Document:

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EMPLOYMENT/NON-COMPETITION/CONFIDENTIALITY AGREEMENT

			
	DATE:
	 	The date of execution set forth below.
	 
	COMPANY/EMPLOYER:
	 	Pride International, Inc.,

a Delaware corporation

5847 San Felipe, Suite 3300

Houston, Texas 77057
	 
	EMPLOYEE:
	 	Kevin C. Robert

19822 Partridge Run Dr.

Houston, Texas 77094

      This Employment/Non-Competition/Confidentiality Agreement by and between Pride International,
Inc. (the “Company” and as further defined below) and Kevin C. Robert (“Employee”), effective as of
the date fully executed by both parties as set forth on the signature page below (the “Agreement”),
is made on the terms as herein provided.

PREAMBLE

      WHEREAS, the Company wishes to attract and retain well-qualified employees and key personnel
and to assure itself of the continuity of its management;

      WHEREAS, the Company recognizes that Employee will serve as a valuable resource of the
Company, and the Company desires to be assured of the continued services of Employee;

      WHEREAS, the Company desires to obtain assurances that Employee will devote his best efforts
to his employment with the Company and will not enter into competition with the Company in its
business as now conducted and to be conducted, or solicit customers or other employees of the
Company to terminate their relationships with the Company;

      WHEREAS, Employee will serve as a key employee of the Company, and he acknowledges that his
talents and services to the Company are of a special, unique, unusual and extraordinary character
and are of particular and peculiar benefit and importance to the Company;

      WHEREAS, the Company is concerned that in the event of a possible or threatened Change in
Control (as defined below) of the Company, Employee may feel insecure, and therefore the Company
desires to provide security to Employee in the event of a Change in Control;

      WHEREAS, the Company further desires to assure Employee that if a possible or threatened
Change in Control should arise and Employee should be involved in deliberations or

 

 

negotiations in connection therewith, Employee would be in a secure position to consider and
participate in such transaction as objectively as possible in the best interests of the Company and
to this end desires to protect Employee from any direct or implied threat to his financial
well-being by a Change in Control;

      WHEREAS, Employee is willing to continue to serve the Company but desires assurances that in
the event of such a Change in Control he will continue to have the employment status and
responsibilities he could reasonably expect absent such event and, that in the event this turns out
not to be the case, he will have fair and reasonable severance protection on the basis of his
service to the Company to that time;

      WHEREAS, different factors impact the Company and Employee under circumstances of regular
employment between the Company and Employee when there is no threat of Change in Control and/or
none has occurred, as opposed to circumstances under which a Change in Control is rumored,
threatened, occurring or has occurred. For this reason, the Agreement deals with the regular
employment of Employee under circumstances whereby no Change in Control is threatened, occurring or
has occurred (“Regular Employment”) and it deals with circumstances whereby a Change in Control is
threatened, occurring or has occurred. The Agreement deals with matters impacting both Regular
Employment and employment following a Change in Control, including non-competition and
confidentiality; and

      WHEREAS, Employee is willing to enter into and carry out the non-competition and
confidentiality obligations and covenants set forth herein in consideration of the Agreement.

AGREEMENT

      NOW, THEREFORE, Employee and the Company (together the “Parties”) agree as follows:

	I.  	     PRIOR AGREEMENTS/CONTRACTS

	 	1.01  	PRIOR AGREEMENTS. Employee represents and warrants to the Company that (i) he
has no continuing non-competition agreements with any prior employers that have not
been disclosed in writing to the Company and (ii) neither the execution of the
Agreement by Employee or the performance by Employee of his obligations under the
Agreement will result in a violation or breach of, or constitute a default under the
provisions of any contract, agreement or other instrument to which Employee is or was a
party.

	II.  	     DEFINITION OF TERMS

	 	2.01  	COMPANY. Company means Pride International, Inc., a Delaware corporation, as
the same presently exists, as well as any and all successors, regardless of the nature
of the entity or the state or nation of organization, whether by reorganization,
merger, consolidation, absorption or dissolution. For the purpose of the Agreement,
Company includes all subsidiaries and affiliates of the Company to the extent such
subsidiary and/or affiliate is carrying on any portion

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	 	 	of the business of the Company or a business similar to that being conducted by the
Company.

	 	2.02  	EXECUTIVE/OFFICER/EMPLOYEE. Executive/Officer/Employee means Kevin C. Robert.

	 	2.03  	EMPLOYMENT DATE. Employee’s initial date of active employment, which shall be
February 28, 2005 (the “Employment Date”).

	 	2.04  	CHANGE IN CONTROL. The term “Change in Control” of the Company shall mean, and
shall be deemed to have occurred on the date of the first to occur of any of the
following:

	 	a.  	there occurs a change in control of the Company of the nature
that would be required to be reported in response to item 6(e) of Schedule 14A
of Regulation 14A or Item 1 of Form 8(k) promulgated under the Securities
Exchange Act of 1934 as in effect on the date of the Agreement, or if neither
item remains in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 which serve similar
purposes;

	 	b.  	any “person” (as such term is used in Sections 12(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial
owner, directly or indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the Company’s then
outstanding securities;

	 	c.  	the individuals who were members of the Board of Directors of
the Company (the “Board”) immediately prior to a meeting of the shareholders of
the Company involving a contest for the election of directors shall not
constitute a majority of the Board of Directors following such election;

	 	d.  	the Company shall have merged into or consolidated with another
corporation, or merged another corporation into the Company, on a basis whereby
less than fifty percent (50%) of the total voting power of the surviving
corporation is represented by shares held by former shareholders of the Company
prior to such merger or consolidation; or

	 	e.  	the Company shall have sold, transferred or exchanged all, or
substantially all, of its assets to another corporation or other entity or
person.

	 	2.05  	TERMINATION. The term “Termination” shall mean termination of the employment
of Employee with the Company (including death and disability (as described below)) for
any reason other than cause (as described below) or voluntary resignation (as described
below). Termination includes “Constructive Termination” as described below.
Termination includes termination at the end of

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	 	   	any “Employment Period” (as hereinafter defined) due to non-renewal or failure to
extend this Agreement for any reason except for cause.

	 	a.  	The term “disability” means physical or mental incapacity
qualifying Employee for a long-term disability under the Company’s long-term
disability plan. If no such plan exists on the Employment Date, the term
“disability” means physical or mental incapacity as determined by a doctor
jointly selected by Employee and the Board of Directors of the Company
qualifying Employee for long-term disability under reasonable employment
standards.

	 	b.  	The term “cause” means: (i) the willful and continued failure
of Employee substantially to perform his duties with the Company (other than
any failure due to physical or mental incapacity) after a demand for
substantial performance is delivered to him by the Board of Directors which
specifically identifies the manner in which the Board believes he has not
substantially performed his duties, (ii) willful misconduct materially and
demonstrably injurious to the Company, or (iii) material violation of the
covenant not to compete (except after termination after Change in Control as
discussed herein). No act or failure to act by Employee shall be considered
“willful” unless done or omitted to be done by him not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Company. The unwillingness of Employee to accept any or all of a change
in the nature or scope of his position, authorities or duties, a reduction in
his total compensation or benefits, or other action by or at request of the
Company in respect of his position, authority, or responsibility that is
contrary to this Agreement, may not be considered by the Board of Directors to
be a failure to perform or misconduct by Employee. Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated for cause for
purposes of the Agreement unless and until there shall have been delivered to
him a copy of a resolution, duly adopted by a vote of three-fourths of the
entire Board of Directors of the Company at a meeting of the Board of Directors
called and held (after reasonable notice to Employee and an opportunity for
Employee and his counsel to be heard before the Board) for the purpose of
considering whether Employee has been guilty of such a willful failure to
perform or such willful misconduct as justifies termination for cause
hereunder, finding that in the good faith opinion of the Board of Directors
Employee has been guilty thereof and specifying the particulars thereof.

	 	c.  	The term “Constructive Termination” means any circumstance by
which the actions of the Company either reduce or change Employee’s title,
position, duties, responsibilities or authority to such an extent or in such a
manner as to relegate Employee to a position not substantially similar to that
which he held prior to such reduction or change and which would degrade,
embarrass or otherwise make it unreasonable for Employee to

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	 	   	remain in the employment of the Company; and includes a violation by the
Company of the employment provisions and conditions of this Agreement.

	 	d.  	The resignation of Employee shall be deemed “voluntary” if it
is for any reason other than one or more of the following:

	 	(i)  	Employee’s resignation or retirement is
requested by the Company other than for cause;

	 	(ii)  	Any significant adverse change in the nature or
scope of Employee’s position, authorities or duties from those
described in this Agreement;

	 	(iii)  	Any reduction in Employee’s total compensation
or benefits from that provided in the Compensation and Benefits Section
hereof;

	 	(iv)  	The material breach by the Company of any other
provision of this Agreement;

	 	(v)  	Any requirement of the Company that Employee
relocate more than 50 miles from downtown Houston, Texas;

	 	(vi)  	Any action by the Company which would
constitute Constructive Termination; or

	 	(vii)  	Non-renewal or failure to extend any
employment term, contrary to the wishes of Employee.

	   	Termination that entitles Employee to the payments and benefits provided in Section 3.05 or
4.02 hereof shall not be deemed or treated by the Company as the termination of Employee’s
employment or the forfeiture of his participation, award, or eligibility, for the purpose of
any plan, practice or agreement of the Company referred to in the Compensation and Benefits
Section hereof, if, and to the extent that, such benefits are provided under Section 3.05 or
4.02 hereof.

	 	2.06  	CUSTOMER. The term “Customer” includes all persons, firms or entities that are
purchasers or end-users of services or products offered, provided, developed, designed,
sold or leased by the Company during the relevant time periods, and all persons, firms
or entities which control, or which are controlled by, the same person, firm or entity
which controls such purchase.

	III.  	  EMPLOYMENT

	 	3.01  	EMPLOYMENT. As of the Employment Date, Employee shall become an employee of
the Company making himself available to the Company in an advisory capacity, but shall
not serve as an officer or perform similar policy making functions for the Company
until Employee commences full-time employment on or about March 9, 2005 (the
“Appointment Date”). Effective on

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	 	   	the Appointment Date, Employee will assume the position of Vice President -
Marketing of the Company. Except as otherwise provided in the Agreement, the
Company hereby agrees to continue Employee in its employ, and Employee hereby agrees
to remain in the employ of the Company, for the Employment Period (as defined
below). From the Appointment Date through the remainder of the Employment Period
(as defined below), Employee shall exercise such position and authority and perform
such responsibilities as are commensurate with the position and authority of Vice
President — Marketing of the Company.

	 	3.02  	BEST EFFORTS AND OTHER EMPLOYMENT OBLIGATIONS OF EMPLOYEE; BUSINESS EXPENSES
AND OFFICE AND OTHER SERVICES.

	 	a.  	Employee agrees that he will at all times faithfully,
industriously and to the best of his ability, experience and talents, perform
all of the duties that may be required of and from him pursuant to the express
and implicit terms hereof, to the reasonable satisfaction of the Company. Said
duties shall be rendered at Houston, Texas, and such other place or places
within or without the State of Texas as the Company and Employee shall agree.

	 	b.  	Employee shall devote his normal and regular business time,
attention and skill to the business and interests of the Company, and the
Company shall be entitled to all of the benefits, profits or other issue
arising from or incident to all work, services and advice of Employee performed
for the Company. Such employment shall be considered “full time” employment.
Employee shall also have the right to devote such incidental and immaterial
amounts of his time which are not required for the full and faithful
performance of his duties hereunder to any outside activities and businesses
which are not being engaged in by the Company and which shall not otherwise
interfere with the performance of his duties hereunder. Notwithstanding the
foregoing, it shall not be a violation of the Agreement for Employee to (i)
serve on corporate, civic or charitable boards or committees, (ii) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(iii) manage personal investments, so long as such activities do not
significantly interfere with the performance of Employee’s responsibilities
hereunder. Employee shall have the right to make investments in any business
provided such investment does not result in a violation of the Non-Competition
Section of this Agreement.

	 	c.  	Employee acknowledges and agrees that Employee owes a fiduciary
duty to the Company. In keeping with these duties, Employee shall make full
disclosure to the Company of all business opportunities pertaining to the
Company’s business and shall not appropriate for Employee’s own benefit
business opportunities concerning the subject matter of the fiduciary
relationship.

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	 	d.  	Employee shall not intentionally take any action which he knows
would not comply with United States laws applicable to Employee’s actions on
behalf of the Company, and/or any of its subsidiaries or affiliates, including
specifically, without limitation, the United States Foreign Corrupt Practices
Act, generally codified in 15 USC 78 (the “FCPA”), as the FCPA may hereafter be
amended, and/or its successor statutes.

	 	e.  	During the employment relationship and after the employment
relationship terminates, Employee agrees to refrain from any disparaging
comments about the Company, any affiliates, or any current or former officer,
director or employee of the Company or any affiliate, and Employee agrees not
to take any action, or assist any person in taking any other action, that is
materially adverse to the interests of the Company or any affiliate or
inconsistent with fostering the goodwill of the Company and its affiliates;
provided, however, that nothing in this Agreement shall apply to or restrict in
any way the communication of information by Employee to any state or federal
law enforcement agency or require notice to the Company thereof, and Employee
will not be in breach of the covenant contained above solely by reason of his
testimony which is compelled by process of law. The Company and its
affiliates, officers and directors agree to refrain from any disparaging
comments about Employee; provided, however, that nothing in this Agreement
shall apply to or restrict in any way the communication of information by the
Company and its affiliates, officers and directors to any state or federal law
enforcement agency or require notice to Employee thereof, and the Company and
its affiliates, officers and directors will not be in breach of the covenant
contained above solely by reason of testimony which is compelled by process of
law.

	 	f.  	During the Employment Period, Employee shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by Employee
in accordance with the most favorable policies, practices and procedures of the
Company as in effect from time to time.

	 	g.  	During the Employment Period, the Company shall furnish
Employee with office space, secretarial assistance and such other facilities
and services as shall be suitable to Employee’s position and adequate for the
performance of Employee’s duties hereunder.

	 	3.03  	TERM OF EMPLOYMENT. Employee’s Regular Employment will commence on the
Employment Date and will be for a term ending at 12:00 o’clock midnight on the second
anniversary of the Employment Date (the “Employment Period”); thereafter, the
Employment Period will be automatically extended for successive terms of one (1) year
commencing on each anniversary of the Employment Date, unless the Company or Employee
gives written notice to the other that employment will not be renewed or continued
after the next scheduled expiration

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	 	   	date which is not less than one (1) year after the date that the notice of
non-renewal was given.

	 	3.04  	COMPENSATION AND BENEFITS. During the Employment Period Employee shall receive
the following compensation and benefits:

	 	a.  	Employee will receive an annual base salary of not less than
$263,000 with the opportunity for increases, from time to time thereafter,
which are in accordance with the Company’s regular executive compensation
practices (the “Annual Base Salary”). The Annual Base Salary will be reviewed
at least annually, but in no event earlier than July 2006.

	 	b.  	Employee will be eligible to participate on a reasonable basis
in annual bonus, stock option and other incentive compensation plans which
provide opportunities to receive compensation in addition to his Annual Base
Salary which are at least equal to the opportunities provided by the Company
for executives with comparable duties.

	 	c.  	Employee will be entitled to receive and participate in
employee benefits (including, but not limited to, medical, life, health,
accident and disability insurance and disability benefits) and perquisites
which are at least equal to those provided by the Company to executives with
comparable duties.

	 	d.  	Employee will receive paid vacation days each year to the same
extent as provided to executives with comparable duties.

	 	e.  	Employee shall receive a monthly automobile allowance in an
amount not less than $750.00.

	 	f.  	Employee will participate, or if dependent on Employee’s
election, will be eligible to participate in all other executive incentive
stock and benefit plans approved and offered by the Company.

