Document:

exv10w2

 

EXHIBIT 10.2

NONQUALIFIED STOCK OPTION AGREEMENT

     This AGREEMENT (this “Agreement”) is made as of June 9, 2006 (the “Grant Date”) by and between
HealthMarkets, Inc., a Delaware corporation (the “Company”), and Steven J. Shulman (“Optionee”).
As a condition precedent to the Company’s grant of the Option (as defined in Section 2 of this
Agreement) to Optionee, Optionee is executing and delivering a counterpart of the Stockholders’
Agreement and thereby agrees to be bound by the terms thereof.

     1. Certain Definitions. Capitalized terms used, but not otherwise defined,
in this Agreement will have the meanings given to such terms in the Company’s 2006 Management
Option Plan (the “Plan”). As used in this Agreement:

          (a) “Call Right” has the meaning specified in Section 8 of this Agreement.

          (b) “Company” has the meaning specified in the introductory paragraph of this
Agreement.

          (c) “Compensation Committee” means the Executive Compensation Committee of the
Board.

          (d) “Disability” shall mean the Optionee’s incapacity due to physical or mental
illness to substantially perform his duties on a full-time basis for at least 26 consecutive weeks
or an aggregate period in excess of 26 weeks in any one fiscal year, and within 30 days after a
notice of termination is thereafter given by the Company, the Optionee shall not have returned to
the full-time performance of the Optionee’s duties; provided, however, if the Optionee shall not
agree with a determination to terminate his employment because of Disability, the question of the
Optionee’s Disability shall be subject to the certification of a qualified medical doctor selected
by the Company or its insurers and acceptable to the Optionee or, in the event of the Optionee’s
incapacity to accept a doctor, the Optionee’s legal representative.

          (e) “Fair Market Value” shall have the meaning specified in the Stockholders
Agreement.

          (f) “Grant Date” has the meaning specified in the introductory paragraph of this
Agreement.

          (g) “Option” has the meaning specified in Section 2 of this Agreement.

          (h) “Optionee” has the meaning specified in the introductory paragraph of this
Agreement.

          (i) “Option Price” has the meaning specified in Section 2 of this Agreement.

          (j) “Option Shares” has the meaning specified in Section 2 of this Agreement.

          (k) “Plan” has the meaning specified in Section 1 of this Agreement.

 

 

          (l) “Term Sheet” means the Stock Option Plan/Grant Term Sheet marked as “Exhibit B”
to the Term Sheet by and between the Company and Optionee dated as of June 2, 2006.

          (m) “Termination for Cause” means the termination by the Company or any Subsidiary
of Optionee’s service with the Company or any Subsidiary as a result of (i) the commission by
Optionee of an act of gross negligence, willful misconduct, fraud, embezzlement, misappropriation
or breach of fiduciary duty against the Company or any of its affiliates or Subsidiaries, or the
conviction of Optionee by a court of competent jurisdiction of, or a plea of guilty or nolo
contendere to, any felony or any crime involving moral turpitude or any crime which reasonably
could affect the reputation of the Company or the Optionee’s ability to perform the duties with the
Company or any Subsidiary, (ii) the commission by Optionee of a material breach of any of his
duties to the Company or any Subsidiary or his covenants in the Stockholders Agreement, which
breach has not been remedied within 30 days of the delivery to the Optionee by the Board of written
notice of the facts constituting the breach, and which breach if not cured, would have a material
adverse effect on the Company, or (iii) the habitual and willful neglect by Optionee of his
obligations or duties as a Director of the Company or any Subsidiary.

     2. Grant of Stock Option. Subject to and upon the terms, conditions, and
restrictions set forth in this Agreement and in the Plan, the Company hereby grants to Optionee an
option (the “Option”) to purchase 6,757 shares of the Company’s Class A-1 Common Stock (the “Option
Shares”), subject to adjustment as set forth herein. The Option may be exercised from time to time
in accordance with the terms of this Agreement. Subject to adjustment as hereinafter provided, all
of the Option Shares may be purchased pursuant to this Option at an exercise price of $37.00 per
share. The Option is intended to be a nonqualified stock option and shall not be treated as an
“incentive stock option” within the meaning of that term under Section 422 of the Code, or any
successor provision thereto.

     3. Term of Option. The term of the Option shall commence on the Grant Date
and, unless earlier terminated in accordance with Section 7 hereof, shall expire ten (10) years
from the Grant Date.

