EXECUTION COPY Exhibit 4.1 =============================================================================== SIRIUS SATELLITE RADIO INC. AND THE BANK OF NEW YORK, as Trustee ------------------- THIRD SUPPLEMENTAL INDENTURE Dated as of October 13, 2004 TO Indenture Dated as of May 23, 2003 ------------------- 3 1/4% Convertible Notes due 2011 =============================================================================== 2 THIRD SUPPLEMENTAL INDENTURE, dated as of the 13th day of October 2004 (this "Third Supplemental Indenture"), between Sirius Satellite Radio Inc., a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), and The Bank of New York, a New York banking corporation, as trustee (the "Trustee"), under the Indenture, dated as of May 23, 2003, between the Company and the Trustee (the "Indenture"). The Company executed and delivered the Indenture to the Trustee to provide for the future issuance of its Securities, to be issued from time to time in series as might be determined by the Company under the Indenture, in an unlimited aggregate principal amount which may be authenticated and delivered thereunder as in the Indenture provided. Pursuant to the terms of the Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its 3 1/4% Convertible Notes due 2011 (the "Series 3 1/4% Notes"), the form of such Series 3 1/4% Notes and the terms, provisions and conditions thereof to be as provided in the Indenture and this Third Supplemental Indenture. The Company has requested the Trustee to join with it in the execution and delivery of this Third Supplemental Indenture. All requirements necessary to make this Third Supplemental Indenture a valid instrument, enforceable in accordance with its terms, and to make the Series 3 1/4% Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have been performed and fulfilled, and the execution and delivery of this Third Supplemental Indenture and the Series 3 1/4% Notes, have been in all respects duly authorized. NOW, THEREFORE, in consideration of the purchase and acceptance of the Series 3 1/4% Notes by the Holders thereof, and for the purpose of setting forth, as provided in the Indenture, the form of the Series 3 1/4% Notes and the terms, provisions and conditions thereof, the Company covenants and agrees with the Trustee as follows: ARTICLE I General Terms and Conditions of the Series 3 1/4% Notes SECTION 1.01. Title and Terms. There shall be and is hereby authorized a series of Securities designated the "3 1/4% Convertible Notes due 2011", limited in aggregate principal amount up to $230,000,000. The Series 3 1/4% Notes shall mature and the principal thereof shall be due and payable, together with all accrued and unpaid interest thereon, on October 15, 2011. The Series 3 1/4% Notes shall be convertible into shares of common stock, $0.001 par value, of the Company, as such shares shall be constituted at the time of conversion ("Common Stock"), in accordance with Article III 3 hereof. The Series 3 1/4% Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made part of this Indenture. The Series 3 1/4% Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Series 3 1/4% Note shall be dated the date of its authentication. The terms of the Series 3 1/4% Notes set forth in Exhibit A are part of the terms of this Third Supplemental Indenture. ARTICLE II The Securities SECTION 2.01. Form and Dating. (a) The Series 3 1/4% Notes will be offered and sold by the Company pursuant to the Terms Agreement (the "Terms Agreement") dated as of October 8, 2004 between the Company and Morgan Stanley & Co. Incorporated. The Series 3 1/4% Notes shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the "Global Securities") without interest coupons, with the global securities legend set forth in Exhibit A hereto, which shall be deposited on behalf of the purchasers of the Series 3 1/4% Notes represented thereby with the Securities Custodian and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in the Indenture. (b) Book-Entry Provisions. This Section 2.01(b) shall apply only to a Global Security deposited with or on behalf of the Depository. The Company shall execute and the Trustee shall, in accordance with this Section 2.01(b), authenticate and deliver initially one or more Global Securities that shall be (i) registered in the name of the Depository for such Global Security or Global Securities or the nominee of such Depository and (ii) delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by the Trustee as custodian for the Depository. Members of, or participants in, the Depository ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Security, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Security. 4 (c) Certificated Securities. Except as provided under the Indenture or this Third Supplemental Indenture, owners of beneficial interests in the Global Securities shall not be entitled to receive physical delivery of certificated Series 3 1/4% Notes. (d) Cancellation or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been redeemed, purchased or canceled, such Global Security shall be returned to the Depository for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged redeemed, purchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction. (e) No Obligation of the Trustee. