Document:

exv10w1

Exhibit 10.1

Execution Copy

 

JEFFERIES GROUP, INC.

(a Delaware corporation)

$300,000,000 Principal Amount

3.875 % Convertible Senior Debentures due 2029

PURCHASE AGREEMENT

Dated: October 21, 2009

 

 

JEFFERIES GROUP, INC.

(a Delaware corporation)

$300,000,000

3.875 % Convertible Senior Debentures due 2029

PURCHASE AGREEMENT

October 21, 2009

Jefferies & Company, Inc.

Citigroup Global Markets Inc.

J.P. Morgan Securities Inc.

BNY Mellon Capital Markets, LLC

U.S. Bancorp Investments, Inc.

BNP Paribas Securities Corp.

Deutsche Bank Securities Inc.

Keefe, Bruyette & Woods, Inc.

			
	c/o	 	Jefferies & Company, Inc.

520 Madison Avenue

New York, New York 10022

Ladies and Gentlemen:

     Jefferies Group, Inc., a Delaware corporation (the “Company”), confirms its agreement with
Jefferies & Company, Inc. and each of the other Underwriters named in Schedule A hereto
(collectively, the “Underwriters”, which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Jefferies & Company, Inc., Citigroup Global
Markets Inc. and J.P. Morgan Securities LLC are acting as Representatives (in such capacity, the
“Representatives”), with respect to the issue and sale by the Company and the purchase by the
Underwriters, acting severally and not jointly, of the respective principal amounts set forth in
said Schedule A of $300,000,000 aggregate principal amount of the Company’s 3.875% Convertible
Senior Debentures due 2029 (the “Firm Debentures”). In addition, solely for the purpose of
covering over-allotments, the Company proposes to grant to the Underwriters the option to purchase
from the Company up to an additional $45,000,000 aggregate principal amount of the Company’s 3.875%
Convertible Senior Debentures due 2029 (the “Additional Debentures”). The Firm Debentures and the
Additional Debentures are hereinafter collectively sometimes referred to herein as, the
“Securities.”

     The Securities are to be issued pursuant to an Indenture dated as of October 26, 2009, as
supplemented by a Supplemental Indenture dated October 26, 2009 (the “Indenture”), between the
Company and The Bank of New York, as trustee (the “Trustee”). The term “Indenture,” as used
herein, includes the Officer’s Certificate (as defined in the Indenture) establishing the form and
terms of the Securities pursuant to Section 3.01 of the Indenture, if any. The Securities will be
convertible in accordance with their terms and the terms of the Indenture into cash and/or shares
of the common stock (the “Common Stock”) of the Company, $0.0001 par value per share (the
“Shares”).

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     The Company understands that the Underwriters propose to make a public offering of the
Securities as soon as the Representatives deem advisable after this Agreement has been executed and
delivered.

     The Company has filed with the Securities and Exchange Commission (the “Commission”) an
automatic shelf registration statement on Form S-3 (No. 333-160214), including the related
preliminary prospectus or prospectuses and post-effective amendment No. 1, thereto, which
registration statement and amendment became effective upon filing under Rule 462(e) of the rules
and regulations of the Commission (the “1933 Act Regulations”) under the Securities Act of 1933, as
amended (the “1933 Act”). Such registration statement, as amended, covers the registration of the
Securities under the 1933 Act. Promptly after execution and delivery of this Agreement, the Company
will prepare and file a prospectus in accordance with the provisions of Rule 430B (“Rule 430B”) of
the 1933 Act Regulations and paragraph (b) of Rule 424 (“Rule 424(b)”) of the 1933 Act Regulations.
Any information included in such prospectus that was omitted from such registration statement at
the time it became effective but that is deemed to be part of and included in such registration
statement pursuant to Rule 430B is referred to as “Rule 430B Information.” Each prospectus used in
connection with the offering of the Securities that omitted Rule 430B Information is herein called
a “preliminary prospectus.” Such registration statement, at any given time, including the
amendments thereto to such time, the exhibits and any schedules thereto at such time, the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at such time
and the documents otherwise deemed to be a part thereof or included therein by 1933 Act
Regulations, is herein called the “Registration Statement.” The Registration Statement at the time
it originally became effective is herein called the “Original Registration Statement.” The final
prospectus in the form first furnished to the Underwriters for use in connection with the offering
of the Securities, including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act at the time of the execution of this Agreement and any preliminary
prospectuses that form a part thereof, is herein called the “Prospectus.” For purposes of this
Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus
or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system
(“EDGAR”).

     All references in this Underwriting Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” (or other references of like import) in
the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and
include all such financial statements and schedules and other information which is incorporated by
reference in or otherwise deemed by 1933 Act Regulations to be a part of or included in the
Registration Statement, Prospectus or preliminary prospectus, as the case may be, prior to the date
hereof; and all references in this Underwriting Agreement to amendments or supplements to the
Registration Statement, Prospectus or preliminary prospectus shall be deemed to include the filing
of any document under the 1934 Act which is incorporated by reference in or otherwise deemed by
1933 Act Regulations to be a part of or included in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be.

     SECTION 1. Representations and Warranties.

     (a) Representations and Warranties by the Company. The Company represents and warrants to
each Underwriter as of the date hereof, the Applicable Time referred to in Section 1(a)(i) hereof
and as of the Closing Time and any Additional Closing Time referred to in Section 2(b) hereof, and
agrees with each Underwriter, as follows:

     (i) Status as a Well-Known Seasoned Issuer. (A) At the time of filing the
Original Registration Statement, (B) at the time of the most recent amendment thereto for
the purposes of complying with Section 10(a)(3) of the 1933 Act (whether such amendment was
by post-effective

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amendment, incorporated report filed pursuant to Section 13 or 15(d) of the 1934 Act or
form of prospectus), (C) at the time of the filing of Amendment No. 1 to the Registration
Statement, (D) at the time the Company or any person acting on its behalf (within the
meaning, for this clause only, of Rule 163(c) of the 1933 Act Regulations) made any offer
relating to the Securities in reliance on the exemption of Rule 163 of the 1933 Act
Regulations and (E) at the date hereof, the Company was and is a “well-known seasoned
issuer” as defined in Rule 405 of the 1933 Act Regulations (“Rule 405”), including not
having been and not being an “ineligible issuer” as defined in Rule 405. The Registration
Statement is an “automatic shelf registration statement,” as defined in Rule 405, and the
Securities and the Shares, since their registration on the Registration Statement, have been
and remain eligible for registration by the Company on a Rule 405 “automatic shelf
registration statement”. The Company has not received from the Commission any notice
pursuant to Rule 401(g)(2) of the 1933 Act Regulations objecting to the use of the automatic
shelf registration statement form.

     At the time of filing the Original Registration Statement, at the earliest time
thereafter that the Company or another offering participant made a bona fide offer (within
the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the Securities and at the date
hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405.

     (ii) Registration Statement, Prospectus and Disclosure at Time of Sale. The
Original Registration Statement became effective upon filing under Rule 462(e) of the 1933
Act Regulations (“Rule 462(e)”) on June 25, 2009, and the post-effective amendment thereto
also became effective upon filing under Rule 462(e). No stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of the Commission
for additional information with respect to the Registration Statement has been complied
with.

     Neither the Company, nor any person acting on the Company’s behalf (within the meaning,
for this paragraph only, of Rule 163(c) of the 1933 Act Regulations), has made any offer
that is a written communication relating to the Securities prior to the filing of the
Original Registration Statement.

     At the respective times the Original Registration Statement and each amendment thereto
became effective, at each deemed effective date with respect to the Underwriters pursuant to
Rule 430B(f)(2) of the 1933 Act Regulations, at the Closing Time, and at any Additional
Closing Time, the Registration Statement complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the
rules and regulations of the Commission under the 1939 Act (the “1939 Act Regulations”), and
did not and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company makes no representations or
warranties as to (i) that part of the Registration Statement which shall constitute a
Statement of Eligibility and Qualification (Form T-1) under the 1939 Act of the Trustee or
(ii) the information contained in or omitted from the Registration Statement or the
Prospectus (or any supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration Statement or the Prospectus
(or any supplement thereto).

     Neither the Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued, at the Closing Time and at any

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Additional Closing Time, included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading.

     Each preliminary prospectus (including the prospectus or prospectuses filed as part of
the Original Registration Statement or any amendment thereto) complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus and the
Prospectus delivered to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

     As of the Applicable Time, neither (x) the Issuer General Use Free Writing
Prospectus(es) (as defined below) issued at or prior to the Applicable Time (as defined
below) and the Statutory Prospectus (as defined below), considered together (collectively,
the “General Disclosure Package”), nor (y) any individual Issuer Limited Use Free Writing
Prospectus, when considered together with the General Disclosure Package, included any
untrue statement of a material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading.

     As of the time of the filing of the Final Term Sheet, the General Disclosure Package,
when considered together with the Final Term Sheet (as defined in Section 3(b)), will not
include any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading.

     As used in this subsection and elsewhere in this Agreement:

     “Applicable Time” means 8:00 am (Eastern time) on October 21, 2009 or such other time
as agreed by the Company and Jefferies & Company, Inc.

     “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined
in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Securities that (i) is
required to be filed with the Commission by the Company, (ii) is a “road show that is a
written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to
be filed with the Commission or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i)
because it contains a description of the Securities or of the offering that does not reflect
the final terms, in each case in the form filed or required to be filed with the Commission
or, if not required to be filed, in the form retained in the Company’s records pursuant to
Rule 433(g).

     “Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors, as evidenced by its
being specified in Schedule C hereto.

     “Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing Prospectus.

     “Statutory Prospectus” as of any time means the prospectus relating to the Securities
that is included in the Registration Statement immediately prior to that time, including any
document incorporated by reference therein and any preliminary or other prospectus deemed to
be a part thereof.

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     Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Securities or until any earlier
date that the issuer notified or notifies Jefferies & Company, Inc. as described in Section
3(e), did not, does not and will not include any information that conflicted, conflicts or
will conflict with the information contained in the Registration Statement or the
Prospectus, including any document incorporated by reference therein and any preliminary or
other prospectus deemed to be a part thereof that has not been superseded or modified.

     The representations and warranties in this subsection shall not apply to statements in
or omissions from the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus made in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Jefferies & Company, Inc. expressly for use therein.

     (iii) Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the “1934 Act Regulations”), and, when read together with the other
information in the Prospectus, (a) at the time the Original Registration Statement became
effective, (b) at the earlier of the time the Prospectus was first used and the date and
time of the first contract of sale of Securities in this offering, (c) at the Closing Time
and (d) at any Additional Closing Time, did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.

     (iv) No Material Adverse Change. Since the respective dates as of which
information is given in the Registration Statement, the General Disclosure Package and the
Prospectus, except as otherwise stated therein, (A) there has been no material adverse
change in the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and its subsidiaries
taken as a whole, and (C) there has been no material change in the capital stock of the
Company, there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.

     (v) Good Standing of the Company and the Subsidiaries. Each of the Company and
its subsidiaries has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or organized with full
corporate power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the General Disclosure Package and the
Prospectus, and the Company and Jefferies & Company, Inc., a Delaware corporation (the
“Subsidiary”) are in good standing and duly qualified to do business as foreign
corporations under the laws of each jurisdiction listed on Annex A, such jurisdictions being
the only jurisdictions where the failure to be so qualified would, individually or in the
aggregate, have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of business

     (vi) Capital Stock of the Subsidiaries. All the outstanding shares of capital
stock of each subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the General Disclosure Package and
the

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Prospectus (or as represented by minority interests as disclosed in the financial
statements incorporated by reference therein), all outstanding shares of capital stock of
the subsidiaries are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest or any other security
interests, claims, liens or encumbrances (other than, in the case of certain non-U.S.
subsidiaries, director qualifying shares which individually and in the aggregate represent
an immaterial ownership interest in such subsidiaries). The Subsidiary is the only
subsidiary that is a Significant Subsidiary (as such term is defined by Rule 405) of the
Company.

     (vii) Capitalization. All of the issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued, are fully paid and
non-assessable, and were not issued in violation of, and are not subject to, any preemptive
or similar rights. The Company’s authorized equity capitalization is as set forth in the
General Disclosure Package and the Prospectus; and, except as set forth in the General
Disclosure Package and the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue (other than equity compensation grants and awards
under the Company’s plans in the ordinary course consistent with past practice), or rights
to convert any obligations into or exchange any securities for, shares of capital stock of
or ownership interests in the Company are outstanding.

