Document:

<PAGE>

                                                                    Exhibit 10.3

THE SYMBOL "**" IS USED THROUGHOUT THIS EXHIBIT TO INDICATE THAT THE
PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

CISCO SYSTEMS
[LOGO]
CAPITAL

170 West Tasman Drive
San Jose, CA  95134-1706

CONFIDENTIAL

                                 April 12, 2001

David Taylor
Chief Financial Officer
PF.Net Corp.
555 Herndon Parkway, Ste. 100
Herndon, VA 20170

Dear Mr. Taylor:

      Cisco Systems Capital Corporation specializes in providing innovative
finance solutions to support the purchase of Cisco Systems, Inc. products and
services. This letter supersedes all previous correspondence. We are pleased to
offer to provide to PF.Net Corp. the following credit accommodations:

Borrower:                        PF.Net Corp. (the "Borrower")

Lender:                          Cisco Systems Capital Corporation (the "Lender"
                                 or "CSCC")

Facility Amount and Purpose:     Up to *********** of term debt under the
                                 Tranche A-3 facility described in the Amended
                                 and Restated Credit Agreement, draft of April
                                 11, 2001 (the "Amended and Restated Credit
                                 Agreement Draft") to finance the purchase of
                                 Cisco Systems, Inc. ("Cisco Systems") products
                                 and services

Facility Availability:           The facility is available from the date when
                                 all closing conditions are satisfied ("Closing
                                 Date") until 24 months following the Closing
                                 Date

Final Maturity:                  December 31, 2006

Minimum Draws:                   In accordance with the terms and conditions of
                                 the Amended and Restated Credit Agreement Draft

<PAGE>

Fees:                            In accordance with the terms and conditions of
                                 the Amended and Restated Credit Agreement Draft
                                 and the draft Tranche A-3 Fee Letter referred
                                 to therein (draft of March 31, 2001) (the "Fee
                                 Letter Draft")

Interest Rate:                   In accordance with the terms and conditions of
                                 the Amended and Restated Credit Agreement Draft

Interest Payment Dates:          In accordance with the terms and conditions of
                                 the Amended and Restated Credit Agreement Draft

Principal Repayment:             In accordance with the terms and conditions of
                                 the Amended and Restated Credit Agreement Draft

Mandatory Prepayment:            In accordance with the terms and conditions of
                                 the Amended and Restated Credit Agreement Draft

Collateral:                      As set forth in the Amended and Restated Credit
                                 Agreement Draft. Lender acknowledges that its
                                 security interest will be shared pari passu
                                 with the Borrower's existing senior lenders and
                                 that State Street Bank and Trust Company will
                                 act as collateral agent.

Covenants and Events of          In accordance with the terms and conditions of
Default:                         the Amended and Restated Credit Agreement Draft

Conditions Precedent to the      Those contained in the Second Amendment to Loan
Initial Drawdown:                Documents (draft of April 11, 2001) (the
                                 "Amendment Draft"), including:

                                 (a)   Payment of all fees, costs, and expenses
                                       due to Lender on Closing Date.
                                 (b)   Execution of the Promissory Note in
                                       favor of Lender.
                                 (c)   Favorable legal opinion(s).
                                 (d)   Satisfactory evidence that the Collateral
                                       Agent has a perfected security interest
                                       in all collateral subject to no other
                                       liens except for liens permitted under
                                       the Amended and Restated Credit Agreement
                                       Draft.
                                 (e)   Completion of an equity investment by
                                       Cisco Systems in Velocita Corp. for an
                                       amount not in excess of ************* on
                                       the terms and conditions set forth in the
                                       Series B Preferred Stock Purchase
                                       Agreement dated April 12, 2001, executed
                                       and delivered by Velocita Corp. and Cisco
                                       Systems.
                                 (f)   Repayment on or before the Closing Date
                                       of the principal and interest due on the
                                       $10,000,000 Nonnegotiable Subordinated
                                       Note dated October 29, 1999 made by
                                       Velocita Corp. to Koch Telecom Ventures,
                                       Inc. "Koch Telecom"), and provision of
                                       term debt by Koch Telecom to Borrower in
                                       a like amount

                                       2
<PAGE>

                                       under the Tranche A-3 facility described
                                       in the Amended and Restated Credit
                                       Agreement Draft.
                                 (g)   Guarantees of Velocita Corp. and all
                                       subsidiaries of the Borrower.
                                 (h)   Satisfaction of the conditions of
                                       effectiveness set forth in Exhibit V of
                                       the Service Provider Agreement dated
                                       April 6, 2001 executed and delivered by
                                       the Borrower and Cisco Systems.
                                 (i)   Execution of definitive credit agreement,
                                       in the form of the Amended and Restated
                                       Credit Agreement Draft, and definitive
                                       fee letter, in the form of the Fee Letter
                                       Draft, with any changes thereto to be in
                                       form and substance satisfactory to
                                       Lender.

Miscellaneous:                   Whether or not the transactions contemplated
                                 hereby are consummated, the Borrower agrees to
                                 pay on demand all reasonable costs and expenses
                                 of the Lender and the reasonable fees and
                                 disbursements of counsel to the Lender incurred
                                 in connection with the commitment letter and
                                 the matters related thereto and the
                                 negotiation, documentation and closing of the
                                 transactions contemplated thereby. A refundable
                                 deposit of ****** for legal fees and other
                                 costs will be required in connection
                                 herewith, as provided below.

      The Lender's commitment to make this credit facility available to the
Borrower is subject to negotiation, execution and delivery of definitive legal
documentation, in form and substance reasonably satisfactory to the Lender and
its counsel, and to the fulfillment of the conditions precedent to be contained
in the Amendment Draft. Those documents shall include, without limitation, those
covenants, closing conditions, and other terms referenced above. Without
limiting the generality of the foregoing, the commitment evidenced hereby is
subject to execution and delivery of a definitive credit agreement and a
definitive fee letter containing those terms and conditions presently set forth
in the Amended and Restated Credit Agreement Draft and the Fee Letter Draft, and
any changes thereto or deviations therefrom must be in form and substance
satisfactory to Lender in the exercise of its sole discretion.

      This commitment letter shall be governed by and construed in accordance
with the law of the State of New York.

      This commitment letter contains the entire and exclusive agreement of the
parties with reference to the matters discussed herein and supersedes all prior
drafts, communications, discussions and understandings, oral or written, with
respect thereto.

      This commitment is intended solely for the Borrower's benefit and shall
not be for the benefit of any other person or entity.

      This letter is confidential and may not be disclosed to any person or
entity other than on a confidential basis to the Agent and Lenders under your
existing Credit Agreement and your and their accountants, attorneys and other
professional advisors retained by you or them in connection with the loan
facility. CSCC also consents to the disclosure of this letter and the terms and
provisions thereof by

                                       3
<PAGE>

the Borrower or any of its subsidiaries or affiliates, (i) at the request of any
governmental authority having jurisdiction over Borrower or such subsidiary or
affiliate, (ii) pursuant to subpoena or other court process, (iii) to the extent
reasonably required in connection with any litigation to which the Borrower or
any of its subsidiaries or affiliates is a party, and (iv) when otherwise
required to do so in accordance with applicable law (including, without
limitation, any disclosure required to be made to any securities or other
regulatory authority, including the Securities and Exchange Commission). The
foregoing permitted disclosure does not include disclosure to any other vendor
providing vendor financing to Borrower or any of its subsidiaries (whether
directly or indirectly). Borrower shall provide prior notice to CSCC of any
proposed public announcements or other public disclosure or filings of or
relating to this letter and the terms and provisions hereof as permitted hereby
("Public Disclosure"), and, except as provided by the provisions of the second
preceding sentence, no Public Disclosure may be made in respect of the fees,
interest rate and other pricing information contained herein without CSCC's
prior consent (such consent not to be unreasonably withheld). Prior to making
any required filing with the U.S. Securities and Exchange Commission or any
other federal, state, provincial or foreign governmental agency or authority as
part of any Public Disclosure, Borrower shall request confidential treatment of
the fees, interest rate and other pricing information contained herein to the
extent permitted by applicable law. Further, the Borrower agrees that, except as
provided by the provisions of this paragraph, it shall not, without CSCC's prior
written consent, disclose the existence or terms of any financing facility with
CSCC or use the name or logo of CSCC or Cisco Systems in any press release,
advertisement or other public pronouncement nor represent to any person that the
relationship between the Borrower and CSCC or Cisco Systems, in respect of the
supply of Cisco Systems' products and services and the financing thereof, is
other than that of seller and purchaser of products and services and/or lender
and borrower.

      Please indicate the Borrower's acceptance of this commitment and its
agreement to the above provisions by causing this letter to be signed on behalf
of the Borrower in the place provided below and returning a copy of this
commitment letter so executed to the Lender, together with payment of a
nonrefundable fee in the aggregate amount of ******* (which will be credited to
the closing fee described above upon the closing of the credit facility and
otherwise credited against the Lender's costs and expenses payable by the
Borrower). A deposit of ****** to cover the Lender's reasonable costs and
expenses, including the costs and expenses of legal counsel and any consultants
(which deposit will be applied toward any costs, expenses and fees payable at
closing or, if the credit facility does not close, will be returned to the
Borrower after deducting the reasonable costs and expenses incurred by the
Lender), whereupon this commitment letter shall become a binding agreement
between the Lender and the Borrower subject to the terms and conditions set
forth herein. The offer set forth herein shall expire at the close of business
in San Jose, California, on April 16, 2001, unless the Lender shall have
received, by fax to CSCC at (416) 306-7099, attn. Mark Usher, a copy of this
letter duly executed by the Borrower prior to such time and any payments
described above. In addition, even if this commitment is accepted by the
Borrower, such commitment shall expire at the close of business in San Jose on
May 31, 2001, if definitive legal documents satisfactory to the Lender and its
counsel have not been executed prior to such time.

      We appreciate the opportunity to make this offer to you and look forward
to working with you on this transaction.

                                Very truly yours,

                                CISCO SYSTEMS CAPITAL CORPORATION

                                By  /s/ David A. Rogan
                                    --------------------------------------

                                       4
<PAGE>

                                    Name: David A. Rogan
                                    Title: President

Acknowledged and Agreed:

PF.NET CORP.

By: /s/ David L. Taylor
    --------------------------
    Title: Chief Financial Officer

                                       5Prepared by MERRILL CORPORATION

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EXECUTION COPY  

    HEALTH NET, INC.  

