Document:

Exhibit 4.1

LEGG MASON, INC.

and

THE BANK OF NEW YORK

as Trustee

INDENTURE

Dated as of January 31, 2008

2.50% Senior Convertible Notes due 2015

TABLE OF CONTENTS

			
	 
	Page

	ARTICLE 1

	Definitions and Incorporation By Reference

	Section 1.01

	Definitions

	7

	Section 1.02

	Incorporation by Reference of Trust Indenture Act

	18

	Section 1.03

	Rules of Construction

	19

	 
	 
	 

	 
	ARTICLE 2

	 

	 
	The Securities

	 

	Section 2.01

	Designation, Amount and Issuance of Securities

	19

	Section 2.02

	Form of the Securities

	20

	Section 2.03

	Date and Denomination of Securities; Payment at Maturity; Payment of Interest

	21

	Section 2.04

	Execution and Authentication

	22

	Section 2.05

	Registrar, Paying Agent and Conversion Agent

	23

	Section 2.06

	Paying Agent to Hold Money in Trust

	24

	Section 2.07

	Holder Lists

	24

	Section 2.08

	Exchange and Registration of Transfer of Securities

	25

	Section 2.09

	Global Securities

	26

	Section 2.10

	Transfer Restrictions

	28

	Section 2.11

	Responsibilities and Obligations of the Trustee

	29

	Section 2.12

	Replacement Securities

	30

	Section 2.13

	Outstanding Securities

	31

	Section 2.14

	Temporary Securities

	32

	Section 2.15

	Cancellation

	32

	Section 2.16

	CUSIP and ISIN Numbers

	33

	Section 2.17

	Additional Securities

	33

	 
	 
	 

	 
	ARTICLE 3

	 

	 
	Repurchase of Securities Upon a Fundamental Change

	 

	Section 3.01

	Repurchase Upon A Fundamental Change

	33

	Section 3.02

	Company Repurchase Notice; Tender Offer Compliance

	35

	Section 3.03

	Effect of Repurchase Notice; Withdrawal

	36

	Section 3.04

	Deposit of Fundamental Change Repurchase Price

	37

	Section 3.05

	Securities Repurchased in Part

	38

	 
	 
	 

	 
	ARTICLE 4

	 

	 
	Covenants

	 

	Section 4.01

	Payment of Securities

	38

	Section 4.02

	Maintenance of Office or Agency

	38

i

			
	Section 4.03

	Rule 144A Information

	39

	Section 4.04

	Existence

	39

	Section 4.05

	Compliance Certificate

	39

	Section 4.06

	Additional Interest Notice

	39

	Section 4.07

	Exchange Act Reports

	40

	 
	 
	 

	 
	ARTICLE 5

	 

	 
	Successor Company

	 

	Section 5.01

	When Company May Merge or Transfer Assets

	40

	Section 5.02

	Successor to be Substituted

	41

	Section 5.03

	Opinion of Counsel to be Given to Trustee

	42

	 
	 
	 

	 
	ARTICLE 6

	 

	 
	Defaults and Remedies

	 

	Section 6.01

	Events of Default

	42

	Section 6.02

	Acceleration

	44

	Section 6.03

	Other Remedies

	45

	Section 6.04

	Waiver of Defaults and Events of Default

	45

	Section 6.05

	Control by Majority

	45

	Section 6.06

	Limitation on Suits

	46

	Section 6.07

	Rights of Holders to Receive Payment

	46

	Section 6.08

	Collection Suit by Trustee

	47

	Section 6.09

	Trustee May File Proofs Claim

	47

	Section 6.10

	Priorities

	47

	Section 6.11

	Undertakings for Costs

	48

	Section 6.12

	Waiver of Stay, Extension or Usury Laws

	48

	Section 6.13

	Alternative Remedy for Failure to Comply with Reporting Obligations in the Indenture and the Trust Indenture Act

	48

	 
	 
	 

	 
	ARTICLE 7

	 

	 
	Trustee

	 

	Section 7.01

	Duties of Trustee

	49

	Section 7.02

	Rights of Trustee

	50

	Section 7.03

	Individual Rights of Trustee

	51

	Section 7.04

	Trustee’s Disclaimer

	52

	Section 7.05

	Notice of Defaults

	52

	Section 7.06

	Reports by Trustee to Holders

	52

	Section 7.07

	Compensation and Indemnity

	53

	Section 7.08

	Replacement of Trustee

	53

	Section 7.09

	Successor Trustee by Merger

	54

	Section 7.10

	Eligibility; Disqualification

	55

	Section 7.11

	Preferential Collection of Claims Against Company

	55

	 
	 
	 

	 
	 
	 

	 
	 
	 

ii

			
	 
	ARTICLE 8

	 

	 
	Discharge of Indenture

	 

	Section 8.01

	Discharge of Liability on Securities

	55

	Section 8.02

	Application of Trust Money

	56

	Section 8.03

	Repayment to Company

	56

	Section 8.04

	Reinstatement

	56

	 
	 
	 

	 
	ARTICLE 9

	 

	 
	Amendments

	 

	Section 9.01

	Without Consent of Holders

	57

	Section 9.02

	With Consent of Holders

	58

	Section 9.03

	Compliance with Trust Indenture Act 

	59

	Section 9.04

	Revocation and Effect of Consents and Waivers

	59

	Section 9.05

	Notation on or Exchange of Securities

	60

	Section 9.06

	Trustee to Sign Amendments

	60

	 
	 
	 

	 
	ARTICLE 10

	 

	 
	Conversion of Securities

	 

	Section 10.01

	Right to Convert

	60

	Section 10.02

	Exercise of Conversion Right; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends

	64

	Section 10.03

	Cash Payments in Lieu of Fractional Shares

	65

	Section 10.04

	Conversion Rate

	66

	Section 10.05

	Adjustment of Conversion Rate

	66

	Section 10.06

	Adjustment to Conversion Rate upon a Make Whole Event

	75

	Section 10.07

	Conversion After Reclassification or Business Combinations

	78

	Section 10.08

	Taxes on Shares Issued

	80

	Section 10.09

	Reservation of Shares, Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock

	80

	Section 10.10

	Responsibility of Trustee

	81

	Section 10.11

	Notice to Holders Prior to Certain Actions

	82

	Section 10.12

	Stockholder Rights Plans

	83

	Section 10.13

	Settlement Upon Conversion; Cash Percentage Election 

	83

	 
	 
	 

	 
	ARTICLE 11

	 

	 
	Miscellaneous

	 

	Section 11.01

	Trust Indenture Act Controls

	85

	Section 11.02

	Notices

	85

	Section 11.03

	Communication by Holders with Other Holders

	86

	Section 11.04

	Certificate and Opinion as to Conditions Precedent

	86

	Section 11.05

	Statements Required in Certificate or Opinion

	86

	Section 11.06

	When Securities Disregarded

	87

iii

			
	Section 11.07

	Rules by Trustee, Paying Agent and Registrar

	87

	Section 11.08

	Legal Holidays

	87

	Section 11.09

	Severability

	87

	Section 11.10

	Governing Law

	87

	Section 11.11

	Waiver of Jury Trial

	87

	Section 11.12

	Force Majeure

	87

	Section 11.13

	No Recourse Against Others

	88

	Section 11.14

	Successors

	88

	Section 11.15

	Counterparts

	88

	Section 11.16

	Table of Contents; Headings

	88

	Section 11.17

	Calculations in Respect of the Securities

	89

	 
	 
	 

	 
	 
	 

	Exhibit A

	Form of Security

	 

	Exhibit B

	Form of Restrictive Legend for Common Stock Issued Upon Conversion

	 

iv

TRUST INDENTURE ACT

 Certain Sections of this Indenture relating to Sections 310 through 318, inclusive, of the Trust Indenture Act of 1939: 

		
	TRUST INDENTURE ACT SECTION

	INDENTURE SECTION

	§ 310

(a)(1), (2) and (5)

	7.10

	(a)(3)

	Not Applicable

	(a)(4)

	Not Applicable

	(b)

	7.10

	(c)

	Not Applicable

	§ 311

(a)

	7.11

	(b)

	7.11

	§ 312

(a)

	2.07

	(b)

	11.03

	(c)

	11.03

	§ 313

(a)

	7.06(a)

	(b)

	7.06(a)

	(c)

	7.06(a)

	(d)

	7.06(b)

	§ 314

(a)(1), (2) and (3)

	4.05, 4.07

	(a)(4)

	4.05

	(b)

	Not Applicable

	(c)(1)

	11.04

	(c)(2)

	11.04

	(c)(3)

	Not Applicable

	(d)

	Not Applicable

	(e)

	11.05

	(f)

	Not Applicable

	§ 315

(a)

	7.01(b)

	(b)

	7.05

	(c)

	7.01(a)

	(d)

	7.01(c)

	(e)

	6.11

	§ 316

(a)

	6.05

	(a)(1)(A)

	6.05

	(a)(1)(B)

	6.04

	(a)(2)

	Not Applicable

	(b)

	6.07

	(c)

	9.04

	§ 317

(a)(1)

	6.08

	(a)(2)

	6.09

	(b)

	2.06

	§ 318

(a)

	11.01

Note that this table shall not, for any purpose, be deemed to be a part of this Indenture.

v

INDENTURE dated as of January 31, 2008 between LEGG MASON, INC., a Maryland corporation (the “Company”), and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the “Trustee”).

WHEREAS, the Company has duly authorized the creation of an issue of its 2.50% Senior Convertible Notes due 2015 (the “Securities”), having the terms, tenor, amount and other provisions hereinafter set forth, and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture; and

WHEREAS, all things necessary to make the Securities, when the Securities are duly executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, in accordance with their and its terms, have been done and performed, and the execution of this Indenture and the issue hereunder of the Securities have in all respects been duly authorized,

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, except as expressly set forth herein, as follows:

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.  Definitions.  

“Additional Interest” means Default Additional Interest and Registration Rights Additional Interest.

“Additional Interest Notice” has the meaning specified in Section 4.06.

“Additional Shares” has the meaning specified in Section 10.06(a).

“Additional Securities” has the meaning specified in Section 2.17.

“Adjustment Event” has the meaning specified in Section 10.05(m).

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control 

6

with such Person; provided that with respect to KKR, each Affiliated Entity of KKR, each KKR Purchaser and each Affiliate of an Affiliated Entity of KKR or a KKR Purchaser shall be deemed to be an Affiliate of KKR.  For the purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling”, “controlled by” and “under common control with” have meanings correlative to the foregoing.

“Affiliated Entity” means, with respect to KKR, any investment fund or holding company formed for investment purposes that is primarily managed, advised or serviced by KKR or by an Affiliate of KKR.

“Agent Members” has the meaning specified in Section 2.09(f).

“Applicable Consideration” has the meaning specified in Section 10.07(a).

“Bank Purchaser” means each of Credit Suisse International, HSBC Bank USA, N.A. and any other Person that becomes a “Bank Purchaser” as defined in the Purchase Agreement.

“Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors.

“Board of Directors” means the Board of Directors of the Company or, other than in the case of the definition of “Continuing Directors,” any committee thereof duly authorized to act on behalf of such Board.

“Business Day” means each day which is not a Legal Holiday.

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

“Cash Percentage” has the meaning specified in Section 10.13(b).

“Cash Percentage Notice” has the meaning specified in Section 10.13(b).

“Closing Date” means the date of this Indenture.

“Closing Sale Price” of any share of Common Stock or any other security on any Trading Day means the closing sale price of such security (or, if no closing sale price is reported, the average of the closing bid and closing ask prices or, if more than one in either case, the average of the average closing bid and the 

7

average closing ask prices) on such date as reported in composite transactions for the principal U.S. securities exchange on which the shares of Common Stock or other security are traded.  If the shares of Common Stock or other security are not listed on a U.S. national or regional securities exchange, the “Closing Sale Price” shall be determined by a nationally recognized securities dealer retained by the Company for that purpose.  The “Closing Sale Price” shall be determined without reference to extended or after hours trading.

“Common Stock” means shares of the class designated as common stock of the Company at the date of this Indenture (namely, common stock, par value $0.10) or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company.

“Company” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

“Company Repurchase Notice” has the meaning specified in Section 3.02(a).

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors who (i) was a member of the Board of Directors on the on the date of the Purchase Agreement; or (ii) was nominated for election or elected to the Board of Directors with the approval of a majority of the Continuing Directors who were members of the Board of Directors at the time of such new director’s nomination or election, which approval may be evidenced either by a specific vote or by approval of the proxy statement issued by the Company on behalf of the entire Board of Directors in which such member is named as nominee for election to the Board of Directors.

“Conversion Agent” has the meaning specified in Section 2.05.

“Conversion Date” has the meaning specified in Section 10.02(c).

“Conversion Notice” has the meaning specified in Section 10.02(a).

“Conversion Observation Period” means, with respect to any Securities, the 40 consecutive Trading Day period (i) with respect to a Conversion Date occurring during the period beginning on the 44th Scheduled Trading Day preceding the Maturity Date and ending on the close of business on the Business Day immediately preceding the Maturity Date, beginning on the 42nd Scheduled Trading Day preceding the Maturity Date and (ii) in all other cases, beginning on the third Scheduled Trading Day following the related Conversion Date.

“Conversion Price” means, for  any day, the amount equal to $1,000 divided by the Conversion Rate in effect on that day.

8

“Conversion Rate” means, for any day, 11.3636 shares of Common Stock per $1,000 principal amount of Securities, as adjusted from time to time under Article 10.

“Corporate Trust Office” means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the dated hereof is located at 101 Barclay Street, Floor 8 West, New York, New York 10286, Attention Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).

“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

“Daily Conversion Value” means, for any Trading Day during the Conversion Observation Period, one-fortieth of (i) the Conversion Rate in effect on such Trading Day, multiplied by (ii) the VWAP Price of the Common Stock (or the consideration into which the Common Stock has been converted in connection with transactions to which Section 10.07 is applicable) on such Trading Day.  For the purposes of determining the Daily Conversion Value of any Applicable Consideration, the following provisions shall apply:

(a)

if the Applicable Consideration includes securities for which the price can be determined in a manner contemplated by the definition of “VWAP Price,” then the value of such securities shall be determined in accordance with the principles set forth in such definition; 

(b)

if the Applicable Consideration includes cash, then the value of such cash shall be the amount thereof; and 

(c)

if the Applicable Consideration includes any other property, then the value of such property shall be the Fair Market Value of such property as determined by the Board of Directors in good faith.

“Daily Settlement Amount,” for each $1,000 principal amount of Securities, for each of the 40 Trading Days during the Conversion Observation Period, shall consist of:

(d)

cash equal to the lesser of $25 and the Daily Conversion Value for such Trading Day; and

(e)

to the extent the Daily Conversion Value exceeds $25, a number of shares of Common Stock (the “Daily Share Amount”) equal to, (A) the difference between the Daily Conversion Value for such Trading Day and $25, divided by (B) the VWAP Price of the Common Stock for such Trading Day, 

9

appropriately adjusted to reflect stock splits, stock dividends, combinations or similar events occurring during the Conversion Observation Period, subject to the Company’s right to deliver a percentage of the Daily Share Amount in cash in accordance with Section 10.13(b).

“Daily Share Amount” has the meaning specified in the definition of Daily Settlement Amount in this Section 1.01.

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

“Default Additional Interest” has the meaning specified in Section 6.13.

“Depositary” means a clearing agency registered under the Exchange Act that is designated to act as the depositary for the Global Securities.  DTC shall be the initial Depositary, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or include such successor.

“Determination Date” has the meaning specified in Section 10.05(m).

“Distributed Assets” has the meaning specified in Section 10.05(c).

“Distribution Notice” has the meaning specified in Section 10.05(c).

“DTC” means The Depository Trust Company.

“Effective Date” has the meaning specified in Section 10.06(a).

“Event of Default” has the meaning specified in Section 6.01.

“Ex-Date” means, for any issuance or distribution, the first date on which the shares of Common Stock trade regular way on the relevant exchange or in the relevant market from which the Closing Sale Price was obtained without the right to receive such issuance or distribution.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder.

“Fair Market Value” means the amount which a willing buyer would pay a willing seller in an arm’s-length transaction.

“Fiscal Quarter” means, with respect to the Company, a fiscal quarter of the Company.  The Company shall confirm the ending dates of its fiscal quarters for the current fiscal year to the Trustee upon the Trustee’s request.

“Fundamental Change” means the occurrence of any of the following after the Closing Date:

10

(a)

the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Company’s Capital Stock that is at the time entitled to vote by the holders thereof in the election of the Board of Directors (or comparable body); or

(b)

the first day on which a majority of the members of the Board of Directors are not Continuing Directors; or

(c)

the adoption by the Company’s stockholders of a plan relating to the liquidation or dissolution of the Company; or

(d)

any transaction or event or any series of transactions or events (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization, asset sale, lease of assets or otherwise) in connection with which all or substantially all of the Common Stock outstanding is exchanged for, converted into, acquired for or constitutes solely the right to receive stock, other securities or other property, assets or cash, other than:

(i)

any transaction that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of the Company’s Capital Stock; or

(ii)

any transaction pursuant to which the holders of the Company’s Capital Stock entitled to vote generally in elections of the Board of Directors immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of the Company’s Capital Stock entitled to vote generally in elections of the directors of the continuing or surviving Person immediately after giving effect to such transaction; or

(iii)

any merger primarily for the purpose of changing the Company’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving entity; or

(e)

the termination of trading of the Common Stock, which will be deemed to have occurred if, for 30 consecutive Trading Days, the Common Stock or other common stock into which the Securities are convertible is not listed for trading on a U.S. national securities exchange or approved for quotation and trading on a national automated inter-dealer quotation system.

However, a Fundamental Change will be deemed not to have occurred if at least 90% of the consideration in the transaction or transactions (other than cash payments for fractional shares and cash payments made in respect of dissenters’ 

11

appraisal rights) which otherwise would constitute a Fundamental Change under clause (d) above consists of shares of common stock traded or to be traded immediately following such transaction on a U.S. national securities exchange or national automated inter-dealer quotation system and, as a result of the transaction or transactions, the Securities become convertible solely into such common stock and other consideration, subject to the provisions set forth in Section 10.07.

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

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

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

“GAAP” means generally accepted accounting principles in the United States as in effect on the Closing Date, including those set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board, (iii) such other statements by such other entity as approved by a significant segment of the accounting profession, and (iv) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.

“Global Securities” has the meaning specified in Section 2.02(c).

“Holder” means a Person recorded in the Register as the holder of a Security.

“Indebtedness” means, with respect to any Person, all indebtedness of such Person for borrowed money.

“Indenture” means this Indenture as amended or supplemented from time to time.

“Initial Dividend Threshold” means $0.24 per share of Common Stock.  

“Initial Purchasers” means the KKR Purchaser and each of the Bank Purchasers.

“interest” means, when used with reference to the Securities, any interest payable under the terms of the Securities, including defaulted interest (if any), 

12

Additional Interest payable under the terms of the Registration Rights Agreement (if any) and Default Additional Interest payable pursuant to Section 6.13 (if any).

“Interest Payment Date” means the dates specified as such in the form of Security as set forth in Exhibit A hereto.

“Interest Record Dates” means the dates specified as such in the form of Security set forth as Exhibit A hereto.  The Interest Record Date for any Interest Payment Date for the Securities shall be the Interest Record Date immediately preceding the applicable Interest Payment Date.

“KKR” means Kohlberg Kravis Roberts & Co. L.P.

“KKR Purchaser” means KKR I-L Limited.

“KKR Securities” means any Securities beneficially owned by (i) KKR, (ii) any Affiliate of KKR, or (iii) any other Person to the extent that such Person holds such Securities in connection with providing, directly or indirectly through one or more intermediaries, KKR or any Affiliate of KKR with long economic exposure to the Securities.

“Legal Holiday” has the meaning specified in Section 11.08.

“Make Whole Event” means the occurrence of any of the following after the Closing Date:

(a)

the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Company’s Capital Stock that is at the time entitled to vote by the holder thereof in the election of the Board of Directors (or comparable body); or

(b)

any transaction or event or any series of transactions or events (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization, asset sale, lease of assets or otherwise) in connection with which all or substantially all of the Common Stock is exchanged for, converted into, acquired for or constitutes solely the right to receive stock, other securities or other property, assets or cash, other than any merger primarily for the purpose of changing the Company’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving entity; or

(c)

the termination of trading of the Common Stock, which will be deemed to have occurred if, for 30 consecutive Trading Days, the Common Stock or other common stock into which the Securities are convertible is not listed for 

13

trading on a U.S. national securities exchange or approved for quotation and trading on a national automated inter-dealer quotation system.

However, a “Make Whole Event” will be deemed not to have occurred if at least 90% of the consideration in the transaction or transactions (other than cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) which otherwise would constitute a “Make Whole Event” under clause (b) above consists of shares of common stock traded or to be traded immediately following such transaction on a U.S. national securities exchange or national automated inter-dealer quotation system and, as a result of the transaction or transactions, the Securities become convertible into such common stock and other consideration, subject to the provisions set forth in Section 10.07.

“Make Whole Termination Date” has the meaning specified in Section 10.06(f).

“Market Disruption Event” means, for any Scheduled Trading Day for the Common Stock (i) a failure by the primary United States national or regional securities exchange or market on which the Common Stock is listed or admitted to trading to open for trading during its regular trading session on such Scheduled Trading Day, or (ii) the occurrence or existence for more than a one-half-hour period in the aggregate on such Scheduled Trading Day of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options, contracts or futures contracts relating to the Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such Scheduled Trading Day.

“Maturity Date” means January 15, 2015.

“Notice of Default” shall have the meaning specified in Section 6.01.

“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company.

“Officers’ Certificate” means a certificate signed by two Officers.

“Opinion of Counsel” means a written opinion from legal counsel.  The counsel may be an employee of or counsel to the Company.

“Paying Agent” has the meaning specified in Section 2.05.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated association or organization, government or any agency or political subdivision thereof or any other entity.

14

“PORTAL Market” means The PORTAL Market operated by the Nasdaq Stock Market or any successor thereto.

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

“Principal” of a Security means the principal of the Security plus the premium, if any, payable on the Security that is due or overdue or is to become due at the relevant time.

“Protected Purchaser” has the meaning specified in Section 2.12.

“Purchase Agreement” means the Purchase Agreement dated January 14, 2008, among the Company, Credit Suisse International and (for limited purposes) KKR, relating to the offering and sale of the Securities, as amended by side letter dated January 30, 2008 among the Company, KKR, the KKR Purchaser, Credit Suisse International and HSBC Bank USA, N.A.

“Reference Period” has the meaning specified in Section 10.05(c).

“Register” has the meaning specified in Section 2.05.

“Registrar” has the meaning specified in Section 2.05.

“Registration Rights Additional Interest” has the meaning assigned to the term “Additional Interest” in Section 2.4 of the Registration Rights Agreement.

“Registration Rights Agreement” means the Registration Rights Agreement dated as of January 31, 2008 among the Company and the Initial Purchasers, as amended from time to time in accordance with its terms.

“Restricted Securities” has the meaning specified in Section 2.10(b).

“Restricted Security Legend” has the meaning specified in Section 2.10(a).

“Rule 144A” means Rule 144A as promulgated under the Securities Act as it may be amended from time to time hereafter.

“Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the primary U.S. national or regional securities exchange or market on which the Common Stock is listed or, if the Common Stock is not listed on a U.S. national or regional securities exchange, on the principal other market on which 

15

the Common Stock is then traded or, if the Common Stock is not so traded, a Business Day.

“SEC” means the Securities and Exchange Commission.

“Securities” means any security issued, authenticated and delivered under this Indenture, including any Global Securities.

“Securities Act” means the Securities Act of 1933, as amended, and all of the rules and regulations promulgated thereunder.

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

“Spin-Off” has the meaning specified in Section 10.05(c).

“Stock Price” has the meaning specified in Section 10.06(a).

“Subsidiary” of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.

“Trading Day” means a day during which (i) there is no Market Disruption Event and (ii) the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a U.S. national or regional securities exchange, the principal other market on which the Common Stock is then traded, is open for trading.  If the Common Stock (or other security for which a Closing Sale Price must be determined) is not listed or traded, “Trading Day” means a “Business Day.”

