Document:

EX-10.1

 

Exhibit 10.1

FIRST AMENDMENT TO

EMPLOYMENT AGREEMENT

BY AND AMONG

BIG LOTS, INC.,

BIG LOTS STORES, INC.

AND

KENT LARSSON

This first amendment (“Amendment”) to the employment agreement (“Agreement”) by and among Big Lots,
Inc. (“BLI”), Big Lots Stores, Inc. (“Big Lots”) and their affiliates, predecessors, successors,
subsidiaries and other related companies (collectively the “Company”) and Kent Larsson
(“Executive”), collectively, the “Parties,” dated August 17, 2005, is effective as of the date
below (“Effective Date”). Capitalized terms used herein but not otherwise defined in this
Amendment shall have the meanings set forth in the Agreement.

1.00 Section 3.01. Section 3.01 of the Agreement is amended by deleting it in its entirety
and replacing it with the following:

     The Company will pay to the Executive an annualized base salary of $200,000, which, at the
discretion of the Company, may be adjusted from time to time in a manner that is consistent with
the Company’s compensation policies in effect for Company employees with a similar title and
position (“Base Salary”) but may not be adjusted to any amount lower than $200,000 without the
Executive’s consent. The Executive’s Base Salary will be paid in installments that correspond with
the Company’s normal payroll practices.

2.0 Section 3.02. Section 3.02 of the Agreement is amended by deleting it in its entirety
and replacing it with the following:

     The Executive will be eligible to receive bonus compensation (“Bonus”) under and subject to
the terms of the Big Lots 2006 Bonus Plan (“Bonus Program”) for the fiscal year beginning January
29, 2006. The Executive’s Bonus will be an amount equal to the Base Salary at the end of such
fiscal year multiplied by the Bonus payout percentage as determined under the Bonus Program. The
Bonus Program is based upon the achievement of the Company’s annual financial plan. The
Executive’s Bonus payout percentage consists of a maximum “Target Bonus” of 50 percent of Base
Salary as defined in the Bonus Program and is subject to adjustment as provided in the Bonus
Program; provided, however, the Executive’s Target Bonus will never be set at less than 50 percent
of Base Salary. The payment of any earned Bonuses is subject to the terms of the Bonus Program and
any agreements issued thereunder. The term “fiscal year” means the period beginning on the first
Sunday after the Saturday closest to January 31st of each calendar year and ending on
the Saturday closest to January 31st of the following calendar year.

 

 

3.0 Section 5.06. Section 5.06 of the Agreement is amended by deleting it in its entirety
and replacing it with the following:

     Beginning January 26, 2007, the Company may terminate the Executive’s employment at any time
without Cause by delivering to the Executive a written notice specifying the date termination is to
be effective. If all requirements of this Agreement are met (including those imposed under Section
7.00) and subject to Section 5.04[5], the Company will make the following payments to the
Executive:

[1] Base Salary. The unpaid Base Salary the Executive earned to the date of termination.
This amount will be paid in a single lump sum on the Company’s next regularly schedule
payroll date for similarly situated employees.

[2] Bonus. The bonus due under the terms of the Bonus Program and Section 3.02.

[3] Income Continuation. The Executive will be entitled to receive an income continuation
payment equal to $6,731 per calendar week until the last day of the twenty-eighth complete
calendar week beginning after the termination date.

[4] Health Care. The Company will reimburse the Executive for the cost of continuing health
coverage under COBRA, less the amount the Executive is expected to pay as an employee
premium for this coverage, if any, until the earlier of [a] the last day of the
twenty-eighth complete calendar week beginning after the termination date or [b] the date
the Executive becomes eligible for the same or similar coverage under another benefit
program. The amounts payable under this section will be increased to reimburse the
Executive for federal, state and local income, employment and wage taxes associated with
that reimbursement.

[5] Transportation. The Executive will be entitled to continue to receive the automobile
benefits described in Section 3.06 until the last day of the twenty-eighth complete calendar
week beginning after the termination date.

[6] Other. Any rights accruing to the Executive under any other compensatory program and
employee benefit plan, fund or program maintained by the Company will be distributed or made
available as required by the terms of the program, plan or fund or as required by law.

4.0 The Agreement. Except as otherwise provided herein, all provisions of the Agreement
are and shall remain in full force and effect and are hereby ratified and confirmed in all
respects, and the execution, delivery and effectiveness of this Amendment shall not operate as a
waiver or amendment of any provision of the Agreement not specifically amended herein. All
references to the Agreement shall be deemed to include this Amendment.

 

 

     IN WITNESS WHEREOF, the Parties have duly executed and delivered this Amendment on September
1, 2006.

	 	 	 
	BIG LOTS, INC.

	 	KENT LARSSON
	 
	 	 
	By: /s/ Steven S. Fishman

	 	/s/ Kent Larsson
	 

	 	 
	 
	 	 
	 
	 	 
	BIG LOTS STORES, INC.
	 	 
	 
	 	 
	By: /s/ Brad A. WaiteEX-4.1

 

EXECUTION COPY

EXHIBIT 4.1

 

DEVELOPERS DIVERSIFIED REALTY CORPORATION,

and

U.S. BANK TRUST NATIONAL ASSOCIATION

Trustee

 

SEVENTH SUPPLEMENTAL INDENTURE

Dated as of August 28, 2006

 

3.50% Convertible Senior Notes due 2011

 

 

 

EXECUTION COPY

SEVENTH SUPPLEMENTAL INDENTURE

     THIS SEVENTH SUPPLEMENTAL INDENTURE (this “Seventh Supplemental Indenture”) is entered into as
of August 28, 2006 between DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (the
“Company”), having its principal place of business at 3300 Enterprise Parkway, Beachwood, Ohio
44122, and U.S. Bank Trust National Association, a national banking association duly organized and
existing under the laws of the United States, as Trustee hereunder (the “Trustee”), having its
Corporate Trust Office at 175 South Street, Columbus, Ohio 43215.

     WHEREAS, the Company and the Trustee entered into that certain Indenture, dated as of May 1,
1994 (as supplemented by a First Supplemental Indenture, dated as of May 10, 1995, by a Second
Supplemental Indenture, dated as of July 18, 2003, by a Third Supplemental Indenture, dated as of
January 23, 2004, by a Fourth Supplemental Indenture, dated as of April 22, 2004, by a Fifth
Supplemental Indenture, dated as of April 28, 2005, and by a Sixth Supplemental Indenture, dated as
of October 7, 2005, the “Original Indenture”), relating to the Company’s senior debt securities;

     WHEREAS, pursuant to Section 901 of the Indenture, the Company and the Trustee may enter into
supplemental indentures to establish the terms and provisions of a series of Securities issued
pursuant to the Indenture;

     WHEREAS, pursuant to Section 301 of the Indenture, the Company and the Trustee desire to
establish the terms of a series of Securities entitled the “3.50% Convertible Senior Notes due
2011” (the “Notes”); and

     WHEREAS, the Company and the Trustee have duly authorized the execution and delivery of this
instrument to establish the terms of the Notes set forth herein and have done all things necessary
to make this instrument (together with the Original Indenture, the “Indenture”) a valid agreement
of the parties hereto, in accordance with its terms;

     NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained
herein, and for other good and valuable consideration the receipt of which is hereby acknowledged,
and for the equal and proportionate benefit of the Holders of the Securities, the Company and the
Trustee agree as follows:

ARTICLE ONE

DEFINITIONS

     Section 1.01. Definitions. Capitalized terms used in this instrument and not
otherwise defined herein shall have the meanings assigned to such terms in the Original Indenture,
as supplemented by the Seventh Supplemental Indenture, or in the form of Note attached as Exhibit A
hereto.

     “Additional Notes” has the meaning provided in Section 2.02 hereof.

     “Additional Interest” has the meaning specified for Liquidated Damages in the Registration
Rights Agreement.

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     “Additional Interest Notice” has the meaning specified in Section 2.26.

     “Additional Shares” has the meaning specified in Section 2.09.

     “Business Day” means, with respect to any Note, any day, other than a Saturday, Sunday or any
other day on which banking institutions in The City of New York are authorized or obligated by law
or executive order to close.

     “Change in Control” means the occurrence at any time any of the following events: (1)
consummation of any transaction or event (whether by means of a share exchange or tender offer
applicable to Common Shares, a liquidation, consolidation, recapitalization, reclassification,
combination or merger of the Company or a sale, lease or other transfer of all or substantially all
of the consolidated assets of the Company) or a series of related transactions or events pursuant
to which all of the outstanding Common Shares are exchanged for, converted into or constitute
solely the right to receive, cash, securities or other property; (2) any “person” or “group” (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than the Company or any majority-owned subsidiary of the Company or any employee
benefit plan of the Company or such subsidiary, is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting
power in the aggregate of all classes of shares of capital stock of the Company then outstanding
entitled to vote generally in elections of the Company’s directors; or (3) during any period of 12
consecutive months after the date of original issuance of the Notes, persons who at the beginning
of such 12-month period constituted the Board of Directors of the Company, together with any new
persons whose election was approved by a vote of a majority of the persons then still comprising
the Board of Directors of the Company who were either members of the Board of Directors of the
Company at the beginning of such period or whose election, designation or nomination for election
was previously so approved, cease for any reason to constitute a majority of the Board of Directors
of the Company. Notwithstanding the foregoing, even if any of the events specified in the
preceding clauses (1) through (3) have occurred, except as specified in clause (x), a Change in
Control will not be deemed to have occurred if either: (x) the Closing Sale Price per Common Share
for any five Trading Days within (i) the period of 10 consecutive Trading Days ending immediately
after the later of the Change in Control or the public announcement of the Change in Control, in
the case of a Change in Control relating to an acquisition of capital shares, or (ii) the period of
10 consecutive Trading Days ending immediately after the Change in Control, in the case of a Change
in Control relating to a merger, consolidation or asset sale, equals or exceeds 105% of the
Conversion Price applicable to the Notes in effect on each of those Trading Days; provided,
however, that the exception to the definition of “Change in Control” specified in this clause (x)
shall not apply in the context of a Change in Control for purposes of Section 2.09 or Section
2.10(d); or (y) at least 90% of the consideration (excluding cash payments for fractional shares
and cash payments made pursuant to dissenters’ appraisal rights) in a merger, consolidation or
other transaction otherwise constituting a Change in Control consists of shares of common stock (or
depositary receipts or other certificates representing common equity interests) traded on a U.S.
national securities exchange or quoted on an established automated over-the-counter trading market
in the United States (or will be so traded or quoted immediately following such merger, consolidation or
other transaction) and as a result of the merger, consolidation or other transaction the Notes
become exchangeable into such shares of common stock (or depositary

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receipts or other certificates representing common equity interests). For the purposes of this definition, “person” includes any
syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange
Act.

     “Change in Control Purchase Date” has the meaning provided in Section 2.08 hereof.

     “Change in Control Purchase Notice” has the meaning provided in Section 2.08 hereof.

     “Change in Control Purchase Price” has the meaning provided in Section 2.08 hereof.

     “Closing Sale Price” of the Common Shares or other capital shares or similar equity interests
or other publicly traded securities on any date means the closing sale price per share (or, if no
closing sale price is reported, the average of the closing bid and ask prices or, if more than one
in either case, the average of the average closing bid and the average closing ask prices) on such
date as reported on the principal U.S. securities exchange on which the Common Shares or such other
capital shares or similar equity interests or other securities are traded or, if the Common Shares
or such other capital shares or similar equity interests or other securities are not listed on a
U.S. national or regional securities exchange, as reported by the National Quotation Bureau
Incorporated or another established over-the-counter trading market in the United States. The
Closing Sale Price shall be determined without regard to after-hours trading or extended market
making. In the absence of the foregoing, the Company shall determine the Closing Sale Price on such
basis as it considers appropriate.

     “Common Shares” means common shares, without par value, of the Company.

     “Company” has the meaning provided in the first paragraph of this instrument until a successor
Person shall have become such pursuant to the applicable provisions of the Indenture, and
thereafter “Company” shall mean such successor Person.

     “Company Notice” has the meaning provided in Section 2.08 hereof.

