Document:

ex10-2.htm

    
      

    

    Exhibit 10.2

     

    NON-QUALIFIED
STOCK OPTION AWARD

    OF
HEALTH DISCOVERY CORPORATION

    

    THIS NON-QUALIFIED STOCK OPTION AWARD
(the “Award”) is made as of the Grant Date by HEALTH DISCOVERY CORPORATION, a
corporation organized under the laws of the State of Georgia (the “Company”) to
R. Scott Tobin (the “Optionee”).

    

    Upon and
subject to the Terms and Conditions attached hereto and incorporated herein by
reference, the Company hereby awards as of the Grant Date to Optionee a
non-qualified stock option (the “Option”), as described below, to purchase the
Option Shares. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Terms and Conditions.

    

    
      
        	 
      	
                A.

              	
                Grant
      Date:  April 29, 2009.

              
	 
      	 
      	 
      
	 
      	
                B.

              	
                Type
      of Option:  Non-Qualified Stock Option.

              
	 
      	 
      	 
      
	 
      	
                C.

              	
                Plan under which
      Option is granted:  This Award is not granted under or
      pursuant to any plan.

              
	 
      	 
      	 
      
	 
      	
                D.

              	
                Option
      Shares:  All or any part of 4,500,000 shares of the Company’s
      common stock (the “Common Stock”), subject to adjustment as provided in
      the attached Terms and Conditions.

              
	 
      	 
      	 
      
	 
      	
                E.

              	
                Exercise
      Price:  $0.08 per share, subject to adjustment as provided in
      the attached Terms and Conditions.  The Exercise Price is, in
      the judgment of the Board of Directors, not less than 100% of the Fair
      Market Value of a share of Common Stock on the Grant
  Date.

              
	 
      	 
      	 
      
	 
      	
                F.

              	
                Option
      Period: The Option may be exercised only during the Option Period which
      commences on the Grant Date and ends on the earliest of (a) the tenth
      (10th) anniversary of the Grant Date; (b) three (3) months following
      the date of the Optionee’s termination of employment with the Company and
      all Affiliates for any reason other than by the Company for Cause; or
      (c) the date of the Optionee’s termination of employment with the
      Company or an Affiliate for Cause; provided, however, that the Option may
      be exercised as to no more than the vested Option Shares determined
      pursuant to the Vesting Schedule.  Note that other restrictions
      to exercising the Option, as described in the attached Terms and
      Conditions, may apply.

              
	 
      	 
      	 
      
	 
      	
                G.

              	
                Vesting
      Schedule:  The Shares shall become vested in accordance
      with Schedule
  1.

              

      

    

    

    IN WITNESS WHEREOF, the parties have
executed and sealed this Award as of the Grant Date set forth
above.

    

    
      
        
          	 
      	
                  OPTIONEE

                	 
      	
                  HEALTH
      DISCOVERY CORPORATION

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	/s/
      R. Scott Tobin	 
      	
                  By:

                	/s/
      Stephen D. Barnhill	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                  Title:

                	
                  Director

                	 
      

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TERMS
AND CONDITIONS TO THE

    NON-QUALIFIED
STOCK OPTION AWARD

    OF
HEALTH DISCOVERY CORPORATION

    

    1.            
Exercise of
Option.  Subject to the provisions provided herein or in the
Award:

    

    (a)           The Option may be
exercised with respect to all or any portion of the vested Option Shares at any
time during the Option Period by the delivery to the Company, at its principal
place of business, of (i) a written notice of exercise in substantially the form
attached hereto as Exhibit
1, which
shall be actually delivered to the Company no earlier than thirty (30) days and
no later than ten (10) days prior to the date upon which Optionee desires to
exercise all or any portion of the Option; (ii) payment to the Company of the
Exercise Price multiplied
by the number
of shares being purchased (the “Purchase Price”) in the manner provided in
Subsection (b); and (iii) satisfaction of the withholding tax obligations
as provided in Section 2, if applicable; provided, however, that in the event
the Optionee is given notice of termination for Cause under any employment or
other agreement between the Optionee and the Company or any Affiliate or
otherwise, the Optionee’s ability to exercise the Option shall be suspended from
the giving of such notice until such time as the Optionee cures the
circumstance(s) constituting Cause, if expressly permitted by the applicable
employment or other agreement or otherwise, or, if there is no opportunity to
cure or no cure is timely effected, from and after the giving of such notice
through and including the effective date that the Optionee’s employment or other
service relationship is terminated for Cause.

    

    (b)           The
Purchase Price shall be paid in full upon the exercise of an Option and no
Option Shares shall be issued or delivered until full payment therefor has been
made. Payment of the Purchase Price for all Option Shares purchased pursuant to
the exercise of an Option shall be made:

    

    (i)           by
tendering cash or certified check in an amount equal to the Purchase
Price;

    

    (ii)          by
the delivery to the Company of a number of shares of Common Stock owned by the
Optionee prior to the date of the Option’s exercise, having a Fair Market Value
on the date of exercise either equal to the Purchase Price;

    

    (iii)         if
and when the Common Stock becomes traded by brokers, whether on a national
securities exchange or otherwise, by delivery of the Purchase Price in cash from
a broker, dealer or other “creditor” as defined by Regulation T issued by the
Board of Governors of the Federal Reserve System following delivery by the
Optionee to the Company of instructions in a form acceptable to the Company
regarding delivery to such broker, dealer or other creditor of that number of
Option Shares with respect to which the Option is exercised;

    

    (iv)         by
having the number of shares of Common Stock to be issued upon exercise of the
Option reduced by the number of whole shares of Common Stock having a Fair
Market Value equal to the Purchase Price; or

    

    (v)          in
any combination of the foregoing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Upon
acceptance of such notice and receipt of payment in full of the Purchase Price
and, if applicable, all required tax withholdings, the Company shall cause to be
issued a certificate representing the Option Shares purchased.

    

    2.            
Withholding.  To
the extent necessary, the Optionee must satisfy his federal, state, and local,
if any, withholding taxes imposed by reason of the exercise of the Option either
by paying to the Company the full amount of the withholding obligation in cash;
by electing, irrevocably and in writing in substantially the form attached
hereto as Exhibit
2 (a “Withholding Election”), to have the actual number of shares of
Common Stock issuable upon exercise reduced by the smallest number of whole
shares of Common Stock which, when multiplied by the Fair Market Value of the
Common Stock as of the date the Option is exercised, is sufficient to satisfy
the amount of the withholding tax; or by any combination of the
above.  The Optionee may make a Withholding Election only if the
following conditions are met:

    

    (a)           the
Withholding Election is made on or prior to the date on which the amount of tax
required to be withheld is determined by executing and delivering to the Company
a properly completed Withholding Election; and

    

    (b)           any
Withholding Election made will be irrevocable; however, the Board of Directors
may, in its sole discretion, disapprove and give no effect to any Withholding
Election.

