTRUCTIONS

 

The undersigned Holder directs
that a certificate for shares of Common Stock deliverable upon settlement on or
after the Purchase Contract Settlement Date of the Purchase Contracts
underlying the number of Treasury Units evidenced by this Treasury Units
Certificate be registered in the name of, and delivered, together with a check
in payment for any fractional share, to the undersigned at the address indicated
below unless a different name and address have been indicated below. If shares
are to be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.

 

	
   

  	
  Signature 

  
	
  Dated: 

  	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   (if assigned to another
  person)

  
					

 

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

 

	
  If shares
  are to be registered in the name of

  and delivered to a Person other than the

  Holder, please (i) print such Person’s name 

  	
   

  	
  REGISTERED
  HOLDER

  
	
  and address
  and (ii) provide a guarantee of

  	
   

  	
  Please print
  name and address of Registered

  
	
   your signature:

  	
   

  	
  Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social
  Security or other

  	
   

  	
  DTC
  Participant #:

  	
   

  
	
  Taxpayer
  Identification

  	
   

  	
   

  
	
  Number, if
  any

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

B-10

 

ELECTION TO
SETTLE EARLY/FUNDAMENTAL CHANGE EARLY SETTLEMENT

 

The undersigned Holder of this Treasury Units
Certificate hereby irrevocably exercises the option to effect [Early
Settlement] [Fundamental Change Early Settlement] in accordance with the terms
of the Purchase Contract and Pledge Agreement with respect to the Purchase
Contracts underlying the number of Treasury Units evidenced by this Treasury
Units Certificate specified below. The option to effect [Early Settlement]
[Fundamental Change Early Settlement] may be exercised only with respect to
Purchase Contracts underlying Treasury Units in multiples of 20 Treasury Units
or an integral multiple thereof. The undersigned Holder directs that a
certificate for shares of Common Stock or other securities deliverable upon
such [Early Settlement] [Fundamental Change Early Settlement] be registered in
the name of, and delivered, together with a check in payment for any fractional
share and any Treasury Units Certificate representing any Treasury Units
evidenced hereby as to which [Early Settlement] [Fundamental Change Early
Settlement] of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. Pledged Treasury Securities deliverable upon such
[Early Settlement] [Fundamental Change Early Settlement] will be transferred in
accordance with the transfer instructions set forth below. If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature
  Guarantee:

  	
   

  

 

B-11

 

Number of Treasury Units evidenced hereby as
to which [Early Settlement] [Fundamental Change Early Settlement] of the
related Purchase Contracts is being elected:

 

	
  If shares of
  Common Stock or Treasury

  Units Certificates are to be registered in the

  name of and delivered to and Treasury

  Securities, as the case may be, are to be

  transferred to a Person other than the

  	
   

  	
  REGISTERED
  HOLDER

   

  
	
  Holder,
  please print such Person’s name and 

  	
   

  	
  Please print
  name and address of

  
	
  address:

  	
   

  	
  Registered
  Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social
  Security or other

  	
   

  	
  DTC
  Participant #:

  	
   

  
	
  Taxpayer
  Identification

  	
   

  	
   

  
	
  Number, if
  any

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

B-12

 

Transfer Instructions for Pledged Treasury
Securities transferable upon [Early Settlement] [Fundamental Change Early
Settlement] or a Termination Event:

 

	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

 

 

 

B-13

 

[TO BE
ATTACHED TO GLOBAL CERTIFICATES]

 

SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL CERTIFICATE

 

The initial number of Treasury Units evidenced by this Global
Certificate is 0. The following increases or decreases in this Global
Certificate have been made:

 

	
  Date

  	
   

  	
  Amount of increase in

  number of Treasury Units

  evidenced by the Global

  Certificate

  	
   

  	
  Amount of decrease in

  number of Treasury Units

  evidenced by the Global

  Certificate

  	
   

  	
  Number of Treasury Units

  evidenced by this Global

  Certificate following such

  decrease or increase

  	
   

  	
  

  Signature of authorized

  signatory of Purchase

  Contract Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-14

 

EXHIBIT C

 

INSTRUCTION TO PURCHASE CONTRACT AGENT FROM HOLDER

(To Create Treasury Units or Corporate Units)

 

The Bank of New York

as Purchase Contract Agent

101 Barclay Street, Floor 8W

New York, New York 10286

Telephone: (212) 815-5995

Facsimile: (212) 815-5704

Attention: Corporate Trust
Administration

 

Re:          [                
Corporate Units]
[              
Treasury Units] of Legg Mason, Inc., a Maryland corporation (the “Company”).

 

The undersigned Holder hereby notifies you
that it has delivered to The Bank of New York, as Securities Intermediary, for
credit to the Collateral Account,
$            
aggregate principal amount of [Notes] [Applicable Ownership Interests in the
Treasury Portfolio] [Treasury Securities] in exchange for the [Notes underlying
Pledged Applicable Ownership Interests in Notes] [Pledged Applicable Ownership
Interests in the Treasury Portfolio] [Pledged Treasury Securities] held in the
Collateral Account, in accordance with the Purchase Contract and Pledge
Agreement, dated as of May 12, 2008 (the “Agreement”;
unless otherwise defined herein, terms defined in the Agreement are used herein
as defined therein), between the Company and The Bank of New York, as
Collateral Agent, as Custodial Agent, as Securities Intermediary, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Corporate Units and Treasury
Units from time to time.  The undersigned
Holder has paid all applicable fees and expenses relating to such exchange.  The undersigned Holder hereby instructs you
to instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Notes underlying Pledged Applicable Ownership Interests in Notes]
[Pledged Applicable Ownership Interests in the Treasury Portfolio] [Pledged
Treasury Securities] related to such [Corporate Units] [Treasury Units].

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  
							

 

C-1

 

Please print name and address
of Registered Holder:

 

 

	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Social Security
  or other Taxpayer

  
	
   

  	
   

  	
  Identification
  Number, if any

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

C-2

 

EXHIBIT D

 

NOTICE
FROM PURCHASE CONTRACT AGENT

TO HOLDERS UPON TERMINATION EVENT
 (Transfer of Collateral upon Occurrence of a
Termination Event)

 

	
  [HOLDER]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
   

  	
   

  	
   

  

 

Re:          [                    
Corporate Units]
[            
Treasury Units] of Legg Mason, Inc., a Maryland corporation (the “Company”).

 

Please refer to the Purchase Contract and
Pledge Agreement, dated as of May 12, 2008 (the “Purchase
Contract and Pledge Agreement”; unless otherwise defined herein,
terms defined in the Purchase Contract and Pledge Agreement are used herein as
defined therein), between the Company and The Bank of New York, as Collateral
Agent, as Custodial Agent, as Securities Intermediary, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Corporate Units and Treasury
Units from time to time.

 

We hereby notify you that a Termination Event
has occurred and that [the Notes underlying Pledged Applicable Ownership
Interests in Notes] [Pledged Applicable Ownership Interests in the Treasury
Portfolio] [Pledged Treasury Securities] comprising a portion of your ownership
interest in           
[Corporate Units] [Treasury Units] have been released and are being held by us
for your account pending receipt of transfer instructions with respect to such
[Notes underlying Pledged Applicable Ownership Interests in Notes] [Pledged
Applicable Ownership Interests in the Treasury Portfolio] [Pledged Treasury
Securities] (the “Released Securities”).

 

Pursuant to Section 3.13 of the Purchase
Contract and Pledge Agreement, we hereby request written transfer instructions
with respect to the Released Securities. 
Upon receipt of your instructions and upon transfer to us of your
[Corporate Units][Treasury Units] effected through book-entry or by delivery to
us of your [Corporate Units Certificate][Treasury Units Certificate], we shall
transfer the Released Securities by book-entry transfer or other appropriate
procedures, in accordance with your instructions.  In the event you fail to effect such transfer
or delivery, the Released Securities and any distributions thereon, shall be
held in our name, or a nominee in trust for your benefit, until such time as
such [Corporate Units][Treasury Units] are transferred or your [Corporate Units
Certificate] [Treasury Units Certificate] is surrendered or satisfactory
evidence is provided that such [Corporate Units Certificate][Treasury Units
Certificate] has been destroyed, lost or stolen, together with any
indemnification that we or the Company may require.

 

D-1

 

	
  Date:

  	
   

  	
   

  	
  THE BANK OF
  NEW YORK,

  
	
   

  	
  as the Purchase Contract Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:    Authorized Signatory

  
					

 

D-2

 

EXHIBIT E

 

NOTICE TO SETTLE BY SEPARATE CASH

 

The Bank of New York

101 Barclay Street, Floor 8W

New York, New York 10286

Telephone: (212) 815-5995

Facsimile: (212) 815-5704

Attention: Corporate Trust
Administration

 

Re:          Corporate
Units of Legg Mason, Inc., a Maryland corporation (the “Company”).

 

The undersigned Holder hereby irrevocably
notifies you in accordance with Section 5.02 of the Purchase Contract and
Pledge Agreement, dated as of May 12, 2008 (the “Purchase
Contract and Pledge Agreement”; unless otherwise defined herein,
terms defined in the Purchase Contract and Pledge Agreement are used herein as
defined therein), between the Company and The Bank of New York, as Collateral
Agent, as Custodial Agent, as Securities Intermediary, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Corporate Units and Treasury
Units from time to time, that such Holder has elected to pay to the Securities
Intermediary for deposit in the Collateral Account, prior to or on 11:00 a.m.,
New York City time, on the sixth Business Day immediately preceding the
Purchase Contract Settlement Date (in lawful money of the United States by
certified or cashiers’ check or wire transfer, in immediately available funds
payable to or upon order of the Securities Intermediary),
$             as
the Purchase Price for the shares of Common Stock issuable to such Holder by
the Company with respect to           
Purchase Contracts on the Purchase Contract Settlement Date.  The undersigned Holder hereby instructs you
to notify promptly the Collateral Agent of the undersigned Holders’ election to
make such Cash Settlement with respect to the Purchase Contracts related to
such Holder’s Corporate Units.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Please print name and address of Registered Holder:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  
						

 

E-1

 

EXHIBIT F

 

RESERVED

 

F-1

 

EXHIBIT G

 

INSTRUCTION FROM PURCHASE CONTRACT AGENT

TO COLLATERAL AGENT

(Creation of Treasury Units)

 

The Bank of New York
      as Collateral Agent

101 Barclay Street, Floor 8W

New York, New York 10286

Telephone: (212) 815-5995

Facsimile: (212) 815-5704

Attention: Corporate Trust
Administration

 

Re:                                                   Corporate
Units of Legg Mason, Inc. (the “Company”).