     (viii) (A) Accuracy of Exhibits. There is no franchise, contract or other
document of a character required to be described in the Registration Statement, the General
Disclosure Package or Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in (I) the General Disclosure Package and
the Prospectus under the headings “Certain ERISA Considerations”, “Description of the
Debentures” and “Description of Securities We May Offer” and (II) the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008 under the headings “Part I — Item
1. Business — Regulation” and “ Part I — Item 3. — Legal Proceedings”, insofar as such
statements summarize legal matters, agreements, documents or proceedings discussed therein,
are accurate and fair summaries of such legal matters, agreements, documents or proceedings.

     (B) The statements set forth in the General Disclosure Package and the Prospectus under
the heading “Material United States Federal Tax Considerations,” insofar as such statements
purport to describe certain federal tax laws of the United States, are accurate and complete
in all material respects.

     (ix) Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding obligation of the
Company.

     (x) Investment Company Act. The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof as described
in the General Disclosure Package and the Prospectus, will not be an “investment company” as
defined in the Investment Company Act of 1940, as amended.

     (xi) Absence of Further Requirements. No consent, approval, authorization,
filing with or order of any court or governmental agency or body is required in connection
with the transactions contemplated herein, including the issuance and sale of the Debentures
and the issuance of the Shares issuable upon conversion of the Debentures, except such as
have been obtained under the 1933 Act and the 1939 Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in the General
Disclosure Package and the Prospectus.

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     (xii) Absence of Conflicts. Neither the issue and sale of the Securities nor
the consummation of any other of the transactions herein contemplated nor the fulfillment of
the terms hereof, including the issuance of the Shares upon conversion of the Debentures,
will conflict with, result in a breach or violation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant
to, (i) the charter or by-laws of the Company or any of its subsidiaries, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which the Company or any
of its subsidiaries is a party or bound or to which its or their property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any of its subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the Company or any
of its subsidiaries or any of its or their properties, which violation or default would, in
the case of clauses (ii) and (iii) above, either individually or in the aggregate with all
other violations and defaults referred to in this paragraph (xii) (if any), have a material
adverse effect on the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in or contemplated
in the General Disclosure Package and the Prospectus (exclusive of any supplement thereto
filed after the date hereof).

     (xiii) Absence of Registration Rights. No holders of securities of the Company
have rights to the registration of such securities under the Registration Statement.

     (xiv) Financial Statements. The consolidated historical financial statements
and schedules of the Company and its consolidated subsidiaries included in the Prospectus,
the Registration Statement and the General Disclosure Package present fairly in all material
respects the financial condition, results of operations and cash flows of the Company as of
the dates and for the periods indicated, comply as to form with the applicable accounting
requirements of the 1933 Act and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods involved (except
as otherwise noted therein). The selected financial data set forth under the captions
“Prospectus Supplement Summary — Recent Developments”, “Summary Consolidated Financial
Information” in the General Disclosure Package, Prospectus and Registration Statement fairly
present, on the basis stated in the General Disclosure Package, Prospectus and the
Registration Statement, the information included therein.

     (xv) Absence of Proceedings. No action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or
any of its subsidiaries or its or their property is pending or, to the best knowledge of the
Company, threatened that (i) could reasonably be expected to have a material adverse effect
on the performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated in the General
Disclosure Package and the Prospectus (exclusive of any supplement thereto filed after the
date hereof).

     (xvi) Possession of Properties. Each of the Company and each of its
subsidiaries owns or leases all such properties as are necessary to the conduct of its
operations as presently conducted.

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     (xvii) Absence of Defaults. Neither the Company nor any subsidiary is in
violation or default of (i) any provision of its charter or bylaws, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is a party or bound or
to which its property is subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or such subsidiary or any
of its properties, as applicable, which violation or default would, in the case of clauses
(ii) and (iii) above, either individually or in the aggregate with all other violations and
defaults referred to in this paragraph (xvii) (if any), have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the General
Disclosure Package and the Prospectus (exclusive of any supplement thereto filed after the
date hereof).

     (xviii) Independent Accountants. KPMG LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their report with
respect to the audited consolidated financial statements and schedules included in the
General Disclosure Package and the Prospectus, is an independent registered public
accounting firm with respect to the Company as required by the 1933 Act and the applicable
published rules and regulations of the Public Company Accounting Oversight Board.

     (xix) Tax Laws. The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof (except in any
case in which the failure so to file would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the General
Disclosure Package and the Prospectus (exclusive of any supplement thereto filed after the
date hereof) and has paid all taxes shown by such returns to be payable and any other
assessment, fine or penalty levied against it, to the extent that any of the foregoing is
due and payable, except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the General Disclosure Package
and the Prospectus (exclusive of any supplement thereto filed after the date hereof).

     (xx) Absence of Labor Dispute. No labor problem or dispute with the employees
of the Company or any of its subsidiaries exists or is threatened or imminent, and the
Company is not aware of any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries’ principal suppliers, contractors or customers, that could have a
material adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set forth in or
contemplated in the General Disclosure Package and the Prospectus (exclusive of any
supplement thereto filed after the date hereof).

     (xxi) Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are engaged; all
policies of insurance and fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees, officers and directors are
in full force and effect; the Company and

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its subsidiaries are in compliance with the terms of such policies and instruments in
all material respects; and there are no claims by the Company or any of its subsidiaries
under any such policy or instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause, except for claims that in the aggregate
are not significant in amount; neither the Company nor any such subsidiary has been refused
any insurance coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have
a material adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set forth in or
contemplated in the General Disclosure Package and the Prospectus (exclusive of any
supplement thereto filed after the date hereof).

     (xxii) Dividends. No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary’s capital stock, from repaying to the Company any loans or
advances to such subsidiary from the Company or from transferring any of such subsidiary’s
property or assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the General Disclosure Package and the Prospectus.

     (xxiii) Possession of Licenses and Permits. The Company and its subsidiaries
possess all licenses, certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary and material to the
conduct of their respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the General
Disclosure Package and the Prospectus (exclusive of any supplement thereto filed after the
date hereof).

     (xxiv) Accounting Controls and Disclosure Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (a) transactions are executed in accordance with management’s
general or specific authorizations; (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (c) access to assets is permitted only in
accordance with management’s general or specific authorization; and (d) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as described in the
General Disclosure Package and the Prospectus, since the end of the Company’s most recent
audited fiscal year, there has been (I) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (II) no change in the
Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial
reporting.

     The Company and its consolidated subsidiaries employ disclosure controls and procedures
that are designed to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms, and is

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accumulated and communicated to the Company’s management, including its principal executive
officer or officers and principal financial officer or officers, as appropriate, to allow
timely decisions regarding disclosure.

     (xxv) Lock-up Agreements. The Company has obtained for the benefit of the
Underwriters the agreement (a “Lock-Up Agreement”), in the form set forth as
Exhibit A hereto, of each of its directors, and its Chief Executive Officer and
Chief Financial Officer.

     (xxvi) Absence of Manipulation. The Company has not taken, directly or
indirectly, any action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the 1934 Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of
the Securities.

     (xxvii) Compliance with the Sarbanes-Oxley Act. There is and has been no
failure on the part of the Company or any of the Company’s directors or officers, in their
capacities as such, to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith
(the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906
related to certifications.

     (xxviii) Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except where such non-compliance with Environmental
Laws, failure to receive required permits, licenses or other approvals, or liability would
not, individually or in the aggregate, have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the General Disclosure Package
and the Prospectus (exclusive of any supplement thereto filed after the date hereof).
Except as set forth in the General Disclosure Package and the Prospectus, neither the
Company nor any of the subsidiaries has been named as a “potentially responsible party”
under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as
amended.

     (xxix) ERISA. Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Section 302 of the United
States Employee Retirement Income Security Act of 1974 (“ERISA”) and the regulations and
published interpretations thereunder with respect to each “plan” (as defined in Section 3(3)
of ERISA and such regulations and published interpretations) in which employees of the
Company and its subsidiaries are eligible to participate and each such plan is in compliance
in all material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. The Company and its subsidiaries have not
incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for
the payment of premiums in the ordinary course) or to any such plan under Title IV of ERISA.

     (xxx) Pending Proceedings and Examinations. The Registration Statement is not
the subject of a pending proceeding or examination under Section 8(d) or 8(e) of the 1933
Act, and
the Company is not the subject of a pending proceeding under Section 8A of the 1933 Act
in connection with the offering of the Securities.

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     (xxxi) Foreign Corrupt Practices Act. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by the Company or any subsidiary of
the FCPA, including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer, payment,
promise to pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the FCPA and the
Company and its subsidiaries have conducted their businesses in compliance with the FCPA and
have instituted and maintain policies and procedures designed reasonably to ensure, and
which are reasonably expected to continue to ensure, continued compliance therewith.

     “FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder.

     (xxxii) Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance in all material respects
with applicable financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.

     (xxxiii) OFAC. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of the Company
or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary or other person or entity, for the
purpose of financing the activities of any subsidiary subject to, or any other person known
to the Company to be currently subject to, any U.S. sanctions administered by OFAC

     (xxxiv) Description of Securities and Indenture. The Securities, the Indenture
and the capital stock of the Company, including the Shares, conform in all material respects
to the description thereof contained in the General Disclosure Package and the Prospectus.

     (xxxv) Due Authorization of the Indenture and the Securities. The Indenture has
been duly authorized, executed and delivered by the Company, has been duly qualified under
the 1939 Act, and constitutes a legal, valid and binding instrument enforceable against the
Company in accordance with its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other laws
affecting creditors’ rights generally from time to time in effect and to general principles
of equity, including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether considered in a proceeding in equity or at
law); and the Securities have been duly authorized and, when executed and authenticated in
accordance with the provisions of the

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Indenture and delivered to and paid for by the Underwriters pursuant to this Agreement,
will constitute legal, valid and binding obligations enforceable against the Company in
accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium or other laws affecting
creditors’ rights generally from time to time in effect and to general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law); the Shares
issuable upon conversion of the Debentures have been duly authorized and validly reserved
for issuance upon conversion of the Debentures, and, upon conversion of the Debentures in
accordance with their terms and the terms of the Indenture, will be issued free of statutory
and contractual preemptive rights, resale rights, rights of first refusal and similar rights
and free of any voting restrictions (and will be free of any restriction, pursuant to the
Company’s charter or bylaws or any agreement or other instrument to which the Company is a
party, upon the transfer thereof), and are sufficient in number to meet the current
conversion requirements (assuming all conditions to such conversion have been satisfied);
such Shares, when so issued upon such conversion in accordance with the terms of the
Debentures and of the Indenture, will be duly and validly issued and fully paid and
nonassessable; and the certificates for such Shares will be in due and proper form.

     (b) Officer’s Certificates. Any certificate signed by any officer of the Company or
any of its subsidiaries delivered to the Representatives or to counsel for the Underwriters shall
be deemed a representation and warranty by the Company to each Underwriter as to the matters
covered thereby.

     SECTION 2. Sale and Delivery to Underwriters; Closing.

     (a) Securities. On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate principal amount of
Firm Debentures set forth in Schedule A opposite the name of such Underwriter, plus any additional
principal amount of Firm Debentures which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof.

     In addition, the Company hereby grants to the several Underwriters the option (the
“Over-Allotment Option”) to purchase, and upon the basis of the representations and
warranties and subject to the terms and conditions herein set forth, the Underwriters shall have
the right to purchase, severally and not jointly, from the Company, ratably in accordance with the
aggregate principal amount of Debentures to be purchased by each of them, all or a portion of the
Additional Debentures as may be necessary to cover over-allotments made in connection with the
offering of the Firm Debentures, at a purchase price set forth in Schedule B. The Over-Allotment
Option may be exercised by Jefferies & Company, Inc. on behalf of the several Underwriters at any
time and from time to time on or before the thirteenth day following the date of the Prospectus
Supplement by written notice to the Company. Such notice shall set forth the aggregate principal
amount of Additional Debentures as to which the Over-Allotment Option is being exercised and the
date and time when the Additional Debentures are to be delivered (any such date and time being
herein referred to as an “Additional Closing Time”); provided, however,
that no Additional Closing Time shall be earlier than the “Closing Time” (as defined below) nor
earlier than the second business day after the date on which the Over-Allotment Option shall have
been exercised nor later than the tenth business day after the date on which the Over-Allotment
Option shall have been exercised. The principal amount of Additional Debentures to be sold to each
Underwriter shall be the principal amount which bears the same proportion to the aggregate
principal amount of Additional Debentures being purchased as the principal amount of Debentures set
forth opposite the name of such
Underwriter on Schedule A hereto bears to the aggregate principal amount of
Debentures, subject to adjustment in accordance with Section 10 hereof.