    

    3.            
Rights as
Shareholder.  Until the stock certificates reflecting the
Option Shares accruing to the Optionee upon exercise of the Option are issued to
the Optionee, the Optionee shall have no rights as a shareholder with respect to
such Option Shares.  The Company shall make no adjustment for any
dividends or distribu­tions or other rights on or with respect to Option
Shares for which the record date is prior to the issuance of that stock
certificate, except as this Award otherwise provides.

    

    4.            
Restriction on
Transfer of Option and Option Shares.

    

    (a)           The
Option evidenced hereby is nontransferable other than pursuant to Section 4(b)
below and by will or the laws of descent and distribution.  The Option
shall be exercisable during the lifetime of the Optionee or the Permitted
Transferee (as defined below in Section 4(b)), if applicable, only by the
Optionee or such Permitted Transferee, if applicable (or in the event of the his
Disability, if applicable, by his personal representative) and after his death,
only by his legatee or the executor of his estate.  In the event the
Permitted Transferee is an entity, the Option shall be exercisable during the
Option Period only by an authorized representative of the Permitted Transferee,
such as the grantor or trustee of a trust or the general partner of a family
partnership, as applicable.

    

    (b)           The
Optionee may transfer the Option to one or more members of his immediate family,
provided any such family member has attained age 21 on or before the intended
date of transfer, to a trust established solely for the benefit of the
Optionee’s immediate family, or to a partnership, provided the only partners in
the partnership on the intended date of transfer are members of the Optionee’s
immediate family (a “Permitted Transferee”).  Solely in accordance
with the following, for purposes of this Section 4(b), the term “immediate
family” means only individuals with one of the following relationships to the
Optionee: spouse, children, stepchildren, grandchildren, parents, stepparents,
grandparents, siblings, nieces, nephews and in-laws.

    

    (c)           In
the event the Option is transferred by the Optionee to a Permissible Transferee,
the Permissible Transferee shall be prohibited from making any subsequent
transfer other than, to the extent applicable, by will or the laws of descent
and distribution.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (d)           Notwithstanding
the foregoing, the Company shall not be obligated to give effect to any transfer
of the Option to a Permitted Transferee unless the Optionee has provided the
Company with advance written notice of the transfer.

    

    5.            
Changes in
Capitalization.

    

    (a)           The
number of Option Shares and the Exercise Price shall be proportionately adjusted
for nonreciprocal transactions between the Company and the holders of capital
stock of the Company that cause the per share value of the shares of Common
Stock underlying the Option to change, such as a stock dividend, stock split,
spinoff, rights offering, or recapitalization through a large, nonrecurring cash
dividend (each, an “Equity Restructuring”).

    

    
      (b)    In the
event of a merger, consolidation, extraordinary dividend, sale of substantially
all of the Company’s assets or other material change in the capital structure of
the Company, or a tender offer for shares of Common Stock that in each case is
not an Equity Restructuring, the Board of Directors or its designee shall take
such action to make such adjustments in the Option or the terms of this Award as
the Board of Directors or its designee, in its sole discretion, determines in
good faith is necessary or appropriate, including, without limitation, adjusting
the number and class of securities subject to the Option, with a corresponding
adjustment in the Exercise Price, substituting a new option to replace the
Option, accelerating the termination of the Option Period or terminating the
Option in consideration of a cash payment to the Optionee in an amount equal to
the excess of the then Fair Market Value of the Option Shares over the aggregate
Exercise Price of the Option Shares. Any determination made by the Board of
Directors or its designee pursuant to this Section 5(b) will be final and
binding on the Optionee.  Any action taken by the Board of Directors
or its designee need not treat all optionees equally.

    

    

    (c)           The
existence of the Option granted pursuant to this Award shall not affect in any
way the right or power of the Company to make or authorize any adjustment,
reclassification, reorganization or other change in its capital or business
structure, any merger or consolidation of the Company, any issue of debt or
equity securities having preferences or priorities as to the Common Stock or the
rights thereof, the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its business or assets, or any other corporate
act or proceeding. Any adjustment pursuant to this Section may provide, in
the Board of Directors’ discretion, for the elimination without payment therefor
of any fractional shares that might otherwise become subject to any
Option.

    

    6.           Special
Limitation on Exercise.  No
purported exercise of the Option shall be effective without the approval of the
Board of Directors, which may be withheld to the extent that the exercise,
either individually or in the aggregate together with the exercise of other
previously exercised stock options and/or offers and sales pursuant to any prior
or contemplated offering of securities, would, in the sole and absolute judgment
of the Board of Directors, require the filing of a registration statement with
the United States Securities and Exchange Commission or with the securities
commission of any state.  If a registration statement is not in effect
under the Securities Act of 1933 or any applicable state securities law with
respect to shares of Common Stock purchasable or otherwise deliverable under the
Option, the Optionee (a) shall deliver to the Company, prior to the exercise of
the Option or as a condition to the delivery of Common Stock pursuant to the
exercise of an Option, such information, representations and warranties as the
Company may reasonably request in order for the Company to be able to satisfy
itself that the Option Shares are being acquired in accordance with the terms of
an applicable exemption from the securities registration requirements of
applicable federal and state securities laws and (b) shall agree that the shares
of Common Stock so acquired will not be disposed of except pursuant to an
effective registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such requirement under
the Securities Act of 1933 and any applicable state securities law.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    7.            
Legend on Stock
Certificates.  Certificates evidencing the Option Shares, to the
extent appropriate at the time, shall have noted conspicuously on the
certificates a legend intended to give all persons full notice of the existence
of the conditions, restrictions, rights and obligations set forth in this
Award.

    

    8.            
Governing
Laws.  This Award and the Terms and Conditions shall be construed,
administered and enforced according to the laws of the State of Georgia;
provided, however, the Option may not be exercised except, in the reasonable
judgment of the Board of Directors, in compliance with exemptions under
applicable state securities laws of the state in which the Optionee resides,
and/or any other applicable securities laws.

    

    9.            
Successors.  This
Award and the Terms and Conditions shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and permitted assigns of
the parties.

    

    10.           Notice.  Except
as otherwise specified herein, all notices and other communications under this
Award shall be in writing and shall be deemed to have been given if personally
delivered or if sent by registered or certified United States mail, return
receipt requested, postage prepaid, addressed to the proposed recipient at the
last known address of the recipient.  Any party may designate any
other address to which notices shall be sent by giving notice of the address to
the other parties in the same manner as provided herein.

    

    11.           Severability.  In
the event that any one or more of the provisions or portion thereof contained in
this Award shall for any reason be held to be invalid, illegal or unenforceable
in any respect, the same shall not invalidate or otherwise affect any other
provisions of this Award, and this Award shall be construed as if the invalid,
illegal or unenforceable provision or portion thereof had never been contained
herein.