 

Please refer to the Purchase Contract and
Pledge Agreement, dated as of May 12, 2008 (the “Agreement”), between the Company and The
Bank of New York, as Collateral Agent, as Custodial Agent, as Securities
Intermediary, as Purchase Contract Agent and as attorney-in-fact for the
Holders of Corporate Units and Treasury Units from time to time.  Capitalized terms used herein but not defined
shall have the meaning set forth in the Agreement.

 

We hereby notify you in accordance with Section
3.13 of the Agreement that the holder of securities named below (the “Holder”) has elected to substitute $                    
Value of Treasury Securities or security entitlements with respect thereto in
exchange for an equal Value of [Notes underlying Pledged Applicable Ownership
Interests in Notes] [Pledged Applicable Ownership Interests in the Treasury
Portfolio] relating to                   
Corporate Units and has delivered to the undersigned a notice stating that the
Holder has Transferred such Treasury Securities or security entitlements with
respect thereto to the Securities Intermediary, for credit to the Collateral
Account.

 

We hereby request that you instruct the
Securities Intermediary, upon confirmation that such Treasury Securities or
security entitlements thereto have been credited to the Collateral Account, to
release to the undersigned an equal Value of [Notes underlying Pledged
Applicable Ownership Interests in Notes] [Pledged Applicable Ownership
Interests in the Treasury Portfolio] or security entitlements with respect
thereto related to          Corporate
Units of such Holder in accordance with Section 3.13 of the Agreement.

 

Date:                                                

 

G-1

 

	
   

  	
  BANK OF NEW YORK, as Purchase

  Contract Agent and as attorney-in-fact of

  the Holders from time to time of the

  Units

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:       Authorized Signatory

  

 

Please print name and address
of Holder electing to substitute Treasury Securities or security entitlements
with respect thereto for the [Notes underlying Pledged Applicable Ownership
Interests in Notes] [Pledged Applicable Ownership Interests in the Treasury
Portfolio]:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer

  Identification Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

G-2

 

EXHIBIT H

 

INSTRUCTION FROM COLLATERAL AGENT

TO SECURITIES INTERMEDIARY
 (Creation of Treasury Units)

 

The Bank of New York
      as Securities Intermediary

101 Barclay Street, Floor 8W

New York, New York 10286

Telephone: (212) 815-5995

Facsimile: (212) 815-5704

Attention: Corporate Trust
Administration

 

Re:                                                   Corporate
Units of Legg Mason, Inc. (the “Company”).

 

The securities
account of The Bank of New York, as Collateral Agent, maintained by the Securities
Intermediary and designated “The Bank of New York, as Collateral Agent of Legg
Mason, Inc., as pledgee of The Bank of New York, as the Purchase Contract
Agent on behalf of and as attorney-in-fact for the Holders” (the “Collateral Account”).

 

Please refer to the Purchase Contract and
Pledge Agreement, dated as of May 12, 2008 (the “Agreement”), between the Company and The
Bank of New York, as Collateral Agent, as Custodial Agent, as Securities
Intermediary, as Purchase Contract Agent and as attorney-in-fact for the
Holders of Corporate Units and Treasury Units from time to time.  Capitalized terms used herein but not defined
shall have the meaning set forth in the Agreement.

 

When you have confirmed that $                    
Value of Treasury Securities or security entitlements with respect thereto has
been credited to the Collateral Account by or for the benefit of                   ,
as Holder of Corporate Units (the “Holder”),
you are hereby instructed to release from the Collateral Account an equal Value
of [Notes underlying Pledged Applicable Ownership Interests in Notes] [Pledged
Applicable Ownership Interests in the Treasury Portfolio] or security
entitlements with respect thereto relating to           
Corporate Units of the Holder by Transfer to the Purchase Contract Agent.

 

Dated:                                                

	
   

  	
  THE BANK OF NEW YORK, 

  as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:       Authorized Signatory

  

 

H-1

 

EXHIBIT I

 

INSTRUCTION FROM PURCHASE CONTRACT AGENT

TO COLLATERAL AGENT

(Recreation of Corporate Units )

 

The Bank of New York
      as Collateral Agent

101 Barclay Street, Floor 8W

New York, New York 10286

Telephone: (212) 815-5995

Facsimile: (212) 815-5704

Attention: Corporate Trust
Administration

 

Re:                               Treasury
Units of Legg Mason, Inc. (the “Company”).

 

Please refer to the Purchase Contract and
Pledge Agreement dated as of May 12, 2008 (the “Agreement”), between the Company and The Bank of New York, as
Collateral Agent, as Custodial Agent, as Securities Intermediary, as Purchase
Contract Agent and as attorney-in-fact for the Holders of Corporate Units and
Treasury Units from time to time. 
Capitalized terms used herein but not defined shall have the meaning set
forth in the Agreement.

 

We hereby notify you in accordance with Section
3.13 of the Agreement that the holder of securities named below (the “Holder”) has elected to substitute $                    
Value of [Notes] [Applicable Ownership Interests in the Treasury Portfolio] or
security entitlements with respect thereto in exchange for $                    
Value of Pledged Treasury Securities relating to Treasury Units and has
delivered to the undersigned a notice stating that the holder has Transferred
such [Notes] [Applicable Ownership Interests in the Treasury Portfolio] or
security entitlements with respect thereto to the Securities Intermediary, for
credit to the Collateral Account.

 

We hereby request that you instruct the
Securities Intermediary, upon confirmation that such [Notes] [Applicable
Ownership Interests in the Treasury Portfolio] or security entitlements with
respect thereto have been credited to the Collateral Account, to release to the
undersigned $                    
Value of Treasury Securities or security entitlements with respect thereto
related to           
Treasury Units of such Holder in accordance with Section 3.13 of the Agreement.

 

	
   

  	
  THE BANK OF NEW YORK,

  as Purchase Contract Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:       Authorized Signatory

  
					

 

I-1

 

Please print name and address
of Holder electing to substitute [Notes] [Applicable Ownership Interests in the
Treasury Portfolio] or security entitlements with respect thereto for Pledged
Treasury Securities:

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer

  Identification Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DTC Participant No.

  	
   

  	
   

  	
   

  	
   

  
							

 

I-2

 

EXHIBIT J

 

INSTRUCTION FROM COLLATERAL AGENT

TO SECURITIES INTERMEDIARY
 (Recreation of Corporate Units)

 

The Bank of New York
     as Securities Intermediary

101 Barclay Street, Floor 8W

New York, New York 10286

Telephone: (212) 815-5995

Facsimile: (212) 815-5704

Attention: Corporate Trust
Administration

 

Re:                               Treasury
Units of Legg Mason, Inc. (the “Company”).

 

The securities
account of The Bank of New York, as
Collateral Agent, maintained by the Securities Intermediary and designated “The
Bank of New York, as Collateral Agent of Legg Mason, Inc., as pledgee of
The Bank of New York, as the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders” (the “Collateral
Account”).

 

Please refer to the Purchase Contract and
Pledge Agreement dated as of May 12, 2008 (the “Agreement”), between the Company and The Bank of New York, as
Collateral Agent, as Custodial Agent, as Securities Intermediary, as Purchase
Contract Agent and as attorney-in-fact for the Holders of Corporate Units and
Treasury Units from time to time. 
Capitalized terms used herein but no defined shall have the meaning set
forth in the Agreement.

 

When you have confirmed that $                     
Value of [Notes] [Applicable Ownership Interests in the Treasury Portfolio] or
security entitlements with respect thereto has been credited to the Collateral
Account by or for the benefit of                                 ,
as Holder of Treasury Units (the “Holder”),
you are hereby instructed to release from the Collateral Account $                     
Value of Treasury Securities or security entitlements thereto by Transfer to
the Purchase Contract Agent.

 

	
   

  	
  THE BANK OF NEW YORK,

  as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:       Authorized Signatory

  
					

 

J-1

 

EXHIBIT K

 

NOTICE OF CASH SETTLEMENT FROM THE PURCHASE 

CONTRACT AGENT TO THE COLLATERAL AGENT
 (Cash Settlement Amounts)

 

The Bank of New York
      as Collateral Agent

101 Barclay Street, Floor 8W

New York, New York 10286

Telephone: (212) 815-5995

Facsimile: (212) 815-5704

Attention: Corporate Trust
Administration

 

Re:                               Corporate
Units of Legg Mason, Inc. (the “Company”).

 

Please refer to the Purchase Contract and Pledge
Agreement dated as of May 12, 2008 (the “Agreement”),
between the Company and The Bank of York, as Collateral Agent, as Custodial
Agent, as Securities Intermediary, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Corporate Units and Treasury Units from
time to time.  Capitalized terms used
herein but not defined shall have the meaning set forth in the Agreement.

 

In accordance with Section 5.01(b)(iv) of the
Agreement, we hereby notify you that as of 11:00 a.m., New York City time,
on the sixth Business Day immediately preceding June 30, 2011 (the “Purchase Contract Settlement Date”), we
have received (i) $                               
in immediately available funds paid in an aggregate amount equal to the
Purchase Price due to the Company on the Purchase Contract Settlement Date with
respect to                                 
Corporate Units and (ii) based on the funds received set forth in clause (i) above,
an aggregate principal amount of $                  
of Notes underlying Pledged Applicable Ownership Interests in Notes are to be
tendered for purchase in each Remarketing.