     4. Right to Exercise. Unless terminated as hereinafter provided, the Option
shall become exercisable only as follows:

          (a) The Option shall become exercisable with respect to 20% of the Option Shares on
each of the first five anniversaries of the Grant Date if Optionee remains in the continuous
service as a Director of the Company or any Subsidiary as of each such date.

          (b) Notwithstanding the foregoing, (i) the Option granted hereby shall become
immediately exercisable with respect to all of the Option Shares upon the occurrence of a Change of
Control if Optionee remains in the continuous service as a Director of the Company or any
Subsidiary until the date of the consummation of such Change of Control.

          (c) Optionee shall be entitled to the privileges of ownership with respect to Option
Shares purchased and delivered to Optionee upon the exercise of all or part of this Option.

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     5. Option Nontransferable. Optionee may not transfer or assign all or any
part of the Option other than by will or by the laws of descent and distribution. This Option may
be exercised, during the lifetime of Optionee, only by Optionee, or in the event of Optionee’s
legal incapacity, by Optionee’s guardian or legal representative acting on behalf of Optionee in a
fiduciary capacity under state law and court supervision.

     6. Notice of Exercise; Payment.

          (a) To the extent then exercisable, the Option may be exercised in whole or in part
by written notice to the Company stating the number of Option Shares for which the Option is being
exercised and the intended manner of payment. The date of such notice shall be the exercise date.
Payment equal to the aggregate Option Price of the Option Shares being purchased pursuant to an
exercise of the Option must be tendered in full with the notice of exercise to the Company in one
or a combination of the following methods as specified by Optionee in the notice of exercise: (i)
cash in the form of currency or check or by wire transfer as directed by the Company, (ii) solely
following an IPO or shares of the Company’s Class A-1 Common Stock otherwise being traded on an
established securities market, through the surrender to the Company of shares of Class A-1 Common
Stock owned by Optionee for at least six months as valued at their Fair Market Value on the date of
exercise or (iii) through such other form of consideration as is deemed acceptable by the Board.

          (b) As soon as practicable upon the Company’s receipt of Optionee’s notice of
exercise and payment, the Company shall direct the due issuance of the Option Shares so purchased.

          (c) As a further condition precedent to the exercise of this Option in whole or in
part, Optionee shall comply with all regulations and the requirements of any regulatory authority
having control of, or supervision over, the issuance of the shares of Class A-1 Common Stock and in
connection therewith shall execute any documents which the Board shall in its sole discretion deem
necessary or advisable.

     7. Termination of Agreement. The Agreement and the Option granted hereby
shall terminate automatically and without further notice on the earliest of the following dates:

          (a) after Optionee’s termination of service as a Director of the Company and its
Subsidiaries, the lesser of (i) ninety (90) calendar days following the Optionee’s date of
termination or (ii) the remaining term of the Option;

          (b) The date of Optionee’s termination of service as a Director of the Company and
its subsidiaries for Cause; or

          (c) Ten (10) years from the Grant Date.

     In the event that Optionee’s employment is terminated in the circumstances described in
Section 7(b) hereof, this Agreement shall terminate at the time of such termination notwithstanding
any other provision of this Agreement and Optionee’s option will cease to be exercisable to the
extent exercisable as of such termination and will not be or become exercisable after such
termination. Upon the Optionee’s termination of service as Director of the Company, and, if
applicable, its Subsidiaries, all Options which are not then exercisable shall immediately
terminate.

     8. Call Right. Upon termination of Optionee’s service as a Director for any
reason prior to an IPO, the Company will have the right to purchase (the “Call Right”) any Option
Shares that Optionee

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received pursuant to the terms and conditions set forth in Article VI Call Rights of the
Stockholders Agreement.

     9. Initial Public Offering. Option Shares acquired on exercise of any
Option will be subject to the terms and conditions of the Stockholders’ Agreement. The Company and
Optionee acknowledge that they will agree to provide the Company with the right to require Optionee
and other executives of the Company or any Subsidiary to waive any registration rights with regard
to such Option Shares upon an IPO, in which case the Company will implement an IPO bonus plan in
cash, stock or additional options to compensate for Optionee’s and the other executives’ loss of
liquidity.

     10. No Contract. Nothing contained in this Agreement shall (a) confer upon
Optionee any right to continue in service as a Director of the Company or any Subsidiary, or (b)
limit or affect in any manner the right of the Company’s stockholders to elect or remove Directors.

     11. Compliance with Law. The Company shall make reasonable efforts to
comply with all applicable federal and state securities laws; provided, however, that
notwithstanding any other provision of this Agreement, the Option shall not be exercisable if the
exercise thereof would result in a violation of any such law.