	 	3.05  	TERMINATION WITHOUT CHANGE IN CONTROL. Notwithstanding anything herein to the
contrary, the Company shall have the right to terminate Employee’s employment at any
time during the Employment Period (including any extended term). Should the Company
choose not to renew or extend the Employment Period of the Agreement or choose to
terminate Employee during, or at the end of, the Employment Period, or in the event of
death or disability of Employee, if the termination is not after a Change in Control
and is not for cause, the Company shall, within thirty (30) days following such
termination, pay or provide to Employee (or his Executor, Administrator or Estate in
the event of death, as soon as reasonably practical):

	 	a.  	An amount equal to one (1) full year of his base salary, which
base salary is here defined as twelve (12) times the then current monthly
salary in effect for Employee and all other benefits due him based upon the
salary in effect on the date of Termination (but not less than the highest
annual

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	 	   	base salary paid to Employee during any of the three (3) years immediately
preceding his date of Termination). There shall be deducted only such
amounts as may be required by law to be withheld for taxes and other
applicable deductions.

	 	b.  	The Company shall provide to Employee for a period of one (1)
full year following the date of his Termination, life, health, accident and
disability insurance coverages which are not less than the highest benefits
furnished to Employee during the term of this Agreement.

	 	c.  	An amount equal to the target award for Employee under the
Company’s annual bonus plan for the fiscal year in which Termination occurs;
provided, however, that (i) if Employee has deferred his award for such year
under a Company plan, the payment due Employee under this subparagraph shall be
paid in accordance with the terms of the deferral or as specified by Employee
and (ii) if the Company has not specified a target award for such year, the
amount will be equal to fifty percent (50%) of the maximum percentage of
Employee’s Annual Base Salary Employee may be entitled to under the Company’s
annual bonus plan in such year.

	 	d.  	All stock options and awards to which Employee is entitled will
immediately vest and the time for exercising any option will extend for 120
days following such termination of employment, or such later date as shall be
specified in the applicable plan and award agreement; provided, however, that
in no event shall the time for exercising an option extend beyond the original
term of the option.

	 	e.  	The “Compensation and Benefits” section hereof shall be
applicable in determining the payments and benefits due Employee under this
section and if Termination occurs after a reduction in all or part of
Employee’s total compensation or benefits, the lump sum severance allowance and
other compensation and benefits payable to him pursuant to this section shall
be based upon his compensation and benefits before the reduction.

	 	f.  	If any provision of this Section cannot, in whole or in part,
be implemented and carried out under the terms of the applicable compensation,
benefit or other plan or arrangement of the Company because Employee has ceased
to be an actual employee of the Company, due to insufficient or reduced
credited service based upon his actual employment by the Company or because the
plan or arrangement has been terminated or amended after the Employment Date,
or for any other reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such benefits to the
Employee, his dependents, beneficiaries and estate as if Employee’s employment
had not been terminated.

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	 	g.  	All life, health, hospitalization, medical and accident
benefits available to Employee’s spouse and dependents shall continue for the
same term as Employee’s benefits. If Employee dies, all benefits will be
provided for a term of one (1) year (or two (2) years if after a Change in
Control) after the date of death of Employee.

	 	h.  	The Company’s obligation under this Section to continue to pay
or provide health care, life, accident and disability insurance to Employee,
Employee’s spouse and Employee’s dependents shall be reduced when and to the
extent any such benefits are paid or provided to Employee by another employer;
provided, however, that Employee shall have all rights, if any, afforded to
retirees to convert group life insurance coverage to the individual life
insurance coverage as, to the extent of, and whenever his group life insurance
coverage under this Section is reduced or expires. Apart from this
subparagraph, Employee shall have and be subject to no obligation to mitigate.

	 	i.  	The Company shall deduct applicable withholding taxes in
performing its obligations under this Section.

	   	Nothing in this Section is intended, nor shall be deemed or interpreted, to be an amendment
to any compensation, benefit or other plan of the Company. To the extent the Company’s
performance under this Section includes the performance of the Company’s obligations to
Employee under any other plan or under another agreement between the Company and Employee,
the rights of Employee under such other plan or other agreement, which are discharged under
the Agreement, are discharged, surrendered, or released pro tanto.

	IV.  	   CHANGE IN CONTROL

	 	4.01  	EXTENSION OF EMPLOYMENT PERIOD. Upon any Change in Control, the Employment
Period shall be immediately and without further action extended for a term of two (2)
years following the effective date of the Change in Control and will expire at 12:00
o’clock midnight on the last day of the month following two (2) years after the Change
in Control. Thereafter, the Employment Period will be extended for successive terms of
one (1) year each, unless terminated, all in the manner specified in Section 3.03.

	 	4.02  	CHANGE IN CONTROL TERMINATION PAYMENTS AND BENEFITS. In the event Employee is
terminated within two (2) years following a Change in Control, Employee will receive
the payments and benefits specified in the “Termination Without Change in Control”
Section at the same time and in the same manner therein specified except as amended and
modified below:

	 	a.  	The salary and benefits specified in Section 3.05(a) will be
paid based upon a multiple of two (2) years (instead of one (1) year).

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	 	b.  	Life, health, accident and disability insurance specified in
Section 3.05(b) will be provided until (i) Employee becomes reemployed and
receives similar benefits from a new employer or (ii) two (2) years after the
date of Termination, whichever is earlier.

	 	c.  	An amount equal to two (2) times the maximum award that
Employee could receive under the Company’s annual bonus plan for the fiscal
year in which the Termination occurs, instead of the benefits provided in
Section 3.05(c) hereof.

	 	d.  	Section 3.05(d) is modified such that the time for exercising
any option will extend to the later of (i) the date that is two (2) years after
the date of the Change in Control or (ii) the date that is 120 days after the
date of Employee’s Termination; provided, however, that in no event shall the
time for exercising an option extend beyond the original term of the option.

	 	e.  	All other rights and benefits specified in Section 3.05.

	 	4.03  	VOLUNTARY RESIGNATION UPON CHANGE IN CONTROL. If Employee voluntarily resigns
his employment within six (6) months after a Change in Control (whether or not the
Company may be alleging the right to terminate employment for cause), he will receive
the same payments, compensation and benefits as if he had had a Termination on the date
of resignation after Change in Control.

	V.  	     NON COMPETITION AND CONFIDENTIALITY/PROTECTION OF INFORMATION

	 	5.01  	CONSIDERATION. Employee recognizes that in each of the highly competitive
businesses in which the Company is engaged, the Company’s trade secrets and other
confidential information, along with personal contacts, are of primary importance in
securing and maintaining business prospects, in retaining the accounts and goodwill of
present Customers and protecting the business of the Company. Employee, therefore,
agrees that in exchange for the provision of trade secrets and other confidential
information, he will agree to the non-competition and confidentiality obligations and
covenants outlined in this Section V.

	 	5.02  	NON-COMPETITION. In exchange for the consideration described above in Section
5.01, Employee agrees that during his employment with the Company and for a period of
six (6) months after he is no longer employed by the Company (unless his employment is
terminated after a Change in Control, in which event there will be no covenant not to
compete and the noncompete covenants and obligations herein will terminate on the date
of termination of Employee), Employee will not, directly or indirectly, either as an
individual, proprietor, stockholder (other than as a holder of up to one percent (1%)
of the outstanding shares of a corporation whose shares are listed on a stock exchange
or traded in

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	 	   	accordance with the automated quotation system of the National Association of
Securities Dealers), partner, officer, employee or otherwise:

	 	a.  	work for, become an employee of, invest in, provide consulting
services to or in any way engage in any business which (i) is primarily engaged
in the drilling and workover of oil and gas wells within the geographical area
described in Section 5.02(e) and (ii) actually competes to a substantial extent
with the Company; or

	 	b.  	provide, sell, offer to sell, lease, offer to lease, or solicit
any orders for any products or services which the Company provided and with
regard to which Employee had direct or indirect supervision or control, within
one (1) year preceding Employee’s termination of employment, to or from any
person, firm or entity which was a Customer for such products or services of
the Company during the one (1) year preceding such termination from whom the
Company had solicited business during such one (1) year; or

	 	c.  	solicit, aid, counsel or encourage any officer, director,
employee or other individual to (i) leave his or her employment or position
with the Company, (ii) compete with the business of the Company, or (iii)
violate the terms of any employment, non-competition or similar agreement with
the Company; or

	 	d.  	employ, directly or indirectly, permit the employment of,
contract for services or work to be performed by, or otherwise use, utilize or
benefit from the services of any officer, director, employee or any other
individual holding a position with the Company within two (2) years after the
date of termination of employment of Employee with the Company or within two
(2) years after such officer, director, employee or individual terminated
employment with the Company, whichever period expires earlier; provided
however, Employee can seek written consent from the Company to hire an officer,
director, employee or individual who has terminated employment with the
Company, and Company consent will not be unreasonably withheld.

	 	e.  	The geographical area within which the non-competition
obligations and covenants of the Agreement shall apply is that territory within
two hundred (200) miles of (i) any of the Company’s present offices, (ii) any
of the Company’s present rig yards or rig operations and (iii) any additional
location where the Company, as of the date of any action taken in violation of
the non-competition obligations and covenants of the Agreement, has an office,
a rig yard, a rig operation or definitive plans to locate an office, a rig
operation or a rig yard or has recently conducted rig operations.
Notwithstanding the foregoing, if the two hundred (200) mile radius extends
into another country or its territorial waters and the Company is not then
doing business in that other country, there will be no territorial limitations
extending into such other country.

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	 	5.03  	CONFIDENTIALITY/PROTECTION OF INFORMATION. Employee acknowledges that his
employment with the Company will, of necessity, provide him with specialized knowledge
which, if used in competition with the Company, or divulged to others, could cause
serious harm to the Company. Accordingly, Employee will not at any time during or
after his employment by the Company, directly or indirectly, divulge, disclose or
communicate to any person, firm or corporation in any manner whatsoever any information
concerning any matter affecting or relating to the Company or the business of the
Company. While engaged as an employee of the Company, Employee may only use
information concerning any matters affecting or relating to the Company or the business
of the Company for a purpose which is necessary to the carrying out of Employee’s
duties as an employee of the Company, and Employee may not make use of any information
of the Company after he is no longer an employee of the Company. Employee agrees to
the foregoing without regard to whether all of the foregoing matters will be deemed
confidential, material or important, it being stipulated by the parties that all
information, whether written or otherwise, regarding the Company’s business, including,
but not limited to, information regarding Customers, Customer lists, costs, prices,
earnings, products, services, formulae, compositions, machines, equipment, apparatus,
systems, manufacturing procedures, operations, potential acquisitions, new location
plans, prospective and executed contracts and other business arrangements, and sources
of supply, is prima facie presumed to be important, material and confidential
information of the Company for the purposes of the Agreement, except to the extent that
such information may be otherwise lawfully and readily available to the general public.
Employee further agrees that he will, upon termination of his employment with the
Company, return to the Company all books, records, lists and other written, electronic,
typed or printed materials, whether furnished by the Company or prepared by Employee,
which contain any information relating to the Company’s business, and Employee agrees
that he will neither make nor retain any copies of such materials after termination of
employment. Notwithstanding any of the foregoing, nothing in this Agreement shall
prevent Employee from complying with applicable federal and/or state laws.
Notwithstanding any of the foregoing, Employee will not be liable for any breach of
these confidentiality provisions unless the same constitutes a material detriment to
the Company, or due to the nature of the information divulged and the manner in which
it was divulged and the person to whom it was divulged it would likely cause damage to
the Company or constitute a material detriment to the Company.

	 	5.04  	COMPANY REMEDIES FOR VIOLATION OF NON-COMPETITION OR CONFIDENTIALITY/PROTECTION
OF INFORMATION PROVISIONS. Without limiting the right of the Company to pursue all
other legal and equitable rights available to it for violation of any of the
obligations and covenants made by Employee herein, it is agreed that:

	 	a.  	the skills, experience and contacts of Employee are of a
special, unique, unusual and extraordinary character which give them a peculiar
value;

-13-

 

	 	b.  	because of the business of the Company, the restrictions agreed
to by Employee as to time and area contained in the Agreement are reasonable;
and

	 	c.  	the injury suffered by the Company by a violation of any
obligation or covenant in the Agreement resulting from loss of profits created
by (i) the competitive use of such skills, experience contacts and otherwise
and/or (ii) the use or communication of any information deemed confidential
herein will be difficult to calculate in damages in an action at law and cannot
fully compensate the Company for any violation of any obligation or covenant in
the Agreement, accordingly:

	 	(i)  	the Company shall be entitled to
injunctive relief to prevent violations thereof and prevent
Employee from rendering any services to any person, firm or
entity in breach of such obligation or covenant and to prevent
Employee from divulging any confidential information; and

	 	(ii)  	compliance with the Agreement is
a condition precedent to the Company’s obligation to make
payments of any nature to Employee, subject to the other
provisions hereof.

	 	5.05  	TERMINATION OF BENEFITS FOR VIOLATION OF NON-COMPETITION AND
CONFIDENTIALITY/PROTECTION OF INFORMATION PROVISIONS. If Employee materially violates
the confidentiality/protection of information and/or non-competition obligations and
covenants herein or any other related agreement he may have signed as an employee of
the Company, Employee agrees there shall be no obligation on the part of the Company to
provide any payments or benefits (other than payments or benefits already earned or
accrued) described in Section 3.05 of the Agreement, subject to the provision of
Section 6.01 hereof. There will be no withholding of benefits or payments due to a
violation of the non-competition obligations hereof if the termination occurred after a
Change in Control, and Employee will not be bound by the non-competition provisions if
terminated after a Change in Control.

	 	5.06  	REFORMATION OF SCOPE. If the provisions of the confidentiality and/or
non-competition obligations and covenants should ever be deemed to exceed the time,
geographic or occupational limitations permitted by the applicable law, Employee and
the Company agree that such provisions shall be and are hereby reformed to the maximum
time, geographic or occupational limitations permitted by the applicable law, and the
determination of whether Employee violated such obligation and covenant will be based
solely on the limitation as reformed.

	VI.  	   GENERAL

	 	6.01  	ENFORCEMENT COSTS. The Company is aware that upon the occurrence of a Change
in Control, or under other circumstances even when a Change in Control

-14-

 

	 	   	has not occurred, the Board of Directors or a stockholder of the Company may then
cause or attempt to cause the Company to refuse to comply with its obligations under
the Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have the Agreement declared unenforceable, or may
take, or attempt to take other action to deny Employee the benefits intended under
the Agreement; or actions may be taken to enforce the non-competition or
confidentiality provisions of the Agreement. In these circumstances, the purpose of
the Agreement could be frustrated. It is the intent of the parties that Employee
not be required to incur the legal fees and expenses associated with the protection
or enforcement of his rights under the Agreement by litigation or other legal action
because such costs would substantially detract from the benefits intended to be
extended to Employee hereunder nor be bound to negotiate any settlement of his
rights hereunder under threat of incurring such costs. Accordingly, if at any time
after the Employment Date, it should appear to Employee that the Company is or has
acted contrary to or is failing or has failed to comply with any of its obligations
under the Agreement for the reason that it regards the Agreement to be void or
unenforceable, that Employee has violated the terms of the Agreement, or for any
other reason, or that the Company has purported to terminate his employment for
cause or is in the course of doing so, or is withholding payments or benefits, or is
threatening to withhold payments or benefits, contrary to the Agreement, or in the
event that the Company or any other person takes any action to declare the Agreement
void or unenforceable, or institutes any litigation or other legal action designed
to deny, diminish or to recover from Employee the benefits provided or intended to
be provided to him hereunder, and Employee has acted in good faith to perform his
obligations under the Agreement, the Company irrevocably authorizes Employee from
time to time to retain counsel of his choice at the expense of the Company to
represent him in connection with the protection and enforcement of his rights
hereunder including, without limitation, representation in connection with
termination of his employment or withholding of benefits or payments contrary to the
Agreement or with the initiation or defense of any litigation or any other legal
action, whether by or against Employee or the Company or any director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction. The
Company is not authorized to withhold the periodic payments of attorney’s fees and
expenses hereunder based upon any belief or assertion by the Company that Employee
has not acted in good faith or has violated the Agreement. If the Company
subsequently establishes that Employee was not acting in good faith and has violated
the Agreement, Employee will be liable to the Company for reimbursement of amounts
paid due to Employee’s actions not based on good faith and in violation of the
Agreement. The reasonable fees and expenses of counsel selected from time to time
by Employee hereinabove provided shall be paid or reimbursed to Employee by the
Company, on a regular, periodic basis within thirty (30) days after presentation by
Employee of a statement or statements prepared by such counsel in accordance with
its customary practices, up to a maximum aggregate amount of $250,000.00.