“Trading Price” means, with respect to a Security on any date of determination, the average of the secondary market bid quotations per $1,000 principal amount of the Securities obtained by the Trustee at the direction of the Company for $5,000,000 principal amount of the Securities at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers selected by the Company; provided that if at least two such bids cannot reasonably be obtained by the Trustee, but one such bid can be reasonably obtained by the Trustee, this one bid will be used.  If the Trustee cannot reasonably obtain at least one bid for $5,000,000 principal amount of the Securities from a nationally recognized securities dealer then, for purposes of Section 10.01(a)(i)(G), the Trading Price of $1,000 principal amount of the Securities will be deemed to be less than 98% of the Conversion Rate of the 

16

Securities on such determination date multiplied by the Closing Sale Price of the Common Stock on such determination date.

“Trust Indenture Act” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as amended, as in effect on the date of this Indenture.

“Trust Officer” means any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

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

“Valuation Period” has the meaning specified in Section 10.05(c).

“VWAP Price” per share of the Common Stock on any Trading Day means the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page LM.N <Equity> VWAP (or any successor thereto) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on such Trading Day, as determined by a nationally recognized investment banking firm retained for this purpose by the Company using a volume-weighted method).

“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person, all the Capital Stock of which (other than directors’ qualifying shares) is owned by such Person or another Wholly Owned Subsidiary of such Person.

Section 1.02.  Incorporation by Reference of Trust Indenture Act.  

(a)

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

“Commission” means the SEC.

“indenture securities” means the Securities.

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“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

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

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

(b)

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

Section 1.03.  Rules of Construction.  

Unless the context otherwise requires:

(a)

a term has the meaning assigned to it;

(b)

an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(c)

“or” is not exclusive;

(d)

“including” means including without limitation; and

(e)

words in the singular include the plural and words in the plural include the singular.

ARTICLE 2

THE SECURITIES

Section 2.01.  Designation, Amount and Issuance of Securities.  

The Securities shall be designated as “2.50% Senior Convertible Notes due 2015.”  The Securities will initially be issued in the aggregate principal amount of $1,250,000,000.  The Company may issue additional securities in accordance with Section 2.17.  Upon the execution of this Indenture, or from time to time thereafter, Securities may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver Securities upon a written order of the Company, such order signed by an Officer of the Company, without any further action by the Company hereunder.

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Section 2.02.  Form of the Securities.  

(a)

The Securities and the Trustee’s certificate of authentication to be borne by such Securities shall be substantially in the form set forth in Exhibit A hereto.  The terms and provisions contained in the form of Securities attached as Exhibit A hereto shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

(b)

Any of the Securities may have such letters, numbers or other marks of identification and such notations, legends, endorsements or changes as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required by the custodian for the Global Securities, the Depositary or by the National Association of Securities Dealers, Inc. in order for the Securities to be tradable on The PORTAL Market or as may be required for the Securities to be tradable on any other market developed for trading of securities pursuant to Rule 144A or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated inter-dealer quotation system on which the Securities may be listed, or to conform to usage, or to indicate any special limitations or restrictions to which any particular Securities are subject.

(c)

So long as the Securities are eligible for book-entry settlement with the Depositary, unless otherwise required by law and except as provided by Section 2.09, all of the Securities will be represented by one or more Securities in global form registered in the name of the Depositary or the nominee of the Depositary (“Global Securities”).  Upon request to the Company from any beneficial owner of outstanding KKR Securities seeking to exercise its rights (i) to elect the form of consideration to be received on conversion of such KKR Securities under Section 10.07, or (ii) to increase the Conversion Rate upon conversion of such KKR Securities in connection with a Make Whole Event under Section 10.06(c), all KKR Securities shall be separately represented by one or more Global Securities; provided, however, that such beneficial owner (A) delivers evidence to the reasonable satisfaction of the Company and the Depositary that such Securities constitute KKR Securities and (B) cooperates in good faith with the Company to the extent necessary to enable the Company to comply with such beneficial owner’s request; provided, further, that the Company, in its sole discretion, may issue certificated Securities pursuant to Section 2.09(c)(ii) upon such beneficial owner’s request in lieu of separately representing the KKR Securities by one or more Global Securities in accordance with this Section 2.02(c).

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(d)

The transfer and exchange of beneficial interests in any Global Securities shall be effected through the Depositary in accordance with this Indenture and the applicable procedures of the Depositary.  Except as provided in Section 2.09, beneficial owners of a Global Security shall not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered Holders of such Global Security.

(e)

Any Global Securities shall represent such of the outstanding Securities as shall be specified therein and shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be increased or reduced to reflect issuances, repurchases, conversions, transfers or exchanges permitted hereby.  Any endorsement of a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Trustee or the custodian for the Global Security, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Securities in accordance with this Indenture.  Payment of principal of, and interest on, any Global Securities shall be made to the Depositary in immediately available funds.

Section 2.03.  Date and Denomination of Securities; Payment at Maturity; Payment of Interest.  

(a)

The Securities shall be issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof.  Each Security shall be dated the date of its authentication and shall bear interest from the date specified on the face of the form of Securities attached as Exhibit A hereto.  Interest on the Securities shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

(b)

On the Maturity Date, each Holder shall be entitled to receive on such date the principal amount of the Securities held and accrued and unpaid interest to, but not including, the Maturity Date. With respect to Global Securities, principal and interest will be paid to the Depositary in immediately available funds.  With respect to any certificated Securities, principal and interest will be payable at the Company’s office or agency maintained for that purpose, which initially will be the Corporate Trust Office.

(c)

The Person in whose name any Security is registered on the Register at 5:00 p.m., New York City time, on any Interest Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date, except that the interest payable upon maturity will be payable to the Person to whom principal is payable upon maturity.

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(d)

Notwithstanding clauses (a) to (c) (inclusive) of this Section 2.03, any Securities or portion thereof surrendered for conversion during the period after the Interest Record Date for any Interest Payment Date and ending prior to such Interest Payment Date shall be accompanied by payment, in immediately available funds or other funds acceptable to the Company, of an amount equal to the interest otherwise payable on such Interest Payment Date on the principal amount being converted; provided that no such payment need be made (i) if a Holder converts its Securities in connection with a Fundamental Change and the Company has specified a Fundamental Change Repurchase Date that is after the Interest Record Date for an Interest Payment Date and on or prior to such Interest Payment Date, (ii) if a Holder converts its Securities following the Interest Record Date immediately preceding the Maturity Date, or (iii) to the extent of any overdue interest, if overdue interest exists at the time of conversion with respect to such Securities.

(e)

Except as provided in clause (d) of this Section 2.03, the Company shall pay interest: 

(i)

on any Global Securities by wire transfer of immediately available funds to the account of the Depositary or its nominee; 

(ii)

on any Securities in certificated form having a principal amount of less than $5,000,000, by check mailed to the address of the Person entitled thereto as it appears in the Register, provided that at maturity, interest will be payable at the office of the Company maintained by the Company for such purposes, which shall initially be the Corporate Trust Office; and 

(iii)

 on any Securities in certificated form having a principal amount of $5,000,000 or more, by wire transfer in immediately available funds at the election of the Holder of such Securities who has duly delivered notice of such election and applicable wire instructions to the Trustee at least five Business Days prior to the relevant Interest Payment Date, provided that at maturity, interest will be payable at the office of the Company maintained by the Company for such purposes, which shall initially be the Corporate Trust Office.  

If a payment date is not a Business Day, payment shall be made on the next succeeding Business Day, and no additional interest shall accrue thereon.

Section 2.04.  Execution and Authentication.  

(a)

One or more Officers shall sign the Securities for the Company by manual or facsimile signature.

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(b)

If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.

(c)

A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security.  The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

(d)

The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities.  Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company.  Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

Section 2.05.  Registrar, Paying Agent and Conversion Agent.  

(a)

The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the “Registrar”), an office or agency where Securities may be presented for payment (the “Paying Agent”) and an office or agency where Securities may be presented for conversion (the “Conversion Agent”).  The Corporate Trust Office shall be considered as one such office or agency of the Company for each of the aforesaid purposes.  The Registrar shall keep a register of the Securities (the “Register”) and of their transfer and exchange.  The Company may have one or more co-registrars and one or more additional paying agents.  The term “Paying Agent” includes any additional paying agent, and the term “Registrar” includes any co-registrars.  The Company initially appoints the Trustee as (i) Registrar and Paying Agent in connection with the Securities, (ii) the custodian with respect to the Global Securities and (iii) Conversion Agent.

(b)

The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or Conversion Agent not a party to this Indenture.  The agency agreement shall incorporate the terms of this Indenture and the Trust Indenture Act to the extent such terms relate to such agent.  The Company shall notify the Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07.  The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent, Conversion Agent or Registrar.

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(c)

The Company may remove any Registrar, Paying Agent or Conversion Agent upon written notice to such Registrar, Paying Agent or Conversion Agent and to the Trustee; provided that no such removal shall become effective until (i) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar, Paying Agent or Conversion Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar, Paying Agent or Conversion Agent until the appointment of a successor in accordance with clause (i) above.  The Registrar, Paying Agent or Conversion Agent may resign at any time upon written notice; provided that the Trustee may resign as Paying Agent, Conversion Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.08.

Section 2.06.  Paying Agent to Hold Money in Trust.  

On or prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent (or if the Company or a Wholly Owned Subsidiary of the Company is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and interest when so becoming due.  The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment.  If the Company or a Wholly Owned Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent.  Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.

Section 2.07.  Holder Lists.  

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders.  If the Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.

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Section 2.08.  Exchange and Registration of Transfer of Securities.  

(a)

The Company shall cause to be kept at the Corporate Trust Office the Register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities.  The Register shall be in written form or in any form capable of being converted into written form within a reasonably prompt period of time.

(b)

Upon surrender for registration of transfer of any Securities to the Registrar or any co-registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.08 and in Section 2.10, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture.

(c)

Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture, upon surrender of the Securities to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.02.  Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive bearing registration numbers not contemporaneously outstanding.

(d)

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

(e)

All Securities presented or surrendered for registration of transfer or for exchange, repurchase or conversion shall (if so required by the Company or the Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, duly executed by the Holder thereof or his attorney duly authorized in writing.

(f)

No service charge shall be made to any Holder for any registration of, transfer or exchange of Securities, but the Company may require payment by the Holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities.

(g)

Neither the Company nor the Trustee nor any Registrar shall be required to exchange, issue or register a transfer of (a) any Securities or portions thereof surrendered for conversion pursuant to Article 10, or (b) any Securities or portions thereof tendered for repurchase (and not withdrawn) pursuant to Section 3.01.

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Section 2.09.  Global Securities.  

(a)

Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary or a nominee thereof and delivered to the Depositary or a nominee thereof or custodian for the Global Securities therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b)

Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security and a successor Depositary is not appointed within 90 calendar days, or (ii) the Depositary has ceased to be a clearing agency registered under the Exchange Act, and a successor depositary has not been appointed by the Company within 90 calendar days, or (iii) the Company notifies the Trustee to cause the issuance of Securities in certificated form, subject to the Depositary’s procedures, in the Company’s sole discretion.  Any Global Securities exchanged pursuant to this Section 2.09(b) shall be so exchanged in whole and not in part.

(c)

The Company shall issue certificated Securities in exchange for beneficial interests in a Global Security upon request by or on behalf of the Depositary in accordance with customary procedures following the request of: 

(i)

any beneficial owner of Securities seeking to enforce its rights under the Securities or this Indenture upon the occurrence and during the continuance of an Event of Default; or 

(ii)

any beneficial owner of KKR Securities seeking to exercise its rights under the Securities or this Indenture (A) to elect the form of consideration to be received on conversion of such KKR Securities under Section 10.07(b), or (B) to increase the Conversion Rate upon conversion of such KKR Securities in connection with a Make Whole Event under Section 10.06(c); provided, however, that such beneficial owner (1) delivers evidence to the reasonable satisfaction of the Company and the Depositary that such Securities constitute KKR Securities and (2) cooperates in good faith with the Company to the extent necessary to enable the Company to comply with such request.  Notwithstanding the foregoing, the issuance of certificated Securities under this clause (c)(ii) shall be in the Company’s sole discretion so long as the KKR Securities are separately represented by one or more Global Securities in accordance with Section 2.02(c) and the beneficial owners of the KKR Securities are otherwise able to exercise their rights under the KKR Securities.

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(d)

Securities issued in exchange for a Global Security or any portion thereof pursuant to clauses (b) or (c) of this Section 2.09 shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Securities or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear any legends required hereunder.  Any Global Securities to be exchanged shall be surrendered by the Depositary to the Trustee, as Registrar; provided that pending completion of the exchange of a Global Security, the Trustee acting as custodian for the Global Securities for the Depositary or its nominee with respect to such Global Securities, shall reduce the principal amount thereof, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee.  Upon any such surrender or adjustment, the Trustee shall authenticate and make available for delivery the Securities issuable on such exchange to or upon the written order of the Depositary or an authorized representative thereof.

(e)

In the event of the occurrence of any of the events specified in Section 2.09(b) above or upon any request described in Section 2.09(c), the Company will promptly make available to the Trustee a sufficient supply of certificated Securities in definitive, fully registered form, without interest coupons.

(f)

Neither any members of, or participants in, the Depositary (“Agent Members”) nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Securities registered in the name of the Depositary or any nominee thereof, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Securities for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a Holder of any Securities.  However, subject to the provisions of this clause (f), a Holder of any Securities may grant proxies and otherwise authorize any Person (including any Agent Member and any Person who may have a beneficial interest in such Securities though an Agent Member) to take any action which a Holder is entitled to take under this Indenture or the Securities.

(g)

At such time as all interests in a Global Security have been repurchased, converted, cancelled or exchanged for Securities in certificated form, such Global Security shall, upon receipt thereof, be canceled by the Trustee in accordance with standing procedures and instructions existing between the Depositary and the custodian for the Global Security.  At any time prior to such 

26

cancellation, if any interest in a Global Security is repurchased, converted, cancelled or exchanged for Securities in certificated form, the principal amount of such Global Security shall, in accordance with the standing procedures and instructions existing between the Depositary and the custodian for the Global Security, be appropriately reduced, and an endorsement shall be made on such Global Security, by the Trustee or the custodian for the Global Security, at the direction of the Trustee, to reflect such reduction.

Section 2.10.  Transfer Restrictions.  

(a)

Until the expiration of the holding period applicable to sales of Securities under Rule 144(d)(1)(ii) under the Securities Act (or any successor provision), (1) any certificate evidencing a Security shall bear a legend in substantially the form identified as the “Restricted Security Legend” (the “Restricted Security Legend”) in the form of Security set forth in Exhibit A and (2) any certificate representing Common Stock issued upon conversion of the Securities shall bear a legend in substantially the form of Exhibit B, unless such Security (or such Common Stock) has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or sold pursuant to Rule 144 under the Securities Act or any similar provision then in force, or unless otherwise agreed by the Company in writing, with written notice thereof to the Trustee.

(b)

Every Security (and all securities issued in exchange therefor or in substitution thereof) that bears or is required under clause (a) of this Section 2.10 to bear the Restricted Security Legend (together with any Common Stock issued upon conversion of the Securities and required to bear the legend set forth in Exhibit B) (collectively, the “Restricted Securities”) shall be subject to the restrictions on transfer set forth in clause (c) of this Section 2.10 and such legends, unless such restrictions on transfer shall be waived by written consent of the Company following receipt of legal advice supporting the permissibility of the waiver of such transfer restrictions, and the Holder of any Restricted Securities, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer.  As used in this Section 2.10, the term “transfer” means any sale, pledge, loan, transfer or other disposition whatsoever of any Restricted Security or any interest therein.

(c)

In connection with any transfer of the Securities that are Restricted Securities prior to the date one year after the later of the last date of original issuance of the Securities and the last date on which the Company or any “affiliate” (as defined in Rule 144 under the Securities Act) of the Company was the owner of the Securities (other than a transfer pursuant to a registration statement which has been declared effective under the Securities Act), the Holder must complete and deliver the form of assignment set forth on the certificate representing the Securities with the appropriate box checked to the Trustee (or 

27

any successor Trustee, as applicable).  If the proposed transfer is pursuant to clause (E) of the Restricted Security Legend, the Holder must, prior to such transfer, furnish to the Trustee (or any successor Trustee, as applicable), such certifications, legal opinions or other information as the Company may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.  The Restricted Security Legend will be removed upon the earlier of the transfer of the Security evidenced thereby pursuant to clause (B) of the Restricted Security Legend, or the later expiration of one year from the last date of original issuance of the Securities and the last date on which the Company or any “affiliate” (as defined in Rule 144 under the Securities Act) of the Company was the owner of the Securities.

If Rule 144(d)(1)(ii) as promulgated under the Securities Act is amended to change the one-year period under Rule 144(d)(1)(ii), then, the references in the Restricted Security Legend and in Exhibit B to “one year,” and in the corresponding transfer restrictions described in this clause (c), will refer to such changed period.  As soon as practicable after the Company has knowledge of the effectiveness of any such amendment to change the one-year period under Rule 144(d)(1)(ii), unless such changes would otherwise be prohibited by, or would otherwise cause a violation of, the federal securities laws applicable at the time, the Company will provide to the Trustee certain certificates and opinions as to the effectiveness of such amendment and the effectiveness of such change to the restrictive legends and transfer restrictions applicable to the Securities.

(d)

Any Securities that are Restricted Securities and as to which such restrictions on transfer shall have expired in accordance with their terms or as to conditions for removal of the Restricted Security Legend set forth therein have been satisfied may, upon surrender of such Securities for exchange to the Registrar in accordance with the provisions of this Section 2.10, be exchanged for a new Security or Securities, of like tenor and aggregate principal amount, which shall not bear the Restricted Security Legend required by this Section 2.10.  If such Restricted Security surrendered for exchange is represented by a Global Security bearing the Restricted Security Legend, the principal amount of the legended Global Securities shall be reduced by the appropriate principal amount and the principal amount of a Global Security without the Restricted Security Legend shall be increased by an equal principal amount.  If a Global Security without the Restricted Security Legend is not then outstanding, the Company shall execute and the Trustee shall authenticate and deliver an unlegended Global Security to the Depositary.

Section 2.11.  Responsibilities and Obligations of the Trustee.  

(a)

The Trustee shall have no responsibility or obligation to any Agent Members or any other Person with respect to the accuracy of the books or records, 

28

or the acts or omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any Agent Member or other Person (other than the Depositary) of any notice or the payment of any amount, under or with respect to such Securities.  All notices and communications to be given to the Holders of Securities and all payments to be made to Holders of Securities under the Securities shall be given or made only to or upon the order of the registered Holders of Securities (which shall be the Depositary or its nominee in the case of a Global Security).  The rights of beneficial owners in any Global Securities shall be exercised only through the Depositary subject to the customary procedures of the Depositary.  The Trustee may conclusively rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its Agent Members.

(b)

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Securities (including any transfers between or among Agent Members) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.12.  Replacement Securities.  

(a)

If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i) notifies the Company or the Trustee within a reasonable time after he has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (ii) makes such request to the Company or the Trustee prior to the Security being acquired by a “protected purchaser” as defined in Section 8-303 of the Uniform Commercial Code (a “Protected Purchaser”) and (iii) satisfies any other reasonable requirements of the Trustee and the Company (including evidence to the satisfaction of the Trustee and the Company of the destruction, loss or theft of such Securities and of the ownership thereof).  If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee to protect the Company, the Trustee, the Paying Agent, the Conversion Agent and the Registrar from any loss that any of them may suffer if a Security is replaced.  The Company and the Trustee may charge the Holder for their expenses in replacing a Security (including any sums sufficient to cover any tax that may be imposed in relation thereto).  

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(b)

If any Security which has matured or is about to mature or has been properly tendered for repurchase on a Fundamental Change Repurchase Date (and not withdrawn) or is to be converted into Common Stock, shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a replacement Security, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Securities), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or in connection with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent evidence to their satisfaction of the destruction, loss or theft of such Securities and of the ownership thereof.

(c)

Every replacement Security is an additional obligation of the Company.

(d)

The provisions of this Section 2.12 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Securities.

Section 2.13.  Outstanding Securities.  

(a)

Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding.  A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.

(b)

If a Security is replaced pursuant to Section 2.12, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a Protected Purchaser.

(c)

If a Security is converted in accordance with Article 10, such Security ceases to be outstanding, and interest ceases to accrue on such Security, in each case from the time the conversion is deemed to take effect on the Conversion Date pursuant to Section 10.02(c).

(d)

If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a Fundamental Change Repurchase Date or Maturity Date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be repurchased or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture, then on and after that 

30

date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

Section 2.14.  Temporary Securities.  

(a)

Pending the preparation of Securities in certificated form, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon the written request of the Company, authenticate and deliver temporary Securities (printed, lithographed or otherwise reproduced).  Temporary Securities shall be issuable in any authorized denomination, and substantially in the form of the Securities in certificated form, but with such omissions, insertions and variations as may be appropriate for temporary Security, all as may be determined by the Company.  Every such temporary Security shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Securities in certificated form. 

(b)

Without unreasonable delay, the Company will execute and deliver to the Trustee or such authenticating agent Securities in certificated form and thereupon any or all temporary Securities may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.02 and the Trustee or such authenticating agent shall authenticate and make available for delivery in exchange for such temporary Securities an equal aggregate principal amount of Securities in certificated form.  Such exchange shall be made by the Company at its own expense and without any charge therefor.  Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Securities in certificated form authenticated and delivered hereunder.

Section 2.15.  Cancellation.  

(a)

The Company at any time may deliver Securities to the Trustee for cancellation.  The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else shall promptly cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and promptly deliver canceled Securities to the Company pursuant to written direction by an Officer.  

(b)

The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation.  The Trustee may not authenticate Securities in place of canceled Securities other than pursuant to the terms of this Indenture.

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Section 2.16.  CUSIP and ISIN Numbers.  

The Company in issuing the Securities on the Closing Date or exchange for a Global Security or any portion thereof pursuant to Section 2.09 may use “CUSIP” and “ISIN” numbers (if then generally in use).

Section 2.17.  Additional Securities.  

The Company may, from time to time without the consent of the Holders of outstanding Securities, increase the principal amount of the Securities by issuing additional Securities in the future pursuant to this Indenture (“Additional Securities”) having terms and conditions identical to those of the other outstanding Securities, except that Additional Securities may have a different initial date from which interest begins to accrue thereon so that the Additional Securities are fungible with outstanding Securities; provided that no differences pursuant to this Section 2.17 shall cause such Additional Securities to constitute a different class of securities than the Securities issued pursuant to the Purchase Agreement for United States federal income tax purposes; and provided further, that the Additional Securities shall have the same CUSIP number as the Securities issued pursuant to the Purchase Agreement.  The Securities originally issued pursuant to the Purchase Agreement and any Additional Securities shall be treated as a single class for all purposes under this Indenture, including waivers, amendments, offers to purchase and United States federal tax purposes. No Additional Securities may be issued if on the issue date therefor any Event of Default has occurred and is continuing.

ARTICLE 3

REPURCHASE OF SECURITIES UPON A FUNDAMENTAL CHANGE

Section 3.01.  Repurchase Upon A Fundamental Change.  

(a)

If there shall occur a Fundamental Change at any time prior to maturity of the Securities, then each Holder of Securities shall have the right, at such Holder’s option, to require the Company to repurchase, at the Fundamental Change Repurchase Price (as defined below), all of such Holder’s Securities, or any portion thereof that is a multiple of $1,000 principal amount, on a date (the “Fundamental Change Repurchase Date”) specified by the Company, that is not less than 30 nor more than 45 calendar days after the date of the Fundamental Change Repurchase Notice related to such Fundamental Change at a cash repurchase price equal to 100% of the principal amount of the Securities being repurchased, plus accrued and unpaid interest to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”), subject to the satisfaction by the Holder of the requirements set forth in Section 

32

3.01(c); provided that if such Fundamental Change Repurchase Date falls after an Interest Record Date and on or prior to the corresponding Interest Payment Date, then the interest payable on the Fundamental Change Repurchase Date shall be paid on the Fundamental Change Repurchase Date to the Holders of record of the Securities on the applicable Interest Record Date instead of the Holders surrendering the Securities for repurchase on such date.

(b)

On or before the fifteenth calendar day after the occurrence of a Fundamental Change, the Company will provide to the Trustee and to all Holders of record of the Securities on the date of the Fundamental Change at their addresses shown in the Register of the Registrar and to beneficial owners of the Securities to the extent required by applicable law, the Company Repurchase Notice as set forth in Section 3.02 with respect to such Fundamental Change.