     12. Adjustments. The Board may make or provide for such substitution or
adjustments in the number of Option Shares covered by this Option, in the Option Price applicable
to such Option, and in the kind of shares covered thereby and/or such other equitable substitution
or adjustments as the Board may determine to prevent dilution or enlargement of Optionee’s rights
that otherwise would result from (a) any stock dividend, extraordinary cash-dividend, stock split,
combination of shares, recapitalization, or other change in the capital structure of the Company,
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reclassification,
reorganization, partial or complete liquidation, or other distribution of assets or issuance of
rights or warrants to purchase securities, or (c) any other corporate transaction or event having
an effect similar to any of the foregoing. Such substitutions and adjustments may include, without
limitation, canceling any and all Options in exchange for cash payments equal to the excess, if
any, of the value of the consideration paid to a shareholder of an Option Share over the Option
Price per share subject to such Option in connection with such an adjustment event.

     13. Relation to Other Benefits. Any economic or other benefit to Optionee
under this Agreement shall not be taken into account in determining any benefits to which Optionee
may be entitled under any plan maintained by the Company or any Subsidiary and shall not affect the
amount of any life insurance coverage available to any beneficiary under any life insurance plan,
if any, covering Optionee.

     14. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable hereto; provided,
however, that no amendment shall adversely affect the rights of Optionee under this Agreement
without Optionee’s written consent.

     15. Severability. If one or more of the provisions of this Agreement is
invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall
be deemed to be separable from the other provisions hereof, and the remaining provisions hereof
shall continue to be valid and fully enforceable.

     16. Relation to Plan. This Agreement is subject to the terms and conditions
of the Plan. In the event of any inconsistent provisions between this Agreement and the Plan, the
Plan shall govern. The Board acting pursuant to the Plan, as constituted from time to time, shall,
except as expressly provided otherwise herein, have the right to determine any questions which
arise in connection with the Option or its exercise.

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     17. Successors and Assigns. The provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee, and the successors and assigns of the Company.

     18. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware, without giving effect to the
principles of conflict of laws thereof and all parties, including their successors and assigns,
consent to the jurisdiction of the state and federal courts of Delaware.

     19. Prior Agreement. As of the Grant Date, this Agreement supersedes any
and all prior and/or contemporaneous agreements, either oral or in writing, between the parties
hereto, or between either or both of the parties hereto and the Company, with respect to the stock
option granted, including, without limitation, the stock option provisions of the Term Sheet. Each
party to this Agreement acknowledges that no representations, inducements, promises, or other
agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any
party, pertaining to the subject matter hereof, which are not embodied herein, and that no prior
and/or contemporaneous agreement, statement or promise pertaining to the subject matter hereof that
is not contained in this Agreement shall be valid or binding on either party.

     20. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required or permitted to be
given hereunder will be in writing and will be deemed to have been duly given when hand delivered
or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five
business days after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been sent by a nationally
recognized overnight courier service such as Federal Express, UPS, or Purolator, addressed to the
Company (to the attention of the Secretary of the Company) at its principal executive offices and
to Optionee at his principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

     21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which together will
constitute one and the same agreement.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its
duly authorized officer and Optionee has executed this Agreement, as of the day and year first
above written.

	 	 	 	 	 
	 	HealthMarkets, Inc.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	 	 
	 	 
 	 
	 	Steven J. Shulman 	 
	 	 	 
	 

-5-exv4w1

 

Exhibit 4.1

CUSIP NUMBER: 832110 AJ 9

ISIN NUMBER : US832110AJ93

$275,000,000

     [THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED
IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

     THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), SHALL ACT AS THE DEPOSITARY WITH
RESPECT TO THE NOTES UNTIL A SUCCESSOR SHALL BE APPOINTED BY THE COMPANY. UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR 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 THEREIN.]*

SMITH INTERNATIONAL, INC.