 

	
   

  	
  THE BANK OF NEW YORK,

  as Purchase Contract Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:       Authorized Signatory

  
					

 

K-1

 

EXHIBIT L

 

INSTRUCTION TO CUSTODIAL AGENT REGARDING
REMARKETING

 

The Bank of
New York

    as
Custodial Agent

101 Barclay Street, Floor 8W

New York, New
York 10286

Telephone:
(212) 815-5995

Facsimile:
(212) 815-5704

Attention:
Corporate Trust Administration

 

Re:          Notes Due 2021 of Legg Mason, Inc.
(the “Company”).

 

The undersigned hereby notifies you in
accordance with the Purchase Contract and Pledge Agreement, dated as of May 12,
2008 (the “Agreement”), between
the Company and The Bank of New York, as Collateral Agent, as Custodial Agent,
as Securities Intermediary, as Purchase Contract Agent and as attorney-in-fact
for the Holders of Corporate Units and Treasury Units from time to time, that
the undersigned elects to deliver $                            
aggregate principal amount of Separate Notes for delivery to the Remarketing
Agent prior to the close of business on the second Business Day immediately
preceding the first of the three sequential Remarketing Dates of the applicable
Three-Business Day Remarketing Period for Remarketing pursuant to Section 5.02(a)(ii)
of the Agreement. The undersigned will, upon request of the Remarketing Agent,
execute and deliver any additional documents deemed by the Remarketing Agent or
by the Company to be necessary or desirable to complete the sale, assignment
and transfer of the Separate Notes tendered hereby. Capitalized terms used
herein but not defined shall have the meaning set forth in the Agreement.

 

The undersigned hereby instructs you, upon
receipt of the Proceeds of a Successful Remarketing from the Remarketing Agent,
to deliver such Proceeds to the undersigned in accordance with the instructions
indicated herein under “A. Payment Instructions.”  The undersigned hereby instructs you, in the
event of a Failed Remarketing, upon receipt of the Separate Notes tendered
herewith from the Remarketing Agent, to deliver such Separate Notes to the
person(s) and the address(es) indicated herein under “B. Delivery
Instructions.”

 

With this notice, the undersigned hereby (i) represents
and warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Separate Notes tendered hereby and that the undersigned
is the record owner of any Separate Notes tendered herewith in physical form or
a participant in The Depository Trust Company (“DTC”)
and the beneficial owner of any SeparateNotes tendered herewith by book-entry
transfer to your account at DTC, (ii) agrees to be bound by the terms and
conditions of Section 5.02(a)(ii) of the Agreement and (iii) acknowledges
and agrees that after the close of business on the second Business Day
immediately preceding the first of the three sequential Remarketing Dates of
the applicable Three-Business Day Remarketing Period, such election shall
become an irrevocable 

 

L-1

 

election to have such Separate Notes
remarketed in each Remarketing, and that the Separate Notes tendered herewith
will only be returned in the event of a Failed Final Remarketing. 

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer Identification

  Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

L-2

 

A.            PAYMENT INSTRUCTIONS

 

Proceeds of a Successful Remarketing should be paid by check in the
name of the person(s) set forth below and mailed to the address set forth
below.

 

 

Name(s)

 

(Please Print)

Address

 

(Please Print)

 

 (Zip Code)

 

(Tax
Identification or Social Security Number)

 

 

B.            DELIVERY
INSTRUCTIONS

 

In the event of a Failed Final Remarketing, Notes which are in physical
form should be delivered to the person(s) set forth below and mailed to the
address set forth below.

 

Name(s)

 

(Please Print)

Address

 

(Please Print)

 

(Zip Code)

 

(Tax Identification or Social Security Number)

 

In the event of a Failed Remarketing during the Three-Business Day
Remarketing Period, Notes which are in book-entry form should be credited to
the account at The Depository Trust Company set forth below.

 

	
   

  	
   

  
	
  DTC Account Number

  
	
   

  
	
  Name of Account Party:

  	
   

  	
   

  
				

 

L-3

 

EXHIBIT M

 

INSTRUCTION TO CUSTODIAL AGENT REGARDING

WITHDRAWAL FROM REMARKETING

 

The Bank of
New York
     as Custodial Agent

101 Barclay
Street, Floor 8W

New York, New
York 10286

Telephone:
(212) 815-5995

Facsimile:
(212) 815-5704

Attention:
Corporate Trust Administration

 

Re:          Notes Due 2021 of Legg Mason, Inc.
(the “Company”).

 

The undersigned hereby notifies you in
accordance with Section 5.02(a)(ii) of the Purchase Contract and Pledge
Agreement, dated as of May 12, 2008 (the “Agreement”),
between the Company and The Bank of New York, as Collateral Agent, as Custodial
Agent, as Securities Intermediary, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Corporate Units and Treasury Units from
time to time, that the undersigned elects to withdraw the $                        
aggregate principal amount of Separate Notes delivered to you for Remarketing
pursuant to Section 5.02(a)(ii) of the Agreement. The undersigned hereby
instructs you to return such Separate Notes to the undersigned in accordance
with the undersigned’s instructions. With this notice, the Undersigned hereby
agrees to be bound by the terms and conditions of Section 5.02(a)(ii) of
the Agreement. Capitalized terms used herein but not defined shall have the
meaning set forth in the Agreement.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer Identification

  Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

M-1Exhibit 4.3

 

LEGG
MASON, INC.

 

AND

 

THE BANK
OF NEW YORK,

 

as
Trustee

 

 

FORM OF

 

SUPPLEMENTAL
INDENTURE NO. 1

Dated
as of              

 

 

 

This FIRST SUPPLEMENTAL
INDENTURE (this “Supplemental Indenture”), dated as
of
                            ,
is between LEGG MASON, INC., a Maryland corporation (the “Company”), and THE BANK OF NEW YORK, as
Trustee (the “Trustee”).

 

R E C I T A L
S

 

WHEREAS, the
Company has heretofore executed and delivered to the Trustee an Indenture,
dated as of May 12, 2008 (the “Base  Indenture” and, as further supplemented by
this Supplemental Indenture, the “Indenture”),
providing for the issuance from time to time of series of the Company’s
Securities (as defined in the Base Indenture);

 

WHEREAS, Section 9.1(7) of
the Base Indenture provides for the Company and the Trustee to enter into an
indenture supplemental to the Base Indenture to establish the form or terms of
Securities of any series and any related Coupons as permitted by Sections 2.1
or 3.1 of the Base Indenture;

 

WHEREAS,
pursuant to Section 3.1 of the Base Indenture, the Company wishes to
provide for the issuance of a new series of Securities to be known as its 5.60%
Senior Notes initially due June 30, 2021 (the “Notes”),
the form and terms of such Notes and the terms, provisions and conditions
thereof to be set forth as provided in this Supplemental Indenture;

 

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

 

NOW,
THEREFORE, in consideration of the covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.01.  Relation to Base Indenture.   This Supplemental Indenture
constitutes an integral part of the Base Indenture.

 

Section 1.02.  Definition of Terms.  For all purposes of this
Supplemental Indenture:

 

1

 

(a)                    Capitalized terms used herein
without definition shall have the meanings specified in the Base Indenture, or,
if not defined in the Base Indenture, in the Purchase Contract and Pledge
Agreement, as applicable;

 

(b)                   a term defined anywhere in this
Supplemental Indenture has the same meaning throughout;

 

(c)                    the singular includes the plural
and vice versa;

 

(d)                   headings are for convenience of
reference only and do not affect interpretation;

 

(e)                    the following terms have the
meanings given to them in this Article 1:

 

“Accounting Event”
means the receipt by the audit committee of the Company’s Board
of Directors of a written report in accordance with Statement on Auditing
Standards (“SAS”) No. 97, “Amendment to
SAS No. 50—Reports on the Application of Accounting Principles,” from the
Company’s independent auditors, provided at the request of management, to the
effect that, as a result of a change in accounting rules after the date of
original issuance of the Notes, the Company must either (a) account for
the Purchase Contracts as derivatives under SFAS 133 (or otherwise
mark-to-market or measure the fair value of all or any portion of the Purchase
Contracts with changes appearing in the Company’s income statement) or (b) account
for the Units using the if-converted method under SFAS 128, and that such
accounting treatment will cease to apply upon redemption of the Notes.

 

“Applicable Principal
Amount” means the aggregate principal amount of the
Notes that are components of Corporate Units on the Special Event Redemption
Date.

 

“Business Day” means any day other than a Saturday, Sunday or
any other day on which banking institutions and trust companies in the City of
New York are permitted or required by applicable law to close.

 

“Contract Settlement Price” shall have the meaning set forth
in Section 7.01(c)(iv)(B).

 

“Corporate Units” shall have the meaning specified in the Purchase
Contract and Pledge Agreement.

 

“Depositary” means a clearing agency
registered under Section 17A of the Securities Exchange Act of 1934, as
amended, that is designated to act as Depositary for the Corporate Units
pursuant to the Purchase Contract and Pledge Agreement.

 

“Depositary Participant” means a broker,
dealer, bank, other financial institution or other Person for whom from time to
time the Depositary effects book entry transfers and pledges of securities
deposited with the Depositary.

 

2

 

“Failed Remarketing” shall have the meaning specified in
the Purchase Contract and Pledge Agreement.

 

“Global
Notes” shall have the meaning set forth in Section 2.04.

 

“Interest
Payment Dates” shall have the meaning set forth in Section 2.05(b).

 

“Interest
Rate” shall have the meaning set forth in Section 2.05(a).

 

“Minimum Price”
shall have the meaning set forth in Section 7.01(h).