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. SECTION 2.02. Right To Require Repurchase. In the event that a Fundamental Change (as defined in Section 2.05) shall occur, each Holder shall have the right, at the Holder's option, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, all of such Holder's Series 3 1/4% Notes, or any portion of the principal amount thereof that is an integral multiple of $1,000 (provided that no single Series 3 1/4% Note may be repurchased in part unless the portion 5 of the principal amount of such Series 3 1/4% Note to be outstanding after such repurchase is equal to $1,000 or an integral multiple of $1,000), on the date (the "Repurchase Date") that is 30 days after the date of the occurrence of a Fundamental Change or, if such 30th day is not a Business Day, the first Business Day thereafter, for cash at a purchase price equal to 100% of the principal amount to be repurchased plus interest accrued and unpaid thereon to, but excluding, the Repurchase Date (subject to the right of Holders of record on the Regular Record Date to receive interest on the relevant Interest Payment Date) (the "Repurchase Price"), plus the Make Whole Premium, if any (the form and amount of any such Make Whole Premium shall be determined pursuant to Article VII). If the Repurchase Date is between a Regular Record Date and the related Interest Payment Date, then the interest payable on such Interest Payment Date shall be paid to the Holder of record of the Series 3 1/4% Note on such Regular Record Date. SECTION 2.03. Notices; Method of Exercising Repurchase Right, Etc. (a) On or before the 10th day after the occurrence of a Fundamental Change, the Company shall mail a notice to all Holders (and to beneficial owners as required by applicable law) of Series 3 1/4% Notes (the "Company Notice") of the occurrence of the Fundamental Change and of the repurchase right set forth herein arising as a result thereof. If the Company gives such notice, the Company shall also deliver a copy of such notice to the Trustee. Each Company Notice shall include the form of a Fundamental Change Purchase Notice (as defined below) to be completed by the Holder and shall state: (1) the date of such Fundamental Change and, briefly, the events causing such Fundamental Change; (2) the date by which the Fundamental Change Purchase Notice must be delivered; (3) the Repurchase Date; (4) the Repurchase Price and the Make Whole Premium, if any; (5) a description of the procedure which a Holder must follow to exercise its repurchase right under this Section 2.03; (6) the procedures for withdrawing a Fundamental Change Purchase Notice by a Holder, including a form of notice of withdrawal; (7) the place or places where such Series 3 1/4% Notes are to be surrendered for payment of the Repurchase Price and the Make Whole Premium, if any; (8) briefly, the conversion rights of Holders of Series 3 1/4% Notes; (9) the Conversion Rate and any adjustments thereto, the date on which the right to convert the Series 3 1/4% Notes will terminate and the 6 places where such Series 3 1/4% Notes may be surrendered for conversion; and (10) that Holders who want to convert Series 3 1/4% Notes must satisfy the requirements set forth in the Series 3 1/4% Notes in order to convert the Series 3 1/4% Notes. No failure of the Company to give the foregoing notice or defect therein shall limit any Holder's right to exercise its repurchase right or affect the validity of the proceedings for the repurchase of Series 3 1/4% Notes. (b) To exercise its repurchase right, a Holder shall deliver to the Paying Agent or an office or agency maintained by the Company for such purpose in the Borough of Manhattan, The City of New York, prior to the close of business on or before the Repurchase Date written notice of the Holder's exercise of such right (the "Fundamental Change Purchase Notice"), which notice shall set forth (i) the name of the Holder, (ii) the principal amount of the Series 3 1/4% Notes to be repurchased (and, if any Series 3 1/4% Note is to be repurchased in part, the portion of the principal amount thereof to be repurchased and the name of the Person in which the portion thereof to remain outstanding after such repurchase is to be registered), (iii) a statement that an election to exercise the repurchase right is being made thereby pursuant to the applicable provisions of the Series 3 1/4% Notes, and (iv) the certificate numbers of the Series 3 1/4% Notes with respect to which the repurchase right is being exercised. (c) In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the Paying Agent the Repurchase Price in cash, and the Make Whole Premium, if any, for payment to the Holder on the Repurchase Date, payable with respect to the Series 3 1/4% Notes (or portion thereof) as to which the repurchase right has been exercised; provided, however, that such Series 3 1/4% Note for which a repurchase right shall have been exercised has been delivered to the Paying Agent at any time after the notice of exercise of a repurchase right shall have been given. Payment of the Repurchase Price and the Make Whole Premium, if any, for such Series 3 1/4% Note shall be made promptly following the later of the Business Day following the Repurchase Date and time of delivery of the Series 3 1/4% Note. If the Paying Agent holds money, securities or other property sufficient to pay the Repurchase Price and the Make Whole Premium, if any, on the Business Day following the Repurchase Date, then, immediately after the Repurchase Date, such Series 3 1/4% Note shall