 AND  

 U.S. BANK TRUST NATIONAL ASSOCIATION,

AS TRUSTEE  

 83/8% Senior Notes Due 2011  

 INDENTURE  

 Dated as of April 12, 2001  

 
  
 

    TABLE OF CONTENTS    
  

	 
	 	 
	 	Page

	ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE	 	 
	SECTION 1.1.	 	Definitions	 	1
	SECTION 1.2.	 	Other Definitions	 	5
	SECTION 1.3.	 	Incorporation by Reference of Trust Indenture Act	 	5
	SECTION 1.4.	 	Rules of Construction	 	6
	

ARTICLE II THE SECURITIES	
 	

 
	SECTION 2.1.	 	Form, Dating and Terms	 	6
	SECTION 2.2.	 	Execution and Authentication	 	11
	SECTION 2.3.	 	Registrar and Paying Agent	 	12
	SECTION 2.4.	 	Paying Agent To Hold Money in Trust	 	13
	SECTION 2.5.	 	Securityholder Lists	 	13
	SECTION 2.6.	 	Transfer and Exchange	 	13
	SECTION 2.7.	 	Form of Certificate to be Delivered in Connection with Transfers to Institutional Accredited Investors	 	16
	SECTION 2.8.	 	Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S	 	18
	SECTION 2.9.	 	Mutilated, Destroyed, Lost or Stolen Securities	 	19
	SECTION 2.10.	 	Outstanding Securities	 	19
	SECTION 2.11.	 	Temporary Securities	 	20
	SECTION 2.12.	 	Cancellation	 	20
	SECTION 2.13.	 	Payment of Interest; Defaulted Interest	 	20
	SECTION 2.14.	 	Computation of Interest	 	21
	SECTION 2.15.	 	CUSIP and ISIN Numbers	 	21
	

ARTICLE III COVENANTS	
 	

 
	SECTION 3.1.	 	Payment of Securities	 	21
	SECTION 3.2.	 	Limitation on Liens	 	22
	SECTION 3.3.	 	Maintenance of Office or Agency	 	22
	SECTION 3.4.	 	Corporate Existence	 	22
	SECTION 3.5.	 	Payment of Taxes and Other Claims	 	22
	SECTION 3.6.	 	Payments for Consent	 	22
	SECTION 3.7.	 	Compliance Certificate	 	23
	SECTION 3.8.	 	Statement by Officers as to Default	 	23
	

ARTICLE IV SUCCESSOR COMPANY	
 	

 
	SECTION 4.1.	 	Consolidation, Merger and Sale of Assets	 	23
	

ARTICLE V REDEMPTION OF SECURITIES	
 	

 
	SECTION 5.1.	 	Optional Redemption	 	23
	SECTION 5.2.	 	Applicability of Article	 	24
	SECTION 5.3.	 	Election to Redeem; Notice to Trustee	 	24
	SECTION 5.4.	 	Selection by Trustee of Securities to Be Redeemed	 	24
	SECTION 5.5.	 	Notice of Redemption	 	24
	SECTION 5.6.	 	Deposit of Redemption Price	 	25
	SECTION 5.7.	 	Securities Payable on Redemption Date	 	25
	SECTION 5.8.	 	Securities Redeemed in Part	 	25
	

ARTICLE VI DEFAULTS AND REMEDIES	
 	

 
	SECTION 6.1.	 	Events of Default	 	26

i

 

	SECTION 6.2.	 	Acceleration	 	27
	SECTION 6.3.	 	Other Remedies	 	27
	SECTION 6.4.	 	Waiver of Past Defaults	 	27
	SECTION 6.5.	 	Control by Majority	 	27
	SECTION 6.6.	 	Limitation on Suits	 	28
	SECTION 6.7.	 	Rights of Holders to Receive Payment	 	28
	SECTION 6.8.	 	Collection Suit by Trustee	 	28
	SECTION 6.9.	 	Trustee May File Proofs of Claim	 	28
	SECTION 6.10.	 	Priorities	 	28
	SECTION 6.11.	 	Undertaking for Costs	 	29
	

ARTICLE VII TRUSTEE	
 	

 
	SECTION 7.1.	 	Duties of Trustee	 	29
	SECTION 7.2.	 	Rights of Trustee	 	30
	SECTION 7.3.	 	Individual Rights of Trustee	 	30
	SECTION 7.4.	 	Trustee's Disclaimer	 	30
	SECTION 7.5.	 	Notice of Defaults	 	31
	SECTION 7.6.	 	Reports by Trustee to Holders	 	31
	SECTION 7.7.	 	Compensation and Indemnity	 	31
	SECTION 7.8.	 	Replacement of Trustee	 	32
	SECTION 7.9.	 	Successor Trustee by Merger	 	32
	SECTION 7.10.	 	Eligibility; Disqualification	 	33
	SECTION 7.11.	 	Preferential Collection of Claims Against Company	 	33
	

ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE	
 	

 
	SECTION 8.1.	 	Discharge of Liability on Securities; Defeasance	 	33
	SECTION 8.2.	 	Conditions to Defeasance	 	34
	SECTION 8.3.	 	Application of Trust Money	 	35
	SECTION 8.4.	 	Repayment to Company	 	35
	SECTION 8.5.	 	Indemnity for U.S. Government Securities	 	35
	SECTION 8.6.	 	Reinstatement	 	35
	

ARTICLE IX AMENDMENTS	
 	

 
	SECTION 9.1.	 	Without Consent of Holders	 	35
	SECTION 9.2.	 	With Consent of Holders	 	36
	SECTION 9.3.	 	Compliance with Trust Indenture Act	 	36
	SECTION 9.4.	 	Revocation and Effect of Consents and Waivers	 	36
	SECTION 9.5.	 	Notation on or Exchange of Securities	 	37
	SECTION 9.6.	 	Trustee To Sign Amendments	 	37
	

ARTICLE X MISCELLANEOUS	
 	

 
	SECTION 10.1.	 	Trust Indenture Act Controls	 	37
	SECTION 10.2.	 	Notices	 	37
	SECTION 10.3.	 	Communication by Holders with other Holders	 	38
	SECTION 10.4.	 	Certificate and Opinion as to Conditions Precedent	 	38
	SECTION 10.5.	 	Statements Required in Certificate or Opinion	 	39
	SECTION 10.6.	 	When Securities Disregarded	 	39
	SECTION 10.7.	 	Rules by Trustee, Paying Agent and Registrar	 	39
	SECTION 10.8.	 	Legal Holidays	 	39
	SECTION 10.9.	 	GOVERNING LAW	 	39
	SECTION 10.10.	 	No Recourse Against Others	 	39
	SECTION 10.11.	 	Successors	 	39

ii

 

	SECTION 10.12.	 	Multiple Originals	 	39
	SECTION 10.13.	 	Variable Provisions	 	39
	SECTION 10.14.	 	Table of Contents; Headings	 	39
	EXHIBIT A	 	Form of the Initial Security	 	A-1
	EXHIBIT B	 	Form of the Exchange Security	 	B-1

iii

 
 
 

CROSS-REFERENCE TABLE    
  

	TIA

Section
	 	 
	 	Indenture

Section

	310(a)(1)	 	 	 	7.10
	(a)(2)	 	 	 	7.10
	(a)(3)	 	 	 	N.A.
	(a)(4)	 	 	 	N.A.
	(b)	 	 	 	7.8; 7.10
	(c)	 	 	 	N.A.
	311(a)	 	 	 	7.11
	(b)	 	 	 	7.11
	(c)	 	 	 	N.A.
	312(a)	 	 	 	2.5
	(b)	 	 	 	10.3
	(c)	 	 	 	10.3
	313(a)	 	 	 	7.6
	(b)(1)	 	 	 	N.A.
	(b)(2)	 	 	 	7.6
	(c)	 	 	 	7.6
	(d)	 	 	 	7.6
	314(a)	 	 	 	3.7; 10.2; 10.5
	(b)	 	 	 	N.A.
	(c)(1)	 	 	 	10.4
	(c)(2)	 	 	 	10.4
	(c)(3)	 	 	 	N.A.
	(d)	 	 	 	N.A.
	(e)	 	 	 	10.5
	315(a)	 	 	 	7.1
	(b)	 	 	 	7.5; 10.2
	(c)	 	 	 	7.1
	(d)	 	 	 	7.1
	(e)	 	 	 	6.11
	316(a)(last sentence)	 	 	 	10.6
	(a)(1)(A)	 	 	 	6.5
	(a)(1)(B)	 	 	 	6.4
	(a)(2)	 	 	 	N.A.
	(b)	 	 	 	6.7
	317(a)(1)	 	 	 	6.8
	(a)(2)	 	 	 	6.9
	(b)	 	 	 	2.4
	318(a)	 	 	 	10.1

N.A.
means Not Applicable. 

Note:
This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture. 

iv

    INDENTURE
dated as of April 12, 2001, between HEALTH NET, INC., a Delaware corporation and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association organized
under the laws of the United States, as Trustee. 

    Each
party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of (i) the Company's 83/8% Senior Notes Due
2011 issued on the date hereof (the "Original Securities" or "Initial Securities"), (ii) if and
when issued, additional series of notes which may be offered subsequent to the Issue Date (the "Subsequent Series Securities"), (iii) if and when
issued in exchange for Initial Securities as provided in the Exchange and Registration Rights Agreement, the Company's 83/8% Senior Notes Due 2011 (the "Exchange
Securities") and (iv) if and when issued as provided in the Exchange and Registration Rights Agreement, the Private Exchange Securities (as defined in the Exchange and
Registration Rights Agreement). 

 
 

ARTICLE I
  
    Definitions and Incorporation by Reference    
  

    SECTION
1.1.  Definitions  

    "Affiliate"
of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing; provided,
however, that the existence of a management contract by the Company or an Affiliate of the Company to manage another entity shall not be deemed to be control. 

    "Board
of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. 

    "Business
Day" means a day other than a Saturday, Sunday or other day on which commercial banking institutions are authorized or required by law to close in New York City. 

    "Code"
means the Internal Revenue Code of 1986, as amended. 

    "Common
Stock" means, with respect to any Principal Subsidiary, stock of any class, however designated, except stock which is non-participating beyond fixed dividend and
liquidation preferences and the holders of which have either no voting rights or limited voting rights entitling them, only in the case of certain contingencies, to elect less than a majority of the
directors (or persons performing similar functions) of such Principal Subsidiary, and shall include securities of any class, however designated, which are convertible into such Common Stock. 

    "Company"
means Health Net, Inc. or its successor. 

    "Debt"
of any Person at any date means any notes, bonds, debentures or similar evidence of indebtedness for borrowed money. 

    "Default"
means any event that is, or after notice or passage of time or both would be, an Event of Default. 

    "Definitive
Securities" means certificated Securities. 

    "DTC"
means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Company. 

    "Exchange
Act" means the Securities Exchange Act of 1934, as amended. 

    "Exchange
and Registration Rights Agreement" means the Exchange and Registration Rights Agreement dated the Issue Date among the Initial Purchasers and the Company, as the same may be
amended, supplemented or modified from time to time. 

 

    "Exchange Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

    "Fiscal
Year" means the fiscal year of the Company. 

    "GAAP"
means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting
profession as in effect from time to time. 

    "guarantee"
means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person: 

	(1)
	to
purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

	(2)
	entered
into for purposes of assuring in any other manner the obligee of such Debt of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in
part); 

provided, however, that the term "guarantee" will not include endorsements for collection or deposit in the ordinary course of business. The term
"guarantee" used as a verb has a corresponding meaning. 

    "Holder"
or "Securityholder" means the Person in whose name a Security is registered in the Note Register. 

    "Incur"
means issue, create, assume, guarantee, incur or otherwise become liable for; and the terms "Incurred" and "Incurrence" have meanings correlative to the foregoing. 

    "Indenture"
means this Indenture, as amended or supplemented from time to time. 

    "Initial
Purchasers" means, collectively, JPMorgan, a division of Chase Securities Inc., Banc of America Securities LLC, Fleet Securities, Inc., Mizuho International
plc, Salomon Smith Barney Inc. and Scotia Capital (USA) Inc. 

    "Initial
Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

    "Issue
Date" means the date on which the Original Securities or Initial Securities are originally issued. 

    "Legal
Holiday" has the meaning ascribed to it in Section 10.8. 

    "Non-U.S.
Person" means a person who is not a U.S. person, as defined in Regulation S. 

    "Note
Register" means the register of Securities, maintained by the Registrar, pursuant to Section 2.3. 

    "Officer"
means the Chairman of the Board, the President, the Chief Financial Officer, any Senior Vice President, any Vice President, the Treasurer or the Secretary of the Company. 