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

     “Conversion Price” means, as of any date of determination, for $1,000 principal amount of
Notes, the quotient of $1,000 divided by the Conversion Rate in effect as of such date, rounded to
the nearest $0.01, with $0.005 rounded upward.

     “Conversion Rate” means initially 15.3589 Common Shares for each $1,000 principal amount of
Notes, as the same shall be adjusted from time to time in accordance with the provisions hereof and
of the Notes.

     “Daily Conversion Value” has the meaning provided in Section 2.11 hereof.

     “Daily Settlement Amount” has the meaning provided in Section 2.11 hereof.

     “Daily VWAP” has the meaning provided in Section 2.11 hereof.

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     “Depositary” has the meaning provided in Section 2.03 hereof.

     “Effective Date” has the meaning specified in Section 2.09.

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

     “Expiration Time” has the meaning specified in Section 2.13.

     “Initial Purchasers” means J.P. Morgan Securities Inc. and Banc of America Securities LLC.

     “interest” means, when used with reference to the Notes, any interest payable under the terms
of the Notes, including Additional Interest, if any, payable under the terms of the Registration
Rights Agreement.

     “Indenture” has the meaning provided in the preamble of this instrument.

     “Interest Payment Date” has the meaning provided in Section 2.05 hereof.

     “Market Disruption Event” has the meaning provided in Section 2.11 hereof.

     “Notes” has the meaning provided in Section 2.01 hereof which shall be substantially in the
form attached as Exhibit A hereto.

     “Observation Period” has the meaning provided in Section 2.11 hereof.

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

     “Purchase Agreement” means the Purchase Agreement, dated August 22, 2006, between the Company
and the Initial Purchasers.

     “Redemption Date” means, with respect to any Note or portion thereof to be redeemed in
accordance with the provisions of Section 2.07 hereof, the date fixed for such redemption in
accordance with the provisions of Section 2.07 hereof.

     “Redemption Price” has the meaning provided in Section 2.07 hereof.

     “Reference Dividend” has the meaning specified in Section 2.13.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of August
28, 2006, between the Company and the Initial Purchasers, as amended from time to time in
accordance with its terms.

     “Regular Record Date” has the meaning provided in Section 2.05 hereof.

     “Restricted Securities” has the meaning specified in Section 2.23.

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

     “Scheduled Trading Day” has the meaning provided in Section 2.11 hereof.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Share Price” has the meaning specified in Section 2.09.

     “Spin-Off” has the meaning specified in Section 2.13.

     “Stated Maturity” has the meaning specified in Section 2.04.

     “Trading Day” means a day during which trading in securities generally occurs on the New York
Stock Exchange or, if the Common Shares are not then listed on the New York Stock Exchange, on the
principal other U.S. national or regional securities exchange on which Common Shares are then
listed or, if the Common Shares are not then listed on a U.S. national or regional securities
exchange, on the principal other market on which Common Shares are then traded; provided that, for
purposes of Section 2.11, the term Trading Day shall have the meaning set forth in Section 2.11.

     “Trading Price” means, with respect to the Notes on any date of determination, the average of
the secondary market bid quotations per $1,000 principal amount of Notes obtained by the Trustee
for a $5,000,000 principal amount of Notes 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, which may include one or more of the Initial Purchasers or any successor to such entities.
If at least two such bids cannot reasonably be obtained by the Trustee, but one such bid can
reasonably be obtained by the Trustee, then one bid shall be used. If the Trustee cannot reasonably
obtain at least one bid for a $5,000,000 principal amount of Notes from a nationally recognized
securities dealer or, in the reasonable judgment of the Company, the bid quotations are not
indicative of the secondary market value of the Notes, then the Trading Price per $1,000 principal
amount of Notes shall be deemed to be less than 98% of the product of the Closing Sale Price of the
Common Shares and the Conversion Rate on such determination date.

     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

ARTICLE TWO

TERMS

     Section 2.01. Title. The Notes shall constitute a series of Securities designated as
the “3.50% Convertible Senior Notes due 2011” of the Company.

     Section 2.02. Aggregate Principal Amount. The aggregate principal amount of Notes
which may be authenticated and delivered under the Indenture is initially limited in aggregate
principal amount to $250,000,000, except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306,
906, 1107 or 1203 of the Indenture and except for any Notes which, pursuant to Section 303 of

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the Indenture, are deemed never to have been authenticated and delivered thereunder; provided
that the Company may from time to time, without the consent of the Holders of the Notes, increase
the principal amount of the Notes by issuing additional Securities in the future (the “Additional
Notes”) having the same terms and ranking equally and ratably with the Notes in all respects and
with the same CUSIP number as the Notes, except for the difference in the issue price and interest
accrued prior to the issue date of such Additional Notes, provided that such Additional Notes
constitute part of the same issue as the Notes for U.S. federal income tax purposes. Any
Additional Notes will be treated as a single series with the Notes under the Indenture and shall
have the same terms as to status, redemption, repurchase, conversion and otherwise as the Notes.

     Section 2.03. Registered Securities in Book-Entry Form. The Notes shall be issuable
in the form of one or more global Securities registered in the name of The Depository Trust
Company’s nominee, and shall be deposited with, or on behalf of, The Depository Trust Company, New
York, New York (the “Depositary”). The Notes may be surrendered for registration of transfer and
for conversion at the office or agency of the Company (including the Trustee) maintained for such
purpose in the Borough of Manhattan, The City of New York, or at any other office or agency
maintained by the Company for such purpose.

     Section 2.04. Stated Maturity of Principal. The Stated Maturity of the principal of
the Notes shall be August 15, 2011.

     Section 2.05. Interest. The Notes shall bear interest at the rate of 3.50% per annum
from August 28, 2006, or from the most recent Interest Payment Date to which interest has been paid
or provided for, as the case may be, and will be payable semi-annually in arrears on February 15
and August 15 of each year (each, an “Interest Payment Date”), commencing on February 15, 2007,
until the principal thereof is paid or duly made available for payment, to the Persons in whose
names such Notes are registered at the close of business on the February 1 or August 1 (whether or
not a Business Day) immediately preceding the applicable Interest Payment Date (each, a “Regular
Record Date”). Interest payable on each Interest Payment Date shall equal the amount of interest
accrued for the period commencing on and including the immediately preceding Interest Payment Date
in respect of which interest has been paid (or commencing on and including August 28, 2006, if no
interest has been paid) and ending on and including the day immediately preceding such Interest
Payment Date. Interest on the Notes will be computed on the basis of a 360-day year consisting of
twelve 30-day months.

     If the Company shall redeem the Notes in accordance with the provisions of Section 2.07
hereof, or if a Holder shall surrender a Note for repurchase by the Company in accordance with the
provisions of 2.08 hereof, subject to the next succeeding sentence, accrued and unpaid interest
(including Additional Interest, if any) shall be payable to each Holder that shall have surrendered
such Note for redemption or repurchase, as the case may be. However, if an Interest Payment Date
shall fall on or prior to the Redemption Date or Change in Control Purchase Date, as the case may
be, for a Note, accrued and unpaid interest (including Additional Interest, if any) due on such
Interest Payment Date shall be payable instead to the Person in whose name such Note is registered
at the close of business on the related Regular Record Date.

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     Section 2.06. Place of Payment. The principal of and the interest on the Notes shall
be payable at the office or agency of the Company (including the Trustee) maintained for such
purpose in the Borough of Manhattan, The City of New York in the manner specified in this
Indenture.

     Section 2.07. Redemption. If, at any time, the Company determines it is necessary to
redeem the Notes in order to preserve the Company’s status as a real estate investment trust, the
Company may, upon not less than 30 nor more than 60 days’ prior written notice by mail to the
Holders of the Notes, redeem the Notes in whole or in part, for cash equal to 100% of the principal
amount of the Notes to be redeemed plus unpaid interest (including Additional Interest, if any)
accrued thereon to the Redemption Date (such amount, the “Redemption Price”). In such case, the
Company shall provide the Trustee with an Officers’ Certificate evidencing that the Board of
Directors of the Company has, in good faith, made the determination that it is necessary to redeem
the Notes in order to preserve the Company’s status as a real estate investment trust.

     If less than all the Notes are to be redeemed, the Trustee shall select the Notes to be
redeemed (in principal amounts of $1,000 and integral multiples thereof) on a pro rata basis or by
such other method the Trustee considers fair and appropriate. The Trustee shall make the selection
at least 30 days but not more than 60 days before the Redemption Date from Outstanding Notes not
previously called for redemption. Notes and portions of the principal amount thereof selected for
redemption shall be in integral multiples of $1,000. The Trustee shall notify the Company promptly
of the Notes or portions of the principal amount thereof to be redeemed. If the Trustee selects a
portion of a Note for partial redemption and a Holder converts a portion of the same Note in
accordance with the provisions of Section 2.10 hereof before termination of the conversion right
with respect to the portion of the Note so selected, the converted portion of such Note shall be
deemed to be from the portion selected for redemption. Notes that have been converted during a
selection of Notes to be redeemed shall be treated by the Trustee as Outstanding for the purpose of
such selection.

     In the event of any redemption in part, the Company shall not be required to: (i) issue or
register the transfer or exchange of any Note during a period beginning at the opening of business
15 days before any selection of Notes to be redeemed and ending at the close of business on the day
of mailing of the relevant notice of redemption, or (ii) register the transfer or exchange of any
Note, or portion thereof, called for redemption, except the unredeemed portion of any Note being
redeemed in part.

     In addition to those matters set forth in Section 1104 of the Indenture, a notice of
redemption sent to the Holders of Notes to be redeemed in accordance with the provisions of the two
preceding paragraphs shall state:

     (a) the name of the Paying Agent and Conversion Agent;

     (b) the then current Conversion Rate;

     (c) that Notes called for redemption may be converted at any time prior to the close of
business on the second Business Day immediately preceding the Redemption Date; and

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     (d) that Holders who wish to convert Notes must comply with the procedures relating
thereto specified in Section 2.12 hereof.

     Section 2.08. Repurchase at Option of Holders upon a Change in Control. If a Change
in Control occurs prior to the Stated Maturity, a Holder of Notes shall have the right to require
the Company to repurchase such Holder’s Notes, in whole or in part (in principal amounts of $1,000
or an integral multiple thereof) for cash equal to 100% of the principal amount of the Notes to be
repurchased, plus unpaid interest (including Additional Interest, if any) accrued thereon to the
Change in Control Purchase Date (such amount, the “Change in Control Purchase Price”), subject to
satisfaction by or on behalf of the Holder of the requirements set forth below.

     Within 20 days after the occurrence of a Change in Control, the Company shall mail a written
notice of the particular Change in Control and of the repurchase right arising as a result of such
Change in Control (the “Company Notice”) by first-class mail to the Trustee, any Paying Agent and
to each Holder (and to beneficial owners as required by applicable law). The notice shall include
a form of Change in Control Purchase Notice (defined below) to be completed by the Holder and shall
state:

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

     (b) the date by which the Change in Control Purchase Notice must be delivered to the
Paying Agent;

     (c) the date on which the Company will repurchase Notes upon a Change in Control, which
must be not less than 15 days nor more than 30 days after the date of the Company Notice
(such date, the “Change in Control Purchase Date”);

     (d) the Change in Control Purchase Price;

     (e) the name and address of the Trustee, the Paying Agent and the Conversion Agent;

     (f) that Notes in respect of which a Change in Control Purchase Notice is provided by a
Holder shall not be convertible unless such Holder validly withdraws such Change in Control
Purchase Notice in accordance with the provisions of this Section 2.08;

     (g) that Notes must be surrendered to the Paying Agent to collect payment of the Change
in Control Purchase Price;

     (h) that the Change in Control Purchase Price for any Note as to which a Change in
Control Purchase Notice has been duly given will be paid within two Business Days after the
later of the Change in Control Purchase Date or the time at which such Notes are surrendered
for repurchase;

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

     (j) the CUSIP number of the Notes.