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

(c)

For Securities to be repurchased at the option of the Holder, the Holder must deliver to the Paying Agent, prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date, (i) a written notice to the Paying Agent of exercise of repurchase (the “Fundamental Change Repurchase Notice”) in the form set forth on the reverse of the Securities duly completed (if the Securities are certificated) or comply with applicable Depositary procedures (if the Securities are represented by a Global Security), together with (ii) such Securities duly endorsed for transfer (if the Securities are certificated) or book-entry transfer of such Securities (if the Securities are represented by a Global Security).  The delivery of such Securities to the Paying Agent with, or at any time after delivery of, the Fundamental Change Repurchase Notice (together with all necessary endorsements) at the office of the Paying Agent shall be a condition to payment by the Company to the Holder of the Fundamental Change Repurchase Price therefor; provided that such Fundamental Change Repurchase Price shall be so paid pursuant to this Section 3.01 only if the Securities so delivered to the Paying Agent shall conform in all respects to the description thereof in the Fundamental Change Repurchase Notice.  All questions as to the validity, eligibility (including time of receipt) and acceptance of any Securities for repurchase shall be determined by the Company, whose determination shall be final and binding absent manifest error.

(d)

The Company shall repurchase from the Holder thereof, pursuant to this Section 3.01, a portion of a Security, if the principal amount of such portion is $1,000 or a whole multiple of $1,000.  Provisions of this Indenture that apply to the repurchase of all of a Security also apply to the repurchase of such portion of such Security.

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(e)

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

(f)

Any repurchase by the Company contemplated pursuant to the provisions of this Section 3.01 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Fundamental Change Repurchase Date and the time of the book-entry transfer or delivery of the Securities.

Section 3.02.  Company Repurchase Notice; Tender Offer Compliance.  

(a)

In connection with any repurchase of Securities upon a Fundamental Change, the Company shall, on or before the fifteenth calendar day after the occurrence of such Fundamental Change, give notice to Holders (with a copy to the Trustee) setting forth information specified in this Section 3.02 (the “Company Repurchase Notice”).

Each Company Repurchase Notice shall:

(i)

state the Fundamental Change Repurchase Price and the Fundamental Change Repurchase Date to which the Company Repurchase Notice relates;

(ii)

state the circumstances constituting the Fundamental Change;

(iii)

 state that the Fundamental Change Repurchase Price will be paid in cash;

(iv)

state that Holders must exercise their right to elect repurchase prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date;

(v)

include a form of Fundamental Change Repurchase Notice;

(vi)

state the name and address of the Paying Agent;

(vii)

 state that Securities must be surrendered to the Paying Agent to collect the repurchase price;

(viii)

 state that a Holder may withdraw its Fundamental Change Repurchase Notice, as applicable, at any time prior to 5:00 p.m., New York City time, on the Business Day immediately preceding the Fundamental Change Repurchase Date, by delivering a valid written notice of withdrawal in accordance with Section 3.03;

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(ix)

state whether the Securities are then convertible, the then applicable Conversion Rate, including expected changes, if any, in the Conversion Rate resulting from the Fundamental Change and expected changes in the cash, shares or other property deliverable upon conversion of the Securities as a result of the occurrence of the Fundamental Change;

(x)

that Securities as to which a Fundamental Change Repurchase Notice has been given may be converted only if the Fundamental Change Repurchase Notice is withdrawn in accordance with the terms of this Indenture;

(xi)

 state the amount of interest accrued and unpaid per $1,000 principal amount of Securities to, but excluding, the Fundamental Change Repurchase Date; and

(xii)

state the CUSIP number of the Securities.

A Company Repurchase Notice may be given by the Company or, at the Company’s request, the Trustee shall give such Company Repurchase Notice in the Company’s name and at the Company’s expense; provided that the text of the Company Repurchase Notice shall be prepared by the Company.

(b)

The Company will, to the extent applicable (i) comply with the provisions of Rule 13e-4 and Rule 14e-1 (or any successor provision) under the Exchange Act that may be applicable at the time of the repurchase of the Securities, (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act or any other schedule required in connection with any offer by the Company to repurchase the Securities and (iii) comply with all other federal and state securities laws in connection with any offer by the Company to repurchase the Securities.

Section 3.03.  Effect of Repurchase Notice; Withdrawal.  

(a)

Upon receipt by the Paying Agent of the Fundamental Change Repurchase Notice specified in Section 3.01, the Holder of the Securities in respect of which such Fundamental Change Repurchase Notice was given shall (unless such Fundamental Change Repurchase Notice is validly withdrawn in accordance with the following paragraph) thereafter be entitled to receive solely the Fundamental Change Repurchase Price with respect to such Securities.  Such repurchase price shall be paid to such Holder, subject to receipt of funds and/or the Securities by the Paying Agent, promptly following the later of (i) the Fundamental Change Repurchase Date with respect to such Securities (provided the Holder has satisfied the conditions in Section 3.01) and (ii) the time of book-entry transfer or delivery of such Securities to the Paying Agent by the Holder thereof in the manner required by Section 3.01.  The Securities in respect of which a Fundamental Change Repurchase Notice has been given by the Holder 

35

thereof may not be converted pursuant to Article 10 hereof on or after the date of the delivery of such Fundamental Change Repurchase Notice, unless such Fundamental Change Repurchase Notice has first been validly withdrawn.

(b)

A Fundamental Change Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Fundamental Change Repurchase Notice at any time prior to 5:00 p.m., New York City time, on the Business Day immediately preceding the Fundamental Change Repurchase Date, specifying:

(i)

the certificate number, if any, of the Securities in respect of which such notice of withdrawal is being submitted if they are in certificated form, or the appropriate Depositary information, in accordance with appropriate Depositary procedures, if the Securities in respect of which such notice of withdrawal is being submitted is represented by a Global Security;

(ii)

the principal amount of the Securities with respect to which such notice of withdrawal is being submitted; and

(iii)

 the principal amount, if any, of such Securities which remains subject to the original Fundamental Change Repurchase Notice, which shall be $1,000 or a whole multiple of $1,000.

(c)

If a Fundamental Change Repurchase Notice is properly withdrawn, the Company shall not be obligated to repurchase the Securities listed in such Fundamental Change Repurchase Notice.

Section 3.04.  Deposit of Fundamental Change Repurchase Price. 

(a)

 Prior to 12:00 p.m., New York City time, on the Fundamental Change Repurchase Date, the Company shall deposit with the Paying Agent or, if the Company is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.06, an amount of cash (in immediately available funds if deposited on the Fundamental Change Repurchase Date), sufficient to pay the aggregate repurchase price of all the Securities or portions thereof that are to be repurchased as of the Fundamental Change Repurchase Date.

(b)

If on the Fundamental Change Repurchase Date the Paying Agent holds cash sufficient to pay the repurchase price and related accrued interest of the Securities that Holders have elected to require the Company to repurchase in accordance with Section 3.01, then, on the Fundamental Change Repurchase Date, such Securities will cease to be outstanding, and interest will cease to accrue (whether or not book entry transfer or delivery of the Securities has been made to the Paying Agent) and all other rights of the Holders of such Securities will terminate, other than the right to receive the Fundamental Change Repurchase 

36

Price and any accrued interest upon delivery or book-entry transfer of the Securities.  This will be the case whether or not book-entry transfer of the Securities has been made or the Securities has been delivered to the Paying Agent.

Section 3.05.  Securities Repurchased in Part. 

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

ARTICLE 4

COVENANTS

Section 4.01.  Payment of Securities.  

The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture in each such case, prior to 12:00 p.m., New York City time.  Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

Section 4.02.  Maintenance of Office or Agency.  

(a)

The Company will maintain an office or agency in the United States where the Securities may be surrendered for registration of transfer or exchange or for presentation for payment or for conversion or repurchase and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served.  As of the date of this Indenture, such office is located at the Corporate Trust Office.  The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency not designated or appointed by the Trustee.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.

(b)

The Company may also from time to time designate co-registrars and one or more offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such 

37

designations.  The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

Section 4.03.  Rule 144A Information.  

The Company covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, make available to any holder or beneficial owner of Securities or any Common Stock issued upon conversion thereof which continue to be Restricted Securities and any prospective purchaser of Securities or such Common Stock designated by such holder or beneficial owner, the information required pursuant to Rule 144A(d)(4) under the Securities Act upon the request of any holder or beneficial owner of the Securities or such Common Stock, all to the extent required to enable such holder or beneficial owner to sell its Securities or Common Stock without registration under the Securities Act within the limitation of the exemption provided by Rule 144A.

Section 4.04.  Existence.  

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

Section 4.05.  Compliance Certificate.  

The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers’ Certificate stating, as to each such Officer signing such certificate, whether to such Officer’s knowledge the Company during such preceding fiscal year has kept, observed, performed and fulfilled the covenants contained in this Indenture and, if the Company shall be in Default, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto.  The Company also shall comply with Section 314(a)(4) of the Trust Indenture Act.

Section 4.06.  Additional Interest Notice.  

If the Company is required to pay Additional Interest to Holders of Securities pursuant to the Registration Rights Agreement or Section 6.13, the 

38

Company will provide written notice (“Additional Interest Notice”) to the Trustee of its obligation to pay Additional Interest no later than two Business Days prior to the proposed payment date for Additional Interest, and the Additional Interest Notice shall set forth the amount of Additional Interest to be paid by the Company on such payment date.  The Trustee shall not at any time be under any duty or responsibility to any Holder of Securities to determine the Additional Interest, or with respect to the nature, extent or calculation of the amount of Additional Interest when made, or with respect to the method employed in such calculation of the Additional Interest.

Section 4.07.  Exchange Act Reports.  

(a)

The Company shall deliver to the Trustee, within fifteen days after the Company is required to file the same with the SEC, copies of the Company’s annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that the Company is required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act.  Reports, information and documents filed by the Company with the SEC via the EDGAR system will be deemed filed with the Trustee for purposes of this Section 4.07 as of the time that such reports, information and documents are filed via EDGAR.

(b)

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on notices from the Company).

ARTICLE 5

SUCCESSOR COMPANY

Section 5.01.  When Company May Merge or Transfer Assets.  

The Company shall not in a single transaction or a series of related transactions consolidate with or merge with or into any other Person, or sell, convey, transfer or lease its property and assets substantially as an entirety to any Person, unless:

(a)

either (i) the Company is the continuing corporation, or (ii) the resulting, surviving or transferee person (if other than the Company) is a corporation or limited liability company organized and existing under the laws of the United States, any state thereof or the District of Columbia and such person 

39

assumes, by a supplemental indenture in a form reasonably satisfactory to the Trustee, all of the Company’s obligations under the Securities and this Indenture;

(b)

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

(c)

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

Section 5.02.  Successor to be Substituted.  

(a)

In case of any such consolidation, merger, sale, conveyance, transfer or lease in which the Company is not the continuing corporation and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and reasonably satisfactory in form and substance to the Trustee, of the due and punctual payment of the principal of, and interest on all of the Securities, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or satisfied by the Company, such successor Person shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as a party hereto, and Legg Mason, Inc. shall be discharged from its obligations under the Securities and this Indenture.  Such successor Person thereupon may cause to be signed, and may issue the Securities either in its own name or in the name of Legg Mason, Inc.

(b)

Upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be signed and delivered to the Trustee for that purpose.  All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.  In the event of any such consolidation, merger, sale, conveyance, transfer or lease, upon compliance with this Article 5 the Person named as the “Company” in the first paragraph of this Indenture or any successor that shall thereafter have become such in the manner prescribed in this Article 5 may be dissolved, wound up and liquidated at any time thereafter and such Person shall be discharged from its liabilities as obligor and maker of the Securities and from its obligations under this Indenture.

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Section 5.03.  Opinion of Counsel to be Given to Trustee.  

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

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01.  Events of Default.  

An “Event of Default” occurs if:

(a)

the Company defaults in any payment of interest on any Security when the same becomes due and payable and such default continues for a period of 30 calendar days;

(b)

the Company defaults in the payment of the principal of any Security when the same becomes due and payable at maturity, or the Company defaults in the payment of the Fundamental Change Repurchase Price when due;

(c)

the Company fails to deliver cash and, if applicable, shares of Common Stock (including any Additional Shares), or a combination of the foregoing, as required pursuant to Article 10 upon the conversion of any Securities and such failure continues for ten Business Days following the scheduled settlement date for such conversion;

(d)

the Company fails to provide notice of the anticipated effective date or actual effective date of a Fundamental Change or a Make Whole Event on a timely basis as required in this Indenture;

(e)

the Company fails to perform or observe any other term, covenant or agreement contained in the Securities or this Indenture (other than those referred to in (a), (b), (c) or (d) above) and such failure continues for 60 days after receipt by the Company of a Notice of Default;

(f)

a failure to pay when due (whether at stated maturity or otherwise) by the Company or any Significant Subsidiary of the Company, after the expiration of any applicable grace period, of principal of Indebtedness, where the amount of such unpaid principal is in an aggregate amount in excess of $50 million or more (or its foreign currency equivalent), or a default that results in the acceleration of maturity, of any Indebtedness of the Company or any Significant Subsidiary of the Company in an aggregate amount in excess of $50 million (or 

41

its foreign currency equivalent at the time), in each case if such Indebtedness is not discharged and such acceleration is not rescinded, stayed or annulled, within a period of 30 calendar days after receipt by the Company of a Notice of Default;

(g)

a final judgment for the payment of $50 million or more (excluding any amounts covered by insurance or subject to a binding indemnity from a financially responsible third party with resources sufficient to pay such indemnity obligation when due) rendered against the Company or any Significant Subsidiary of the Company, which judgment is not discharged or the enforcement of which is not effectively stayed within 90 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished;

(h)

the Company or any Significant Subsidiary of the Company, pursuant to or within the meaning of any Bankruptcy Law:

(i)

commences a voluntary case;

(ii)

consents to the entry of an order for relief against it in an involuntary case;

(iii)

 consents to the appointment of a Custodian of it or for any substantial part of its property; or

(iv)

makes a general assignment for the benefit of its creditors; 

or takes any comparable action under any foreign laws relating to insolvency; or

(i)

a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i)

is for relief against the Company or any Significant Subsidiary of the Company in an involuntary case;

(ii)

appoints a Custodian of the Company or any Significant Subsidiary of the Company or for any substantial part of its property; or

(iii)

 orders the winding up or liquidation of the Company or any Significant Subsidiary of the Company; 

or any similar relief is granted under any foreign laws, and, in each such case, the order or decree remains unstayed and in effect for 60 consecutive days.

The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

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A Default under clause (e) or (f) above is not an Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Securities notify the Company or the Company and the Trustee, respectively, of the Default and the Company does not cure such Default within the time specified after receipt of such notice.  Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.”  When any Default under this Section 6.01 is cured in accordance herewith, it shall cease to be a Default.

The Company shall deliver to the Trustee, promptly upon becoming aware of any Default, written notice of any Default known to the party, its status and what action the Company is taking or proposes to take with respect thereto.

Section 6.02.  Acceleration.  

(a)

If an Event of Default (other than an Event of Default specified in Section 6.01(h) or Section 6.01(i) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the outstanding Securities by notice to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable.  Upon such a declaration, such principal and interest shall be due and payable immediately.  If an Event of Default specified in Section 6.01(h) or Section 6.01(i) with respect to the Company occurs, the principal of and interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.  

(b)

The Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if:

(i)

the Company has paid (or deposited with the Trustee a sum sufficient to pay) (A) all overdue interest on all the Securities, (B) the principal amount of any Securities that has become due otherwise than by such acceleration or declaration, (C) interest upon overdue interest, to the extent that payment of such interest is lawful, and (D) any amount due to the Trustee for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel; and

(ii)

all existing Events of Default have been cured or waived, except nonpayment of principal or interest that has become due solely because of acceleration.  

No such rescission shall affect any subsequent Default or impair any right consequent thereto.

43

Section 6.03.  Other Remedies.  

(a)

If an Event of Default occurs and is continuing, and the principal of and accrued but unpaid interest on the Securities has been declared due and payable as provided in Section 6.02 the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.

(b)

The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.

Section 6.04.  Waiver of Defaults and Events of Default.  

(a)

The Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may on behalf of the Holders of all the Securities, waive any Default or Event of Default and its consequences except an Event of Default arising (i) from a failure to pay the principal of a Security when due, (ii) from the failure to pay the Fundamental Change Repurchase Price on the Fundamental Change Repurchase Date applicable upon the repurchase any Security in connection with a Fundamental Change when required pursuant to the terms of this Indenture, (iii) from the failure of the Company to deliver Common Stock (including any Additional Shares), cash and, if applicable shares of or a combination of the foregoing, as applicable upon the conversion of any Securities pursuant to the terms of this Indenture or (iv) in respect of any provision of this Indenture that under Section 9.02 cannot be amended without the consent of each Holder affected.  

(b)

When an Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Event of Default or impair any consequent right.

Section 6.05.  Control by Majority.  

The Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Holders or would involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such 

44

direction.  Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

Section 6.06.  Limitation on Suits.  

(a)

Except to enforce the right to receive payment of principal or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless:

(i)

the Holder gives to the Trustee written notice stating that an Event of Default is continuing;

(ii)

the Holders of at least 25% in principal amount of the Securities outstanding make a written request to the Trustee to pursue the remedy;

(iii)

 such Holder or Holders offer to the Trustee reasonable security or indemnity satisfactory to the Trustee against any loss, liability, claim, damage or expense of the Trustee;

(iv)

the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and

(v)

the Holders of a majority in principal amount of the Securities then outstanding do not give the Trustee a direction inconsistent with the request.

(b)

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

(c)

Anything contained in this Indenture or the Securities to the contrary notwithstanding, the Holder of any Securities, without the consent of either the Trustee or the Holder of any other Securities, on its own behalf and for its own benefit, may enforce, and may institute and maintain any proceeding suitable to enforce, its rights of conversion as provided herein.

Section 6.07.  Rights of Holders to Receive Payment.  

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal of (including the Fundamental Change Repurchase Price) and accrued interest on the Securities held by such Holder, or delivery of the cash and, if applicable, shares of Common Stock issuable upon conversion of the Securities, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment or delivery on 

45

or after such respective dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08.  Collection Suit by Trustee.  

If an Event of Default specified in Section 6.01(a) or 6.01(b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.

Section 6.09.  Trustee May File Proofs of Claim.  

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

Section 6.10.  Priorities.  

(a)

If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

(i)

FIRST:  to the Trustee for amounts due under Section 7.07;

(ii)

SECOND:  to Holders for amounts due and unpaid on the Securities for principal and interest, ratably without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and

(iii)

 THIRD:  to the Company.

(b)

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.  At least 15 days before such record date, the Trustee shall mail to each Holder and the Company a notice that states the record date, the payment date and amount to be paid.

46

Section 6.11.  Undertaking for Costs.  

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Securities on or after the due date expressed in such Securities or to any suit for the enforcement of the right to convert any Securities in accordance with the provisions of Article 10.

Section 6.12.  Waiver of Stay, Extension or Usury Laws.  

The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

Section 6.13.  Alternative Remedy for Failure to Comply with Reporting Obligations in the Indenture and the Trust Indenture Act.  

(a)

Notwithstanding any other provision of this Article 6, if the Company so elects, the sole remedy for an Event of Default relating to the failure to comply with Section 4.07 of this Indenture and/or for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act will, for the 270 days after the occurrence of such an Event of Default, consist exclusively of the right to receive additional interest (the “Default Additional Interest”) on the Securities at an annual rate equal to 

(i)

0.25% of the principal amount of the Securities then outstanding over such portion of the first 90-day period immediately following such Event of Default during which such Event of Default is continuing;

47

(ii)

0.50% of the principal amount of the Securities then outstanding over such portion of the 180-day period immediately following the 90th day after such Event of Default during which such Event of Default is continuing.

In the event the Company does not elect to pay the Default Additional Interest upon an Event of Default in accordance with this Section 6.13, the Securities will be subject to acceleration as provided above.  

(b)

The Default Additional Interest will accrue on all outstanding Securities from and including the date on which an Event of Default relating to a failure to comply with Section 4.07 of this Indenture and/or for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act first occurs to, but not including, the 270th day thereafter (or such earlier date on which the Event of Default relating to such failure shall have been cured or waived) and will be payable in the same manner as the Registration Rights Additional Interest.  On such 270th day (or earlier, if the Event of Default relating to such failure is cured or waived prior to such 270th day) such Default Additional Interest will cease to accrue and the Securities will be subject to acceleration as provided above if the Event of Default is continuing.

(c)

This Section 6.13 will not affect the rights of holders of Securities in the event of the occurrence of any other Event of Default.

ARTICLE 7

TRUSTEE

Section 7.01.  Duties of Trustee. 

(a)

If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

(b)

Except during the continuance of an Event of Default:

(i)

the Trustee need only perform such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii)

in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.  However, in the case of certificates or opinions specifically required by 

48

any provision of this Indenture to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but the Trustee need not confirm or investigate the accuracy of any mathematical calculations or any other facts stated in such certificates and opinions).

(c)

The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i)

this paragraph does not limit the effect of paragraph (b) of this Section;

(ii)

the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii)

the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(d)

Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

(e)

The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

(f)

Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g)

No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

Section 7.02.  Rights of Trustee.  

(a)

The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.

(b)

Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.

49

(c)

The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d)

The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

(e)

The Trustee may consult with counsel of its selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f)

The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, note, debenture, other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(g)

The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby.

(h)

In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(i)

The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture.

(j)

The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

Section 7.03.  Individual Rights of Trustee.  

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.  Any 

50

Conversion Agent, Paying Agent, Registrar or co-paying agent may do the same with like rights.  However, the Trustee must comply with Sections 7.10 and 7.11.

Section 7.04.  Trustee’s Disclaimer.  

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee’s certificate of authentication.

Section 7.05.  Notice of Defaults.  

(a)

The Trustee shall not be deemed to have notice of any Default, other than a payment default, unless a Trust Officer shall have been advised in writing that a Default has occurred.  No duty imposed upon the Trustee in this Indenture shall be applicable with respect to any Default of which the Trustee is not deemed to have notice.

(b)

If a default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Holder notice of the default within the earlier of 90 days after it occurs or 30 days after it is known to a Trust Officer or written notice of it is received by the Trustee.  Except in the case of a default in payment of principal or interest on any Security (including payments pursuant to the repurchase provisions of such Security), the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Holders.

Section 7.06.  Reports by Trustee to Holders.  

(a)

As promptly as practicable, beginning with the May 15 following the first anniversary of the date of this Indenture, and in any event prior to May 15 in each subsequent year, the Trustee shall, to the extent that any of the events described in Section 313(a) of the Trust Indenture Act occurred within the previous twelve months, but not otherwise, mail to each Holder a brief report dated as of May 15 that complies with Section 313(a) of the Trust Indenture Act.  The Trustee shall also comply with Section 313(b) of the Trust Indenture Act.

(b)

A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed.  The Company agrees to promptly notify the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof.

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Section 7.07.  Compensation and Indemnity.  

(a)

The Company shall pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services.  Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts.  The Company shall indemnify the Trustee, and hold it harmless, against any and all loss, claim, damage, liability or expense (including reasonable attorneys’ fees and expenses) incurred by or in connection with the offer and sale of the Securities or the administration of this trust and the performance of its duties hereunder.  The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided that any failure so to notify the Company shall not relieve the Company of its indemnity obligations hereunder.  The Company shall defend the claim and the indemnified party shall provide reasonable cooperation at the Company’s expense in the defense.  Such indemnified parties may have separate counsel and the Company shall pay the fees and expenses of such counsel; provided that the Company shall not be required to pay such fees and expenses if it assumes such indemnified parties’ defense and, in such indemnified parties’ reasonable judgment, there is no conflict of interest between the Company and such parties in connection with such defense.  The Company need not reimburse any expense or indemnify against any loss, liability or expense caused by an indemnified party through such party’s own willful misconduct and negligence.

(b)

To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal of and interest and any liquidated damages on particular Securities.

(c)

The Company’s payment obligations pursuant to this Section 7.07 shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any Bankruptcy Law or the resignation or removal of the Trustee.  When the Trustee incurs expenses after the occurrence of an Event of Default specified in Section 6.01(h) or 6.01(i) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

Section 7.08.  Replacement of Trustee.  

(a)

The Trustee may resign at any time by so notifying the Company.  The Holders of a majority in principal amount of the Securities then outstanding 

52

may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee.  The Company shall remove the Trustee if:

(i)

the Trustee fails to comply with Section 7.10;

(ii)

the Trustee is adjudged bankrupt or insolvent;

(iii)

 a Custodian takes charge of the Trustee or its property; or

(iv)

the Trustee otherwise becomes incapable of acting.

(b)

If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities then outstanding and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.

(c)

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders.  The retiring Trustee shall, upon payment of its compensation and expenses payable under this Indenture, promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

(d)

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities then outstanding may, at the Company’s expense, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(e)

If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(f)

Notwithstanding the replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

Section 7.09.  Successor Trustee by Merger.  