    "Officers'
Certificate" means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. 

2

 

    "Opinion of Counsel" means a written opinion (subject to customary assumptions, qualifications and exceptions) from legal counsel who is reasonably acceptable to the Trustee. The
counsel may be an employee of or counsel to the Company or the Trustee. 

    "Original
Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

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

    "Principal
Subsidiary" means a consolidated Subsidiary of the Company that, as of the time of the determination of whether such consolidated Subsidiary is a "Principal Subsidiary,"
accounted for 10% or more of the total assets of the Company and its consolidated Subsidiaries, in each case as set forth in the most recent balance sheets filed by the Company with the SEC. 

    "Private
Exchange Securities" shall have the meaning set forth in the Exchange and Registration Rights Agreement. 

    "QIB"
has the meaning ascribed to it in Section 2.1. 

    "Redemption
Date" means, with respect to any redemption of Securities, the date of redemption with respect thereto. 

    "Registered
Exchange Offer" shall have the meaning set forth in the Exchange and Registration Rights Agreement. 

    "Restricted
Period" means the 40 consecutive days beginning on and including the later of (1) the day on which the Initial Securities are offered to persons other than
distributors (as defined in Regulation S under the Securities Act) and (2) the Issue Date. 

    "Restricted
Securities Legend" means the Private Placement Legend set forth in clause (1) of Section 2.1(c) or the
Regulation S Legend set forth in clause (2) of Section 2.1(c), as applicable. 

    "SEC"
means the Securities and Exchange Commission. 

    "Securities"
means the collective reference to the Initial or Original Securities, Subsequent Series Securities, Exchange Securities and Private Exchange Securities. 

    "Securities
Act" means the Securities Act of 1933, as amended. 

    "Securities
Custodian" means the custodian with respect to a Global Security (as appointed by DTC), or any successor Person thereto and shall initially be the Trustee. 

    "Significant
Subsidiary" means any Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC. 

    "Stated
Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable,
including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for
the payment thereof. 

    "Subsequent
Series Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. 

    "Subsidiary"
means any corporation, limited liability company or other business entity of which more than 50% of the total voting power of the equity interests entitled (without
regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof or any partnership of which more than 50% of the partners' equity interests (considering
all partners' equity 

3

 

interests as a single class) is, in each case, at the time owned or controlled, directly or indirectly, by the Company one or more of the Subsidiaries of the Company or combination thereof. 

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

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

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

    "U.S.
Government Securities" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is
pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Securities or a specific payment of principal of
or interest on any such U.S. Government Securities held by such custodian for the account of the holder of such depository receipt; provided that
(except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect
of the U.S. Government Securities or the specific payment of principal of or interest on the U.S. Government Securities evidenced by such depository receipt. 

4

 

    SECTION 1.2.  Other Definitions.  

	Term
 
	 	Defined in

Section
	 
	"Agent Member"	 	2.1	(d)
	"Authenticating Agent"	 	2.2	 
	"Bankruptcy Law"	 	6.1	 
	"Company Order"	 	2.2	 
	"Corporate Trust Office"	 	3.3	 
	"covenant defeasance option"	 	8.1	(b)
	"cross acceleration provision"	 	6.1	 
	"Custodian"	 	6.1	 
	"Defaulted Interest"	 	2.1	3
	"Event of Default"	 	6.1	 
	"Exchange Global Note"	 	2.1	(a)
	"Global Securities"	 	2.1	(a)
	"IAI"	 	2.1	(a)
	"Institutional Accredited Investor Global Note"	 	2.1	(a)
	"legal defeasance option"	 	8.1	(b)
	"Paying Agent"	 	2.3	 
	"Payment Default"	 	6.1	 
	"Private Placement Legend"	 	2.1	(c)
	"Registrar"	 	2.3	 
	"Regulation S"	 	2.1	(a)
	"Regulation S Global Note"	 	2.1	(a)
	"Regulation S Legend"	 	2.1	(c)
	"Regulation S Note"	 	2.1	(a)
	"Resale Restriction Termination Date"	 	2.6	 
	"Rule 144A"	 	2.1	(a)
	"Rule 144A Global Note"	 	2.1	(a)
	"Rule 144A Note"	 	2.1	(a)
	"Special Interest Payment Date"	 	2.1	3
	"Special Record Date"	 	2.1	3
	"Successor Company"	 	4.1	 

    SECTION
1.3.  Incorporation by Reference of Trust Indenture Act.  This Indenture is subject to the
mandatory provisions of the TIA that are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: 

    "Commission"
means the SEC. 

    "indenture
securities" means the Securities. 

    "indenture
security holder" means a Securityholder. 

    "indenture
to be qualified" means this Indenture. 

    "indenture
trustee" or "institutional trustee" means the Trustee. 

    "obligor"
on the indenture securities means the Company and any other obligor on the indenture securities. 

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

5

 

    SECTION 1.4.  Rules of Construction.  Unless the context otherwise requires: 

    (1) a
term has the meaning assigned to it; 

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

    (3) "or"
is not exclusive; 

    (4) "including"
means including without limitation; 

    (5) words
in the singular include the plural and words in the plural include the singular; and 

    (6) the
principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet
of the issuer dated such date prepared in accordance with GAAP. 

 
 

ARTICLE II
  
    The Securities    
  

    SECTION
2.1.  Form, Dating and Terms.  (a) The Original Securities are being offered and sold by
the Company pursuant to a Purchase Agreement, dated April 9, 2001, among the Company and the Initial Purchasers. The Original Securities will be resold initially only to (i) qualified
institutional buyers (as defined in Rule 144A under the Securities Act ("Rule 144A")) in reliance on Rule 144A
("QIBs") and (ii) Persons other than U.S. Persons (as defined in Regulation S under the Securities Act
("Regulation S")) in reliance on Regulation S. Such Original Securities may thereafter be transferred to, among others, QIBs in reliance on
Rule 144A, Non-U.S. Persons in reliance on Regulation S and institutional "accredited investors" (as defined in Rules 501(a)(1), (2), (3) or (7) under
the Securities Act) who are not QIBs ("IAIs") in accordance with the procedure described herein. 

    Initial
Securities offered and sold to the Initial Purchasers, and subsequently resold to QIBs in the United States of America in reliance on Rule 144A (each, a
"Rule 144A Note") will be issued on the Issue Date in the form of a permanent global Security, without interest coupons, substantially in the
form of Exhibit A, which is hereby incorporated by reference and made a part of this Indenture, including appropriate legends as set forth in
clause (c) below (the "Rule 144A Global Note"), deposited with the Trustee, as custodian
for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Note may be represented by more than one certificate, if so required by
DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. 

    Initial
Securities offered, sold and resold outside the United States of America (each, a "Regulation S Note") in reliance on
Regulation S shall be issued in the form of a permanent global Security substantially in the form of Exhibit A, including appropriate
legends as set forth in clause (c) below (the "Regulation S Global Note"), deposited with
the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Regulation S Global Note may be represented by more than one
certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Regulation S Global Note may
from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. 

    Initial
Securities resold after an initial resale to QIBs in reliance on Rule 144A or an initial resale in reliance on Regulation S to IAIs in the United States of
America will be issued in the form of a 

6

 

permanent global Security substantially in the form of Exhibit A (the "Institutional Accredited Investor Global
Note") deposited with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Institutional Accredited
Investor Global Note may be represented by more that one certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate
principal amount of the Institutional Accredited Investor Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided. 

    Exchange
Securities exchanged for interests in the Rule 144A Note, the Regulation S Note and the Institutional Accredited Investor Global Note will be issued in the form
of a permanent global Security substantially in the form of Exhibit B, which is hereby incorporated by reference and made a part of this
Indenture, deposited with the Trustee as hereinafter provided, including the appropriate legend set forth in clause (c) below (the
"Exchange Global Note"). The Exchange Global Note may be represented by more than one certificate, if so required by DTC's rules regarding the maximum
principal amount to be represented by a single certificate. 

    The
Rule 144A Global Note, the Regulation S Global Note, the Institutional Investor Global Note and the Exchange Global Note are sometimes collectively herein referred
to as the "Global Securities." 

    Except
as described in the succeeding two sentences, the principal of, premium, if any, and interest on the Securities shall be payable at the office or agency of the Company
maintained for such purpose in the City of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to  Section 2.3; provided,
however, that, at the option of the Company, each installment of interest
may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Note Register. Payments in respect of Securities represented by a Global Security
(including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by DTC. Payments in respect of Securities represented by
Definitive Securities (including principal, premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate principal amount of Securities represented by Definitive Securities will be
made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the
Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its
discretion). 

    The
Private Exchange Securities shall be in the form of Exhibit A. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage, in addition to those set forth on Exhibits A and B and in
clause (c) below. The Company and the Trustee shall approve the forms of the Securities and any notation, endorsement or legend on them. Each
Security shall be dated the date of its authentication. The terms of the Securities set forth in Exhibit A and  Exhibit B are part of the terms of
this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to be bound by such terms. 

    (b)  Denominations.  The Securities shall be issuable only in fully registered form, without coupons, and
only in denominations of $1,000 and any integral multiple thereof. 

    (c)  Restrictive Legends.  Unless and until (i) an Initial Security is sold under an effective
registration statement or (ii) an Initial Security is exchanged for an Exchange Security in connection with an effective registration statement, in each case pursuant to the Exchange and
Registration Rights Agreement, 

7

 
    1.  the Rule 144A Global Note and the Institutional Accredited Investor Global Note shall bear the following legend (the "Private
Placement Legend") on the face thereof: 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, SUCH REGISTRATION. 

THE
HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES, ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PROVIDED THAT PRIOR TO SUCH
TRANSFER, THE TRANFEROR FURNISHES TO THE COMPANY AND THE TRUSTEE A CERTIFICATE CONTAINING CERTAIN REPRESENTATIONS RELATING TO THE PROPOSED TRANSFER BEING EFFECTED PURSUANT TO AND IN ACCORDANCE WITH
REGULATION S (THE FORM OF WHICH CERTIFICATE CAN BE OBTAINED FROM THE TRUSTEE), (E) INSIDE THE UNITED STATES, TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT AND THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE COMPANY AND THE TRUSTEE A CERTIFICATE CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
CERTIFICATE CAN BE OBTAINED FROM THE TRUSTEE), OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE. 

8

 

    2.  the
Regulation S Global Note shall bear the following legend (the "Regulation S Legend") on the face
thereof: 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE
ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE
ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), AND (2) BY ITS ACCEPTANCE HEREOF,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S,
PROVIDED THAT PRIOR TO SUCH TRANSFER, THE TRANFEROR FURNISHES TO THE COMPANY AND THE TRUSTEE A CERTIFICATE CONTAINING CERTAIN REPRESENTATIONS RELATING TO THE PROPOSED TRANSFER BEING EFFECTED PURSUANT
TO AND IN ACCORDANCE WITH REGULATION S (THE FORM OF WHICH CERTIFICATE CAN BE OBTAINED FROM THE TRUSTEE), (E) INSIDE THE UNITED STATES, TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT AND THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE COMPANY AND THE TRUSTEE A CERTIFICATE
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH CERTIFICATE CAN BE OBTAINED FROM THE TRUSTEE), OR (F) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE
DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH THE SECURITIES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S) AND (B) THE DATE 

9

 

OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. 

    3.  the
Global Securities, whether or not an Initial Security, shall bear the following legend on the face thereof: 

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

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

    (d)  Book-Entry Provisions.  i) This  Section 2.1(d) shall apply only to Global Securities deposited with the Trustee, as custodian for DTC.