     The Company shall also disseminate a press release through Dow Jones & Company, Inc. or
Bloomberg Business News announcing the occurrence of such Change in Control or publish such
information in a newspaper of general circulation in The City of New York or on the Company’s
website, or through such other public medium as the Company shall deem appropriate at such time.

     A Holder may exercise its rights specified in this Section 2.08 upon delivery of a written
notice of such Holder’s exercise of its repurchase right (a “Change in Control Purchase Notice”) to
the Paying Agent at any time prior to the close of business on the third Business Day prior to the
Change in Control Purchase Date, stating:

     (a) if such Notes are in certificated form, the certificate number(s) of the Notes
which the Holder will deliver to be repurchased;

     (b) the portion of the principal amount of the Notes to be repurchased, in multiples of
$1,000, provided that the remaining principal amount of Notes is in an authorized
denomination; and

     (c) that such Note shall be repurchased pursuant to the applicable provisions hereof
and of the Notes.

     The Paying Agent shall promptly notify the Company in writing of the receipt by it of any
Change in Control Purchase Notice.

     Book-entry transfer of Notes in book-entry form in compliance with appropriate procedures of
the Depositary or delivery of Notes in certificated form (together with all necessary endorsements)
to the Paying Agent on or after the Change in Control Purchase Date at the offices of the Paying
Agent shall be a condition to the receipt by the Holder of the Change in Control Purchase Price
therefor. Holders electing to require the Company to repurchase Notes must effect such transfer or
delivery to the Paying Agent prior to the Change in Control Purchase Date to receive payment of the
Change in Control Purchase Price on or within two Business Days after the Change in Control
Purchase Date. The Company shall pay the Change in Control Purchase Price within two Business Days
after the later of the Change in Control Purchase Date or the time of such transfer or delivery of
the Notes.

     A Change in Control Purchase Notice may be withdrawn in whole or in part by a Holder by means
of a written notice of withdrawal delivered to the office of the Paying Agent prior to the close of
business on the third Business Day prior to the Change in Control Purchase Date specifying:

     (a) the Holder’s name;

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     (b) the principal amount of Notes in respect of which the Change in Control
Purchase Notice is being withdrawn, which must be an integral multiple of $1,000;

     (c) if the Notes subject to the notice of withdrawal are in certificated form, the
certificate number(s) of all Notes subject to the notice of withdrawal; and

     (d) the principal amount of Notes, if any, that remains subject to the Change in
Control Purchase Notice, which must be an integral multiple of $1,000.

     If Notes subject to the notice of withdrawal are in book-entry form, the above notices must
also comply with the applicable procedures of the Depositary.

     On or before 10:00 a.m. (New York City time) on the Change in Control Purchase Date, the
Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is
acting as the Paying Agent, shall segregate and hold in trust) money sufficient to pay the
aggregate Change in Control Purchase Price of the Notes to be repurchased pursuant to this Section
2.08. If the Paying Agent holds, in accordance with the terms of this Indenture, money sufficient
to pay the Change in Control Purchase Price of such Notes on the Change in Control Purchase Date,
then, on and after such date, such Notes shall cease to be Outstanding and interest on such Notes
shall cease to accrue and all rights of the Holders of such Notes shall terminate (other than the
right to receive the Change in Control Purchase Price after delivery or transfer of the Notes).
Such will be the case whether or not book-entry transfer of the Notes in book-entry form is made
and whether or not Notes in certificated form, together with the necessary endorsements, are
delivered to the Paying Agent.

     Notwithstanding the foregoing, no Notes may be repurchased by the Company in accordance with
the provisions of this Section 2.08 if there has occurred and is continuing an Event of Default
with respect to the Notes (other than a default in the payment of the Change in Control Purchase
Price).

     To the extent legally required in connection with a repurchase of Notes, the Company shall
comply with the provisions of Rule 13e-4 and other tender offer rules under the Exchange Act then
applicable, if any, and will file a Schedule TO or any other schedule required under the Exchange
Act.

     The Company may arrange for a third party to purchase Notes for which the Company has received
a valid Change in Control Purchase Notice that has not been properly withdrawn, in the manner and
otherwise in compliance with the requirements set forth herein and in the Notes. If a third party
purchases any Notes under such circumstances, then interest will continue to accrue on the Notes
and such Notes will continue to be Outstanding after the Change in Control Purchase Date for all
purposes of the Indenture and will be fungible with all other Notes then Outstanding.

     Section 2.09. Make Whole Amount. If the Effective Date (as defined below) of a Change
in Control occurs prior to the Stated Maturity as a result of a transaction or event described in
clauses (1) or (2) of the definition of Change in Control and a Holder elects to convert its Notes
in connection with such Change in Control pursuant to Section 2.10(d) hereof, the Company shall
increase the applicable Conversion Rate for such Notes surrendered for

11

 

conversion by a number of additional Common Shares (the “Additional Shares”) as specified
below. A conversion of Notes shall be deemed for these purposes to be “in connection with” such a
Change in Control if the notice of conversion of the Notes is received by the Conversion Agent on
any date from and including the date that is the Effective Date of such Change in Control up to and
including the earlier of the 30th Business Day following the Effective Date of such Change in
Control and the second Business Day preceding the Stated Maturity.

     The number of Additional Shares will be determined by reference to the table below and is
based on the date on which such Change in Control transaction becomes effective (the “Effective
Date”) and the price (the “Share Price”) paid per Common Share in such Change in Control
transaction. If holders of Common Shares receive only cash in a Change in Control transaction, the
Share Price shall be the cash amount paid per Common Share. In all other cases, the Share Price
shall be the average of the Closing Sale Prices of the Common Shares on the 10 consecutive Trading
Days up to but excluding the Effective Date.

     The Share Prices set forth in the first row of the table (i.e., the column headers) will be
adjusted as of any date on which the Conversion Rate of the Notes is adjusted. The adjusted Share
Prices will equal the Share Prices applicable immediately prior to such adjustment multiplied by a
fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving
rise to the Share Price adjustment and the denominator of which is the Conversion Rate as so
adjusted. In addition, the number of Additional Shares will be subject to adjustment in the same
manner as the Conversion Rate in accordance with the provisions of Section 2.13 hereof.

     The following table sets forth the Share Price and number of Additional Shares to be received
per $1,000 principal amount of Notes:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Share Price
	Effective Date	 	$53.15	 	$60.00	 	$65.00	 	$70.00	 	$75.00	 	$80.00	 	$85.00	 	$90.00	 	$95.00	 	$100.00	 	$105.00	 	$110.00
	August 28, 2006
	 	 	3.4558	 	 	 	2.1759	 	 	 	1.5356	 	 	 	1.0728	 	 	 	0.7362	 	 	 	0.4938	 	 	 	0.3200	 	 	 	0.1965	 	 	 	0.1096	 	 	 	0.0489	 	 	 	0.0079	 	 	 	0.0000	 
	August 15, 2007
	 	 	3.4558	 	 	 	2.1323	 	 	 	1.4769	 	 	 	1.0078	 	 	 	0.6747	 	 	 	0.4406	 	 	 	0.2770	 	 	 	0.1648	 	 	 	0.0890	 	 	 	0.0391	 	 	 	0.0069	 	 	 	0.0000	 
	August 15, 2008
	 	 	3.4558	 	 	 	2.0458	 	 	 	1.3709	 	 	 	0.8994	 	 	 	0.5741	 	 	 	0.3537	 	 	 	0.2068	 	 	 	0.1109	 	 	 	0.0499	 	 	 	0.0123	 	 	 	0.0000	 	 	 	0.0000	 
	August 15, 2009
	 	 	3.4558	 	 	 	1.8941	 	 	 	1.1956	 	 	 	0.7272	 	 	 	0.4231	 	 	 	0.2317	 	 	 	0.1153	 	 	 	0.0470	 	 	 	0.0087	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	August 15, 2010
	 	 	3.4558	 	 	 	1.6377	 	 	 	0.8885	 	 	 	0.4356	 	 	 	0.1874	 	 	 	0.0644	 	 	 	0.0094	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	August 15, 2011
	 	 	3.4558	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 

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

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

     (b) if the Share Price is equal to or in excess of $110.00 per Common Share (subject to
adjustment as specified in the second preceding paragraph), no Additional Shares will be
issued upon a conversion of Notes; and

12

 

     (c) if the Share Price is less than $53.15 per Common Share (subject to adjustment as
specified in the second preceding paragraph), no Additional Shares will be issued upon a
conversion of Notes.

     Notwithstanding the foregoing, in no event shall the total number of Common Shares issuable
upon a conversion of Notes exceed 18.8147 shares per $1,000 principal amount of Notes, subject to
adjustment in the same manner as the Conversion Rate pursuant to Section 2.13 hereof.

     Section 2.10. Conversion Rights.

     Subject to the restrictions on ownership of the Common Shares as set forth in Section 2.14
hereof and to the conditions set forth herein, Holders may surrender their Notes for conversion for
cash and, if applicable, Common Shares, at the applicable Conversion Rate prior to the close of
business on the second Business Day immediately preceding the Stated Maturity of the Notes at any
time on or after June 15, 2011, and also under any of the circumstances set forth in this Section
2.10.

     (a) Conversion Upon Satisfaction of Market Price Condition. A Holder may surrender any of
its Notes for conversion during any calendar quarter beginning after September 30, 2006 (and only
during such calendar quarter) if, and only if, the Closing Sale Price of the Common Shares for at
least 20 Trading Days (whether or not consecutive) in the period of 30 consecutive Trading Days
ending on the last Trading Day of the preceding calendar quarter is more than 125% of the
Conversion Price per Common Share in effect on the applicable Trading Day. The Board of Directors
of the Company shall make appropriate adjustments, in its good faith determination, to account for
any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment
to the Conversion Rate where the ex-dividend date of the event occurs, during that 30 consecutive
Trading Day period.

     (b) Conversion Upon Satisfaction of Trading Price Condition. A Holder may surrender any of
its Notes for conversion during the five consecutive Trading Day period following any five
consecutive Trading Days in which the Trading Price per $1,000 principal amount of Notes (as
determined following a reasonable request by a Holder of the Notes) was less than 98% of the
product of the Closing Sale Price of the Common Shares multiplied by the Conversion Rate.

     The Trustee shall have no obligation to determine the Trading Price of the Notes unless the
Company shall have requested such determination, and the Company shall have no obligation to make
such request unless a Holder provides the Company with written reasonable evidence that the Trading
Price per $1,000 principal amount of the Notes would be less than 98% of the product of the Closing
Sale Price of the Common Shares and the Conversion Rate, whereupon the Company shall instruct the
Trustee to determine the Trading Price of the Notes beginning on the next Trading Day and on each
successive Trading Day until the Trading Price is greater than or equal to 98% of the product of
the Closing Sale Price of the Common Shares and the Conversion Rate.

     Notwithstanding anything to the contrary in this Seventh Supplemental Indenture (including,
but not limited to, the definition of Trading Price or this Section 2.10 hereof), the sole

13

 

method by which the Trustee shall determine the Trading Price shall be by the appointment by the
Trustee, at the cost and expense of the Company, of a bid solicitation agent that shall be an
independent nationally recognized investment banking firm to determine the Trading Price as
required by this Seventh Supplemental Indenture. Such bid solicitation agent shall perform all
functions and duties that may be required of the Trustee herein in connection with or related to
the determination of a Trading Price. So long as the Trustee has exercised reasonable care in the
appointment of such bid solicitation agent, the Trustee shall not be liable for any negligent acts
or omissions, or misconduct, of such bid solicitation agent.

     (c) Conversion Upon Notice of Redemption. A Holder may surrender for conversion any of the
Notes called for redemption at any time prior to the close of business on the second Business Day
prior to the Redemption Date, even if the Notes are not otherwise convertible at such time. The
right to convert Notes pursuant to this clause (c) will expire after the close of business on the
second Business Day prior to the Redemption Date unless the Company defaults in making the payment
due upon redemption. A Holder may convert fewer than all of its Notes so long as the Notes
converted are an integral multiple of $1,000 principal amount and the remaining principal amount of
Notes is in an authorized denomination. However, if a Holder has already delivered a Change in
Control Purchase Notice with respect to a Note, such Holder may not surrender such Note for
conversion until it has withdrawn such notice in accordance with the applicable provisions of
Section 2.08 hereof.