    

    12.           Entire
Agreement.  This
Award and these Terms and Conditions express the entire understanding and
agreement of the parties with respect to the subject matter hereof and supersede
all proposals or understandings, other communications between the parties,
whether written or oral, relating to such subject matter.  If there
are any conflicts between the terms of this Award and these Terms and
Conditions, on the one hand, and the Employment Agreement with the Optionee
dated April 2, 2009, on the other hand, the terms of this Award and the Terms
and Conditions shall control.  The Optionee hereby agrees to accept as
binding, conclusive and final all decisions and interpretations of the Board of
Directors regarding any question relating to the terms of this
Award.  This Award may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument.

    

    13.           Violation.  Except
as provided in Section 4, any transfer, pledge, sale, assignment, or
hypothecation of the Option or any portion thereof shall be a violation of the
terms of this Award and these Terms and Conditions and shall be void and without
effect.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    14.           Headings.  Section
headings used herein are for convenience of reference only and shall not be
considered in construing this Award or these Terms and Conditions.

    

    15.           Specific
Performance.  In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of this Award and
these Terms and Conditions, the party or parties who are thereby aggrieved shall
have the right to specific performance and injunction in addition to any and all
other rights and remedies at law or in equity, and all such rights and remedies
shall be cumulative.

    

    16.           No Right to Continued
Retention.  The award of Option Shares hereunder shall not be
construed as giving the Optionee the right to continued employment by the
Company or any Affiliate or the continued use of the Optionee’s services by the
Company or any Affiliate.

    

    17.           Definitions.

    

    (a)           “Affiliate” means
(i) any subsidiary or parent of the Company; (ii) an entity that
directly or through one or more intermediaries controls, is controlled by, or is
under common control with the Company, as determined by the Company; or
(iii) any entity in which the Company has such a significant interest that
the Company determines it should be deemed an “Affiliate,” as determined in the
sole discretion of the Company.

    

    (b)           “Board of Directors”
means the board of directors of the Company.

    

    (c)           “Cause” means “Cause”
as defined in the employment or other services agreement between the Optionee
and the Company or an Affiliate that is in effect at the date that an action
constituting “Cause” occurs, or if no such definition or agreement exists,
“Cause” means (i) failure (other than such failure resulting from his
incapacity during physical or mental illness) by the Optionee to substantially
perform his duties with the Company or an Affiliate; (ii) conduct by the
Optionee that amounts to fraud, dishonesty, disloyalty or willful misconduct in
the performance of the Optionee’s duties and responsibilities; (iii) the
Optionee being arrested for, charged in relation to (by criminal information,
indictment or otherwise), or convicted of a crime involving breach of trust or
moral turpitude or any felony; (iv) conduct by the Optionee that amounts to
gross and willful insubordination or inattention to his duties and
responsibilities; or (v) a breach or violation of the terms of any
agreement to which Optionee and the Company or an Affiliate are
party.

    

    (d)           “Change in Control”
means the consummation of (i) a merger, consolidation, share exchange,
combination, reorganization, or like transaction involving the Company in which
the shareholders of the Company immediately prior to such transaction do not own
at least fifty percent (50%) of the value or voting power of the issued and
outstanding capital stock of the Company or its successor immediately after such
transaction, or (ii) the sale or transfer (other than as security for the
Company's obligations) of all or substantially all of the assets of the Company
in any transaction or a series of related transactions, in which the Company,
any corporation controlled by the Company, or the shareholders of the Company
immediately prior to the transaction do not own at least fifty percent (50%) of
the value or voting power of the issued and outstanding equity securities of the
acquirer immediately after the transaction.

     

    (e)           “Fair Market Value”
means the value of a share of Common Stock as of a date, determined as
follows:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (i)           if
the shares of Common Stock are traded on any national securities exchange or
through any nationally recognized quotation or market system (including, without
limitation Nasdaq), Fair Market Value shall mean the closing price at which
Common Stock shall have been sold on the trading day immediately preceding such
date, as reported by any such exchange or system selected by the Board of
Directors on or through which the shares of Common Stock are then
traded;

    

    (ii)          if
the shares of Common Stock are not actively traded on any such exchange or
through any such system, Fair Market Value shall mean the closing price for the
Common Stock for the most recent trading day immediately preceding such date, as
reported by such exchange or system; or

    

    (iii)         if
the shares of Common Stock are not actively traded or reported on any exchange
or through any such system and have not experienced a recent trading day, Fair
Market Value shall mean the fair market value of a share of Common Stock as
determined by the Board of Directors taking into account such facts and
circumstances deemed to be material by the Board of Directors to the value of
the Common Stock in the hands of the Optionee.

    

    Notwithstanding the foregoing, for
purposes of Subsections (i), (ii), or (iii) above, the Board of Directors may
use the closing price as of the indicated date, the average price or value as of
the indicated date or for a period certain ending on the indicated date, the
price determined at the time the transaction is processed, the tender offer
price for shares of Common Stock, or any other method which the Board of
Directors determines is reasonably indicative of fair market value.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
1

    

    NOTICE
OF EXERCISE OF

    STOCK
OPTION TO PURCHASE

    COMMON
STOCK OF

    HEALTH
DISCOVERY CORPORATION

    

    
      
        
          
            
              
                
                  
                    
                      	 
      	
                              Name:

                            	 
      	 
      
	 
      	
                              Address:

                            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              Date:

                            	 
      	 
      

                    

                  

                

              

            

          

        

      

    

    

    Health
Discovery Corporation

    2 East
Bryan Street, Suite 601

    Savannah,
GA  31401

    Attn:  Secretary

    

    Re:           Exercise
of Non-Qualified Stock Option

    

    Dear Sir
or Madam:

    

    Subject to acceptance hereof in writing
by Health Discovery Corporation (the “Company”), pursuant to the provisions of
the terms and conditions of the Non-Qualified Stock Option Award (the “Award”),
I hereby give at least ten days but no more than thirty days prior notice of my
election to exercise options granted to me to purchase ______________ shares of
common stock of the Company (“Common Stock”) under the Award dated as of
____________.  The purchase shall take place as of ___________________
(the “Exercise Date”).