(a)

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another 

53

corporation or banking association, the resulting, surviving or transferee corporation, without any further act, shall be the successor Trustee.

(b)

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee succeeds to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force accorded to a certificate of the Trustee under the terms of the Securities or in this Indenture.

Section 7.10.  Eligibility; Disqualification.  

The Trustee shall at all times satisfy the requirements of Section 310(a) of the Trust Indenture Act.  The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.  The Trustee shall comply with Section 310(b) of the Trust Indenture Act.

Section 7.11.  Preferential Collection of Claims Against Company.  

The Trustee shall comply with Section 311(a) of the Trust Indenture Act.  A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated.

ARTICLE 8

DISCHARGE OF INDENTURE

Section 8.01.  Discharge of Liability on Securities. 

(a)

At any time after all outstanding Securities have become due and payable, whether at maturity or upon a repurchase pursuant to Article 3 hereof, and any pending conversions have been completed (including delivery of all cash and shares of Common Stock, if any, deliverable pursuant to such conversions in accordance with Section 10.13) then this Indenture shall, subject to Section 8.01(b), cease to be of further effect when (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.12) for cancellation or (ii) the Company irrevocably deposits with the Trustee money sufficient to pay at maturity or upon repurchase all outstanding Securities, including interest thereon to but excluding, maturity or repurchase date (other 

54

than Securities replaced pursuant to Section 2.12), and if in each such case the Company pays all other sums payable hereunder by the Company.  The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Company.

(b)

Notwithstanding clause (a) of this Section 8.01, the Company’s obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 2.10, 2.12, 2.13, 7.07, 7.08 and in this Article 8 shall survive until the Securities have been paid in full.  Thereafter, the Company’s obligations in Sections 7.07, 8.03 and 8.04 shall survive such satisfaction and discharge of this Indenture.

Section 8.02.  Application of Trust Money.  

The Trustee shall hold in trust money deposited with it pursuant to this Article 8.  It shall apply the deposited money through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities in accordance with this Indenture in relation to the conversion of Securities pursuant to the terms hereof.

Section 8.03.  Repayment to Company.  

(a)

The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time.

(b)

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

Section 8.04.  Reinstatement.  

If the Trustee or Paying Agent is unable to apply any money in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with this Article 8; provided that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

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ARTICLE 9

AMENDMENTS

Section 9.01.  Without Consent of Holders.  

The Company and the Trustee may amend this Indenture or the Securities without notice to or consent of any Holder:

(a)

to provide for conversion rights of Holders of the Securities and the Company’s repurchase obligations in connection with a Fundamental Change in the event of any reclassification of Common Stock, merger or consolidation, or sale, conveyance, transfer or lease of the Company’s property and assets substantially as an entirety;

(b)

to secure the Securities, including provisions regarding the circumstances under which collateral may be released or substituted;

(c)

evidence the succession of another Person to the Company under the terms of this Indenture or successive successions, and provide for the assumption of the Company’s obligations to the Holders in the event of a merger or consolidation, or sale, conveyance, transfer or lease of the Company’s property and assets substantially as an entirety;

(d)

to surrender any right or power conferred upon the Company;

(e)

to add to the covenants of the Company for the benefit of the Holders;

(f)

to make any provision with respect to matters or questions arising under this Indenture that the Company may deem necessary or desirable and that shall not be inconsistent with provisions of this Indenture; provided that such change or modification does not, in the good faith opinion of the Board of Directors, adversely affect the interests of the Holders of the Securities in any material respect;

(g)

to increase the Conversion Rate in accordance with this Indenture; 

(h)

to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the Trust Indenture Act;

(i)

to add or provide for the guarantee of obligations under the Securities or additional obligors on the Securities;

(j)

to cure any ambiguity or correct or supplement any inconsistency or defective provision contained in this Indenture;

56

(k)

to make any changes or modifications necessary in connection with the registration of the Securities under the Securities Act as contemplated by the Registration Rights Agreement; provided that such change or modification does not adversely affect the interests of the Holders of the Securities in any material respect;

(l)

to provide for a successor Trustee; or

(m)

to make any other change that does not materially adversely affect the rights of any Holder.

After an amendment under this Section 9.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.

Section 9.02.  With Consent of Holders.  

The Company and the Trustee may amend this Indenture or the Securities with the written consent or affirmative vote of the Holders of at least a majority in principal amount of the Securities then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Securities), without notice to any other Holder.  However, without the consent of each Holder of an outstanding Security affected, an amendment may not:

(a)

extend the Maturity Date; 

(b)

reduce the rate of or extend the time for payment of interest on any Security;

(c)

reduce the principal amount of any Security;

(d)

reduce any amount payable upon repurchase of any Security;

(e)

impair the right of a Holder to institute suit for payment of any Securities;

(f)

make any Security payable in a currency other than that stated in the Security;

(g)

change the obligation of the Company to repurchase any Security upon a Fundamental Change in a manner adverse to the Holders in any material respect;

(h)

except as required by this Indenture, adversely affect in any material respect, the right of a Holder to convert any Securities into cash and, if applicable, shares of Common Stock (or to the extent otherwise applicable, other property, 

57

including cash, receivable upon conversion pursuant to the terms of this Indenture) or reduce the Conversion Rate, except as otherwise permitted pursuant to this Indenture; or

(i)

make any changes in Section 6.04 or 6.07, the first sentence of this Section 9.02 regarding the percentage of the Securities required for consent or any modification of this Indenture that does not require the consent of each affected Holder or the second sentence of this Section 9.02.

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section becomes effective, the Company shall mail to Holders a notice briefly describing such amendment.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.

Section 9.03.  Compliance with Trust Indenture Act.  

Every amendment to this Indenture or the Securities shall comply with the Trust Indenture Act as then in effect.

Section 9.04.  Revocation and Effect of Consents and Waivers.  

(a)

A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent or waiver is not made on the Security.  However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective.  After an amendment or waiver becomes effective, it shall bind every Holder.  An amendment or waiver becomes effective once (i) the requisite number of consents have been received by the Company or the Trustee and (ii) in the case of an amendment, such amendment has been executed by the Company and the Trustee.

(b)

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

58

consent shall be valid or effective for more than 120 days after such record date unless consents from Holders of the principal amount of Securities required hereunder to give such consent or take such action shall have also been given and not revoked within such 120-day period.

Section 9.05.  Notation on or Exchange of Securities.  

If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee.  The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder.  Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms.  Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment.

Section 9.06.  Trustee to Sign Amendments.  

The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may but need not sign it.  In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it, and shall be provided with and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Company enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03).

ARTICLE 10

CONVERSION OF SECURITIES

Section 10.01.  Right to Convert. 

(a)

Subject to and upon compliance with the provisions of this Indenture, on or prior to the close of business on the second Business Day immediately preceding the Maturity Date, the Holder of any Securities not previously repurchased shall have the right, at such Holder’s option, to convert the principal amount of the Securities held by such Holder, or any portion of such principal amount which is an integral multiple of $1,000, into cash and, if applicable, fully paid and non-assessable shares of Common Stock (as such shares shall then be constituted) as described in Section 10.13, at the Conversion Rate in 

59

effect at such time, by surrender of the Securities so to be converted in whole or in part, together with any required funds, under the circumstances described in this Section 10.01 and in the manner provided in Section 10.02.  The Securities shall be convertible:

(i)

at any time prior to July 15, 2014, only upon the occurrence of one or more of the following events:

(A)

on any date during any Fiscal Quarter beginning after March 31, 2008 (and only during such Fiscal Quarter), if the Closing Sale Price of a share of the Common Stock was more than 130% of the then current Conversion Price for at least 20 Trading Days in the period of 30 consecutive Trading Days ending on the last Trading Day of the previous Fiscal Quarter;

(B)

if the Company distributes to all or substantially all holders of the Common Stock, rights or warrants entitling them to purchase, for a period of 45 calendar days or less, shares of the Common Stock at a price less than the average Closing Sale Price per share of the Common Stock for the ten Trading Days preceding the declaration date for such distribution;

(C)

if the Company distributes to all or substantially all holders of the Common Stock, cash or other assets, debt securities or rights to purchase the Company’s securities, which distribution has a per share value (as determined in good faith by the Board of Directors) exceeding 10% of the Closing Sale Price per share of the Common Stock on the Trading Day preceding the declaration date for such distribution; provided, however, that for the avoidance of doubt, a distribution of the Common Stock for the purpose of effecting a subdivision of the Common Stock will not entitle any Holder to convert its Securities under this clause (C);

(D)

if the Company consolidates with or merges with or into another Person or is a party to a binding share exchange or conveys, transfers, sells, leases or otherwise disposes of all or substantially all of its properties and assets in each case in a transaction not constituting a Fundamental Change, pursuant to which the Common Stock would be converted into cash, securities and/or other property, at any time beginning 15 calendar days prior to the date announced by the Company as the anticipated effective date of the transaction and until and including the date which is 15 calendar days after the date that is the actual effective date of such transaction;

60

(E)

if a Fundamental Change occurs, at any time beginning on the Business Day following the effective date of the Fundamental Change until 5:00 p.m., New York City time, on the Business Day preceding the Fundamental Change Repurchase Date relating to such Fundamental Change; 

(F)

if a Make Whole Event occurs, at any time beginning on the Business Day following the effective date of the Make Whole Event until 5:00 p.m., New York City time, on the Make Whole Termination Date relating to such Make Whole Event; or

(G)

if more than $250 million principal amount of the Securities outstanding are not KKR Securities, then during the five consecutive Business Day period immediately following any five consecutive Trading Day period in which the Trading Price for $1,000 principal amount of the Securities for each day during such five Trading Day period was less than 98% of the Closing Sale Price per share of the Common Stock multiplied by the Conversion Rate in effect for each such Trading Day; or

(ii)

at any time on or after July 15, 2014.

(b)

If the condition to conversion set forth in clause (A) of Section 10.01(a)(i) shall have been satisfied with respect to a Fiscal Quarter beginning after March 31, 2008, the Conversion Agent shall notify the Company and, if the Trustee is not the Conversion Agent, the Trustee in writing, on or prior to the fifth Business Day following the first day of such Fiscal Quarter.

(c)

In the case of a distribution contemplated by clauses (B) or (C) of Section 10.01(a)(i), the Company shall notify Holders of Securities at least 20 calendar days prior to the Ex-Date for such distribution (the “Distribution Notice”). Once the Company has given the Distribution Notice, Holders may surrender their Securities for conversion at any time until the earlier of (i) 5:00 p.m., New York City time, on the Business Day immediately preceding the Ex-Date, or (ii) such time the Company announces that such distribution will not take place.  In the event of a distribution contemplated by clauses (B) or (C) of Section 10.01(a)(i), a Holder may not convert any of its Securities if the Holder will, as a result of the Holder holding its Securities and without converting its Securities, otherwise participate in such distribution at the same time that holders of Common Stock participate as if the Holder had held a number of shares of Common Stock equal to the Conversion Rate multiplied by the principal amount (expressed in thousands) of the Securities held by the Holder. 

(d)

In the case of a consolidation, merger, binding share exchange or conveyance, transfer, sale, lease or other disposition contemplated by clause (D) of Section 10.01(a)(i), the Company shall notify Holders of Securities at least 20 

61

calendar days prior to the anticipated effective date of such consolidation, merger, binding share exchange or conveyance, transfer, sale, lease or other disposition.

(e)

In the case of a Fundamental Change contemplated by clause (E) of Section 10.01(a)(i), the Company shall notify Holders of Securities in accordance with Section 3.02.

(f)

In the case of a Make Whole Event contemplated by clause (F) of Section 10.01(a)(i), the Company shall notify Holders of Securities of the anticipated effective date of the Make Whole Event at least 20 calendar days prior to such anticipated effective date. 

(g)

The Trustee shall have no obligation to determine the Trading Price of the Securities and whether the Securities are convertible pursuant to clause (G) of Section 10.01(a)(i) unless the Company has requested in writing such determination.  The Company shall have no obligation to make such request unless a Holder of the Securities (i) provides the Company with reasonable written evidence that the Trading Price of $1,000 principal amount of the Securities would be less than 98% of the Closing Sale Price of the Common Stock multiplied by the then current Conversion Rate and (ii) requests that the Company requests such determination from the Trustee. At such time, the Company shall instruct the Trustee to, and the Trustee shall, determine the Trading Price of the Securities beginning on the next Trading Day and for each following Trading Day until the minimum Trading Price threshold is exceeded. 

The Trustee shall be entitled at its sole discretion to consult with the Company and to request the assistance of the Company in connection with the Trustee’s duties and obligations pursuant to this Section 10.01(g) (including without limitation the calculation or determination of the Closing Sale Price and the Trading Price), and the Company shall, if requested by the Trustee, cooperate with, and provide assistance to, the Trustee in carrying out its duties under this Section 10.01(g).  Upon determination of the Closing Sale Price and the Trading Price, the Trustee shall notify the Company in writing of such determination.  

(h)

Whenever the Securities shall become convertible pursuant to this Section 10.01, the Company shall notify the Holders of the event triggering such convertibility as required under this Section 10.01 either (i) by written notice to Holders in the manner provided in Section 11.02, (ii) by electronic communication to Holders, or (iii) by issuing a press release through Business Wire containing the relevant information and making such information available on the Company’s website or through another public medium as the Company may use at that time.  Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  

(i)

Securities in respect of which a Holder has delivered a Fundamental Change Repurchase Notice exercising such Holder’s right to require the Company to repurchase such Securities pursuant to Section 3.01 may be converted only if 

62

such Fundamental Change Repurchase Notice is withdrawn in accordance with Section 3.03, unless the Company defaults in payment of the Fundamental Change Repurchase Price.

(j)

A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted its Securities to Common Stock, and only to the extent such Securities are deemed to have been converted to Common Stock under this Article 10.

Section 10.02.  Exercise of Conversion Right; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends.  

(a)

In order to exercise the conversion right with respect to any Securities in certificated form, the Company must receive at the office or agency of the Company, which will initially be the Corporate Trust Office, such Securities with the original or facsimile of the form entitled “Conversion Notice” on the reverse thereof, duly completed and manually signed, together with such Securities duly endorsed for transfer, together with any other required transfer documents, accompanied by the funds, if any, required by this Section 10.02.  Such notice shall also state the name or names (with address or addresses) in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued, and shall be accompanied by transfer or similar taxes, if required pursuant to Section 10.08.

In order to exercise the conversion right with respect to any interest in a Global Security, the Holder must complete, or cause to be completed, the appropriate instruction form for conversion pursuant to the Depositary’s book-entry conversion program; deliver, or cause to be delivered, by book-entry delivery an interest in such Global Security; furnish appropriate endorsements and transfer documents if required by the Company or the Trustee or Conversion Agent; and pay the funds, if any, required by this Section 10.02 and any transfer or similar taxes if required pursuant to Section 10.08.

(b)

After satisfaction of the requirements for conversion set forth in clause (a) of this Section 10.02, the Company will deliver cash, Common Stock or a combination of cash and Common Stock in accordance with Section 10.13.  In case any Securities of a denomination greater than $1,000 shall be surrendered for partial conversion, and subject to Section 2.03, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of the Securities so surrendered, without charge to the Holder, a new Security or Securities in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Securities.

(c)

Each conversion shall be deemed to have been effected as to any such Securities (or portion thereof) on the date on which the requirements set forth in clause (a) of this Section 10.02 have been satisfied as to such Securities 

63

(or portion thereof) (the “Conversion Date”) and such Securities will be deemed to have been converted immediately prior to 5:00 p.m., New York City time, on the Conversion Date.  The Person in whose name any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become, on said date, the holder of record of the shares represented thereby to the extent permitted by applicable law; provided that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the Person in whose name the certificates are to be issued as the record holder thereof for all purposes on the next succeeding day on which such stock transfer books are open.

(d)

Any Securities or portion thereof surrendered for conversion during the period after the Interest Record Date for any Interest Payment Date but prior to the corresponding Interest Payment Date shall be accompanied by payment of interest required to be paid (if any) in respect of such Securities under Section 2.03.  Except as provided in this Section 10.02(d) and in Section 10.05, no payment or other adjustment shall be made for interest accrued on any Securities converted or for dividends on any shares issued upon the conversion of such Securities as provided in this Article 10.

(e)

Upon the conversion of an interest in a Global Security, the Trustee (or other Conversion Agent appointed by the Company), or the custodian for the Global Security at the direction of the Trustee (or other Conversion Agent appointed by the Company), shall make a notation on such Global Security as to the reduction in the principal amount represented thereby.  The Company shall notify the Trustee in writing of any conversions of Securities effected through any Conversion Agent other than the Trustee.

(f)

Upon the conversion of any Securities, the accrued but unpaid interest attributable to the period from the issue date of the Securities to the Conversion Date, with respect to the converted Securities, shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through delivery of the cash (including a cash payment in lieu of fractional shares, if any) and shares of Common Stock, if any, in exchange for the Securities being converted pursuant to the provisions hereof.

Section 10.03.  Cash Payments in Lieu of Fractional Shares.  

No fractional shares of Common Stock or scrip certificates representing fractional shares shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares that shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof to the extent permitted hereby) so surrendered.  If any fractional share of stock would be issuable upon the conversion of any Security or Securities, the Company shall make an adjustment and payment therefor in cash to the Holder of 

64

Securities at a price equal to the Closing Sale Price on the last Trading Day of the Conversion Observation Period.

Section 10.04.  Conversion Rate.  

Each $1,000 principal amount of the Securities shall be convertible into cash and/or the number of shares of Common Stock, if any, based upon the Conversion Rate, subject to adjustment as provided in Section 10.05 and Section 10.06.  The Company shall settle its obligation to convert the Securities as provided in Section 10.13.

Section 10.05.   Adjustment of Conversion Rate.  

The Conversion Rate shall be adjusted from time to time by the Company, without duplication, as set forth in this Section 10.05.

(a)

In case the Company shall, at any time or from time to time while any of the Securities are outstanding, (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to all or substantially all holders of its outstanding shares of Common Stock, or (ii) split the outstanding shares of Common Stock into a greater number of such shares or combine outstanding shares of Common Stock into a smaller number of such shares, the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0 x OS1 / OS0

where: 

CR0 

= 

the Conversion Rate in effect immediately prior to the Ex-Date of such dividend or distribution, or the effective date of such share split or combination, as applicable;

CR1 

= 

the Conversion Rate in effect immediately after the opening of business on such Ex-Date or effective date, as applicable;

OS0 

= 

the number of shares of Common Stock outstanding immediately prior to such Ex-Date or effective date, as applicable; and

OS1 

= 

the number of shares of Common Stock outstanding immediately after the opening of business on such Ex-Date or effective date after giving effect to such dividend, distribution, share split or share combination.

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An adjustment to the conversion rate made pursuant to this clause (a) will become effective immediately after the opening of business on the Ex-Date or effective date of such dividend, distribution, share split or share combination, as applicable.  

To the extent that a dividend, distribution, share split or share combination of the type described in this Section 10.05(a) is declared but not so paid or made, the Conversion Rate shall again be readjusted to the Conversion Rate that would then be in effect if such dividend, distribution, share split or share combination had not been declared.

(b)

In case the Company shall, at any time or from time to time while any of the Securities are outstanding, issue rights or warrants (other than rights or warrants referred to in Section 10.05(c)) to all or substantially all holders of its outstanding Common Stock entitling them, for a period of not more than 45 calendar days from the date of such distribution, to subscribe for or purchase shares of Common Stock, at a price per share less than the average of the Closing Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement of the issuance of such rights or warrants, the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0 x OS0 + X / OS0 + Y

where:

CR0

 = 

the Conversion Rate in effect immediately prior the Ex-Date for such issuance; 

CR1

 = 

the Conversion Rate in effect immediately after the opening of business on such Ex-Date;

OS0

 = 

the number of shares of Common Stock outstanding immediately prior to such Ex-Date;

X 

= 

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

Y 

= 

the number of shares of Common Stock equal to the aggregate price payable to exercise such rights or warrants, divided by the average of the Closing Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement of the issuance of such rights or warrants. 

66

An adjustment to the conversion rate made pursuant to this clause (b) will become effective immediately after the opening of business on the Ex-Date for such issuance.  

To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate will be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.  If such rights or warrants are not so issued, the Conversion Rate will be readjusted to be the Conversion Rate that would then be in effect if such rights or warrants had not been issued.  

(c)

In case the Company shall, at any time or from time to time while any of the Securities are outstanding, by dividend or otherwise, distribute shares of Capital Stock of the Company (other than the Common Stock), or evidences of our Indebtedness or other assets or property or rights, or warrants to acquire shares of Capital Stock of the Company or other securities (any of the foregoing, the “Distributed Assets”), to all or substantially all holders of its outstanding shares of Common Stock, excluding (i) dividends or distributions described in clauses (a) or (b) of this Section 10.05, (ii) dividends or distributions paid exclusively in cash, (iii) any dividends and distributions in connection with a reclassification, change, consolidation, merger, combination, sale or conveyance resulting in a change in the conversion consideration under Section 10.07, and (iv) Spin-Offs to which the provisions set forth below in this clause (c) shall apply, then the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0 x SP0 / SP0 - FMV

where: 

CR0 

= 

the Conversion Rate in effect immediately prior to the Ex-Date for such distribution; 

CR1 

= 

the Conversion Rate in effect immediately after the opening of business on such Ex-Date;

SP0 

= 

the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date for such distribution; and 

FMV 

= 

the Fair Market Value on the Ex-Date for such distribution (as determined in good faith by the Board of Directors) of the Distributed Assets applicable to one share of Common Stock. 

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Notwithstanding the foregoing, no adjustment will be made to the Conversion Rate under this clause (c) (other than an adjustment for a Spin-Off) in the event that (i) the Fair Market Value of the Distributed Assets applicable to one share of Common Stock is equal to or greater than the average Closing Sale Price of the Common Stock over the 10 consecutive Trading Day Period ending on the Business Day immediately preceding the Ex-Date for such distribution, or (ii) such average Closing Sale Price exceeds such Fair Market Value by less than $1.00.  In such cases, in lieu of the adjustment under this clause (c), each Holder of Securities shall have the right to receive, at the same time as holders of the Common Stock and in addition to the cash and shares of Common Stock (if any) issuable upon conversion, for each $1,000 principal amount of Securities, the kind and amount of Distributed Assets such Holder would have received had such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect immediately prior to the Ex-Date for such distribution. 

If the Board of Directors determines the Fair Market Value of any distribution for purposes of this clause (c) by reference to the actual or when issued trading market for any Distributed Assets comprising all or part of such distribution, it must in doing so consider the prices in such market over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Date for such distribution (the “Reference Period”), to the extent possible, unless the Board of Directors determines in good faith that determining the Fair Market Value during the Reference Period would not be appropriate.

Notwithstanding the foregoing, in the event that any such dividend or other distribution consists of shares of Capital Stock of any class or series, or similar equity interest, of or relating to one or more of the Subsidiaries or other business units of the Company (a “Spin-Off”), the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0 x FMV0 + MP0 / MP0

where: 

CR0 

= 

the Conversion Rate in effect immediately prior to the end of the Valuation Period;

CR1 

= 

the Conversion Rate in effect immediately after the end of the Valuation Period;

FMV0 

= 

the average of the Closing Sale Prices of the Capital Stock or similar equity interest distributed to holders of the outstanding shares of Common Stock applicable to one share of the Common Stock over the first 10 consecutive Trading Day period after, and including, 

68

the effective date of the Spin-Off (the “Valuation Period”); and

MP0 

= 

the average of the Closing Sale Prices per share of the Common Stock over the Valuation Period.

The adjustment to the Conversion Rate under this clause (c) in respect of a Spin-Off will occur on the last day of the Valuation Period; provided that in respect of any Securities converted during the Valuation Period, references with respect to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed between the effective date of such Spin-Off and the conversion date for such Securities in determining the applicable Conversion Rate.  

To the extent that such dividend or distribution is not so paid or made, the Conversion Rate will be readjusted to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

For purposes of this clause (c) and clauses (a) and (b) of this Section 10.05, any dividend or distribution to which this clause (c) is applicable that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock (or both), shall be deemed instead to be (A) a dividend or distribution of the evidences of Indebtedness, assets or shares of Capital Stock other than such shares of Common Stock or rights or warrants (and any Conversion Rate adjustment required by this clause (c) with respect to such dividend or distribution shall then be made) immediately followed by (B) a dividend or distribution of such shares of Common Stock or such rights or warrants (and any further Conversion Rate adjustment required by clauses (a) or (b) of this Section 10.05 with respect to such dividend or distribution shall then be made), except the Ex-Date for such dividend or distribution shall be substituted for “the Ex-Date for such dividend or other distribution” within the meaning of clause (a) of this Section 10.05 and the “Ex-Date for such issuance” within the meaning of clause (b) of this Section 10.05 and any shares of Common Stock included in such dividend or distribution shall not be deemed “outstanding immediately prior to the opening of business on the Ex-Date for such dividend or distribution” within the meaning of clause (a) of this Section 10.05.