    (ii) Each
Global Security initially shall (x) be registered in the name of DTC or the nominee of DTC, (y) be delivered to the Trustee as custodian for DTC
and (z) bear legends as set forth in Section 2.1(c). 

    (iii) Members
of, or participants in, DTC ("Agent Members") shall have no rights under this Indenture with respect to
any Global Security held on their behalf by DTC or by the Trustee as the custodian of DTC or under such Global Security, and DTC may be treated by the Company, the Trustee and any agent of the Company
or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary
practices of DTC governing the exercise of the rights of a Holder of a beneficial interest in any Global Security. 

    (iv) In
connection with any transfer of a portion of the beneficial interest in a Global Security pursuant to subsection (e) of this Section to beneficial owners
who are required to hold Definitive Securities, the Securities Custodian shall reflect on its books and records the date and a decrease in the principal amount of such Global Security in an amount
equal to the principal amount of the beneficial interest in the Global Security to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Definitive
Securities of like tenor and amount. 

    (v) In
connection with the transfer of an entire Global Security to beneficial owners pursuant to subsection (e) of this Section, such Global Security shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such 

10

 

Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations. 

    (vi) The
registered Holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests
through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. 

    (e)  Definitive Securities.  (i) Except as provided below, owners of beneficial interests in Global
Securities will not be entitled to receive Definitive Securities. If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Definitive Securities in exchange for
their beneficial interests in a Global Security upon written request in accordance with DTC's and the Registrar's procedures. In addition, Definitive Securities shall be transferred to all beneficial
owners in exchange for their beneficial interests in a Global Security if (a) DTC notifies the Company that it is unwilling or
unable to continue as depositary for such Global Security or DTC ceases to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as
depositary, and in each case a successor depositary is not appointed by the Company within 90 days of such notice, (b) the Company executes and delivers to the Trustee and Registrar an
Officers' Certificate stating that such Global Security shall be so exchangeable or (c) an Event of Default has occurred and is continuing and the Registrar has received a request from DTC. 

    (ii) Any
Definitive Security delivered in exchange for an interest in a Global Security pursuant to  Section 2.1(d)(iv) or (v) shall, except as otherwise
provided by  Section 2.6(c), bear the applicable legend regarding transfer restrictions applicable to the Definitive Security set forth in  Section 2.1(c). 

    (iii) In
connection with the exchange of a portion of a Definitive Security for a beneficial interest in a Global Security, the Trustee shall cancel such Definitive
Security, and the Company shall execute, and the Trustee shall authenticate and deliver, to the transferring Holder a new Definitive Security representing the principal amount not so transferred. 

    SECTION
2.2.  Execution and Authentication.  One Officer shall sign the Securities for the Company by
manual or facsimile signature. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. 

    A
Security shall not be valid until an authorized signatory of the Trustee manually authenticates the Security. The signature of the Trustee on a Security shall be conclusive evidence
that such Security has been duly and validly authenticated and issued under this Indenture. A Security shall be dated the date of its authentication. 

    At
any time and from time to time after the execution and delivery of this Indenture, the Trustee shall authenticate and make available for delivery: (1) Original Securities
for original issue on the Issue Date initially in an aggregate principal amount of $400,000,000 (2) if and when issued, the Subsequent Series Securities and (3) Exchange Securities and
Private Exchange Securities for issue pursuant to the Exchange and Registration Rights Agreement, and only in exchange for Initial Securities of an equal principal amount, in each case upon a written
order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company (the "Company
Order"). Such Company Order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities, Exchange Securities, Private Exchange Securities or Subsequent Series Securities. The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is initially limited to $400,000,000 outstanding (plus any Subsequent Series Securities), except for Securities authenticated and delivered upon
registration or transfer of, or in exchange for, or in lieu 

11

 

of, other Securities of the same class pursuant to Section 2.6, Section 2.9,  Section 2.11,
Section 5.8,  Section 9.5 and except for transactions similar to the Registered Exchange Offer. All Securities issued on the Issue Date and all
Subsequent
Series Securities shall be identical in all respects other than issue dates, the date from which interest accrues and any changes relating thereto. Notwithstanding anything to the contrary contained
in this Indenture, all Securities issued under this Indenture shall vote and consent together on all matters as one class and no series of Securities will have the right to vote or consent as a
separate class on any matter. 

    The
Trustee may appoint an agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate the Securities.
Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by the Authenticating Agent. An Authenticating Agent has the same rights as a Paying Agent to deal with Holders or an Affiliate of the Company. 

    In
case the Company, pursuant to Article IV, shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or
into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental
hereto with the Trustee pursuant to Article IV, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Order
of the successor Person, shall authenticate and deliver Securities as specified in such order for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any
new name of a successor Person pursuant to this Section 2.2 in exchange or substitution for or upon registration of transfer of any Securities,
such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time outstanding for Securities authenticated and delivered in
such new name. 

    SECTION
2.3.  Registrar and Paying Agent.  The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for
payment (the "Paying Agent"). The Company shall cause each of the Registrar and the Paying Agent to maintain an office or agency in the Borough of
Manhattan, the City of New York. The Registrar shall keep a register of the Securities and of their transfer and exchange (the "Note Register"). The
Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. 

    The
Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the
terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of each such agent. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.7. The Company or any of its Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer
agent. 

    The
Company initially appoints DTC to act as depository with respect to the Global Securities. The Trustee is authorized to enter into a letter of representations with DTC in the form
provided to the Trustee by the Company and to act in accordance with such letter. 

    The
Company initially appoints the Trustee as Registrar and Paying Agent for the Securities. 

12

 

    SECTION 2.4.  Paying Agent To Hold Money in Trust.  By at least 10:00 a.m. (New York City time) on
the date on which any principal of or interest on any Security is due and payable, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal, premium, if any, or interest
when due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money held by such Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee in writing of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent (other
than the Trustee) to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent. Upon complying with this Section, the Paying Agent (if other than the Company
or a Subsidiary) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve
as Paying Agent for the Securities. 

    SECTION
2.5.  Securityholder Lists.  The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of Securityholders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, or to the
extent otherwise required under the TIA, the Company shall furnish to the Trustee, in writing at least seven Business Days before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders and the Company shall otherwise comply with TIA
§312(a). 

    SECTION
2.6.  Transfer and Exchange.  (a) The following provisions shall apply with respect to
any proposed transfer of a Rule 144A Note or an Institutional Accredited Investor Global Note prior to the date which is two years after the later of the date of its original issue and the last
date on which the Company or any Affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination
Date"): 

     (i) a
transfer of a Rule 144A Note or an Institutional Accredited Investor Global Note or a beneficial interest therein to a QIB in reliance on Rule 144A
shall be made upon the representation of the transferee in the form as set forth on the reverse of the Security that it is purchasing for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the proposed transferee has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; 

    (ii) a
transfer of a Rule 144A Note or an Institutional Accredited Investor Global Note or a beneficial interest therein to an IAI shall be made upon receipt by
the Trustee or its agent of a certificate substantially in the form set forth in Section 2.7 from the proposed transferee and, if requested by
the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them; and 

    (iii) a
transfer of a Rule 144A Note or an Institutional Accredited Investor Global Note or a beneficial interest therein to a Non-U.S. Person in
reliance on Regulation S shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.8  from the proposed transferor and, if
requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each
of them. 

13

 

    (b) The
following provisions shall apply with respect to any proposed transfer of a Regulation S Note prior to the expiration of the Restricted Period: 

     (i) a
transfer of a Regulation S Note or a beneficial interest therein to a QIB in reliance on Rule 144A shall be made upon the representation of the
transferee, in the form set forth on the reverse of the Security, that it is purchasing for its own account or an account with respect to which it exercises sole investment discretion and that it and
any such account is a "qualified institutional buyer" within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Company as the proposed transferee has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; 

    (ii) a
transfer of a Regulation S Note or a beneficial interest therein to an IAI shall be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 2.7 from
the proposed transferee and, if requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them; and 

    (iii) a
transfer of a Regulation S Note or a beneficial interest therein to a Non-U.S. Person in reliance on Regulation S shall be made upon
receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.8 hereof from the proposed transferor and,
if requested by the Company or the Trustee, receipt by the Trustee or its agent of an opinion of counsel, certification and/or other information satisfactory to each of them. 

    After
the expiration of the Restricted Period, interests in the Regulation S Note may be transferred without requiring the certification set forth in  Section 2.7 or Section 2.8 or any additional certification. 

    (c)  Restricted Securities Legend.  Upon the transfer, exchange or replacement of Securities not bearing
a Restricted Securities Legend, the Registrar shall deliver Securities that do not bear a Restricted Securities Legend. Upon the transfer, exchange or replacement of Securities bearing a Restricted
Securities Legend, the Registrar shall deliver only Securities that bear a Restricted Securities Legend unless there is delivered to the Registrar an Opinion of Counsel to the effect that neither such
legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. 

    (d) The
Registrar shall retain copies of all letters, notices and other written communications received pursuant to  Section 2.1 or this Section 2.6. The
Company shall have the right to inspect and make
copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable prior written notice to the Registrar. 

    (e)  Obligations with Respect to Transfers and Exchanges of Securities.  

     (i) To
permit registrations of transfers and exchanges, the Company shall, subject to the other terms and conditions of this  Article II, execute, and the Trustee shall authenticate, Definitive Securities
and Global Securities at the Registrar's or
co-registrar's request. 

    (ii) No
service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require from a Holder payment of a sum sufficient to
cover any transfer tax, assessments or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer pursuant to Section 3.5 or Section 9.5). 

14

 

    (iii) The Registrar or co-registrar shall not be required (A) to issue, to register the transfer of or to exchange any Security during a period
beginning at the opening of 15 days before the day of any selection of Securities for redemption and ending at the close of business on the day of selection, (B) to register the transfer
of or to exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (C) to register the transfer of or to
exchange a Security between a record date and the next succeeding interest payment date. 

    (iv) Prior
to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest
on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary. 

    (v) Any
Definitive Security delivered in exchange for an interest in a Global Security pursuant to Section 2.1(d)
shall, except as otherwise provided by Section 2.6(c), bear the applicable legend regarding transfer restrictions applicable to the Definitive
Security set forth in Section 2.1(c). 

    (vi) All
Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits
under this Indenture as the Securities surrendered upon such transfer or exchange. 

    (f)  No Obligation of the Trustee.  (i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a participant in, DTC or other Person with respect to the accuracy of the records of DTC or its nominee or of any participant or member
thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than DTC) of any notice (including
any notice of redemption) or the payment of any amount or delivery of any Securities (or other security or property) under or with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders in respect of the Securities shall be given or made only to or upon the order of the registered Holders (which shall be DTC or its nominee
in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Trustee may
rely and shall be fully protected in relying upon information furnished by DTC with respect to its members, participants and any beneficial owners. 

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

15

  

    SECTION
2.7.  Form of Certificate to be Delivered in Connection with Transfers to Institutional Accredited
Investors.  

[Date] 

Health
Net, Inc.

c/o U.S. Bank Trust National Association

100 Wall Street

Suite 1600

New York, New York 10005

Attention: Corporate Trust Services 

Ladies
and Gentlemen: 

    This
certificate is delivered to request a transfer of $            principal amount of the 83/8% Senior Notes Due 2011 (the "Notes") of Health Net, Inc.
(the "Company"). 