    

    On or before the Exercise Date, I will
pay the applicable purchase price as follows:

    

    
      
        	 
      	
                [  ]

              	
                by
      delivery of cash or a certified check for $___________ for the full
      purchase price payable to the order of Health Discovery
      Corporation;

              
	 
      	 
      	 
      
	 
      	
                [  ]

              	
                by
      having the number of shares of Common Stock to be issued upon exercise of
      the Option reduced by the number of whole shares of Common Stock having a
      Fair Market Value equal to the purchase price;

              
	 
      	 
      	 
      
	 
      	
                [  ]

              	
                by
      the delivery to the Company of a number of shares of Common Stock owned by
      the Optionee prior to the date of the Option’s exercise, having a Fair
      Market Value on the date of exercise either equal to the purchase
      price;

              
	 
      	 
      	 
      
	 
      	
                [  ]

              	
                by
      delivery of the purchase price by _________________________, a broker,
      dealer or other “creditor” as defined by Regulation T issued by the
      Board of Governors of the Federal Reserve System.  I hereby
      authorize the Company to issue a stock certificate for the number of
      shares indicated above in the name of said broker, dealer or other
      creditor or its nominee pursuant to instructions received by the Company
      and to deliver said stock certificate directly to that broker, dealer or
      other creditor (or to such other party specified in the instructions
      received by the Company from the broker, dealer or other creditor) upon
      receipt of the purchase price.  Note:  This
      choice is available only if and when the Common Stock becomes traded by
      brokers.

              

      

    

     

    
      
        
        

      

      
        Exhibit 1
- Page 1 of 3

        
          

        

      

      
        
        

      

    

     

    I
understand that I am not permitted to exercise the Option if I have been given
notice that my employment or service with the Company or an Affiliate will be
terminated for Cause.  I understand that if my ability to exercise is
suspended in the manner provided for in the foregoing sentence, that my ability
to exercise may only be reinstated in the event that I cure the circumstances
specified in such notice that was the basis for my termination for Cause and
only if such ability to cure is expressly provided for in the applicable
employment or other agreement or otherwise.

    

    The required federal, state and local
income tax withholding obligations, if any, on the exercise of the Award shall
also be paid on or before the Exercise Date in the manner provided in the
Withholding Election previously tendered or to be tendered to the Company no
later than the Exercise Date.

    

    As soon as the stock certificate is
registered in my name, please deliver it to me at the above
address.

    

    If the Common Stock being acquired is
not registered for issuance to and resale by the Optionee pursuant to an
effective registration statement on Form S-8 (or successor form) filed under the
Securities Act of 1933, as amended (the “1933 Act”), I hereby represent,
warrant, covenant, and agree with the Company as follows:

    

    The
shares of the Common Stock being acquired by me will be acquired for my own
account without the participation of any other person, with the intent of
holding the Common Stock for investment and without the intent of participating,
directly or indirectly, in a distribution of the Common Stock and not with a
view to, or for resale in connection with any distribution of the Common Stock,
nor am I aware of the existence of any distribution of the Common
Stock;

    

    I am not
acquiring the Common Stock based upon any representation, oral or written, by
any person with respect to the future value of, or income from, the Common Stock
but rather upon an independent examination and judgment as to the prospects of
the Company;

    

    The
Common Stock was not offered to me by means of any publicly disseminated
advertisements or sales literature, nor am I aware of any offers made to other
persons by such means;

    

    I am able
to bear the economic risks of the investment in the Common Stock, including the
risk of a complete loss of my investment therein;

    

    I
understand and agree that the Common Stock will be issued and sold to me without
registration under any state law relating to the registration of securities for
sale, and will be issued and sold in reliance on the exemptions from
registration under the 1933 Act, provided by Sections 3(b) and/or 4(2) thereof
and the rules and regulations promulgated thereunder;

    

    The
Common Stock cannot be offered for sale, sold or transferred by me other than
pursuant to: (A) an effective registration under the 1933 Act or in a
transaction otherwise in compliance with the 1933 Act; and (B) evidence
satisfactory to the Company of compliance with the applicable securities laws of
other jurisdictions.  The Company shall be entitled to rely upon an
opinion of counsel satisfactory to it with respect to compliance with the above
laws;

    

    The
Company will be under no obligation to register the Common Stock or to comply
with any exemption available for sale of the Common Stock without registration
or filing, and the information or conditions necessary to permit routine sales
of securities of the Company under Rule 144 under the 1933 Act may not now be
available and no assurance has been given that it or they will become
available.  The Company is under no obligation to act in any manner so
as to make Rule 144 available with respect to the Common Stock;

     

    
      
        
        

      

      
        Exhibit 1
- Page 2 of 3

        
          

        

      

      
        
        

      

    

     

    I have
and have had complete access to and the opportunity to review and make copies of
all material documents related to the business of the Company, including, but
not limited to, contracts, financial statements, tax returns, leases, deeds and
other books and records.  I have examined such of these documents as I
wished and am familiar with the business and affairs of the
Company.  I realize that the purchase of the Common Stock is a
speculative investment and that any possible profit therefrom is
uncertain;

    

    I have
had the opportunity to ask questions of and receive answers from the Company and
any person acting on its behalf and to obtain all material information
reasonably available with respect to the Company and its affairs.  I
have received all information and data with respect to the Company which I have
requested and which I have deemed relevant in connection with the evaluation of
the merits and risks of my investment in the Company;

    

    I have
such knowledge and experience in financial and business matters that I am
capable of evaluating the merits and risks of the purchase of the Common Stock
hereunder and I am able to bear the economic risk of such purchase;
and

    

    The
agreements, representations, warranties and covenants made by me herein extend
to and apply to all of the Common Stock of the Company issued to me pursuant to
this Award.  Acceptance by me of the certificate representing such
Common Stock shall constitute a confirmation by me that all such agreements,
representa­tions, warranties and covenants made herein shall be true and
correct at that time.

    

    I understand that the certificates
representing the shares being purchased by me in accordance with this notice
shall bear a legend referring to the foregoing covenants, representations and
warranties and restrictions on transfer, and I agree that a legend to that
effect may be placed on any certificate which may be issued to me as a
substitute for the certificates being acquired by me in accordance with this
notice.  I also understand that capitalized terms used, but not
defined herein, shall have the meaning ascribed to them in the
Award.

    

    
      
        
          
            
              
                	 
      	Very
      truly yours,	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                        Name:

                      	 
      	 
      

              

            

          

        

      

    

    

    AGREED TO
AND ACCEPTED

    HEALTH
DISCOVERY CORPORATION

    

    
      
        
          
            
              
                	
                        By:

                      	 
      	 
      
	 
      	 
      	 
      
	
                        Name:

                      	 
      	 
      
	 
      	 
      	 
      
	
                        Title:

                      	 
      	 
      
	 
      	 
      	 
      
	
                        Date:

                      	 
      	 
      

              

            

          

        

      

    

    

    
      
        
        

      

      
        Exhibit 1
- Page 3 of 3

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
2

    

    NOTICE
OF WITHHOLDING ELECTION

    FOR
EXERCISE OF STOCK OPTION

    TO
PURCHASE

    COMMON
STOCK OF

    HEALTH
DISCOVERY CORPORATION

    
 

    
      
        
          
            
              
                
                  	 
      	
                          Name:

                        	 
      	 
      
	 
      	
                          Address:

                        	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          Date:

                        	 
      	 
      

                

              

            

          

        

      

    

     

    Health
Discovery Corporation

    2 East
Bryan Street, Suite 601

    Savannah,
GA  31401

    Attn:  Secretary

    

    Re:           Withholding
Election

    

    Dear Sir
or Madam:

    

    This election relates to the Option
identified in Paragraph 3 below.  I hereby certify that:

    

    (1)          
 My correct name and social security number and my current address are set
forth at the end of this document.