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     (b) Payment. Payment of the purchase price for, and delivery of certificates for, the
Debentures shall be made at the offices of Dewey & LeBoeuf LLP, 1301 Avenue of the Americas, New
York, New York 10019, or at such other place as shall be agreed upon by the Representatives and the
Company, at 9:00 A.M. (Eastern time) on the third business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives and the Company (such
time and date of payment and delivery being herein called “Closing Time”). Payment of the purchase
price for the Additional Debentures shall be made at the Additional Closing Time in the same manner
and at the same office and time of day as the payment for the Firm Debentures. Electronic transfer
of the Additional Debentures shall be made to you at the additional time of purchase in such names
and in such denominations as you shall specify.

     Payment shall be made to the Company by wire transfer of immediately available funds to a bank
account designated by the Company, against delivery to the Representatives for the respective
accounts of the Underwriters of certificates for the Securities to be purchased by them. It is
understood that each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the Securities which it has
agreed to purchase. Jefferies & Company, Inc., individually and not as a representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase price for the
Securities to be purchased by any Underwriter whose funds have not been received by the Closing
Time, but such payment shall not relieve such Underwriter from its obligations hereunder.

     (c) Denominations; Registration. Certificates for the Securities shall be in such
denominations ($1,000 or integral multiples of $1,000 in excess thereof) and registered in such
names as the Representatives may request in writing at least one full business day before the
Closing Time. The Securities will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time) on the business
day prior to the Closing Time.

     SECTION 3. Covenants of the Company. The Company covenants with each Underwriter as
follows:

     (a) Compliance with Securities Regulations and Commission Requests; Payment of Filing Fees.
The Company, subject to Section 3(b), will comply with the requirements of Rule 430B and will
notify the Representatives immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement or new registration statement relating to
the Securities shall become effective, or any supplement or amendment to General Disclosure
Package, or any supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or the filing of a new registration statement or any
amendment or supplement to the Prospectus or any document incorporated by reference therein or
otherwise deemed to be a part thereof or for additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration Statement or such new
registration statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of
any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and
(v) if the Company becomes the subject of a proceeding under Section 8A of the 1933 Act in
connection with the offering of the Securities. The Company will effect the filings required under
Rule 424(b), in the manner and within the time period required by Rule 424(b) (without reliance on
Rule 424(b)(8)), and will

13

 

take such steps as it deems necessary to ascertain promptly whether the form of prospectus
supplement transmitted for filing under Rule 424(b) was received for filing by the Commission and,
in the event that it was not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment. The Company shall pay the required
Commission filing fees relating to the Securities within the time required by Rule 456(b)(1) (i) of
the 1933 Act Regulations without regard to the proviso therein and otherwise in accordance with
Rules 456(b) and 457(r) of the 1933 Act Regulations (including, if applicable, by updating the
“Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) either in a
post-effective amendment to the Registration Statement or on the cover page of a prospectus filed
pursuant to Rule 424(b)).

     (b) Filing of Amendments and Exchange Act Documents; Preparation of Final Term Sheet. For so
long as the Company is required by the 1933 Act to deliver a prospectus in connection with
transactions contemplated hereby, the Company will give the Representatives notice of its intention
to file or prepare any amendment to the Registration Statement or new registration statement
relating to the Securities or any amendment, supplement or revision to either any preliminary
prospectus (including any prospectus included in the Original Registration Statement or amendment
thereto at the time it became effective) or to the General Disclosure Package or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, and the Company will furnish the
Representatives with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object. The Company has given the
Representatives notice of any filings made pursuant to the 1934 Act or 1934 Act Regulations within
48 hours prior to the Applicable Time; the Company will give the Representatives notice of its
intention to make any such filing from the Applicable Time to the Closing Time and will furnish the
Representatives with copies of any such documents a reasonable amount of time prior to such
proposed filing and will not file or use any such document to which the Representatives or counsel
for the Underwriters shall object. The Company will prepare a final term sheet (the “Final Term
Sheet”) reflecting the final terms of the Securities, in form and substance satisfactory to the
Representatives, and shall file such Final Term Sheet as an “issuer free writing prospectus”
pursuant to Rule 433 prior to the close of business two business days after the date hereof;
provided that the Company shall furnish the Representatives with copies of any such Final Term
Sheet a reasonable amount of time prior to such proposed filing and will not use or file any such
document to which the Representatives or counsel to the Underwriters shall object.

     (c) Delivery of Registration Statements. The Company has furnished or will deliver to the
Representatives and counsel for the Underwriters, without charge, signed or photo copies of the
Original Registration Statement and of each amendment thereto (including exhibits filed therewith
or incorporated by reference therein and documents incorporated or deemed to be incorporated by
reference therein or otherwise deemed to be a part thereof) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives, without charge, a conformed
copy of the Original Registration Statement and of each amendment thereto (without exhibits) for
each of the Underwriters. The copies of the Original Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

     (d) Delivery of Prospectuses. The Company has delivered to each Underwriter, without charge,
as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

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     (e) Continued Compliance with Securities Laws. The Company will comply with the 1933 Act and
the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the 1939
Act Regulations so as to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the General Disclosure Package and the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which it is necessary, in
the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement
or amend or supplement the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such
time to amend the Registration Statement or to file a new registration statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment, supplement or new registration statement as may be necessary to correct such
statement or omission or to comply with such requirements, the Company will use its best efforts to
have such amendment or new registration statement declared effective as soon as practicable (if it
is not an automatic shelf registration statement with respect to the Securities) and the Company
will furnish to the Underwriters such number of copies of such amendment, supplement or new
registration statement as the Underwriters may reasonably request. If at any time following
issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a
result of which such Issuer Free Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement (or any other registration statement relating
to the Securities) or the Statutory Prospectus or any preliminary prospectus or included or would
include an untrue statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, the Company will promptly notify Jefferies & Company, Inc.
and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to
eliminate or correct such conflict, untrue statement or omission.

     (f) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from date hereof; provided,
however, that the Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or so subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company will also supply the Underwriters
with such information as is necessary for the determination of the legality of the Securities for
investment under the laws of such jurisdictions as the Underwriters may request.

     (g) Rule 158. The Company will timely file such reports pursuant to the 1934 Act as are
necessary in order to make generally available to its securityholders as soon as practicable an
earnings statement for the purposes of, and to provide to the Underwriters the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

     (h) Use of Proceeds. The Company will use the net proceeds received by it from the sale of
the Securities in the manner specified in the General Disclosure Package and the Prospectus under
“Use of Proceeds.”

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     (i) Restriction on Sale of Similar Securities. During the period commencing on and including
the date hereof and ending on and including the 60th day following the date of the Prospectus (as
the same may be extended as described below, the “Lock-up Period”), the Company will not, without
the prior written consent of Jefferies & Company, Inc. (which consent may be withheld at the sole
discretion of Jefferies & Company, Inc.), directly or indirectly, sell (including, without
limitation, any short sale), offer, contract or grant any option to sell, pledge, transfer or
establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the 1934 Act,
or otherwise dispose of or transfer, or announce the offering of, or file any registration
statement under the 1933 Act in respect of, any Common Stock, options, rights or warrants to
acquire Common Stock or securities exchangeable or exercisable for or convertible into Common Stock
(other than as contemplated by this Agreement with respect to the Securities) or publicly announce
the intention to do any of the foregoing; provided, however, that the Company may issue Common
Stock or options to purchase Common Stock, or issue Common Stock upon exercise of options, pursuant
to any stock option, stock bonus or other stock plan or arrangement described in the Prospectus.
Notwithstanding the foregoing, if (i) during the last 17 days of the Lock-up Period, the Company
issues an earnings release or material news or a material event relating to the Company occurs or
(ii) prior to the expiration of the Lock-up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the Lock-up Period, then in
each case the Lock-up Period will be extended until the expiration of the 18-day period beginning
on the date of the issuance of the earnings release or the occurrence of the material news or
material event, as applicable, unless Jefferies & Company, Inc. waives, in writing, such extension
(which waiver may be withheld at the sole discretion of Jefferies & Company, Inc.), except that
such extension will not apply if, (i) within three business days prior to the 15th calendar day
before the last day of the Lock-up Period, the Company delivers a certificate, signed by the Chief
Financial Officer or Chief Executive Officer of the Company, certifying on behalf of the Company
that (i) the Shares are “actively traded securities” (as defined in Regulation M), (ii) the Company
meets the applicable requirements of paragraph (a)(1) of Rule 139 under the Securities Act in the
manner contemplated by NASD Conduct Rule 2711(f)(4), and (iii) the provisions of NASD Conduct
Rule 2711(f)(4) are not applicable to any research reports relating to the Company published or
distributed by any of the Underwriters during the 15 days before or after the last day of the
Lock-up Period (before giving effect to such extension). The Company will provide the
Representatives with prior notice of any such announcement that gives rise to an extension of the
Lock-up Period.

     (j) Reporting Requirements. The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.

     (k) Issuer Free Writing Prospectuses. The Company represents and agrees that, unless it
obtains the prior consent of the Representative, and each Underwriter represents and agrees that,
unless it obtains the prior consent of the Company and the Representative, it has not made and will
not make any offer relating to the Securities or the Shares that would constitute an “issuer free
writing prospectus,” as defined in Rule 433, or that would otherwise constitute a “free writing
prospectus,” as defined in Rule 405, required to be filed with the Commission; provided, however,
that prior to the preparation of the Final Term Sheet in accordance with Section 3(b), the
Underwriters are authorized to use the information with respect to the final terms of the
Securities in communications conveying information relating to the offering to investors. Any such
free writing prospectus consented to by the Company and the Representative is hereinafter referred
to as a “Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees
that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,”
as defined in Rule 433, and has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission
where required, legending and record keeping.

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     (l) Listing of Shares. The Company will use its best efforts to cause the Shares issuable upon
conversion of the Debentures to be listed on the New York Stock Exchange and to maintain such
listing.

     (m) Transfer Agent and Registrar. The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar for the Common Stock.

     (n) Reservation of Shares. The Company will at all times reserve and keep available, free of
preemptive rights, shares of Common Stock in an amount sufficient to satisfy the Company’s
obligations to issue Shares upon conversion of the Debentures.

     SECTION 4. Payment of Expenses.

     (a) Expenses. The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as originally filed and of
each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery of the Securities or
the Shares, (iii) the preparation, issuance and delivery of the certificates for the Securities to
the Underwriters, (iv) the fees and disbursements of the Company’s counsel, accountants and other
advisors, (v) the qualification of the Securities and the Shares under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection therewith and in connection
with the preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Permitted Free Writing
Prospectus and of the Prospectus and any amendments or supplements thereto and any cost associated
with electronic delivery of any of the foregoing by the Underwriters to investors, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky Survey and any
supplement thereto, (viii) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the Indenture and the Securities, (ix)
the costs and expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the Securities, including without limitation,
expenses associated with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations, travel and lodging expenses of
the Representatives and officers of the Company and any such consultants, and the cost of aircraft
and other transportation chartered in connection with the road show, (x) any fees payable in
connection with the rating of the Securities and (xi) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection with, the review by
the Financial Industry Regulatory Authority, Inc. (“FINRA”) of the terms of the sale of the
Securities.

     (b) Termination of Agreement. If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall reimburse
the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.

     SECTION 5. Conditions of Underwriters’ Obligations. The obligations of the several
Underwriters hereunder are subject to the accuracy of the representations and warranties of the
Company contained in Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the performance by the
Company of its covenants and other obligations hereunder, and to the following further conditions:

     (a) Effectiveness of Registration Statement; Filing of Prospectus; Payment of Filing Fee. The
Registration Statement has become effective and at Closing Time no stop order suspending the

17

 

effectiveness of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the reasonable satisfaction
of counsel to the Underwriters. A prospectus containing the Rule 430B Information shall have been
filed with the Commission in the manner and within the time period required by Rule 424(b) without
reliance on Rule 424(b)(8) (or a post-effective amendment providing such information shall have
been filed and become effective in accordance with the requirements of Rule 430B). The Company
shall have paid the required Commission filing fees relating to the Securities and the Shares
within the time period required by Rule 456(1)(i) of the 1933 Act Regulations without regard to the
proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act
Regulations and, if applicable, shall have updated the “Calculation of Registration Fee” table in
accordance with Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration
Statement or on the cover page of a prospectus filed pursuant to Rule 424(b).