-15-

 

	 	6.02  	INCOME, EXCISE OR OTHER TAX LIABILITY. Employee will be liable for and will
pay all income tax liability by virtue of any payments made to Employee under this
Agreement, as if the same were earned and paid in the normal course of business and not
the result of a Change in Control and not otherwise triggered by the “golden parachute”
or excess payment provisions of the Internal Revenue Code of the United States, which
would cause additional tax liability to be imposed. If any additional income tax,
excise or other taxes are imposed on any amount or payment in the nature of
compensation paid or provided to or on behalf of Employee, the Company shall “gross-up”
Employee for such tax liability by paying to Employee an amount sufficient so that
after payment of all such taxes so imposed, Employee’s position on an after-tax basis
is what it would have been had no such additional taxes been imposed. Employee will
cooperate with the Company to minimize the tax consequences to Employee and to the
Company so long as the actions proposed to be taken by the Company do not cause any
additional tax consequences to Employee and do not prolong or delay the time that
payments are to be made, or reduce the amount of payments to be made, unless Employee
consents in writing to any delay or deferment of payment.

	 	6.03  	PAYMENT OF BENEFITS UPON TERMINATION FOR CAUSE. If the termination of Employee
is not after a Change in Control and is for cause, the Company will have the right to
withhold all payments other than (i) what is accrued and owing under the terms of any
employee benefit plan maintained by the Company, and (ii) those specified in Section
6.01; provided however, that if a final judgment is entered finding that cause did not
exist for termination, the Company will pay all benefits to Employee to which he would
have been entitled had Employee’s termination not been for cause, plus interest on all
amounts withheld from Employee at the rate specified for judgments under Article
5069-1.05 V.A.T.S. but not less than ten percent (10%) per annum. If the termination
for cause occurs after a Change in Control, the Company shall not have the right to
suspend or withhold payments to Employee under any provision of the Agreement until or
unless a final judgment is entered upholding the Company’s determination that the
termination was for cause, in which event Employee will be liable to the Company for
all amounts paid, plus interest at the rate allowed for judgments under Article
5069-1.05 V.A.T.S.

	 	6.04  	NON-EXCLUSIVE AGREEMENT. The specific arrangements referred to herein are not
intended to exclude or limit Employee’s participation in other benefits available to
Employee or personnel of the Company generally, or to preclude or limit other
compensation or benefits as may be authorized by the Board of Directors of the Company
at any time, or to limit or reduce any compensation or benefits to which Employee would
be entitled but for the Agreement.

	 	6.05  	NOTICES. Notices, requests, demands and other communications provided for by
the Agreement shall be in writing and shall either be personally delivered by hand or
sent by: (i) Registered or Certified Mail, Return Receipt Requested, postage prepaid,
properly packaged, addressed and deposited in the United States Postal System; (ii) via
facsimile transmission if the receiver acknowledges

-16-

 

	 	   	receipt; or (iii) via Federal Express or other expedited delivery service provided
that acknowledgment of receipt is received and retained by the deliverer and
furnished to the sender, if to Employee, at the last address he has filed, in
writing, with the Company, or if to the Company, to its Corporate Secretary at its
principal executive offices.

	 	6.06  	NON-ALIENATION. Employee shall not have any right to pledge, hypothecate,
anticipate, or in any way create a lien upon any amounts provided under the Agreement,
and no payments or benefits due hereunder shall be assignable in anticipation of
payment either by voluntary or involuntary acts or by operation of law. So long as
Employee lives, no person, other than the parties hereto, shall have any rights under
or interest in the Agreement or the subject matter hereof. Upon the death of Employee,
his executors, administrators, devisees and heirs, in that order, shall have the right
to enforce the provisions hereof, to the extent applicable.

	 	6.07  	ENTIRE AGREEMENT; AMENDMENT. The Agreement constitutes the entire agreement of
the Parties with respect of the subject matter hereof. No provision of the Agreement
may be amended, waived, or discharged except by the mutual written agreement of the
Parties. The consent of any other person(s) to any such amendment, waiver or discharge
shall not be required.

	 	6.08  	SUCCESSORS AND ASSIGNS. The Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns, by operation of law or otherwise,
including, without limitation, any corporation or other entity or persons which shall
succeed (whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company, and the
Company will require any successor, by agreement in form and substance satisfactory to
Employee, expressly to assume and agree to perform the Agreement. Except as otherwise
provided herein, the Agreement shall be binding upon and inure to the benefit of
Employee and his legal representatives, heirs and assigns; provided, however, that in
the event of Employee’s death prior to payment or distribution of all amounts,
distributions and benefits due him hereunder, if any, each such unpaid amount and
distribution shall be paid in accordance with the Agreement to the person or persons
designated by Employee to the Company to receive such payment or distribution and in
the event Employee has made no applicable designation, to his estate. If the Company
should split, divide or otherwise become more than one entity, all liability and
obligations of the Company shall be the joint and several liability and obligation of
all of the parts.

	 	6.09  	GOVERNING LAW. Except to the extent required to be governed by the laws of the
State of Delaware because the Company is incorporated under the laws of said State, the
validity, interpretation and enforcement of the Agreement shall be governed by the laws
of the State of Texas.

-17-

 

	 	6.10  	VENUE. To the extent permitted by applicable state or federal law, venue for
all proceedings hereunder will be in the U.S. District Court for the Southern District
of Texas, Houston Division.

	 	6.11  	HEADINGS. The headings in the Agreement are inserted for convenience of
reference only and shall not affect the meaning or interpretation of the Agreement.

	 	6.12  	SEVERABILITY. In the event that any provision or portion of the Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions of the Agreement shall be unaffected thereby and shall remain in full force
and effect.

	 	6.13  	PARTIAL INVALIDITY. In the event that any part, portion or section of the
Agreement is found to be invalid or unenforceable for any reason, the remaining
provisions of the Agreement shall be binding upon the parties hereto, and the Agreement
will be construed to give meaning to the remaining provisions of the Agreement in
accordance with the intent of the Agreement.

	 	6.14  	COUNTERPARTS. The Agreement may be executed in one or more counterparts, each
of which shall be deemed to be original, but all of which together constitute one and
the same instrument.

	 	6.15  	NO WAIVER. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or provision
of the Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

-18-

 

      IN WITNESS WHEREOF, Employee has hereunto set his hand and, pursuant to the authorization from
its Board of Directors and the Compensation Committee of such Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf.

      EXECUTED in multiple originals and/or counterparts as of the date set forth below.

	 	 	 	 	 
	
	 		 	/s/ Kevin C. Robert
	
	 		 	 
	
	 	 	 	Kevin C. Robert
	 
	 	 	 	 
	

	 	 	 	Date:
	 
	 	 	 	 
	
	 		 	February 28, 2005
	
	 		 	 
	 
	 	 	 	 
	ATTEST:	 	PRIDE INTERNATIONAL, INC.
	 
	 	 	 	 
	/s/ W. Gregory Looser
W. Gregory Looser

Secretary

	 	By:	 	/s/ Paul A. Bragg
Paul A. Bragg

President & Chief Executive Officer
	 
	 	 	 	 
	

	 	Date:	 	February 28, 2005

-19-exv4w13

 

EXHIBIT 4.13

 

 

CAPITAL AUTOMOTIVE REIT,

as Issuer

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

SECOND SUPPLEMENTAL TRUST INDENTURE

Dated as of May 12, 2004

Providing for Issuance of

6% CONVERTIBLE NOTES DUE MAY 15, 2024

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	Page	 
	ARTICLE I DEFINED TERMS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II DESCRIPTION OF CONVERTIBLE NOTES
	 	 	6	 
	 
	 	 	 	 
	SECTION 2.1 Establishment
	 	 	6	 
	SECTION 2.2 Payment of Principal and Interest
	 	 	7	 
	SECTION 2.3 Global Securities
	 	 	8	 
	SECTION 2.4 Transfer
	 	 	9	 
	SECTION 2.5 Denominations
	 	 	9	 
	SECTION 2.6 Ranking
	 	 	9	 
	SECTION 2.7 Defeasance
	 	 	9	 
	SECTION 2.8 Additional Events of Default; Amendments
	 	 	9	 
	 
	 	 	 	 
	ARTICLE III REDEMPTION
	 	 	10	 
	 
	 	 	 	 
	SECTION 3.1 Optional Redemption
	 	 	10	 
	SECTION 3.2 Notice of Redemption
	 	 	10	 
	SECTION 3.3 Purchase of Convertible Notes at the Option of the Holder
	 	 	11	 
	SECTION 3.4 Purchase of Convertible Notes at Option of the Holder upon a Change in Control
	 	 	15	 
	SECTION 3.5 Effect of Purchase Notice or Change in Control Purchase Notice
	 	 	17	 
	SECTION 3.6 Covenant to Comply With Securities Laws Upon Purchase of Convertible Notes
	 	 	18	 
	SECTION 3.7 Repayment to the Company
	 	 	19	 
	 
	 	 	 	 
	ARTICLE IV CONVERSION OF CONVERTIBLE NOTES
	 	 	19	 
	 
	 	 	 	 
	SECTION 4.1 Conversion of Convertible Notes
	 	 	19	 
	SECTION 4.2 Adjustment of Conversion Rate
	 	 	23	 
	SECTION 4.3 When Adjustment May Be Deferred
	 	 	27	 
	SECTION 4.4 When No Adjustment Required
	 	 	27	 
	SECTION 4.5 Notice of Adjustment
	 	 	27	 
	SECTION 4.6 Voluntary Increase
	 	 	28	 
	SECTION 4.7 Notice of Certain Transactions
	 	 	28	 
	SECTION 4.8 Reorganization of the Company; Special Distributions
	 	 	28	 
	SECTION 4.9 Company Determination Final
	 	 	29	 
	SECTION 4.10 Trustee’s Adjustment Disclaimer
	 	 	29	 
	SECTION 4.11 Simultaneous Adjustments
	 	 	30	 
	SECTION 4.12 Successive Adjustments
	 	 	30	 
	SECTION 4.13 Savings Provisions
	 	 	30	 
	 
	 	 	 	 
	ARTICLE V COVENANTS
	 	 	30	 
	 
	 	 	 	 
	SECTION 5.1 Restriction on Subsidiary Indebtedness and Preferred Stock
	 	 	30	 
	SECTION 5.2 Provision of Financial Information
	 	 	31	 
	 
	 	 	 	 
	ARTICLE VI MISCELLANEOUS PROVISIONS
	 	 	31	 
	 
	 	 	 	 
	SECTION 6.1 Ratification and Incorporation of Base Indenture
	 	 	31	 
	SECTION 6.2 Governing Law
	 	 	31	 
	SECTION 6.3 Counterparts
	 	 	31	 
	SECTION 6.4 Entire Agreement
	 	 	32	 

- i -

 

     THIS SECOND SUPPLEMENTAL TRUST INDENTURE is made as of this 12th day of May, 2004 (the
“Supplemental Indenture”), by and between Capital Automotive REIT, a real estate
investment trust organized under the laws of the State of Maryland, as issuer (the
“Company”), and Wells Fargo Bank, National Association, a national banking
association organized under the laws of the United States of America, as trustee (the
“Trustee”).

RECITALS OF THE COMPANY

     WHEREAS, the Company has heretofore entered into a Base Indenture with the Trustee, dated as
of April 15, 2004 (the “Base Indenture”), providing for the issuance from time to time of
unsubordinated debentures, notes or other evidences of indebtedness in series;

     WHEREAS, the Base Indenture is incorporated herein by this reference and the Base Indenture,
as supplemented by this Second Supplemental Indenture, is herein called the “Indenture;”

     WHEREAS, under the Base Indenture, the Board of Directors of the Company may at any time
establish a new series of Securities, in accordance with the provisions of the Base Indenture, with
the terms of such series established pursuant to a supplemental indenture executed by the Company
and the Trustee;

     WHEREAS, the Company proposes to create under the Base Indenture a new series of Securities;

     WHEREAS, the Company desires to issue $110,000,000 of its 6% Convertible Notes due May 15,
2024, having the terms and conditions hereinafter set forth, primarily in order to pay down or
eliminate existing Indebtedness and pursue other general corporate purposes;

     WHEREAS, all conditions necessary to authorize the execution and delivery of this Supplemental
Indenture and to make it a valid and binding obligation of the Company have been done or performed;

     NOW THEREFORE, for and in consideration of the agreements and obligations set forth herein and
for good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:

ARTICLE I

DEFINED TERMS

     The following defined terms used herein shall, unless the context otherwise requires, have the
meanings specified below. Capitalized terms used and not otherwise defined herein shall have the
respective meanings given them in the Base Indenture:

 

 

     “Accounting Event” shall be deemed to occur if (a) the authoritative guidance
promulgated by the Financial Accounting Standards Board, the Commission, or other national
accounting standard setters permits the settlement of an issuer’s obligation to repurchase
securities at the option of the holder thereof in the issuer’s Capital Stock and expressly provides
that such shares issuable in satisfaction of such repurchase obligation shall not be taken into
account for purposes of computing the issuer’s diluted earnings per share (unless and until such
shares are actually issued) and such guidance remains in effect, or (b) the Company receives advice
from a nationally recognized accounting firm that such settlement and accounting treatment are
permitted.

     “Capital Stock” of any Person means any and all shares (including ordinary shares or
American Depositary Shares), interests, participations, or other equivalents, however designated,
of corporate stock or other equity participations, including partnership interests, whether general
or limited, of such Person and any rights (other than debt securities convertible or exchangeable
into an equity interest), warrants or options to acquire an equity interest in such Person.

     “Change in Control” will be deemed to have occurred at the time after Original Issue
Date that any of the following occurs:

     (a) any “person” or “group” within the meaning of Sections 13(d) or 14(d)(2) of the
Exchange Act, including the Company’s affiliates, other than the Company, its Subsidiaries
or its or their employee benefit plans, files a Schedule 13D or Schedule TO or any successor
schedule, form or report under the Exchange Act disclosing that such person or group has
become the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of greater
than 50% of the voting power of the Common Shares or other Capital Stock into which the
Common Shares may be reclassified or sold; provided, however, that a person shall not be
deemed a beneficial owner of, or to own beneficially, (i) any securities tendered pursuant
to a tender or exchange offer made by or on behalf of such person or any of such person’s
Affiliates until such tendered securities are accepted for purchase or exchange thereunder
or (ii) any securities if such beneficial ownership (A) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made pursuant to
the applicable rules and regulations under the Exchange Act and (B) is not also then
reportable on Schedule 13D or any successor schedule under the Exchange Act; or

     (b) consummation of any share exchange, consolidation or merger of the Company pursuant
to which the Common Shares will be converted into cash, securities or other property in each
case other than a share exchange, consideration, or merger of the Company in which the
holders of the Company’s Common Shares immediately prior to such transaction have, directly
or indirectly, at least a majority of the total voting power in aggregate of all classes of
Capital Stock of the continuing or surviving Company immediately after such transaction.

 - 2 -

 

A Change in Control will not be deemed to have occurred in respect of either of the foregoing,
however, if either:

     (i) the average of the Closing Prices of the Common Shares for the five consecutive
Trading Days ending immediately before the later of the Change in Control or the public
announcement thereof, equals or exceeds 105% of the Conversion Price of the Convertible
Notes immediately before the Change in Control or the public announcement thereof, or

     (ii) at least 90% of the consideration in the transaction or transactions constituting
the Change in Control consists of Capital Stock traded on a national securities exchange or
quoted on the Nasdaq National Market or which will be so traded or quoted when issued or
exchanged in connection with a Change in Control.

“Change in Control Purchase Date” has the meaning provided in Section 3.4(a) hereof.

“Change in Control Purchase Notice” has the meaning provided in Section 3.4(c) hereof.

“Change in Control Purchase Price” has the meaning provided in Section 3.4(a) hereof.

     “Closing Price” means, as of any date of determination, the closing sale price of a
Common Share on such date (or if no closing sale price is reported, the average of the bid and
asked prices or, if more than one in either case, the average of the average bid and the average
asked prices) on such date as reported by the Nasdaq National Market, or if the Common Shares are
not quoted on the Nasdaq National Market, as reported by the principal U.S. exchange or quotation
system on which the Common Shares are then listed or quoted. If the Common Shares are not listed
or quoted for trading on a principal U.S. exchange or automated quotation system, the “Closing
Price” will be the average of the mid-point of the last bid and asked prices for the Common Shares
on the relevant date from each of at least three nationally recognized independent investment
banking firms selected by the Company for this purpose.