    

    (2)          
 I am (check one, whichever is applicable).

    

    
      
        	 
      	 
      	
                [  ]

              	
                the
      original recipient of the Option.

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                [  ]

              	
                the
      legal representative of the estate of the original recipient of the
      Option.

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                [  ]

              	
                a
      legatee of the original recipient of the Option.

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                [  ]

              	
                the
      legal guardian of the original recipient of the
  Option.

              

      

    

    

    (3)           The Option pursuant to which this
election relates was issued under the Non-Qualified Stock Option
Award (the “Award”) dated as of ____________ in the name of _____________________
for the purchase of a total of __________ shares of Common
Stock.  This election relates to _____ ________ shares of Common Stock
issuable upon exercise of the Option (the “Stock”), provided that the numbers
set forth above shall be deemed changed as appropriate to reflect the applicable
provisions in the Award.

    

    (4)           In
connection with any exercise of the Option with respect to Stock, I hereby elect
to have certain shares issuable pursuant to the exercise withheld by the Company
for the purpose of having the value of the shares applied to pay federal, state
and local, if any, taxes arising from the exercise.

     

    
      
        
        

      

      
        Exhibit 2
- Page 1 of 2

        
          

        

      

      
        
        

      

    

     

    (5)           The
shares to be withheld shall have, as of the tax date applicable to the exercise,
a fair market value equal to the minimum statutory tax withholding requirement
under federal, state and local law in connection with the exercise.

    

    (6)           This
Withholding Election is made no later than the tax date and is otherwise timely
made pursuant to the Award.

    

    (7)           I
understand that this Withholding Election may not be revised, amended or revoked
by me.

    

    (8)           I
further understand that the Company shall withhold from the Common Stock a whole
number of shares of Stock having the value specified in Paragraph 4
above.

    

    (9)           I
have read and understand the provisions of the Award that relate to the making
of a Withholding Election and I have no reason to believe that any of the
conditions therein to the making of this Withholding Election have not been
met.  Capitalized terms used in this Notice of Withholding Election
shall have the meanings given to them in the Award.

     

    

    

    
      
        
          	
                  Dated:

                	
                   
      

                	 
      

        

      

    

    

    

    
      
        
          
            
              
                
                  	 
      	 
      	 
      
	 
      	
                          Signature

                        	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                          Name
      (printed)

                        	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                          Street
      Address

                        	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                          City,
      State, Zip Code

                        	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                          Social
      Security Number

                        	 
      

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        Exhibit 2
- Page 2 of 2

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
1

    

    VESTING
SCHEDULE

    

    The
Option Shares shall vest in the following increments if the service conditions,
indicated by applicable Vesting Date, are satisfied, as provided
below:

    

    
      
        
          	
                  Vesting Date

                	 
      	
                  Number of Options

                
	
                  April
      10, 2009

                	 
      	
                  1,000,000

                
	
                  January
      1, 2010

                	 
      	
                  1,500,000

                
	
                  September
      15, 2010

                	 
      	
                  2,000,000

                

        

      

    

    

    Each
portion of the option identified under the “Number of Options” column above
shall vest only if and when (1) the Executive has been continuously employed by
the Company through the applicable Vesting Date, and (2) with respect to the
options that have Vesting Dates of January 1 and September 15, 2010, the Option
Shares shall not vest until either the Company has (i) cash on hand in excess of
$800,000, or (ii) a positive, trailing 90-day EBITDA, or (iii) raised an
additional $1,000,000 in capital from new investments, excluding any proceeds
from the exercise of any warrants or options.

    

    Notwithstanding
the foregoing, in the event of either (i) a termination of the Optionee by the
Company without Cause or by the Optionee for Good Reason (as defined in the
employment agreement between the Optionee and the Company), or (ii) a Change in
Control occurs while the Optionee is employed by the Company, the Optionee shall
immediately become fully vested in all of the Option Shares (as adjusted for
changes in capitalization as provided in the attached Terms and Conditions),
provided that upon a Change of Control the per share consideration received by
shareholders of the Company on account of the Change in Control is equal to or
greater than $0.10 per share of Common Stock (as adjusted for changes in
capitalization as provided in the attached Terms and Conditions).

     

     

     

     

    Schedule 1 - Page 1 of
1Exchange Global 12% Senior Secured Note due 2015

 Exhibit 4.1 
 12% SENIOR SECURED NOTE DUE 2015 
 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN. 
 TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO.
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE. 
  

 1 

 RYERSON INC. 
 12% SENIOR SECURED NOTE DUE 2015 
  

			
	No. 001	  	CUSIP: 78375P AL1
		  	ISIN: US78375P AL13

 Ryerson Inc. promises to pay to Cede & Co. or registered assigns, the principal sum of
THREE HUNDRED SEVENTY-SIX MILLION TWO HUNDRED TEN THOUSAND DOLLARS $376,210,000 on November 1, 2015. 
 Interest Payment Dates:
May 1 and November 1, beginning May 1, 2008. 
 Record Dates: April 15 and October 15. 
 Reference is made to further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same
effect as set forth at this place. 
 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the
reverse hereof by manual signature, this Note shall not be entitled to any benefits under this indenture referred to on the reverse hereof or be valid or obligatory for any purpose. 
  

 2 

			
	RYERSON INC.
		
	By:	 	/s/ Terence R. Rogers
		 	 Name: Terence R. Rogers
 Title: Chief
Financial Officer

  

			
	 TRUSTEE’S CERTIFICATE OF AUTHENTICATION
 This is one of the 12% Senior Secured Notes
referred to in the within-mentioned Indenture:
 Dated: April 9, 2009