 

“Modification”
shall have the meaning set forth in Section 7.02(a)(ii).

 

“Optional Redemption” means the redemption of the Notes
pursuant to the terms of Section 3.02.

 

“Optional Redemption Date” has the meaning set forth in Section 3.02.

 

“Purchase
Contract and Pledge Agreement” means the Purchase Contract and
Pledge Agreement, dated as of May 12, 2008, between the Company and The
Bank of New York, as
Purchase Contract Agent, collateral agent, custodial agent and securities
intermediary, as amended from time to time.

 

“Purchase Contracts”
and “Purchase Contract” shall have their
respective meanings specified in the Purchase Contract and Pledge Agreement.

 

“Purchase
Contract Settlement Date” means June 30, 2011.

 

“Put Price”
shall have the meaning set forth in Section 7.04(a).

 

“Put Right”
shall have the meaning set forth in Section 7.04(a).

 

“Quarterly Interest Payment Date” shall have
the meaning set forth in Section 2.05(b).

 

“Quotation Agent”
means any primary U.S. government securities dealer selected by
the Company.

 

“Record
Date” means (a) with respect to any Quarterly Interest Payment
Date for the Notes, the fifteenth day (regardless of whether such day is a
Business Day) of the calendar month in which such Quarterly Interest Payment
Date falls; provided that the Company may, at its option, select any
other day as the Record Date for any Interest Payment Date so long as (i) such
Record Date selected is more than one Business Day but less than sixty Business
Days prior to such Interest Payment Date and (ii) at least ten Business
Days prior to the new Record Date for such Interest Payment Date, the Company
notifies the Purchase Contract Agent in writing of

 

3

 

the new Record Date and instructs the
Purchase Contract Agent to notify the Holders of such Record Date, and (b) with
respect to the Reset Effective Date that is not a Quarterly Interest Payment
Date, any day selected as the Record Date by the Company so long as such Record
Date is more than one Business Day but less than sixty Business Days prior to
such Interest Payment Date.

 

“Redemption”
means either an Optional Redemption or a Special Event Redemption.

 

“Redemption
Amount” shall mean, for each Note, an amount equal to the product of
the principal amount of that Note and a fraction, the numerator of which is the
Special Event Treasury Portfolio Purchase Price and the denominator of which is
the Applicable Principal Amount.

 

“Redemption Date”
means either the Optional Redemption Date or Special Event Redemption Date.

 

“Redemption
Price” shall mean, for each Note, (i) in the event of a Special
Event Redemption, the Redemption Amount and (ii) in the event of an
Optional Redemption, the principal amount, in each case plus any
accrued and unpaid interest (including any interest deferred pursuant to the
Company’s election of such a Modification) on such Note to, but excluding, the
applicable Redemption Date; provided that
the portion of the Redemption Amount consisting of accrued and unpaid interest
will be paid to the record holder of such Note on the immediately preceding
Record Date.

 

“Remarketed Notes”
shall have the meaning set forth in Section 7.01(i).

 

“Remarketing
Agent” shall mean the Remarketing Agent designated by the Company
under the Remarketing Agreement.

 

“Remarketing
Agreement” means the Remarketing Agreement to be entered into among
the Company, the Remarketing Agent, and The Bank of New York, as Purchase Contract Agent, as
amended from time to time.

 

“Remarketing Announcement”
shall have the meaning set forth in Section 7.01(c).

 

“Remarketing Announcement Date” means (i) the sixth
Business Day immediately preceding the first Remarketing Date of any
Three-Business Day Remarketing Period during the Period for Early Remarketing
and (ii) for the Final Three-Business Day Remarketing Period, the third
Business Day immediately preceding the first Remarketing Date of the Final
Three-Business Day Remarketing Period.

 

“Remarketing Price”
shall have the meaning set forth in Section 7.01(c)(iv)(A).

 

4

 

“Remarketing Treasury Portfolio” shall have the meaning specified in
the Purchase Contract and Pledge Agreement.

 

“Remarketing Treasury Portfolio Purchase Price” shall have the meaning specified in
the Purchase Contract and Pledge Agreement.

 

“Reset Effective Date”
means, (i) in connection with a Successful Remarketing of the Notes during
the Period for Early Remarketing, the third Business Day immediately following
the Remarketing Date on which the Notes are successfully remarketed unless the Notes are successfully
remarketed within the next succeeding five Business Days of an Interest Payment
Date in which case the Reset Effective Date shall be such Interest Payment
Date, and (ii) in
connection with a Successful Remarketing of the Notes on any of the Remarketing
Dates during the Final Three-Business Day Remarketing Period, the Purchase
Contract Settlement Date.

 

“Reset Rate”
means the interest rate per annum, calculated in accordance with Section 7.02(a) below,
on the Notes to be in effect on and after the Reset Effective Date.

 

“Separate Notes” means Notes that are no
longer a component of Corporate Units.

 

“Separate Notes Purchase Price” shall have the meaning specified in
the Purchase Contract and Pledge Agreement.

 

“Special Event”
means either an Accounting Event or a Tax Event.

 

“Special Event Redemption” means the
redemption of the Notes pursuant to the terms hereof following the occurrence
of a Special Event.

 

“Special Event Redemption Date” shall have the meaning set
forth in Section 3.01.

 

“Special Event Treasury Portfolio” shall have the meaning
specified in the Purchase Contract and Pledge Agreement.

 

“Special Event Treasury Portfolio Purchase Price” shall have
the meaning specified in the Purchase Contract and Pledge Agreement.

 

“Stated
Maturity” shall have the meaning specified in Section 2.02.

 

“Subsequent Interest
Payment Date” means, following the Reset Effective
Date, if the Company elects on the Successful Remarketing Date to make interest
payable on a semi-annual basis, each semi-annual interest payment date
established by the Company on such Successful Remarketing Date. Otherwise, each
reference to “Subsequent Interest Payment Date”
means a Quarterly Interest Payment Date.

 

5

 

“Successful Remarketing” shall have the meaning specified in
the Purchase Contract and Pledge Agreement.

 

“Successful Remarketing
Date” means the Remarketing Date on which the Notes are successfully
remarketed in accordance with the provisions of the Remarketing Agreement.

 

“Tax Event” means the receipt by the Company of an opinion of
counsel, rendered by a law firm having a recognized national tax practice, to
the effect that, as a result of any amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative decision, pronouncement, judicial
decision or action interpreting or applying such laws or regulations, which
amendment or change is effective or which proposed change, pronouncement,
action or decision is announced on or after the date hereof, there is more than
an insubstantial increase in the risk that interest payable by the Company on
the Notes is not, or within 90 days of the date of such opinion, will not be,
deductible by the Company, in whole or in part, for United States federal
income tax purposes.

 

“Underwriters” means the underwriters identified in Schedule
1 to the Underwriting Agreement.

 

“Underwriting Agreement” means the Underwriting Agreement,
dated as of May 6, 2008, among the Company and the Underwriters, relating
to the issuance of Corporate Units by the Company.

 

The terms “Company,”
“Trustee,” “Indenture,” “Base Indenture” and “Notes” shall
have the respective meanings set forth in the recitals to this Supplemental
Indenture and the paragraph preceding such recitals.

 

ARTICLE 2

GENERAL TERMS AND
CONDITIONS OF THE NOTES

 

Section 2.01.  Designation and Principal Amount.  There is hereby authorized a
series of Securities designated as 5.60% Senior Notes initially due June 30,
2021 limited in aggregate principal amount to $1,000,000,000 (or $1,150,000,000
if the Underwriters exercise their overallotment option to purchase additional Corporate
Units in full as set forth in the Underwriting Agreement).  The Notes may be issued from time to time
upon written order of the Company for the authentication and delivery of Notes
pursuant to Section 3.3 of the Base Indenture.

 

Section 2.02.  Maturity. 
Unless a Special Event Redemption has occurred, the Notes
will mature and the principal amount thereof shall be due and payable together
with all accrued and unpaid interest thereon, on the Stated Maturity.  The “Stated Maturity”
shall mean June 30, 2021 or such other date as determined by the Company
on the Successful Remarketing Date (subject to agreement between the Company
and the Remarketing Agent pursuant to the

 

6

 

Remarketing
Agreement with respect to the Remarketing Fee), it being understood that if
there shall have been a Failed Remarketing, the Stated Maturity shall remain June 30,
2021.

 

Section 2.03.  Form, Payment and Appointment.  Except as provided in Section 2.04,
the Notes shall be issued in fully registered, certificated form, bearing
identical terms. Principal of and interest on the Notes will be payable, the
transfer of such Notes will be registrable, and such Notes will be exchangeable
for Notes of a like aggregate principal amount in denominations of $1,000
(unless Notes have previously been issued in denominations of $50 and integral
multiples thereof, in which case Notes will be exchangeable for a like
aggregate principal amount in denominations of $50 and integral multiples of
$50) and integral multiples of $1,000 bearing identical terms and provisions,
at the office or agency of the Company maintained for such purpose in the
Borough of Manhattan, The City of New York, which shall initially be the
Corporate Trust Office of the Trustee; provided, however, that payment of interest may be made at the option
of the Company by check mailed to the Holder at such address as shall appear in
the Security Register or by wire transfer to an account appropriately
designated by the Holder entitled to payment.

 

No service
charge shall be made for any registration of transfer or exchange of the Notes,
but the Company may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.

 

The Security Registrar and Paying Agent for
the Notes shall initially be the Trustee.

 

The Notes shall be issuable in denominations
of $1,000 and integral multiples of $1,000 in excess thereof; provided, however, that
upon the release by the Collateral Agent of the Pledged Notes (other than any
release of Pledged Notes in connection with (i) the creation of Treasury
Units by Collateral Substitution, (ii) a Successful Remarketing, (iii) Fundamental
Change Early Settlement, or (iv) Early Settlement in accordance with
Sections 3.13, 5.02, 5.04(b)(ii) and 5.07 of the Purchase Contract and
Pledge Agreement, respectively, and as such terms are defined therein), the
Notes shall be issuable in denominations of $50 and integral multiples of
$50.  Each Applicable Ownership Interest in a Note
held as a component of a Corporate Unit represents an undivided ownership
interest of 1/20, or 5%, of $1,000 principal amount of Notes.