     “Common Shares” means the shares of beneficial interest, $0.01 par value per share, of
the Company, which is the Company’s only outstanding class of Common Shares.

     “Company Notice” has the meaning provided in Section 3.3(f) hereof.

     “Company Notice Date” has the meaning provided in Section 3.3(f) hereof.

     “Conversion Agent” means the Trustee or such other office or agency designated by the
Company where Convertible Notes may be presented for conversion.

     “Conversion Date” has the meaning provided in Section 4.1(c) hereof.

     “Conversion Price” per Common Share means $1,000 divided by the then-applicable
Conversion Rate. The Initial Closing Price is $35.5679 per Common Share.

 - 3 -

 

     “Conversion Rate” means, as of any date of determination, the number of Common Shares
into which a Convertible Note may be converted in accordance with Article IV hereof. The initial
Conversion Rate is 28.1152 per $1,000 principal amount of Convertible Notes.

     “Conversion Value” of a Convertible Note means, as of any date of determination, the
product of the Closing Price multiplied by the Conversion Rate.

     “Convertible Notes” has the meaning provided in Section 2.1 hereof.

     “Corporate Trust Office of the Trustee” means 213 Court Street, Suite 703, Middletown,
CT, 06457.

     “Current Market Price” means, (i) for purposes of Section 4.2(b), (c) or (d), with
respect to a Common Share on any day, the average of the daily Closing Prices for the five
consecutive Trading Days commencing six Trading Days before the date on which Common Shares traded
on such date settle regular way on the Record Date with respect to distributions, issuances or
other events requiring computation under Section 4.2(b), (c) or (d); and (ii) for purposes of
Section 4.2(e), the average of the daily Closing Prices for the five consecutive Trading Days
commencing on the Trading Day next succeeding the Expiration Date.

     “Ex-Dividend Date” means the first date upon which a sale of a Common Share does not
automatically transfer the right to receive the relevant dividend from the seller of the Common
Share to the buyer.

     “Expiration Date” has the meaning provided in Section 4.2(e) hereof.

     “Expiration Time” has the meaning provided in Section 4.2(e) hereof.

     “Extraordinary Cash Dividend” means any dividend or other cash distribution payable in
respect of the Common Shares that is not a Regular Cash Dividend.

     “Interest Payment Date” means each May 15 and November 15 of each year, commencing
November 15, 2004.

     “Interest Period” means any six-month period from May 15 to November 15 and from
November 15 to May 15, as appropriate. Notwithstanding, the initial Interest Period shall begin on
the Original Issue Date and end on November 15, 2004.

     “Market Price” of Common Shares on a Purchase Date means the average of the Closing
Prices of the Common Shares for the five Trading Day period ending on the third Business Day Prior
to such Purchase Date (if the third Business Day prior to such Purchase Date is a Trading Day, or
if not, then on the last Trading Day immediately prior to the third Business Day), appropriately
adjusted to take into account the occurrence, during the period commencing on the first of the
Trading Days of the five Trading Day period and ending on such Purchase Date, of any event
described in Section 4.2; subject, however to the conditions set forth in Sections 4.3 and 4.4.

 - 4 -

 

     “Maryland REIT Statute” means Title 8 of the Corporations and Associates Article of
the Annotated Code of Maryland.

     “Original Issue Date” means May 12, 2004.

     “Principal Value Conversion” has the meaning provided in Section 4.1(b)(i).

     “Purchased Shares” has the meaning provided in Section 4.2(e).

     “Purchase Date” has the meaning provided in Section 3.3(a) hereof.

     “Purchase Notice” has the meaning provided in Section 3.3(b) hereof.

     “Purchase Price” has the meaning provided in Section 3.3(a) hereof.

     “Record Date” means, with respect to any dividend, distribution or other transaction
or event in which the holders of Common Shares have the right to receive any cash, securities or
other property or in which the Common Shares (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other property (whether
such date is fixed by the Board of Directors or by statute, contract or otherwise).

     “Redemption Date” has the meaning provided in Section 3.1 hereof.

     “Redemption Price” has the meaning provided in Section 3.1 hereof.

     “Regular Cash Dividend” means the regular quarterly cash distributions as declared by
the Board of Trustees as part of the Company’s dividend payment practice or stated cash dividend
payment practice or stated cash dividend policy then in effect, as well as any dividends declared
by the Board of Trustees that are necessary to preserve the Company’s status as a real estate
investment trust for federal income tax purposes, whether publicly announced or not.

     “Regular Record Date” means, with respect to each Interest Payment Date, the close of
business on the last calendar day of the month immediately preceding the month in which such
Interest Payment Date (whether or not a Business Day) occurs.

     “Sale Price” means, on any date of determination, the average of the secondary market
bid quotations per Convertible Note in the principal amount of $1,000, obtained by the Conversion
Agent for $5 million aggregate principal amount of Convertible Notes at approximately 3:30 p.m.,
New York City time, on such determination date from three nationally recognized securities dealers
(none of which shall be an Affiliate of the Company) in The City of New York (or such other place
that may be determined from time to time by the Company) selected by the Company; provided, however
if (a) three such bids can not be obtained by the Conversion Agent, then the average of the two
bids shall be obtained; (b) only one such bid can reasonably be obtained by the Conversion Agent,
that one bid shall be used. If the Conversion Agent cannot reasonably obtain at least one such
bid, or in the Company’s reasonable judgment, the bid quotations are not indicative of the
secondary market value of the Convertible Notes as of

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such determination date, then the Sale Price for such determination date shall be deemed to be
less than 94% of the Conversion Values of the Convertible Notes during that period.

     “Significant Subsidiary” means (1) any guarantor that would be a “significant
subsidiary” as defined in Regulation S-X promulgated pursuant to the Securities Act as such
Regulation is in effect on the Original Issue Date and (2) any guarantor that, when aggregated with
all other guarantors that are not otherwise Significant Subsidiaries and as to which any bankruptcy
event has occurred and is continuing, would constitute a Significant Subsidiary under clause (1) of
this definition.

     “Special Record Date” has the meaning provided in Section 2.2(a) hereof.

     “Stated Maturity” means May 15, 2024.

     “Subsidiary” means, with respect to any Person:

     (1) any Company, limited liability company, association or other business entity of which more
than 50% of the total voting power of the Equity Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Board of Directors thereof are at the
time owned or controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and

     (2) any partnership (a) the sole general partner or the managing general partner of which is
such Person or a Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination thereof).

     Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Company.

     “Trading Day” means (a) if the applicable security is listed, admitted for trading or
quoted on the New York Stock Exchange, the Nasdaq National Market or another U.S. national or
regional securities exchange, a day on which the New York Stock Exchange, the Nasdaq National
Market or such other national or regional securities exchange, as the case may be, is open for
business or (b) if the applicable security is not so listed, admitted for trading or quoted, any
Business Day.

     “Trigger Event” has the meaning provided in Section 4.2(c).

     “Triggering Distribution” has the meaning provided in Section 4.2(d).

ARTICLE II

DESCRIPTION OF CONVERTIBLE NOTES

     SECTION 2.1 Establishment.

     (a) There is hereby established a new series of notes to be issued under the Indenture, to be
designated as the Company’s 6% Convertible Notes due May 15, 2024 (the “Convertible
Notes”).

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     (b) There are to be authenticated and delivered $110,000,000 principal amount of Convertible
Notes. The maximum principal amount of Convertible Notes of this series that may be issued is
$110,000,000.

     (c) The Convertible Notes shall be issued in fully registered form. The Convertible Notes
shall be issued in the form of one or more Global Securities in substantially the form set out in
Exhibit A hereto. The Depositary with respect to the Convertible Notes shall be The
Depository Trust Company.

     (d) The form of the Trustee’s Certificate of Authentication for the Convertible Notes shall be
in substantially the form attached to the form of Convertible Note.

     (e) Each Convertible Note shall be dated the date of authentication thereof and shall bear
interest from the Original Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for.

     SECTION 2.2 Payment of Principal and Interest.

     (a) The principal of the Convertible Notes shall be due at Stated Maturity (unless earlier
redeemed, accelerated, purchased or converted). The unpaid principal amount of the Convertible
Notes shall bear interest at the rate of 6% per annum until paid. Interest for each Interest
Period shall be paid semi-annually in arrears on each Interest Payment Date to the Person in whose
name the Convertible Notes are registered on the Regular Record Date for such Interest Payment
Date, provided that interest payable at the Stated Maturity of principal or on a Redemption Date or
Purchase Date as provided herein shall be paid to the Person to whom principal is payable, except
as otherwise provided herein. Any such interest that is not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holders on such Regular Record Date and may either
be paid to the Person or Persons in whose name the Convertible Notes are registered at the close of
business on a special record date (“Special Record Date”) for the payment of such defaulted
interest to be fixed by the Trustee, notice whereof shall be given to Holders of the Convertible
Notes not less than ten days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange, if any, on which
the Convertible Notes shall be listed, and upon such notice as may be required by any such
exchange, all as more fully provided in the Base Indenture.

     (b) Payments of interest on the Convertible Notes shall include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for the Convertible Notes shall
be computed and paid on the basis of a 360-day year of twelve, 30-day months. In the event that
any date on which interest is payable on the Convertible Notes is not a Business Day, then a
payment of the interest payable on such date shall be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such delay), with the
same force and effect as if made on the date the payment was originally payable.

     (c) Subject to the rules of the Depositary with respect thereto, payment of the principal and
interest due at the Stated Maturity or earlier redemption, purchase or conversion of the
Convertible Notes shall be made upon surrender of the Convertible Notes at the Corporate

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Trust Office of the Trustee. The Company will pay cash amounts in money of the United States
that at the time of payment is legal tender for payment of public and private debts. The Company
may pay interest, the Redemption Price, Purchase Price, Change in Control Purchase Price and the
principal amount at Stated Maturity, as the case may be, by check or wire payable in such money;
provided, however that a Holder holding Convertible Notes with an aggregate principal amount in
excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election
of such Holder. The Company may mail an interest check to the Holder’s registered address.
Notwithstanding the foregoing, so long as this Convertible Note is registered in the name of a
Depositary or its nominee, all payments hereon shall be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee.

     SECTION 2.3 Global Securities.

     (a) The Convertible Notes will be issued in the form of one or more Global Securities
registered in the name of the Depositary or its nominee. Except under the limited circumstances
described below, Convertible Notes represented by one or more Global Securities will not be
exchangeable for, and will not otherwise be issuable as, Convertible Notes in definitive form. The
Global Securities described above may not be transferred except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or to a successor Depositary or its nominee.

     (b) Owners of beneficial interests in such a Global Security will not be considered the
Holders thereof for any purpose under the Indenture, and no Global Security representing a
Convertible Note shall be exchangeable, except for another Global Security of like denomination and
tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or
its nominee. The rights of Holders of such Global Security shall be exercised only through the
Depositary.

     (c) A Global Security shall be exchangeable for Convertible Notes registered in the names of
persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as a Depositary for such Global Security and no
successor Depositary shall have been appointed by the Company, or if at any time the Depositary
ceases to be a clearing agency registered under the Exchange Act, at a time when the Depositary is
required to be so registered to act as such Depositary and no successor Depositary shall have been
appointed by the Company, in each case within 90 days after the Company receives such notice or
becomes aware of such cessation, (ii) the Company in its sole discretion determines that such
Global Security shall be so exchangeable, or (iii) there shall have occurred an Event of Default
with respect to the Convertible Notes. Any Global Security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for Convertible Notes registered in such names as the
Depositary shall direct.

     (d) If the Convertible Notes are in the form of one or more Global Securities, any requirement
hereunder for delivery of such Convertible Note (or identification of certificate numbers with
respect thereto) shall require the beneficial owners thereof and the Company to comply with the
requirements of the Depositary and its direct and indirect participants with respect thereto. If
the Convertible Notes become registrable in the names of persons other than the Depositary, any
requirement for the Company to pay the Purchase Price, Change in Control

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Purchase Price, or to issue Common Shares on account of any conversion shall be contingent
upon such Holder delivering its certificate representing such Convertible Notes to the Company,
together with any required endorsement of such certificate.

     SECTION 2.4 Transfer.

     (a) No service charge will be made for any transfer or exchange of Convertible Notes, but
payment will be required of a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith.

     (b) The Company shall not be required (a) to issue, transfer or exchange any Convertible Notes
during a period beginning at the opening of business 15 days before the date of the mailing of a
notice pursuant to Section 11.5 of the Base Indenture identifying the numbers of the Convertible
Notes to be called for redemption, and ending at the close of business on the day of the mailing,
or (b) to transfer or exchange any Convertible Notes theretofore selected for redemption in whole
or in part, except the unredeemed portion of any Convertible Notes redeemed in part.

     SECTION 2.5 Denominations.

     The Convertible Notes may be issued in denominations of $1,000.00, or any integral multiple
thereof.

     SECTION 2.6 Ranking.

     The Convertible Notes will rank pari passu with all of the Company’s other unsecured and
unsubordinated Indebtedness.

     SECTION 2.7 Defeasance. The provisions of Article IV of the Base Indenture shall be
inapplicable to the Convertible Notes.

     SECTION 2.8 Additional Events of Default; Amendments.

     (a) In addition to those matters set forth in Section 5.1 of the Base Indenture, an “Event of
Default” with respect to the Convertible Notes shall also mean any of the following events:

     (i) default in the Company’s obligation to repurchase Convertible Notes upon the
Company’s exercise of its repurchase option pursuant to Section 3.1, upon the occurrence of
a Change in Control pursuant to Section 3.4 or upon the exercise by a holder of its option
to require the Company to repurchase such holder’s Convertible Notes pursuant to Section
3.3; or

     (ii) default in the Company’s obligation to convert the Convertible Notes upon exercise
of a Holder’s conversion right and continuance of such default for ten Business Days.

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     (b) In addition to any waiver of default restrictions set forth in Section 5.13 of the Base
Indenture, Holders of Convertible Notes may not waive any Event of Default listed in Section
2.8(a).

     (c) In addition to the restrictions on amendments set forth in Section 9.2 of the Base
Indenture, without the consent of each Holder of an outstanding Convertible Note, no amendments
shall be made that would:

     (i) reduce the Redemption Price, Purchase Price or Change in Control Purchase Price;

     (ii) make any change that adversely affects the right to convert the Convertible Notes
into Common Shares; or

     (iii) make any change that adversely affects the Holders’ right to require the Company
to purchase a Convertible Note.

ARTICLE III

REDEMPTION

     SECTION 3.1 Optional Redemption.

     The Company, at its option, may redeem the Convertible Notes in cash, at any time in whole or
from time to time in part, on or after May 15, 2009 on any date (a “Redemption Date”), at a
redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed (the
“Redemption Price”) plus any accrued and unpaid interest on the principal amount to be
redeemed to but excluding the Redemption Date; provided that if the Redemption Date is on or after
a Regular Record Date but on or prior to the related Interest Payment Date, interest will be
payable to the Holders in whose names the Convertible Notes are registered at the close of business
on the relevant Regular Record Date.

     SECTION 3.2 Notice of Redemption.

     (a) The Company shall provide notice to the Trustee and to each Holder of Securities of
Convertible Notes as provided in Sections 11.3 and 11.5 of the Base Indenture except that notice to
Holders shall be given at least 15 days but not more than 60 days before the Redemption Date. In
addition to the information required by Section 11.5, the Company shall provide to each Holder with
the Notice of Redemption:

     (i) the Conversion Price;

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

     (iii) that the Convertible Notes called for redemption may be converted at any time
before the close of business on the Business Day preceding the Redemption Date; and

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     (iv) that the Holders who want to convert Convertible Notes must satisfy the
requirements set forth in paragraph 8 of the Global Security.

     (b) If any Convertible Note selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Convertible Note so
selected, the converted portion of such Convertible Note shall be deemed (so far as may be) to be
the portion selected for redemption. Convertible Notes that have been converted during a selection
of Convertible Notes to be redeemed may be treated by the Trustee as outstanding for the purpose of
such selection.