    Upon
transfer, the Notes would be registered in the name of the new beneficial owner as follows: 

	 	 	Name:	 	 	 	 
	 	 	 	 	
	 	 
	

 	
 	

Address:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

 	
 	

Taxpayer ID Number:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

 	
 	

The undersigned represents and warrants to you that:	
 	

 

    1.  We
are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount
of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and risk of our investment in the Notes and we invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 

    2.  We
understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes to offer, sell or otherwise transfer such Notes prior to the date which is two years after
the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Notes (or any predecessor thereto) (the
"Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective
under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"),
to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of such an institutional 

16

 

"accredited investor," in each case in a minimum principal amount of Notes of $250,000 or (f) pursuant to any other available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer
of the Notes is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the
form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" (within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) that is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges
that the Company and the Trustee reserve the right prior to any offer, sale or other transfer prior to the Resale Termination Date of the Notes pursuant to clauses (d), (e) or (f) above
to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee. 

    3.  We
represent that either: (i) no portion of the assets used to acquire and hold the Notes or any interest therein constitutes assets of any
(A) employee benefit plan that is subject to Title 1 of the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (B) plan, individual retirement account or other
arrangement that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code") or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA
(collectively, "Similar Laws"), or (C) other entity whose underlying assets are considered to include "plan assets" of such plans, accounts or arrangements (each, a "Plan"), or (ii) the
purchase and holding of the Notes or any interest therein will not constitute a non-exempt prohibited transaction within the meaning of Section 406 of ERISA or Section 4975
of the Code or similar violation under any applicable Similar Laws. 

	 	 	TRANSFEREE:	 	 
	 	 	 	 	

	

 	
 	

BY:	
 	

 
	 	 	 	 	

17

 

    SECTION 2.8.  Form of Certificate to be Delivered in Connection with Transfers Pursuant to
Regulation S.  

[Date] 

Health
Net, Inc. Inc.

c/o U.S. Bank Trust National Association (the "Trustee")

100 Wall Street

Suite 1600

New York, New York 10005

Attention: Corporate Trust Services 

	Re:	 	Health Net, Inc.

83/8% Senior Notes Due 2011 (the "Securities")

Ladies
and Gentlemen: 

    In
connection with our proposed sale of $      aggregate principal amount of the Securities, we confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: 

    (a) the
offer of the Securities was not made to a person in the United States; 

    (b) either
(i) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States or (ii) the transaction was executed in, on or through the facilities of a designated off-shore securities market and
neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; 

    (c) no
directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of
Regulation S, as applicable; and 

    (d) the
transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. 

    In
addition, if the sale is made during a distribution compliance period and the provisions of Rule 903(b)(2) or Rule 904(b)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2) or Rule 904(b)(1), as the case may be. 

    You
and the Trustee are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. 

	 	 	Very truly yours,	 	 
	

 	
 	

[Name of Transferor]	
 	

 
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	
	 	 
	

 	
 	

 Authorized Signature

	
 	

 

18

 

    SECTION
2.9.  Mutilated, Destroyed, Lost or Stolen Securities.  If a mutilated Security is surrendered to
the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if
the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is replaced, and, in the absence of notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. 

    In
case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security,
pay such Security. 

    Upon
the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the Trustee) in connection therewith. 

    Every
new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the
Company and any other obligor upon the Securities, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other Securities duly issued hereunder. 

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

    SECTION
2.10.  Outstanding Securities.  Securities outstanding at any time are all Securities
authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Security ceases to be outstanding in the
event the Company or a Subsidiary holds the Security, provided, however, that (i) for purposes of determining which are outstanding for consent or voting purposes hereunder, Securities shall
cease to be outstanding in the event the Company or an Affiliate of the Company holds the Security and (ii) in determining whether the Trustee shall be protected in making a determination
whether the Holders of the requisite principal amount of outstanding Securities are present at a meeting of Holders of Securities for quorum purposes or have consented to or voted in favor of any
request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, or relying upon any such quorum, consent or vote, only Securities which a Trust Officer of the
Trustee actually knows to be held by the Company or an Affiliate of the Company shall not be considered outstanding. 

    If
a Security is replaced pursuant to Section 2.9, it ceases to be outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide purchaser. 

    If
the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a Redemption Date or maturity date money sufficient to pay all principal and interest payable
on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Securityholders
on that date 

19

 

pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. 

    SECTION
2.11.  Temporary Securities.  Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of Definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Securities. After the preparation of Definitive Securities,
the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at any office or agency maintained by the Company for that purpose and such exchange
shall be without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute, and the Trustee shall authenticate and make available for
delivery in exchange therefor, one or more Definitive Securities representing an equal principal amount of Securities. Until so exchanged, the Holder of temporary Securities shall in all respects be
entitled to the same benefits under this Indenture as a holder of Definitive Securities. 

    SECTION
2.12.  Cancellation.  The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and return to the Company all Securities surrendered for registration of transfer, exchange, payment or cancellation. The Company may not issue new Securities to replace Securities it has paid
or delivered to the Trustee for cancellation for any reason other than in connection with a transfer or exchange. 

    SECTION
2.13.  Payment of Interest; Defaulted Interest.  Interest on any Security which is payable, and
is punctually paid or duly provided for, on any interest payment date shall be paid to the Person in whose name such Security (or one or more predecessor Securities) is registered at the close of
business on the regular record date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 2.3. 

    Any
interest on any Security which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease
to be payable to the Holder on the regular record date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate
borne by the Securities (such defaulted interest and interest thereon herein collectively called "Defaulted Interest") shall be paid by the Company, at
its election in each case, as provided in clause (a) or (b) below: 

    (a) The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective predecessor Securities) are
registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date (not less than 30 days after such notice) of the proposed payment (the
"Special Interest Payment Date"), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a record date (the "Special
Record Date") for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the Special Interest Payment Date
and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and
at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest 

20

 

and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 10.2, not less than
10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Securities (or their respective predecessor
Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b). 

    (b) The
Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee. 

    Subject
to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of, transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. 

    SECTION
2.14.  Computation of Interest.  Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months. 

    SECTION
2.15.  CUSIP and ISIN Numbers.  The Company in issuing the Securities may use "CUSIP" and "ISIN"
numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" and "ISIN" numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such CUSIP or ISIN numbers. The Company shall promptly notify the
Trustee of any change in the CUSIP and ISIN numbers. 

 
 

ARTICLE III
  
    Covenants    
  

    SECTION
3.1.  Payment of Securities.  The Company shall pay the principal of, premium, if any, and
interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal, premium and interest shall be considered paid on the date due if on such date the
Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, premium and interest then due and the Trustee or the Paying Agent, as the case may be, is not
prohibited from paying such money to the Securityholders on that date. 

    The
Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to
the extent lawful. 

    Notwithstanding
anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes
imposed by the United States of America from principal or interest payments hereunder. 

21

  

    SECTION
3.2.  Limitation on Liens.  The Company shall not, and shall not permit any of its Principal
Subsidiaries to, issue, assume, Incur or guarantee any Debt secured by a mortgage, pledge, lien or other encumbrance, directly or indirectly, on any of the Common Stock of a Principal Subsidiary owned
by the Company or any of its Principal Subsidiaries, unless the Company's obligations under the Securities and, if the Company so elects, any other indebtedness of the Company ranking on a parity
with, or prior to, the Securities, shall be secured equally and ratably with, or prior to, such secured Debt so long as it is outstanding and is so secured. 

    SECTION
3.3.  Maintenance of Office or Agency.  The Company shall maintain in the City of New York an
office or agency where the Securities may be presented or surrendered for payment, where, if applicable, the Securities may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this Indenture may be served. The principal corporate trust office (the "Corporate Trust
Office") of the Trustee located in the City of New York shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or
agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate
Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. 

    The
Company may also from time to time designate one or more other offices or agencies (in or outside of the City of New York) where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind any such designation; provided, however,that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any such other office or agency. 

    SECTION
3.4.  Corporate Existence.  Subject to  Article IV, the Company shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence,
rights (charter and statutory), licenses and franchises; provided, however, that the Company shall not be required to preserve any such right, license
or franchise if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is
not, and will not be, disadvantageous in any material respect to the Holders, and provided, further, that the Company may consolidate with or merge with
or into, or sell, lease or convey all or substantially all of its assets to, any Person in accordance with Section 4.1. 

    SECTION
3.5.  Payment of Taxes and Other Claims.  The Company shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (ii) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a material liability or lien upon the
property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves, if
necessary (in the good faith judgment of management of the Company), are being maintained in accordance with GAAP or where the failure to effect such payment will not be disadvantageous to the
Holders. 

    SECTION
3.6.  Payments for Consent.  Neither the Company nor any of its Subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of interest, fees or otherwise, to any Holder of any Securities for or as an inducement to any consent, waiver or 

22

 

amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid or is paid to all Holders of the Securities that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. 

    SECTION
3.7.  Compliance Certificate.  The Company shall deliver to the Trustee within 120 days
after the end of each Fiscal Year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default or Event of Default and whether or not the signers know of any Default or Event of Default that occurred during such period. If they do, the certificate shall describe
the Default or Event of Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA § 314(a)(4). 

    SECTION
3.8.  Statement by Officers as to Default.  The Company shall deliver to the Trustee, as soon as
possible and in any event within 10 days after the Company becomes aware of the occurrence of any Default or Event of Default, an Officers' Certificate setting forth the details of such Default
or Event of Default and the action which the Company proposes to take with respect thereto. 

 
 

ARTICLE IV
  
    Successor Company    
  

    SECTION
4.1.  Consolidation, Merger and Sale of Assets.  The Company shall not consolidate with or merge
with or into, or sell, lease or convey all or substantially all its assets to, any Person, unless: 

     (i) the
resulting, surviving or transferee Person (the "Successor Company") shall be either the Company or a Person
organized under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall assume by supplemental indenture executed
and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture; and 

    (ii) immediately
after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. 

    For
purposes of this Section 4.1, the sale, lease, conveyance, assignment, transfer, or other disposition of all or
substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. 

    The
Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, but, in the case of a lease of all or
substantially all its assets, the Company will not be released from the obligation to pay the principal of and interest on the Securities. 

 
 

ARTICLE V
  
    Redemption of Securities    
  

    SECTION
5.1.  Optional Redemption.  The Securities may be redeemed, at the option of the Company, at any
time in whole, or from time to time in part, subject to the conditions and at the redemption prices specified in the form of Securities set forth in Exhibits
A and B hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid
interest to the Redemption Date. 

23

 

    SECTION 5.2.  Applicability of Article.  Redemption of Securities at the election of the Company or
otherwise, as permitted by any provision of this Indenture, shall be made in accordance with such provision and this Article. 

    SECTION
5.3.  Election to Redeem; Notice to Trustee.  The election of the Company to redeem any
Securities pursuant to Section 5.1 shall be evidenced by a resolution of the Board of Directors of the Company. In case of any redemption at the election of the Company, the Company shall, upon
not later than the earlier of the date that is 30 days prior to the Redemption Date fixed by the Company or the date on which notice is given to the Holders (except as provided in  Section 5.5
or unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal
amount of Securities to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to be redeemed pursuant to  Section 5.4.

    SECTION
5.4.  Selection by Trustee of Securities to Be Redeemed.  If less than all the Securities are to
be redeemed at the option of the Company at any time pursuant to Section 5.1, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee from the outstanding Securities not previously called for redemption, in compliance with the requirements of the principal national
securities exchange, if any, on which such Securities are listed, or, if such Securities are not so listed, then on a pro rata basis, by lot or by such
other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements) and which may provide for the selection for redemption of portions of
the principal of the Securities; provided, however, that (i) Securities and portions thereof that the Trustee selects shall be in amounts of
$1,000 or an integral multiple of $1,000 and (ii) no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less than $1,000. 