 

Section 2.04.  Global Notes. 
 Notes that are no
longer a component of the Corporate Units and released from the Collateral
Account (as defined in the Purchase Contract and Pledge Agreement) will be
issued in permanent global form (a “Global
Note”), and if issued as one or more Global Notes, the Depositary
shall be The Depository Trust Company or such other depositary as any officer
of the Company may from time to time designate. 
Upon the creation of Treasury Units or the recreation of Corporate
Units, an appropriate annotation shall be made on the Schedule of Increases and
Decreases on the Global Notes held by the Depositary.  Unless and until such Global Note is
exchanged for Notes in certificated form, Global Notes may be transferred, in
whole but not in part, and any payments on the Notes shall be made, only to the

 

7

 

Depositary or
a nominee of the Depositary, or to a successor Depositary selected or approved
by the Company or to a nominee of such successor Depositary.

 

Section 2.05.  Interest.  (a) The Notes will bear interest
initially at the rate of 5.60% per year (the “Interest
Rate”) from the date of original issuance to, but excluding, the
earlier of (i) the Stated Maturity and (ii) the Reset Effective
Date.  In the event of a Successful
Remarketing of the Notes, the Interest Rate will be reset by the Remarketing
Agent, as set forth under Section 7.02. 
If the Interest Rate is so reset, the Notes will bear interest at the
Reset Rate from the related Reset Effective Date to, but excluding, the Stated
Maturity.  The Notes shall bear interest,
to the extent permitted by law, compounded quarterly or semi-annually, as
applicable, on any overdue principal and payment of interest at the Interest
Rate through and including the day immediately preceding the Reset Effective
Date and at the Reset Rate thereafter.

 

(b)                       Interest on the Notes shall be
payable initially quarterly in arrears on (i) March 30, June 30,
September 30 and December 30 of each year (each, a “Quarterly Interest
Payment Date”), commencing on September 30, 2008 and (ii) the
Reset Effective Date, but only to the extent such Reset Effective Date is not a
Quarterly Interest Payment Date, in each case, to the Person in whose name such
Note, or any predecessor Note, is registered at the close of business on the
Record Date for such Interest Payment Date. 
With respect to clause (ii) of the previous sentence, the Company
shall designate a Record Date for such Interest Payment Date no later than 10
Business Days prior to the Record Date selected by the Company.  Following a Successful Remarketing of the
Notes, interest on the Notes, if the Company elects on the Successful
Remarketing Date, may be payable semi-annually in arrears on the Subsequent
Interest Payment Dates (together with Quarterly Interest Payment Dates and the
Reset Effective Date, if not a Quarterly Interest Payment Date, the “Interest Payment Dates”). 
Interest payments will include interest accrued from and including the
immediately preceding Interest Payment Date or, in the case of the first
Interest Payment Date, from and including May 12, 2008, to but excluding
such Interest Payment Date.  If the Reset
Effective Date is not a Quarterly Interest Payment Date, (i) interest paid
on the Reset Effective Date to the Collateral Agent (as such term is defined in
the Purchase Contract and Pledge Agreement) will be paid by the Collateral
Agent to Holders of Corporate Units subject to the provisions of the Purchase
Contract and Pledge Agreement on the Interest Payment Date for the Corporate
Units next following the Reset Effective Date and (ii) interest on the
Notes will accrue from, and including, the Reset Effective Date at the Reset
Rate and be payable on the Subsequent Interest Payment Dates.

 

(c)                        The amount of interest payable for
any full quarterly period or any full semi-annual period, as the case may be,
will be computed on the basis of a 360-day year consisting of twelve 30-day
months.  The amount of interest payable
for any period shorter than a full quarterly or semi-annual period, as the case
may be, for which interest is computed will be computed on the basis of a
30-day month and, for any period less than a month, on the basis of the actual
number of days elapsed per 30-day month. 
In the event that any scheduled Interest Payment Date falls on a day
that is not a Business Day, then payment of interest payable on such Interest
Payment Date will be made on the next succeeding day which is a Business Day
(and without any interest

 

8

 

or other payment in respect of any such
delay), except that, if such Business Day is in the next calendar year, then
such payment will be made on the preceding Business Day, in each case, with the
same force and effect as if made on such scheduled Interest Payment Date.

 

Section 2.06.  No Defeasance.  The provisions of Sections 4.3,
4.4, 4.5 and 4.6 of the Base Indenture shall not apply to the Notes.

 

Section 2.07.  No Sinking Fund.  The Notes are not entitled to the
benefit of any sinking fund.

 

Section 2.08.  Voting Rights.  The provisions of Section 13.5(c) of
the Base Indenture shall not apply to the Notes.

 

ARTICLE 3

REDEMPTION OF THE NOTES

 

Section 3.01.  Special Event Redemption.  If a Special Event shall occur and
be continuing, the Company may, at its option, redeem the Notes in whole, but
not in part, on any Interest Payment Date prior to the earlier of the
Successful Remarketing Date or the Purchase Contract Settlement Date, at a
price per Note equal to the Redemption Price, payable on the date of redemption
(the “Special Event Redemption Date”)
in accordance with the redemption procedures set forth in Section 3.05
below.  Notice of any Special Event
Redemption will be mailed by the Company (with a copy to the Trustee) at least
30 days but not more than 60 days before the Special Event Redemption Date to
each registered Holder of the Notes at its registered address.  In addition, the Company shall notify the
Collateral Agent in writing that a Special Event has occurred and that the
Company intends to redeem the Notes on the Special Event Redemption Date.  Unless the Company defaults in the payment of
the Redemption Price, on and after the Special Event Redemption Date, (a) interest
shall cease to accrue on the Notes, (b) the Notes shall become due and
payable at the Redemption Price, and (c) the Notes shall be void and all
rights of the Holders in respect of the Notes shall terminate and lapse (other
than the right to receive the Redemption Price upon surrender of such Notes but
without interest on such Redemption Price).  
Following the notice of a Special Event Redemption, neither the Company
nor the Trustee shall be required to register the transfer of or exchange the
Notes to be redeemed.

 

Section 3.02.  Optional Redemption.  The Company may redeem the Notes,
in whole or in part, on a date not earlier than December 30, 2012 at a price
per Note equal to the Redemption Price, payable on the date of redemption (the
“Optional Redemption Date”).

 

Section 3.03.  Notice of Redemption. 
Notice of any Redemption will be mailed by the Company (with a copy to
the Trustee) at least 30 days but not more than 60 days before the Redemption
Date to the holders of Notes.  In
addition, the Company shall notify the Collateral Agent in writing that the
Company intends to redeem the Notes on the Redemption Date and, in

 

9

 

the case of a
Special Event Redemption, that a Special Event has occurred.  If the Company elects to redeem the Notes in
connection with a Special Event Redemption, the Company shall appoint the
Quotation Agent to assist the Company in determining the Treasury Portfolio
Purchase Price.

 

Section 3.04.  Effect of Redemption. 
Unless the Company defaults in the payment of the Redemption Price, on
and after the Redemption Date, (a) interest shall cease to accrue on the
Notes immediately prior to the close of business on the Redemption Date, (b) the
Notes shall become due and payable at the Redemption Price, and (c) the
Notes shall be void and all rights of the holders in respect of the Notes shall
terminate and lapse (other than the right to receive the Redemption Price upon
surrender of such Notes but without interest on such Redemption Price).  Following the notice of a Redemption, neither
the Company nor the Trustee shall be required to register the transfer of or
exchange the Notes to be redeemed.

 

Section 3.05.  Redemption Procedures. 
On or prior to the Redemption Date, the Company shall deposit with the
Trustee immediately available funds in an amount sufficient to pay, on the
Redemption Date, the aggregate Redemption Price for (i) in the case of a
Special Event Redemption, all outstanding Notes or (ii) in the case of an
Optional Redemption where the Company elects to redeem the Notes in part, such
redeemed Notes.  If the Company (1) gives
an irrevocable notice of redemption with respect to the Notes pursuant to Section 3.03
in connection with an Optional Redemption and (2) has paid to the Trustee
a sufficient amount of cash in connection with the related Redemption or
Maturity Date of the Notes, then, on the Redemption Date, the Trustee will
irrevocably deposit with the Depositary funds sufficient to pay the Redemption
Price for the Notes being redeemed.  The
Company will also give the Depositary irrevocable instructions and authority to
pay the Redemption Price in immediately available funds to the holders of
beneficial interests in the Global Notes. 
If any Redemption Date is not a Business Day, then the Redemption Amount
will be payable on the next Business Day (and without any interest or other
payment in respect of any such delay). However, if payment on the next Business
Day causes payment of the Redemption Amount to be in the next calendar year,
then payment will be on the immediately preceding Business Day, in each case
with the same force and effect as if made on that payment date.  Interest to be paid on or before the
Redemption Date for any Notes called for Redemption shall be payable to the
holders on the Record Dates for the related Interest Payment Dates.  If less than all of the Notes are redeemed in
connection with an Optional Redemption, such Notes shall be redeemed pro rata in accordance with the Depositary’s internal
procedures.

 

Section 3.06.  No Other Redemption. 
Except as set forth in this Article 3, the Notes shall not be
redeemable by the Company prior to the Maturity Date.  The redemption provisions of Article XI
of the Base Indenture shall not apply to the Notes.