(d)

In case the Company shall, at any time or from time to time while any of the Securities are outstanding, by dividend or otherwise, make a distribution consisting exclusively of cash to all or substantially all holders of the outstanding Common Stock, other than (i) regular quarterly cash dividends (as determined in good faith by the Board of Directors) that do not exceed the Initial Dividend Threshold, and (ii) dividends or distributions made in connection with our liquidation, dissolution or winding-up or upon a merger or consolidation, the Conversion Rate will be adjusted based on the following formula: 

CR1 = CR0 x SP0 / SP0 - C

69

where:

CR0  

= 

the Conversion Rate in effect immediately prior to the Ex-Date for such distribution;

CR1 

= 

the Conversion Rate in effect immediately after the opening of business on the Ex-Date for such distribution;

SP0 

= 

the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Date for such distribution; and

C 

= 

the amount in cash per share we distribute to holders of the Common Stock in excess of the Initial Dividend Threshold; provided that if the distribution is not a regular quarterly cash dividend (as determined in good faith by the Board of Directors), the Initial Dividend Threshold will be deemed to be zero.  

Whenever the Conversion Rate is adjusted, the Initial Dividend Threshold shall be adjusted by multiplying the Initial Dividend Threshold then in effect by a fraction, the numerator of which is the Conversion Rate prior to adjustment and the denominator of which is the Conversion Rate following such adjustment.

An adjustment to the Conversion Rate made pursuant to this clause (d) will become effective on the Ex-Date for such dividend or distribution.  To the extent that such distribution is not so paid or made, the Conversion Rate will be readjusted to the Conversion Rate that would then be in effect if such distribution had not been declared. 

Notwithstanding the foregoing, no adjustment will be made to the Conversion Rate under this clause (d) in the event that (i) the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Date for such distribution, or (ii) such Closing Sale Price exceeds the amount of such distribution by less than $1.00.  In such cases, in lieu of the adjustment under this clause (d), each Holder of Securities shall have the right to receive, at the same time as holders of the Common Stock and in addition to the cash and shares of Common Stock (if any) issuable upon conversion, for each $1,000 principal amount of Securities the amount of cash such Holder would have received had such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect immediately prior to the Ex-Date for such distribution. 

(e)

In case the Company or any Subsidiary of the Company makes, at any time or from time to time while any of the Securities are outstanding, a 

70

payment in respect of a tender offer or exchange offer for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Closing Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate will be increased based on the following formula:

CR1 = CR0 x AC + (SP1 x OS1) / SP1 x OS1

where: 

CR0 

= 

the Conversion Rate in effect on immediately prior to the effective date of the adjustment set forth below;

CR1 

= 

the Conversion Rate in effect immediately after the effective date of the adjustment set forth below;

AC 

= 

the aggregate value of all cash and any other consideration (as determined in good faith by the Board of Directors) paid or payable for shares purchased in such tender or exchange offer;

OS0 

= 

the number of shares of the Common Stock outstanding immediately prior to the date such tender or exchange offer expires;

OS1 

= 

the number of shares of the Common Stock outstanding immediately after the date such tender or exchange offer expires excluding, to the extent applicable, any shares purchased pursuant to such tender offer or exchange offer; and

SP1 

= 

the Closing Sale Price of the Common Stock on the Trading Day next succeeding the date such tender or exchange offer expires. 

The adjustment to the Conversion Rate pursuant to this clause (e) will become effective at the close of business on the Trading Day next succeeding the date such tender or exchange offer expires.

Notwithstanding the foregoing, no adjustment will be made to the Conversion Rate under this clause (e) as a result of a tender offer solely to holders of fewer than 100 shares of the Common Stock.

(f)

Except as stated herein, we will not adjust the Conversion Rate for the issuance of shares of the Common Stock or any securities convertible into or exchangeable for shares of the Common Stock or the right to purchase shares of 

71

the Common Stock or such convertible or exchangeable securities.  If, however, the application of the foregoing formulas would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made (other than as a result of a share combination). 

(g)

To the extent permitted by law, the Company may in its sole discretion make such increases in the Conversion Rate, in addition to those required by clauses (a) to (e) of this Section 10.05, as the Board of Directors considers to be advisable to avoid or diminish any United States federal income tax to holders of Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes.  

(h)

To the extent permitted by applicable law, the Company from time to time may increase the Conversion Rate by any amount for any period of time, the increase is irrevocable during the period and the Board of Directors shall have made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive.  Whenever the Conversion Rate is increased under this clause (h), the Company shall mail to Holders of record of the Securities a notice of the increase, which notice will be given at least 15 days prior to the effectiveness of any such increase, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

(i)

No adjustment in the Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least 1% in such Conversion Rate; provided that any adjustments that by reason of this clause (i) are not required to be made shall be carried forward and the Company shall take such carried-forward adjustments into account in any subsequent adjustment and make such carry forward adjustments, regardless of whether the aggregate adjustment is less than 1% (A) on each day from and after the 25th Scheduled Trading Day prior to the maturity of the Securities, (B) in connection with a Fundamental Change, on each day from and including the 10th calendar day prior to the anticipated Effective Date of the Fundamental Change to the Effective Date of the Fundamental Change, and (C) in connection with a Make Whole Event, from and including the 10th calendar day prior to the anticipated Effective Date of the Make Whole Event to the Make Whole Termination Date.  

(j)

All calculations under this Article 10 shall be made by the Company and shall be made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of a share, as the case may be.  

(k)

No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest or for any issuance of Common Stock or convertible or exchangeable securities or rights to purchase Common Stock or convertible or exchangeable securities.  Interest will not accrue on any cash into which the Securities are convertible.

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(l)

Whenever the Conversion Rate is adjusted as herein provided, the Company will provide notice to Holders of such adjustment either (i) by written notice to Holders in the manner provided in Section 11.02, (ii) by electronic communication to Holders, or (iii) by issuing a press release through Business Wire containing the relevant information and making such information available on the Company’s website or through another public medium as the Company may use at that time.  In addition, the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers’ Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment.  Unless and until a Trust Officer of the Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume that the last Conversion Rate of which it has actual knowledge is still in effect.  Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to the Holder of each Securities at its last address appearing on the Register, within 20 calendar days after execution thereof.  Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

(m)

In any case in which this Section 10.05 provides that an adjustment shall become effective (i) upon the opening of business on an Ex-Date, or (ii) at the close of business on a day after the date a tender or exchange offer expires (each a “Determination Date”), the Company may elect to defer, until the occurrence of the applicable distribution, issuance of Common Stock or payment (an “Adjustment Event”) triggering a Conversion Rate adjustment (A) issuing to the Holder any Securities converted after such Determination Date and before the occurrence of such Adjustment Event, the additional cash, shares of Common Stock, if any, or other securities or property issuable upon such conversion by reason of the adjustment required by such Adjustment Event over and above the cash, the Common Stock, or combination of cash and Common Stock, issuable upon such conversion before giving effect to such adjustment and (B) paying to such Holder any amount in cash in lieu of any fractional share. 

(n)

For purposes of this Section 10.05, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

(o)

No adjustment to the Conversion Rate shall be made pursuant to Section 10.05 on account of a distribution on Common Stock, if the Holders of the Securities will otherwise participate for each $1,000 principal amount of Securities in such distribution without conversion as a result of holding the Securities at the same time and on the same terms as a holder of a number of shares of Common Stock equal to the Conversion Rate.

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(p)

Notwithstanding the foregoing, no adjustment to the Conversion Rate need be made for:

(i)

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

(ii)

the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries.

(q)

Notwithstanding this Section 10.05 and the other provisions of Article 10, if any Conversion Rate adjustment becomes effective, or any Ex-Date (relating to a required Conversion Rate adjustment) occurs, during the period beginning on a Conversion Date and ending on close of business on the last Trading Day of the corresponding Conversion Observation Period, the Board of Directors may make adjustments to the Conversion Rate or the amount of cash or number of shares of Common Stock issuable upon conversion of the Securities, as may be necessary or appropriate to effect the intent of this Section 10.05 and the other provisions of Article 10 and to avoid unjust or inequitable results, as determined in good faith by the Board of Directors. Any adjustment made pursuant to this clause (q) shall apply in lieu of the adjustment or other term that would otherwise be applicable.

Section 10.06.  Adjustment to Conversion Rate upon a Make Whole Event. 

(a)

If and only to the extent a Holder elects to convert Securities at any time following the effective date of a Make Whole Event (the “Effective Date”) but before 5:00 p.m., New York City time, on the Make Whole Termination Date, the Conversion Rate applicable to such converted Securities will be increased by a number of additional shares of Common Stock (the “Additional Shares”).  The number of Additional Shares of Common Stock shall be determined as set forth in clauses (b) and (c) of this Section 10.06, based on the Effective Date and the price (the “Stock Price”) paid per share for the Common Stock in such Make Whole Event.  If holders of the Common Stock receive only cash in such Make Whole Event, the “Stock Price” shall be the cash amount paid per share. Otherwise, the “Stock Price” shall be the average of the Closing Sale Prices of the Common Stock on the five Trading Days prior to, but not including, the Effective Date of such Make Whole Event.

(b)

Subject to clause (c) of this Section 10.06, the number of Additional Shares per $1,000 principal amount of Securities by which the Conversion Rate shall be increased for conversions of Securities in connection with a Make Whole 

74

Event pursuant to clause (a) of this Section 10.06 will be as set forth in the following table, based on the Effective Date and the Stock Price for the Make Whole Event:

									
	 
	Effective Date 

	Stock Price

	January 15,

2008

	January 15, 2009

	January 15, 2010

	January 15, 2011

	January 15, 2012

	January 15, 2013

	January 15, 2014

	January 15, 2015

	$71.64

	2.5950

	2.5950

	2.5950

	2.5950

	2.5950

	2.5950

	2.5950

	2.5950

	$75.00

	2.3314

	2.3767

	2.4016

	2.4095

	2.3803

	2.2780

	2.0638

	1.9697

	$80.00

	1.9976

	2.0186

	2.0173

	1.9947

	1.9302

	1.7858

	1.5069

	1.1364

	$85.00

	1.7244

	1.7270

	1.7064

	1.6617

	1.5725

	1.4011

	1.0848

	0.4011

	$90.00

	1.4992

	1.4880

	1.4534

	1.3932

	1.2879

	1.1016

	0.7716

	0.0000

	$95.00

	1.3120

	1.2907

	1.2462

	1.1756

	1.0609

	0.8692

	0.5438

	0.0000

	$100.00

	1.1553

	1.1267

	1.0756

	0.9987

	0.8795

	0.6893

	0.3813

	0.0000

	$120.00

	0.7337

	0.6936

	0.6353

	0.5561

	0.4468

	0.2957

	0.0987

	0.0000

	$140.00

	0.5008

	0.4622

	0.4103

	0.3435

	0.2582

	0.1528

	0.0400

	0.0000

	$160.00

	0.3608

	0.3277

	0.2851

	0.2323

	0.1687

	0.0965

	0.0266

	0.0000

	$180.00

	0.2705

	0.2432

	0.2093

	0.1685

	0.1213

	0.0703

	0.0211

	0.0000

If the Stock Price or Effective Date for a Make Whole Event are not set forth in the table above, then:

(i)

if the Stock Price is between two Stock Price amounts on the table or the Effective Date is between two Effective Dates on the table, the number of Additional Shares of Common Stock will be determined by straight-line interpolation between the number of Additional Shares of Common Stock set forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 365-day year;

(ii)

if the Stock Price in excess of $180.00 per share (subject to adjustment in the same manner as and as of any date on which the Conversion Rate is adjusted under Section 10.05), the number of Additional Shares of Common Stock will be zero; or

(iii)

 if the Stock Price less than $71.64 per share (subject to adjustment in the same manner as and as of any date on which the Conversion Rate is adjusted under Section 10.05), the number of Additional Shares of Common Stock will be zero.

Notwithstanding the foregoing, in no event will the Conversion Rate, as increased by the number of Additional Shares determined pursuant to this clause (b), exceed 13.9587 shares per $1,000 principal amount of the Securities, such number of shares being subject to adjustment in the same manner as and as of any date on which the Conversion Rate is adjusted under Section 10.05; provided, however, that in no event will the number of Additional Shares by which the Conversion Rate is increased (if any) on conversion of any KKR Securities under clause (c) of this Section 10.06 be so limited.

(c)

In case the holder of any KKR Securities converts such KKR Securities under clause (a) of this Section 10.06 in connection with a Make Whole Event described in clauses (a) or (b) of the definition thereof in Section 1.01 on or 

75

prior to January 15, 2012 and provides evidence to the reasonable satisfaction of the Company, the Trustee or the Conversion Agent (as the case may be) that such Securities constitute KKR Securities, the number of Additional Shares per $1,000 principal amount of KKR Securities by which the Conversion Rate shall be increased for conversions of such KKR Securities in connection with a Make Whole Event pursuant to clause (a) of this Section 10.06 will be as set forth in the following table and not as determined under clause (b) of this Section 10.06, based on the Effective Date and the Stock Price of the Make Whole Event:

						
	 
	Effective Date

	Stock Price

	January 15,

2008

	January 15, 2009

	January 15, 2010

	January 15, 2011

	January 15, 2012

	$10.00

	88.6364

	101.4501

	109.4364

	109.4364

	109.4364

	$20.00

	38.6364

	45.0753

	52.3434

	59.4364

	59.4364

	$30.00

	21.9697

	26.2837

	31.1560

	36.6590

	42.7697

	$40.00

	13.6364

	16.8879

	20.5624

	24.7148

	29.4072

	$50.00

	8.6364

	11.2505

	14.2062

	17.5483

	21.3272

	$60.00

	5.3030

	7.4921

	9.9688

	12.7708

	15.9407

	$70.00

	2.9221

	4.8077

	6.9421

	9.3583

	12.0934

	$71.64

	2.5950

	4.4389

	6.5264

	8.8896

	11.5649

	$75.00

	2.3314

	3.7339

	5.7314

	7.9933

	10.5545

	$80.00

	1.9976

	2.7943

	4.6721

	6.7990

	9.2079

	$85.00

	1.7244

	1.9652

	3.7374

	5.7452

	8.0199

	$90.00

	1.4992

	1.4880

	2.9066

	4.8084

	6.9638

	$95.00

	1.3120

	1.2907

	2.1632

	3.9703

	6.0190

	$100.00

	1.1553

	1.1267

	1.4941

	3.2161

	5.1686

	$120.00

	0.7337

	0.6936

	0.6353

	0.8276

	2.4760

	$140.00

	0.5008

	0.4622

	0.4103

	0.3435

	0.5529

	$160.00

	0.3608

	0.3277

	0.2851

	0.2323

	0.1687

	$180.00

	0.2705

	0.2432

	0.2093

	0.1685

	0.1213

If the Stock Price or Effective Date for a Make Whole Event are not set forth in the table above, then:

(i)

if the Stock Price is between two Stock Price amounts on the table or the Effective Date is between two Effective Dates on the table, the number of Additional Shares of Common Stock will be determined by straight-line interpolation between the number of Additional Shares of Common Stock set forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 365-day year;

(ii)

if the Stock Price in excess of $180.00 per share (subject to adjustment in the same manner as and as of any date on which the Conversion Rate is adjusted under Section 10.05), the number of Additional Shares of Common Stock will be zero; or

(iii)

 if the Stock Price less than $10.00 per share (subject to adjustment in the same manner as and as of any date on which the Conversion Rate is adjusted under Section 10.05), the number of Additional Shares of Common Stock will be such number of Additional Shares that would have been issued based on the Effective Date had the Stock Price been $10 (as so adjusted).

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(d)

The numbers of Additional Shares of Common Stock set forth in the tables in clauses (b) and (c) of this Section 10.06 shall be adjusted, as of any date on which the Conversion Rate is adjusted, in the same manner in which the Conversion Rate is adjusted.  The Stock Prices set forth in the tables in clauses (b) and (c) of this Section 10.06 shall be adjusted, as of any date on which the Conversion Rate is adjusted, to equal the Stock Price applicable immediately prior to such adjustment, multiplied by a fraction of which:

(i)

the numerator shall be the Conversion Rate immediately prior to the adjustment; and

(ii)

the denominator shall be the Conversion Rate as so adjusted.

(e)

The Company shall provide written notice to all Holders of the anticipated Effective Date of any Make Whole Event that the Company knows, or reasonably should know, will occur at least 15 calendar days prior to such anticipated Effective Date.  

(f)

The Company shall provide written notice to all Holders of record as of the Effective Date of the Make Whole Event at their addresses shown in the Register (and to beneficial owners to the extent required by applicable law) of the occurrence of such Make Whole Event, the resulting adjustment to the Conversion Rate and the last date on which Holders may convert in connection with such Make Whole Event (the “Make Whole Termination Date”), which shall be a date that is not less than 20 nor more than 35 calendar days after the date of the notice under this clause (f).

Section 10.07.  Conversion After Reclassification or Business Combinations.  

(a)

If any of the following events occur:

(i)

any reclassification or change of the outstanding Common Stock (other than changes in par value or changes as a result of a subdivision or combination);

(ii)

any consolidation or merger of the Company with or into another Person; or

(iii)

 any sale, lease, transfer, conveyance or other disposition of all or substantially all of the Company’s assets and those of its Subsidiaries taken as a whole to any other Person, 

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in each case, as a result of which holders of the outstanding Common Stock shall be entitled to receive stock, other securities or other property or assets (including cash or any combination thereof) with respect to or in exchange for such Common Stock, in each case, the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture, if such supplemental indenture is then required to so comply) providing that the Securities shall, without the consent of any Holders of Securities, be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash or any combination thereof) (the “Applicable Consideration”) that such Holder would have been entitled to receive upon such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition had each $1,000 principal amount of Securities been converted into a number of shares of Common Stock equal to the Conversion Rate immediately prior to such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition, except that after the adjustment of the conversion obligation under this Section 10.07, the provisions for settlement upon conversion set forth in Section 10.13 shall continue to apply; provided that any increase in the Conversion Rate in connection with a Make Whole Event under Section 10.06 shall be in effect under this Section 10.07 only until the close of business on  the Make Whole Termination Date relating to such Make Whole Event.  

(b)

If holders of Common Stock have the opportunity to elect the form of consideration to be received in an event covered by this Section 10.07, the consideration into which the Securities will be convertible in connection with such event will be the weighted average of the types and amounts of consideration received by the holders of the Common Stock that affirmatively make such an election; provided, however, that if the Holders of the KKR Securities (if any) provide evidence to the reasonable satisfaction of the Company, the Trustee or the Conversion Agent (as the case may be) that such Securities constitute KKR Securities, the Company will make adequate provision whereby the Holders of the KKR Securities shall have a reasonable opportunity to elect, to the same extent the holders of the Common Stock may so elect, the form of consideration into which the KKR Securities, treated as a single class, shall be convertible from and after the effective date such event.  

(c)

The Company shall not become a party to a transaction covered by this Section 10.07 unless its terms are consistent with this Section 10.07.  

(d)

If, in the case of any such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other disposition, the stock or other securities and assets receivable thereupon by a holder of Common Stock includes shares of stock or other securities and assets of a corporation other than the successor or purchasing corporation, as the case may be, in such reclassification, change, consolidation, merger, sale, lease, transfer, conveyance or other 

78

disposition, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including, to the extent practicable, the provisions providing for the conversion rights set forth in this Article 10.  The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the Register of the Securities maintained by the Registrar, within 20 days after execution thereof.  Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

(e)

The above provisions of this Section 10.07 shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales, leases, transfers, conveyances or other dispositions.

(f)

If this Section 10.07 applies to any event or occurrence, no adjustment shall be made to the Conversion Rate under Section 10.05 in respect of such event of occurrence.

Section 10.08.  Taxes on Shares Issued.  

The issue of stock certificates on conversions of Securities shall be made without charge to the converting Holder of Securities for any documentary, stamp or similar issue or transfer tax in respect of the issue thereof.  The Company shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the Holder of any Securities converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

Section 10.09.  Reservation of Shares, Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock.  

(a)

The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for the conversion of the Securities, including any Additional Shares, from time to time as Securities are presented for conversion.

(b)

Before taking any action which would cause an adjustment increasing the Conversion Rate to an amount that would cause the Conversion Price to be reduced below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Securities, the Company will take all corporate action which may, in the opinion of its counsel, be necessary in order 

79

that the Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Rate.

(c)

The Company covenants that all shares of Common Stock which may be issued upon conversion of Securities will, upon issue, be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof, except as set forth in Section 10.08; provided that if any adjustment to the Conversion Price is made and a Holder is deemed to recognize, as provided by applicable law, a distribution from the Company even though such Holder has not received any cash or property as a result of such adjustment, the Company shall be entitled to withhold (to the extent required by law) United States federal income tax, if any, on such deemed distribution from interest payments and other amounts payable on conversion of the Securities.

(d)

The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Securities hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued upon conversion, the Company will in good faith and as expeditiously as possible, to the extent then permitted by the rules and interpretations of the Commission (or any successor thereto), endeavor to secure such registration or approval, as the case may be.

(e)

The Company further covenants that, if at any time the Common Stock shall be listed on The New York Stock Exchange or any other national securities exchange or national automated inter-dealer quotation system, the Company will, if permitted by the rules of such exchange or automated inter-dealer quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated inter-dealer quotation system, all Common Stock issuable upon conversion of the Securities; provided that if the rules of such exchange or automated inter-dealer quotation system permit the Company to defer the listing of such Common Stock until the first conversion of the Securities into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Securities in accordance with the requirements of such exchange or automated inter-dealer quotation system at such time.

Section 10.10.  Responsibility of Trustee.  

(a)

The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Securities to determine the Conversion Rate or whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same.  

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(b)

The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any capital stock, other securities or other assets or property, which may at any time be issued or delivered upon the conversion of any Securities; and the Trustee and any other Conversion Agent make no representations with respect thereto.  

(c)

Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Securities for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 10.  

(d)

Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 10.07 relating either to the kind or amount of shares of capital stock or other securities or other assets or property (including cash) receivable by Holders of Securities upon the conversion of their Securities after any event referred to in such Section 10.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 9.01, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate and Opinion of Counsel (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.

Section 10.11.  Notice to Holders Prior to Certain Actions.  In case:

(a)

the Company shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the Conversion Rate pursuant to Section 10.05; or

(b)

the Company shall authorize the granting to the Holders of all or substantially all of its Common Stock or rights or warrants to subscribe for or purchase any share of any class of its Capital Stock or any other rights or warrants that would require an adjustment in the Conversion Rate pursuant to Section 10.05;

(c)

of any reclassification or reorganization of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or

81

(d)

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

then the Company shall cause to be filed with the Trustee and to be mailed to each Holder of Securities at its address appearing on the Register, as promptly as practicable a notice stating (i) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (ii) the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding up; provided that a separate notice shall not be required under this Section 10.11 if such notice has been effectively provided under another provision of this Indenture.  Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up.

Section 10.12.  Stockholder Rights Plans.  

To the extent that any stockholder rights plan (i.e., a “poison pill”) adopted by the Company is in effect upon conversion of the Security, the converting Holder shall receive, in addition to any shares of Common Stock issued in connection with such conversion, the rights under the rights plan, unless prior to such conversion, the rights plan has terminated or expired, all the rights have been redeemed or the rights have separated from the Common Stock.  There shall be no adjustment to the Conversion Rate with respect to the adoption of any such rights plan and the distribution of the rights with respect to shares of Common Stock, unless the rights have separated from the Common Stock.  If the rights provided for in any future rights plan adopted by the Company have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights agreement so that the Holders of the Securities would not be entitled to receive any rights in respect of Common Stock issuable upon conversion of the Securities, the Conversion Rate will be adjusted as provided in Section 10.5(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.  

Section 10.13.  Settlement Upon Conversion; Cash Percentage Election.  

(a)

Upon any conversion of Securities, the Company will deliver to converting Holders in respect of each $1,000 principal amount of Securities being converted a “Settlement Amount” equal to the sum of the Daily Settlement 

82

Amounts for each of the 40 Trading Days during the Conversion Observation Period.  Settlement in cash and shares of Common Stock, if any, will occur on the third Trading Day following the final Trading Day of the Conversion Observation Period.