     (d) Conversion Upon Specified Transactions. If the Company elects to:

     (i) distribute to all holders of Common Shares rights entitling them to
purchase, for a period expiring within 45 days, Common Shares at less than the
Closing Sale Price of the Common Shares on the Trading Day immediately preceding the
declaration date of the distribution; or

     (ii) distribute to all holders of Common Shares assets, debt securities or
certain rights to purchase securities of the Company, which distribution has a per
share value exceeding 10% of the Closing Sale Price of the Common Shares on the
Trading Day immediately preceding the declaration date of such distribution,

the Company shall notify the Holders of the Notes in writing at least 20 days prior to the
ex-dividend date for such distribution. Following the giving of such notice, Holders may surrender
their Notes for conversion at any time until the earlier of the close of business on the Business
Day immediately prior to the ex-dividend date or an announcement that such distribution will not
take place; provided, however, that a Holder may not exercise this right to convert if the Holder
may participate, on an as-converted basis (assuming for such purposes that the Notes are
convertible solely in Common Shares at the then applicable Conversion Rate), in the distribution
without a conversion of Notes. The ex-dividend date is the first date upon which a sale of the
Common Shares does not automatically transfer the right to receive the relevant distribution from
the seller of Common Shares to its buyer.

     In addition, if the Company is party to a consolidation, merger or binding share exchange
pursuant to which all of the Common Shares would be exchanged for cash, securities or other

14

 

property that is not otherwise a Change in Control, a Holder may surrender Notes for
conversion at any time from and including the date that is 15 Business Days prior to the Effective
Date of the transaction up to and including five Business Days after the actual date of such
transaction. The Company shall notify Holders as promptly as practicable following the date it
publicly announces such transaction (but in no event less than 15 Business Days prior to the
anticipated effective time of such transaction).

     If a Change in Control occurs prior to the Stated Maturity as a result of a transaction
described in clauses (1) or (2) of the definition of “Change in Control”, a Holder will have the
right to convert its Notes at any time from and including the Effective Date of such transaction up
to and including the earlier of the 30th Business Day following the Effective Date of the
transaction and the second Business Day prior to the Stated Maturity, provided that, if a Holder
has already delivered a Change in Control Purchase Notice with respect to a Note, such Holder may
not surrender such Note for conversion until it has withdrawn such notice in accordance with the
applicable provisions of Section 2.08 hereof. The Company will notify Holders as promptly as
practicable following the date that it publicly announces such Change in Control (but in no event
later than five Business Days prior to the Effective Date of such Change in Control).

     If the Company is a party to a consolidation, merger or binding share exchange (including,
without limitation, by way of a recapitalization, reclassification or change of Common Shares
(other than changes resulting from a subdivision or combination) or a sale, lease or transfer to a
third party of the Company’s and the Company’s subsidiaries’ consolidated assets substantially as
an entirety) pursuant to which all of the Common Shares are exchanged for cash, securities or other
property, then at the Effective Date of the transaction any conversion of Notes and the
determination of the sum of the Daily Share Amounts will be based on, and determined by reference
to, the kind and amount of cash, securities or other property that the Holder would have received
if such Holder had converted its Notes into Common Shares immediately prior to the Effective Date
of the transaction. For purposes of the foregoing, where a consolidation, merger or binding share
exchange involves a transaction that causes Common Shares to be exchanged into the right to receive
more than a single type of consideration based upon any form of shareholder election, such
consideration will be deemed to be the weighted average of the types and amounts of consideration
received by the holders of Common Shares that affirmatively make such an election. If a Change of
Control occurs prior to the Stated Maturity as a result of a transaction described in clauses (1)
or (2) of the definition thereof, the Company will adjust the Conversion Rate for Notes surrendered
for conversion in connection with such a Change in Control transaction, as described in Section
2.09 hereof.

     (e) Conversion Upon Delisting of the Common Shares. A Holder of Notes may surrender any of
its Notes for conversion at any time beginning on the first Business Day after the Common Shares
have ceased to be listed on a U.S. national or regional securities exchange for a 30 consecutive
Trading Day period.

     Section 2.11. Conversion Settlement. Upon a conversion of Notes, the Company shall
deliver, in respect of each $1,000 principal amount of Notes being converted, cash and Common
Shares, if any, equal to the sum of the Daily Settlement Amounts for each of the 30 Trading Days
during the Observation Period.

15

 

     The “Daily Settlement Amount,” for each of the 30 Trading Days during the Observation
Period, shall consist of:

     (a) cash equal to the lesser of (i) one-thirtieth of $1,000 and (ii) the Daily
Conversion Value (defined below); and

     (b) to the extent the Daily Conversion Value exceeds one-thirtieth of $1,000, a number
of Common Shares equal to (i) the difference between the Daily Conversion Value and
one-thirtieth of $1,000, divided by (ii) the Daily VWAP (defined below) for such day.

     “Daily Conversion Value” means, for each of the 30 consecutive Trading Days during the
Observation Period, one-thirtieth of the product of (i) the applicable Conversion Rate and (ii) the
Daily VWAP of the Common Shares on such day.

     “Daily VWAP” means, for each of the 30 consecutive Trading Days during the Observation Period,
the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on
Bloomberg page “DDR.N <equity> AQR” (or its equivalent successor if such page is not
available) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such
Trading Day (or if such volume-weighted average price is unavailable, the market value of one
Common Share on such Trading Day determined, using a volume-weighted average method, by a
nationally recognized independent investment banking firm retained for this purpose by the
Company).

     “Observation Period” with respect to any Note means the 30 consecutive Trading Day period
beginning on and including the second Trading Day after a Note is surrendered to the Conversion
Agent for conversion, except that with respect to any Note surrendered for conversion during the
period beginning on June 15, 2011 and ending on the second Business Day prior to the Stated
Maturity, “Observation Period” means the first 30 Trading Days beginning on and including the 32nd
Scheduled Trading Day prior to the Stated Maturity.

     For the purposes of determining payment upon conversion in accordance with the provisions of
this Section 2.11, “Trading Day” means a day during which (i) trading in Common Shares generally
occurs on the principal U.S. national or regional securities exchange or market on which Common
Shares are listed or admitted for trading and (ii) there is no Market Disruption Event.

     “Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the principal
U.S. national or regional securities exchange or market on which Common Shares are listed or
admitted for trading.

     For the purposes of determining payment upon conversion in accordance with the provisions of
this Section 2.11, “Market Disruption Event” means (i) a failure by the principal U.S. national or
regional securities exchange or market on which Common Shares are listed or admitted to trading to
open for trading during its regular trading session or (ii) the occurrence or existence prior to
1:00 p.m. on any Trading Day for Common Shares for an aggregate one half hour period of any
suspension or limitation imposed on trading (by reason of movements in price

16

 

exceeding limits permitted by the stock exchange or otherwise) in Common Shares or in any
options, contracts or future contracts relating to Common Shares.

     The Company shall deliver the sum of the Daily Settlement Amounts for each of the 30 Trading
Days during the Observation Period to converting Holders on the third Business Day immediately
following the last day of the Observation Period.

     The Company shall deliver cash in lieu of any fractional Common Share issuable in connection
with payment of the settlement amount (based on the Closing Sale Price of Common Shares on the last
day of the applicable Observation Period).

     Section 2.12. Conversion Procedures. To convert Notes, a Holder must satisfy the
requirements set forth in this Section 2.12.

     To convert the Notes, a Holder must (a) complete and manually sign the irrevocable conversion
notice on the reverse of the Note (or complete and manually sign a facsimile of such notice) and
deliver such notice to the Conversion Agent at the office maintained by the Conversion Agent for
such purpose, (b) with respect to Notes which are in certificated form, surrender the Notes to the
Conversion Agent, or, if the Notes are in book-entry form, comply with the appropriate procedures
of the Depositary, (c) furnish appropriate endorsements and transfer documents if required by the
Conversion Agent, the Company or the Trustee and (d) pay any transfer or similar tax, if required.
The date on which the Holder satisfies all such requirements shall be deemed to be the date on
which the applicable Notes shall have been tendered for conversion.

     Notes in respect of which a Holder has delivered a Change in Control Purchase Notice may be
converted only if such notice is withdrawn in accordance with the terms of Section 2.08.

     In case any Note shall be surrendered for partial conversion, the Company shall execute and
the Trustee shall authenticate and deliver to, or upon the written order of, the Holder of the Note
so surrendered, without charge to such Holder, a new Note or Notes in authorized denominations in
an aggregate principal amount equal to the portion of the surrendered Notes not surrendered for
conversion. A Holder may convert fewer than all of such Holder’s Notes so long as the Notes
converted are an integral multiple of $1,000 principal amount.

     Upon surrender of a Note for conversion by a Holder, such Holder shall deliver to the Company
cash equal to the amount that the Company is required to deduct and withhold under applicable law
in connection with the conversion; provided, however, if the Holder does not deliver such cash, the
Company may deduct and withhold from the amount of consideration otherwise deliverable to such
Holder the amount required to be deducted and withheld under applicable law.

     Upon conversion of a Note, a Holder will not receive any cash payment representing accrued and
unpaid interest (including original issue discount) on such Note, except as specified in the
immediately following paragraph. Instead, upon a conversion of Notes, the Company will deliver to
the surrendering Holder only the consideration specified in Section 2.11. Delivery of cash and
Common Shares, if any, upon a conversion of Notes will be deemed to satisfy the Company’s
obligation to pay the principal of the Notes and any accrued and unpaid interest

17

 

(including original issue discount) thereon. Accordingly, upon a conversion of Notes, any
accrued and unpaid interest (including original issue discount) will be deemed paid in full rather
than cancelled, extinguished or forfeited. In no event will the Conversion Rate be adjusted to
account for accrued and unpaid interest (including original issue discount) on the Notes.

     Holders of Notes at the close of business on a Regular Record Date for an interest payment
will receive payment of interest payable on the corresponding Interest Payment Date notwithstanding
the conversion of such Notes at any time after the close of business on the applicable Regular
Record Date. Notes surrendered for conversion by a Holder after the close of business on any
Regular Record Date for an interest payment and on or prior to the corresponding Interest Payment
Date must be accompanied by payment of an amount equal to the interest that such Holder is to
receive on such Notes on such Interest Payment Date; provided, however, that no such payment shall
be required to be made (1) if such Notes have been called for redemption on a Redemption Date that
is after such Regular Record Date and on or prior to such Interest Payment Date, (2) with respect
to overdue interest (including Additional Interest), if any overdue interest exists at the time of
conversion with respect to such Notes or (3) in respect of any conversion that occurs after the
Regular Record Date for the interest payment due on August 15, 2011.

     Upon conversion of a Note, the Company, if it is required to deliver Common Shares, will pay
any documentary, stamp or similar issue or transfer tax due on the issue of the Common Shares upon
such conversion unless the tax is due because the Holder requests the Common Shares to be issued or
delivered to a Person other than the Holder, in which case the Holder must pay the tax due prior to
the delivery of such Common Shares. Certificates representing Common Shares will not be issued or
delivered unless all taxes and duties, if any, payable by the Holder have been paid.

     A Holder of Notes, as such, shall not be entitled to any rights of a holder of Common Shares.
Such Holder shall only acquire such rights upon the delivery by the Company of Common Shares, if
any, in accordance with the provisions of Section 2.11 upon a conversion of Notes by a Holder.

     If a Holder converts more than one Note at the same time, the number of Common Shares, if any,
issuable upon the conversion shall be based on the total principal amount of the Notes surrendered
for conversion.

     The Company shall, prior to issuance of any Notes hereunder, and from time to time as may be
necessary, reserve out of its authorized but unissued Common Shares a sufficient number of Common
Shares to permit the conversion of the Notes at the applicable Conversion Rate. Any Common Shares
delivered upon a conversion of Notes shall be newly issued shares or treasury shares, shall be duly
and validly issued and fully paid and nonassessable and shall be free from preemptive rights and
free of any lien or adverse claim.