cease to be outstanding and interest will cease to accrue and will be deemed paid regardless of whether such Series 3 1/4% Note has been delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right of such Holder to receive the Repurchase Price and the Make Whole Premium, if any, upon delivery of such Series 3 1/4% Note). (d) On or prior to the Repurchase Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3 of the Indenture) an amount of money, securities or other property sufficient to pay the Repurchase Price and the Make 7 Whole Premium, if any, of the Series 3 1/4% Notes which are to be repaid on the Repurchase Date. (e) If any Series 3 1/4% Note (or portion thereof) surrendered for repurchase shall not be so paid on the Business Day following the Repurchase Date, the principal amount of such Series 3 1/4% Note (or portion thereof, as the case may be) shall, until paid, bear interest from the Repurchase Date at the rate of 3 1/4% per annum, and each Series 3 1/4% Note shall remain convertible into Common Stock in accordance with Article III herein until the principal of such Series 3 1/4% Note (or portion thereof, as the case may be) shall have been paid or duly provided for. (f) Any Series 3 1/4% Note which is to be repurchased only in part shall be surrendered to the Trustee (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Series 3 1/4% Note without service charge, a new Series 3 1/4% Note or Series 3 1/4% Notes, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the portion of the principal of the Series 3 1/4% Note so surrendered that was not repurchased. (g) Any Holder that has delivered to the Trustee a Fundamental Change Purchase Notice shall have the right to withdraw such notice at any time prior to the close of business on the Business Day immediately preceding the Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent prior to the close of business on such date. The notice of withdrawal shall state the principal amount and the certificate numbers of the Series 3 1/4% Notes as to which the withdrawal notice relates and the principal amount, if any, which remains subject to the notice of exercise of a repurchase right. A Series 3 1/4% Note in respect of which a Holder has exercised its option to require repurchase upon a Fundamental Change may thereafter be converted into Common Stock only if such Holder withdraws its notice in accordance with the preceding sentence. SECTION 2.04. Certain Definitions. For purposes of this Article II: (a) the term "beneficial owner" shall be determined in accordance with Rules l3d-3 and 13d-5 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except that a Person shall be deemed to have "beneficial ownership" of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time; and (b) the term "Person" shall include any syndicate or group which would be deemed to be a "Person" under Section 13(d)(3) of the Exchange Act. SECTION 2.05. Fundamental Change. A "Fundamental Change" shall mean any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or 8 otherwise) in connection with which 90% or more of the Common Stock outstanding is exchanged for, converted into, acquired for or constitutes solely the right to receive, consideration, less than 90% of which is common stock that: (a) is listed on, or immediately after the transaction or event will be listed on, a United States national securities exchange; or (b) is approved, or immediately after the transaction or event will be approved, for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices. ARTICLE III Conversion SECTION 3.01. Conversion Privilege. (a) A Holder of a Series 3 1/4% Note may convert such Series 3 1/4% Note into Common Stock at any time during the period stated in paragraph 7 of the Series 3 1/4% Notes. The number of shares of Common Stock issuable upon conversion of a Series 3 1/4% Note per $1,000 of Principal Amount thereof (the "Conversion Rate") shall be that set forth in paragraph 7 of the Series 3 1/4% Notes, subject to adjustment as herein set forth. A Holder may convert a portion of the Principal Amount of a Series 3 1/4% Note if the portion is $1,000 or an integral multiple of $1,000. Provisions of this Third Supplemental Indenture that apply to conversion of all of a Series 3 1/4% Note also apply to conversion of a portion of a Series 3 1/4% Note. (b) If a Holder converts its Series 3 1/4% Notes at any time beginning on the date on which the Company gives notice to the Holders of the occurrence of any Fundamental Change that occurred on or prior to July 15, 2011 (as set forth in Section 2.03(a) above), and ending at the close of business on the Repurchase Date corresponding to such Fundamental Change, such holder shall receive: (i) the Make Whole Premium, if any, which shall be in an amount and form determined as set forth in Article VII, and shall be paid on the Repurchase Date corresponding to such Fundamental Change; plus (ii) the number of shares of Common Stock into which such Holder's Series 3 1/4% Notes are convertible as set forth in paragraph 7 of the Series 3 1/4% Notes; plus (iii) accrued but unpaid interest on such Series 3 1/4% Notes, if any, to, but excluding the Conversion Date, which interest shall be payable in cash. (c) Notwithstanding any provision of this Third Supplemental Indenture, in no event will the total number of shares of Common Stock issuable upon conversion of 9 the Series 3 1/4% Notes (including