(b)

By the close of business on the Business Day prior to the first Scheduled Trading Day of the applicable Conversion Observation Period, the Company may specify a percentage of the Daily Share Amount included in the Daily Settlement Amount that will be settled in cash (the “Cash Percentage”) and will notify Holders of such Cash Percentage through written notice to the Trustee (the “Cash Percentage Notice”).  If the Company elects to specify a Cash Percentage:

(i)

the amount of cash that the Company will deliver in respect of the Daily Share Amount for each Trading Day in the applicable Conversion Observation Period will equal the product of (A) the Cash Percentage, (B) the Daily Share Amount for such Trading Day (assuming for this purpose the Company has not specified a Cash Percentage), and (C) the VWAP Price for such Trading Day; and 

(ii)

the number of shares of Common Stock that the Company will deliver in respect of each Trading Day in the applicable Conversion Observation Period (in lieu of the full Daily Share Amount for such Trading Day) will be a percentage of the Daily Share Amount (assuming the Company has not specified a Cash Percentage) equal to 100% minus the Cash Percentage.

If the Company does not specify a Cash Percentage by the close of business on the Business Day prior to the scheduled first Trading Day of the applicable Conversion Observation Period, the Company must settle 100% of the Daily Share Amount for each Trading Day in the applicable Conversion Observation Period with shares of Common Stock; provided that the Company shall pay cash in lieu of fractional shares otherwise issuable upon conversion of such Securities.  

Notwithstanding the foregoing, in the event of a Fundamental Change in which the consideration received by the holders of the Common Stock consists entirely of cash, the Daily Share Amount will be calculated based solely on the amount of cash that holders of the Common Stock are entitled to receive in respect of each share of the Common Stock upon such Fundamental Change.  In such event, the Company will pay the Holders in cash, as promptly as practicable, but in any event no later than the third Trading Day following the surrender of the Securities for Conversion.

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ARTICLE 11

MISCELLANEOUS

Section 11.01.  Trust Indenture Act Controls.  

If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the Trust Indenture Act, the required provision shall control.

Section 11.02.  Notices.  

(a)

Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows:

if to the Company:

Legg Mason, Inc.

100 Light Street

Baltimore, Maryland  21202

Attention:  General Counsel

if to the Trustee:

The Bank of New York

101 Barclay Street

Floor 8W

New York, New York 10286

Attention:  Corporate Trust Administration

(b)

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

(c)

Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the Register and shall be sufficiently given if so mailed within the time prescribed.

(d)

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

(e)

With respect to any Global Security, references in this Indenture to any required “mailing” of a notice shall be deemed to refer to any other means of notice consistent with the Depositary’s applicable procedures.

84

Section 11.03.  Communication by Holders with Other Holders.  

Holders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Holders with respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the Trust Indenture Act.

Section 11.04.  Certificate and Opinion as to Conditions Precedent.  

Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

(a)

an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(b)

an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

Section 11.05.  Statements Required in Certificate or Opinion.  

Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(a)

a statement that the individual making such certificate or opinion has read such covenant or condition;

(b)

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

(c)

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

(d)

a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

85

Section 11.06.  When Securities Disregarded.  

In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded.  Subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination.

Section 11.07.  Rules by Trustee, Paying Agent and Registrar.  

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

Section 11.08.  Legal Holidays.  

A “Legal Holiday” is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York or the location of the Corporate Trust Office or place of payment.  If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.  If a regular record date is a Legal Holiday, the record date shall not be affected.

Section 11.09.  Severability.  

If any part or provision of this Indenture or the Securities is held unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, the invalid or unenforceable part or provisions shall be replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Indenture and the Securities shall remain binding upon the parties hereto. 

Section 11.10.  Governing Law.  

This indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 11.11.  Waiver Of Jury Trial.  

86

Each of the Company and the Trustee hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Indenture, the Securities or the transactions contemplated by this Indenture.

Section 11.12.  Force Majeure.  

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 11.13.  No Recourse Against Others.  

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Security, each Holder shall waive and release all such liability.  The waiver and release shall be part of the consideration for the issue of the Securities.

Section 11.14.  Successors.  

All agreements of the Company in this Indenture and the Securities shall bind its successors.  All agreements of the Trustee in this Indenture shall bind its successors.

Section 11.15.  Counterparts.

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

Section 11.16.  Table of Contents; Headings.  

The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference 

87

only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

Section 11.17.  Calculations in Respect of the Securities.  

Except as otherwise provided in Section 10.01(b) of this Indenture, the Company will be responsible for making all calculations called for under the Indenture or the Securities. These calculations include, but are not limited to, determinations of the Closing Sale Price of the Common Stock, accrued interest payable on the Securities, the Conversion Rate and the Conversion Price. The Company or its agents will make all these calculations in good faith and, absent manifest error, such calculations will be final and binding on Holders of the Securities.  The Company will provide a schedule of these calculations to each of the Trustee, the Conversion Agent and the Paying Agent upon request, and each of the Trustee, Conversion Agent and the Paying Agent is entitled to rely upon the accuracy of such calculations without independent verification. The Trustee will forward these calculations to any Holder of the Securities upon the request of that Holder.

88

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

		
	LEGG MASON, INC., as Issuer

	 
	 

	 
	 

	By:

	/s/ Mark R. Fetting

	Name:

Mark R. Fetting

	Title:

President and Chief

Executive Officer

[Signature page – Indenture]

		
	THE BANK OF NEW YORK, as Trustee

	 
	 

	By:

	/s/ Carols R. Luciano

	Name:

Carols R. Luciano

	Title:

Vice President 

[Signature page – Indenture]

EXHIBIT A

[FORM OF FACE OF SECURITY]

2.50% SENIOR CONVERTIBLE NOTE DUE 2015

 [Form of Global Securities Legend]

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

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

[Form of Restricted Security Legend]

THE SECURITY EVIDENCED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT; PROVIDED, HOWEVER, THAT THE “PURCHASERS” (AS DEFINED IN THE NOTE PURCHASE AGREEMENT BETWEEN LEGG MASON, INC (THE “COMPANY”), THE PURCHASERS NAMED THEREIN AND KOHLBERG KRAVIS ROBERTS & CO. L.P.) MAY TRANSFER THIS SECURITY TO AN AFFILIATED ENTITY, PROVIDED THAT (1) SUCH TRANSFERRING PURCHASER REASONABLY DETERMINES SUCH TRANSFER IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT, AND (2) SUCH TRANSFEREE AGREES TO BE BOUND BY THE TRANSFER PROVISIONS OF THE INDENTURE, THE NOTE PURCHASE AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT BETWEEN THE COMPANY, KKR I-L LIMITED AND THE BANKS NAMED THEREIN.

BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY “AFFILIATE” (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO THE PROVISO IN THE PRECEDING PARAGRAPH, OR (E) PURSUANT TO ANOTHER AVAILABLE 

EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

2.50% SENIOR CONVERTIBLE NOTE DUE 2015

			
	No.  __ 

	 
	$_______

	 
	CUSIP Number: 

ISIN Number:

	_______

_______

       

Legg Mason, Inc., a Maryland corporation, promises to pay to [Cede & Co., or its registered assigns]1, the principal sum of $_______, [as revised by the Schedule of Increases or Decreases in Global Security attached hereto,]2 on January 15, 2015.

Interest Payment Dates:  

January 15 and July 15.

Interest Record Dates:  

January 1 and July 1.

Reference is made to the further provisions of this Security set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Security the right to convert this Security into cash and, if applicable, Common Stock, on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture.

1 Use bracketed language for a Global Security.

2 Use bracketed language for a Global Security.

IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

		
	LEGG MASON, INC., as Issuer

	 
	 

	By:

	_____________________________

	Name:

	Title:

Dated:                                    

		
	TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.

	 
	 

	By:

	_____________________________

	 
	Authorized Signatory

[FORM OF REVERSE SIDE OF SECURITY]

2.50% SENIOR CONVERTIBLE NOTE DUE 2015

1.

Interest

(a)

LEGG MASON, INC., a Maryland corporation (such corporation, and its successors and assigns under the Indenture (as defined below) hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate of 2.50% per annum.  The Company will pay interest semiannually on January 15 and July 15 of each year commencing on July 15, 2008.  Interest on the Security will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date the Security is first issued.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.  If a payment date is not a Business Day, payment will be made on the next succeeding Business Day, and no additional interest will accrue in respect of such payment by virtue of the payment being made on such later date.

(b)

The Holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of January 31, 2008, among the Company, KKR I-L Limited, Credit Suisse International and HSBC Bank USA, N.A. (the “Registration Rights Agreement”) providing for the payment of additional interest.  The Company may also elect to pay additional interest on this Security as a remedy for an Event of Default relating to a failure to file with the Trustee reports required under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(c)

Except as otherwise specifically set forth, all references herein to “interest” include additional interest payable by the Company under the Registration Rights Agreement and additional interest that the Company elects to pay under the Indenture (as defined below) in connection with a failure to file reports required under the Exchange Act.

2.

Paying Agent, Registrar and Conversion Agent

Initially, The Bank of New York (the “Trustee”), will act as Paying Agent, Registrar and Conversion Agent.  The Company may appoint and change any Paying Agent, Registrar or co-registrar or Conversion Agent without notice.  The Company or any of its domestically incorporated wholly owned Subsidiaries may act as Paying Agent, Registrar or co-registrar, or Conversion Agent.

3.

Indenture

The Company issued the Securities under an Indenture dated as of January 31, 2008 (the “Indenture”), between the Company and the Trustee.  The terms of 

the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “Trust Indenture Act”).  Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of those terms.

This Security is one of the Securities referred to in the Indenture issued in an initial aggregate principal amount of $1.25 billion.  Additional Securities may be issued in accordance with the Indenture.  The Indenture also imposes limitations on the ability of the Company to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Company.

5.

Repurchase of Securities Upon a Fundamental Change

If a Fundamental Change occurs at any time prior to maturity of the Security, this Security will be subject to a repurchase on the terms and conditions of the Indenture, at the option of the Holder, on a Fundamental Change Repurchase Date, specified by the Company.

6.

Conversion

Upon the occurrence of certain events specified in the Indenture and in compliance with the provisions of the Indenture, on or prior to the close of business on the second Business Day immediately preceding the Maturity Date of this Security, the Holder hereof has the right, at its option, to convert each $1,000 principal amount of this Security into a combination of cash and Common Stock, determined as set forth in the Indenture, based on a Conversion Rate of 11.3636 shares of Common Stock per $1,000 principal amount of Securities, as the same may be adjusted pursuant to the terms of the Indenture.

7.

Denominations, Transfer, Exchange

The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000.  A Holder may transfer or exchange Securities in accordance with the Indenture.  Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture.

8.

Persons Deemed Owners

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

9.

Defaults and Remedies

If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable.  If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Securities will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

10.

No Recourse Against Others

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Security, each Holder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

11.

Authentication

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

12.

Abbreviations

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

13.

Governing Law

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

15.

CUSIP and ISIN Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Securities Identification Procedures, the Company has caused CUSIP and ISIN numbers to be printed on the Securities.  No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers placed thereon.

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

CONVERSION NOTICE

TO:

LEGG MASON, INC.

THE BANK OF NEW YORK, as Trustee

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

Dated: ______________________

______________________________

______________________________

Signature(s)

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

______________________________

Signature Guarantee

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

Please print name and address

__________________________

(Name)

______________________________

(Street Address)

______________________________

(City, State and Zip Code)

Principal amount to be converted

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

$_____________________________

Social Security or Other Taxpayer

Identification Number:

______________________________

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

FUNDAMENTAL CHANGE REPURCHASE NOTICE

TO:

LEGG MASON, INC.

THE BANK OF NEW YORK, as Trustee

The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a notice from Legg Mason, Inc. (the “Company”) regarding the right of Holders to elect to require the Company to repurchase the Securities and requests and instructs the Company to repay the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture at the price of 100% of such entire principal amount or portion thereof, together with accrued and unpaid interest to, but excluding, the Fundamental Change Repurchase Date to the registered Holder hereof.  Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.  The Securities shall be repurchased by the Company as of the Fundamental Change Repurchase Date pursuant to the terms and conditions specified in the Indenture.

Dated:

______________________

Signature(s):

________________________

________________________

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

Securities Certificate Number (if applicable):   ______________________

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

Social Security or Other Taxpayer Identification Number:   ____________

ASSIGNMENT

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

In connection with any transfer of the Securities (or any successor provision) (other than any transfer pursuant to a registration statement that has been declared effective under the Securities Act), the undersigned confirms that such Securities are being transferred:

If the undersigned is an “Initial Purchaser” (as defined in the Indenture), to an “affiliate” of the undersigned, as defined in Rule 144 under the Securities Act of 1933, as amended provided that the undersigned (1) reasonably determines such transfer is exempt from, or not subject to, registration under the Securities Act of 1933, as amended, and (2) agrees to be bound by the transfer provisions of the Indenture, the Note Purchase Agreement and the Registration Rights Agreement (each as defined in the Indenture); or

To Legg Mason, Inc. or a subsidiary thereof; or

Pursuant to a Registration Statement which has been declared effective under the Securities Act of 1933, as amended, and which continues to be effective at the time of transfer; or

If the Securities are eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as amended, to a “qualified institutional buyer” in compliance with Rule 144A under the Securities Act of 1933, as amended, that purchases for its own account or for the account of a “qualified institutional buyer” to whom notice is given that the transfer is being made in reliance on Rule 144A under the Securities Act of 1933, as amended; or

Pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended, subject to the Company’s and the Trustee’s right prior to any such offer, sale or transfer to require the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them;

and unless the Securities has been transferred to Legg Mason, Inc. or a subsidiary thereof, the undersigned confirms that such Securities are not being transferred to an “affiliate” of the Company as defined in Rule 144 under the Securities Act of 1933, as amended.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof.

Dated: ______________________

______________________________

______________________________

Signature(s)

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

______________________________

Signature Guarantee

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

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL SECURITY1

The following increases or decreases in this Global Security have been made:

					
	Date 

	Amount of decrease in Principal Amount of this Global  Security

	Amount of increase in Principal Amount of this Global Security

	Principal Amount of this Global Security following such decrease or increase

	Signature of authorized signatory of Trustee or Securities Custodian

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

1 For Global Securities only.

EXHIBIT B

FORM OF RESTRICTIVE LEGEND FOR

COMMON STOCK ISSUED UPON CONVERSION

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT; PROVIDED, HOWEVER, THAT THE “PURCHASERS” (AS DEFINED IN THE NOTE PURCHASE AGREEMENT BETWEEN LEGG MASON, INC (THE “COMPANY”), THE PURCHASERS NAMED THEREIN AND KOHLBERG KRAVIS ROBERTS & CO. L.P.) MAY TRANSFER THIS SECURITY TO AN AFFILIATED ENTITY, PROVIDED THAT (1) SUCH TRANSFERRING PURCHASER REASONABLY DETERMINES SUCH TRANSFER IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT, AND (2) SUCH TRANSFEREE AGREES TO BE BOUND BY THE TRANSFER PROVISIONS OF THE INDENTURE, THE NOTE PURCHASE AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT BETWEEN THE COMPANY, KKR I-L LIMITED AND THE BANKS NAMED THEREIN. 

BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITIES PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY “AFFILIATE” (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM 

NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO THE PROVISO IN THE PRECEDING PARAGRAPH, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND ITS TRANSFER AGENT SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.Exhibit 4.2

	 
	

 

REGISTRATION RIGHTS AGREEMENT

by and between

LEGG MASON, INC.

and

KKR I-L Limited,

CREDIT SUISSE INTERNATIONAL and

HSBC BANK USA, NATIONAL ASSOCIATION

 

January 31, 2008

	 
	

 

	
TABLE OF CONTENTS

	 	
Page

	 
	
1.      Definitions
	
1

	
2.      Registration Under the 1933 Act
	
7

	 	
2.1     Shelf Registration
	
7

	 	
2.2     Expenses
	
10

	 	
2.3     Effectiveness
	
10

	 	
2.4     Interest
	
11

	 	
2.5     Suspension
	
12

	
3.      Registration Procedures
	
13

	
4.      Indemnification; Contribution
	
19

	
5.      Distributions by Holders
	
25

	
6.      Miscellaneous
	
31

	 	
6.1     No Inconsistent Agreements
	
31

	 	
6.2     Amendments and Waivers
	
32

	 	
6.3     Notices
	
33

	 	
6.4     Successor and Assigns
	
33

	 	
6.5     Third Party Beneficiaries
	
34

	 	
6.6     Specific Enforcement
	
34

	 	
6.7     Counterparts
	
34

	 	
6.8     Headings
	
34

	 	
6.9     GOVERNING LAW
	
34

	 	
6.10   Severability
	
34

	 	
6.11   Entire Agreement
	
35

	 	
6.12   Interpretation
	
35

	 
	

 

	
INDEX OF DEFINED TERMS

	 	 	 	 
	
1933 Act
	
1
	
Person
	
3

	
1934 Act
	
1
	
Pre-Announcement Periods
	
17

	
1939 Act
	
1
	
Prospectus
	
3

	
Additional Interest
	
8
	
Purchase Agreement
	
1

	
Affiliate
	
1
	
Purchasers
	
1

	
Agreement
	
1
	
Questionnaire
	
6

	
Automatic Shelf Registration Statement
	
1
	
Registrable Securities
	
3

	
Bank Purchaser
	
1
	
Registration Default
	
8

	
Bank Purchasers
	
1
	
Registration or Offering Expenses
	
3

	
Beneficially own
	
1
	
Rule 144A
	
4

	
Business Day
	
2
	
SEC
	
4

	
Closing Date
	
2
	
Securities
	
1

	
Common Stock
	
2
	
Security Agreement
	
4

	
Company
	
1
	
Shelf Registration
	
4

	
Conversion Rate
	
2
	
Shelf Registration Statement
	
4

	
Delay Period
	
17
	
Sponsor
	
4

	
Depositary
	
2
	
Sponsor Supported Distribution
	
4

	
Effectiveness Period
	
2
	
Substantial Distribution
	
4

	
Free Writing Prospectus
	
2
	
Suspension Period
	
9

	
Holder
	
2
	
Swap Agreements
	
5

	
Indenture
	
2
	
Threshold Amount
	
5

	
Initial Purchaser
	
2
	
Trustee
	
5

	
Issuer Free Writing Prospectus
	
2
	
Underwriter
	
5

	
Majority Holders
	
3
	
Well-known
	
5

	
Notes
	
1
	 	 

	 
	

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of January 31, 2008, by and among LEGG MASON, INC., a Maryland corporation (the "Company"), and the PURCHASERS NAMED ON EXHIBIT A of the Purchase Agreement (as defined below) (collectively, the "Purchasers").

This Agreement is made pursuant to the Note Purchase Agreement, dated January 14, 2008 (the "Purchase Agreement"), by and among the Company, the Purchasers and, solely for purposes of Section 1, 5.5, 5.6 and 8 thereto, the Sponsor (as defined below), which provides for the sale by the Company to the Purchasers of $1,250,000,000 aggregate principal amount of the Company's 2.5% Convertible Senior Notes due 2015 (the "Notes").  The Notes, together with the shares of Common Stock (as defined below) into which the Notes are convertible are referred to herein as the "Securities."  In order to induce the Purchasers to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement.  The execution of this Agreement is a condition to the closing under the Purchase Agreement.

In consideration of the foregoing, the parties hereto agree as follows:

1.     Definitions.

As used in this Agreement, the following capitalized defined terms shall have the following meanings:

"1933 Act" shall mean the Securities Act of 1933, as amended.

"1934 Act" shall mean the Securities Exchange Act of l934, as amended.

"1939 Act" shall mean the Trust Indenture Act of 1939, as amended.

"Affiliate" shall have the meaning given to it in the Indenture.

"Automatic Shelf Registration Statement" shall have the meaning set forth in Rule 405 of the 1933 Act.

"Bank Purchasers" mean the Purchasers identified as Bank Purchasers on the signature pages hereto, and each of their successors, assigns and direct and indirect transferees that are party to a Swap Agreement (each, individually, a "Bank Purchaser").

"Beneficially Own" or "Beneficial Ownership" shall have the meaning set forth in Rule 13d-3 of the rules and regulations promulgated under the Exchange Act, except that for purposes of this Agreement the words "within sixty days" in Rule 13d-3(d)(1)(i) shall not apply, to the effect that a Person shall be deemed to be the beneficial owner of a security if that Person has the right to acquire beneficial ownership of such security at any time, provided that, for the avoidance of doubt, a Bank Purchaser shall be deemed to Beneficially Own Securities over which such Bank Purchaser is exercising its rights under Section 6 of the Security Agreement.

	
1

	

"Business Day" shall mean any calendar day on which the New York Stock Exchange, the Nasdaq Stock Market and the Securities and Exchange Commission are open for trading or business, as the case may be.

"Closing Date" shall have the meaning given to it in the Purchase Agreement.

"Common Stock" shall mean any shares of common stock, $0.10 par value, of the Company and any other shares of common stock as may constitute "Common Stock" for purposes of the Indenture.

"Conversion Rate" shall have the meaning given to it in the Indenture.

"Depositary" shall mean The Depository Trust Company and its successors or assigns, or any other depositary appointed by the Company, provided, however, that such appointed depositary must have an address in the Borough of Manhattan, in the City of New York, unless no such depositary is available.

 "Effectiveness Period" shall mean the period beginning on the date the Shelf Registration Statement is effective pursuant to Section 2.1 hereof and ending on the earlier of (i) such time as all the Securities cease to be Registrable Securities and (ii) the date that is seven years and 90 days from the date hereof or, if later, the date that is 90 days after the Sponsor and any KKR Holder ceases to hold at least $75 million in aggregate principal amount of Registrable Securities (calculated, with respect to Common Stock as set forth in the definition of "Majority Holders").  

"Free Writing Prospectus" shall have the meaning set forth in Rule 405 of the 1933 Act.

"Holder" shall mean any Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct and indirect transferees who Beneficially Own Registrable Securities.

"Indenture" shall mean the Indenture relating to the Notes, dated as of the date hereof, between the Company and The Bank of New York, as Trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof.

"Initial Purchaser" shall mean an initial purchaser or placement agent in connection with the offer or sale of Securities pursuant to a Sponsor Supported Distribution effected under Rule 144A under the Exchange Act.

"Issuer Free Writing Prospectus" shall have the meaning set forth in Rule 433 of the 1933 Act.

"KKR Holder" means the KKR Purchaser, for so long as it owns any Registrable Securities, and each of its Affiliates who Beneficially Own Registrable Securities.

"KKR Purchaser" means KKR I-L Limited.

	
2

	

"Majority Holders" shall mean Holders holding over 50% of the aggregate principal amount of the outstanding Notes constituting Registrable Securities outstanding; provided that, for the purpose of this definition, a holder of shares of Common Stock into which the Notes were converted or exercised, as applicable, shall be deemed to hold an aggregate principal amount of the Notes (in addition to the principal amount of Notes held by such holder) equal to the product of (i) the quotient of (A) the number of such shares of Common Stock held by such holder and (B) the Conversion Rate in effect at the time of the conversion of the Notes as determined in accordance with the Indenture and (ii) $1,000, provided further, that whenever the consent or approval of the Majority Holders or of a specified percentage of the Holders of Registrable Securities is required hereunder, Notes or Common Stock into which the Notes were converted or exercised, held by the Company or any Subsidiary of the Company shall be disregarded and Notes held by any Holder shall be included in determining whether such consent or approval was given by the Majority Holders or such specified percentage of the Holders of Registrable Securities.

"Person" shall mean an individual, partnership (general or limited), corporation, limited liability company, trust, unincorporated organization or other entity, or a government or agency or political subdivision thereof.

"Prospectus" shall mean the prospectus relating to the Securities included in a Shelf Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all materials incorporated by reference therein.

"Registrable Securities" shall mean all or any of the Securities; provided, however, that such Securities shall cease to be Registrable Securities when (i) a Shelf Registration Statement with respect to such Securities shall have become effective under the 1933 Act and such Securities shall have been sold or transferred pursuant to such Shelf Registration Statement, (ii) such Securities have been transferred in compliance with Rule 144 under the 1933 Act (or any successor provision thereto), or (iii) such Securities shall have ceased to be outstanding.