 

10

 

ARTICLE 4

FORM OF NOTE

 

Section 4.01.  Form Of Note.  The Notes and the Trustee’s
Certificate of Authentication to be endorsed thereon are to be substantially in
the forms attached as Exhibit A hereto, with such changes therein as the
officers of the Company executing the Notes (by manual or facsimile signature)
may approve, such approval to be conclusively evidenced by their execution
thereof.

 

ARTICLE 5

ORIGINAL ISSUE OF NOTES

 

Section 5.01.  Original Issue Of Notes.  Notes in the aggregate principal
amount of  $1,000,000,000 (or
$1,150,000,000 if the Underwriters exercise their over-allotment option to
purchase additional Corporate Units in full as set forth in the Underwriting
Agreement) may from time to time, upon execution of this Supplemental Indenture,
be executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company pursuant to Section 3.3 of the Base Indenture
without any further action by the Company (other than as required by the Base
Indenture).

 

ARTICLE 6

ORIGINAL ISSUE DISCOUNT

 

Section 6.01. Original
Issue Discount.  The Company
shall file with the Trustee promptly at the end of each calendar year (i) a
written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on Notes that are outstanding as of
the end of the year and (ii) such other specific information relating to
such original issue discount as may then be required under the Internal Revenue
Code of 1986, as amended from time to time.

 

ARTICLE 7

REMARKETING

 

Section 7.01.  Remarketing Procedures.  (a)   Pursuant
to the Remarketing Agreement and as described below, the Company (i) during
the Period for Early Remarketing may, at its option, select one or more
Three-Business Day Remarketing Periods consisting of three successive
Remarketing Dates on each of which it shall cause the Remarketing Agent to
remarket, in whole (but not in part), unless the Notes have previously been
successfully remarketed in accordance with the provisions of the Remarketing
Agreement or a Special Event Redemption shall have occurred or will occur on or
prior to the last possible Reset Effective Date related to the

 

11

 

applicable Three-Business
Day Remarketing Period, (A) the Pledged Notes of Corporate Units holders
included in the Corporate Units, and (B) any Separate Notes of Holders who
have elected in the manner set forth in the Purchase Contract and Pledge
Agreement and the Remarketing Agreement to have their Notes so remarketed, for
settlement on the Reset Effective Date, and (ii) shall, unless the Notes
have previously been successfully remarketed in accordance with the provisions
of the Remarketing Agreement or a Special Event Redemption Date shall have
occurred or will occur on or prior to the Purchase Contract Settlement Date,
cause the Remarketing Agent to remarket, in whole (but not in part), on each
Remarketing Date during the Final Three-Business Day Remarketing Period, (A) the
Pledged Notes of Corporate Unit holders who have not already settled the
Purchase Contracts included in their Corporate Units and who have failed to
notify the Purchase Contract Agent, on or prior to the seventh Business Day
immediately preceding the Purchase Contract Settlement Date, of their intention
to settle such Purchase Contracts in cash, and (B) any Separate Notes of
Holders who have elected in the manner set forth herein to have their Notes so
remarketed, for settlement on the Purchase Contract Settlement Date. The
Company may select a Three-Business Day Remarketing Period during the Period
for Early Remarketing by designating each of the three sequential Remarketing
Dates to comprise such Three-Business Day Remarketing Period; provided that no Remarketing Date during the Period for
Early Remarketing shall occur earlier than December 27, 2010 or later than
June 17, 2011.

 

(b)                       The Company will request, not less than 10 Business Days prior to
each Remarketing Announcement Date, that the Depositary (or any successor or
its nominee) notify the Depositary participants holding Notes, Corporate Units
and Treasury Units of the Remarketing.

 

(c)                        On the Remarketing Announcement Date, the Company shall make an
announcement regarding the proposed Remarketing of the Notes (the “Remarketing Announcement”). 
The Remarketing Announcement shall specify the following:

 

(i)                                     (A)                              if the Remarketing Announcement relates to a Remarketing to occur
during the Period for Early Remarketing, that the Notes may be remarketed on
any or all of the sixth, seventh and eighth Business Days following such
Remarketing Announcement Date;

 

(B)                               if the Remarketing Announcement
relates to a Remarketing to occur during the Final Three-Business Day
Remarketing Period, that the Notes may be remarketed on any or all of the
third, fourth and fifth Business Days following such Remarketing Announcement
Date;

 

(ii)                                  (A)                              if the Remarketing Announcement relates to a Remarketing to occur
during the Period for Early Remarketing, that the Reset Effective Date will be
the third Business Day following the Remarketing Date on which the Notes are
successfully remarketed unless there is a Successful Remarketing within five
Business Days of the

 

12

 

next
succeeding Interest Payment Date, in which case such Interest Payment Date will
be the Reset Effective Date; or

 

(B)                              if the Remarketing Announcement
relates to a Remarketing to occur during the Final Three-Business Day Remarketing
Period, that the Reset Effective Date will be June 30, 2011 if there is a
Successful Remarketing;

 

(iii)                               that the Reset Rate and Subsequent Interest Payment Dates for the
Notes will be established, and if the Company elects to make any Modifications
to the terms of the Notes as provided in Section 7.02, that such
Modifications will be set on the Successful Remarketing Date and effective on
and after the Reset Effective Date;

 

(iv)                              (A)                              if the Remarketing Announcement relates to a Remarketing to occur
during the Period for Early Remarketing, that the Reset Rate will equal the
interest rate on the Notes that will enable the Notes to be remarketed at a
price (the “Remarketing Price”) equal to at
least 100% of the sum of the Remarketing Treasury Portfolio Purchase Price and
the Separate Notes Purchase Price, plus the applicable Remarketing Fee; or

 

(B)                              if the Remarketing Announcement relates to a Remarketing to occur
during the Final Three-Business Day Remarketing Period, that the Reset Rate
will equal the interest rate on the Notes that will enable the Notes to be
remarketed at a price (the “Contract Settlement Price”)
equal to at least 100% of their aggregate principal amount, plus the applicable
Remarketing Fee; and

 

(v)                                 the possible ranges of the Remarketing Fee, expressed as a
percentage of the Remarketing Treasury Portfolio Purchase Price and the
Separate Notes Purchase Price or as a percentage of the aggregate principal
amount of the Notes to be remarketed, as the case may be.

 

On the Remarketing Announcement Date, the
Company will issue a press release through any appropriate news agency,
including Dow Jones & Company, Inc. and Bloomberg Business News
containing the Remarketing Announcement.

 

(d)        Each
Holder of Separate Notes may elect to have Separate Notes held by such Holder
remarketed in any Remarketing.  A Holder making
such an election must, pursuant to the Purchase Contract and Pledge Agreement,
notify the Custodial Agent and deliver such Separate Notes to the Custodial
Agent on or prior to 5:00 p.m., New York City time, on the second Business
Day, but no earlier than the fifth Business Day, immediately preceding the
first Remarketing Date of any Three-Business Day Remarketing Period.  Any such notice and delivery may not be
conditioned upon the level at which the Reset Rate is established in the
Remarketing.  Any such notice and
delivery may be withdrawn on or prior to 5:00 p.m., New York City time, on
the second Business Day immediately preceding the first Remarketing Date

 

13

 

of the applicable Three-Business Day Remarketing Period in accordance
with the provisions set forth in the Purchase Contract and Pledge
Agreement.  Any such notice and delivery
not withdrawn by such time will be irrevocable with respect to such
Remarketing.  Pursuant to Section 5.02
of the Purchase Contract and Pledge Agreement, promptly
after 11:00 a.m., New York City time, on the Business Day immediately
preceding the first Remarketing Date of the applicable Three-Business Day
Remarketing Period, the Custodial Agent, based on the notices and deliveries
received by it prior to such time, shall notify the Remarketing Agent of the
principal amount of Separate Notes to be tendered for Remarketing and shall
cause such Separate Notes to be presented to the Remarketing Agent.  Under Section 5.02 of the Purchase
Contract and Pledge Agreement, certain Notes that are components of Corporate
Units will be deemed tendered for Remarketing and will be remarketed in
accordance with the terms of the Remarketing Agreement.

 

(e)                        Unless and
until there has been a Successful Remarketing, on each Remarketing Date during
a Three-Business Day Remarketing Period, the Company shall cause the
Remarketing Agent to use its reasonable efforts to remarket the Notes that the
Collateral Agent and the Custodial Agent shall have notified the Remarketing
Agent have been tendered for, or otherwise are to be included in, the
Remarketing, at a price per $1,000 principal amount of the Notes such that the
aggregate price for the aggregate principal amount of the Notes being
Remarketed on that date will be approximately (i) if the Reset Effective
Date is not the Purchase Contract Settlement Date, the Remarketing Price or (ii) if
the Reset Effective Date is the Purchase Contract Settlement Date, the Contract
Settlement Price.

 

(f)                          In the event of a Successful Remarketing, on the Remarketing Date,
the Remarketing Agent shall (i) notify the Collateral Agent, the Custodial
Agent, the Purchase Contract Agent, the Company, the Trustee, the Depositary
and the Clearing Agency of the Reset Rate determined in such Remarketing, the
Subsequent Interest Payment Dates and the related Regular Record Dates, any
Modifications by the Company of the Notes and the aggregate principal amount of
Notes sold in such Remarketing, (ii) notify each purchaser of the Reset
Rate, the Subsequent Interest Payment Dates and the related Regular Record
Dates, the Stated Maturity of the Notes and the aggregate principal amount such
purchaser is to purchase, and (iii) instruct each purchaser to give
instructions to its Depositary participant to pay the purchase price on the
Reset Effective Date in same day funds against delivery of the Notes purchased
through the Depositary’s normal procedures. 
In addition, the Company will request that the Depositary notify its
participants, no later than the Business Day next succeeding the Successful
Remarketing Date, of the Reset Rate, the Subsequent Interest Payment Dates and
related Regular Record Dates and any Modifications of the Notes.