     SECTION 3.3 Purchase of Convertible Notes at the Option of the Holder.

     (a) General. On each of May 15, 2009, May 15, 2014 and May 15, 2019 (each, a “Purchase
Date”), each Holder shall have the right, at such Holder’s option, to require the Company to
purchase any or all of such Holder’s Convertible Notes. The Company shall purchase such
Convertible Notes at a price equal to 100% of the principal amount of the Convertible Notes to be
purchased (the “Purchase Price”) plus any accrued and unpaid interest on the principal
amount to be purchased to but excluding the Purchase Date; provided that if the Purchase Date is on
or after a Regular Record Date but on or prior to the related Interest Payment Date, interest will
be payable to Holders in whose names the Convertible Notes are registered at the close of business
on the relevant Regular Record Date.

     (b) Exercise of Purchase Option. For a Convertible Note to be so purchased at the option of
the Holder, the Paying Agent must receive:

     (i) from the Holder a written notice of purchase (a “Purchase Notice”) at any
time from the opening of business on the date that is 20 Business Days prior to the Purchase
Date until the close of business on the fifth Business Day prior to such Purchase Date
stating:

     (A) the portion of the principal amount of the Convertible Note which the
Holder will deliver to be purchased, which portion must be in principal amounts of
$1,000 or an integral multiple thereof;

     (B) that such Convertible Note shall be purchased as of the Purchase Date
pursuant to the terms and conditions specified in paragraph 6 of the Global Security
and in this Indenture;

     (C) if an Accounting Event has occurred and the Company has elected, pursuant
to Section 3.3(c), to pay the Purchase Price in Common Shares, whether, if such
portion of the Purchase Price shall ultimately become payable entirely in cash
because any of the conditions to payment of the Purchase Price in Common Shares is
not satisfied prior to the close of business on the relevant Purchase Date as set
forth in Section 3.3(e), such Holder elects (i) to withdraw such Purchase Notice as
to some or all of the Convertible Notes to which such Purchase Notice relates
(stating the expected principal amount of the Convertible Notes as to which such
withdrawal shall relate), or (ii) to receive cash in respect of the entire

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Purchase Price for all Convertible Notes (or portions thereof) to which such
Purchase Notice relates; and

     (D) delivery of such Convertible Note to the Paying Agent prior to, on or after
the Purchase Date (together with all necessary endorsements) at the offices of the
Paying Agent, such delivery being a condition to receipt by the Holder of the
Purchase Price therefor, together with all accrued interest; provided, however, that
such Purchase Price, together with all accrued interest, shall be so paid pursuant
to this Section 3.3 only if the Convertible Note so delivered to the Paying Agent
shall conform in all respects to the description thereof in the related Purchase
Notice, as determined by the Company.

     If a Holder, in a Purchase Notice or a written notice of withdrawal delivered to the Paying
Agent in accordance with Section 3.5, fails to indicate such Holder’s choice with respect to the
election set forth in clause (C) of Section 3.3(b)(i), such Holder shall be deemed to have elected
to receive cash in respect of the entire Purchase Price for all Convertible Notes subject to such
Purchase Notice in the circumstances set forth in such clause (C).

     The Company shall purchase from the Holder thereof, pursuant to this Section 3.3, a portion of
a Convertible Note if the Principal Amount of such portion is $1,000 or an integral multiple of
$1,000. Provisions of this Indenture that apply to the purchase of all of a Convertible Note also
apply to the purchase of such portion of such Convertible Note.

     Any purchase by the Company contemplated pursuant to the provisions of this Section 3.3 shall
be consummated by the delivery of the consideration to be received by the Holder promptly following
the later of the Purchase Date and compliance with Section 3.3(b).

     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Purchase Notice contemplated by this Section 3.3(b) shall have the right to withdraw such Purchase
Notice at any time prior to the close of business on the Business Day preceding the Purchase Date
by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.5.

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

     (c) Manner of Payment of Purchase Price. The Purchase Price of Convertible Notes in respect
of which a Purchase Notice pursuant to Section 3.3(b) has been given shall be paid in U.S. legal
tender. Notwithstanding the foregoing, upon the occurrence of an Accounting Event, the Company may
elect to pay the Purchase Price of Convertible Notes, in cash or Common Shares.

     (d) Payment of Purchase Price in Cash. If the Purchase Price is to be paid in cash, the
Company shall deposit cash, in respect of purchases under this Section 3.3, at the time and in the
manner as provided in Section 3.5(b), sufficient to pay the aggregate Purchase Price of all
Convertible Notes, together with all accrued interest to, but not including, the Purchase Date, to
be purchased pursuant to this Section 3.3.

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     (e) Payment of Purchase Price in Common Shares. If an Accounting Event has occurred and the
Company has elected to pay the Purchase Price of Convertible Notes in Common Shares, the Company
shall issue a number of Common Shares equal to the quotient obtained by dividing (i) the Purchase
Price to be paid by Common Shares by (ii) the Market Price of one Common Share as determined by the
Company in the Company Notice, subject to the next succeeding paragraph.

     The Company shall not issue fractional Common Shares in payment of the Purchase Price.
Instead, the Company shall pay cash based on the Market Price for all fractional shares. It is
understood that if a Holder elects to have more than one Convertible Note purchased, the number of
Common Shares shall be based on the aggregate amount of Convertible Notes to be purchased.

     The Company’s right to exercise its election to purchase Convertible Notes through the
issuance of Common Shares shall be conditioned upon:

     (i) the occurrence of an Accounting Event;

     (ii) the Company not having given its Company Notice of an election to pay in cash and
its giving of a timely Company Notice of an election to purchase the Convertible Notes with
Common Shares as provided herein;

     (iii) the registration of such Common Shares under the Securities Act or the Exchange
Act, in each case, if required by applicable law;

     (iv) the authorization for quotation of such Common Shares on the Nasdaq National
Market, or if the Common Shares are not then quoted on the Nasdaq National Market, the
listing of such Common Shares on a principal national securities exchange on which the
Common Shares are then listed;

     (v) any necessary qualifications or registration under applicable state securities laws
or the availability of an exemption therefrom; and

     (vi) the receipt by the Trustee of an Officers’ Certificate and an Opinion of Counsel
each stating that (A) the terms of the issuance of the Common Shares are in conformity with
this Indenture and (B) the Common Shares to be issued by the Company in payment of the
Purchase Price in respect of the Convertible Notes have been duly authorized and, when
issued and delivered pursuant to the terms of this Indenture in payment of the Purchase
Price in respect of the Convertible Notes, shall be validly issued, fully paid and
non-assessable and free from preemptive rights under the Company’s Declaration of Trust and
Bylaws and the Maryland REIT Statute, and, in the case of such Officers’ Certificate,
stating that the conditions above and the condition set forth in the second succeeding
sentence have been satisfied and, in the case of such Opinion of Counsel, stating that the
conditions in clauses (iii) through (v) above have been satisfied.

     Such Officers’ Certificate shall also set forth the number of Common Shares to be issued for
each $1,000 principal amount and the Closing Price of a single Common Share on each Trading Day
during the period commencing on the first Trading Day of the period during which

 - 13 -

 

the Market Price is calculated and ending on the third day prior to the applicable Purchase
Date. The Company may pay the Purchase Price in Common Shares only if the information necessary to
calculate the Market Price is published in a daily newspaper of national circulation. If the
foregoing condition and the conditions in clauses (i) through (vi) above are not satisfied prior to
the close of business on the Purchase Date, and the Company has elected to purchase the Convertible
Notes pursuant to this Section 3.3 through the issuance of Common Shares, the Company shall pay the
entire Purchase Price of Convertible Notes in cash.

     Upon determination of the actual number of Common Shares to be issued upon redemption of
Convertible Notes, the Company shall (i) disseminate a press release containing such information
through at least two of Reuter’s Economic Services, Bloomberg Business News, PR Newswire and Dow
Jones & Company Inc. and (ii) publish such information on its web site or through such other public
medium as it may use at that time.

     (f) Company Notice. In connection with any purchase of Convertible Notes pursuant to Section
3.3, the Company shall give written notice of the Purchase Date to the Holders (the “Company
Notice”). The Company Notice shall be sent by first-class mail to the Trustee and to each
Holder (and to each beneficial owner as required by applicable law) not less than 20 Business Days
prior to any Purchase Date (the “Company Notice Date”). Each Company Notice shall include
a form of Purchase Notice to be completed by a Convertible Noteholder and shall state:

     (i) the Purchase Price and the Conversion Price per $1,000 principal amount of
Convertible Notes;

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

     (iii) if an Accounting Event has occurred, whether the Company is electing to pay the
Purchase Price in cash or Common Shares;

     (iv) if an Accounting Event has occurred and the Company has elected to pay the
Purchase Price in Common Shares, the Market Price and the method for calculating same;

     (v) that Convertible Notes as to which a Purchase Notice has been given may be
converted if they are otherwise convertible only in accordance with Article IV hereof and
paragraph 8 of the Global Security if the applicable Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;

     (vi) that Convertible Notes must be surrendered to the Paying Agent to collect payment;

     (vii) that the Purchase Price for, and any accrued interest on, any Convertible Note as
to which a Purchase Notice has been given and not withdrawn will be paid promptly following
the later of the Purchase Date and the time of surrender of such Convertible Note;

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     (viii) the procedures the Holder must follow to exercise rights under Section 3.3 and a
brief description of those rights;

     (ix) briefly, the conversion rights of the Convertible Notes;

     (x) the procedures for withdrawing a Purchase Notice (including pursuant to the terms
of Section 3.5);

     (xi) that, unless the Company defaults in making payments on Convertible Notes for
which a Purchase Notice has been submitted, interest on such Convertible Notes will cease to
accrue on the Purchase Date; and

     (xii) the CUSIP number of the Convertible Notes.

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

     SECTION 3.4 Purchase of Convertible Notes at Option of the Holder upon a Change in
Control.

     (a) If at any time the Convertible Notes remain outstanding there shall have occurred a Change
in Control, Convertible Notes shall be purchased by the Company, at the option of the Holder
thereof, at a price equal to 100% of the principal amount of the Convertible Notes to be purchased
(the “Change in Control Purchase Price”) plus any accrued and unpaid interest on the
principal amount to be purchased to but not including the date that is 45 Business Days after the
occurrence of the Change in Control (the “Change in Control Purchase Date”), subject to
satisfaction by or on behalf of the Holder of the requirements set forth in Section 3.4(c).

     (b) Within 30 days after the occurrence of a Change in Control, the Company shall mail a
written notice of the Change in Control by first-class mail to the Trustee and to each Holder (and
to beneficial owners as required by applicable law). The notice shall include a form of Change in
Control Purchase Notice to be completed by the Convertible Noteholder and shall state:

     (i) briefly, the events causing a Change in Control and the date of such Change in
Control;

     (ii) the date by which the Change in Control Purchase Notice pursuant to this Section
3.4 must be given;

     (iii) the Change in Control Purchase Date and the last date on which a Holder may
exercise its purchase right;

     (iv) the Change in Control Purchase Price;

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

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     (vi) the Conversion Price;

     (vii) that Convertible Notes as to which a Change in Control Purchase Notice has been
given may be converted pursuant to Article IV hereof only if the Change in Control Purchase
Notice has been withdrawn in accordance with the terms of this Indenture;

     (viii) that Convertible Notes must be surrendered to the Paying Agent to collect
payment;

     (ix) that the Change in Control Purchase Price for any Convertible Note as to which a
Change in Control Purchase Notice has been duly given and not withdrawn will be paid
promptly following the later of the Change in Control Purchase Date and time of surrender of
such Convertible Note;

     (x) briefly, the procedures the Holder must follow to exercise rights under this
Section 3.4;

     (xi) briefly, the conversion rights of the Convertible Notes;

     (xii) the procedures for withdrawing a Change in Control Purchase Notice;

     (xiii) that, unless the Company defaults in making payment of such Change in Control
Purchase Price, interest on Convertible Notes surrendered for purchase by the Company will
cease to accrue on and after the Change in Control Purchase Date; and

     (xiv) the CUSIP number of the Convertible Notes.

     (c) A Holder may exercise its rights specified in Section 3.4(a) upon delivery of a written
notice of purchase (a “Change in Control Purchase Notice”) to the Paying Agent at any time
prior to the close of business on the fifth Business Day prior to the Change in Control Purchase
Date, stating:

     (i) the portion of the principal amount of the Convertible Note to be purchased, which
portion must be $1,000 or an integral multiple thereof; and

     (ii) that such Convertible Note shall be purchased pursuant to the terms and conditions
specified in paragraph 6 of the Global Security.

     The delivery of such Convertible Note to the Paying Agent prior to, on or after the Change in
Control Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent
shall be a condition to the receipt by the Holder of the Change in Control Purchase Price therefor;
provided, however that such Change in Control Purchase Price shall be so paid pursuant to this
Section 3.4 only if the Convertible Note so delivered to the Paying Agent shall conform in all
respects to the description thereof set forth in the related Change in Control Purchase Notice.

 - 16 -

 

     The Company shall purchase from the Holder thereof, pursuant to this Section 3.4, a portion of
a Convertible Note if the principal amount of such portion is $1,000 or an integral multiple of
$1,000. Provisions of this Indenture that apply to the purchase of all of a Convertible Note also
apply to the purchase of such portion of such Convertible Note.

     Any purchase by the Company contemplated pursuant to the provisions of this Section 3.4 shall
be consummated by the delivery of the consideration to be received by the Holder promptly following
the later of the Change in Control Purchase Date and compliance with Section 3.4(c).

     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Change in Control Purchase Notice contemplated by this Section 3.4(c) shall have the right to
withdraw such Change in Control Purchase Notice at any time prior to the close of business on the
Business Day immediately preceding the Change in Control Purchase Date by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 3.5.

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

     SECTION 3.5 Effect of Purchase Notice or Change in Control Purchase Notice.

     Upon receipt by the Paying Agent of the Purchase Notice or Change in Control Purchase Notice
specified in Section 3.3(b) or Section 3.4(c), as applicable, the Holder of the Convertible Note in
respect of which such Purchase Notice or Change in Control Purchase Notice, as the case may be, was
given shall (unless such Purchase Notice or Change in Control Purchase Notice is withdrawn as
specified in the following two paragraphs) thereafter be entitled to receive solely the Purchase
Price or Change in Control Purchase Price, as the case may be, with respect to such Convertible
Note. Such Purchase Price or Change in Control Purchase Price, together with all accrued interest
to, but not including, the Purchase Date or Change in Control Purchase Date, as the case may be,
shall be paid to such Holder promptly following the later of (x) the Purchase Date or the Change in
Control Purchase Date, as the case may be, with respect to such Convertible Note (provided the
conditions in Section 3.3(b) or Section 3.4(c), as applicable, have been satisfied) and (y) the
time of delivery of such Convertible Note to the Paying Agent in the manner provided in this
Indenture. Convertible Notes in respect of which a Purchase Notice or Change in Control Purchase
Notice, as the case may be, has been given by the Holder thereof may not be converted pursuant to
Article IV hereof on or after the date of the delivery of such Purchase Notice or Change in Control
Purchase Notice, as the case may be, unless such Purchase Notice or Change in Control Purchase
Notice, as the case may be, has first been validly withdrawn as specified in the following two
paragraphs.

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

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     (i) the principal amount of the Convertible Note with respect to which such notice of
withdrawal is being submitted, and

     (ii) the principal amount, if any, of the Convertible Note which remains subject to the
original Purchase Notice or Change in Control Purchase Notice, as the case may be, and which
has been or will be delivered for purchase by the Company.

     A written notice of withdrawal of a Purchase Notice shall be in the form set forth in the
preceding paragraph.

     There shall be no purchase of any Convertible Notes pursuant to Section 3.3 or 3.4 if there
has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such
Convertible Notes, of the required Purchase Notice or Change in Control Purchase Notice, as the
case may be) and is continuing an Event of Default (other than a default in the payment of the
Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such
Convertible Notes). The Paying Agent will promptly return to the respective Holders thereof any
Convertible Notes (x) with respect to which a Purchase Notice or Change in Control Purchase Notice,
as the case may be, has been withdrawn in compliance with this Indenture, or (y) held by it during
the continuance of an Event of Default (other than a default in the payment of the Purchase Price
or Change in Control Purchase Price, as the case may be, with respect to such Convertible Notes) in
which case, upon such return, the Purchase Notice or Change in Control Purchase Notice with respect
thereto shall be deemed to have been withdrawn.