     (b) Opinion of Counsel for Company. At Closing Time, the Representatives shall have received
the favorable opinion, dated as of Closing Time, of Morgan, Lewis & Bockius LLP, counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letter for each of the other Underwriters to the effect set forth in
Exhibit A hereto and to such further effect as counsel to the Underwriters may reasonably request.

     (c) Opinion of Counsel for Underwriters. At Closing Time, the Representatives shall have
received the favorable opinion, dated as of Closing Time, of Dewey & LeBoeuf LLP, counsel for the
Underwriters, together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (v), (vii) and (viii) and the
last paragraph of Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the Representatives. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of public officials.

     (d) Officers’ Certificate. At Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the Prospectus or the General
Disclosure Package, any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and the Representatives
shall have received a certificate of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as though expressly made at
and as of Closing Time, (iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or, to their knowledge, contemplated by the
Commission.

     (e) Accountant’s Comfort Letter. At the time of the execution of this Agreement, the
Representatives shall have received from KPMG LLP a letter dated such date, in form and substance
satisfactory to the Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement, the preliminary
prospectus and the Prospectus.

18

 

     (f) Bring-down Comfort Letter. At Closing Time, the Representatives shall have received from
KPMG LLP a letter, dated as of Closing Time, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (f) of this Section, except that the specified date
referred to shall be a date not more than five business days prior to Closing Time.

     (g) Maintenance of Rating. At Closing Time, the Securities shall be rated at least Baa2
(negative outlook) by Moody’s Investor’s Service Inc., BBB (negative outlook) by Fitch Ratings and
BBB (negative outlook) by Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc. Since
the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to
the Securities or any of the Company’s other debt securities by any “nationally recognized
statistical rating agency”, as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act, and, except for the negative outlook referred to above, no such
organization shall have publicly announced that it has under surveillance or review its rating of
the Securities or any of the Company’s other debt securities.

     (h) No Objection. FINRA has confirmed that it has not raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.

     (i) Listing of Shares. The Shares shall have been approved for listing on the New York Stock
Exchange, subject only to notice of issuance.

     (j) Lock-Up Agreements. The Underwriters shall have received each of the signed Lock-Up
Agreements referred to in Section 1(a)(xxv) hereof, and each such Lock-Up Agreement shall be in
full force and effect at the Closing Time and the Additional Closing Time, as the case may be.

     (k) Additional Documents. At Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities and the issuance of the Shares as herein
contemplated, or in order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Securities and the Shares as herein
contemplated shall be satisfactory in form and substance to the Representatives and counsel for the
Underwriters.

     (l) Termination of Agreement. If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing Time, and such
termination shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in
full force and effect.

     SECTION 6. Indemnification.

     (a) Indemnification of Underwriters. (1) The Company agrees to indemnify and hold harmless
each Underwriter, its affiliates, as such term is defined in Rule 501(b) under the 1933 Act (each,
an “Affiliate”), its employees and selling agents and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:

     (i) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising out of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), including the Rule 430B
Information, or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or arising out of
any untrue

19

 

statement or alleged untrue statement of a material fact contained in any preliminary
prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;

     (ii) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company;

     (iii) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by Jefferies & Company, Inc.), reasonably incurred in
investigating, preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under (i) or (ii)
above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Jefferies & Company, Inc. expressly
for use in the Registration Statement (or any amendment thereto), including the Rule 430B
Information or any preliminary prospectus any Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto).

     (2) Insofar as this indemnity agreement may permit indemnification for liabilities under the
1933 Act of any person who is a partner of an Underwriter or who controls an underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and who, at the date of this
Agreement, is a director or officer of the Company or controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, such indemnity agreement is subject to
the undertaking of the Company in the Registration Statement under Item 17 “Undertakings.”

     (b) Indemnification of Company, Directors and Officers. Each Underwriter severally agrees to
indemnify and hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)(1) of this
Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment thereto), including
the Rule 430B Information or any preliminary prospectus, any Issuer Free Writing Prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Jefferies & Company, Inc.
expressly for use therein.

     (c) Actions against Parties; Notification. Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. In the case of parties
indemnified pursuant to Section 6(a)(1) above, counsel to the indemnified parties shall be selected
by Jefferies & Company, Inc.,

20

 

and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

     (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(1) (ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement.

     SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of
any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying
party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the Underwriters on
the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.

     The relative benefits received by the Company on the one hand and the Underwriters on the
other hand in connection with the offering of the Securities pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by the Company and the
total underwriting discount received by the Underwriters, in each case as set forth on the cover of
the Prospectus bear to the aggregate initial public offering price of the Securities as set forth
on the cover of the Prospectus.

     The relative fault of the Company on the one hand and the Underwriters on the other hand shall
be determined by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.

21

 

     The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred
to above in this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged
omission.

     Notwithstanding the provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.

     No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.

     For purposes of this Section 7, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s
Affiliates, employees and selling agents shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution
as the Company. The Underwriters’ respective obligations to contribute pursuant to this Section 7
are several in proportion to the principal amount of Securities set forth opposite their respective
names in Schedule A hereto and not joint.

     SECTION 8. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in certificates of
officers of the Company or any of its subsidiaries submitted pursuant hereto, shall remain
operative and in full force and effect regardless of (i) any investigation made by or on behalf of
any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company, and (ii) delivery of and payment for
the Securities.

     SECTION 9. Termination of Agreement.

     (a) Termination; General. The Representatives may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since the time of execution
of this Agreement or since the respective dates as of which information is given in the Prospectus
(exclusive of any supplement thereto filed after the date hereof) or the General Disclosure
Package, any material adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the effect of which is such
as to make it, in the judgment of the Representatives, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the Commission or the New
York Stock Exchange,

22

 

or if trading generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority, or a material disruption has occurred in
commercial banking or securities settlement, or (iv) a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United States, or (v) if a
banking moratorium has been declared by either Federal or New York authorities.

     (b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination
shall be without liability of any party to any other party except as provided in Section 4 hereof,
and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.

     SECTION 10. Default by One or More of the Underwriters. If one or more of the
Underwriters shall fail at Closing Time to purchase the Firm Debentures which it or they are
obligated to purchase under this Agreement (the “Defaulted Debentures”), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of
the Defaulted Debentures in such amounts as may be agreed upon and upon the terms herein set forth;
if, however, the Representatives shall not have completed such arrangements within such 24-hour
period, then:

          (a) if the number of Defaulted Debentures does not exceed 10% of the aggregate principal
amount of the Firm Debentures to be purchased hereunder, each of the non-defaulting Underwriters
shall be obligated, severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or

          (b) if the number of Defaulted Debentures exceeds 10% of the aggregate principal amount of the
Firm Debentures to be purchased hereunder, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.

     No action taken pursuant to this Section shall relieve any defaulting Underwriter from
liability in respect of its default.

     In the event of any such default which does not result in a termination of this Agreement,
either the Representatives or the Company shall have the right to postpone Closing Time for a
period not exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used herein, the term
“Underwriter” includes any person substituted for an Underwriter under this Section 10.

     SECTION 11. Tax Disclosure. Notwithstanding any other provision of this Agreement,
immediately upon commencement of discussions with respect to the transactions contemplated hereby,
the Company (and each employee, representative or other agent of the Company) may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind (including opinions or
other tax analyses) that are provided to the Company relating to such tax treatment and tax
structure. For purposes of the foregoing, the term “tax treatment” is the purported or claimed
federal income tax treatment of the transactions contemplated hereby, and the term “tax structure”
includes any fact that may be relevant to understanding the purported or claimed federal income tax
treatment of the transactions contemplated hereby.

23

 

     SECTION 12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication. Notices to the Underwriters shall be directed to the Representatives through
Jefferies & Company, Inc., 520 Madison Avenue, 12th Floor, New York, New York 10022, attention:
General Counsel, Investment Bank; and notices to the Company shall be directed to it at 520 Madison
Avenue, 12th Floor, New York, New York 10022, attention of the Legal Department.

     SECTION 13. No Advisory or Fiduciary Relationship. The Company acknowledges and
agrees that (a) the purchase and sale of the Securities pursuant to this Agreement, including the
determination of the public offering price of the Securities and any related discounts and
commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and
the several Underwriters, on the other hand, (b) in connection with the offering contemplated
hereby and the process leading to such transaction each Underwriter is and has been acting solely
as a principal and is not the agent or fiduciary of the Company, or its stockholders, creditors,
employees or any other party, (c) no Underwriter has assumed or will assume an advisory or
fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby
or the process leading thereto (irrespective of whether such Underwriter has advised or is
currently advising the Company on other matters) and no Underwriter has any obligation to the
Company with respect to the offering contemplated hereby except the obligations expressly set forth
in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the Company, and (e) the
Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the
offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory
and tax advisors to the extent it deemed appropriate.

     SECTION 14. Integration. This Agreement supersedes all prior agreements and
understandings (whether written or oral) between the Company and the Underwriters, or any of them,
with respect to the subject matter hereof.

     SECTION 15. Parties. This Agreement shall each inure to the benefit of and be binding
upon the Underwriters and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Company
and their respective successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of
such purchase.

     SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     SECTION 17. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

24

 

     SECTION 18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.

     SECTION 19. Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.

25

 

     If the foregoing is in accordance with your understanding of our agreement, please sign and
return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement between the Underwriters and the Company in accordance with its
terms.

	 	 	 	 	 
	 	Very truly yours,

JEFFERIES GROUP, INC.

 	 
	 	By:  	/s/ Roland T. Kelly 	 
	 	 	Name:  	Roland T. Kelly 	 
	 	 	Title:  	Assistant Secretary 	 
	 

CONFIRMED AND ACCEPTED,

     as of the date first above written:

JEFFERIES & COMPANY, INC.

CITIGROUP GLOBAL MARKETS INC.

J.P. MORGAN SECURITIES INC.

BNY MELLON CAPITAL MARKETS, LLC

U.S.BANCORP INVESTMENTS, INC.

BNP PARIBAS SECURITIES CORP.

DEUTSCHE BANK SECURITIES INC.

KEEFE, BRUYETTE & WOODS, INC.

	 	 	 	 	 
	By:

	 	Jefferies & Company, Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Robert Aberman 	 	 
	 

	 	 

Name: Robert Aberman
	 	 
	 

	 	Title: Managing Director	 	 
	 

	 	Authorized Signatory	 	 

26

 

Exhibit A

FORM OF LOCK-UP AGREEMENT

October  , 2009

Jefferies & Company, Inc.

520 Madison Avenue

New York, New York 10022

     Re: Jefferies Group, Inc.

Ladies and Gentlemen:

     The undersigned understands that you and the other several underwriters (the “Underwriters”)
propose to enter into a Purchase Agreement (the “Purchase Agreement”) with Jefferies Group, Inc., a
Delaware corporation (the “Company”), with respect to the public offering (the “Offering”) of the
Company’s Convertible Senior Debentures (the “Securities”). Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Purchase Agreement.

     In order to induce you to enter into the Purchase Agreement, the undersigned hereby agrees
that, without the prior written consent of Jefferies & Company, Inc., the undersigned will not,
during the period commencing on the date hereof and ending 60 days after the date of the prospectus
supplement relating to the Offering (the “Final Prospectus”), (1) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock, $0.0001 per share par value, of
the Company (the “Common Stock”) or any securities convertible into or exercisable or exchangeable
for Common Stock (including without limitation, Common Stock which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations of the Securities and
Exchange Commission and securities which may be issued upon exercise of a stock option or warrant)
or (2) enter into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. In addition, the undersigned agrees that, without the prior written consent of
Jefferies & Company, Inc., it will not, during the period commencing on the date hereof and ending
60 days after the date of the Final Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. Notwithstanding the foregoing, if (1) during the
last 17 days of the 60-day restricted period, the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the expiration of the
60-day restricted period, the Company announces that it will release earnings results during the
16-day period beginning on

Exhibit A-1

 

Exhibit A

the last day of the 60-day period, the restrictions imposed by this Letter Agreement shall continue
to apply until the expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.

     In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the
registration or transfer of the securities described herein, are hereby authorized to decline to
make any transfer of securities if such transfer would constitute a violation or breach of this
Letter Agreement. The undersigned further agrees that, for the 60-day restricted period, the
undersigned will not, without the prior written consent of Jefferies & Company, Inc., make any
demand for, or exercise any right with respect to, the registration of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock or any such securities.

     The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Letter Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.

     The undersigned understands that if the Purchase Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for and delivery of
the Securities to be sold thereunder, the undersigned shall be released form all obligations under
this Letter Agreement. The undersigned understands that the Underwriters are entering into the
Purchase Agreement and proceeding with the Offering in reliance upon this Letter Agreement.