     The Company shall endeavor promptly to comply with all federal and state securities laws
regulating the issuance and delivery of Common Shares, if any, upon a conversion of Notes and shall
cause to have listed or quoted all such Common Shares on each U.S. national securities

18

 

exchange or over-the-counter or other domestic market on which the Common Shares are then
listed or quoted.

     Except as set forth herein, no other payment or adjustment for interest shall be made upon
conversion of Notes.

     Section 2.13. Conversion Rate Adjustments. The Conversion Rate shall be adjusted from
time to time as follows:

     (a) If the Company issues Common Shares as a dividend or distribution on Common Shares
to all holders of Common Shares, or if the Company effects a share split or share
combination, 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 adjustment relating to such event
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the new Conversion Rate in effect taking such
event into account
	 
	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of Common Shares outstanding
immediately prior to such event
	 
	 	 	 	 	 	 
	 

	 	OS1
	 	=
	 	the number of Common Shares outstanding
immediately after such event.

Any adjustment made pursuant to this clause (a) shall become effective on the date that is
immediately after (x) the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution or (y) the date on which such split or
combination becomes effective, as applicable. If any dividend or distribution described in
this clause (a) is declared but not so paid or made, the new Conversion Rate shall be
readjusted to the Conversion Rate that would then be in effect if such dividend or
distribution had not been declared.

     (b) If the Company issues to all holders of Common Shares any rights, warrants, options
or other securities entitling them for a period of not more than 45 days after the date of
issuance thereof to subscribe for or purchase Common Shares, or if the Company issues to all
holders of Common Shares securities convertible into Common Shares for a period of not more
than 45 days after the date of issuance thereof, in either case at an exercise price per
Common Share or a conversion price per Common Share less than the Closing Sale Price of the
Common Shares on the Business Day immediately preceding the time of announcement of such
issuance, the Conversion Rate will be adjusted based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	CR0 x (OS0+X)/(OS0+Y)

19

 

	 	 	 	 	 	 	 
	 

	 	where	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately prior to the adjustment
relating to such event
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the new Conversion Rate taking such event into account
	 
	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of Common Shares outstanding
immediately prior to such event
	 
	 	 	 	 	 	 
	 

	 	X
	 	=
	 	the total number of Common Shares issuable
pursuant to such rights, warrants, options, other securities or
convertible securities
	 
	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	the number of Common Shares equal to the
quotient of (A) the aggregate price payable to exercise such rights,
warrants, options, other securities or convertible securities and (B)
the average of the Closing Sale Prices of the Common Shares for the 10
consecutive Trading Days prior to the Business Day immediately
preceding the date of announcement for the issuance of such rights,
warrants, options, other securities or convertible securities.

For purposes of this clause (b), in determining whether any rights, warrants, options, other
securities or convertible securities entitle the holders to subscribe for or purchase, or
exercise a conversion right for, Common Shares at less than the applicable Closing Sale
Price of the Common Shares, and in determining the aggregate exercise or conversion price
payable for such Common Shares, there shall be taken into account any consideration received
by the Company for such rights, warrants, options, other securities or convertible
securities and any amount payable on exercise or conversion thereof, with the value of such
consideration, if other than cash, to be determined by the Board of Directors of the
Company. If any right, warrant, option, other security or convertible security described in
this clause (b) is not exercised or converted prior to the expiration of the exercisability
or convertibility thereof, the new Conversion Rate shall be readjusted to the Conversion
Rate that would then be in effect if such right, warrant, option, other security or
convertible security had not been so issued.

     (c) If the Company distributes capital shares, evidences of indebtedness or other
assets or property of the Company to all holders of Common Shares, excluding:

     (i) dividends, distributions, rights, warrants, options, other securities or
convertible securities referred to in clause (a) or (b) above,

     (ii) dividends or distributions paid exclusively in cash, and

     (iii) Spin-Offs described below in this clause (c),
then the Conversion Rate will be adjusted based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	CR0 x SP0/(SP0-FMV)

20

 

	 	 	 	 	 	 	 
	 

	 	where	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately
prior to the adjustment relating to such event
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the new Conversion Rate taking such event
into account
	 
	 	 	 	 	 	 
	 

	 	SP0
	 	=
	 	the Closing Sale Price of the Common Shares
on the Trading Day immediately preceding the ex-dividend date for such
distribution
	 
	 	 	 	 	 	 
	 

	 	FMV
	 	=
	 	the fair market value (as determined in good
faith by the Board of Directors of the Company) of the capital shares,
evidences of indebtedness, assets or property distributed with respect
to each outstanding Common Share on the earlier of the record date or
the ex-dividend date for such distribution.

     An adjustment to the Conversion Rate made pursuant to the immediately preceding
clause shall be made successively whenever any such distribution is made and shall
become effective on the ex-dividend date for such distribution.

     If the Company distributes to all holders of Common Shares capital shares of any
class or series, or similar equity interest, of or relating to a subsidiary or other
business unit of the Company (a “Spin-Off”), the Conversion Rate in effect immediately
before the close of business on the date fixed for determination of holders of Common
Shares entitled to receive such distribution 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 adjustment relating to such event
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the new Conversion Rate taking such event
into account
	 
	 	 	 	 	 	 
	 

	 	FMV0
	 	=
	 	the average of the Closing Sale Prices of the
capital shares or similar equity interest distributed to holders of
Common Shares applicable to one Common Share over the first 10
consecutive Trading Days after the effective date of the Spin-Off
	 
	 	 	 	 	 	 
	 

	 	MP0
	 	=
	 	the average of the Closing Sale Prices of the
Common Shares over the first 10 consecutive Trading Days after the
effective date of the Spin-Off.

     An adjustment to the Conversion Rate made pursuant to the immediately preceding
clause will occur on the 10th Trading Day from and including the effective date of the
Spin-Off.

21

 

     If any such dividend or distribution described in this clause (c) is declared but not
paid or made, the new Conversion Rate shall be readjusted to be the Conversion Rate that
would then be in effect if such dividend or distribution had not been declared.

     (d) If the Company pays or makes any cash dividend or distribution in respect of any of
its quarterly fiscal periods (without regard to when paid) to all holders of Common Shares
in an aggregate amount that, together with other cash dividends or distributions made in
respect of such quarterly fiscal period, exceeds the product of $0.59 (the “Reference
Dividend”) multiplied by the number of Common Shares outstanding on the record date for such
distribution, the Conversion Rate will be adjusted based on the following formula:

	 	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	CR0 x SP0/(SP0-C)
	 
	 	 	 	 	 	 
	 

	 	where	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately
prior to the adjustment relating to such event
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the new Conversion Rate taking such event
into account
	 
	 	 	 	 	 	 
	 

	 	SP0
	 	=
	 	the Closing Sale Price of Common Shares on
the Trading Day immediately preceding the ex-dividend date for such
distribution
	 
	 	 	 	 	 	 
	 

	 	C
	 	=
	 	the amount in cash per Common Share that the
Company distributes to holders of Common Shares in respect of such
quarterly fiscal period that exceeds the Reference Dividend.

     An adjustment to the Conversion Rate made pursuant to this clause (d) shall become
effective on the ex-dividend date for such dividend or distribution. If any dividend or
distribution described in this clause (d) is declared but not so paid or made, the new
Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect if
such dividend or distribution had not been declared.

     The Reference Dividend shall be subject to adjustment on account of any of the events
set forth in clauses (a), (b) and (c) above and clause (e) below. Any such adjustment will
be effected by multiplying the Reference Dividend by a fraction, the numerator of which will
equal the Conversion Rate in effect immediately prior to the adjustment on account of such
event and the denominator of which will equal the Conversion Rate as adjusted.

     (e) If the Company or any of its subsidiaries makes a payment in respect of a tender
offer or exchange offer for Common Shares to the extent that the cash and value of any other
consideration included in the payment per Common Share exceeds the Closing Sale Price of a
Common Share 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 “Expiration Time”), the
Conversion Rate will be adjusted based on the following formula:

22

 

	 	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	CR0 x (AC + (SP1 x OS1))/(SP1 x OS0)
	 
	 	 	 	 	 	 
	 

	 	where	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately
prior to the adjustment relating to such event
	 
	 	 	 	 	 	 
	 

	 	CR1
	 	=
	 	the new Conversion Rate taking such event
into account
	 
	 	 	 	 	 	 
	 

	 	AC
	 	=
	 	the aggregate value of all cash and any other
consideration (as determined by the Board of Directors of the Company)
paid or payable for Common Shares purchased in such tender or exchange
offer
	 
	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of Common Shares outstanding
immediately prior to the date such tender or exchange offer expires
	 
	 	 	 	 	 	 
	 

	 	OS1
	 	=
	 	the number of Common Shares outstanding
immediately after such tender or exchange offer expires (after giving
effect to the purchase or exchange of shares pursuant to such tender or
exchange offer)
	 
	 	 	 	 	 	 
	 

	 	SP1
	 	=
	 	the average of the Closing Sale Prices of
Common Shares for the 10 consecutive Trading Days commencing on the
Trading Day next succeeding the date such tender or exchange offer
expires.

     If the application of the foregoing formula would result in a decrease in the
Conversion Rate, no adjustment to the Conversion Rate will be made.

     Any adjustment to the Conversion Rate made pursuant to this clause (e) shall become
effective on the date immediately following the determination of the average of the Closing
Sale Prices of Common Shares for purposes of SP1 above. If the Company or one of its
subsidiaries is obligated to purchase Common Shares pursuant to any such tender or exchange
offer but is permanently prevented by applicable law from effecting any such purchase or all
such purchases are rescinded, the new Conversion Rate shall be readjusted to be the
Conversion Rate that would be in effect if such tender or exchange offer had not been made.

     (f) Notwithstanding the foregoing, in the event of an adjustment to the Conversion Rate
pursuant to clause (d) or (e) above, in no event will the Conversion Rate exceed 18.8147 per
$1,000 principal amount of Notes, subject to adjustment pursuant to clauses (a), (b) and (c)
above.

     (g) If the Company has in effect a rights plan while any Notes remain Outstanding,
Holders of Notes will receive, upon a conversion of Notes in respect of which the Company is
required to deliver Common Shares, in addition to such Common Shares, rights under the
Company’s shareholder rights agreement unless, prior to conversion, the rights have expired,
terminated or been redeemed or unless the rights have separated from the Common Shares. If
the rights provided for in the rights plan

23

 

adopted by the Company have separated from the Common Shares in accordance with the
provisions of the applicable shareholder rights agreement so that Holders of Notes would not
be entitled to receive any rights in respect of Common Shares, if any, that the Company is
required to deliver upon conversion of Notes, the Conversion Rate will be adjusted at the
time of separation as if the Company had distributed to all holders of Common Shares capital
shares, evidences of indebtedness or other assets or property pursuant to clause (c) above,
subject to readjustment upon the subsequent expiration, termination or redemption of the
rights. In lieu of any such adjustment, the Company may amend such applicable shareholder
rights agreement to provide that upon a conversion of Notes the Holders will receive, in
addition to any Common Shares that the Company is required to deliver upon such conversion,
the rights which would have attached to such Common Shares if the rights had not become
separated from the Common Shares under such applicable shareholder rights agreement. To the
extent that the Company adopts any future shareholder rights agreement, upon a conversion of
Notes in respect of which the Company is required to deliver Common Shares, a Holder of
Notes shall receive, in addition to such Common Shares, the rights under the future
shareholder rights agreement whether or not the rights have separated from Common Shares at
the time of conversion and no adjustment will be made in accordance with clause (c) or
otherwise.

     In addition to the adjustments pursuant to clauses (a) through (g) above, the Company
may increase the Conversion Rate in order to avoid or diminish any income tax to holders of
Common Shares resulting from any dividend or distribution of capital shares (or rights to
acquire Common Shares) or from any event treated as such for income tax purposes. The
Company may also, from time to time, to the extent permitted by applicable law, increase the
Conversion Rate by any amount for any period if the Company has determined that such
increase would be in the best interests of the Company. If the Company makes such
determination, it will be conclusive and the Company will mail to Holders of the Notes a
notice of the increased Conversion Rate and the period during which it will be in effect at
least fifteen (15) days prior to the date the increased Conversion Rate takes effect in
accordance with applicable law.