     (b) Deposit of Purchase Price or Change in Control Purchase Price. Prior to 10:00
a.m. (local time in the City of New York) on the Purchase Date or the Change in Control Purchase
Date, as the case may be, the Company shall deposit with the Trustee or with the Paying Agent (or,
if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent,
shall segregate and hold in trust as provided in Section 6.5 of the Base Indenture) an amount of
money (in immediately available funds if deposited on such Business Day) sufficient to pay the
aggregate Purchase Price, together with all accrued interest to, but not including, the Purchase
Date or Change in Control Purchase Price, as the case may be, of all the Convertible Notes or
portions thereof which are to be purchased as of the Purchase Date or Change in Control Purchase
Date, as the case may be.

     SECTION 3.6 Covenant to Comply With Securities Laws Upon Purchase of Convertible
Notes.

     When complying with the provisions of Section 3.3 or 3.4 hereof (provided that such offer or
purchase constitutes an “issuer tender offer” for purposes of Rule 13e-4 (which term, as used
herein, includes any successor provision thereto) under the Exchange Act at the time of such offer
or purchase), the Company shall (i) comply in all material respects with Rule 13e-4 and Rule 14e-1
under the Exchange Act, (ii) file the related Schedule TO (or any successor schedule, form or
report) under the Exchange Act, and (iii) otherwise comply in all material respects with all
federal and state securities laws so as to permit the rights and obligations under Sections 3.3 and
3.4 to be exercised in the time and in the manner specified in Sections 3.3 and 3.4.

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     SECTION 3.7 Repayment to the Company.

     The Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed,
together with interest or dividends, if any, thereon (subject to the provisions of Section 6.2(j)
of the Base Indenture), held by them for the payment of the Purchase Price or Change in Control
Purchase Price, as the case may be, and accrued interest; provided, however, that to the extent
that the aggregate amount of cash deposited by the Company pursuant to Section 3.5 exceeds the
aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of the
Convertible Notes or portions thereof which the Company is obligated to purchase as of the Purchase
Date or Change in Control Purchase Date, as the case may be, and accrued interest thereon, then,
unless otherwise agreed in writing with the Company, promptly after the Business Day following the
Purchase Date or Change in Control Purchase Date, as the case may be, the Trustee shall return any
such excess to the Company together with interest or dividends, if any, thereon (subject to the
provisions of Section 6.2(j) of the Base Indenture).

ARTICLE IV

CONVERSION OF CONVERTIBLE NOTES

     SECTION 4.1 Conversion of Convertible Notes.

     (a) Subject to the further provisions of this Article IV and paragraph 8 of the Global
Security, a Holder of a Convertible Note may convert the principal amount of such Convertible Note
(or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into
Common Shares on any Business Day, if the average of the Closing Prices of the Common Shares for
the immediately preceding 30 consecutive Trading Day period is more than 110% of the average of the
Conversion Prices of our Common Shares during such 30-Trading Day period (the “Closing Price
Condition”), subject to the exceptions provided below; provided, however, that if such
Convertible Note is called for redemption or submitted or presented for purchase pursuant to
Article III such conversion right shall terminate at the close of business on the Business Day
immediately preceding the Redemption Date or Change in Control Purchase Date, as the case may be,
for such Convertible Note (unless the Company shall default in making the redemption payment or
Change in Control Purchase Price payment when due, in which case the conversion right shall not
apply following the close of business on the date such default is cured and such Convertible Note
is redeemed or purchased, as the case may be). The number of Common Shares deliverable upon
conversion of a Convertible Note is determined by dividing (x) the principal amount of the
Convertible Notes, or the portion thereof being converted, by (y) the Conversion Price in effect on
the Conversion Date. The initial Conversion Price and the Conversion Rate shall be that set forth
in paragraph 8 of the Global Security.

     Holders will not receive any cash payment representing accrued and unpaid interest upon
conversion of a Convertible Note. Accrued and unpaid interest on the Convertible Note shall be
deemed paid in full rather than canceled, extinguished or forfeited. The Company will not adjust
the Conversion Rate to account for accrued interest, if any.

     A Holder of Convertible Notes is not entitled to any rights of a holder of Common Shares until
such Holder has converted its Convertible Note to Common Shares, and only to the extent

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such Convertible Note are deemed to have been converted into Common Shares pursuant to this
Article IV.

(b) Even if the Closing Price Condition is not satisfied,

     (i) if during any five consecutive Trading Day period, the average of the Sale Prices
for the Convertible Notes for that five consecutive Trading Day period was less than 94% of
the average of the Conversion Values for the Convertible Notes during that period, a Holder

may surrender Convertible Notes for conversion at any time during the following five
Business Days; provided, however, that if on any Conversion Date on which a Convertible Note
is surrendered for conversion based on the condition described in this paragraph that is on
or after May 15, 2019, the Closing Price on the Trading Day before the Conversion Date is
greater than 100% of the then applicable Conversion Price and less than 110% of the then
applicable Conversion Price, then Holders surrendering Convertible Notes for conversion will
receive, at the option of the Company, in lieu of Common Shares based on the then applicable
Conversion Rate, cash or Common Shares with a value equal to the principal amount of the
Convertible Notes being converted (a “Principal Value Conversion”). Common Shares
delivered upon a Principal Value Conversion will be valued at the Closing Price on the
Conversion Date. The Company shall deliver Common Shares upon a Principal Value Conversion
no later than the third business day following the determination of the Closing Price;

The Conversion Agent will determine the Sale Price of the Convertible Notes pursuant to this
Section 4.1(b)(i) only after being instructed to do so by the Company. The Company has no
obligation to so instruct the Conversion Agent unless a Holder provides the Company with
reasonable evidence that the provisions of this Section 4.1(b)(i) have been satisfied. If
such reasonable evidence is so presented, the Company shall instruct the Conversion Agent to
determine the Sale Prices for the applicable period; provided that the Conversion Agent
shall be under no duty or obligation to make the calculations described in Section 4(b)(i)
hereof or to determine whether the Convertible Notes are convertible pursuant to such
Section. For the avoidance of doubt, the Company shall make the calculations described in
Section 4.1(b)(i) using the Sale Price provided by the Conversion Agent.

     (ii) a Holder may surrender for conversion a Convertible Note that has been called for
redemption pursuant to Section 3.1 at any time prior to close of business on the Business
Day prior to the Redemption Date;

     (iii) in the event that the Company declares:

     (A) a dividend or distribution of any rights or warrants to all holders of
Common Shares entitling them to subscribe for or purchase, for a period expiring
within 60 days, Common Shares at a price less than the Current Market Price on the
Trading Day immediately preceding the Record Date for such dividend or distribution,
or

     (B) a dividend or distribution of cash, debt securities (or other evidences of
indebtedness), or other assets (excluding dividends or distributions

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for which Conversion Rate adjustment is required to be made under Section
4.2(a) or Section 4.2(b) below), where the fair market value of such dividend or
distribution has a per share value exceeding 10% of the Current Market Price as of
the Trading Day immediately preceding the declaration date for such dividend or
distribution,

then the Convertible Notes may be surrendered for conversion beginning on the date the
Company gives notice to the Holders of such right, which shall not be less than 20 days
prior to the Ex-Dividend Date for such dividend or distribution, and Convertible Notes may
be surrendered for conversion at any time until the earlier of the close of business on the
Business Day prior to the Ex-Dividend Date or the Company’s announcement that such
distribution will not take place. No adjustment to the ability of the holders to convert
will be made if the holders are entitled to participate in the distribution without
conversion; and

     (iv) in the event that the Company is a party to a consolidation, merger or binding
share exchange pursuant to which all or substantially all of the Common Shares would be
converted into cash, securities or other property, the Convertible Notes may be surrendered
for conversion at any time from or after the date which is 15 days prior to the anticipated
effective date of the transaction until 15 days after the actual date of such transaction.

The Board of Trustees shall determine the anticipated effect date of the transaction, and
such determination shall be conclusive and binding on the Holders and shall be publicly
announced by the Company by issuance of a press release and publication on its website or
through such other public medium as it may use at that time not later than two Business Days
prior to the 15th day before the anticipated effective date.

     (c) Conversion Procedure. To convert a Convertible Note, a Holder must satisfy the
requirements in paragraph 8 of the Global Security. The first Business Day on which the Holder
satisfies all those requirements is the conversion date (the “Conversion Date”).

     As soon as practicable after the Conversion Date, the Company shall deliver to the Holder,
through the Conversion Agent, a certificate for the number of full Common Shares deliverable upon
the conversion or exchange and cash in lieu of any fractional share determined pursuant to Section
4.1(d); provided that, in case of a Principal Value Conversion pursuant to Section 4.1(b)(i), the
Company shall deliver such Common Shares or cash pursuant to Section 4.1(d) not later than three
Business Days following the Conversion Date. The person in whose name the certificate is
registered shall be treated as a shareholder of record on and after the next Business Day following
the Conversion Date. Upon conversion of a Convertible Note, such person shall no longer be a
Holder of such Convertible Note. No payment or adjustment will be made for dividends on, or other
distributions with respect to, any Common Shares except as provided in this Article IV.

     If any Holder elects to convert Convertible Notes (in whole or in part) during the period from
the close of business on any Regular Record Date for the payment of an installment of interest to
the opening of business on the next succeeding Interest Payment Date, then the Holder shall deliver
to the Conversion Agent payment in funds acceptable to the Company of an amount

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equal to the interest payable on such Interest Payment Date on the principal amount of such
Convertible Notes then being converted, and such interest installment shall be payable to such
registered Holder notwithstanding the conversion of the Convertible Notes, subject to the
provisions of this Indenture relating to the payment of defaulted interest by the Company. If the
Company defaults in the payment of interest payable on such Interest Payment Date, the Company
shall promptly repay such funds to such Holder.

     Nothing in this Section 4.1 shall affect the right of a Holder in whose name any Convertible
Note is registered at the close of business on a Regular Record Date to receive the interest
payable on such Convertible Note on the related Interest Payment Date in accordance with the terms
of this Indenture and the Convertible Notes. If the Holder converts more than one Convertible Note
at the same time, the number of Common Shares deliverable upon the conversion shall be based on the
total principal amount of the Convertible Notes converted.

     If the last day on which a Convertible Note may be converted is not a Business Day, the
Convertible Note may be converted on the next succeeding day that is a Business Day.

     If a Convertible Note is converted in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder, a new Convertible Note in an authorized denomination equal
in principal amount to the unconverted portion of the Convertible Note.

     A Convertible Note in respect of which a Holder has delivered a Purchase Notice pursuant to
Section 3.3 or a Change in Control Purchase Notice pursuant to Section 3.4 exercising the option of
such Holder to require the Company to purchase such Convertible Note may be converted only if such
Purchase Notice or Change in Control Purchase Notice is withdrawn by a written notice of withdrawal
complying in all respects with each of the provisions of this Indenture relating to such notice and
delivered to the Paying Agent prior to the close of business on the Business Day preceding the
Purchase Date or Change in Control Purchase Date, as the case may be.

     (d) Cash Payments in Lieu of Fractional Shares. The Company shall not issue fractional
Common Shares upon conversion of Convertible Notes. Instead the Company shall deliver cash for the
current market value of the fractional share. The current market value of a fractional share shall
be determined to the nearest 1/1,000 of a share by multiplying the Closing Price on the Trading Day
immediately preceding the Conversion Date by the fractional amount and rounding the product to the
nearest whole cent.

     (e) Taxes on Conversion. The Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of Common Shares upon conversion of a Convertible Note. However, the
Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a
name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificates
representing the Common Shares being issued in a name other than the Holder’s name until the
Conversion Agent receives a sum sufficient to pay any tax which shall be due because the shares are
to be issued in a name other than the Holder’s name. Nothing herein shall preclude the Company’s
withholding any tax required by law or regulations.

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     (f) Covenants of the Company. The Company shall, prior to issuance of any Convertible Notes
hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued
Common Shares a sufficient number of Common Shares to permit the conversion of the Convertible
Notes. All Common Shares delivered upon conversion of the Convertible Notes shall be newly issued
shares, shall be duly and validly issued and fully paid and nonassessable, and shall be free from
preemptive rights under the Company’s Declaration of Trust and Bylaws and the Maryland REIT Statute
and free of any lien or adverse claim. The Company shall endeavor promptly to comply with all
federal and state securities laws regulating the order and delivery of Common Shares upon the
conversion of Convertible Notes, if any, and shall cause to have listed or quoted all such Common
Shares on each United States national securities exchange, automated quotation system or
over-the-counter or other domestic market on which the Common Shares are then listed or quoted;
provided, that if the rules of such exchange, system or market permit the Company to defer the
listing or quotation of the Common Shares until the first conversion of the Convertible Notes into
Common Shares in accordance with the provisions of this Indenture, the Company covenants to list
such Common Shares issuable upon conversion of the Convertible Notes in accordance with the
requirements of such exchange, system or market at such time.

     SECTION 4.2 Adjustment of Conversion Rate.

     The Conversion Rate shall be adjusted from time to time by the Company as follows:

     (a) In case the Company shall (i) pay a dividend on its Common Shares in Common Shares, (ii)
make a distribution on its Common Shares in Common Shares, (iii) subdivide its outstanding Common
Shares into a greater number of shares, or (iv) combine its outstanding Common Shares into a
smaller number of shares, the Conversion Rate in effect immediately prior thereto shall be adjusted
so that the same shall equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to such event by a fraction of which the numerator shall be the number of Common
Shares outstanding immediately after such event and the denominator of which shall be the number of
Common Shares outstanding immediately prior to such event. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the Record Date in the case of a dividend
or distribution and shall become effective immediately after the effective date in the case of
subdivision or combination.

     (b) In case the Company shall issue rights or warrants to all or substantially all holders of
its Common Shares entitling them (for a period commencing no earlier than the Record Date described
below and expiring not more than 60 days after such Record Date) to subscribe for or purchase
Common Shares (or securities convertible into Common Shares) at a price per share (or having a
conversion price per share) less than the Current Market Price on the Trading Day immediately prior
to the Record Date for such issuance, the Conversion Rate in effect shall be adjusted so that the
same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior
to such Record Date by a fraction of which the numerator shall be the number of Common Shares
outstanding at the close of business on the date immediately preceding the Record Date plus the
number of additional Common Shares offered (or into which the Convertible Notes so offered are
convertible), and the denominator of which shall be the number of Common Shares outstanding at the
close of business on the date immediately preceding the Record Date plus the number of shares which
the aggregate offering

 - 23 -

 

price of the total number of Common Shares so offered (or the aggregate conversion price of
the Convertible Notes so offered, which shall be determined by multiplying the number of Common
Shares issuable upon conversion of such Convertible Notes by the Conversion Price Common Share
pursuant to the terms of such Convertible Notes) would purchase at the Current Market Price on the
Trading Day immediately preceding the Record Date for such issuance. Such adjustment shall be made
successively whenever any such rights or warrants are issued, and shall become effective on the day
following the date of announcement of such issuance. If at the end of the period during which such
rights or warrants are exercisable not all rights or warrants shall have been exercised, the
adjusted Conversion Rate shall be immediately readjusted to what it would have been based upon the
number of additional Common Shares actually issued (or the number of Common Shares issuable upon
conversion of Convertible Notes actually issued).

     (c) In case the Company shall distribute to all or substantially all holders of its Common
Shares, any shares of Capital Stock of the Company (other than Common Shares), Extraordinary Cash
Dividends or any evidences of Indebtedness or other non-cash assets (including securities of any
person other than the Company but excluding dividends or distributions referred to in subsection
(a) of this Section 4.2), or shall distribute to all or substantially all holders of its Common
Shares rights or warrants to subscribe for or purchase any of its Convertible Notes (excluding
those rights and warrants referred to in subsection (b) of this Section 4.2, then in each such case
the Conversion Rate shall be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to such distribution by a fraction of
which the numerator shall be the Current Market Price on the Record Date for such distribution and
the denominator shall be the Current Market Price on such Record Date less the fair market value on
such Record Date (as determined by the Board of Directors, whose determination shall be conclusive
evidence of such fair market value and which shall be evidenced by an Officers’ Certificate
delivered to the Trustee) of the portion of the Capital Stock, evidences of Indebtedness or other
non-cash assets so distributed or of such rights or warrants applicable to one Common Share
(determined on the basis of the number of Common Shares outstanding on the Record Date). Such
adjustment shall be made successively whenever any such distribution is made and shall become
effective immediately after the Record Date for such distribution.