     This Letter Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of laws principles thereof.

	 	 	 	 	 
	 

	 	Very truly yours,	 	 
	 
	 

	 	 
 

Name:
	 	 

Exhibit A-2

 

Exhibit A

SCHEDULE A

	 	 	 	 	 
	 	 	Principal	 
	 	 	Amount of	 
	Name
of Underwriter
	 	Debentures	 
	Jefferies & Company, Inc.
	 	$	90,000,000	 
	Citigroup Global Markets Inc.
	 	 	90,000,000	 
	J.P. Morgan Securities Inc.
	 	 	60,000,000	 
	BNY Mellon Capital Markets, LLC.
	 	 	25,500,000	 
	U.S. Bancorp Investments, Inc.
	 	 	12,000,000	 
	BNP Paribas Securities Corp.
	 	 	9,000,000	 
	Deutsche Bank Securities Inc.
	 	 	9,000,000	 
	Keefe, Bruyette & Woods, Inc.
	 	 	4,500,000	 
	 
	 	 	 
	 
	 	 	 	 
	Total
	 	$	300,000,000	 
	 
	 	 	 

Sch A-1

 

SCHEDULE B

JEFFERIES GROUP, INC.

$300,000,000 3.875% Convertible Senior Debentures due 2029

	1.	 	The initial public offering price of the Debentures shall be 100% of the
principal amount thereof, plus accrued interest, if any, from the date of issuance.
	 
	2.	 	The purchase price to be paid by the Underwriters for the Debentures shall be
97.75% of the principal amount thereof.
	 
	3.	 	The interest rate on the Debentures shall be 3.875 % per annum.
	 
	4.	 	The Initial Conversion Rate shall be 25.5076 shares of common stock per $1,000
principal amount of debentures.

Sch B-1

 

SCHEDULE C

1. Final Term Sheet, dated October 21, 2009

Sch C-1

 

Exhibit A

FORM OF OPINION OF COMPANY’S COUNSEL

TO BE DELIVERED PURSUANT TO

SECTION 5(b)

     (i) Each of the Company and the Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority to own or lease, as the case
may be, and to operate its properties and conduct its business as described in the General
Disclosure Package and the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each of the jurisdictions set forth on
Annex A attached hereto.

     (ii) All the outstanding shares of capital stock of the Subsidiary have been duly and
validly authorized and issued and are fully paid and nonassessable, and, except as otherwise
set forth in the General Disclosure Package and the Prospectus, all outstanding shares of
capital stock of the Subsidiary are owned by the Company either directly or through wholly
owned subsidiaries free and clear of any perfected security interest and, to the knowledge
of such counsel, after due inquiry, any other security interest, claim, lien or encumbrance.

     (iii) The Shares into which the Securities are convertible at the initial “Conversion
Rate” (as defined in the Indenture) plus the maximum number of additional shares identified
in the table under the caption “Description of Debentures—Adjustment to Shares Delivered
upon Conversion upon a Make-Whole Fundamental Change” in the Prospectus, assuming that the
conditions for such conversion have been satisfied, have been duly authorized and validly
reserved for issuance upon conversion of the Securities; and such Shares, when issued and
delivered upon conversion in accordance with the terms of the Securities and Indenture, will
be duly and validly authorized, fully paid and non-assessable and free of statutory
preemptive rights and, to our knowledge, contractual preemptive rights, resale rights,
rights of first refusal and similar rights.

     (iv) The Securities, the Indenture and the capital stock of the Company, including the
Shares, conform in all material respects to the description thereof contained in the General
Disclosure Package and the Prospectus.

     (v) The Indenture has been duly authorized, executed and delivered, has been duly
qualified under the 1939 Act, and constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance,
moratorium or other laws affecting creditors’ rights generally from time to time in effect
and to general principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether considered in a
proceeding in equity or at law); and the Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters pursuant to this Agreement, will constitute legal, valid
and binding obligations enforceable against the Company in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or other laws affecting creditors’

A-1

 

rights generally from time to time in effect and to general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law).

     (vi) (A) To the knowledge of such counsel, there is no pending or threatened action,
suit or proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or its or their property, of a
character required to be disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or other document required
to be filed as an exhibit thereto that is not filed as required.

          (B) The statements included or incorporated by reference in (I) the General Disclosure
Package and the Prospectus under the headings “Certain ERISA Considerations”, “Description
of the Debentures” and “Description of Securities We May Offer” and (II) the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008 under the headings “Part I -
Item 1. Business — Regulation” and “Part I — Item 3. — Legal Proceedings” insofar as such
statements summarize legal matters, agreements, documents or proceedings discussed therein,
are accurate and fair summaries of such legal matters, agreements, documents or proceedings.

          (C) The statements set forth in the General Disclosure Package and the Prospectus under
the heading “Material United States Federal Tax Considerations”, insofar as such statements
purport to describe certain federal tax laws of the United States, are accurate and complete
in all material respects.

IRS CIRCULAR 230 DISCLOSURE

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that
any U.S. federal tax advice contained herein does not deal with a taxpayer’s particular
circumstances. Further, it was written in support of the promotion, marketing or recommending of
the transaction or matter described herein. This opinion was not intended or written to be used,
and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.
Taxpayers should consult their own tax advisors regarding the tax consequences to them in their own
particular circumstances.

     (vii) The Registration Statement has become effective under the 1933 Act; any required
filing of each prospectus relating to the Securities (including the Prospectus, any
preliminary prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b) (without reference to Rule
424(b)(8)); any required filing of each Issuer Free Writing Prospectus pursuant to Rule 433
has been made in the manner and within the time period required by Rule 433(d); to the
knowledge of such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been instituted or
threatened, and the Registration Statement and the Prospectus (including without limitation
each deemed effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) or
the 1933 Act Regulations) (other than the financial statements and other financial or
statistical information contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable requirements of the 1933 Act,
the 1934 Act and the 1939 Act and the respective rules thereunder.

     (viii) This Agreement has been duly authorized, executed and delivered by the Company.

A-2

 

     (ix) The Company is not and, after giving effect to the offering and sale of the
Securities, the issuance of the Shares and the application of the proceeds thereof as
described in the General Disclosure Package and the Prospectus, will not be an “investment
company” as defined in the Investment Company Act of 1940, as amended.

     (x) No consent, approval, authorization, filing with or order of any court or
governmental agency or body is required in connection with the transactions contemplated in
the Purchase Agreement, except such as have been obtained under the 1933 Act and such as may
be required under the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner contemplated in this
Agreement and in the Prospectus and such other approvals (specified in such opinion) as have
been obtained.

     (xi) Neither the execution and delivery of the Indenture, the issue and sale of the
Securities, the issuance of the Shares, nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will conflict with,
result in a breach or violation of or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant to, (i) the charter or
by-laws of the Company or the Subsidiary, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument, known to such counsel, to which the Company or its
subsidiaries is a party or bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the Company or its
subsidiaries of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or its subsidiaries or
any of its or their properties, which violation or default would, in the case of
clauses (ii) and (iii) above, either individually or in the aggregate with all other
violations and defaults referred to in this paragraph (x) (if any), have a material adverse
effect on the condition, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the General Disclosure Package
and the Prospectus.

     In rendering such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the State of New York, the General Corporation Law of the
State of Delaware or the Federal laws of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for the Underwriters and (B) as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of the Company and public
officials.

     In addition, such counsel shall state that such counsel has participated in conferences with
officers and other representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the contents of the
Original Registration Statement and Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Original Registration Statement or Prospectus (except as and to the
extent stated in subparagraphs (iii) and (v) above), such counsel does not believe that the
Original Registration Statement or any amendment thereto (except for financial statements and
schedules and other financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which such counsel need make no statement), at the time such
Original Registration Statement or any such amendment became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be stated

A-3

 

therein or necessary to make the statements therein not misleading; that the Registration
Statement, including the Rule 430B Information (except for financial statements and schedules and
other financial data included or incorporated by reference therein or omitted therefrom and the
Form T-1, as to which such counsel need make no statement), at each deemed effective date with
respect to the Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act Regulations, contained an
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; or that the Prospectus or any
amendment or supplement thereto (except for financial statements and schedules and other financial
data included or incorporated by reference therein or omitted therefrom and the Form T-1, as to
which such counsel need make no statement), at the time the Prospectus was issued, at the time any
such amended or supplemented prospectus was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they were made, not
misleading. In addition, nothing has come to such counsel’s attention that would lead such counsel
to believe that the General Disclosure Package, other than the financial statements and schedules
and other financial data included or incorporated by reference therein or omitted therefrom, as to
which such counsel need make no statement, as of the Applicable Time, contained any untrue
statement of a material fact or omitted to state any material fact necessary in order to make the
statements therein, in the light of circumstances under which they were made, not misleading. With
respect to statements contained in the General Disclosure Package, any statement contained in any
of the constituent documents shall be deemed to be modified or superseded to the extent that any
information contained in subsequent constituent documents modifies or replaces such statement.

A-4

 

Annex A

	 	 	 
	Jefferies & Company, Inc.	 	Jefferies Group, Inc.
	Delaware

	 	Delaware
	California

	 	California
	New York

	 	New Yorkexv10w5

Exhibit 10.5

JABIL CIRCUIT, INC.

2002 STOCK INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract and
retain the best available personnel for positions of substantial responsibility, to provide
additional incentive to Employees and Consultants, and to promote the success of the Company’s
business. Awards granted under the Plan may be Incentive Stock Options, Nonstatutory Stock Options,
Stock Awards, Performance Units, Performance Shares or Stock Appreciation Rights.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means the Board or any Committee or person as shall be administering the
Plan, in accordance with Section 4 of the Plan.

          (b) “Applicable Law” means the legal requirements relating to the administration of the Plan
under applicable federal, state, local and foreign corporate, tax and securities laws, and the
rules and requirements of any stock exchange or quotation system on which the Common Stock is
listed or quoted.

          (c) “Award” means an Option, Stock Appreciation Right, Stock Award, Performance Unit or
Performance Share granted under the Plan.

          (d) “Award Agreement” means the agreement, notice and/or terms or conditions by which an Award
is evidenced, documented in such form (including by electronic communication) as may be approved by
the Administrator.

          (e) “Board” means the Board of Directors of the Company.

          (f) “Change in Control” means the happening of any of the following, unless otherwise provided
by the Award Agreement:

               (i) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the properties or assets of the Company and its subsidiaries
taken as a whole to any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than the Company or one of its subsidiaries;

               (ii) the adoption of a plan relating to the Company’s liquidation or dissolution;

               (iii) the consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any person other than the Company or its
subsidiaries, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than 50% of the combined voting power of the
Company’s voting stock or other voting stock into which the Company’s voting stock is
reclassified, consolidated, exchanged or changed, measured by voting power rather than
number of shares;

               (iv) the Company consolidates with, or merges with or into, any person, or any person
consolidates with, or merges with or into, the Company, in any such event pursuant to a
transaction in which any of the voting stock of the Company or such other person is
converted into or exchanged for cash, securities or other property, other than any such
transaction where the shares of voting stock of the Company outstanding immediately prior
to such transaction directly or indirectly constitute, or are converted into or exchanged
for, a majority of the voting stock of the surviving person immediately after giving effect
to such transaction; or

 

 

               (v) the first day on which a majority of the members of the Board are not Continuing
Directors. “Continuing Director” means, as of any date of determination with respect to any Award,
any member of the Board who (1) was a member of the Board on the Date of Grant of such Award; or
(2) was nominated for election or elected to the Board with the approval of a majority of the
continuing directors who were members of the Board at the time of such nomination or election.”

          (g) “Change in Control Price” means, as determined by the Board,

               (i) the highest Fair Market Value of a Share within the 60 day period immediately preceding
the date of determination of the Change in Control Price by the Board (the “60-Day Period”), or

               (ii) the highest price paid or offered per Share, as determined by the Board, in any bona fide
transaction or bona fide offer related to the Change in Control of the Company, at any time within
the 60-Day Period, or

               (iii) some lower price as the Board, in its discretion, determines to be a reasonable estimate
of the fair market value of a Share.

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

          (i) “Committee” means a Committee appointed by the Board in accordance with Section 4 of the
Plan.

          (j) “Common Stock” means the Common Stock, $.001 par value, of the Company.

          (k) “Company” means Jabil Circuit, Inc., a Delaware corporation.