"Registration or Offering Expenses" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including: (i) all SEC registration and filing fees, (ii) in the case of a Sponsor Supported Distribution for the benefit of the Purchasers, all reasonable fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of one counsel for any Underwriters, Initial Purchasers or Holders in connection with blue sky qualification of any of the Registrable Securities), (iii) all expenses of the Company in preparing or assisting in preparing, word processing, printing and distributing any Shelf Registration Statement and any Prospectus, and, in the case of a Sponsor Supported Distribution, any offering or information memorandum, any amendments or supplements thereto, any securities sales agreements and any other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges, (v) all rating agency fees, if any, (vi) the fees and disbursements of counsel for the Company and of the independent public accountants of the Company, including, in the case of a Sponsor Supported Distribution, the expenses of any "comfort letters", (vii) the reasonable fees and expenses of the Trustee, and any escrow agent or custodian, and (viii) the reasonable fees and expenses of a single counsel to the Holders in connection with the Shelf Registration Statement and in connection with a Sponsor Supported Distribution, which counsel shall be selected by the Majority Holders, but excluding any underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder and, except as provided under clause (viii) above, all reasonable expenses and fees for all counsel and other professionals representing the Holders in connection with the sale or disposition of Registrable Securities.

	
3

	

"Rule 144A" means Rule 144A under the 1933 Act.

"SEC" shall mean the Securities and Exchange Commission or any successor agency or government body performing the functions currently performed by the United States Securities and Exchange Commission.

"Security Agreement" shall have the meaning given such term in the Purchase Agreement.

"Shelf Effectiveness Deadline" shall mean the date 180 days after the Closing Date.

"Shelf Registration" shall mean a registration effected pursuant to Section 2.1.

"Shelf Registration Statement" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 2.1 of this Agreement which covers all of the Registrable Securities on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all materials incorporated by reference therein; provided, however, that a registration statement shall not be deemed a Shelf Registration Statement until such time as it includes a Prospectus relating to the Securities.

"Sponsor" shall mean Kohlberg Kravis Roberts & Co. L.P.

"Sponsor Supported Distribution" means a distribution of Notes or Common Stock that are Registrable Securities in connection with which Holders have utilized their rights for cooperation from the Company under Section 5 of this Agreement.

"Substantial Distribution" shall mean an offer and sale of Securities that are Registrable Securities of at least the Threshold Amount by one or more Holders to purchasers that are not Affiliates of the Company (other than the Sponsor or its Affiliates to the extent they are deemed to be "Affiliates" of the Company at such time), where such offer and sale is made pursuant to either Rule 144A or pursuant to a bona fide public offering made pursuant to the Shelf Registration Statement.

"Swap Agreements" shall have the meaning given such term in the Purchase Agreement.

	
4

	

"Threshold Amount" shall mean, with respect to an offer and sale of Securities that are Registrable Securities, an aggregate of at least $75 million principal amount of Securities (calculated, with respect to Common Stock as set forth in the definition of "Majority Holders"); provided however, if the proposed offer and sale of Securities relates to all of the Securities held by a Holder and its Affiliates, "Threshold Amount" shall mean an aggregate of at least $25 million principal amount of such Securities. 

"Trustee" shall mean the trustee with respect to the Securities under the Indenture.

"Underwriter" shall mean an underwriter, as defined in the 1933 Act, of the Securities in connection with an offering thereof under a Shelf Registration Statement pursuant to and in accordance with a Sponsor Supported Distribution.

"Well-Known Seasoned Issuer" shall have the meaning set forth in Rule 405 of the 1933 Act.

2.     Registration Under the 1933 Act. 

2.1.     Shelf Registration.

(a)     No later than 90 days after the Closing Date the Company shall, at its cost, file with the SEC a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders that have provided the Questionnaire and the other information pursuant to Section 2.1(d).  The Company shall, at its cost, use its commercially reasonable efforts to cause such Shelf Registration Statement to become or be declared effective under the 1933 Act as promptly as is reasonably practicable after such Shelf Registration Statement is filed, but in no event later than the Shelf Effectiveness Deadline.  If the Company is a Well-Known Seasoned Issuer at the time of filing the Shelf Registration Statement with the SEC, such Shelf Registration Statement shall be designated by the Company as an Automatic Shelf Registration Statement.

(b)     The Company shall, at its cost, use its commercially reasonable efforts, subject to Section 2.5, to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the 1933 Act in order to permit the Prospectus forming part thereof to be usable by Holders during the Effectiveness Period.  Upon the expiration of an Automatic Shelf Registration Statement, so long as it remains a Well-Known Seasoned Issuer the Company shall file a new Shelf Registration Statement which shall be designated by the Company as an Automatic Shelf Registration Statement.

(c)     The Company shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, (i) to comply in all material respects with the applicable requirements of the 1933 Act, and (ii) not to contain any untrue statement of a material fact required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus, in the light of the circumstances in which they were made) not misleading.

	
5

	

(d)     Notwithstanding any other provision hereof, no Holder of Registrable Securities may include any of its Registrable Securities in the Shelf Registration Statement pursuant to this Agreement unless the Holder furnishes to the Company a fully completed notice and questionnaire in the form attached hereto as Exhibit A (the "Questionnaire") and such other information in writing as the Company may reasonably request in writing for use in connection with the Shelf Registration Statement and in any application to be filed with or under state securities laws.  At least 30 business days prior to the filing of the Shelf Registration Statement, the Company will provide notice to the Holders of its intention to file the Shelf Registration Statement.  In order to be named as a selling securityholder in the Shelf Registration Statement or Prospectus at the time of effectiveness of the Shelf Registration Statement, each Holder must no later than 20 days following notice by the Company as set forth in the previous sentence, furnish in writing the completed Questionnaire and such other information that the Company may reasonably request in writing, if any, to the Company and the Company will include the information from the completed Questionnaire and such other information, if any, in the Shelf Registration Statement and the Prospectus, as necessary and in a manner, so that upon effectiveness of the Shelf Registration Statement the Holder will be permitted to deliver the Prospectus to purchasers of the Holder's Registrable Securities.  From and after the date that the Shelf Registration Statement becomes effective, upon receipt of a completed Questionnaire and such other information that the Company may reasonably request in writing, if any, the Company shall (i) within 20 Business Days after receipt of such Questionnaire and such other information, use commercially reasonable efforts to file any amendments or supplements to the Shelf Registration Statement necessary for such Holder to be named as a selling securityholder in the Prospectus contained therein to permit such Holder to deliver the Prospectus to purchasers of the Holder's Securities, provided that if a post-effective amendment to the Shelf Registration Statement is required, the Company shall not be obligated to file more than one such amendment for all such holders during one fiscal quarter, provided, further, that if such Questionnaire and such other information is delivered during a Suspension Period, the Company shall so inform the Holder delivering such Questionnaire and such other information and shall take the action described in this Section 2.1(d) (i) within five Business Days after the expiration of the Suspension Period and (ii) if the Company files a post-effective amendment to the Shelf Registration Statement, use its commercially reasonable efforts to cause such post-effective amendment to become or be declared effective under the 1933 Act as promptly as practicable.  Holders that do not deliver a completed written Questionnaire and such other information, as provided for in this Section 2.1(d), will not be named as selling securityholders in the Prospectus.  Each Holder named as a selling securityholder in the Prospectus agrees to promptly furnish to the Company in writing all information required to be disclosed in order to make information previously furnished to the Company by the Holder not materially misleading and any other information regarding such Holder and the distribution of such Holder's Registrable Securities as the Company may from time to time reasonably request in writing for inclusion in the Shelf Registration Statement.

(e)      Each Holder agrees that if such Holder wishes to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus it will do so only in accordance with Section 2.1(d) and subject to Section 2.5.  Each Holder agrees not to sell any Registrable Securities pursuant to the Shelf Registration Statement without delivering, or causing to be delivered, a Prospectus (excluding those materials incorporated by reference therein) to the purchaser thereof and, following termination of the Effectiveness Period, to notify the Company, within ten days of a written request by the Company, of the amount of Registrable Securities sold pursuant to the Shelf Registration Statement.

	
6

	

(f)     The Company agrees that, in the context of a registered Sponsor Supported Distribution, and only for the period of 30 days from the earlier of the public announcement or commencement of marketing efforts with respect to such Sponsor Supported Distribution, unless it obtains the prior consent of the managing Underwriter (which consent shall not be unreasonably withheld or delayed), and each Holder agrees that, unless it obtains the prior written consent of the Company, it will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a Free Writing Prospectus required to be filed with the SEC.  The Company represents that any Issuer Free Writing Prospectus prepared by it or authorized by it in writing for use by such Holder will be delivered to each such Holder and will not include any information that conflicts with the information contained in the Shelf Registration Statement or the Prospectus and that any such Issuer Free Writing Prospectus, when taken together with the information in the Shelf Registration Statement and the Prospectus, will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

The Company agrees to supplement or amend the Shelf Registration Statement if required by the 1933 Act or the rules and regulations thereunder or by the instructions applicable to the registration form used by the Company or, to the extent the Company does not reasonably object, as reasonably requested by the Purchasers with respect to information relating to such Purchasers or by the Trustee on behalf of the Holders covered by such Shelf Registration Statement with respect to information relating to such Holders, and to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after it is used or filed with the SEC, provided, however, that any such amendment or supplement filed by the Company via the EDGAR system will be deemed to have been furnished to the Holders of Registrable Securities.

2.2     Expenses.  The Company shall pay all Registration or Offering Expenses in connection with the registration pursuant to Section 2.1 and, without duplication, in connection with a Sponsor Supported Distribution pursuant to Section 5.  Each Holder shall pay all underwriting and placement discounts and commissions, agency and placement fees, brokers commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities.

2.3.     Effectiveness.  After a Shelf Registration Statement is effective, if the offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Shelf Registration Statement will be deemed not to have been effective during the period of such interference, until the offering of Registrable Securities pursuant to such Shelf Registration Statement may legally resume.

2.4.     Interest.  In the event that (a) a Shelf Registration Statement has not become effective by the Shelf Effectiveness Deadline, (b) after the Shelf Registration Statement has become effective, subject to Section 2.5, the Shelf Registration Statement fails to be effective or usable by the Holders without being succeeded within five Business Days by a post-effective amendment, supplement or a report filed with the SEC pursuant to the 1934 Act that cures the failure to be effective or usable or (c) the Shelf Registration Statement is unusable by the Holders for any reason, and the number of days for which the Shelf Registration Statement shall not be usable exceeds any Suspension Period permitted by Section 2.5 hereunder (each such event being a "Registration Default"), additional interest ("Additional Interest"), will accrue on the Notes that are Registrable Securities at a rate per annum of 0.25% of the principal amount of the Notes that are Registrable Securities to and including the 90th day following such registration default and an additional 0.25% of the principal amount of the Notes that are Registrable Securities from and after the 91st day following such Registration Default, in each case payable periodically on January 15 and July 15 each year; provided, however, that, in no event shall Additional Interest accrue under this Agreement at a rate per annum exceeding 0.50% of the principal amount of the Notes that are Registrable Securities.  Notwithstanding the foregoing, in no event will Additional Interest be payable in connection with a Registration Default relating to a failure to register the Common Stock into which the Notes are convertible; for the avoidance of doubt, if none of the Securities are registered then Additional Interest only will be payable in connection with the Registration Default relating to the failure to register the Notes.  Upon the cure of all Registration Defaults then continuing, the accrual of Additional Interest will automatically cease and the interest rate borne by the Notes will revert to the original interest rate at such time.  Additional Interest shall be computed based on the actual number of days elapsed in each six-month period between payment dates after the Shelf Effectiveness Deadline in which the Shelf Registration Statement is not effective or is unusable.  Holders who have converted Notes into Common Stock will not be entitled to receive any Additional Interest with respect to such Common Stock or the principal amount of the Notes converted.

	
7

	

The Trustee shall be entitled, but shall not be obligated, on behalf of the Holders of Registrable Securities, to seek any available remedy for the enforcement of this Agreement, including for the payment of any Additional Interest.  Notwithstanding the foregoing, the parties agree that the sole monetary damages payable for a violation of the terms of this Agreement with respect to which Additional Interest is expressly provided shall be such Additional Interest.  Nothing shall preclude a Holder of Registrable Securities from pursuing or obtaining specific performance or equitable relief with regard to this Agreement.  Each obligation to pay Additional Interest shall be deemed to accrue from and including the day following the Registration Default to but excluding the day on which the Registration Default is cured.

A Registration Default under clause (a) above shall be cured on the date that the Shelf Registration Statement becomes effective.  A Registration Default under clause (b) or (c) above shall be cured on the date an amended Shelf Registration Statement becomes effective or the Company otherwise declares the Shelf Registration Statement and the Prospectus useable, as applicable.

The parties agree that the Additional Interest provided for in this Section 2.4 constitutes a reasonable estimate of the damages that may be incurred by Holders of Registrable Securities and does not constitute a penalty.

2.5     Suspension.  Notwithstanding any other provision hereof, the Company may suspend the use of any Prospectus, without incurring or accruing any obligation to pay Additional Interest pursuant to Section 2.4, for a period not to exceed an aggregate of 60 days in any 90-day period or an aggregate of 120 calendar days in any 360-day period, as such period may be reduced pursuant to Section 5(b) hereof (each, a "Suspension Period"), if the Company shall have determined in good faith that because of valid business reasons (not including avoidance of the Company's obligations hereunder), including without limitation plans for a registered public offering, an acquisition or other proposed or pending corporate developments and similar events or because of filings with the SEC, it is in the best interests of the Company to suspend such use, and prior to suspending such use the Company provides the Holders with written notice of such suspension, which notice need not specify the nature of the event giving rise to such suspension (and, upon receipt of such notice, each Holder agrees not to sell any Registrable Securities pursuant to the Shelf Registration Statement until such Holder is advised in writing that the Prospectus may be used, which notice the Company agrees to provide promptly following the lapse of the event or circumstances giving rise to such suspension), provided that 60 days shall be increased to 75 days if the Company shall have determined in good faith that the disclosure of previously undisclosed proposed or pending material business transaction would be reasonably likely to impede its ability to consummate such transaction.  Each Holder shall keep confidential any communications received by it from the Company regarding the suspension of the use of the Prospectus (including the fact of the suspension), except as required by applicable law.

	
8

	

3.     Registration Procedures.

In connection with the obligations of the Company with respect to the Shelf Registration, the Company shall, subject to the rights of the Company to invoke and maintain a Suspension Period in accordance with Section 2.5 of this Agreement without being in violation of any of the provisions hereof:

(a)     not less than five days prior to filing the Shelf Registration Statement, any Prospectus forming a part thereof, any amendment to the Shelf Registration Statement or amendment or supplement to such Prospectus (other than amendments and supplements that do nothing more than name Holders and provide information with respect thereto), furnish to the Purchasers or any Underwriter or designee thereof and one special counsel to the Purchasers or any Underwriter or designee thereof copies of all such documents proposed to be filed and use its commercially reasonable efforts to reflect in each such document when so filed with the SEC such comments as the Purchasers or any Underwriter or designee thereof and such special counsel to the Purchasers or any Underwriter or designee thereof reasonably shall propose within three days of the delivery of such copies to the Purchasers or any Underwriter or designee thereof and counsel to the Purchaser or any Underwriter or designee thereof.  In addition, if any Holder that has provided the Questionnaire and the other information required by Section 2.1(d) shall so request in writing, a reasonable time prior to filing any such documents, the Company shall furnish to such Holder copies of all such documents proposed to be filed and use its commercially reasonable efforts to reflect in each such document when so filed with the SEC such comments as such Holder reasonably shall propose within three Business Days of the delivery of such copies to such Holder;

(b)     ensure that (i) the Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the 1933 Act, and (ii) the Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

	
9

	

(c)     use its commercially reasonable efforts at all times, except as provided in Section 2.5, to take all steps necessary to effect and maintain the registration of all of the Registrable Securities covered by the Shelf Registration Statement;

(d)     prepare and file with the SEC such amendments and post-effective amendments to the Shelf Registration Statement as may be necessary under applicable law to keep the Shelf Registration Statement effective for the Effectiveness Period, subject to Section 2.5; and cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed in compliance with Rule 424 (or any similar provision then in force) under the 1933 Act and use its commercially reasonable efforts to comply during the Effectiveness Period with the provisions of the 1933 Act, the 1934 Act and the rules and regulations thereunder required to enable the disposition of all Registrable Securities covered by the Shelf Registration Statement in accordance with the intended method or methods of distribution (as provided to the Company in the Questionnaires) by the selling Holders thereof;

(e)      (i) notify in writing each Holder of Registrable Securities of the filing of a Shelf Registration Statement or any post-effective amendment to a Shelf Registration Statement and of when any such Shelf Registration Statement or any post-effective amendment to a Shelf Registration Statement has become effective; (ii) during the Effectiveness Period, furnish to each Holder of Registrable Securities that has provided the Questionnaires and the information required by Section 2.1(d) and to each Underwriter, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or Underwriter may reasonably request in writing, including financial statements and schedules and, if such Holder or Underwriter so requests, all exhibits thereto in connection with the sale or other disposition of the Registrable Securities; and (iii) subject to Section 2.5 and to any notice by the Company in accordance with Section 3(g) of the existence of any fact of the kind described in Sections 3(g)(i), (ii), (iii), (iv) and (v), hereby consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders and Underwriters of Registrable Securities that has provided the Questionnaire and the other information required by Section 2.1(d) in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set forth therein;

(f)     use its commercially reasonable efforts to register or qualify or cooperate with the Holders and Underwriters in connection with the registration or qualification (or exemption from such registration or qualification) of the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities covered by a Shelf Registration Statement and each Underwriter shall reasonably request in writing, and do any and all other acts and things which may be reasonably necessary or advisable to maintain such registration or qualification and to enable each such Holder and Underwriter to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), or (ii) take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject;

	
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(g)     notify as promptly as reasonably practicable each Holder of Registrable Securities under a Shelf Registration that has provided the Questionnaire and the other information required by Section 2.1(d) and, if requested by such Holder, confirm such advice in writing promptly (i) of any request, following the effectiveness of the Shelf Registration Statement under the 1933 Act, by the SEC or any state securities authority for post-effective amendments and supplements to a Shelf Registration Statement and Prospectus or for additional information after the Shelf Registration Statement has become effective, (ii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Shelf Registration Statement or the initiation of any proceedings for that purpose, (iii) of the occurrence (but not the nature of or details concerning) of any event or the discovery of any facts during the period a Shelf Registration Statement is effective which makes any statement made in such Shelf Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Shelf Registration Statement or Prospectus in order to make the statements therein not misleading, (provided, however, that no notice by the Company shall be required pursuant to this clause (iii) in the event that the Company either promptly files a Prospectus supplement to update the Prospectus or a Form 8-K or other appropriate 1934 Act report that is incorporated by reference into the Shelf Registration Statement, which, in either case, contains the requisite information that results in such Shelf Registration Statement no longer containing any untrue statement of material fact or omitting to state a material fact necessary to make the statements therein not misleading), (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (v) of any determination by the Company that a post-effective amendment to such Shelf Registration Statement would be required by applicable law;

(h)     provided a Holder (collectively with its Affiliates) then holds at least $75 million aggregate principal amount of Registrable Securities (calculated with respect to Common Stock, as set forth in the definition of "Majority Holders"), as promptly as reasonably practicable furnish to such Holder and any Underwriter or designee thereof (i) copies of any comment letters received from the SEC with respect to a Shelf Registration Statement or any documents incorporated therein and (ii) any other request by the SEC or any state securities authority for amendments or supplements to a Shelf Registration Statement and Prospectus or for additional information with respect to the Shelf Registration Statement and Prospectus;

(i)     use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Shelf Registration Statement or the qualification of the securities therein for sale in any jurisdiction at the earliest practicable moment or, if any such order or suspension is made effective during any Suspension Period, at the earliest practicable moment after the Suspension Period;

(j)     upon the occurrence of any event or the discovery of any facts, each as contemplated by Sections 3(g)(i), (ii), (iii), (iv) and (v), as promptly as practicable after the occurrence of such an event or within the time period required by Section 2.5, use its commercially reasonable efforts to prepare a supplement or post-effective amendment to the Shelf Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, at such time as such public disclosure is otherwise made or the Company determines that such disclosure is not necessary, in each case to correct any misstatement of a material fact or to include any omitted material fact, the Company agrees promptly to notify each Holder that has provided the Questionnaire and the other information required by Section 2.1(d) of such determination and to furnish each Holder such number of copies of the Prospectus as amended or supplemented, as such Holder may reasonably request;

	
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(k)      (i) use its commercially reasonable efforts to cause the Indenture to be qualified under the 1939 Act in connection with the registration of the Registrable Securities, (ii) cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the 1939 Act, and (iii) execute, and use its commercially reasonable efforts to cause the Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner;

(l)     use its commercially reasonable efforts to cause all Registrable Securities which are Common Stock to be listed on any securities exchange or inter-dealer quotation system on which similar securities issued by the Company are then listed;

(m)     make generally available to its security holders earning statements covering at least 12 months (which need not be audited) satisfying the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder as soon as reasonably practicable and, in any event, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year), or such longer period as may be permitted under the 1934 Act, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Shelf Registration Statement; 

(n)     make a reasonable effort to provide such information as is required for any filings required to be made with the Financial Industry Regulatory Authority; and

(o)     not later than the effective date of the Shelf Registration Statement, provide a CUSIP number for the Securities registered under the Shelf Registration Statement and provide the Trustee with printed certificates for such Securities, free of any restrictive legends, in a form eligible for deposit with the Trustee as custodian for Depositary.

Without limiting the provisions of Section 2.1(d), the Company may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Securities to furnish to the Company such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Company may from time to time reasonably request in writing.  Each Holder agrees promptly to furnish to the Company in writing all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not misleading, any other information regarding such Holder and the distribution of such Registrable Securities as may be required to be disclosed in the Prospectus or Shelf Registration Statement under applicable law or pursuant to SEC comments and any information otherwise reasonably required by the Company to comply with applicable law or regulations.

	
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Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event or the discovery of any facts, each of the kind described in Section 3(g)(i), (ii), (iii), (iv) and (v), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Prospectus included in the Shelf Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(j) or written notice from the Company that the Shelf Registration Statement is again effective and no amendment or supplement is needed, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities at the time of receipt of such notice.

4.     Indemnification; Contribution.

(a)     Indemnification by the Company.  The Company agrees to indemnify and hold harmless each Purchaser, each Holder who provided the Questionnaire and the other information to the Company in accordance with Section 2.1(d) and each of their respective directors, officers and employees and agents and each Person, if any, who controls such Purchaser or Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (each of the foregoing is referred to herein as an "indemnified party") (i) against any loss, claim, damage, liability or expense, as incurred, to which such indemnified party may become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon (x) any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement (or, in each case, any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact, in each case, necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (y) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact, in each case, necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (z) any untrue statement or alleged untrue statement of a material fact contained in any Issuer Free Writing Prospectus prepared by it or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact, in each case, necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided, that (subject to Section 4(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all reasonable out-of-pocket expense whatsoever, as incurred (including the reasonable fees and disbursements of counsel), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; and to reimburse each indemnified party for any and all expenses (including the fees and disbursements of counsel chosen by the indemnified parties) as such expenses are reasonably incurred by such indemnified party in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense incurred by an indemnified party to the extent, but only to the extent, (A) arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by such indemnified party expressly for use in the Shelf Registration Statement (or, in each case, any amendment or supplement thereto), any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or any Issuer Free Writing Prospectus (or any amendment or supplement thereto) or (B) use of a Prospectus during a period when use of such Prospectus has been suspended pursuant to Section 2.5 hereof, provided that such Holder has received notice of such suspension.  The indemnity agreement set forth in this Section 4(a) shall be in addition to any liabilities that the Company may otherwise have.

	
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(b)     Indemnification by the Holders.  Each Holder who has provided the Questionnaire and the other information to the Company in accordance with Section 2.1(d), severally, but not jointly, agrees to indemnify and hold harmless the Company, each Purchaser and the other selling Holders who have provided the Questionnaire and the other information to the Company in accordance with Section 2.1(d) and each of their respective directors, officers, employees and agents and each Person, if any, who controls the Company, any Purchaser or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or, in each case, any amendment thereto), any preliminary prospectus or the Prospectus included therein (or any amendment or supplement thereto) or any Issuer Free Writing Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by or on behalf of such Holder expressly for use in the Shelf Registration Statement (or, in each case, any amendment thereto), such preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or any Issuer Free Writing Prospectus (or any amendment or supplement thereto).