     In the event the then fair market value (as so determined) of the portion of the Capital
Stock, evidences of Indebtedness or other non-cash assets so distributed or of such rights or
warrants applicable to one Common Share is equal to or greater than the Current Market Price on
such Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that
each holder of a Convertible Note shall have the right to receive upon conversion the amount of
Capital Stock, evidences of Indebtedness or other non-cash assets so distributed or of such rights
or warrants such holder would have received had such holder converted each Convertible Note on such
Record Date. In the event that such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if
such dividend or distribution had not been declared. If the Board of Trustees determines the fair
market value of any distribution for purposes of this Section 4.2 by reference to the actual or
when issued trading market for any Convertible Notes, it must in doing so consider the prices in
such market over the same period used in computing the Current Market Price.

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     Rights or warrants distributed by the Company to all holders of Common Shares entitling the
holders thereof to subscribe for or purchase shares of the Company’s Capital Stock (either
initially or under certain circumstances), which rights or warrants, until the occurrence of a
specified event or events (“Trigger Event”) (i) are deemed to be transferred with such
Common Shares; (ii) are not exercisable; and (iii) are also issued in respect of future issuances
of Common Shares, shall be deemed not to have been distributed for purposes of this Section 4.2
(and no adjustment to the Conversion Rate under this Section 4.2 will be required) until the
occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate
shall be made under this Section 4.2. If any such right or warrant, including any such existing
rights or warrants distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase different securities,
evidences of Indebtedness or other non-cash assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and Record Date with respect to new
rights or warrants with such rights (and a termination or expiration of the existing rights or
warrants without exercise by any of the holders thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto that was counted for
purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under
this Section 4.2 was made, (i) in the case of any such rights or warrants, all of which shall have
been redeemed or repurchased without exercise by any holders thereof, the Conversion Rate shall be
readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal to the per share redemption
or repurchase price received by a holder or holders of Common Shares with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to all holders of Common
Shares as of the date of such redemption or repurchase, and (ii) in the case of such rights or
warrants which shall have expired or been terminated without exercise by any holders thereof, the
Conversion Rate shall be readjusted as if such rights and warrants had not been issued.

     (d) In case the Company shall distribute a Regular Cash Dividend (a “Triggering
Distribution”) to all or substantially all holders of its Common Shares in excess of $0.42 per
share in any quarterly period, the Conversion Rate shall be adjusted so that the same shall equal
the rate determined by multiplying such Conversion Rate in effect on the Business Day immediately
preceding the Record Date for such Triggering Distribution by a fraction of which the numerator
shall be the Current Market Price on the Record Date for such Triggering Distribution, and the
denominator shall be the Current Market Price on the Record Date for such Triggering Distribution
less the aggregate amount by which the cash so distributed applicable to one Common Share
(determined on the basis of the number of Common Shares outstanding on the Record Date for such
Triggering Distribution) exceeds $0.42 in any quarterly period, such increase to become effective
immediately prior to the opening of the Business Day following the date on which the Triggering
Distribution is paid. It is expressly understood that a stock buyback, repurchase or similar
transaction or program shall in no event be considered a Triggering Distribution for purposes of
this Section 4.2(d) or Section 4.2(e).

     (e) In case the Company or any of its Subsidiaries shall purchase any of the Company’s Common
Shares (excluding stock options) by means of a tender offer, other than an

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odd-lot offer by the Company or any of its Subsidiaries, then, effective immediately prior to
the opening of Business Day after the last date (the “Expiration Date”) tenders could have
been made pursuant to such tender offer (as it may be amended) (the last time at which such tenders
could have been made on the Expiration Date is hereinafter sometimes called the “Expiration
Time”), the Conversion Rate shall be adjusted so that the same shall equal the rate determined
by multiplying the Conversion Rate in effect at the close of business on the Expiration Date by a
fraction of which the numerator shall be the sum of (i) the aggregate consideration (determined as
set forth below) payable to shareholders of the Company based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of
the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as
the “Purchased Shares”) and (ii) the product of the number of Common Shares outstanding
(less any Purchased Shares) immediately after the Expiration Time and the Current Market Price per
share of the Common Shares, and the denominator shall be the product of the number of Common Shares
outstanding (including Purchased Shares) immediately prior to the Expiration Time multiplied by the
Current Market Price as of the close of business on the Expiration Date. For purposes of this
Section 4.2(e), the aggregate consideration in any such tender offer shall equal the sum of the
aggregate amount of cash consideration and the aggregate fair market value (as determined by the
Board of Trustees, whose determination shall be conclusive evidence thereof and which shall be
evidenced by an Officers’ Certificate delivered to the Trustee) of any other consideration payable
in such tender offer. In the event that the Company is obligated to purchase Common Shares
pursuant to any such tender offer, but the Company is permanently prevented by applicable law from
effecting any or all such purchases or any or all such purchases are rescinded, the Conversion Rate
shall again be adjusted to be the Conversion Rate which would have been in effect based upon the
number of Common Shares actually purchased. If the application of this Section 4.2(e) to any
tender offer would result in a decrease in the Conversion Rate, no adjustment shall be made for
such tender offer under this Section 4.2(e). For purposes of this Section 4.2(e), the term “tender
offer” shall mean and include both tender offers and exchange offers, all references to “purchases”
of shares in tender offers (and all similar references) shall mean and include both the purchase of
shares in tender offers and the acquisition of shares pursuant to exchange offers, and all
references to “tendered shares” (and all similar references) shall mean and include shares tendered
in both tender offers and exchange offers.

     (f) In any case in which this Section 4.2 shall require that an adjustment be made following a
Record Date, an announcement date or a determination date or Expiration Date, as the case may be,
established for purposes of this Section 4.2, the Company may elect to defer (but only until five
Business Days following the filing by the Company with the Trustee of the certificate described in
Section 4.5) issuing to the Holder of any Convertible Note converted after such Record Date or
announcement date or determination date or Expiration Date the Common Shares and other Capital
Stock of the Company issuable upon such conversion over and above the Common Shares and other
Capital Stock of the Company issuable upon such conversion only on the basis of the Conversion Rate
prior to adjustment; and, in lieu of the shares the issuance of which is so defined, the Company
shall issue or cause its transfer agents to issue due bills or other appropriate evidence prepared
by the Company of the right to receive such shares. If any distribution in respect of which an
adjustment to the Conversion Rate is required to be made as of the Record Date or announcement date
or determination date or Expiration Date therefor is not thereafter made or paid by the Company for
any reason, the

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     Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect if
such record date had not been fixed or such announcement date or effective date or determination
date or Expiration Date had not occurred.

     (g) No adjustment shall be made pursuant to this Section 4.2 if the Holders may participate in
the transaction that would otherwise give rise to an adjustment pursuant to this Section 4.2
without conversion of such Holder’s Convertible Notes.

     SECTION 4.3 When Adjustment May Be Deferred.

     No adjustment in the Conversion Rate need be made unless the adjustment would require an
increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are not made
shall be carried forward and taken into account in any subsequent adjustment.

     All calculations under this Article IV shall be made to the nearest cent or to the nearest
1/1,000th of a share, as the case may be.

     SECTION 4.4 When No Adjustment Required.

     No adjustment need be made for a transaction referred to in Section 4.2 or 4.8 if Holders of
Convertible Notes are to participate in the transaction without conversion on a basis and with
notice that the Board of Directors of the Company determines to be fair and appropriate in light of
the basis and notice on which holders of Common Shares participate in the transaction. No
adjustment need be made upon the issuance of any Common Shares pursuant to any present or future
plan providing for the reinvestment of dividends or interest payable on securities of the Company
and the investment of additional optional amounts in Common Shares under any plan (including the
Company’s existing Dividend Reinvestment and Share Purchase Plan).

     No adjustment need be made upon the issuance of any Common Shares, options to purchase Common
Shares or phantom shares pursuant to any present or future employee, officer, director or
consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries.

     No adjustment need be made for a change in the par value or no par value of the Common Shares
or for any accrued and unpaid interest.

     To the extent the Convertible Notes become convertible pursuant to this Article IV into cash,
no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash.

     SECTION 4.5 Notice of Adjustment.

     Whenever the Conversion Rate is adjusted, the Company shall promptly mail to the Holders a
notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such
notice and a certificate from the Company’s independent public accountants briefly stating the
facts requiring the adjustment and the manner of computing it, The certificate shall be conclusive
evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to exhibit the same to
any Holder desiring inspection thereof.

 - 27 -

 

     SECTION 4.6 Voluntary Increase.

     The Company from time to time may increase the Conversion Rate as the Board of Trustees
considers advisable to avoid or diminish any income tax to holders of Common Shares or rights to
purchase our Common Shares resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes. The Company may also,
from time to time, to the extent permitted by applicable law, increase the applicable Conversion
Rate by any amount for any period of at least 20 days if the Board of Trustees has determined that
such increase would be in the Company’s best interests, which determination shall be conclusive.
Whenever the Conversion Rate is increased, the Company shall mail to Holders and file with the
Trustee and the Conversion Agent a notice of the increase. The Company shall mail the notice at
least 15 days before the date the increased Conversion Rate takes effect. The notice shall state
the increased Conversion Rate and the period it will be in effect.

     SECTION 4.7 Notice of Certain Transactions.

     (a) Whenever any event described in Section 4.1 shall occur which shall cause the Convertible
Notes to become convertible into Common Shares, the Company shall (i) promptly deliver in
accordance with Sections 1.6 and 1.7 of the Base Indenture, written notice of the convertibility of
the Convertible Notes to the Trustee and each Holder; and (ii) publicly announce that the
Convertible Notes have become convertible. Such written notice and public announcement shall
include a description of such event, a description of the periods during which the Convertible
Notes shall be convertible and the procedures by which a Holder may convert its Convertible Notes.

     (b) If:

     (i) the Company takes any action that would require an adjustment in the Conversion
Rate pursuant to Section 4.2 (unless no adjustment is to occur pursuant to Section 4.4); or

     (ii) the Company takes any action that would require a supplemental indenture pursuant
to Section 4.8; or

     (iii) there is a liquidation or dissolution of the Company;

then the Company shall mail to Holders and file with the Trustee and the Conversion Agent a notice
stating the proposed Record Date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, binding share exchange,
transfer, liquidation or dissolution. The Company shall file and mail the notice at least 15 days
before such date. Failure to file or mail the notice or any defect in it shall not affect the
validity of the transaction.

     SECTION 4.8 Reorganization of the Company; Special Distributions.

     If the Company is a party to a transaction subject to Section 8.1 of the Base Indenture (other
than a sale of all or substantially all of the assets of the Company in a transaction in which

 - 28 -

 

the holders of Common Shares immediately prior to such transaction do not receive securities,
cash or other assets of the Company or any other person) or a merger or binding share exchange
which reclassifies or changes its outstanding Common Shares, the person obligated to deliver
securities, cash or other assets upon conversion of Convertible Notes shall enter into a
supplemental indenture. If the issuer of securities deliverable upon conversion of Convertible
Notes is an Affiliate of the successor to the Company, that issuer shall join in the supplemental
indenture.

     The supplemental indenture shall provide that the Holder of a Convertible Note may convert it
into the kind and amount of securities, cash or other assets which such Holder would have received
immediately after the consolidation, merger, binding share exchange or transfer if such Holder had
converted the Convertible Note immediately before the effective date of the transaction, assuming
(to the extent applicable) that such Holder (i) was not a constituent person or an Affiliate of a
constituent person to such transaction; (ii) made no election with respect thereto; and (iii) was
treated alike with the plurality of non-electing Holders. The supplemental indenture shall provide
for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided
for in this Article IV. The Company shall mail to Holders a notice briefly describing the
supplemental indenture.

     If this Section applies, Section 4.2 does not apply.

     If the Company makes a distribution to all holders of its Common Shares of any of its assets,
or debt securities or any rights, warrants or options to purchase Convertible Notes of the Company
that, but for the provisions of the last paragraph of Section 4.4, would otherwise result in an
adjustment in the Conversion Rate pursuant to the provisions of Section 4.4, then, from and after
the record date for determining the holders of Common Shares entitled to receive the distribution,
a Holder of a Convertible Note that converts such Convertible Note in accordance with the
provisions of this Indenture shall upon such conversion be entitled to receive, in addition to the
shares of Common Shares into which the Convertible Note is convertible, the kind and amount of
securities, cash or other assets comprising the distribution that such Holder would have received
if such Holder had converted the Convertible Note immediately prior to the Record Date for
determining the holders of Common Shares entitled to receive the distribution.

     SECTION 4.9 Company Determination Final.

     Any determination that the Company or its Board of Trustees must make pursuant to Section
4.1(d), 4.2, 4.3, 4.4, 4.8 or 4.11 is conclusive, absent manifest error.

     SECTION 4.10 Trustee’s Adjustment Disclaimer.

     The Trustee has no duty to determine when an adjustment under this Article IV should be made,
how it should be made or what it should be. The Trustee has no duty to determine whether a
supplemental indenture under Section 4.8 need be entered into or whether any provisions of any
supplemental indenture are correct. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets delivered upon conversion of
Convertible Notes. The Trustee shall not be responsible for the Company’s failure to comply with
this Article IV. Each Conversion Agent shall have the same protection under this

 - 29 -

 

Section 4.10 as the Trustee. Unless and until the Trustee receives a certificate from the
Company setting forth the particulars of an adjustment under this Article IV, the Trustee may
assume without inquiry that no such adjustment has been, or is required to be, made.

     SECTION 4.11 Simultaneous Adjustments.

     In the event that this Article IV requires adjustments to the Conversion Rate under more than
one circumstance set forth in Sections 4.2 and the record dates for the distributions giving rise
to such adjustments shall occur on the same date, then such adjustments shall be made by applying
the provisions of Section 4.2.

     SECTION 4.12 Successive Adjustments.

     After an adjustment to the Conversion Rate under this Article IV, any subsequent event
requiring an adjustment under this Article IV shall cause an adjustment to the Conversion Rate as
so adjusted.

     SECTION 4.13 Savings Provisions.

     Notwithstanding any other provision of this Indenture, the Company shall not be obligated to
convert Convertible Notes into Common Shares with respect to any Holder to the extent that such
conversion would result in a violation of the “Ownership Limit” as defined in Article VIII of the
Company’s Declaration of Trust.

ARTICLE V

COVENANTS

     SECTION 5.1 Restriction on Subsidiary Indebtedness and Preferred Stock.

     (a) The Company shall not permit the Partnership or any Subsidiary (i) to incur unsecured
Indebtedness, except for (A) Indebtedness payable to the Company and (B) Indebtedness (not to
exceed $4.4 million) issued in exchange for, or the net proceeds of which are used to refinance,
refund, repay or defease, currently outstanding unsecured Indebtedness payable to third parties in
the amount of $4.4 million, or any refinancings thereof in an amount not to exceed the amount so
refinanced, refunded, repaid or defeased (plus premiums, accrued interest, fees and expenses) or
(ii) to guarantee unsecured Indebtedness, unless in each case the Convertible Notes will rank pari
passu, with such Indebtedness.

     (b) The Company shall not permit the Partnership to issue, other than to the Company,
preferred units of partnership interest in the Partnership, unless the Convertible Notes will rank
senior to any such preferred units.

     (c) If the Partnership issues its Guarantee of the Convertible Notes in accordance with the
Section 3.1 of the Base Indenture, such Guarantee shall be deemed to satisfy the foregoing
conditions. Notwithstanding the foregoing, the Company and the Trustee agree that the satisfaction
of the provisions of the immediately preceding sentence shall not be the

 - 30 -

 

exclusive means of satisfying the restrictions set forth in Section 5.1(a) and 5.1(b) of this
Supplemental Indenture.

     SECTION 5.2 Provision of Financial Information.