	
	 WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

		
	 By:
	 	/s/ Lynn M. Steiner
		 	Authorized Signatory

 (Reverse of 12% Senior Secured Note) 
 12% Senior Secured Notes due 2015 
 RYERSON INC. 
 Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 
 (1) Interest. 
 (a) Ryerson
Inc., a Delaware corporation, or its successor (together, “Ryerson” or the “Company”), promises to pay interest on the principal amount of this Note (“12% Senior Secured Note” and,
together with the Floating Rate Senior Secured Note, the “Notes”) at a fixed rate. Ryerson will pay interest in United States dollars (except as otherwise provided herein) semiannually in arrears on May 1 and November 1,
commencing on May 1, 2008 or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”). Interest on the 12% Senior Secured Notes shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from and including October 19, 2007; provided that if there is no existing Default or Event of Default in the payment of interest, and if this 12% Senior Secured Note is
authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date (but after October 19, 2007), interest shall accrue from such next succeeding Interest Payment Date, except in the case of the
original issuance of 12% Senior Secured Notes, in which case interest shall accrue from the date of authentication. Ryerson shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1 % per annum in excess of the then applicable interest rate on the 12% Senior Secured Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The interest rate on the Notes will
in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application. 
 (b) Registration Rights Agreement. The Holder of this Note is entitled to the benefits of a Registration Rights Agreement, dated as of October 19, 2007, among Rhombus Merger Corporation (subsequently
merged with and into Ryerson, “Rhombus”), the Guarantors party thereto and the Initial Purchasers. 
 (2) Method of
Payment. Ryerson will pay interest on the 12% Senior Secured Notes (except defaulted interest) on the applicable Interest Payment Date to the Persons who are registered Holders of 12% Senior Secured Notes at the close of business on the
May 1 and November 1 preceding the Interest Payment Date, even if such 12% Senior Secured Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The 12% Senior Secured Notes shall be payable as to principal, premium and interest at the office or agency of Ryerson maintained for such purpose within or without the City and State of New York, or, at the option of
Ryerson, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds 

  

 1 

 
shall be required with respect to principal of, premium, if any, and interest on, all Global Notes and all other 12% Senior Secured Notes the Holders of
which shall have provided written wire transfer instructions to Ryerson and the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private
debts. 
 Any payments of principal of and interest on this 12% Senior Secured Note prior to Stated Maturity shall be binding upon all future
Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. The amount due and payable at the maturity of this Note shall be payable only upon
presentation and surrender of this Note at an office of the Trustee or the Trustee’s agent appointed for such purposes. 
 (3) Paying
Agent and Registrar. Initially, Wells Fargo Bank, National Association, the Trustee under the Indenture, shall act as Paying Agent and Registrar. Ryerson may change any Paying Agent or Registrar without notice to any Holder. Ryerson or any of
its Restricted Subsidiaries may act in any such capacity. 
 (4) Indenture. Rhombus issued the 12% Senior Secured Notes under an
Indenture, dated as of October 19, 2007 (the “Indenture”), among Rhombus, Ryerson, the Guarantors and the Trustee. The terms of the 12% Senior Secured Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb) (the “TIA”). To the extent the provisions of this 12% Senior Secured Note are inconsistent with the provisions of the
Indenture, the Indenture shall govern. The 12% Senior Secured Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The 12% Senior Secured Notes issued on the Issue Date are senior
Obligations of Ryerson limited to $425,000,000 in aggregate principal amount, plus amounts, if any, sufficient to pay premium and interest on outstanding 12% Senior Secured Notes as set forth in Paragraph 2 hereof. The Indenture permits the issuance
of Additional Notes subject to compliance with certain conditions. 
 The payment of principal and interest on the 12% Senior Secured Notes
is unconditionally guaranteed on a senior basis by the Guarantors. 
 (5) Optional Redemption. 
 (a) The 12% Senior Secured Notes may be redeemed, in whole or in part, at any time prior to November 1, 2011, at the option of the
Company upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a Redemption Price equal to 100% of the principal amount of the 12% Senior Secured Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest, if any, to, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). 

 

 2 

 (b) The 12% Senior Secured Notes are subject to redemption, at the option of the Company,
in whole or in part, at any time on or after November 1, 2011, upon not less than 30 nor more than 60 days’ notice at the following Redemption Prices (expressed as percentages of the principal amount to be redeemed) set forth below, plus
accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of Holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the redemption
date), if redeemed during the 12-rnonth period beginning November 1 of the years indicated: 
  

				
	 Year
	  	Percentage	 
	 2011
	  	106.000	%
	 2012
	  	103.000	%
	 2013 and thereafter
	  	100.000	%

 (c) In addition to the optional redemption of the 12% Senior Secured Notes in
accordance with the provisions of the preceding paragraph, prior to November 1, 2010, the Company may, with the net proceeds of one or more Qualified Equity Offerings, redeem up to 35% of the aggregate principal amount of the outstanding 12%
Senior Secured Notes (including Additional Notes that are 12% Senior Secured Notes) at a Redemption Price equal to 112% of the principal amount of thereof, together with accrued and unpaid interest thereon, if any, to the date of redemption;
provided that at least 65% of the principal amount of 12% Senior Secured Notes then outstanding (including Additional Notes that are 12% Senior Secured Notes) remains outstanding immediately after the occurrence of any such redemption
(excluding 12% Senior Secured Notes held by the Company or its Subsidiaries) and that any such redemption occurs within 90 days following the closing of any such Qualified Equity Offering. 
 (6) Mandatory Redemption. Except as set forth under Sections 3.9, 4.10 and 4.14 of the Indenture, the Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the 12%, Senior Secured Notes. 
 (7) Repurchase at Option of Holder.

 (a) Upon the occurrence of a Change of Control, each Holder will have the right to require Ryerson to repurchase all or any
part (equal to $2,000 and any integral multiple of $1,000 in excess thereof) of such Holder’s 12% Senior Secured Notes pursuant to the offer described below (the “Change of Control Offer”) at an offer price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to the date of purchase. Within 30 days following any Change of Control, Ryerson will deliver a notice to each Holder describing the transaction or transactions
that constitute the Change of Control setting forth the procedures governing the Change of Control Offer required by the Indenture. 
 (b) Upon the occurrence of certain Asset Sales, the Company may be required to offer to purchase 12% Senior Secured Notes. 
 (c) Holders of the 12% Senior Secured Notes that are the subject of an Offer to Purchase will receive notice of an Offer to Purchase pursuant to an Asset Sale or a Change of Control from Ryerson prior to any related Purchase Date and may
elect to have such 12% Senior Secured Notes purchased by completing the form titled “Option of Holder to Elect Purchase” appearing below. 
  