6% SENIOR NOTE DUE 2016

     SMITH INTERNATIONAL, INC., a Delaware corporation (the “Company”, which term includes any
successor corporation under the Indenture referred to on the reverse hereof), for value received,
hereby promises to pay to [Cede & Co.], or registered assigns, at the office or agency of the
Company in New York, New York, the principal sum of Two Hundred Seventy-Five Million Dollars on
December 15, 2016, in the coin or currency of the United States, and to pay interest, semi-annually
on June 15 and December 15 of each year, commencing December 15, 2006, on said principal sum at
said office or agency, in like coin or currency, at the rate per annum specified in the title of
this Note, from the June 15 or the December 15, as the case may be, next preceding the date of this
Note to which interest has been paid or duly provided for, unless the date hereof is a date to
which interest has been paid or duly provided for, in which case from the date of this Note, or
unless no interest has been paid or duly provided for on this Note, in which case from June 15,
2006, until payment of said principal sum has been made or duly provided for, and to pay interest
(including post-petition interest in any proceeding under any applicable bankruptcy laws) on
overdue installments of interest (without regard to any applicable grace period) and on overdue
principal and premium, if any, from time to time on demand at the rate per annum specified in the
title of this Note, in each case to the extent lawful; provided, however, that payment of interest
may be made at the option of the Company by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register unless this Note is a Global
Security, in which case all payments hereon shall be made by wire transfer. Notwithstanding the
foregoing, if the date hereof is after June 1 or December 1, as the case may be, and before the
following June 15 or December 15, this Note shall bear interest from such June 15 or December 15;
provided, however, that if the Company shall default in the payment of interest due on such June 15
or December 15, then this Note shall bear interest from the next preceding June 15 or December 15,
to which interest has been paid or duly provided for or, if no interest has been paid or duly
provided for on this Note, from June 15, 2006. The interest so payable on any June 15 or December
15 will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof,
be paid to the person in whose name this Note is registered at the close of business on June 1 or
December 1, as the case may be, next preceding such June 15 or December 15, whether or not such day
is a Business Day.

     Reference is made to the further provisions of this Note set forth on the reverse hereof. Such
further provisions shall for all purposes have the same effect as though fully set forth at this
place.

 

			
	*	 	Include only if this Note is issued in global form.

 

 

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

     IN WITNESS WHEREOF, Smith International, Inc. has caused this instrument to be signed manually
or by facsimile by its duly authorized officer and has caused its corporate seal to be affixed
hereunto or imprinted hereon.

Dated:

	 	 	 	 	 
	(SEAL) 	SMITH INTERNATIONAL, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  		 
	 	 	Title:  	
	 
	 

Attest:

_______________________________

Name:

Title:

 

 

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated pursuant to the within-mentioned
Indenture.

	 	 	 	 	 
	 	THE BANK OF NEW YORK, as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

Date of Authentication:

 

REVERSE OF NOTE

SMITH INTERNATIONAL, INC.

6% SENIOR NOTE DUE 2016

     This Note is one of a duly authorized issue of debentures, notes, 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 September 8,
1997 (herein called the “Indenture”), duly executed and delivered by the Company and The Bank of
New York, as Trustee (herein called the “Trustee”), to which Indenture, all indentures supplemental
thereto and all resolutions of the Board of Directors establishing the form or terms of any series
of Securities, reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the
Securities. 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 bear interest (if
any) at different rates, may be subject to different redemption provisions (if any), may be subject
to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the
Indenture provided. This Note is one of a series designated as the 6% Senior Notes due 2016 (herein
called “the Notes”) of the Company, limited initially in aggregate principal amount to
$275,000,000, with the Company having the option to issue additional Notes in an unlimited
aggregate principal amount from time to time after the original issuance of the Notes.

     Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal and, to the extent lawful, on overdue installments of
interest at the rate per annum borne by this Note. If a payment date is not a Business Day as
defined in the Indenture at a place of payment, payment may be made at that place on the next
succeeding day that is a Business Day, and no interest shall accrue for the intervening period.

     In case an Event of Default with respect to Notes, as defined in the Indenture, shall have
occurred and be continuing, the principal hereof and the interest accrued hereon, if any, may be
declared, and upon such declaration shall become, due and payable, in the manner, with the effect
and subject to the conditions provided in the Indenture.