any shares of Common Stock issued pursuant to Article VII) exceed in the aggregate 250.6265 per $1,000 principal amount of Series 3 1/4% Notes, such number subject to adjustment as herein set forth. SECTION 3.02. Conversion Procedure. To convert a Series 3 1/4% Note a Holder must satisfy the requirements contained in paragraph 7 of the Series 3 1/4% Notes. The date on which a Holder of Series 3 1/4% Notes satisfies all those requirements is the conversion date (the "Conversion Date"). As soon as practicable after the Conversion Date, the Company shall deliver to the Holder, through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion and cash in lieu of any fractional share determined pursuant to Section 3.03. The Person in whose name the certificate is registered shall be treated as a stockholder of record on and after the Conversion Date; provided, however, that no surrender of a Series 3 1/4% Note on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the Person or Persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such conversion shall be at the Conversion Rate in effect on the date that such Series 3 1/4% Note shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of a Series 3 1/4% Note, such Person shall no longer be a Holder of such Series 3 1/4% Note unless the Company defaults in the delivery of shares of Common Stock in respect of such conversion and such default continues for a period of 10 days. No payment or adjustment will be made for dividends or other distribution with respect to any Common Stock except as provided in this Article III. If the Holder converts more than one Series 3 1/4% Note at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the total Principal Amount of the Series 3 1/4% Notes converted. Upon surrender of a Series 3 1/4% Note that is converted in part, the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder, a new Series 3 1/4% Note in an authorized denomination equal in Principal Amount to the unconverted portion of the Series 3 1/4% Note surrendered. If the last day on which a Series 3 1/4% Note may be converted is a Legal Holiday in a place where the Conversion Agent is located, the Series 3 1/4% Note may be surrendered to the Conversion Agent on the next succeeding day that is not a Legal Holiday. SECTION 3.03. Fractional Shares. The Company will not issue a fractional share of Common Stock upon conversion of a Series 3 1/4% Note. Instead, the Company will deliver cash for the current market value of the fractional share. The current market value of a fractional share shall be determined to the nearest 1/10,000th of 10 a share by multiplying the last reported sale price (determined as set forth in the definition of Current Market Price), on the last Trading Day prior to the Conversion Date, of a full share by the fractional amount and rounding the product to the nearest whole cent. SECTION 3.04. Taxes on Conversion. The Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion of a Series 3 1/4% Note in accordance with Section 3.01. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax that will be due because the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulations. SECTION 3.05. Company To Provide Stock. The Company shall, prior to issuance of any Series 3 1/4% Notes hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Series 3 1/4% Notes into Common Stock. All shares of Common Stock delivered upon conversion of the Series 3 1/4% 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, other than any lien or claim created by the Holder. The Company shall endeavor promptly to comply with all Federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Series 3 1/4% Notes, if any, and will use its best efforts to list or cause to have quoted such shares of Common Stock on the principal national securities exchange or in the over-the-counter or other domestic market on which the Common Stock is then listed or quoted. SECTION 3.06. Adjustment for Change in Capital Stock. In case the Company shall (i) pay a dividend, or make a distribution, in shares of its Common Stock, on its Common Stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, or (iii) combine its outstanding Common Stock into a smaller number of shares, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the Holder of any Series 3 1/4% Note thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which it would have owned or have been entitled to receive after the happening of any of the events described above had such Series 3 1/4% Note been converted immediately prior to the happening of such event. If any dividend or distribution of the type described in clause (i) above is not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. An adjustment made pursuant to this Section 3.06 shall become effective immediately after the record 11 date, in the case of a dividend, and shall become effective immediately after the effective date, in the case of subdivision or combination. SECTION 3.07. Adjustment for Rights Issue. In case the Company shall issue rights or warrants to all holders of its Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Stock at a price per share less than the Current Market Price (as defined herein) per share of Common Stock at the record date for the determination of stockholders entitled to receive such rights or warrants, the Conversion Rate in effect immediately prior thereto shall be increased by multiplying