     If, in connection with any adjustment to the Conversion Rate as set forth in this
Section 2.13 a Holder shall be deemed for U.S. federal tax purposes to have received a
distribution, the Company may set off any withholding tax it reasonably believes it is
required to collect with respect to any such deemed distribution against cash payments of
interest in accordance with the provisions of Section 2.05 hereof or from cash and Common
Shares, if any, otherwise deliverable to a Holder upon a conversion of Notes in accordance
with the provisions of Section 2.11 hereof or a redemption or repurchase of a Note in
accordance with the provisions of Section 2.07 or 2.08 hereof.

     The Company will not make any adjustment to the Conversion Rate if Holders of the Notes
are permitted to participate, on an as-converted basis, in the transactions described above.

     Notwithstanding anything to the contrary contained herein, in addition to the other
events set forth herein on account of which no adjustment to the Conversion Rate shall be
made, the applicable Conversion Rate shall not be adjusted for:

24

 

     (i) the issuance of any Common Shares pursuant to any present or future plan
providing for the reinvestment of dividends or interest payable on securities of the
Company and the investment of additional optional amounts in Common Shares under any
plan;

     (ii) the issuance of any Common Shares or options or rights to purchase those
shares pursuant to any present or future employee, director or consultant benefit
plan, employee agreement or arrangement or program of the Company;

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

     (iv) a change in the par value of the Common Shares;

     (v) accumulated and unpaid dividends or distributions; and

     (vi) as a result of a tender offer solely to holders of fewer than 100 Common
Shares.

     No adjustment in the Conversion Price will be required unless the adjustment would require an
increase or decrease of at least 1% of the Conversion Price. If the adjustment is not made because
the adjustment does not change the Conversion Price by at least 1%, then the adjustment that is not
made will be carried forward and taken into account in any future adjustment. All required
calculations will be made to the nearest cent or 1/1000th of a share, as the case may be.
Notwithstanding the foregoing, if the Notes are called for redemption, all adjustments not
previously made will be made on the applicable Redemption Date.

     Whenever the Conversion Rate is adjusted as herein provided, the Company shall, as promptly as
reasonably practicable, 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. 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 Holders of the Notes within
20 Business Days of the effective date of such adjustment. Failure to deliver such notice shall
not affect the legality or validity of any such adjustment.

     For purposes of this Section 2.13, the number of Common Shares 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 Common Shares.

     Notwithstanding anything in this Section 2.13 to the contrary, in no event shall the
Conversion Rate be adjusted so that the Conversion Price would be less than $0.01.

     Section 2.14. Ownership Limit; Withholding. Notwithstanding any other provision of
the Notes or the instructions contained herein, no Holder of Notes shall be entitled to convert
such

25

 

Notes for Common Shares to the extent that receipt of such shares would cause such Holder
(together with such Holder’s affiliates) to exceed the ownership limit contained in the Articles of
Incorporation of the Company as in effect from time to time.

     At the Maturity of the principal of the Notes, whether at Stated Maturity or upon earlier
redemption or repurchase of Notes or otherwise, and as otherwise required by law, the Company may
deduct and withhold from the amount of consideration otherwise deliverable to such Holder the
amount required to be deducted and withheld under applicable law.

     Section 2.15. Merger, Consolidation or Sale.

     Section 801 of the Indenture, for purposes of the Notes, is hereby modified and amended to
include the following additional proviso:

     “(iii) if as a result of such transaction the Notes become exchangeable into common
stock or other securities issued by a third party, such third party shall assume or fully
and unconditionally guarantee all obligations under the Notes and the Indenture.”

     Section 2.16. Satisfaction and Discharge. The provisions of ARTICLE FOURTEEN of the
Indenture shall not be applicable to the Notes. The Company may satisfy and discharge its
obligations under the Indenture by delivering to the Trustee for cancellation all Outstanding Notes
or by depositing with the Trustee, the Paying Agent or the Conversion Agent, if applicable, after
the Notes have become due and payable, whether on the date of the Stated Maturity of the principal
amount of the Notes, any Redemption Date or Change in Control Purchase Date or upon conversion or
otherwise, cash or Common Shares in accordance with the terms hereof sufficient to pay all of the
Outstanding Notes and paying all other sums payable under the Notes and the Indenture in respect of
the Notes.

     Section 2.17. Events of Default; Waiver of Past Defaults.

     (a) Section 501 of the Indenture is modified and amended for purposes of the Notes to add the
following Events of Default as clauses (9) and (10):

     “default in the delivery when due of the amounts owing upon conversion, on the terms
set forth herein and in the Notes, upon exercise of a Holder’s conversion right in
accordance with the terms hereof and of the Notes and the continuation of such default for
10 days;”

     - and -

     “failure of the Company to provide a Company Notice within 20 days after the occurrence
of a Change in Control as provided in Section 2.08 of the Seventh Supplemental Indenture.”

     (b) Clause five of Section 501 of the Indenture is modified and amended for purposes of the
Notes to read as follows :

26

 

     “if any event of default under any bond, debenture, note or other evidence of
indebtedness of the Company (including an event of default with respect to any other series
of securities), or under any mortgage, indenture or other instrument of the Company under
which there may be issued or by which there may be secured or evidenced any indebtedness of
the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or for
which the Company is directly responsible or liable as obligor or guarantor), whether such
indebtedness now exists or shall hereafter be created, shall happen and shall result in an
aggregate principal amount exceeding $25,000,000 becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been waived, rescinded or
annulled, within a period of 10 days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the Outstanding Securities of that series a
written notice specifying such default and requiring the Company to cause such indebtedness
to be discharged or cause such acceleration to be rescinded or annulled and stating that
such notice is a “Notice of Default” hereunder. Subject to the provisions of Section 601,
the Trustee shall not be deemed to have knowledge of such default unless either (A) a
Responsible Officer of the Trustee shall have actual knowledge of such default or (B) the
Trustee shall have received written notice thereof from the Company, from any Holder, from
the holder of any such indebtedness or from the trustee under any such mortgage, indenture
or other instrument;”

     (c) Section 508 of the Indenture is modified and amended for purposes of the Notes to read as
follows:

     “Notwithstanding any other provision in this Indenture, the Holder of any Note shall
have the right which is absolute and unconditional to receive payment of the principal of,
and (subject to Sections 305 and 307) interest on, and amounts owing upon conversion in
respect of, such Note on the respective due dates expressed in such Note (or, in the case of
redemption on the Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such Holder.”

     (d) Section 513 of the Indenture is modified and amended for purposes of the Notes to add the
following as clause (3):

     (3) “in respect of the failure to convert any Notes in accordance with their terms.”

     Section 2.18. Modification. Section 902 of the Indenture is modified for purposes of
the Notes to add the following as clauses (4) and (5):

     “(4) impair the right to institute suit for the enforcement of the payment and delivery
of amounts owing upon conversion of the Notes; or

     (5) make any change that impairs or adversely affects the rights of a Holder to convert
Notes in accordance with the terms hereof and the Notes; or”

27

 

     Section 2.19. Certain Covenants Not Applicable to the Notes. The Notes shall not be
entitled to the benefits of the covenants set forth in Section 1004, Section 1005, Section 1011 and
Section 1015 of the Indenture.

     Section 2.20. Calculations in Respect of the Notes. Except as otherwise specifically
stated herein or in the Notes, all calculations to be made in respect of the Notes shall be the
obligation of the Company. All calculations made by the Company or its agent as contemplated
pursuant to the terms hereof and of the Notes shall be made in good faith and be final and binding
on the Company and the Holders absent manifest error. The Company shall provide a schedule of
calculations to the Trustee, and the Trustee shall be entitled to rely upon the accuracy of the
calculations by the Company without independent verification. The Trustee shall forward
calculations made by the Company to any Holder of Notes upon written request within 20 Business
Days after the effective date of any adjustment.

     Section 2.21. Authorized Denominations. The Notes shall be issued in denominations of
$1,000 and integral multiples thereof and payments of principal, interest (including Additional
Interest) and Additional Amounts, if any, on the Notes shall be made in U.S. dollars.

     Section 2.22. Conversion Agent, Paying Agent and Securities Registrar. U.S. Bank
Trust National Association, is hereby appointed as Conversion Agent, Paying Agent and the Security
Registrar for the Notes. The Security Register for the Notes will be maintained by the Security
Registrar at the Trustee’s Corporate Trust Office. The rights, privileges, protections, immunities
and benefits given to the Trustee pursuant to the Indenture, including, without limitation, its
right to be indemnified, are extended to, and shall be enforceable by, each of the Conversion
Agent, the Paying Agent and the Security Registrar.

     Section 2.23. Restrictions on Transfer. (a) Every Note (and all Notes issued in
exchange therefor or in substitution thereof) that bears or is required under this Section 2.23(a)
to bear the legend set forth in this Section 2.23(a) (together with any Common Shares issued upon
conversion of the Notes, collectively, the “Restricted Securities”) shall be subject to the
restrictions on transfer set forth in this Section 2.23(a) (including those set forth in the legend
below) unless such restrictions on transfer shall be waived by written consent of the Company, and
the Holder of each such Restricted Security, by such Holder’s acceptance thereof, agrees to be
bound by all such restrictions on transfer. As used in this Section 2.23(a), the term “transfer”
means any sale, pledge, loan, transfer or other disposition whatsoever of any Restricted Security
or any interest therein.

     Until the expiration of the holding period applicable to sales of Restricted Securities under
Rule 144(k) under the Securities Act (or any successor provision), any certificate evidencing a
Restricted Security shall bear a legend in substantially the following form, unless such Restricted
Security 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:

28

 

THIS SECURITY AND THE COMMON SHARES 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, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER:

          (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), IS AWARE THAT THE TRANSFER TO IT IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE
SECURITIES ACT AND IS ACQUIRING THIS SECURITY IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT;

          (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS
SECURITY AND THE LAST DATE ON WHICH THE COMPANY OR AN AFFILIATE THEREOF WAS THE OWNER OF THIS
SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY OR THE COMMON SHARES ISSUABLE UPON CONVERSION
OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND
WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER; AND

          (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS SECURITY ARE TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(C) OR 2(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS
SECURITY AND THE LAST DATE ON WHICH THE COMPANY OR AN AFFILIATE THEREOF WAS THE OWNER OF THIS
SECURITY, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS SECURITY TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS
APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(C) ABOVE, 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 OR THE TRUSTEE 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. THIS LEGEND WILL
BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS SECURITY PURSUANT TO CLAUSE 2(C) OR 2(D) ABOVE
OR THE EXPIRATION OF TWO YEARS FROM THE LATER OF THE ORIGINAL ISSUE DATE OF THIS SECURITY AND THE
LAST DATE ON WHICH THE COMPANY OR AN AFFILIATE THEREOF WAS THE OWNER OF THIS SECURITY.

29

 

          PURSUANT TO SECTIONS 1271 THROUGH 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS
SECURITY HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. TO OBTAIN (I) THE ISSUE PRICE OF THIS
SECURITY, (II) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, (III) THE ISSUE DATE, AND (IV) THE YIELD TO
MATURITY; CONTACT INVESTOR RELATIONS AT 3300 ENTERPRISE PARKWAY, BEACHWOOD, OHIO 44122 OR BY PHONE
AT (216) 755-5500.

          THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS
SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE
HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS
AGREEMENT.

     Any Notes 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 foregoing legend
set forth therein have been satisfied may, upon surrender of such Note for exchange to the
Securities Registrar in accordance with the provisions of this Section 2.23, be exchanged for a new
Note or Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive
legend required by this Section 2.23(a). If such Restricted Security surrendered for exchange is
represented by a global Note bearing the legend set forth in this Section 2.23(a), the principal
amount of the legended global Note shall be reduced by the appropriate principal amount and the
principal amount of a global Note without the legend set forth in this Section 2.23(a) shall be
increased by an equal principal amount. If a global Note without the legend set forth in this
Section 2.23(a) is not then Outstanding, the Issuer shall execute and the Trustee shall
authenticate and deliver an unlegended global Note to the Depositary.