          (l) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render services and who is compensated for such services, including without
limitation non-Employee Directors who are paid only a director’s fee by the Company or who are
compensated by the Company for their services as non-Employee Directors. In addition, as used
herein, “consulting relationship” shall be deemed to include service by a non-Employee Director as
such.

          (m) “Continuous Status as an Employee or Consultant” means that the employment or consulting
relationship is not interrupted or terminated by the Company, any Parent or Subsidiary. Continuous
Status as an Employee or Consultant shall not be considered interrupted in the case of (i) any
leave of absence approved in writing by the Board, an Officer, or a person designated in writing by
the Board or an Officer as authorized to approve a leave of absence, including sick leave, military
leave, or any other personal leave; provided, however, that for purposes of Incentive Stock
Options, any such leave may not exceed 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract (including certain Company policies) or statute, or (ii) transfers
between locations of the Company or between the Company, a Parent, a Subsidiary or successor of the
Company; or (iii) a change in the status of the Grantee from Employee to Consultant or from
Consultant to Employee.

          (n) “Covered Stock” means the Common Stock subject to an Award.

          (o) “Date of Grant” means the date on which the Administrator makes the determination granting
the Award, or such other later date as is determined by the Administrator. Notice of the
determination shall be provided to each Grantee within a reasonable time after the Date of Grant.

          (p) “Date of Termination” means the date on which a Grantee’s Continuous Status as an Employee
or Consultant terminates.

          (q) “Director” means a member of the Board.

          (r) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the
Code.

          (s) “Employee” means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s
fee by the Company shall be sufficient to constitute “employment” by the Company.

          (t) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (u) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

 

 

               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading
in Common Stock) on the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

               (ii) If the Common Stock is quoted on the NASDAQ System (but not on the National Market System
thereof) or is regularly quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;

               (iii) In the absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.

          (v) “Grantee” means an individual who has been granted an Award.

          (w) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

          (x) “Mature Shares” means Shares for which the holder thereof has good title, free and clear
of all liens and encumbrances, and that such holder either (i) has held for at least six months or
(ii) has purchased on the open market.

          (y) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.

          (z) “Officer” means a person who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.

          (aa) “Option” means a stock option granted under the Plan.

          (bb) “Parent” means a corporation, whether now or hereafter existing, in an unbroken chain of
corporations ending with the Company if each of the corporations other than the Company holds at
least 50 percent of the voting shares of one of the other corporations in such chain.

          (cc) “Performance Period” means the time period during which the performance goals established
by the Administrator with respect to a Performance Unit or Performance Share, pursuant to Section 9
of the Plan, must be met.

          (dd) “Performance Share” has the meaning set forth in Section 9 of the Plan.

          (ee) “Performance Unit” has the meaning set forth in Section 9 of the Plan.

          (ff) “Plan” means this 2002 Stock Incentive Plan.

          (gg) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.

          (hh) “Share” means a share of the Common Stock, as adjusted in accordance with Section 11 of
the Plan.

          (ii) “Stock Appreciation Right” or “SAR” has the meaning set forth in Section 7 of the Plan.

          (jj) “Stock Grant” means Shares that are awarded to a Grantee pursuant to Section 8 of the
Plan.

 

 

          (kk) “Subsidiary” means a corporation, domestic or foreign, of which not less than 50 percent
of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now
exists or is hereafter organized or acquired by the Company or a Subsidiary

     3. Stock Subject to the Plan. Subject to the provisions of Section 11 of the Plan and
except as otherwise provided in this Section 3, the maximum aggregate number of Shares that may be
subject to Awards under the Plan since the Plan became effective is 33,608,726, which includes
Shares that were available on August 31, 2008 to be subject to future Awards, plus Shares that were
subject to Awards on August 31, 2008, and all Shares issued prior to August 31, 2008. The Shares
may be authorized, but unissued, or reacquired Common Stock.

          If an Award expires or becomes unexercisable without having been exercised in full the
remaining Shares that were subject to the Award shall become available for future Awards under the
Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, if the payment
upon exercise of a SAR is in the form of Shares, the Shares subject to the SAR shall be counted
against the available Shares as one Share for every Share subject to the SAR, regardless of the
number of Shares used to settle the SAR upon exercise.

     4. Administration of the Plan.

          (a) Procedure.

               (i) Multiple Administrative Bodies. The Plan may be administered by different bodies
with respect to different groups of Employees and Consultants. Except as provided below, the Plan
shall be administered by (A) the Board or (B) a committee designated by the Board and constituted
to satisfy Applicable Law.

               (ii) Rule 16b-3. To the extent the Board or the Committee considers it desirable for
transactions relating to Awards to be eligible to qualify for an exemption under Rule 16b-3, the
transactions contemplated under the Plan shall be structured to satisfy the requirements for
exemption under Rule 16b-3.

               (iii) Section 162(m) of the Code. To the extent the Board or the Committee considers
it desirable for compensation delivered pursuant to Awards to be eligible to qualify for an
exemption from the limit on tax deductibility of compensation under Section 162(m) of the Code, the
transactions contemplated under the Plan shall be structured to satisfy the requirements for
exemption under Section 162(m) of the Code.

               (iv) Authorization of Officers to Grant Options. In accordance with Applicable Law,
the Board may, by a resolution adopted by the Board, authorize one or more Officers to designate
Officers and Employees (excluding the Officer so authorized) to be Grantees of Options and
determine the number of Options to be granted to such Officers and Employees; provided, however,
that the resolution adopted by the Board so authorizing such Officer or Officers shall specify the
total number and the terms (including the exercise price, which may include a formula by which such
price may be determined) of Options such Officer or Officers may so grant.

          (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee or an Officer, subject to the specific duties delegated by the Board to such
Committee or Committee, the Administrator shall have the authority, in its sole and absolute
discretion:

               (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(u) of
the Plan;

               (ii) to select the Consultants and Employees to whom Awards will be granted under the Plan;

               (iii) to determine whether, when, to what extent and in what types and amounts Awards are
granted under the Plan;

               (iv) to determine the number of shares of Common Stock to be covered by each Award granted
under the Plan;

               (v) to determine the forms of Award Agreements, which need not be the same for each grant or
for each Grantee, and which may be delivered electronically, for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any Award granted under the Plan. Such terms and conditions, which need not be the same for each
grant or for each

 

 

Grantee, include, but are not limited to, the exercise price, the time or times
when Options and SARs may be exercised (which may be based on performance criteria), the extent to
which vesting is suspended during a leave of absence, any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Award or the shares of
Common Stock relating thereto, based in each case on such factors as the Administrator shall
determine;

               (vii) to construe and interpret the terms of the Plan and Awards;

               (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including,
without limiting the generality of the foregoing, rules and regulations relating to the operation
and administration of the Plan to accommodate the specific requirements of local and foreign laws
and procedures;

               (ix) to modify or amend each Award (subject to Section 13 of the Plan). However, the
Administrator may not modify or amend any outstanding Option so as to specify a lower exercise
price or accept the surrender of an outstanding Option and authorize the granting of a new Option
with a lower exercise price in substitution for such surrendered Option;

               (x) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator;

               (xi) to determine the terms and restrictions applicable to Awards;

               (xii) to make such adjustments or modifications to Awards granted to Grantees who are
Employees of foreign Subsidiaries as are advisable to fulfill the purposes of the Plan or to comply
with Applicable Law;

               (xiii) to delegate its duties and responsibilities under the Plan with respect to sub-plans
applicable to foreign Subsidiaries, except its duties and responsibilities with respect to
Employees who are also Officers or Directors subject to Section 16(b) of the Exchange Act;

               (xiv) to provide any notice or other communication required or permitted by the Plan in either
written or electronic form; and

               (xv) to make all other determinations deemed necessary or advisable for administering the
Plan.

          (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Grantees and any other holders of Awards.

     5. Eligibility and General Conditions of Awards.

          (a) Eligibility. Awards other than Incentive Stock Options may be granted to Employees
and Consultants. Incentive Stock Options may be granted only to Employees. If otherwise eligible,
an Employee or Consultant who has been granted an Award may be granted additional Awards.

          (b) Maximum Term. Subject to the following provision, the term during which an Award
may be outstanding shall not extend more than ten years after the Date of Grant, and shall be
subject to earlier termination as specified elsewhere in the Plan or Award Agreement; provided,
however, that any deferral of a cash payment or of the delivery of Shares that is permitted or
required by the Administrator pursuant to Section 10 of the Plan may, if so permitted or required
by the Administrator, extend more than ten years after the Date of Grant of the Award to which the
deferral relates.

          (c) Award Agreement. To the extend not set forth in the Plan, the terms and conditions
of each Award, which need not be the same for each grant or for each Grantee, shall be set forth in
an Award Agreement. The Administrator, in its sole and absolute discretion, may require as a
condition to any Award Agreement’s effectiveness that the Award Agreement be executed by the
Grantee, including by electronic signature or other electronic indication of acceptance, and that the Grantee agree to such further terms and
conditions as specified in the Award Agreement.

 

 

          (d) Termination of Employment or Consulting Relationship. In the event that a
Grantee’s Continuous Status as an Employee or Consultant terminates (other than upon the Grantee’s
death or Disability), then, unless otherwise provided by the Award Agreement, and subject to
Section 11 of the Plan:

               (i) the Grantee may exercise his or her unexercised Option or SAR, but only within such period
of time as is determined by the Administrator, and only to the extent that the Grantee was entitled
to exercise it at the Date of Termination (but in no event later than the expiration of the term of
such Option or SAR as set forth in the Award Agreement). In the case of an Incentive Stock Option,
the Administrator shall determine such period of time (in no event to exceed three months from the
Date of Termination) when the Option is granted. If, at the Date of Termination, the Grantee is not
entitled to exercise his or her entire Option or SAR, the Shares covered by the unexercisable
portion of the Option or SAR shall revert to the Plan. If, after the Date of Termination, the
Grantee does not exercise his or her Option or SAR within the time specified by the Administrator,
the Option or SAR shall terminate, and the Shares covered by such Option or SAR shall revert to the
Plan. An Award Agreement may also provide that if the exercise of an Option following the Date of
Termination would be prohibited at any time because the issuance of Shares would violate Company
policy regarding compliance with Applicable Law, then the exercise period shall terminate on the
earlier of (A) the expiration of the term of the Option set forth in Section 6(b) of the Plan or
(B) the expiration of a period of 10 days after the Date of Termination during which the exercise
of the Option would not be in violation of such requirements;

               (ii) the Grantee’s Stock Awards, to the extent forfeitable immediately before the Date of
Termination, shall thereupon automatically be forfeited;

               (iii) the Grantee’s Stock Awards that were not forfeitable immediately before the Date of
Termination shall promptly be settled by delivery to the Grantee of a number of unrestricted Shares
equal to the aggregate number of the Grantee’s vested Stock Awards;

               (iv) any Performance Shares or Performance Units with respect to which the Performance Period
has not ended as of the Date of Termination shall terminate immediately upon the Date of
Termination.

          (e) Disability of Grantee. In the event that a Grantee’s Continuous Status as an
Employee or Consultant terminates as a result of the Grantee’s Disability, then, unless otherwise
provided by the Award Agreement:

               (i) the Grantee may exercise his or her unexercised Option or SAR at any time within 12 months
from the Date of Termination, but only to the extent that the Grantee was entitled to exercise the
Option or SAR at the Date of Termination (but in no event later than the expiration of the term of
the Option or SAR as set forth in the Award Agreement). If, at the Date of Termination, the Grantee
is not entitled to exercise his or her entire Option or SAR, the Shares covered by the
unexercisable portion of the Option or SAR shall revert to the Plan. If, after the Date of
Termination, the Grantee does not exercise his or her Option or SAR within the time specified
herein, the Option or SAR shall terminate, and the Shares covered by such Option or SAR shall
revert to the Plan.

               (ii) the Grantee’s Stock Awards, to the extent forfeitable immediately before the Date of
Termination, shall thereupon automatically be forfeited;

               (iii) the Grantee’s Stock Awards that were not forfeitable immediately before the Date of
Termination shall promptly be settled by delivery to the Grantee of a number of unrestricted Shares
equal to the aggregate number of the Grantee’s vested Stock Awards;

               (iv) any Performance Shares or Performance Units with respect to which the Performance Period
has not ended as of the Date of Termination shall terminate immediately upon the Date of
Termination.