(c)     Notifications and Other Indemnification Procedures.  Promptly after receipt by an indemnified party under this Section 4 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 4, notify the indemnifying party in writing of the commencement thereof, but the failure to so notify the indemnifying party (1) will not relieve it from liability under paragraph (a) or (b)  above unless and to the extent it did not otherwise learn of such action and such failure materially prejudices the indemnifying party and (2) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b)  above.  In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict will arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be material legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties.  Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party's election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 4 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (other than one local counsel), reasonably approved by the indemnifying party, representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

	
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(d)     Settlements.  The indemnifying party under this Section 4 shall not be liable for any settlement of any proceeding effected without its written consent, which shall not be withheld unreasonably, but if settled with such consent or if there is a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 4(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 45 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (x) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (y) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(e)     If the indemnification provided for in this Section 4 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Holders on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

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

The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any reasonable out-of-pocket legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

Notwithstanding the provisions of this Section 4, (i) no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which the Securities sold by such Holder exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and (ii) no Initial Purchaser shall be required to indemnify or contribute any amount in excess of the purchaser discount or commission applicable to the Securities sold by such Initial Purchaser.

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

For purposes of this Section 4, each director, officer, employee and agent of Holder, or each Person, if any, who controls any Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Holder, and each director, officer, employee or agent of the Company, and each Person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company.

	
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(f)     The provisions of this Section 4 shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Company or any indemnified person referred to in this Section 4, and shall survive the sale by a Holder of securities covered by the Shelf Registration Statement.

5.     Distributions by Holders

(a)     If the Company shall at any time receive a written request from Holders then able to participate in a Substantial Distribution that in the aggregate have Beneficial Ownership of at least the Threshold Amount of Registrable Securities (i) that the Company assist in a Substantial Distribution, (ii) stating that such Holders have a current bona fide intent to effectuate a Substantial Distribution and (iii) providing verification that such Holders Beneficially Own at least the Threshold Amount of Registrable Securities, the Company will (x) provide reasonable notice of the request to each Purchaser pursuant to which the Company will offer to include such Purchaser's Registrable Securities in such Substantial Distribution upon a written request from such Purchaser received by the Company within 10 days of such notice (such request to specify the number of such Purchaser's Registrable Securities that such Purchaser requests be included in such Substantial Distribution) and (y) provide such Holders (including such Purchasers that submitted a written request within such ten-day period) with its reasonable cooperation, as requested by such Holders, to facilitate such Substantial Distribution; provided, however, that for the purposes of this Section 5 only, "Holders" shall be deemed to refer solely to Holders that are KKR Holders and the Bank Purchasers; provided, further, that the Company shall only be required to assist the Holders with an aggregate of eight such Substantial Distributions (and the parties agree that, notwithstanding anything herein to the contrary, unless the KKR Holders and their Affiliates at any time hold less than $75 million principal amount of Registrable Securities, all non-KKR Holders shall have the right to initiate a request that the Company assist in no more than three Substantial Distributions); provided further, that the Company shall not be required to assist any Holders with a Substantial Distribution more than twice in any 365 day period; and provided further, that the Company will only be required to provide Holders with such cooperation until the earlier of consummation of the Sponsor Supported Distribution or 45 days following the earlier of the public announcement or commencement of marketing efforts with respect to such distribution.  Under any circumstances and for such periods as the Company would be permitted to initiate a Suspension Period pursuant to Section 2.5, the Company shall have the right to delay the commencement (e.g., the taking of any external activity, but not including internal, non-public preparatory work) of a Sponsor Supported Distribution (a "Delay Period") for a period of days which, when aggregated with any pending or prior Suspension Periods and Delay Periods, would not exceed the 60 and 120-day limits set forth in Section 2.5 without, in the context of a registered Sponsor Supported Distribution, formally initiating a Suspension Period, provided that any such Delay Periods may not exceed and shall reduce (on a day-for-day basis) the 60 and 120-day limits referred to in Section 2.5 unless otherwise agreed by the Majority Holders participating in such registered Sponsor Supported Distribution, provided further that the Company shall be able to invoke such additional Suspension Periods as may required in order to comply with the Company's obligations under the Registration and Investor Rights Agreement, dated as of December 1, 2005, between Citigroup Inc. ("Citi") and the Company (the "Citi Registration Rights Agreement").  In the event that the Company invokes an additional Suspension Period as a result of a conflict between the request for a Sponsor Supported Distribution and the Company's obligations under the Citi Registration Rights Agreement, the Company will provide reasonable cooperation as is reasonably requested to permit a Supported Distribution to be commenced promptly after such conflict ceases to exist.  In addition, under no circumstances shall the Company be required to commence a Sponsor Supported Distribution at any time during the three week period immediately preceding the scheduled public disclosure of results for any quarter (the "Pre-Announcement Periods") and any delay during that time shall not be counted against the Suspension Period.  If a request for a Sponsor Supported Distribution has been made before any Delay Period or Pre-Announcement Period, however, the Company will provide reasonable cooperation as is reasonably requested during such Delay Period or Pre-Announcement Period to permit such Sponsor Supported Distribution to be commenced promptly following the expiration of such Delay Period or Pre-Announcement Period.  For the avoidance of doubt, any Sponsor Supported Distribution shall not require any pre-clearance under any stock trading policies of the Company in effect at such time.

	
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For purposes of the eight Substantial Distributions with which the Company is required to provide the Holders with assistance, it shall be deemed to be a Substantial Distribution for which the Company has provided assistance if the Holders request such assistance and the Substantial Distribution is cancelled, terminated or otherwise not consummated, unless such cancellation, termination or failure to consummate such Substantial Distribution is based upon material adverse information concerning the Company of which the Holders initiating such Substantial Distribution were not aware at the time of such request.

(b)     In furtherance of the Company's undertakings, and subject to the limitations in Section 5(a), the Company agrees to use its commercially reasonable efforts to enter into such customary agreements (on terms reasonably acceptable to the Company) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of the Registrable Securities being offered and sold in a Substantial Distribution by the Holders in which the Company provides cooperation, including: 

(i)using commercially reasonable efforts to obtain opinions of counsel to the Company and updates thereof addressed the Underwriters or Initial Purchasers, if any, covering matters as are customarily requested in opinions covering secondary resale offerings of companies of comparable size, maturities and lines of business as the Company;

(ii)using commercially reasonable efforts to obtain "comfort" letters and updates thereof from the Company's independent certified public accountants (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements are, or are required to be, included in the Shelf Registration Statement or offering memorandum, as the case may be) addressed to the Underwriters or Initial Purchasers, if any, such letters covering matters as are customarily requested in comfort letters covering secondary resale offerings of companies of comparable size, maturities and lines of business as the Company;

(iii)making reasonably available for inspection by each Holder and the Underwriters or Initial Purchasers, if any, participating in any Substantial Distribution, and any attorney, accountant or other agent retained by any such Holder or Underwriter or Initial Purchaser, all relevant financial and other records and pertinent corporate documents of the Company as are customarily made available in secondary resale offerings of companies of comparable size, maturities and lines of business as the Company; 

	
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(iv)using commercially reasonable efforts to cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information, and causing appropriate persons to be reasonably available for discussions concerning such documents, as reasonably requested by any such Holder, Underwriter, Initial Purchaser, attorney, accountant or agent in connection with any such Substantial Distribution as is customary for similar due diligence examinations;

(v)delivering such documents and certificates (including an offering or information memorandum in the context of a Substantial Distribution effected pursuant to Rule 144A) to the Holders and the Underwriters or Initial Purchasers, if any, as may be reasonably requested by such Holders, Underwriters or Initial Purchasers and as are customarily delivered in secondary resale offerings of companies of comparable size, maturities and lines of business as the Company; 

 (vi)making appropriate members of senior management, which shall, in the Company's discretion, not include the Chief Executive Officer of the Company, reasonably available to participate in one due diligence conference call lasting no more than one hour with the Underwriters, the Initial Purchasers and the Holders participating in such Substantial Distribution and make telephonic presentations to rating agencies as is reasonably necessary and customary in secondary resale offerings of companies of comparable size, maturities and lines of business as the Company, provided, that in the event of a Substantial Distribution in excess of $250 million the Company shall, in addition to the foregoing, make appropriate members of senior management, which shall include the Chief Executive Officer of the Company at the request of such Holders, reasonably available to participate in one conference call lasting no more than one hour with potential investors;

 (vii)if an underwriting or purchase, sale or agency agreement is entered into, causing the same to set forth indemnification provisions and procedures substantially equivalent to the indemnification provisions and procedures set forth in Section 4 with respect to the Underwriters or Initial Purchasers and all other parties to be indemnified pursuant to said Section or, at the request of any Underwriters or Initial Purchasers, in the form customarily provided to such Underwriters or Initial Purchasers in similar types of transactions; 

(viii)not selling, offering or agreeing to sell, granting any option for the sale of, or otherwise transferring or disposing of securities of the same type (including any underlying securities) as the Registrable Securities included in such Substantial Distribution, or any securities convertible into or exchangeable or exercisable for such securities, during the ten days prior to the pricing of such Substantial Distribution and until the earlier of (A) the end of any lock-up period which the Underwriters or Initial Purchasers deem is necessary to effectuate the Substantial Distribution (which in no event will be greater than 60 days), which lock-up period shall begin on the date of the pricing of such Substantial Distribution, and (B) the abandonment of such Substantial Distribution, provided that the Company may offer, issue and sell shares of securities of the same type (including any underlying securities) as the Registrable Securities (1) pursuant to any employee, officer or director stock or benefit plan, (2) upon the conversion or exercise of securities, or rights with respect to any such securities, outstanding on the date hereof, or (3) issued or to be issued by the Company in connection with an acquisition; and

	
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(ix) causing (A) the Chief Executive Officer, the Chief Financial Officer and each other director and executive officer of the Company as the Underwriters or the Initial Purchasers reasonably determine is necessary to effectuate such Substantial Distribution, and (B) each Person who then Beneficially Owns more than 5% of the Common Sock, to agree not to effect any public or private sale or distribution or otherwise dispose (including sales pursuant to Rule 144 under the 1933 Act) of any Common Stock during such period (except as part of such Substantial Distribution, if otherwise permitted and subject to reasonable and customary exceptions including, but not limited to, the exercise of stock options or warrants and transfers or sales of shares of Common Stock for the payment of exercise costs (including Taxes) in respect thereof), unless each Holder and the Underwriters or Initial Purchasers, if any, participating in any Substantial Distribution otherwise agree.  

Other than as provided in this Section 5 (and in the context of a registered Substantial Distribution, the other applicable provisions of this Agreement), the Company shall not be obligated to cooperate to facilitate any underwritten offering to facilitate a Substantial Distribution or otherwise.

In connection with any Substantial Distribution in which the Company provides assistance to the Holders or the Underwriters or the Initial Purchasers thereto, if any, the Company may require each Holder or Underwriter or Initial Purchaser, and their attorneys, accountants or agents retained by them, to maintain in confidence and not to disclose to any other person any information or records provided as part of such assistance and reasonably designated by the Company as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such registration statement or otherwise), or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such requirement), or (C) such information is required to be set forth in the Shelf Registration Statement or the prospectus or offering or information memorandum included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus in order that such Shelf Registration Statement, prospectus, amendment or supplement, complies with applicable requirements of the federal securities laws and the rules and regulations of the Commission and does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing or (D) such information becomes available to any such person from a source other than the Company and such source is not bound by a confidentiality agreement or other confidentiality obligations or duties, as the case may be.

	
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If any of the Registrable Securities to be sold in a Substantial Distribution are to be sold in an underwritten offering, the Underwriter or Underwriters and Initial Purchaser or Initial Purchasers that will manage such offering will be selected by the Majority Holders of such Registrable Securities included in such offering and shall be reasonably acceptable to the Company. 

(f)     Notwithstanding anything herein to the contrary, any Bank Purchaser shall only be able to utilize the provisions under this Section 5 in connection with the sale of Registrable Securities by such Bank Purchaser in connection with the early termination or settlement of the Swap Agreement to which such Bank Purchaser is a party or the exercise by such Bank Purchaser of its rights as secured party under the Security Agreement to which such Bank Purchaser is a party.

(g)The Holders hereby acknowledge and agree that any right to sell Common Stock hereunder is subject to Citi's piggyback registration rights, and the priorities with respect thereto, set forth in Section 4(c) of the Citi Registration Rights Agreement.

(h) This Section 5 shall terminate, and the Holders shall have no rights pursuant to this Section 5, upon the earlier to occur of (i) the date on which the Holders collectively Beneficially Own less than $75,000,000 in aggregate principal amount of Registrable Securities (calculated as set forth under the definition of "Majority Holders") and (ii) the termination of the Effectiveness Period.

6.     Miscellaneous.

6.1     No Inconsistent Agreements.  The Company has not entered into and the Company will not after the date of this Agreement enter into any agreement with respect to its securities which conflicts with the rights granted to the Holders of Registrable Securities in this Agreement.  The rights granted to the Holders hereunder do not for the term of this Agreement conflict with the rights granted to the holders of the Company's other issued and outstanding securities under any such agreements.

6.2     Amendments and Waivers.  The provisions of this Agreement may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Majority Holders; provided, however, if the proposed amendment, qualification, modification, supplement or waiver, as the case may be, has a material and disproportionate adverse effect on certain Holders as compared to the remaining Holders, the consent of the Holders so affected will be required in addition to the consent of the Majority Holders; provided further, however, that no amendment, qualification, supplement, waiver or consent with respect to Sections 2.4 and 4 hereof shall be effective as against any Holder of Registered Securities unless consented to in writing by such Holder; and provided, further, that the provisions of this Section 6.2 may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of each Holder, except that any provision of this Section 6.2 which provides that an amendment to this Agreement may be made upon the written consent of the Majority Holders may itself be amended, qualified, modified or supplemented, and waivers or consents to departures from any such provision may be given if the Company obtains the written consent of the Majority Holders.  Notwithstanding the foregoing (except the foregoing provisos), (i) a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Registrable Securities are being sold pursuant to a Shelf Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of the Registrable Securities being sold rather than registered under such Shelf Registration Statement and (ii) this Agreement may be amended by a written agreement between the Company and the Majority Holders, without the consent of the Holders of the Registrable Securities, in order to cure any ambiguity or to correct or supplement any provision contained herein, provided that no such amendment shall adversely affect the interest of the Holders of Registrable Securities.  Each Holder of Registrable Securities outstanding at the time of any amendment, modification, waiver or consent pursuant to this Section 6.2, shall be bound by such amendment, modification, waiver or consent, whether or not any notice or writing indicating such amendment, modification, waiver or consent is delivered to such Holder.  Notwithstanding the foregoing, Section 5 may only be amended, qualified or supplemented if approved by the Purchasers (and their Affiliates).

	
21

	

6.3     Notices.  All notices, consents and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, facsimile,, any courier guaranteeing overnight delivery or by electronic delivery (a) if to a Holder, in the manner set forth in the Indenture; and (b) if to the Company, initially at the Company's address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 6.3

All such notices and communications shall be deemed to have been duly given when delivered in person or by private courier with receipt, if telefaxed when verbal or email confirmation from the recipient is received, or three (3) days after being deposited in the United States mail, first-class, registered or certified, return receipt requested, with postage paid.

Copies of all such notices, demands, or other communications to any Holder shall be deemed to have been duly given, if such notice has been duly given to the Trustee under the Indenture, at the address specified in such Indenture.

6.4     Successor and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders and the indemnified persons referred to in Section 4; provided, however, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture.  If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof.   

6.5     Third Party Beneficiaries.  Each Holder of Registrable Securities shall be a third party beneficiary to the agreements made hereunder between the Company, on the one hand, and the Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder.

	
22

	

6.6     Specific Enforcement.  Without limiting the remedies available to the Purchasers and the Holders, the Company acknowledges that any failure by the Company to comply with its obligations under Sections 2.1 and 2.6 may result in material irreparable injury to the Purchasers or the Holders for which there is no adequate remedy at law, that it may not be possible to measure damages for such injuries precisely and that, in the event of any such failure, any Purchaser or any Holder may seek such relief as may be required to specifically enforce the Company's obligations under Sections 2.1 and 2.6.

6.7     Counterparts.  This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

6.8     Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

6.9     Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.   THE PARTIES HERETO EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

6.10     Severability.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

6.11     Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Registrable Securities.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

6.12     Interpretation.  The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement, and section and subsection references are to this Agreement unless otherwise specified.  The headings in this Agreement are included for convenience of reference only and will not limit or otherwise affect the meaning or interpretation of this Agreement.  Whenever the words "include," "includes" or "including" are used in this Agreement, they will be deemed to be followed by the words "without limitation."  The phrases "the date of this Agreement," "the date hereof" and terms of similar import, unless the context otherwise requires, will be deemed to refer to the date set forth in the first paragraph of this Agreement.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  All matters to be agreed to by any party hereto must be agreed to in writing by such party unless otherwise indicated herein.

	
23

	

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LEGG MASON, INC.

By:/s/Mark R. Fetting

       Name: Mark R. Fetting

       Title: President and Chief

                Executive Officer

	 
	

Confirmed and accepted as of the date

first above written:

KKR I-L Limited 

By:/s/ Tagar C. Olson 

       Name: Tagar C. Olson

      Title: Director

	 
	

 

CREDIT SUISSE INTERNATIONAL 

By: /s/ Laura Muir

Name:Laura Muir

Title:Authorized Signatory

By: /s/ Parminder Bains

Name:Parminder Bains

Title:Authorized Signatory

	 
	

 

HSBC Bank USA, NATIONAL ASSOCIATION 

By:  /s/ Sandra Nicotra

Name:Sandra Nicotra

Title:Senior Vice President

	 
	

EXHIBIT A

 

SELLING SECURITYHOLDER QUESTIONNAIRE

The undersigned beneficial owner (the "Selling Securityholder") of the 2.50% Convertible Senior Notes due 2015 (the "Notes") of Legg Mason, Inc. (the "Company") or the shares of the Company's Common Stock, par value $0.10 per share, issuable upon conversion of the Notes (the "Common Stock" and, together with the Notes, the "Registrable Securities") hereby gives notice to the Company of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the Shelf Registration Statement.  The undersigned, by signing and returning this Selling Securityholder Questionnaire, understands that it will be bound by the terms and conditions of this Selling Securityholder Questionnaire and the Registration Rights Agreement, dated as of January 31, 2008, among the Company and the Purchasers thereto.

Selling security holders that do not complete this Questionnaire and deliver it to the Company as provided below will not be named selling security holders in the prospectus and therefore will not be permitted to sell any Registrable securities pursuant to the Shelf Registration Statement.

Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company's directors, the Company's officers and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against certain losses arising in connection with statements concerning the undersigned made in the Shelf Registration Statement or the related prospectus in reliance upon the information provided in this Selling Securityholder Questionnaire.  The undersigned hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons set forth therein.

Certain legal consequences arise from being named a selling security holder in the Shelf Registration Statement and the related prospectus.  Accordingly, holders and beneficial holders are advised to consult their own securities law counsel regarding the consequences of being named or not named as a selling security holder in the Shelf Registration Statement and the related prospectus.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

	
(1)
	
(a)
	
Full Legal Name of Selling Securityholder:

	 	 	
                                                                                          

	 	
(b)
	
Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities listed in (3) below are held:

	 	 	
                                                                                          

	
A-1

	

	 	
(c)
	
Full Legal Name of DTC Participant  (if applicable and if not the same as (b) above) through which Registrable Securities listed in (3) below are held:

	 	 	
                                                                                          

	
(2)
	
Address for Notices to Selling Securityholder:

	 	
                                                                                          

	 	
                                                                                          

	 	
Telephone (including area code):
	
                                                                                

	 	
Fax (including area code):
	
                                                                                          

	 	
Contact Person:
	
                                                                                          

	
(3)
	
Beneficial Ownership of Registrable Securities:

	 	
                                                                                          

	 	
(a)
	
Type and Principal Amount/Number of Registrable Securities beneficially owned:

	 	 	
                                                                                          

	 	
(b)
	
CUSIP No(s). of such Registrable Securities beneficially owned:

	 	 	
                                                                                          

	
(4)
	
Beneficial Ownership of Other Securities of the Company Owned by the Selling Securityholder:

	 	
Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item (3).

	 	
(a)
	
Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

	 	 	
                                                                                          

	 	
(b)
	
CUSIP No(s). of such Other Securities beneficially owned:

	 	 	
                                                                                          

	
A-2

	

	 
	
(5)
	
Relationship with the Company:

	 	
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

	 	
State any exceptions here:                                                                                   

	
(6)
	
Is the Selling Securityholder a registered broker-dealer?

	 	
Yes ̈

No ̈

If "Yes", please answer subsection (a) and subsection (b):
(a)Did the Selling Securityholder acquire the Registrable Securities as compensation for underwriting/broker-dealer activities to the Company?
Yes ̈

No ̈

(b)If you answered "No" to question 6(a), please explain your reason for acquiring the Registrable Securities:

	 	
                                                                                                     

	 	
                                                                                                     

	
(7)
	
Is the Selling Securityholder an affiliate of a registered broker-dealer?

	 	
Yes ̈

No ̈

If "Yes", please identify the registered broker-dealer(s), describe the nature of the affiliation(s) and answer subsection (a) and subsection (b):

	 	
                                                                                                     

	 	
                                                                                                     

	 	(a)Did the Selling Securityholder purchase the Registrable Securities in the ordinary course of business (if no, please explain)?
Yes ̈

No ̈

Explain:

	 	
                                                                                                     

	 	
                                                                                                     

	 	(b)Did the Selling Securityholder have an agreement or understanding, directly or indirectly, with any person to distribute the Registrable Securities at the same time the Registrable Securities were originally purchased (if yes, please explain)?
Yes ̈

No ̈

Explain:

	 	
                                                                                                     

	 	
                                                                                                     

	
A-3

	

	
(8)
	
Is the Selling Securityholder a non-public entity?

	 	
Yes ̈

No ̈

If "Yes", please answer subsection (a):
(a)Identify the natural person or persons that have voting or investment control over the Registrable Securities that the non-public entity owns:

	 	
                                                                                                     

	 	
                                                                                                     

	
(9)
	
Plan of Distribution:

	 	
Except as set forth below, the undersigned Selling Securityholder (including its donees and pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows (if at all):  Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, in accordance with the Registration Rights Agreement, through underwriters, broker-dealers or agents.  If the Registrable Securities are sold through underwriters or broker-dealers, the Selling Securityholders will be responsible for underwriting discounts or commissions or agent commissions.  Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices.  Such sales may be effected in transactions (which may involve cross or block transactions) (i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options.  In connection with sales of the Registrable Securities or otherwise, the undersigned Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging positions they assume.  The undersigned Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.

	 	
State any exceptions here:
	
                                                                                   

	
                                                                                                                                                                 

The undersigned Selling Securityholder acknowledges that it understands its obligations to comply with the provisions of the Securities Exchange Act of 1934, as amended, and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Shelf Registration Agreement.  The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.

	
A-4

	

Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the Selling Securityholder against certain liabilities.

In the event the undersigned transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Company other than pursuant to the Shelf Registration Statement, the undersigned agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Selling Securityholder Questionnaire and the Registration Rights Agreement.

In accordance with the undersigned's obligation under the Registration Rights Agreement to provide such information as may be required by law or by the staff of the Commission for inclusion in the Shelf Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at anytime while the Shelf Registration Statement remains effective.  All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery to the address set forth below.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items (1) through (9) above and the inclusion of such information in the Shelf Registration Statement and the related prospectus.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus.

By signing below, the undersigned agrees that if the Company notifies the undersigned that Shelf Registration Statement is not available, the undersigned will suspend use of the prospectus until notice from the Company that the prospectus is again available.

Once this Selling Securityholder Questionnaire is executed by the undersigned and received by the Company, the terms of this Selling Securityholder Questionnaire, and the representations, warranties and agreements contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the undersigned with respect to the Registrable Securities beneficially owned by the undersigned and listed in Item (3) above.  This Selling Securityholder Questionnaire shall be governed in all respects by the laws of the State of New York.

	
A-5

	

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Selling Securityholder Questionnaire to be executed and delivered either in person or by its duly authorized agent.

	
Dated:
	
                                            
	 
	 	 
	 	
                                                                                   

	 	
Beneficial Owner

	 	 
	 	
By:
	
                                                                          

	 	
Name:
	
                                                                          

	 	
Title:
	
                                                                          

 

PLEASE RETURN THE COMPLETED AND EXECUTED 

SELLING SECURITYHOLDER QUESTIONNAIRE TO THE COMPANY AT:

 

LEGG MASON, INC. 

100 Light Street

Baltimore, MD 21202

Fax: 410-454-4915

Attn:  Tom Merchant, Deputy

General Counsel

	
A-6

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