     In the event Rule 144(k) under the Securities Act (or any successor provision) is amended to
shorten the two-year period under Rule 144(k), then, the references in the restrictive legends set
forth above to “TWO YEARS,” and in the corresponding transfer restrictions described above, and in
the Notes and the Common Shares will be deemed to refer to such shorter period, from and after
receipt by the Trustee of an Officers’ Certificate and an Opinion of Counsel to that effect. As
soon as reasonably practicable after the Company knows of the effectiveness of any such amendment
to shorten the two-year period under Rule 144(k), unless such changes would otherwise be prohibited
by, or would cause a violation of, the federal securities laws applicable at the time, the Company
will provide to the Trustee an Officers’ Certificate and an Opinion of Counsel as to the
effectiveness of such amendment and the effectiveness of such change to the restrictive legends and
transfer restrictions.

     (b) Any Restricted Securities, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor provision), purchased or
owned by the Company or any Affiliate thereof may not be resold by the Company or such Affiliate
and will be surrendered to the Trustee for cancellation. Upon expiration of the holding period
applicable to Restricted Securities under Rule 144(k) under the Securities Act (or any successor
provision), the Notes may, to the extent permitted by applicable law, be reissued or sold or may be
surrendered to the Trustee for cancellation. Any Notes surrendered for cancellation may not be
reissued or resold and will be canceled promptly by the Trustee.

30

 

     (c) The Trustee shall have no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under this instrument or under applicable law
with respect to any transfer of any interest in any Note 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 instrument, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

     Section 2.24. Rule 144A Information Requirement. Within the period prior to the
expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities
Act (or any successor provision), 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 Notes or any Common Shares issued upon conversion thereof which
continue to be Restricted Securities in connection with any sale thereof and any prospective
purchaser of Notes or such Common Shares 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 Notes or such Common Shares, all to the extent required to enable
such Holder or beneficial owner to sell its Notes or Common Shares without registration under the
Securities Act within the limitation of the exemption provided by Rule 144A.

     Section 2.25. Provision of Financial Information. The Company, for so long as any
Notes are Outstanding, within 15 days after it is required to file the same with the Commission,
will furnish to the Holders of the Notes, or cause the Trustee to furnish to the Holders of the
Notes, all annual, quarterly and other reports that it may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act. 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 an Officers’ Certificate).
If the Company is not required to file the foregoing forms or reports with the Commission, then it
will file with the Trustee and the Commission such reports as may be prescribed by the Commission
at such time.

     Section 2.26. Additional Interest Notice. In the event that the Company is required
to pay Additional Interest to Holders of Notes pursuant to the Registration Rights Agreement, the
Company will provide written notice (“Additional Interest Notice”) to the Trustee of its obligation
to pay Additional Interest no later than fifteen (15) calendar 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 Notes 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.

31

 

ARTICLE THREE

FORM OF NOTES

     Section 3.01. Form of Notes. The Notes and the Trustee’s certificate of
authentication to be borne by such Notes shall be substantially in the form set forth in Exhibit A
hereto. Any of the Notes 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 the Indenture, or as may be required by the Depositary or by the National
Association of Securities Dealers, Inc. in order for the Notes to be eligible for trading on The
PORTALSM Market or as may be required for the Notes 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 quotation system on which the Notes may be listed, or to
conform to usage, or to indicate any special limitations or restrictions to which any particular
Notes are subject.

ARTICLE FOUR

MISCELLANEOUS

     Section 4.01. Relation to Original Indenture. This Seventh Supplemental Indenture
supplements the Original Indenture and shall be a part of and subject to all the terms thereof.
Except as supplemented hereby, all of the terms, provisions and conditions of the Original
Indenture and the Securities issued thereunder shall continue in full force and effect.

     Section 4.02. Concerning the Trustee. The Trustee shall not be responsible for any
recital herein, as such recitals shall be taken as statements of the Company, or the validity of
the execution by the Company of this Seventh Supplemental Indenture. The Trustee makes no
representations as to the validity or sufficiency of this instrument.

     Section 4.03. Effect of Headings. The Article and Section headings herein are for
convenience of reference only and shall not affect the construction hereof.

     Section 4.04. Counterparts. This instrument may be executed in counterparts, each of
which shall be deemed an original, but all of which shall together constitute one and the same
instrument.

     Section 4.05. Governing Law. This instrument shall be governed by and construed in
accordance with the laws of the State of Ohio.

[signature page follows]

32

 

EXECUTION COPY

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

	 	 	 	 	 
	 	DEVELOPERS DIVERSIFIED REALTY CORPORATION

 	 
	 	By:  	/s/ William H. Schafer
 	 
	 	 	Name:  	William H. Schafer 	 
	 	 	Title:  	Executive Vice President and Chief Financial Officer 	 
	 

Attest:

	 	 	 
	/s/ David E. Weiss

	 	 
	 

Name: David E. Weiss

	 	 
	Title: Assistant Secretary
	 	 

	 	 	 	 	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION

as Trustee

 	 
	 	By:  	/s/ Thomas E. Tabor
 	 
	 	 	Name:  	Thomas E. Tabor 	 
	 	 	Title:  	Vice President 	 
	 

Attest:

	 	 	 
	/s/ Paul Schmalzel

	 	 
	 

Name: Paul Schmalzel

	 	 
	Title: Vice President
	 	 

33

 

Exhibit A

[FORM OF NOTE]

DEVELOPERS DIVERSIFIED REALTY CORPORATION

3.50% Convertible Senior Note due 2011

[Include only for Global Notes]

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

     UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM,
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE
THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A
NOMINEE OF SUCH SUCCESSOR.

[Include only for Notes that are Restricted Securities]

     THIS SECURITY AND THE COMMON SHARES 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, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER:

     (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), IS AWARE THAT THE TRANSFER TO IT IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE
SECURITIES ACT AND IS ACQUIRING THIS SECURITY IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT;

     (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS
SECURITY AND THE LAST DATE ON WHICH DEVELOPERS DIVERSIFIED REALTY CORPORATION (THE “COMPANY”) OR AN
AFFILIATE THEREOF WAS THE OWNER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY OR THE
COMMON SHARES ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY

A-1

 

OF ITS SUBSIDIARIES, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER; AND

     (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS SECURITY ARE TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(C) OR 2(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS
SECURITY AND THE LAST DATE ON WHICH THE COMPANY OR AN AFFILIATE THEREOF WAS THE OWNER OF THIS
SECURITY, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS SECURITY TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS
APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(C) ABOVE, 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 OR THE TRUSTEE 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. THIS LEGEND WILL
BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS SECURITY PURSUANT TO CLAUSE 2(C) OR 2(D) ABOVE
OR THE EXPIRATION OF TWO YEARS FROM THE LATER OF THE ORIGINAL ISSUE DATE OF THIS SECURITY AND THE
LAST DATE ON WHICH THE COMPANY OR AN AFFILIATE THEREOF WAS THE OWNER OF THIS SECURITY.

[Include for all Notes]

     PURSUANT TO SECTIONS 1271 THROUGH 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS
SECURITY HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. TO OBTAIN (I) THE ISSUE PRICE OF THIS
SECURITY, (II) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, (III) THE ISSUE DATE, AND (IV) THE YIELD TO
MATURITY; CONTACT INVESTOR RELATIONS AT 3300 ENTERPRISE PARKWAY, BEACHWOOD, OHIO 44122 OR BY PHONE
AT (216) 755-5500.

[Include only for Notes that are Restricted Securities]

     THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS
SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE
HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS
AGREEMENT.

A-2

 

			
	NO. 001
	 	PRINCIPAL AMOUNT
	 	 	 
	CUSIP NO. 251591 AP 8
	 	$250,000,000

DEVELOPERS DIVERSIFIED REALTY CORPORATION

3.50% Convertible Senior Note due 2011

     DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (the “Company”, which term
shall include any successor under the Indenture hereinafter referred to), for value received,
hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of Two Hundred
and Fifty Million Dollars ($250,000,000) on August 15, 2011 unless redeemed, repurchased or
converted prior to such date in accordance with the terms hereof and of the Indenture.

     This Note shall bear interest as specified on the reverse hereof. This Note is convertible
for the consideration specified on the reverse hereof. This Note is subject to redemption by the
Company at its option and to repurchase by the Company at the option of the Holder as specified on
the reverse hereof.

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

     This Note shall not be entitled to the benefits of the Indenture or be valid or become
obligatory for any purpose until the certificate of authentication hereon shall have been signed by
the Trustee.

A-3

 

     IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by
an authorized signatory.

Dated: August 28, 2006

	 	 	 	 	 
	 	DEVELOPERS DIVERSIFIED REALTY CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 
	 

	 	 	 
	Attest:

	 	 
	 

Name:

	 	 
	Title:
	 	 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

	 	 	 	 	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

A-4

 

	 	 	 	 	 

[REVERSE OF NOTE]

DEVELOPERS DIVERSIFIED REALTY CORPORATION

3.50% Convertible Senior Note due 2011

     This Note is one of a duly authorized issue of notes, debentures, bonds, or other evidences of
indebtedness of the Company (hereinafter called the “Securities”) of the series hereinafter
specified, all issued or to be issued under and pursuant to an Indenture, dated as of May 1, 1994
(as amended and supplemented by the First Supplemental Indenture, dated as of May 10, 1995, by the
Second Supplemental Indenture, dated as of July 18, 2003, by the Third Supplemental Indenture,
dated as of January 23, 2004, by the Fourth Supplemental Indenture, dated as of April 22, 2004, by
the Fifth Supplemental Indenture, dated as of April 28, 2005, by the Sixth Supplemental Indenture,
dated as of October 7, 2005, and by the Seventh Supplemental Indenture, dated as of August 28,
2006, and as further amended or supplemented from time to time, the “Indenture”), duly executed and
delivered by Developers Diversified Realty Corporation, an Ohio corporation (the “Company”), to
U.S. Bank Trust National Association, as trustee (the “Trustee,” which term includes any successor
trustee under the Indenture with respect to the series of Securities of which this Note is a part),
and reference is hereby made to the Indenture, and all modifications and amendments and indentures
supplemental thereto relating to the Notes, for a description of the rights, limitations of rights,
obligations, duties, and immunities thereunder of the Trustee, the Company, and the Holders of the
Notes and the terms upon which the Notes are authenticated and delivered. The Securities may be
issued in one or more series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may accrue interest (if any) at different rates or formulas
and may otherwise vary as provided in the Indenture. This Note is one of a series of Securities
designated as the “3.50% Convertible Senior Notes due 2011” of the Company, initially limited
(except as permitted under the Indenture) in aggregate principal amount to $250,000,000. Terms
used herein without definition and which are defined in the Indenture have the meanings assigned to
them in the Indenture.

1. INTEREST 

     The Notes shall bear interest at the rate of 3.50% per annum from August 28, 2006 or from the
most recent Interest Payment Date (as defined below) to which interest has been paid or duly
provided for, as the case may be, payable semi-annually in arrears on February 15 and August 15 of
each year (each, an “Interest Payment Date”), commencing on February 15, 2007, until the principal
hereof is paid or duly made available for payment. Interest payable on each Interest Payment Date
shall equal the amount of interest accrued for the period commencing on and including the
immediately preceding Interest Payment Date in respect of which interest has been paid or duly
provided for (or commencing on and including August 28, 2006, if no interest has been paid or duly
provided for) and ending on and including the day immediately preceding such Interest Payment Date.
Interest on the Notes will be computed on the basis of a 360-day year consisting of twelve 30-day
months.

A-5

 

2. METHOD OF PAYMENT 

     Except as provided in the Indenture, the Company shall pay interest on the Notes to the
Persons who are Holders of record of Notes at the close of business (whether or not a Business Day)
on the February 1 and August 1 immediately preceding the applicable Interest Payment Date (each, a
“Regular Record Date”). Holders must surrender Notes to a Paying Agent and comply with the other
terms of the Indenture to collect the principal amount, Redemption Price or Change in Control
Purchase Price of the Notes, plus, if applicable, accrued and unpaid interest (including Additional
Interest, if any) payable as herein provided at maturity, upon redemption by the Company in order
to preserve the status of the Company as a real estate investment trust or repurchase at the
Holder’s option upon a Change in Control. The Company shall pay, in money of the United States
that at the time of payment is legal tender for payment of public and private debts, all amounts
due in cash with respect to the Notes on the dates and in the manner provided in this Note and the
Indenture.