 3 

 (8) Notice of Redemption. Notice of redemption shall be sent electronically or mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose 12% Senior Secured Notes are to be redeemed at its registered address. 12% Senior Secured Notes in denominations larger than $2,000 may be redeemed in part but only in a
minimum, amount of $2,000 principal amount (and integral multiples of $1,000 in excess thereof), unless all of the 12% Senior Secured Notes held by a Holder are to be redeemed. On and after the redemption date, interest ceases to accrue on the 12%
Senior Secured Notes or portions hereof called for redemption. 
 (9) Denominations, Transfer, Exchange. The 12% Senior Secured Notes
are in registered form without coupons in initial denominations of $2,000 and any integral multiple of $1,000 in excess thereof. The transfer of the 12% Senior Secured Notes may be registered and the 12% Senior Secured Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and Ryerson may require a Holder to pay any taxes and fees required by law or permitted by
the Indenture. Ryerson need not exchange or register the transfer of any 12% Senior Secured Note or portion of a 12% Senior Secured Note selected for redemption, except for the unredeemed portion of any 12% Senior Secured Note being redeemed in
part. Also, it need not exchange or register the transfer of any 12% Senior Secured Notes for a period of 15 days before a selection of 12% Senior Secured Notes to be redeemed or during the period between a record date and the corresponding Interest
Payment Date. 
 (10) Persons Deemed Owners. The registered holder of a 12% Senior Secured Note may be treated as its owner for all
purposes. 
 (11) Amendment, Supplement and Waiver. Subject to the following paragraphs, the Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes, including, without limitation, consents obtained in connection with a purchase of or tender offer or exchange offer for
Notes, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes, including
consents obtained in connection with a tender offer or exchange offer for the Notes. 
 Without the consent of any Holders, Ryerson, the
Guarantors and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Indenture for any of the following purposes: 
 (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company
in the Indenture, the Guarantees, the Security Documents and in the Notes; 
 (2) to add to the covenants of the Company for
the benefit of the Holders, or to surrender any right or power herein conferred upon Ryerson; 
 (3) to add additional Events
of Default; 
  

 4 

 (4) to provide for uncertificated Notes in addition to or in place of the certificated
Notes; 
 (5) to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee or
Collateral Agent; 
 (6) to provide for or confirm the issuance of Additional Notes in accordance with the terms of the
Indenture; 
 (7) to add to the Collateral Securing the Notes, to add a Guarantor or to release a Guarantor in accordance with
the Indenture; 
 (8) to cure any ambiguity, defect, omission, mistake or inconsistency; 
 (9) to make any other provisions with respect to matters or questions arising under the Indenture, provided that such actions
pursuant this clause shall not adversely affect the interests of the Holders in any material respect, as determined in good faith by the Board of Directors of the Company; 
 (10) to conform the text of the Indenture or the Notes to any provision of the “Description of Notes” in the Offering Memorandum
to the extent that the Trustee has received an Officers’ Certificate stating that such text constitutes an unintended conflict with the description of the corresponding provision in the “Description of Notes”; 
 (11) to mortgage, pledge, hypothecate or grant any other Lien in favor of the Collateral Agent for the benefit of the Trustee on behalf of
the Holders of the Notes, as additional security for the payment and performance of all or any portion of the Obligations under the Indenture and the Notes, in any property or assets, including any which are required to be mortgaged, pledged or
hypothecated, or in which a Lien is required to be granted to or for the benefit of the Trustee or the Collateral Agent pursuant to the Indenture, any of the Security Documents or otherwise; 
 (12) to release Collateral from the Lien of the Indenture and the Security Documents when permitted or required by the Security Documents,
the Intercreditor Agreement or the Indenture; or 
 (13) to secure any Additional Secured Obligations under the Security
Documents. 
  

 5 

 With the consent of the Holders of not less than a majority in aggregate principal amount of the
outstanding Notes, Ryerson, the Guarantors and the Trustee may enter into an indenture or indentures supplemental to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the
indenture or the Notes or of modifying in any manner the rights of the Holders under the Indenture, including the definitions therein; provided, however, that no such supplemental indenture shall, without the consent of the Holder of
each outstanding Note affected thereby: 
 (1) change the Stated Maturity of any Note or of any installment of interest on any
Note, or reduce the amount payable in respect of the principal thereof or the rate of interest thereon or any premium payable thereon, or reduce the amount that would be due and payable on acceleration of the maturity thereof, or change the place of
payment where, or the coin or currency in which, any Note or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof, or change the date on
which any Notes may be subject to redemption or reduce the Redemption Price therefor, 
 (2) reduce the percentage in
aggregate principal amount of the outstanding Notes, 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 certain provisions of the Indenture or
certain defaults thereunder and their consequences) provided for in the Indenture, 
 (3) modify the obligations of the
Company to make Offers to Purchase upon a Change of Control or from the Excess Proceeds of Asset Sales if such modification was done after the occurrence of such Change of Control or such Asset Sale, 
 (4) subordinate, in right of payment, the Notes to any other Debt of the Company, 
 (5) modify any of the provisions of this paragraph or provisions relating to waiver of defaults or certain covenants, except to increase
any such percentage required for such actions or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note affected thereby, or 
 (6) release any Guarantees required to be maintained under the Indenture (other than in accordance with the terms of the Indenture).

 In addition, any amendment to, or waiver of, the provisions of the Indenture or any Security Document that has the effect of releasing all
or substantially all of the Collateral from the Liens securing the Notes or otherwise modifying the Intercreditor Agreement in any manner adverse in any material respect to the Holders of the Notes will require the consent of the Holders of at least
66-2/3% in aggregate principal amount of the Notes then outstanding. 
 The Holders of not less than a majority in aggregate principal amount
of the outstanding Notes may on behalf of the Holders of all the Notes waive any past default under the Indenture and its consequences, except a default: 
 (1) in any payment in respect of the principal of (or premium, if any) or interest on any Notes (including any Note which is required to have been purchased pursuant to an Offer to Purchase which has been made by the
Issuer), or 
 (2) in respect of a covenant or provision hereof which under the Indenture cannot be modified or amended
without the consent of the Holder of each outstanding Note affected. 
  

 6 

 (12) Defaults and Remedies. Events of Default include: 
 (1) default in the payment in respect of the principal of (or premium, if any, on) any Note at its maturity (whether at Stated Maturity or
upon repurchase, acceleration, optional redemption or otherwise); 
 (2) default in the payment of any interest upon any Note
when it becomes due and payable, and continuance of such default for a period of 30 days; 
 (3) failure to perform or comply
with the Indenture provisions described under Section 5.1 thereof; 
 (4) except as permitted by the Indenture, any Note
Guarantee of any Significant Subsidiary (or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary), shall for any reason cease to be, or it shall be asserted by any Guarantor or the Company not to be,
in full force and effect and enforceable in accordance with its terms; 
 (5) default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor in the Indenture (other than a covenant or agreement a default in whose performance or whose breach specifically dealt with in clauses (1), (2) (3) or (4) above), and continuance
of such default or breach for a period of 30 days after written notice thereof has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Notes;

 (6) a default or defaults under any bonds, debentures, notes or other evidences of Debt (other than the Notes) by the
Company or any Restricted Subsidiary having, individually or in the aggregate, a principal or similar amount outstanding of at least $10.0 million, whether such Debt now exists or shall hereafter be created, which default or defaults shall have
resulted in the acceleration of the maturity of such Debt prior to its express maturity or shall constitute a failure to pay at least $10.0 million of such Debt when due and payable after the expiration of any applicable grace period with respect
thereto; 
 (7) the entry against the Company or any Restricted Subsidiary that is a Significant Subsidiary of a final
judgment or final judgments for the payment of money in an aggregate amount in excess of $10.0 million, by a court or courts of competent jurisdiction, which judgments remain undischarged, unwaived, unstayed, unbonded or unsatisfied for a period of
60 consecutive days; 
 (8) (i) the Company, any Restricted Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law: 
 (a) commences a voluntary case, 
 (b) consents to the entry of an order for relief against it
in an involuntary case, 
  