    The
Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed. 

    For
all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Securities shall relate, in the case of any Security redeemed or to
be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. 

    SECTION
5.5.  Notice of Redemption.  Notice of redemption shall be given in the manner provided for in  Section 10.2 not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed. The Trustee
shall give notice of redemption in the Company's name and at the Company's expense; provided, however, that the Company shall deliver to the Trustee, at
least 45 days prior to the Redemption Date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in
the following items. 

    All
notices of redemption shall state: 

    (1) the
Redemption Date, 

    (2) the
redemption price and the amount of accrued interest to the Redemption Date payable as provided in  Section 5.7, if any, 

    (3) if
less than all outstanding Securities are to be redeemed, the identification of the particular Securities (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Securities to be redeemed and the aggregate principal amount of Securities to be outstanding after such partial redemption, 

    (4) in
case any Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of
such Security, the 

24

 

Holder will receive, without charge, a new Security or Securities of authorized denominations for the principal amount thereof remaining unredeemed, 

    (5) that
on the Redemption Date the redemption price (and accrued interest, if any, to the Redemption Date payable as provided in  Section 5.7) will become due and payable upon each such Security, or the
portion thereof, to be redeemed, and, unless the Company defaults in
making the redemption payment, that interest on Securities called for redemption (or the portion thereof) will cease to accrue on and after said date, 

    (6) the
place or places where such Securities are to be surrendered for payment of the redemption price and accrued interest, if any, 

    (7) the
name and address of the Paying Agent, 

    (8) that
Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price, 

    (9) the
CUSIP number, and that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the
Securities, and 

    (10) the
paragraph of the Securities pursuant to which the Securities are to be redeemed. 

    SECTION
5.6.  Deposit of Redemption Price.  Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.4)
an amount of money sufficient to pay the redemption price of, and accrued interest on, all the Securities which are to be redeemed on that date. 

    SECTION
5.7.  Securities Payable on Redemption Date.  Notice of redemption having been given as
aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the redemption price therein specified (together with accrued interest, if any, to the Redemption
Date), and from and after such date (unless the Company shall default in the payment of the redemption price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the redemption price, together with accrued interest, if any, to the Redemption Date (subject
to the rights of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). 

    If
any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid, bear interest from the
Redemption Date at the rate borne by the Securities. 

    SECTION
5.8.  Securities Redeemed in Part.  Any Security which is to be redeemed only in part pursuant to
the provisions of this Article V shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to  Section 3.3
(with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Security at the expense of the Company, a new Security or Securities, of any authorized denomination as requested by such Holder, in an aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered, provided that each such new Security will be in a
principal amount of $1,000 or integral multiple thereof. 

25

  

 
 

ARTICLE VI
  
    Defaults and Remedies    
  

    SECTION
6.1.  Events of Default.  An "Event of Default" occurs if: 

    (1) the
Company defaults in any payment of interest or additional interest (as required by the Exchange and Registration Rights Agreement) on any Security when the same
becomes due and payable, and such default continues for a period of 30 days; 

    (2) the
Company defaults in the payment of the principal or premium, if any, on any Security when the same becomes due and payable at its Stated Maturity, upon optional
redemption, upon declaration or otherwise; 

    (3) the
Company defaults in the performance of or breaches any covenant or agreement in this Indenture or under the Securities, other than those referred to in
(1) or (2) above, and such default continues for 60 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities; 

    (4) (A)
the Company or any of its Subsidiaries fails to pay indebtedness for money borrowed by the Company or any of its Subsidiaries in an aggregate principal amount
of at least $50,000,000, at the later of final maturity or the expiration of any applicable grace period ("Payment Default") and such payment shall not have been made, waived or extended within
30 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities or (B) the maturity of indebtedness for money borrowed by
the Company or any of its Subsidiaries in an aggregate principal amount of at least $50,000,000 is accelerated, if such acceleration results from a default under the instrument giving rise to or
securing such indebtedness for money borrowed (the "cross acceleration provision") and such acceleration has not been discharged in full or such acceleration has not been rescinded or annulled within
30 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities; 

    (5) the
Company or any Subsidiary which is a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law (as defined below): 

    (A) commences
a voluntary case; 

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

    (C) consents
to the appointment of a Custodian (as defined below) of it or for any substantial part of its property; or 

    (D) makes
a general assignment for the benefit of its creditors; or 

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

    (A) is
for relief against the Company in an involuntary case; 

    (B) appoints
a Custodian of the Company for all or substantially all of the Company's property; or 

    (C) orders
the winding up or liquidation of the Company; and 

    in
each case the order or decree remains unstayed and in effect for 60 days. 

    The
foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or
pursuant to any 

26

 

judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. 

    The
term "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or
state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any
Bankruptcy Law. 

    The
Company shall deliver to the Trustee, within 10 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Default or Event of Default
under clauses (3), (4), (5) or (6) of this Section 6.1, which notice shall contain the status thereof and a description of the
action being taken or proposed to be taken by the Company in respect thereof. 

    SECTION
6.2.  Acceleration.  If an Event of Default described in clauses (1), (2), (3) and
(4) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in outstanding principal amount of the Securities by notice to the Company and the Trustee,
may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Securities to be due and payable. Upon such a
declaration, such principal, premium and accrued and unpaid interest shall be immediately due and payable. If an Event of Default described in clauses (5) and (6) above occurs and is
continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Securities will become and be immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. 

    SECTION
6.3.  Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, or premium, if any, or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. 

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

    SECTION
6.4.  Waiver of Past Defaults.  The Holders of a majority in principal amount of the outstanding
Securities by notice to the Trustee may (a) waive, by their consent (including, without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for,
Securities), an existing Default or Event of Default and its consequences except (i) a Default or Event of Default in the payment of the principal of, premium, if any, or interest on a Security
or (ii) a Default or Event of Default in respect of a provision that under Section 9.2 cannot be amended without the consent of each
Securityholder affected and (b) rescind any such acceleration with respect to the Securities and its consequences if (1) rescission would not conflict with any judgment or decree of a
court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Securities that have become due
solely by such declaration of acceleration, have been cured or waived. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any consequent right. 

    SECTION
6.5.  Control by Majority.  The Holders of a majority in principal amount of the outstanding
Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.1 and  Section 7.2, that the Trustee
determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. 

27

 

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

    SECTION
6.6.  Limitation on Suits.  Subject to  Section 6.7, a Securityholder may not pursue any remedy with respect to this Indenture or
the Securities unless: 

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

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

    (3) such
Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; 

    (4) the
Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and 

    (5) the
Holders of a majority in principal amount of the Securities do not give the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such
request during such 60-day period. 

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

    SECTION
6.7.  Rights of Holders to Receive Payment.  Notwithstanding any other provision of this
Indenture (including, without limitation, Section 6.6), the right of any Holder to receive payment of principal of, premium, if any, or interest
on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder. 

    SECTION
6.8.  Collection Suit by Trustee.  If an Event of Default specified in  Section 6.1(1) or (2)
 occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in  Section 7.7. 

    SECTION
6.9.  Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Securityholders allowed in any judicial proceedings relative to the Company, its Subsidiaries or its or their respective creditors or properties and may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under  Section 7.7. 

    SECTION
6.10.  Priorities.  If the Trustee collects any money or property pursuant to this  Article VI, it shall pay out the money or
property in the following order: 

    FIRST:
to the Trustee for amounts due under Section 7.7; 

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

28

 

    THIRD: to the Company. 

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

    SECTION
6.11.  Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to  Section 6.7 or a
suit by Holders of more than 10% in outstanding principal amount of the Securities. 

 
 

ARTICLE VII
  
    Trustee    
  

    SECTION
7.1.  Duties of Trustee.  (a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs; provided that if an Event of Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any
loss, liability or expense (other than as provided in clause (c) below). 

    (b) Except
during the continuance of an Event of Default: 

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

    (2) in
the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provisions hereof
are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but
need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). 

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

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

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

    (3) the
Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to  Section 6.5. 

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

29

 

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

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

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

    (h) Every
provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of
this Section and to the provisions of the TIA. 

    (i)  Unless
otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer. 

    (j)  The
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders
unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against any loss, liability or expense (including reasonable attorneys' fees and expenses)
that might be incurred by it in compliance with such request or direction. 

    SECTION
7.2.  Rights of Trustee.  Subject to Section 7.1, 

    (a) The
Trustee may conclusively rely on any document (whether in its original or facsimile form) reasonably believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. 

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

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

    (d) The
Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers,  provided, however, that the Trustee's conduct does
not constitute willful misconduct or negligence. 

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

    SECTION
7.3.  Individual Rights of Trustee.  The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Section 7.10 and  Section 7.11. In
addition, the Trustee shall be permitted to engage in transactions with the Company; provided,
however, that if the Trustee acquires any conflicting interest the Trustee must
(i) eliminate such conflict within 90 days of acquiring such conflicting interest, (ii) apply to the SEC for permission to continue acting as Trustee or (iii) resign. 

    SECTION
7.4.  Trustee's Disclaimer.  The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, shall not be 

30

 

accountable for the Company's use of the proceeds from the Securities and shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate of authentication. 

    SECTION
7.5.  Notice of Defaults.  If a Default or Event of Default occurs and is continuing and if a
Trust Officer has actual knowledge thereof, the Trustee shall mail to each Securityholder at the address set forth in the Note Register notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Security (including payments pursuant to the optional redemption
provisions of such Security), the Trustee may withhold the notice if and so long as its Board of Directors, a committee of its Board of Directors or a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders. 

    SECTION
7.6.  Reports by Trustee to Holders.  As promptly as practicable after each May 15
beginning with the May 15 following the date of this Indenture, and in any event prior to July 15 in each year, the Trustee shall mail to each Securityholder a brief report dated as of
such May 15 that complies with TIA § 313(a). The Trustee also shall comply with TIA § 313(b). The Trustee shall also transmit by mail all reports required by TIA
§ 313(c). 

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

    SECTION
7.7.  Compensation and Indemnity.  The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services hereunder as the Company and the Trustee shall from time to time agree in writing. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or
made by it, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee against any and all loss, liability, damages, claims or expense (including reasonable attorneys' fees and expenses) incurred by it
without negligence or bad faith on its part in connection with the administration of this trust and the performance of its duties hereunder, including
the costs and expenses of enforcing this Indenture (including this Section 7.7) and of defending itself against any claims (whether asserted by
any Securityholder, the Company or otherwise). The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall provide reasonable cooperation in the defense. The Trustee may have separate counsel and the
Company shall pay the fees and expenses of such counsel, provided that the Company shall not be required to pay such fees and expenses if it assumes the
Trustee's defense, and, in the reasonable judgment of outside counsel to the Trustee, there is no conflict of interest between the Company and the Trustee in connection with such defense. The Company
need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own willful misconduct, negligence or bad faith. 

    To
secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other
than money or property held in trust to pay principal of and interest on particular Securities. The Trustee's right to receive payment of any amounts due under this  Section 7.7 shall not be
subordinate to any other liability or Debt of the Company. 

    The
Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified
in 

31

 

 Section 6.1(5) or (6) with respect to the Company, the expenses are intended to constitute expenses of administration
under any Bankruptcy Law. 