     (a) If the Company shall be required to file reports with the Commission pursuant to Section
13 or 15(d) of the Exchange Act, it will file such reports by the required date and, within 15 days
of such date, deliver copies of all such reports to the Trustee for, and transmit a copy to, each
holder of the Convertible Notes. If the Company is not required to file reports with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act, it will deliver to the Trustee and
transmit to each holder of the Convertible Notes reports that contain substantially the same kind
of information that would have been included in annual and quarterly reports filed with the
Commission had the Company been required to file such reports, such information to be delivered or
transmitted within 15 days after the same would have been required to be filed with the Commission
had the Company been required to file such reports.

     (b) Notwithstanding the foregoing, if the Company is not required to file reports with the
Commission because information about the Company is contained in the reports filed by another
entity with the Commission, the delivery to the Trustee for the Convertible Notes of the reports
filed by such entity with the Commission and the transmittal by mail to all holders of the
Convertible Notes of each annual and quarterly report filed with the Commission by such entity
within the time periods set forth in the preceding sentence shall be deemed to satisfy the
Company’s obligations to provide financial information under the applicable provisions of the Base
Indenture.

ARTICLE VI

MISCELLANEOUS PROVISIONS

     SECTION 6.1 Ratification and Incorporation of Base Indenture.

     As supplemented by this Supplemental Indenture, the Base Indenture is in all respects ratified
and confirmed, and the Base Indenture together with this Supplemental Indenture shall be read,
taken and construed as one and the same instrument.

     SECTION 6.2 Governing Law.

     This Supplement and the Convertible Notes shall be governed by, and construed in accordance
with, the laws of the state of New York (without giving effect to the conflicts of laws principles
thereof).

     SECTION 6.3 Counterparts.

     This Supplemental Indenture may be executed in any number of counterparts, each of which shall
be an original; but such counterparts shall together constitute but one and the same instrument.

 - 31 -

 

     SECTION 6.4 Entire Agreement.

     This Supplemental Indenture, together with the Base Indenture, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof, and fully
supersedes any prior of contemporaneous agreements relating to such subject matter.

[Signature Page Follows]

 - 32 -

 

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

	 	 	 	 	 	 	 
	 	 	Capital Automotive REIT,
	 	 	as Issuer
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Thomas D. Eckert	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Thomas D. Eckert
	 	 
	

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Wells Fargo Bank, National Association,
	 	 	as Trustee
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Joseph P O’Donnell	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Joseph P. O’Donnell
	 	 
	

	 	Title:
	 	Assistant Vice President	 	 

[Second
Supplement Trust Indenture]

 

 

GLOBAL SECURITY

6% CONVERTIBLE NOTES DUE MAY 15, 2024

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

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

Exhibit A, Page 1

 

 

CAPITAL AUTOMOTIVE REIT

6% CONVERTIBLE NOTES DUE MAY 15, 2024

	 	 	 
	ISIN: US139733AB56
	 	 
	CUSIP No.: 139733AB5
	 	 
	Certificate No.

	 	U.S.$110,000,000

     Capital Automotive REIT, a real estate investment trust organized under the laws of
the State of Maryland (the “Company”), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of One Hundred Ten Million United States Dollars
(U.S.$110,000,000) on May 15, 2024, unless prepaid prior thereto, together with accrued interest
thereon at the rate of 6% per annum.

1. Interest.

     Interest on this Convertible Note shall be due and payable in accordance with the terms hereof
and of the Indenture (defined below). Interest shall be payable semi-annually in arrears on each
May 15 and November 15, commencing on November 15, 2004, to registered holders of the Convertible
Notes on the last day of the preceding month. Payments of interest on the Convertible Notes shall
include interest accrued to but excluding the respective Interest Payment Dates. Interest payments
for the Convertible Notes shall be computed and paid on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on the Convertible Notes is
not a Business Day, then payment of the interest payable on such date shall be made on the next
succeeding day that is a Business Day (and without any interest or other payment in respect of any
such delay), with the same force and effect as if made on the date the payment was originally
payable.

     Any interest that is not punctually paid or duly provided for on an Interest Payment Date
shall forthwith cease to be payable to the Holders on the Regular Record Date and may either be
paid to the Person or Persons in whose name the Convertible Notes are registered at the close of
business on a Special Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Convertible Notes not less than ten days
prior to such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange, if any, on which the Convertible
Notes shall be listed, and upon such notice as may be required by any such exchange, all as more
fully provided in the Indenture.

2. Method of Payment.

     Subject to the terms and conditions of the Indenture, the Company will make payments in
respect of the Redemption Price, Purchase Price, Change in Control Purchase Price and the principal
amount at Stated Maturity, as the case may be, to the Holder who furnishes appropriate endorsements
and transfer documents relating to the Convertible Note, if required by the Paying Agent to collect
such payments in respect of the Convertible Note. The Company will pay cash amounts in money of
the United States that at the time of payment is legal tender for payment of public and private
debts. However, the Company may pay interest, the Redemption Price,

Exhibit A, Page 2

 

 

Purchase Price, Change in Control Purchase Price and the principal amount at Stated Maturity,
as the case may be, by check or wire payable in such money; provided, however that a Holder holding
Convertible Notes with an aggregate principal amount in excess of $2,000,000 will be paid by wire
transfer in immediately available funds at the election of such Holder. The Company may mail an
interest check to the Holder’s registered address. Notwithstanding the foregoing, so long as this
Convertible Note is registered in the name of a Depositary or its nominee, all payments hereon
shall be made by wire transfer of immediately available funds to the account of the Depositary or
its nominee.

3. Paying Agent, Conversion Agent and Registrar.

     Initially, Wells Fargo Bank, National Association (the “Trustee”) will act as Paying
Agent, Conversion Agent, and Registrar. The Company may appoint and change any Paying Agent,
Conversion Agent or Registrar without notice, other than notice to the Trustee. The Company or any
of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent or
Registrar.

4. Indenture.

     This Note is one of a duly authorized issue of 6% Convertible Notes due May 15, 2024 (the
“Convertible Notes”) issued and to be issued under an indenture dated as of April 15, 2004
(the “Base Indenture”), as supplemented by the Second Supplemental Indenture dated May 12,
2004 (the “Supplemental Indenture,” and collectively with the Base Indenture, the
“Indenture”), by and between the Company and Wells Fargo Bank, National Association, as
trustee (the “Trustee,” which term includes any successor trustee as permitted under the
Indenture). Reference is hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders
of the Convertible Notes and the terms upon which the Convertible Notes are, and are to be,
authenticated and delivered.

     Capitalized terms used herein and not otherwise defined shall have the meanings set forth in
the Indenture.

5. Redemption at the Option of the Company.

     No sinking fund is provided for the Convertible Notes. The Convertible Notes are not
redeemable prior to May 15, 2009. On or after May 15, 2009, the Convertible Notes are redeemable,
at any time in whole or from time to time in part, for a redemption price equal to 100% of the
principal amount of the Convertible Notes to be redeemed (“Redemption Price”) plus accrued
and unpaid interest up to but not including the Redemption Date; provided that, if the Redemption
Date is on or after a Regular Record Date but on or prior to the related Interest Payment Date,
interest will be payable to the Holders in whose names the Convertible Notes are registered at the
close of business on the relevant Regular Record Date.

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

     Subject to the terms and conditions of the Indenture, the Company shall become obligated to
purchase at the option of the Holder, all or any portion of the Convertible Notes held

Exhibit A, Page 3

 

 

by such Holder, in any integral multiple of $1,000, on May 15, 2009, May 15, 2014 and May 15,
2019 (each, a “Purchase Date”) at a purchase price equal to 100% of the aggregate principal
amount of the Convertible Note (the “Purchase Price”), together with accrued and unpaid
interest up to but not including the Purchase Date; provided that if the Purchase Date is on or
after a Regular Record Date but on or prior to the related Interest Payment Date, interest will be
payable to the Holders in whose names the Convertible Notes are registered at the close of business
on the relevant Regular Record Date upon delivery of a Purchase Notice containing the information
set forth in the Indenture, at any time from the opening of business on the date that is 20
Business Days prior to such Purchase Date, and upon delivery of the Convertible Notes to the Paying
Agent by the Holder as set forth in the Indenture. The Company shall be required to pay the
Purchase Price in cash, provided, however, that if an Accounting Event (as defined in the
Indenture) has occurred, the Company may elect to pay the Purchase Price in cash or Common Shares
valued at the Current Market Price.

     At the option of the Holder and subject to the terms and conditions of the Indenture, the
Company shall become obligated to purchase the Convertible Notes held by such Holder 45 Business
Days after the occurrence of a Change in Control of the Company (the “Change in Control
Purchase Date”), for a purchase price equal to 100% of the principal amount thereof (the
“Change in Control Purchase Price”) plus accrued and unpaid interest up to but not
including the Change in Control Purchase Date, which Change in Control Purchase Price shall be paid
in cash.

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

     If cash sufficient to pay the Purchase Price or Change in Control Purchase Price, as the case
may be, and accrued and unpaid interest if any, of all Convertible Notes or portions thereof to be
purchased as of the Purchase Date or the Change in Control Purchase Date, as the case may be, is
deposited with the Paying Agent on the Purchase Date or the Change in Control Purchase Date,
interest ceases to accrue on such Convertible Notes (or portions thereof) upon such Purchase Date
or Change in Control Purchase Date, and the Holder thereof shall have no other rights as such other
than the right to receive the Purchase Price or Change in Control Purchase Price, as the case may
be, upon surrender of such Convertible Note.

7. Notice of Redemption.

     Notice of redemption pursuant to paragraph 5 of this Convertible Note will be mailed at least
15 days but not more than 60 days before the Redemption Date to each Holder of Convertible Notes to
be redeemed at the Holder’s registered address. If money sufficient to pay the Redemption Price of
all Convertible Notes (or portions thereof) to be redeemed on the Redemption Date is deposited with
the Paying Agent prior to or on the Redemption Date, immediately after such Redemption Date
interest ceases to accrue on such Convertible Notes or portions thereof. Convertible Notes in
denominations larger than $1,000 of principal amount may be redeemed in part but only in integral
multiples of $1,000 of principal amount.

Exhibit A, Page 4

 

 

8. Conversion.

     A Holder of a Convertible Note may convert the principal amount of such Convertible Note (or
any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into
Common Shares on any Business Day, subject to the conditions set forth in Section 4.1 of the
Indenture; provided, however, that if such Convertible Note is called for redemption or subject to
purchase upon a Change in Control or upon exercise of the purchase right described in paragraph 6
above, the conversion right will terminate at the close of business on the Business Day immediately
preceding the Redemption Date, the Change in Control Purchase Date or a Purchase Date, as the case
may be, for such Convertible Note or such earlier date as the Holder presents such Convertible Note
for redemption or purchase (unless the Company shall default in paying the redemption payment,
Change in Control Purchase Price or a Purchase Price, as the case may be, when due, in which case
the conversion right shall terminate at the close of business on the date such default is cured and
such Convertible Note is redeemed or purchased, as the case may be).

     The initial conversion price is $35.5679. The initial Conversion Rate is 28.1152 Common
Shares per $1,000 principal amount of Convertible Notes. The number of Common Shares deliverable
upon conversion of a Convertible Note is determined by dividing (x) the principal amount of the
Convertible Note, or the portion thereof being converted, by (y) the Conversion Price in effect on
the Conversion Date.

     A Convertible Note in respect of which a Holder has delivered a Purchase Notice or Change in
Control Purchase Notice exercising the option of such Holder to require the Company to purchase
such Convertible Note may be converted only if such notice of exercise is withdrawn in accordance
with the terms of the Indenture.

     To surrender a Convertible Note for conversion, a Holder must (i) complete and manually sign a
conversion notice (or complete and manually sign a facsimile of such notice) and deliver such
notice to the Conversion Agent, (ii) furnish appropriate endorsements and transfer documents, if
required by the Company, the Trustee or the Conversion Agent, (iii) pay any transfer or similar
tax, if required and (iv) in the case of a conversion pursuant to section 4.1(b)(1) of the
Indenture, provide the Company with reasonable evidence that the conditions to such conversion have
been satisfied.

9. Denominations; Transfer; Exchange.

     This Note is a Global Security deposited with the Trustee as custodian for The Depositary
Trust Company (“DTC”) acting as Depositary, and registered in the name of CEDE & CO., a
nominee of DTC, and CEDE & CO., as holder of record of this Convertible Note, shall be entitled to
receive payments of principal and interest by wire transfer of immediately available funds. The
statements in the legend relating to DTC set forth above are an integral part of the terms of this
Convertible Note and by acceptance thereof each holder of this Note agrees to be subject to and
bound by the terms and provisions set forth in such legend, if any.

     The Convertible Notes may be issued in denominations of $1,000 of principal amount and
integral multiples of $1,000. A Holder may transfer or exchange Convertible Notes in

Exhibit A, Page 5

 

 

accordance with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange any Convertible
Notes selected for redemption (except, in the case of a Convertible Note to be redeemed in part,
the portion of the Convertible Note not to be redeemed) or any Convertible Notes in respect of
which a Purchase Notice or a Change in Control Purchase Notice has been given and not withdrawn
(except, in the case of a Convertible Note to be purchased in part, the portion of the Convertible
Note not to be purchased) or any Convertible Notes for a period of 15 days before the mailing of a
notice of redemption of Convertible Notes to be redeemed.

10. Persons Deemed Owners.

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

11. Amendment; Waiver.

     Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Convertible
Notes may be amended with the written consent of the Holders of at least a majority in aggregate
principal amount of the Convertible Notes at the time outstanding and (ii) certain defaults or
noncompliance with certain provisions may be waived with the written consent of the Holders of a
majority in aggregate principal amount of the Convertible Notes at the time outstanding. The
Indenture or the Convertible Notes may be amended without the consent of any Holders under
circumstances set forth in Section 9.1 of the Base Indenture.

12. Defaults and Remedies.

     Under the Indenture, Events of Default include (i) default for three days in payment of any
interest on any Convertible Notes, (ii) default in payment of the principal amount, Redemption
Price, Purchase Price or Change in Control Purchase Price, as the case may be, in respect of the
Convertible Notes when the same becomes due and payable, (iii) default for 10 Business Days in
converting any Convertible Notes, (iv) failure by the Company to comply with other agreements in
the Indenture or the Convertible Notes, subject to notice and lapse of time; (v) default by the
Company under one or more agreements or indentures under which the Company or certain related
parties then has outstanding indebtedness in excess of $10 million; and (vi) certain events of
bankruptcy or insolvency.

     Holders of Convertible Notes may not enforce the Indenture or the Convertible Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Convertible
Notes unless it receives reasonable indemnity or security. Subject to certain limitations, Holders
of a majority in aggregate principal amount of the Convertible Notes at the time outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of
Convertible Notes notice of any continuing Default (except a Default in payment of amounts
specified in clause (i) or (ii) above) if it determines that withholding notice is in their
interests.

13. Authentication.

Exhibit A, Page 6

 

 

     This Convertible Note shall not be valid until an authorized signature of the Trustee manually
signs the Trustee’s Certificate of Authentication with respect to this Convertible Note.

Exhibit A, Page 7

 

 

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

Dated as of May 12, 2004.

Capital Automotive REIT

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	Title:	 	 

CERTIFICATE OF AUTHENTICATION

     This is one of the 6% Convertible Notes due May 15, 2024 referred to in the within-mentioned
Indenture.

Wells Fargo Bank, National Association, as Trustee

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	

	 	Authorized Signatory	 	 

Exhibit A, Page 8

 

 

ASSIGNMENT FORM

	 	 	 
	For value received
	 	 
	

	 	 
	 
	 	 
	hereby sells, assigns and transfers unto
	 
	 	 
	 
	 
	 	 
	 
	Please insert social security or
	other identifying number of assignee
	 
	 	 
	Please print or type name and address,
	including zip code, of assignee:
	 
	 	 
	 
	 
	 	 
	 
	 
	 	 
	 
	 
	 	 
	 

the within Note and does hereby irrevocably constitute and appoint                                          Attorney to transfer
the Note on the books of the Company with full power of substitution in the premises.

	 	 	 	 	 	 	 
	Date:

	 	 	 	Your signature:	 	 
	

	 	 
	 	 	 	 
	 	 	 	 	(Sign exactly as your name
	 	 	 	 	appears on the Note)

Exhibit A, Page 9

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