the Conversion Rate in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately after the opening of business on the day following the record date for the determination of the stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights or warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such record date for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors of the Company; provided, however, that if rules of such automated quotation system or exchange permit the Company to defer the listing of such Common Stock until the first conversion of the Series 3 1/4% Notes into Common Stock in accordance with the provisions of this Third Supplemental Indenture, the conversion of the Series 3 1/4% Notes in accordance with the requirements of such automated quotation system or exchange at such time. SECTION 3.08. Adjustment for Other Distributions. (a) In case the Company shall distribute to all holders of its Common Stock (excluding any distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary) any shares of any class of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (including cash or securities) or rights or warrants to subscribe for or purchase any of its securities (excluding those referred to in Section 3.07) (any of the foregoing hereinafter in this Section 3.08(a) called the "Distributed Securities") then, in each case, the Conversion 12 Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below, and the denominator shall be the Current Market Price per share of the Common Stock on such record date less the fair market value on such record date (as determined by the Board of Directors of the Company, whose determination shall be conclusive, and described in a certificate filed with the Trustee; provided, however, that in the case of Distributed Securities that are capital stock of, or similar equity interests in, a subsidiary or other business unit of the Company that are listed or quoted on a national or regional exchange or market, the fair market value of such Distributed Securities shall be the average closing sales prices of such Distributed Securities for the ten Trading Days commencing on and including the fifth Trading Day after the date on which "ex-dividend trading" commences for such distribution on the Nasdaq National Market or such other national or regional exchange or market on which the Distributed Securities are then listed or quoted) of the Distributed Securities so distributed applicable to one share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (b) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash, then the Conversion Rate shall be increased so that it equals the rate determined by multiplying the Conversion Rate in effect on the record date with respect to the cash distribution by a fraction, (x) the numerator of which shall be the Current Market Price of a share of Common Stock on the record date, and (y) the denominator of which shall be the same price of a share of Common Stock on the record date less the amount of the distribution. For purposes of this Section 3.08(b) only, (A) "Current Market Price" shall mean the average of the daily Closing Sale Prices per share of Common Stock for the ten consecutive Trading Days ending on the earlier of the date of determination and the day before the "ex" date with respect to the distribution requiring such computation and (B) the term "ex" date, when used with respect to any distribution, means the date on which the Common Stock trades, regular way, on the relevant exchange or in the relevant market from which the Closing Sale Price was obtained without the right to receive such distribution. (c) In case a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer shall involve the payment by the Company or such Subsidiary of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors of the Company or, to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive, and described in a resolution of such Board of Directors or such duly authorized committee thereof, as the case may be, at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended)) that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to 13 stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (excluding any Purchased Shares) at the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator shall be the number of shares of Common Stock outstanding (including any Purchased Shares) at the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company or such Subsidiary is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company or such Subsidiary is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate, that would then be effect if such tender or exchange offer had not been made. (d) In case a tender or exchange offer made by a Person other than the Company or any Subsidiary of the Company for an amount that increases the offeror's ownership of Common Stock to more than 25% of the Common Stock outstanding shall expire and such tender or exchange offer shall involve the payment by such Person of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors of the Company or, to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive, and described in a resolution of such Board of Directors or such duly authorized committee thereof, as the case may be) at the Expiration Time that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, and in which, as of the Expiration Time the Board of Directors of