          (f) Death of Grantee. In the event of the death of an Grantee, then, unless otherwise
provided by the Award Agreement,

               (i) the Grantee’s unexercised Option or SAR may be exercised at any time within 12 months
following the date of death (but in no event later than the expiration of the term of such Option
or SAR as set forth in the Award Agreement), by the Grantee’s estate or by a person who acquired the right to
exercise the Option or SAR by bequest or inheritance, but only to the extent that the Grantee was
entitled to exercise the Option or SAR at the date of death. If, at the time of death, the Grantee
was not entitled to exercise his or her entire Option or SAR,

 

 

the Shares covered by the unexercisable portion of the Option or SAR shall immediately revert to the Plan. If, after death,
the Grantee’s estate or a person who acquired the right to exercise the Option or SAR by bequest or
inheritance does not exercise the Option or SAR within the time specified herein, the Option or SAR
shall terminate, and the Shares covered by such Option or SAR shall revert to the Plan.

               (ii) the Grantee’s Stock Awards, to the extent forfeitable immediately before the date of
death, shall thereupon automatically be forfeited;

               (iii) the Grantee’s Stock Awards that were not forfeitable immediately before the date of
death shall promptly be settled by delivery to the Grantee’s estate or a person who acquired the
right to hold the Stock Grant by bequest or inheritance, of a number of unrestricted Shares equal
to the aggregate number of the Grantee’s vested Stock Awards;

               (iv) any Performance Shares or Performance Units with respect to which the Performance Period
has not ended as of the date of death shall terminate immediately upon the date of death.

          (g) Buyout Provisions. Except as otherwise provided in this Section 5(g), the
Administrator may at any time offer to buy out, for a payment in cash or Shares, an Award
previously granted, based on such terms and conditions as the Administrator shall establish and
communicate to the Grantee at the time that such offer is made. No such buy out shall occur without
the prior approval or consent of the Company’s stockholders. Any such cash offer made to an Officer
or Director shall comply with the provisions of Rule 16b-3 relating to cash settlement of stock
appreciation rights. This provision is intended only to clarify the powers of the Administrator and
shall not in any way be deemed to create any rights on the part of Grantees to buyout offers or
payments.

          (h) Nontransferability of Awards.

               (i) Except as provided in Section 5(h)(iii) below, each Award, and each right under any Award,
shall be exercisable only by the Grantee during the Grantee’s lifetime, or, if permissible under
Applicable Law, by the Grantee’s guardian or legal representative.

               (ii) Except as provided in Section 5(h)(iii) below, no Award (prior to the time, if
applicable, Shares are issued in respect of such Award), and no right under any Award, may be
assigned, alienated, pledged, attached, sold or otherwise transferred to encumbered by a Grantee
otherwise than by will or by the laws of descent and distribution (or in the case of Stock Awards,
to the Company) and any such purported assignment, alienation, pledge, attachment, sale, transfer
or encumbrance shall be void and unenforceable against the Company or any Subsidiary; provided,
that the designation of a beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.

               (iii) To the extent and in the manner permitted by Applicable Law, and to the extent and in
the manner permitted by the Administrator, and subject to such terms and conditions as may be
prescribed by the Administrator, a Grantee may transfer an Award to:

                    (A) a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law of the Grantee (including adoptive relationships);

                    (B) any person sharing the employee’s household (other than a tenant or employee);

                    (C) a trust in which persons described in (A) and (B) have more than 50 percent of the
beneficial interest;

                    (D) a foundation in which persons described in (A) or (B) or the Grantee control the
management of assets; or

                    (E) any other entity in which the persons described in (A) or (B) or the Grantee own more than
50 percent of the voting interests;

provided such transfer is not for value. The following shall not be considered transfers for value:
a transfer under a domestic relations order in settlement of marital property rights, and a
transfer to an entity in which more than 50 percent of the voting interests are owned by persons
described in (A) above or the Grantee, in exchange for an interest in such entity.

 

 

     6. Stock Options.

          (a) Limitations.

               (i) Each Option shall be designated in the Award Agreement as either an Incentive Stock Option
or a Nonstatutory Stock Option. Any Option designated as an Incentive Stock Option:

                    (A) shall not have an aggregate Fair Market Value (determined for each Incentive Stock Option
at the Date of Grant) of Shares with respect to which Incentive Stock Options are exercisable for
the first time by the Grantee during any calendar year (under the Plan and any other employee stock
option plan of the Company or any Parent or Subsidiary (“Other Plans”)), determined in accordance
with the provisions of Section 422 of the Code, that exceeds $100,000 (the “$100,000 Limit”);

                    (B) shall, if the aggregate Fair Market Value of Shares (determined on the Date of Grant) with
respect to the portion of such grant that is exercisable for the first time during any calendar
year (“Current Grant”) and all Incentive Stock Options previously granted under the Plan and any
Other Plans that are exercisable for the first time during a calendar year (“Prior Grants”) would
exceed the $100,000 Limit, be exercisable as follows:

                         (1) The portion of the Current Grant that would, when added to any Prior Grants, be
exercisable with respect to Shares that would have an aggregate Fair Market Value (determined as of
the respective Date of Grant for such Options) in excess of the $100,000 Limit shall,
notwithstanding the terms of the Current Grant, be exercisable for the first time by the Grantee in
the first subsequent calendar year or years in which it could be exercisable for the first time by
the Grantee when added to all Prior Grants without exceeding the $100,000 Limit; and

                         (2) If, viewed as of the date of the Current Grant, any portion of a Current Grant could not
be exercised under the preceding provisions of this Section 6(a)(i)(B) during any calendar year
commencing with the calendar year in which it is first exercisable through and including the last
calendar year in which it may by its terms be exercised, such portion of the Current Grant shall
not be an Incentive Stock Option, but shall be exercisable as a separate Option at such date or
dates as are provided in the Current Grant.

               (ii) No Employee shall be granted, in any fiscal year of the Company, Options to purchase more
than 3,000,000 Shares. The limitation described in this Section 6(a)(ii) shall be adjusted
proportionately in connection with any change in the Company’s capitalization as described in
Section 11 of the Plan. If an Option is canceled in the same fiscal year of the Company in which it
was granted (other than in connection with a transaction described in Section 11 of the Plan), the
canceled Option will be counted against the limitation described in this Section 6(a)(ii).

          (b) Term of Option. The term of each Option shall be stated in the Award Agreement;
provided, however, that in the case of an Incentive Stock Option, the term shall be 10 years from
the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the
case of an Incentive Stock Option granted to a Grantee who, at the time the Incentive Stock Option
is granted, owns stock representing more than 10 percent of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be
five years from the date of grant or such shorter term as may be provided in the Award Agreement.

          (c) Option Exercise Price and Consideration.

               (i) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be determined by the Administrator and, except as otherwise provided
in this Section 6(c)(i), shall be no less than 100 percent of the Fair Market Value per Share on
the Date of Grant.

                    (A) In the case of an Incentive Stock Option granted to an Employee who on the Date of Grant
owns stock representing more than 10 percent of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110 percent
of the Fair Market Value per Share on the Date of Grant.

 

 

                    (B) Any Option that is (1) granted to a Grantee in connection with the acquisition
(“Acquisition”), however effected, by the Company of another corporation or entity (“Acquired
Entity”) or the assets thereof, (2) associated with an option to purchase shares of stock or other
equity interest of the Acquired Entity or an affiliate thereof (“Acquired Entity Option”) held by
such Grantee immediately prior to such Acquisition, and (3) intended to preserve for the Grantee
the economic value of all or a portion of such Acquired Entity Option, may be granted with such
exercise price as the Administrator determines to be necessary to achieve such preservation of
economic value.

                    (C) Any Option that is granted to a Grantee not previously employed by the Company, or a
Parent or Subsidiary, as a material inducement to the Grantee’s commencing employment with the
Company may be granted with such exercise price as the Administrator determines to be necessary to
provide such material inducement.

          (d) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any
conditions that must be satisfied before the Option may be exercised. An Option shall be
exercisable only to the extent that it is vested according to the terms of the Award Agreement.

          (e) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. The acceptable form of consideration may consist of any combination of cash,
personal check, wire transfer or, subject to the approval of the Administrator:

               (i) pursuant to rules and procedures approved by the Administrator, promissory note;

               (ii) Mature Shares;

               (iii) pursuant to procedures approved by the Committee, (A) through the sale of the Shares
acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an
irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay the exercise price, together with, if requested
by the Company, the amount of federal, state, local or foreign withholding taxes payable by the
Grantee by reason of such exercise, or (B) through simultaneous sale through a broker of Shares
acquired upon exercise; or

               (iv) such other consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Law.

          (f) Exercise of Option.

               (i) Procedure for Exercise; Rights as a Stockholder.

                    (A) Any Option granted hereunder shall be exercisable according to the terms of the Plan and
at such times and under such conditions as determined by the Administrator and set forth in the
Award Agreement.

                    (B) An Option may not be exercised for a fraction of a Share.

                    (C) An Option shall be deemed exercised when the Company receives:

                         (1) written or electronic notice of exercise (in accordance with the Award Agreement and any
action taken by the Administrator pursuant to Section 4(b) of the Plan or otherwise) from the
person entitled to exercise the Option, and

                         (2) full payment for the Shares with respect to which the Option is exercised. Full payment
may consist of any consideration and method of payment authorized by the Administrator and
permitted by the Award Agreement and the Plan.

 

 

                         (3) Shares issued upon exercise of an Option shall be issued in the name of the Grantee or, if
requested by the Grantee, in the name of the Grantee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.

                         (4) Exercising an Option in any manner shall decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

     7. Stock Appreciation Rights.

          (a) Grant of SARs. Subject to the terms and conditions of the Plan, the Administrator
may grant SARs in tandem with an Option or alone and unrelated to an Option. Tandem SARs shall
expire no later than the expiration of the underlying Option.

          (b) Limitation. No Employee shall be granted, in any fiscal year of the Company, SARs
covering more than 3,000,000 Shares. The limitation described in this Section 7(b) shall be
adjusted proportionately in connection with any change in the Company’s capitalization as described
in Section 11 of the Plan. If a SAR is canceled in the same fiscal year of the Company in which it
was granted (other than in connection with a transaction described in Section 11 of the Plan), the
canceled SAR will be counted against the limitation described in this Section 7(b).

          (c) Exercise of SARs. SARs shall be exercised by the delivery of a written or
electronic notice of exercise to the Company (in accordance with the Award Agreement and any action
taken by the Administrator pursuant to Section 4(b) of the Plan or otherwise), setting forth the
number of Shares over which the SAR is to be exercised. Tandem SARs may be exercised:

               (i) with respect to all or part of the Shares subject to the related Option upon the surrender
of the right to exercise the equivalent portion of the related Option;

               (ii) only with respect to the Shares for which its related Option is then exercisable; and

               (iii) only when the Fair Market Value of the Shares subject to the Option exceeds the exercise
price of the Option.

The value of the payment with respect to the tandem SAR may be no more than 100 percent of the
difference between the exercise price of the underlying Option and the Fair Market Value of the
Shares subject to the underlying Option at the time the tandem SAR is exercised.

          (d) Payment of SAR Benefit. Upon exercise of a SAR, the Grantee shall be entitled to
receive payment from the Company in an amount determined by multiplying:

               (i) the excess of the Fair Market Value of a Share on the date of exercise over the SAR
exercise price; by

               (ii) the number of Shares with respect to which the SAR is exercised;

provided, that the Administrator may provide in the Award Agreement that the benefit payable on
exercise of an SAR shall not exceed such percentage of the Fair Market Value of a Share on the Date
of Grant as the Administrator shall specify. As determined by the Administrator, the payment upon
exercise of an SAR may be in cash, in Shares that have an aggregate Fair Market Value (as of the
date of exercise of the SAR) equal to the amount of the payment, or in some combination thereof, as
set forth in the Award Agreement.

     8. Stock Awards.

 

 

          (a) Authorization to Grant Stock Awards. Subject to the terms and conditions of the
Plan, the Administrator may grant Stock Awards to Employees or Consultants from time to time. A
Stock Award may be made in Shares or denominated in units representing rights to receive Shares.
Each Stock Award shall be evidenced by an Award Agreement that shall set forth the conditions, if
any, which will need to be timely satisfied before the Stock Award will be effective and the
conditions, if any, under which the Grantee’s interest in the related Shares or units will be
forfeited. A Stock Award made in Shares that are subject to forfeiture conditions and/or other
restrictions may be designated as an Award of ‘Restricted Stock.’ A Stock Award denominated in
units that are subject to forfeiture conditions and/or other restrictions may be designated as an
Award of ‘Restricted Stock Units.’ No more than 3,000,000 Shares or units may be granted pursuant
to Stock Awards to an individual Grantee in any calendar year.

          (b) Code Section 162(m) Provisions.