     The Indenture contains provisions which provide that the Company and the Trustee may enter
into one or more supplemental indentures amending the Indenture and the Securities of any series
with the consent of the Holders of at least a majority in principal amount of the Outstanding
Securities of each series affected by such supplemental indenture, and the Holders of at least a
majority in principal amount of the Outstanding Securities of any series may waive (a) any past
default under the Indenture with respect to such series and its consequences and (b) either past or
future compliance by the Company with any provision of Sections 10.4 to 10.8 of the Indenture;
provided that, without the consent of each Holder of the Securities of each series affected
thereby, an amendment or waiver, including a waiver of past defaults, may not: (i) change the due
date of the principal of, or any installment of principal of or interest on, any Security, or
reduce the principal amount thereof or the rate of interest thereon or any premium
payable upon redemption thereof, or reduce the amount of the principal of any Security
that would be due and payable upon a declaration of the maturity thereof pursuant to the Indenture,
or change the place of payment where, or the coin or Currency in which, any Security or any premium
or the interest thereon is denominated or payable (or, in the case of certain Securities which
provide for less than the entire principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof pursuant to the Indenture, reduce the amount of principal
payable upon such a declaration of acceleration of the maturity thereof), or impair the right to
institute suit for the enforcement of any such payment on or after the due date thereof (or, in the
case of redemption, on or after the date of redemption), (ii) reduce the percentage of the
principal amount of the Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with the aforesaid provisions of the Indenture or defaults thereunder and
their consequences) provided for in the Indenture or (iii) modify any of the provisions of Section
5.13, Section 9.2 or Section 10.10 of the Indenture, except to increase any such percentage or to
provide that certain other provisions of the Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.

     It is also provided in the Indenture that, subject to certain conditions, the Holders of at
least a majority in principal amount of the Outstanding Securities of any series may waive an
existing default with respect to the Securities of such series and its consequences, except a
default in the payment of principal of (or premium, if any) or interest on any Security of such

 

series or in respect of a covenant or provision of the Indenture which cannot be modified or
amended without the consent of the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall
extend to any subsequent or other default or impair any right consequent thereto.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of and any premium and interest on this Note in the manner, at the place, at the
respective times, at the rate and in the coin or Currency herein prescribed.

     The Notes are issuable initially in fully registered form, without coupons, in denominations
of $1,000 and any whole multiple thereof at the office or agency of the Company in New York, New
York, and in the manner and subject to the limitations provided in the Indenture, but, without the
payment of any service charge, Notes may be exchanged for a like aggregate principal amount of
Notes of other authorized denominations.

     The Notes shall be redeemable, in whole or in part at any time, at the option of the Company
on any date (a “Redemption Date”), at a redemption price equal to accrued interest thereon to the
date of redemption plus the greater of (i) 100% of the principal amount of such notes or (ii) the
sum of the present values of the remaining scheduled payments of principal and interest thereon
(exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate
plus 16 basis points.

     “Comparable Treasury Issue” means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
a comparable maturity to the remaining term of such Notes.

     “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company.

     “Comparable Treasury Price” means, with respect to any Redemption Date, (A) the average of the
Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such quotations.

     “Reference Treasury Dealer Quotations"' means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York time on
the third business day preceding such Redemption Date.

     “Reference Treasury Dealer” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Calyon Securities (USA) Inc., Greenwich Capital Markets, Inc., J.P. Morgan Securities Inc. and
LaSalle Financial Services, Inc. or their affiliates which are primary U.S. Government securities
dealers, and their respective successors; provided, however, that if any of the foregoing or their
affiliates shall cease to be a primary U.S. Government securities dealer in The City of New York (a
“Primary Treasury Dealer’’), the Company shall substitute therefor another Primary Treasury
Dealer.

     “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolated yield (on a day count basis) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption
Date.

     Upon due presentment for registration of transfer of this Note at the office or agency of the
Company in New York, New York, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Indenture, without charge except for any tax or other governmental
charge imposed in connection therewith.

     The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the
registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of
receiving payment of, or on account of, the principal hereof and, subject to the provisions hereof,
interest hereon, and for all other purposes, and neither the Company nor the

 

 

Trustee nor any agent
of the Company or the Trustee shall be affected by any notice to the contrary.

     No recourse under or upon any obligation, covenant or agreement of the Company in the
Indenture, any indenture supplemental thereto or in any Note, or because of any indebtedness
evidenced thereby, shall be had against any incorporator, stockholder, officer or director, as
such, past, present, or future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof.

     This Note shall be governed by and construed in accordance with the internal laws of the State
of New York without regard to conflicts of laws principles thereof.

     Terms used herein which are defined in the Indenture shall have the respective meanings
assigned thereto in the Indenture.

 

 

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 TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

 

 

 

 

the Note and all rights thereunder, hereby irrevocably constituting and appointing such person
attorney to transfer such Note on the books of the Company, with full power of substitution in the
premises.

	 	 	 	 	 
	 	 	 
	Dated: 	 	 	 
	 	 	 
	Signature:	 	 
	 

			
	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
whatsoever.

Signature Guarantee: ___________________________________________________________________

SIGNATURE GUARANTEE

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

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