 7 

 (c) consents to the appointment of a Custodian of it or for all or substantially all of
its property, 
 (d) makes a general assignment for the benefit of its creditors, or 
 (e) generally is not paying its debts as they become due; 
 or (ii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 
 (a) is for relief against the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, in an
involuntary case; 
 (b) appoints a Custodian of the Company or any Restricted Subsidiary that is a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Restricted Subsidiaries; 
 (c) orders the liquidation of the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary and the order or decree remains unstayed and in effect for 60 consecutive days; or 
 (9) unless all of the Note Collateral has been released from the Note Liens in accordance with the provisions of the Security Documents,
default by the Company or any Subsidiary in the performance of the Security Documents which adversely affects the enforceability, validity, perfection or priority of the Note Liens on a material portion of the Note Collateral granted to the
Collateral Agent for the benefit of the Trustee and the Holders of the Notes, the repudiation or disaffirmation by the Company or any Subsidiary of its material obligations under the Security Documents or the determination in a judicial proceeding
that the Security Documents are unenforceable or invalid against the Company or any Subsidiary party thereto for any reason with respect to a material portion of the Note Collateral (which default, repudiation, disaffirmation or determination is not
rescinded, stayed, or waived by the Persons having such authority pursuant to the Security Documents) or otherwise cured within 60 days after the Company receives written notice thereof specifying such occurrence from the Trustee or the Holders of
at least 66-2/3% of the outstanding principal amount of the Obligations and demanding that such default be remedied. 
 If an
Event of Default (other than an Event of Default specified in clause (8) above with respect to the Company) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of
the outstanding Notes may declare the principal of the Notes and any accrued interest on the Notes to be due and payable immediately by a notice in writing to the Company (and to the Trustee if given by Holders); provided, however, that after
such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of the outstanding Notes may, under certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the nonpayment of accelerated principal of or interest on the Notes, have been cured or waived as provided in the Indenture. 
  

 8 

 In the event of a declaration of acceleration of the Notes solely because an Event of Default described
in clause (6) above has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically rescinded and annulled if the event of default or payment default triggering such Event of Default pursuant to clause
(6) shall be remedied or cured by the Company or a Restricted Subsidiary of the Company or waived by the holders of the relevant Debt within 20 Business Days after the declaration of acceleration with respect thereto and if the rescission and
annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction obtained by the Trustee for the payment of amounts due on the Notes. 
 If an Event of Default specified in clause (8) above occurs with respect to the Company, the principal of and any accrued interest on the Notes then
outstanding shall ipso facto become immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Trustee may withhold from Holders notice of any Default (except Default in payment of principal of,
premium, if any, and interest) if the Trustee determines that withholding notice is in the interest of the Holders to do so. 
 (13)
Trustee Dealings with Ryerson. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for Ryerson, the Guarantors or their respective Affiliates, and may otherwise deal with
Ryerson, the Guarantors or their respective Affiliates, as if it were not the Trustee. 
 (14) No Recourse Against Others. No
director, officer, employee, stockholder, general or limited partner or incorporator, past, present or future, of the Company, the Guarantors or any of their respective Subsidiaries, as such or in such capacity, shall have any personal liability for
any obligations of the Issuer under the 12% Senior Secured Notes, any Guarantee or the Indenture by reason of his, her or its status as such director, officer, employee, stockholder, general or limited partner or incorporator. 
 (15) Authentication. This 12% Senior Secured Note shall not be valid until authenticated by the manual signature of the Trustee or an
authenticating agent. 
 (16) Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN
COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U7G/M/A (= Uniform Gifts to Minors Act). 
 (17) CUSIP, ISIN Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has
caused CUSIP numbers to be printed on the 12% Senior Secured Notes and the Trustee may use CUSIP, ISIN or other similar numbers in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers
either as printed on the 12% Senior Secured Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 
  

 9 

 Ryerson shall furnish to any Holder upon written request and without charge a copy of the Indenture.
Requests may be made to: 
 Ryerson Inc. 
 2621 West 15th Place 
 Chicago, Illinois 60608 
 Facsimile: (773) 788-4219 
 Attention: Counsel 
  

 10 

 ASSIGNMENT FORM 
 To assign this 12% Senior Secured Note, fill in the form below: (I) or (we) assign and transfer this 12% Senior Secured Note to 
  

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

 (Print or type assignee’s name, address and zip code) 
 and irrevocably appoint
                                         
                                         
                                         
              to transfer this 12% Senior Secured Note on the books of Rhombus. The agent may substitute another to act for him. 
 Date: ____________________ 
  

			
	
	Your Signature: ______________________
	 (Sign exactly as your name appears on the
 face of this 12% Senior Secured Note)

 Signature guarantee: 
 (Signature must be guaranteed by a participant in a recognized signature guarantee medallion program) 
  

 11 

 OPTION OF HOLDER TO ELECT PURCHASE 
 If you want to elect to have this 12% Senior Secured Note purchased by Ryerson pursuant to Section 4.7 (Restricted Payments), 4.10 (Asset Sale),
4.14 (Change of Control) or 4.16 (Event of Loss) of the Indenture, check the box below: 
  ̈  Section 4.7             ̈  Section
4.10             ̈  Section 4.14             ̈  Section 4.16 
 If you want to elect to have only part of the 12% Senior Secured Note purchased by
Ryerson pursuant to Section 4.7, 4.10, 4.14 or 4.16 of the Indenture, state the amount you elect to have purchased: $ 
  

									
				
	Date: _______________________	 		 	Your Signature: 	 	 
		 		 		 	(Sign exactly as your name appears on
the 12% Senior Secured Note)
				
		 		 		 	Signature guarantee:

 (Signature must be guaranteed by a participant in a recognized signature guarantee medallion
program) 
  

 12 

 SCHEDULE OF EXCHANGES OF 12% SENIOR SECURED NOTES 
 The following exchanges of a part of this Global Note for other 12% Senior Secured Notes have been made: 
  

									
	 Date of Exchange
	  	 Amount of Decrease in
Principal Amount of this
Global
Note
	  	 Amount of Increase in
Principal Amount of this
Global
Note
	  	 Principal Amount of this
Global Note Following Such
Decrease (or
Increase)
	  	 Signature of Authorized
Officer of Trustee or 12%
Senior Secured
Note
Custodian

  

 3

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