               (i) Notwithstanding any other provision of the Plan, if the Compensation Committee of the
Board (the “Compensation Committee”) determines at the time a Stock Award is granted to a Grantee
that such Grantee is, or may be as of the end of the tax year for which the Company would claim a
tax deduction in connection with such Stock Award, a “covered employee” within the meaning of
Section 162(m)(3) of the Code, and to the extent the Compensation Committee considers it desirable
for compensation delivered pursuant to such Stock Award to be eligible to qualify for an exemption
from the limit on tax deductibility of compensation under Section 162(m) of the Code, then the
Compensation Committee may provide that this Section 8(b) is applicable to such Stock Award under
such terms as the Compensation Committee shall determine.

               (ii) If a Stock Award is subject to this Section 8(b), then the lapsing of restrictions
thereon and the distribution of Shares pursuant thereto, as applicable, shall be subject to
satisfaction of one, or more than one, objective performance targets. The Compensation Committee
shall determine the performance targets that will be applied with respect to each Stock Award
subject to this Section 8(b) at the time of grant, but in no event later than 90 days after the
commencement of the period of service to which the performance target(s) relate. The performance
criteria applicable to Stock Awards subject to this Section 8(b) will be one or more of the
following criteria: (A) stock price; (B) market share; (C) sales; (D) earnings per share, core
earnings per share or variations thereof; (E) return on equity; (F) costs; (G) revenue; (H) cash to
cash cycle; (I) days payables outstanding; (J) days of supply; (K) days sales outstanding; (L) cash
flow; (M) operating income; (N) profit after tax; (O) profit before tax; (P) return on assets; (Q)
return on sales; (R) inventory turns; (S) invested capital; (T) net operating profit after tax; (U)
return on invested capital; (V) total shareholder return; (W) earnings; (X) return on equity or
average shareowners’ equity; (Y) total shareowner return; (Z) return on capital; (AA) return on
investment; (BB) income or net income; (CC) operating income or net operating income; (DD)
operating profit or net operating profit; (EE) operating margin; (FF) return on operating revenue;
(GG) contract awards or backlog; (HH) overhead or other expense reduction; (II) growth in
shareowner value relative to the moving average of the S&P 500 Index or a peer group index; (JJ)
credit rating; (KK) strategic plan development and implementation; (LL) net cash provided by
operating activities; (MM) gross margin; (NN) economic value added; (OO) customer satisfaction;
(PP) financial return ratios; and/or (QQ) market performance.

               (iii) Notwithstanding any contrary provision of the Plan, the Compensation Committee may not
increase the number of shares granted pursuant to any Stock Award subject to this Section 8(b), nor
may it waive the achievement of any performance target established pursuant to this Section 8(b).

               (iv) Prior to the payment of any Stock Award subject to this Section 8(b), the Compensation
Committee shall certify in writing that the performance target(s) applicable to such Stock Award
was met.

               (v) The Compensation Committee shall have the power to impose such other restrictions on Stock
Awards subject to this Section 8(b) as it may deem necessary or appropriate to ensure that such
Stock Awards satisfy all requirements for “performance-based compensation” within the meaning of
Code section 162(m)(4)(C) of the Code, the regulations promulgated thereunder, and any successors
thereto.

     9. Performance Units and Performance Shares.

          (a) Grant of Performance Units and Performance Shares. Subject to the terms of the
Plan, the Administrator may grant Performance Units or Performance Shares to any Employee or
Consultant in such amounts and upon such terms as the Administrator shall determine.

 

 

          (b) Value/Performance Goals. Each Performance Unit shall have an initial value that is
established by the Administrator on the Date of Grant. Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the Date of Grant. The Administrator shall set
performance goals that, depending upon the extent to which they are met, will determine the number
or value of Performance Units or Performance Shares that will be paid to the Grantee.

          (c) Payment of Performance Units and Performance Shares.

               (i) Subject to the terms of the Plan, after the applicable Performance Period has ended, the
holder of Performance Units or Performance Shares shall be entitled to receive a payment based on
the number and value of Performance Units or Performance Shares earned by the Grantee over the
Performance Period, determined as a function of the extent to which the corresponding performance
goals have been achieved.

               (ii) If a Grantee is promoted, demoted or transferred to a different business unit of the
Company during a Performance Period, then, to the extent the Administrator determines appropriate,
the Administrator may adjust, change or eliminate the performance goals or the applicable
Performance Period as it deems appropriate in order to make them appropriate and comparable to the
initial performance goals or Performance Period.

          (d) Form and Timing of Payment of Performance Units and Performance Shares. Payment of
earned Performance Units or Performance Shares shall be made in a lump sum following the close of
the applicable Performance Period. The Administrator may pay earned Performance Units or
Performance Shares in cash or in Shares (or in a combination thereof) that have an aggregate Fair
Market Value equal to the value of the earned Performance Units or Performance Shares at the close
of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed
appropriate by the Administrator. The form of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.

     10. Deferral of Receipt of Payment. The Administrator may permit or require a Grantee
to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due by
virtue of the exercise of an Option or SAR, the grant of or the lapse or waiver of restrictions
with respect to Stock Awards or the satisfaction of any requirements or goals with respect to
Performance Units or Performance Shares. If any such deferral is required or permitted, the
Administrator shall establish such rules and procedures for such deferral.

     11. Adjustments Upon Changes in Capitalization or Change of Control.

          (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of Covered Shares, and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Award, as well as the price
per share of Covered Stock, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made
by the Board, whose determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Covered Stock.

          (b) Change in Control. In the event of a Change in Control, then the following
provisions shall apply:

               (i) Vesting. Any Award outstanding on the date such Change in Control is determined to
have occurred that is not yet exercisable and vested on such date:

                    (A) shall become fully exercisable and vested on the first anniversary of the date of such
Change in Control (the “Change in Control Anniversary”) if the Grantee’s Continuous Status as an
Employee or Consultant does not terminate prior to the Change in Control Anniversary;

 

 

                    (B) shall become fully exercisable and vested on the Date of Termination if the Grantee’s
Continuous Status as an Employee or Consultant terminates prior to the Change in Control
Anniversary as a result of termination by the Company without Cause or resignation by the Grantee
for Good Reason; or

                    (C) shall not become full exercisable and vested if the Grantee’s Continuous Status as an
Employee or Consultant terminates prior to the Change in Control Anniversary as a result of
termination by the Company for Cause or resignation by the Grantee without Good Reason.

For purposes of this Section 11(b)(i), the following definitions shall apply:

                    (D) “Cause” means:

                         (1) A Grantee’s conviction of a crime involving fraud or dishonesty; or

                         (2) A Grantee’s continued willful or reckless material misconduct in the performance of the
Grantee’s duties after receipt of written notice from the Company concerning such misconduct;

provided, however, that for purposes of Section 11(b)(i)(D)(2), Cause shall not include any one or
more of the following: bad judgment, negligence or any act or omission believed by the Grantee in
good faith to have been in or not opposed to the interest of the Company (without intent of the
Grantee to gain, directly or indirectly, a profit to which the Grantee was not legally entitled).

                    (E) “Good Reason” means:

                         (1) The assignment to the Grantee of any duties inconsistent in any respect with the Grantee’s
position (including status, titles and reporting requirement), authority, duties or
responsibilities, or any other action by the Company that results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action that is not taken in bad faith and that is remedied by the Company promptly
after receipt of written notice thereof given by the Grantee within 30 days following the
assignment or other action by the Company;

                         (2) Any reduction in compensation; or

                         (3) Change in location of office of more than 35 miles without prior consent of the Grantee.

               (ii) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Award is outstanding, it will terminate
immediately prior to the consummation of such proposed action. The Board may, in the exercise of
its sole discretion in such instances, declare that any Option or SAR shall terminate as of a date
fixed by the Board and give each Grantee the right to exercise his or her Option or SAR as to all
or any part of the Covered Stock, including Shares as to which the Option or SAR would not
otherwise be exercisable.

               (iii) Merger or Asset Sale. Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a merger of the Company with or into another corporation, or
the sale of substantially all of the assets of the Company, in the event of such a merger or sale
each outstanding Option or SAR shall be assumed or an equivalent option or right shall be
substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation or a Parent or Subsidiary of the successor corporation
does not agree to assume the Option or SAR or to substitute an equivalent option or right, the
Administrator shall, in lieu of such assumption or substitution, provide for the Grantee to have
the right to exercise the Option or SAR as to all or a portion of the Covered Stock, including
Shares as to which it would not otherwise be exercisable. If the Administrator makes an Option or
SAR exercisable in lieu of assumption or substitution in the event of a merger or sale of assets,
the Administrator shall notify the Grantee that the Option or SAR shall be fully exercisable for a
period of 15 days from the date of such notice, and the Option or SAR will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or SAR shall be
considered assumed if, following the merger or sale of assets, the option or right confers the
right to purchase, for each Share of Covered Stock subject to the Option or SAR immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock for each Share held
on

 

 

the effective date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with the consent of the
successor corporation and the participant, provide for the consideration to be received upon the
exercise of the Option or SAR, for each Share of Optioned Stock subject to the Option or SAR, to be
solely common stock of the successor corporation or its Parent equal in Fair Market Value to the
per Share consideration received by holders of Common Stock in the merger or sale of assets.

               (iv) Except as otherwise determined by the Board, in its discretion, prior to the occurrence
of a Change in Control other than the dissolution or liquidation of the Company, a merger of the
Company with or into another corporation, or the sale of substantially all of the assets of the
Company, in the event of such a Change in Control, all outstanding Options and SARs, to the extent
they are exercisable and vested (including Options and SARs that shall become exercisable and
vested pursuant to Section 11(b)(i) above), shall be terminated in exchange for a cash payment
equal to the Change in Control Price (reduced by the exercise price applicable to such Options or
SARs). These cash proceeds shall be paid to the Grantee or, in the event of death of an Grantee
prior to payment, to the estate of the Grantee or to a person who acquired the right to exercise
the Option or SAR by bequest or inheritance.

     12. Term of Plan. The Plan shall become effective upon its approval by the
stockholders of the Company within 12 months after the date the Plan is adopted by the Board. Such
stockholder approval shall be obtained in the manner and to the degree required under applicable
federal and state law. The Plan shall continue in effect until October 17, 2011, unless terminated
earlier under Section 13 of the Plan.

     13. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

          (b) Stockholder Approval. The Company shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of
the Code (or any successor rule or statute or other applicable law, rule or regulation, including
the requirements of any exchange or quotation system on which the Common Stock is listed or
quoted). Furthermore, the Company shall obtain stockholder approval of any modification or
amendment of the Plan to the extent that the Board, in its sole and absolute discretion, reasonably
determines, in accordance with the requirements of any exchange or quotation system on which the
Common Stock is listed or quoted, that such modification or amendment constitutes a material
revision or material amendment of the Plan. Such stockholder approval, if required, shall be
obtained in such a manner and to such a degree as is required by the applicable law, rule or
regulation.

          (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Grantee, unless mutually agreed otherwise
between the Grantee and the Administrator, which agreement must be in writing and signed by the
Grantee and the Company.

     14. Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares shall not be issued pursuant to an Award unless the
exercise, if applicable, of such Award and the issuance and delivery of such Shares shall comply
with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, Applicable Law, and
the requirements of any stock exchange or quotation system upon which the Shares may then be listed
or quoted, and shall be further subject to the approval of counsel for the Company with respect to
such compliance.

          (b) Investment Representations. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

     15. Liability of Company.

 

 

          (a) Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

          (b) Grants Exceeding Allotted Shares. If the Covered Stock covered by an Award
exceeds, as of the date of grant, the number of Shares that may be issued under the Plan without
additional stockholder approval, such Award shall be void with respect to such excess Covered
Stock, unless stockholder approval of an amendment sufficiently increasing the number of Shares
subject to the Plan is timely obtained in accordance with Section 13 of the Plan.

     16. Reservation of Shares. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

     17. Rights of Employees and Consultants. Neither the Plan nor any Award shall confer
upon an Grantee any right with respect to continuing the Grantee’s employment or consulting
relationship with the Company, nor shall they interfere in any way with the Grantee’s right or the
Company’s right to terminate such employment or consulting relationship at any time, with or
without cause.

     18. Sub-plans for Foreign Subsidiaries. The Board may adopt sub-plans applicable to
particular foreign Subsidiaries. All Awards granted under such sub-plans shall be treated as grants
under the Plan. The rules of such sub-plans may take precedence over other provisions of the Plan,
with the exception of Section 3, but unless otherwise superseded by the terms of such sub-plan, the
provisions of the Plan shall govern the operation of such sub-plan.

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