the Company is not recommending rejection of the offer, the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all Purchased Shares and (y) the product of the number of shares of Common Stock outstanding (excluding any Purchased Shares) at the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator shall be the number of shares of Common Stock outstanding (including any Purchased Shares) at the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that such Person is obligated to purchase shares pursuant to any such tender or exchange offer, but such Person is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made. 14 Notwithstanding the foregoing, the adjustment described in this Section 3.08(d) shall not be made if, as of the Expiration Time, the prospectus relating to such tender offer discloses a plan or an intention to cause the Company to engage in any transaction described in Article VIII of the Indenture. SECTION 3.09. When Adjustment May Be Deferred. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article III shall be made to the nearest cent or to the nearest 1/l0,000th of a share, as the case may be. SECTION 3.10. When No Adjustment Required. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value or no par value of the Common Stock. To the extent the Series 3 1/4% Notes become convertible or exchangeable into cash, assets, property or securities (other than capital stock of the Company), no adjustment need be made thereafter as to the cash, assets, property or such securities. Interest will not accrue on the cash. SECTION 3.11. Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to the Holders of the Series 3 1/4% Notes a notice of such adjustment. The Company shall file with the Trustee and the Conversion Agent such notice. The notice shall, absent manifest error, be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such notice except to exhibit the same to any Holder desiring inspection thereof. SECTION 3.12. Voluntary Increase. The Company may make such increases in the Conversion Rate, in addition to those required by Sections 3.06, 3.07 and 3.08 of this Third Supplemental Indenture, as the Board of Directors of the Company considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. To the extent permitted by applicable law, the Company from time to time may increase the Conversion Rate by any amount for any period of time, so long as the increase is irrevocable during such period and the Board of Directors of the Company shall have made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive. Whenever the Conversion Rate is so increased, the Company shall mail to the Holders of the Series 3 1/4% Notes and file with the Trustee and the Conversion Agent a notice of the increase. The Company shall mail the notice at least two Trading Days before the date the increased Conversion Rate takes 15 effect. The notice shall state the increased Conversion Rate and the period it will be in effect. SECTION 3.13. Notice of Certain Transactions. If: (1) the Company makes any distribution or dividend that would require an adjustment in the Conversion Rate pursuant to Section 3.06, 3.07 or 3.08; (2) the Company takes any action that would require a supplemental indenture pursuant to Section 3.14; or (3) there is a liquidation or dissolution of the Company; then the Company shall mail or shall deliver to the Trustee and direct the Trustee to mail to Holders of the Series 3 1/4% Notes and file with the Trustee and the Conversion Agent a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. The Company shall file and mail the notice at least 15 days before such date. Failure to file or mail the notice or any defect in it shall not affect the validity of the transaction. SECTION 3.14. Effect of Reclassification, Consolidation, Merger or Sale. If any of the following events occur, namely (i) any reclassification of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation, merger or combination of the Company with another Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, or (iii) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture providing that each Series 3 1/4% Note shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance by a Holder of a number of shares of Common Stock issuable upon conversion of such Series 3 1/4% Notes immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The Company shall cause the Trustee to mail notice of the execution of such supplemental indenture to each Holder of Series 3 1/4% Notes at its address appearing on the Series 3 1/4% Note register provided for in Section 7.4 of the Indenture. 16 The above provisions of this Section shall similarly apply to successive reclassifications, consolidations, mergers, combinations and sales. If this Section applies, none of Sections 3.06, 3.07 or 3.08 shall apply. SECTION 3.15. Company Determination Final. Any determination that the Company, or the Board of Directors of the Company or a duly authorized committee thereof must make pursuant to Section 3.03, 3.06, 3.07, 3.08, 3.09, 3.10, 3.14 or 3.17 is conclusive. SECTION 3.16. Trustee's Adjustment Disclaimer. The Trustee has no duty to determine when an adjustment under this Article III should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 3.14 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for, and makes no representation as to, the validity or value of any securities or assets issued upon conversion