    SECTION
7.8.  Replacement of Trustee.  The Trustee may resign at any time by so notifying the Company.
The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: 

    (1) the
Trustee fails to comply with Section 7.10; 

    (2) the
Trustee is adjudged bankrupt or insolvent; 

    (3) a
receiver or other public officer takes charge of the Trustee or its property; or 

    (4) the
Trustee otherwise becomes incapable of acting. 

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

    A
successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in  Section 7.7. 

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

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

    Notwithstanding
the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee. 

    SECTION
7.9.  Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act
shall be the successor Trustee. 

    In
case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Securities
shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated;
and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in
the name of the successor to the Trustee; provided that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate
Securities in the name of any predecessor Trustee shall only apply to its successor or successors by merger, consolidation or conversion. 

32

  

    SECTION
7.10.  Eligibility; Disqualification.  The Trustee shall at all times satisfy the requirements of
TIA § 310(a). The Trustee shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. The Trustee shall
comply with TIA § 310(b); provided, however, that there shall be excluded from the operation
of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA § 310(b)(1) are met. 

    SECTION
7.11.  Preferential Collection of Claims Against Company.  The Trustee shall comply with TIA
§ 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent
indicated. 

 
 

ARTICLE VIII
  
    Discharge of Indenture; Defeasance    
  

    SECTION
8.1.  Discharge of Liability on Securities; Defeasance.  (a) Subject to  Section 8.1(c), when (i)(x) the Company delivers
to the Trustee all outstanding Securities (other than Securities replaced pursuant to  Section 2.9) for cancellation or (y) all outstanding Securities not theretofore delivered for cancellation
have become due and payable,
whether at maturity or upon redemption, or will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name and at the expense of the Company and the Company irrevocably deposits or causes to be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders money in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any
reinvestment of interest to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest
to the date of maturity or redemption, (ii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company is a party or by which the Company is bound; (iii) the Company has
paid or caused to be paid all sums payable by it under this Indenture and the Securities; and (iv) the Company has delivered irrevocable instructions to the Trustee under this Indenture to
apply the deposited money toward the payment of such Securities at maturity or the Redemption Date, as the case may be, then the Trustee shall acknowledge satisfaction and discharge of this Indenture
on demand of the Company (accompanied by an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent specified herein relating to the satisfaction and discharge of this
Indenture have been complied with) and at the cost and expense of the Company. 

    (b) Subject
to Sections 8.1(c) and Section 8.2, the Company at
any time may terminate (i) all its obligations under the Securities and this Indenture ("legal defeasance option"), and after giving effect to
such legal defeasance, any omission to comply with such obligations shall no longer constitute a Default or Event of Default or (ii) its obligations under  Section 3.2 and Section 3.6, and the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason
of any reference in any such covenant to any other provision herein or in any other document, and such omission to comply shall not constitute a Default or Event of Default under  Section 6.1(3)
(clause (ii) being referred to as the "covenant defeasance option"), but
except as specified above, the remainder of this Indenture and the Securities shall be unaffected thereby. The Company may exercise its legal defeasance option notwithstanding its prior exercise of
its covenant defeasance option. 

33

 

    If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance
option, payment of the Securities may not be accelerated because of an Event of Default specified in Section 6.1(4). 

    Upon
satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company
terminates. 

    (c) Notwithstanding
the provisions of Section 8.1(a) and (b), the
Company's obligations in Section 2.2, Section 2.3,  Section 2.4, Section 2.5,  Section 2.6, Section 2.9,  Section 2.10,
Section 2.11,  Section 2.12, Section 3.1,  Section 3.3, Section 3.4,
Section 3.5, Section 3.7,  Section 3.8, Section 6.7,  Section 7.7, Section 7.8 and in this  Article VIII shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections
7.7, 8.4 and 8.5 shall survive. 

    SECTION
8.2.  Conditions to Defeasance.  The Company may exercise its legal defeasance option or its
covenant defeasance option only if: 

    (1) the
Company irrevocably deposits in trust with the Trustee for the benefit of the Holders money in U.S. dollars or U.S. Government Securities or a combination
thereof for the payment of principal, premium, if any, and interest on the Securities to maturity or redemption, as the case may be; 

    (2) the
Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of
principal and interest when due and without
reinvestment on the deposited U.S. Government Securities plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity; 

    (3) no
Default or Event of Default shall have occurred and be continuing on the date of such deposit or, with respect to certain Events of Default specified in  Section 6.1(5) and Section 6.1(6), on the 91st day after such date of deposit; 

    (4) such
legal defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a Default under, this Indenture or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; 

    (5) the
Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) to the effect that (A) the Securities
and (B) assuming no intervening bankruptcy of the Company between the date of deposit and the 91st day following the deposit and that no Holder of the Securities is an insider of the Company,
after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' right
generally; 

    (6) the
deposit does not constitute a default under any other agreement binding on the Company; 

    (7) the
Company delivers to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; 

    (8) in
the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions)
in the United States stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the 

34

 

applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such
legal defeasance had not occurred; 

    (9) in
the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and
exclusions) in the United States to the effect that the Securityholders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and
will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred; and 

    (10) the
Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge
of the Securities and this Indenture as contemplated by this Article VIII have been complied with. 

    SECTION
8.3.  Application of Trust Money.  The Trustee shall hold in trust money or U.S. Government
Securities deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Securities
through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. 

    SECTION
8.4.  Repayment to Company.  The Trustee and the Paying Agent shall promptly turn over to the
Company upon request any excess money or securities held by them upon payment of all the obligations under this Indenture. 

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

    SECTION
8.5.  Indemnity for U.S. Government Securities.  The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Securities or the principal and interest received on such U.S. Government Securities. 

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

    The
Trustee's rights under this Article VIII shall survive termination of this Indenture. 

 
 

ARTICLE IX
  
    Amendments    
  

    SECTION
9.1.  Without Consent of Holders.  The Company and the Trustee may amend this Indenture or the
Securities without notice to or consent of any Securityholder: 

    (1) to
cure any ambiguity, omission, defect or inconsistency; 

35

 

    (2) to comply with Article IV in respect of the assumption by a Successor Company of an obligation of the Company
under this Indenture; 

    (3) to
add guarantees with respect to the Securities; 

    (4) to
secure the Securities; 

    (5) to
add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; 

    (6) to
make any change that does not adversely affect the rights of any Securityholder; or 

    (7) to
comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA. 

    After
an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all
Securityholders at the address set forth in the Note Register, or any defect therein, shall not impair or affect the validity of an amendment under this Section. 

    SECTION
9.2.  With Consent of Holders.  The Company and the Trustee may amend this Indenture or the
Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities). However, without the consent of each Securityholder affected, an amendment may not: 

    (1) reduce
the amount of Securities whose Holders must consent to an amendment; 

    (2) reduce
the stated rate of or extend the stated time for payment of interest on any Security; 

    (3) reduce
the principal of or extend the Stated Maturity of any Security; 

    (4) reduce
the premium payable upon the redemption of any Security or change the time at which any Security may or shall be redeemed as described above under  Article V or any similar provision, whether
through an amendment to or waiver of  Article V, a definition or otherwise; 

    (5) make
any Security payable in money other than that stated in the Security; 

    (6) impair
the right of any Holder to receive payment of principal of, premium, if any, and interest on such Holder's Securities on or after the due dates therefor or
to institute suit for the enforcement of any payment on or with respect to such Holder's Securities; or 

    (7) make
any change to the amendment provisions which require each Holder's consent or in the waiver provisions. 

    It
shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the substance thereof. 

    After
an amendment under this Section 9.2 becomes effective, the Company shall mail to Securityholders a notice briefly
describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this  Section 9.2. 

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

    SECTION
9.4.  Revocation and Effect of Consents and Waivers.  A consent to an amendment or a waiver by a
Holder of a Security shall bind the Holder and every subsequent Holder of that Security or 

36

 

portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes
effective or otherwise in accordance with any related solicitation documents. After an amendment or waiver becomes effective, it shall bind every Securityholder. An amendment or waiver shall become
effective upon receipt by the Trustee of the requisite number of written consents under Section 9.1 or  9.2 as applicable. 

    The
Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described
above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at
such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not
such Persons continue to be Holders after such record date. No such consent shall become valid or effective more than 120 days after such record date. 

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

    SECTION
9.6.  Trustee To Sign Amendments.  The Trustee shall sign any amendment authorized pursuant to
this Article IX if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee
may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Sections
7.1 and 7.2) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject
to customary exceptions, and complies with the provisions hereof (including Section 9.3). 

 
 

ARTICLE X
  
    Miscellaneous    
  

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

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

if
to the Company: 

Health
Net, Inc.

21650 Oxnard Street

Woodland Hills, California 91367

Attention: General Counsel 

With
a copy to: 

37

 

Skadden, Arps, Slate, Meagher & Flom (Illinois)

333 West Wacker Drive, Suite 2100

Chicago, Illinois 60606

Attention: Peter C. Krupp, Esq. 

if
to the Trustee: 

U.S.
Bank Trust National Association

100 Wall Street, Suite 1600

New York, New York 10005

Attention: Corporate Trust Services 

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

    Any
notice or communication mailed to a registered Securityholder shall be mailed by first-class mail to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. 

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

    SECTION
10.3.  Communication by Holders with other Holders.  Securityholders may communicate pursuant to
TIA § 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA § 312(c). 

    SECTION
10.4.  Certificate and Opinion as to Conditions Precedent.  Upon any request or application by
the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee: 

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

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

    SECTION
10.5.  Statements Required in Certificate or Opinion.  Each certificate or opinion with respect
to compliance with a covenant or condition provided for in this Indenture shall include: 

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

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

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

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

    In
giving such Opinion of Counsel, counsel may rely as to factual matters on an Officers' Certificate or on certificates of public officials. 

38

 

    SECTION 10.6.  When Securities Disregarded.  In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination. 

    SECTION
10.7.  Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules for
action by, or a meeting of, Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. 

    SECTION
10.8.  Legal Holidays.  A "Legal Holiday" is a Saturday, a Sunday or other day on which
commercial banking institutions are authorized or required to be closed in New York City. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. 

    SECTION 10.9.  GOVERNING
LAW.  THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. 

    SECTION
10.10.  No Recourse Against Others.  An incorporator, director, officer, employee, Affiliate or
stockholder of the Company, solely by reason of this status, shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the
consideration for the issue of the Securities. 

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

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

    SECTION
10.13.  Variable Provisions.  The Company initially appoints the Trustee as Paying Agent and
Registrar and custodian with respect to any Global Securities. 

    SECTION
10.14.  Table of Contents; Headings.  The table of contents, cross-reference sheet and headings
of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof. 

39

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

	 	 	HEALTH NET, INC.
	

 	
 	

By:	
 	

/s/ STEVEN P. ERWIN   

	 	 	 	 	Name:	 	Steven P. Erwin
	 	 	 	 	Title:	 	Executive Vice President and

Chief Financial Officer
	

 	
 	

U.S. BANK TRUST NATIONAL ASSOCIATION,

as Trustee
	

 	
 	

By:	
 	

/s/ ADAM BERUNAN   

	 	 	 	 	Name:	 	Adam Berunan
	 	 	 	 	Title:	 	Assistant Secretary

40

 
EXHIBIT A 

[FORM
OF FACE OF INITIAL SECURITY] 

[Applicable
Restricted Securities Legend] 

[Depository
Legend, if applicable] 

No.
[      ]
                                        Principal
Amount $[            ], as revised by the Schedule of Increases and Decreases in Global
Security attached hereto 

CUSIP
NO.                 