3. PAYING AGENT, CONVERSION AGENT AND SECURITY REGISTRAR 

     Initially, the Trustee shall act as Paying Agent, Conversion Agent and Security Registrar.
The Company hereby initially designates the Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York as the office to be maintained by it where this Note may be
presented for payment, registration of transfer or exchange, where notices or demands to or upon
the Company in respect of this Note or the Indenture may be served and where the Notes may be
surrendered for conversion in accordance with the provisions of paragraph 6 hereof and the
Indenture. The Company may appoint and change any Paying Agent, Conversion Agent, Security
Registrar or co-registrar or approve a change in the office through which any Paying Agent acts
without notice, other than notice to the Trustee.

4. REDEMPTION BY THE COMPANY

     If the Company determines it is necessary to redeem the Notes for cash in order to preserve
the status of the Company as a real estate investment trust, the Company may redeem the Notes then
Outstanding, in whole or in part, at 100% of the principal amount of the Notes to be redeemed plus
unpaid interest (including Additional Interest, if any) accrued thereon to the Redemption Date (the
“Redemption Price”).

     Notice of any such redemption shall be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Notes to be redeemed at the Holder’s registered
address. Notes in denominations larger than $1,000 principal amount may be redeemed in part but
only in integral multiples of $1,000 principal amount.

5. REPURCHASE AT OPTION OF HOLDER UPON A CHANGE IN CONTROL 

     (a) If a Change in Control occurs prior to the Stated Maturity, a Holder shall have the right,
at such Holder’s option and subject to the terms and conditions of the Indenture, to require the
Company to repurchase all or any of such Holder’s Notes having a principal amount equal to $1,000
or an integral multiple thereof on the date (the “Change in Control Purchase Date”) specified by
the Company in the Company Notice (which date shall be no earlier than 15 days and no later than 30
days after the date of such Company Notice) for cash equal to the

A-6

 

100% of the principal amount of the Notes to be repurchased plus unpaid interest (including
Additional Interest, if any) accrued thereon to the Change in Control Purchase Date (the “Change in
Control Purchase Price”).

     (c) Holders have the right to withdraw any Change in Control Purchase Notice by delivery to
the Paying Agent of a written notice of withdrawal in accordance with the provisions of the
Indenture.

     (d) If the Paying Agent holds, in accordance with the terms of the Indenture, money sufficient
to pay the Change in Control Purchase Price of such Notes on the Change in Control Purchase Date,
then, on and after such date, such Notes shall cease to be Outstanding and interest on such Notes
shall cease to accrue, and all other rights of the Holder shall terminate (other than the right to
receive the Change in Control Purchase Price upon delivery or transfer of the Notes).

6. CONVERSION

     The Notes shall be convertible into the consideration specified in the Indenture at such
times, upon compliance with such conditions and upon the terms set forth in the Indenture.

     The initial Conversion Rate shall be 15.3589 Common Shares per $1,000 principal amount of
Notes, subject to adjustment in certain circumstances as specified in the Indenture. Notes
tendered for conversion by a Holder after the close of business on any Regular Record Date for an
interest payment and on or prior to the corresponding Interest Payment Date must be accompanied by
payment of an amount equal to the interest that such Holder is to receive on such Notes on such
Interest Payment Date; provided, however, that no such payment shall be required (1) if such Notes
have been called for redemption on a Redemption Date that is after such Regular Record Date and on
or prior to such Interest Payment Date, (2) with respect to overdue interest, if any overdue
interest exists at the time of conversion with respect to such Notes or (3) in respect of any
conversion that occurs after the Regular Record Date for the interest payment due on August 15,
2011.

     The Conversion Rate applicable to each Note a notice of conversion in respect of which is
received by the Conversion Agent from and including the Effective Date of a Change in Control
resulting from a transaction described in clauses (1) or (2) of the definition of Change in Control
up to and including the earlier of the 30th Business Day following the Effective Date of such
Change in Control and the Stated Maturity of the Notes shall be increased by the number of
Additional Shares specified in the Indenture.

     To convert this Note, the Holder must (a) complete and manually sign the irrevocable
conversion notice set forth below (or complete and manually sign a facsimile of such notice) and
deliver such notice to the Conversion Agent at the office maintained by the Conversion Agent for
such purpose, (b) if this Note is in certificated form, surrender such Note to the Conversion
Agent, (c) furnish appropriate endorsements and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (d) pay any transfer or similar tax, if required. The date on
which the Holder satisfies all such requirements shall be deemed to be the date on which this Note
shall have been surrendered for conversion.

A-7

 

     If the Holder has delivered a Change in Control Purchase Notice requiring the Company to
repurchase all or a portion of this Note pursuant to paragraph 5 hereof, then this Note (or portion
hereof subject to such Change in Control Purchase Notice) may be converted only if the Change in
Control Purchase Notice is withdrawn in accordance with the terms of the Indenture.

7. RANKING

     The Notes are senior unsecured obligations of the Company and shall rank pari passu in right
of payment with all other senior unsecured indebtedness of the Company from time to time
outstanding.

8. DEFAULTED INTEREST 

     Except as otherwise specified herein or in the Indenture, any Defaulted Interest on this Note
shall forthwith cease to be payable to the Holder hereof on the relevant Regular Record Date by
virtue of having been such Holder, and such Defaulted Interest may be paid by the Company as
provided for in Section 307 of the Indenture.

9. DENOMINATIONS; TRANSFER; CONVERSION

     This Note is issuable only in fully registered form, without coupons, in denominations of
$1,000 and integral multiples thereof. This Note may be exchanged for a like aggregate principal
amount of Notes of other authorized denominations at the office or agency of the Company in The
City of New York, in the manner and subject to the limitations provided herein and in the
Indenture, but without the payment of any charge except for any tax or other governmental charge
imposed in connection therewith. Upon due presentment for registration of transfer of this Note at
the office or agency of the Company in The City of New York, one or more new Notes of authorized
denominations in an equal aggregate principal amount will be issued to the transferee in exchange
therefor, and bearing such restrictive legends as may be required by the Indenture, but without
payment of any charge except for any tax or other governmental charge imposed in connection
therewith. In the event of any redemption in part, the Company shall not be required to: (i) issue
or register the transfer or exchange of any Note during a period beginning at the opening of
business 15 days before any selection of Notes to be redeemed and ending at the close of business
on the day of mailing of the relevant notice of redemption, or (ii) register the transfer or
exchange of any Note, or portion thereof, called for redemption, except the unredeemed portion of
any Note redeemed in part.

10. PERSONS DEEMED OWNERS 

     The Holder of this Note may be treated as the owner of this Note for all purposes, and neither
the Company or the Trustee nor any authorized agent of the Company or the Trustee shall be affected
by any notice to the contrary, except as required by law.

11. ADDITIONAL RIGHTS OF HOLDERS

     In addition to the rights provided to Holders of Notes under the Indenture, Holders shall have
all the rights set forth in the Registration Rights Agreement, dated as of August 28, 2006, among
the Company and the Initial Purchasers named therein.

A-8

 

12. MODIFICATION AND AMENDMENT; WAIVER 

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities under the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in the aggregate principal amount of all Outstanding Securities affected
thereby (voting together as a single class). The Indenture also provides that certain amendments
or modifications may not be made without the consent of each Holder to be affected thereby.
Furthermore, provisions in the Indenture permit the Holders of a majority in the aggregate
principal amount of the Outstanding Securities of any series, in certain instances, to waive, on
behalf of all of the Holders of Securities of such series, certain past defaults under the
Indenture and their consequences. Any such waiver by the Holder of this Note shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and other Notes issued upon
the registration of transfer hereof or in exchange hereof, or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.

13. DEFAULTS AND REMEDIES 

     If an Event of Default occurs and is continuing, the Trustee, or the Holders of not less than
25% in aggregate principal amount of the Notes at the time Outstanding, may declare the principal
amount and any accrued and unpaid interest, of all the Notes to be due and payable in the manner
and with the effect provided in the Indenture.

     Events of Default in respect of the Notes are set forth in Section 501 of the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the Indenture.

14. CONSOLIDATION, MERGER, AND SALE OF ASSETS 

     In the event of a consolidation or merger of the Company or a sale, lease or conveyance of all
or substantially all of the assets of the Company, as described in ARTICLE EIGHT of the Indenture,
the successor entity to the Company shall succeed to and be substituted for the Company and may
exercise the rights and powers of the Company under the Indenture, and thereafter, except in the
case of a lease, the Company shall be relieved of all obligations and covenants under the Indenture
and the Notes.

15. CERTAIN COVENANTS NOT TO APPLY

     The Notes shall not be entitled to the benefits of the covenants set forth in Section 1004,
Section 1005, Section 1011 and Section 1015 of the Indenture.

16. TRUSTEE AND AGENT DEALINGS WITH THE COMPANY 

     The Trustee, Paying Agent, Conversion Agent and Securities Registrar under the Indenture, each
in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise
deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have if it were not Trustee,
Paying Agent, Conversion Agent or Registrar.

A-9

 

17. CALCULATIONS IN RESPECT OF THE NOTES 

     Except as otherwise specifically stated herein or in the Indenture, all calculations to be
made in respect of the Notes shall be the obligation of the Company. All calculations made by the
Company or its agent as contemplated pursuant to the terms hereof and of the Indenture shall be
final and binding on the Company and the Holders absent manifest error. The Company shall provide a
schedule of calculations to the Trustee, and the Trustee shall be entitled to rely upon the
accuracy of the calculations by the Company without independent verification. The Trustee shall
forward calculations made by the Company to any Holder of Notes upon written request.

18. GOVERNING LAW 

     The Indenture and this Note shall be governed by and construed in accordance with the laws of
the State of Ohio.

A-10

 

ASSIGNMENT

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

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

	 	 	 	 	 
	 

	 	 

	 	 

 

(Please print or Typewrite Name and Address

Including Postal Zip Code of Assignee)

 

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints

 

to transfer said Note on the books of the Company, with full power of substitution in the premises.

In connection with any transfer of the Note prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (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 Note is being transferred:

	 	o	 	To Developers Diversified Realty Corporation or any of its subsidiaries; or
	 
	 	o  	 	To a “qualified institutional buyer” in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
	 
	 	o	 	 Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as
amended; or
	 
	 	o	 	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.

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

A-11

 

Dated:                                                           

	 	 	 
	Signature Guaranteed
	 	 
	 
	 
	 

	 	 
	NOTICE: Signature must be guaranteed
by an eligible Guarantor Institution
(banks, stockbrokers, savings and
loan associations and credit unions)
with membership in an approved
signature guarantee medallion
program pursuant to Securities and
Exchange Commission Rule 17Ad-15.

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

A-12

 

CONVERSION NOTICE

     To convert this Note as provided in the Indenture, check the box:  o

     To convert only part of this Note, state the principal amount to be converted (must be $1,000
or an integral multiple of $1,000): $                    .

     If, in the event the Company delivers Common Shares and you want the stock certificate made
out in another Person’s name, fill in the form below:

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)

	 	 	 	 	 	 	 
	 

	 	 	 	 	Your Signature:
	 
	 	 	 	 
	Date:
	 	                                        
	 	 	 	 
	 	 	 	 	 	
(Sign exactly as your name appears on the
other side of this Note)
	 
	 	 	 	 
	1Signature guaranteed by:	 	 
	 
	 	 	 	 
	By:

	 	 	 	 	 

 

			
	1	 	Signature must be guaranteed by an eligible
Guarantor Institution (banks, stockbrokers, savings and loan associations and
credit unions) with membership in an approved signature guarantee medallion
program pursuant to Securities and Exchange Commission Rule 17Ad-15.

A-13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]