 

(g)                       In accordance with the Depositary’s normal procedures, on the
Reset Effective Date, the transactions described above with respect to each
Note tendered for purchase and sold in such Remarketing shall be executed
through the Depositary, and the accounts of the respective Depositary
participants shall be debited and credited and such Notes delivered by book
entry as

 

14

 

necessary to effect purchases and
sales of such Notes.  The Depositary
shall make payment in accordance with its normal procedures.

 

(h)                       In no event shall the aggregate price for the Notes in a
Remarketing be less than a price (the “Minimum Price”)
equal to (i) in the case of a Remarketing during the Period for Early Remarketing,
100% of the sum of the Remarketing Treasury Portfolio Purchase Price and the
Separate Notes Purchase Price or (ii) in the case of a Remarketing during
the Final Three-Business Day Remarketing Period, 100% of the aggregate
principal amount of the Notes being remarketed. 
A remarketing attempt on any Remarketing Date will be deemed
unsuccessful if the (i) Remarketing Agent is unable to remarket the Notes
for an aggregate price that is at least equal to the Minimum Price; or (ii) if
a condition precedent to such Remarketing is not fulfilled.

 

(i)                           The right of each Holder of Notes that are included in Corporate
Units to have such Notes, and each Holder of Separate Notes to have any
Separate Notes (together, the “Remarketed Notes”),
remarketed and sold on any Remarketing Date shall be limited to the extent that
(i) the Remarketing Agent conducts a Remarketing pursuant to the terms of
the Remarketing Agreement, (ii) a Special Event Redemption has not
occurred prior to such Remarketing Date, (iii) the Remarketing Agent is
able to find a purchaser or purchasers for Remarketed Notes at the Minimum
Price, and (iv) the purchaser or purchasers deliver the purchase price
therefor to the Remarketing Agent as and when required.

 

(j)                           Neither the Trustee, the Company nor the Remarketing Agent shall
be obligated in any case to provide funds to make payment upon tender of Notes
for Remarketing.

 

Section 7.02.  Reset Rate; Modifications.  (a) In
connection with each Remarketing, (i) the Remarketing Agent shall
determine the reset interest rate (rounded to the nearest one-thousandth
(0.001) of one percent per annum) that it believes will, when applied to the
Notes (with any Modifications as determined by the Company pursuant to this Section 7.02(a) taken
into account), enable the aggregate principal amount of the Notes being
remarketed on such date to be sold at an aggregate price equal to at least (A) if
the Reset Effective Date is not the Purchase Contract Settlement Date, the
Remarketing Price or (B) if the Reset Effective Date is the Purchase
Contract Settlement Date, the Contract Settlement Price and (ii) if there
is a Successful Remarketing, the Company may elect, at its option, to (A) change
the Stated Maturity to any other date later than December 30, 2012 and
earlier than June 30, 2021; provided that
there shall be at least two years between the Reset Effective Date and any
modified Optional Redemption Date; (B) change the seniority of the Notes
to be the Company’s senior subordinated obligations or subordinated obligations;
(C) add to, modify or remove altogether the Company’s Optional Redemption
right; and (D) add interest deferral provisions to the Notes (each, a “Modification”). The reset interest rate established on the
Remarketing Date on which a Successful Remarketing occurs shall be the “Reset Rate,” and the Reset Rate and any
Modification the Company elects shall be effective on the Reset Effective Date.

 

15

 

(b)                       Anything herein to the contrary notwithstanding, the Reset Rate
shall not exceed the maximum rate permitted by applicable law and the
Remarketing Agent shall have no obligation to determine whether there is any
limitation under applicable law on the Reset Rate or, if there is any such
limitation, the maximum permissible Reset Rate on the Notes and it shall rely
solely upon written notice from the Company (which the Company agrees to
provide prior to the eighth Business Day before the first Remarketing Date of
any Three-Business Day Remarketing Period)
as to whether or not there is any such limitation and, if so, the maximum
permissible Reset Rate.

 

(c)                        In the event of a Failed
Remarketing or if no Notes are included in Corporate Units and none of the
holders of the Separate Notes elect to have their Notes remarketed in any
Remarketing, the applicable interest rate on the Notes will not be reset and
will continue to be the Interest Rate provided that there will be at least two
years between the Reset Effective Date and any modified Redemption Date;

 

(d)                       In the event of a Successful
Remarketing, the Interest Rate shall be reset at the Reset Rate as determined
by the Remarketing Agent under the Remarketing Agreement.  The Reset Rate shall be effective from and
after the Reset Effective Date.

 

Section 7.03.  Failed Remarketing.   (a) 
If, by 4:00 p.m., New York City time, on the last Remarketing Date
of any Three-Business Day Remarketing Period, the Remarketing Agent is unable
to remarket all of the Remarketed Notes at the Minimum Price, pursuant to the
terms and conditions hereof, a Failed Remarketing shall be deemed to have
occurred, and the Remarketing Agent shall so advise, by telephone the
Depositary, the Purchase Contract Agent and the Company.  Promptly following any Failed Remarketing,
the Remarketing Agent shall return, no later than the Business Day immediately
following the end of such Three-Business Day Remarketing Period, the Separate
Notes submitted for Remarketing, if any, to the Custodial Agent for
distribution to the appropriate holders pursuant to the terms of the Purchase
Contract and Pledge Agreement.

 

(b)                       The Company shall cause a
notice of such Failed Remarketing to be published
through any appropriate news agency, including Dow Jones & Company, Inc.
and Bloomberg Business News no later than 9:00 a.m., New York City time,
on the Business Day following the last Remarketing Date of such Three-Business
Day Remarketing Period (which notice, if the unsuccessful Remarketing attempt
shall occur during the Final Three-Business Day Remarketing Period, shall
include the procedures that must be followed if a Holder of Notes wishes to
exercise its Put Right, as hereinafter defined.

 

Section 7.04.  Put Right.  (a) If there has not been a Successful
Remarketing prior to the Purchase Contract Settlement Date, Holders of Separate
Notes and Holders of Notes that are a component of Corporate Units will,
subject to this Section 7.04, have the right (the “Put Right”)
to require the Company to purchase their Notes, on the Purchase Contract
Settlement Date, at a price per Note equal to $1,000 (or $50 per Applicable
Ownership Interest) plus accrued and unpaid interest to but excluding the
Purchase Contract Settlement Date (the “Put Price”);

 

16

 

provided, however, that as of the Purchase Contract Settlement Date,
Holders of Notes that are part of a Corporate Unit with respect to which a Put
Right has been automatically exercised under clause (b) below shall be
deemed to have elected to pay the Purchase Price for the shares of Common Stock
to be issued under the related Purchase Contract from a portion of the Proceeds
of the Put Right of such Notes equal to the Purchase Price, less any Deferred
Contract Adjustment Payments, in full satisfaction of such Holders’ obligations
under the Purchase Contracts, and any remaining amount of the Put Price
following satisfaction of the related Purchase Contract will be paid to such
Holder.

 

(b)                       The Put Right of Holders of
Notes that are part of Corporate Units will be automatically exercised unless
such Holders (1) prior to 11:00 a.m., New York City time, on the
second Business Day immediately preceding the Purchase Contract Settlement
Date, provide written notice to the Purchase Contract Agent of their intention
to settle the related Purchase Contract with separate cash, and (2) on or
prior to 11:00 a.m., New York City time, on the Business Day immediately
preceding the Purchase Contract Settlement Date, deliver to the Collateral
Agent $50 in cash per Purchase Contract, in each case pursuant to the Purchase
Contract Agreement.  The Put Price for
Holders of Separate Notes shall be applied in accordance with Section 7.04(c) below.

 

(c)                        The Put Right of a Holder of
a Separate Note shall only be exercisable upon delivery of a notice to the
Trustee by such Holder on or prior to the second Business Day prior to the
Purchase Contract Settlement Date.  On or
prior to the Purchase Contract Settlement Date, the Company shall deposit with
the Trustee immediately available funds in an amount sufficient to pay, on the
Purchase Contract Settlement Date, the aggregate Put Price of all Separate
Notes with respect to which a Holder has exercised a Put Right.  In exchange for any Separate Notes
surrendered pursuant to the Put Right, the Trustee shall then distribute such
amount to the Holders of such Separate Notes.

 

Section 7.05.  Additional
Event of Default.  In addition to the events listed as Events
of Default in Section 5.1 of the Base Indenture, it shall be an additional
Event of Default with respect to the Notes if the Company shall not have
satisfied its obligation to pay the Put Price when due with respect to any
Separate Note following exercise of the Put Right in accordance with Section 7.04,
unless such Notes underlie Corporate Units, in which case the obligation of the
Company to pay the Put Price shall be netted against such Holder’s obligation
to pay the Purchase Price (as defined in the Purchase Contract and Pledge
Agreement) in accordance with Section 5.02 (c) under the Purchase
Contract and Pledge Agreement.

 

17

 

ARTICLE 8

TAX TREATMENT

 

Section 8.01.  Tax Treatment.  The Company agrees, and by
acceptance of a Corporate Unit, each holder of a Corporate Unit will be deemed
to have agreed, for all tax purposes, (i) to treat the acquisition of a
Corporate Unit as the acquisition of the ownership interest in the Note and the
Purchase Contract constituting the Corporate Unit, (ii) to treat the Note
as indebtedness of the Company that is subject to the rules applicable to
contingent payment debt instruments under Treas. Reg. Sec. 1.1275-4 and (iii) to
treat the Note and the Purchase Contracts as separate instruments.  A Holder of Notes may obtain the comparable
yield and projected payment schedule for the Notes, determined by the Company
pursuant to Treas. Reg. Sec. 1.1275-4, by submitting a written request for such
information to the Company at the following address:  Legg Mason, Inc., 100 Light Street,
Baltimore, Maryland 21202, Attn: Corporate Secretary.