of Series 3 1/4% Notes. The Trustee shall not be responsible for the Company's failure to comply with this Article III. Each Conversion Agent shall have the same protection under this Section 3.16 as the Trustee. SECTION 3.17. Simultaneous Adjustments. In the event that this Article III requires adjustments to the Conversion Rate under more than one of Sections 3.06, 3.07, 3.08(a) or 3.08(b), and the record dates for the distributions giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying, first, the provisions of Section 3.08(a); second, the provisions of Section 3.08(b); third, the provisions of Section 3.06; and fourth, the provisions of Section 3.07. SECTION 3.18. Successive Adjustments. After an adjustment to the Conversion Rate under this Article III, any subsequent event requiring an adjustment under this Article III shall cause an adjustment to the Conversion Rate as so adjusted. SECTION 3.19. General Considerations. Whenever successive adjustments to the Conversion Rate are called for pursuant to this Article III, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Article and to avoid unjust or inequitable results as determined in good faith by the Board of Directors of the Company. Each share of Common Stock issued upon conversion of Series 3 1/4% Notes pursuant to this Article III shall be entitled to receive the appropriate number of common stock or preferred stock purchase rights, as the case may be (the "Rights"), if any, that shares of Common Stock are entitled to receive and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any stockholder rights agreement adopted by the Company, as the same may be amended from time to time (in each case, a "Rights Agreement"). Provided that such Rights Agreement requires that each share of Common Stock issued upon conversion of Series 3 1/4% Notes at any time prior to the distribution of separate certificates representing the Rights be entitled to receive such Rights, then, 17 notwithstanding anything else to the contrary in this Article III, there shall not be any adjustment to the conversion privilege or Conversion Rate as a result of the issuance of the Rights, but an adjustment to the Conversion Rate shall be made pursuant to Section 3.08(b) (to the extent required thereby) upon the separation of the Rights from the Common Stock. SECTION 3.20. Definitions. "Current Market Price" per share of the Common Stock on any date of determination means the average of the last reported sale prices of the Common Stock for the ten consecutive Trading Days ending on and including such date of determination. The last reported sale price (the "Closing Sale Price") for any Trading Day shall be (i) if the Common Stock is then listed or admitted for trading on any national securities exchange, the last sale price, or the closing bid price if no sale occurred, of the Common Stock on such Trading Day on the principal securities exchange on which the Common Stock is listed, (ii) if the Common Stock is not listed or admitted for trading as described in clause (i), the last reported sale price of the Common Stock on such Trading Day on the Nasdaq National Market, or any similar system of automated dissemination of quotations of securities prices then in common use, if so quoted, or (iii) if not listed or quoted as described in clause (i) or (ii), the mean between the high bid and low asked quotations on such Trading Day for the Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for the Common Stock on at least five of the ten preceding Trading Days. If none of the conditions set forth above is met, the last reported sale price of the Common Stock on any Trading Day or the average of such last reported sale prices for any period shall be the fair market value of the Common Stock as determined by a member firm of the New York Stock Exchange selected by the Company. Notwithstanding the foregoing, the Current Market Price per share of Common Stock for the purpose of any adjustment to the Conversion Ratio pursuant to (x) Section 3.08(a) of this Third Supplemental Indenture in respect of Distributed Securities that are capital stock of, or similar equity interests in, a subsidiary or other business unit of the Company that are listed or quoted on a national or regional exchange or market, means the average closing sales prices of the Common Stock for the ten Trading Days commencing on and including the fifth trading day after the date on which "ex-dividend trading" commences for such distribution on the Nasdaq National Market or such other national or regional exchange or market on which the Common Stock are then listed or quoted and (y) Section 3.08(c) or Section 3.08(d) of this Third Supplemental Indenture means the Closing Sale Price on the date of determination. "Depository" means The Depository Trust Company, its nominees and their respective successors. "Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depository), or any successor Person thereto, and shall initially be the Trustee. 18 "Trading Day" means a day during which trading in securities generally occurs on the Nasdaq National Market or, if the applicable security is not quoted on the Nasdaq National Market, or if the applicable security is not listed on the Nasdaq National Market, on the principal other national or regional securities exchange or market on which the applicable security is then listed or traded. SECTION 3.21. Other Definitions.