 

ARTICLE 9

MISCELLANEOUS

 

Section 9.01.  Ratification Of Indenture. The
Base Indenture, as supplemented by this Supplemental Indenture, is in all
respects ratified and confirmed, and this Supplemental Indenture shall be
deemed part of the Indenture in the manner and to the extent herein and therein
provided.

 

Section 9.02   Responsibility For
Recitals, Etc.  The recitals
herein and in the Notes (except in the Trustee’s certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. 
The Trustee makes no representations as to the validity or sufficiency
of this Supplemental Indenture or of the Notes. 
The Trustee shall not be accountable for the use or application by the
Company of the Notes or of the proceeds thereof.

 

Section 9.03.
Separability.  In case any one
or more of the provisions contained in this Supplemental Indenture or in the
Notes shall for any reason be held to be invalid, illegal or unenforceable in
any respect, then, to the extent permitted by law, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Supplemental
Indenture or of the Notes, but this Supplemental Indenture and the Notes shall
be construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.

 

Section 9.04  Successors And Assigns.  This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company and the Trustee.

 

18

 

Section 9.05.  Governing Law.  THIS SUPPLEMENTAL INDENTURE AND
THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS
THEREOF.  The Company and the Trustee
hereby submit to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York state court
sitting in New York City for the purposes of all legal proceedings arising out
of or relating to this Supplemental Indenture or the Notes.  The Company and the Trustee irrevocably waive
to the fullest extent permitted by applicable law, any objection which they may
now or hereafter have to the laying of the venue of any such proceeding brought
in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.

 

Section 9.06.  Counterparts. 
This Supplemental Indenture may be executed in any number of
counterparts by the parties hereto on separate counterparts, each of which,
when so executed and delivered, shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

 

19

 

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

 

 

	
   

  	
  LEGG MASON, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A

 

[IF THIS NOTE IS TO BE A GLOBAL SECURITY, INSERT:]

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY OR A NOMINEE OF THE DEPOSITORY TRUST COMPANY. THIS NOTE IS EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY
TRUST COMPANY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY
TRUST COMPANY TO A NOMINEE OF THE DEPOSITORY TRUST COMPANY OR BY A NOMINEE OF
THE DEPOSITORY TRUST COMPANY TO THE DEPOSITORY TRUST COMPANY OR ANOTHER NOMINEE
OF THE DEPOSITORY TRUST COMPANY.

 

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

 

 

LEGG
MASON, INC.

5.60% Senior Notes initially
due June 30, 2021

 

Initially $               

 

	
  No.  [   ]

  	
   

  	
  CUSIP No.

  

 

LEGG MASON, INC., a corporation organized and existing under the laws
of Maryland (hereinafter called the “Company,” which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to [Cede &
Co.]/[The Bank of New York, as Purchase Contract Agent], or its registered
assigns, the principal sum of up to
                            ,
as set forth in the Schedule of Increases or Decreases in the Note attached
hereto, on the Stated Maturity, and to pay interest thereon from May 12,
2008 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, quarterly in arrears on each Interest Payment Date
of each year, commencing on September 30, 2008, at the rate of 5.60% per
annum through and including the day immediately preceding the Reset Effective
Date, if any, and after the Reset Effective Date, semi-annually (if the Company
elects such Modification on the Successful Remarketing Date) in arrears on the
Subsequent Interest Payment Dates at the Reset Rate, in each case on the basis
of a 360-day year consisting of twelve 30-day months, until the principal
hereof is paid or duly provided for or made available for payment, and (to the
extent that the payment of such interest shall be legally enforceable) to pay
interest, compounded quarterly, at the rate of 5.60% per annum on any overdue
principal and payment of interest through and including the day immediately
preceding the Reset Effective Date, if any, and thereafter at the Reset Rate,
if any, compounded semi-annually (if such Modification is applicable).  The amount of interest payable for any period shorter than a full
quarterly or semi-annual period, as the case may be, for which interest is
computed will be computed on the basis of a 30-day month and, for any period
less than a month, on the basis of the actual number of days elapsed per 30-day
month.  The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Record Date for such Interest Payment Date.

 

Payment of the
principal of and interest on this Note will be made at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, The City
of New York, which shall initially be the Corporate Trust Office of the
Trustee, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company by check mailed to
the Holder at such address as shall appear in the Security Register or by wire
transfer to an account appropriately designated by the Holder entitled to
payment.

 

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

 

 

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

 

 

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

 

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LEGG MASON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

 

This is one of the Notes referred to in the within mentioned Indenture.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  
						

 

 

FORM OF REVERSE OF NOTE

 

This Note is
one of a duly authorized issue of securities of the Company (herein called the “Notes”), issued and to be issued in one or more series under
an Indenture (the “Base Indenture,”
and as further supplemented by the First Supplemental Indenture, the “Indenture”), dated as of May 12, 2008, between the
Company and The Bank of New York, as Trustee, to which Indenture reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered.  This Note
is one of the series designated on the face hereof, limited in aggregate
principal amount to
$                      .

 

Unless an
earlier Special Event Redemption has occurred, this Note shall mature and the
principal amount thereof shall be due and payable together with all accrued and
unpaid interest thereon on the Stated Maturity. 
The “Stated Maturity” shall mean June 30,
2021 or, upon the Reset Effective Date, if the Company elects on the Successful
Remarketing Date, any other date later than December 30, 2012 and earlier
than June 30, 2021; provided that
there shall be at least two years between the Reset Effective Date and the
initial Stated Maturity on the Successful Remarketing Date (subject to
agreement between the Company and the Remarketing Agent pursuant to the
Remarketing Agreement with respect to the Remarketing Fee), it being understood
that if there shall have been a Failed Remarketing, the Stated Maturity shall
remain June 30, 2021.  Any change of
the Stated Maturity and any other Modifications the Company elects, in each
case in accordance with the Indenture, shall be effective on and after the
Reset Effective Date.

 

“Subsequent Interest Payment Date” means, following the Reset
Effective Date, if the Company elects on the Successful Remarketing Date to
make interest payable on a semi-annual basis, each semi-annual interest payment
date established by the Company on such Successful Remarketing Date. Otherwise,
each reference to “Subsequent Interest
Payment Date” means a Quarterly Interest Payment Date.

 

If a Special
Event shall occur and be continuing, the Company may, at its option, redeem the
Notes of this series in whole, but not in part, on any Interest Payment Date
prior to the earlier of the Successful Remarketing Date or the Purchase
Contract Settlement Date, at a price per Note equal to the Redemption Price as
set forth in the Indenture.

 

If this Note
is not a component of Corporate Units, the Holder of this Note may, on or prior
to the second Business Day, but no earlier than the fifth Business Day,
immediately preceding the first Remarketing Date of any Three-Business Day
Remarketing Period, elect to have this Note remarketed in the same manner as
Pledged Notes, by delivering this Note, along with a notice of such election to
The Bank of New York, as Custodial Agent, for Remarketing in accordance with
the Purchase and Pledge Agreement.

 

 

If there has
not been a Successful Remarketing prior to the Purchase Contract Settlement
Date, the holders of Notes will have the right to require the Company to
purchase their Notes on the Purchase Contract Settlement Date, all as more
fully described in the Indenture.

 

The Notes are
not entitled to the benefit of any sinking fund and will not be subject to
defeasance.

 

If an Event of
Default with respect to Notes of this series shall occur and be continuing, the
principal of the Notes of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.

 

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

 

No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this Note at the times,
place and rate, and in the coin or currency, herein prescribed.

 

As provided in
the Indenture and subject to certain limitations therein set forth, the
transfer of this Note is registrable in the Securities Register, upon surrender
of this Note for registration of transfer at the office or agency of the
Company in any place where the principal of and interest on this Note are
payable, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Securities Registrar duly executed
by the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Notes of this series, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.

 

The Notes of
this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof except as provided
for in Section 2.03 of the First Supplemental Indenture.  As provided in the Indenture and subject to
certain limitations therein set forth, Notes of this series are exchangeable
for a like aggregate principal amount of Notes of this series of a different
authorized denomination, as requested by the Holder surrendering the same.

 

 

No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

 

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

 

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

 

In the case of
any conflict between the provisions of this Note and the Indenture, the
provisions of the Indenture shall control. 
This Note and the Indenture shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

The Company
agrees, and by acceptance of a Corporate Unit, each holder of a Corporate Unit
will be deemed to have agreed, for all tax purposes (i) to treat the
acquisition of a Corporate Unit as the acquisition of the ownership interest in
the Note and the Purchase Contract constituting the Corporate Unit, (ii) to
treat the Note as indebtedness of the Company that is subject to the rules applicable
to contingent payment debt instruments under Treas. Reg. Sec. 1.1275-4 and (iii) to
treat the Note and the Purchase Contracts as separate instruments.  A Holder of Notes may obtain the comparable
yield and projected payment schedule for the Notes, determined by the Company
pursuant to Treas. Reg. Sec. 1.1275-4, by submitting a written request for such
information to the Company at the following address:  Legg Mason, Inc., 100 Light Street,
Baltimore, Maryland 21202, Attn: Corporate Secretary.

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns
and transfers this Note to:

	
   

  
	
   

  

 

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

 

 

 

(Insert address and zip code of assignee)

 

and irrevocably appoints

	
   

  
	
   

  
	
   

  

 

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

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DTC Participant #:

  	
   

  	
   

  	
   

  	
   

  
									

 

 

SIGNATURE GUARANTEE

 

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

 

 

SCHEDULE
OF INCREASES OR DECREASES IN NOTE

 

The initial principal amount of this Note is
$                        .  The following increases or decreases in a
part of this Note have been made:

 

	
  Date

  	
   

  	
  Amount
  of decrease

  in principal amount

  of this Note

  	
   

  	
  Amount
  of increase in

  principal amount of

  this Note

  	
   

  	
  Principal
  amount of

  this Note following

  such decrease (or

  increase)

  	
   

  	
  Signature
  of

  authorized officer of

  Trustee

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