ISIN:                  

83/8%
Senior Notes Due 2011 

    Health
Net, Inc., a Delaware corporation, promises to pay to [            ], or registered assigns, the principal sum of
[            ] Dollars, as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on April 15, 2011. 

Interest
Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1 

    Additional
provisions of this Security are set forth on the other side of this Security. 

	 	 	HEALTH NET, INC.
	

 	
 	

By:
	 	 	

	TRUSTEE'S CERTIFICATE OF

AUTHENTICATION	 	 

U.S. BANK TRUST NATIONAL ASSOCIATION,

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture. 

	By	 	 
	Authorized Signatory	 	Date: [            ]  , 2001

A–1

 
[FORM OF REVERSE SIDE OF INITIAL SECURITY] 

83/8%
Senior Note Due 2011 

1. Interest  

    Health Net, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. 

    The
Company will pay interest semiannually on April 15 and October 15 of each year commencing October 15, 2001. Interest on the Securities will accrue from the
most recent date to which interest has been paid on the Securities or, if no interest has been paid, from April 12, 2001. The Company shall pay interest on overdue principal or premium, if any
(plus interest on such interest to the extent
lawful), at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 

2. Method of Payment  

    By at least 10:00 a.m. (New York City time) on the date on which any principal of or interest on any Security is due and payable, the Company shall
deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest when due. The Company will pay interest (except Defaulted Interest) to the Persons
who are registered Holders of Securities at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Except as described in the succeeding two sentences, the principal of,
premium, if any, and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in the City of New York, or at such other office or agency of the
Company as may be maintained for such purpose pursuant to Section 2.3 of the Indenture; provided,
however, that, at the option of the Company, each installment of interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall
appear on the Note Register. Payments in respect of Securities represented by a Global Security (including principal, premium, if any, and interest) will be made by wire transfer of immediately
available funds to the accounts specified by The Depository Trust Company. Payments in respect of Securities represented by Definitive Securities (including principal, premium, if any, and interest)
held by a Holder of at least $1,000,000 aggregate principal amount of Securities represented by Definitive Securities will be made by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than
15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 

3. Paying Agent and Registrar  

    Initially, U.S. Bank Trust National Association (the "Trustee"), will act as Trustee, Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice to any Securityholder. The Company or any of its Subsidiaries may act as Paying Agent, Registrar or co-registrar. 

4. Indenture  

    The Company issued the Securities under an Indenture dated as of April 12, 2001 (as it may be amended or supplemented from time to time in accordance
with the terms thereof, the "Indenture"), 

A–2

 

between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15  U.S.C.
§§ 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those
terms. In the event of any inconsistency between the terms of this Security and the terms of the Indenture, the terms of the Indenture shall control. 

    The
Securities are general unsecured senior obligations of the Company, including (a) $400,000,000 aggregate principal amount of Securities being offered on the Issue Date
(subject to Section 2.9 of the Indenture) and (b) the Subsequent Series Securities. This Security is one of the [Original or
Initial] [Subsequent Series] Securities referred to in the Indenture. The Initial Securities, Subsequent Series Securities, Private Exchange Securities and Exchange
Securities will be treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on, among other things: the Incurrence of liens by the Company or its
Principal Subsidiaries on Common Stock of Principal Subsidiaries and consolidations, mergers and sales of assets of the Company. 

5. Interest Rate Adjustment  

    The interest rate payable on the Securities will be subject to adjustment from time to time if either of the Rating Agencies (as defined below) downgrades the
rating ascribed to the Securities below Investment Grade (as defined below). There will be no limit on the number of times the interest rate payable on the Securities can be adjusted up or down based
on rating changes by either Rating Agency during the life of the Securities. 

    The
Securities will bear interest at the applicable interest rate from the date of issuance of the Securities up until the date on which either of the Rating Agencies downgrades the
rating ascribed to the Securities below Investment Grade (the "Step-Up Date"). Beginning with and including a Step-Up Date, the Securities will bear interest at an adjusted
interest rate per annum equal to 97/8% per annum. 

    If
on any date (the "Step-Down Date") subsequent to a step-up in the interest rate as a result of a rating change by either or both of the Rating Agencies, a
new rating change by either or both of the Rating Agencies causes the ratings ascribed to the Securities by both Rating Agencies to be above Non-Investment Grade (as defined below), the
interest payable on the Securities will be decreased to 83/8% per annum effective from and including the Step-Down Date. 

    Any
interest rate increase or decrease, as described herein, will take effect on the Step-Up Date or Step-Down Date, as applicable. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. 

    For
purposes of this "Interest Rate Adjustment" provision, the following definitions shall apply: 

    "Investment
Grade" means Baa3 (or the equivalent) or higher by Moody's or BBB- (or the equivalent) or higher by S&P or the equivalent of such ratings used by any other
Rating Agency selected as provided in the definition of the term "Rating Agencies." 

    "Non-Investment
Grade" means Ba1 (or the equivalent) or lower by Moody's or BB+ (or the equivalent) or lower by S&P or the equivalent of such ratings used by any other
Rating Agency selected as provided in the definition of the term "Rating Agencies." 

    "Rating
Agencies" means (i) Moody's Investors Service, Inc. ("Moody's") and Standard and Poor's Ratings Service ("S&P") or (ii) if Moody's or S&P or both shall
not make a rating of the Securities publicly available, a nationally recognized securities rating agency or agencies, as the case may be, selected by the issuer by notice to the trustee, which shall
be substituted for Moody's or S&P or both, as the case may be. "Rating Agency" shall mean either of the Rating Agencies. 

A–3

 

6. Redemption  

    The Securities will be redeemable, at the option of the Company, at any time in whole, or from time to time in part, upon not less than 30 and not more than
60 days' prior notice mailed to each Holder of Securities to be so redeemed at such Holder's registered address, at a redemption price equal to the greater of 

	•
	100%
of the principal amount of the Securities to be redeemed; and

	•
	the
sum of the present values of the remaining scheduled payments thereon consisting of principal and interest, exclusive of interest accrued to the date
of redemption, at the rate in effect on the date of calculation of the redemption price, discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield (as defined below), plus 40 basis points; 

plus
accrued interest to the date of redemption. 

    For
purposes of determining the optional redemption price, the following definitions are applicable: 

    "Comparable
Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities 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 comparable
maturity to the remaining term of such Securities. 

    "Comparable
Treasury Price" means, with respect to any redemption date, 

	•
	the
bid price for the Comparable Treasury Issue, expressed as a percentage of its principal amount, at 4:00 p.m. on the third business day preceding
that redemption date, as set forth on "Telerate Page 500," or such other page as may replace Telerate Page 500; or

	•
	if
Telerate Page 500, or any successor page, is not displayed or does not contain bid prices for the Comparable Treasury Issue at that time, the average of
the Reference Treasury Dealer Quotations obtained by the Trustee for that redemption date, after excluding the highest and lowest of four such reference Treasury Dealer Quotations, or, if the Trustee
is unable to obtain at least four such Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Trustee. 

    "Independent
Investment Banker" means Chase Securities Inc. or, if such firm is unwilling or unable to select the applicable Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Trustee and reasonably acceptable to the Company. 

    "Reference
Treasury Dealer" means Chase Securities Inc. and its successors and three other primary U.S. Government Securities dealers in New York City selected by the
Independent Investment Banker (each, a "Primary Treasury Dealer"); provided, however, that if any of the
foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer. 

    "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, an average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue for the Securities, expressed in each case as a percentage of its principal amount, quoted in writing to the Trustee by such Reference Treasury Dealer at
5:00 p.m., New York City time, on the third business day preceding such Redemption Date. 

    "Treasury
Yield" means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity, computed as of the third business day immediately
preceding 

A–4

 

the Redemption Date, of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue, expressed as a percentage of its principal amount, equal to the applicable Comparable
Treasury Price for such Redemption Date. 

    In
the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed or, if the Securities are not so listed, then on a pro rata basis, by lot or by such other method
as the Trustee shall deem to be fair and appropriate (and in such manner as complies with applicable legal requirements) provided that (i) Securities and portions thereof that the Trustee
selects shall be in amounts of $1,000 or an integral multiple of $1,000 and (ii) no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less
than $1,000. If any Security is to be redeemed in part only, the notice of redemption relating to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security
in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the redemption date, interest will
cease to accrue on Securities or portions thereof called for redemption as long as the Company has deposited with the Trustee or with a Paying Agent (or, if applicable, segregated and held in trust)
money sufficient to pay the redemption price of, and accrued interest on, all the Securities which are to be redeemed on such date. 

7. Denominations; Transfer; Exchange  

    The Securities are in registered form without coupons in denominations of principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not (A) issue, register the transfer of or exchange any Security during a period beginning at the opening of 15 days
before the day of any selection of Securities for redemption and ending at the close of business on the day of selection, (B) register the transfer of or to exchange any Security so selected
for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (C) register the transfer of or to exchange a Security between a record date and the
next succeeding interest payment date. 

8. Persons Deemed Owners  

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

9. Unclaimed Money  

    If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its
request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 

10. Defeasance  

    Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government Securities for the payment of principal, premium, if any, and interest on the Securities to redemption or maturity, as the
case may be. 

A–5

   11. Amendment, Waiver  

    Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of
at least a majority in principal amount of the then outstanding Securities and (ii) any default (other than with respect to nonpayment or in respect of a provision that cannot be amended
without the written consent of each Securityholder affected) or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the then
outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to
cure any ambiguity, omission, defect or inconsistency, or to comply with Article IV of the Indenture, or to add guarantees with respect to the
Securities, or to secure the Securities, or to add additional covenants of the Company, or surrender rights and powers conferred on the Company, or to comply with any request of the SEC in connection
with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 

12. Defaults and Remedies  

    Under the Indenture, Events of Default include (i) default in any payment of interest or additional interest on any Security when due, continued for
30 days; (ii) default in the payment of principal or premium, if any, on any Security when due at its Stated Maturity, upon optional redemption, upon declaration or otherwise;
(iii) default by the Company in the performance of or breaches by the Company of any covenant or agreement in the Indenture or under the Securities, other than those referred to in
(i) or (ii), where such default continues for 60 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities;
(iv) (a) failure by the Company or any of its Subsidiaries to pay indebtedness for money borrowed by the Company or any of its Subsidiaries in an aggregate principal amount of at least
$50,000,000, at the later of final maturity or the expiration of any applicable grace period ("Payment Default") and such Payment Default shall not have been made, waived or extended within
30 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities or (b) acceleration of the maturity of indebtedness for
money borrowed by the Company or any of its Subsidiaries in an aggregate principal amount of at least $50,000,000, if that acceleration results from a default under the instrument giving rise to or
securing such indebtedness for money borrowed (the "cross-acceleration provision") and such indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within
30 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities; or (v) certain events of bankruptcy, insolvency or
reorganization of the Company or any Subsidiary which is a Significant Subsidiary (the "bankruptcy provisions"). 

    If
an Event of Default described in clauses (i), (ii), (iii) and (iv) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in
outstanding principal amount of the
Securities by notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on
all the Securities to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest shall be immediately due and payable. If an Event of Default described in
clause (v) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. 

    Securityholders
may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it
receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default 

A–6

 

or Event of Default in payment of principal of, premium, if any, or interest on any Security) if it determines in good faith that withholding notice is in the interests of Securityholders. 

13. Trustee Dealings with the Company  

    Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee. 

14. No Recourse Against Others  

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

15. Authentication  

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

16. Abbreviations  

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

17. CUSIP Numbers  

    Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on
the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as
printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

18. Governing Law  

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

    The
Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security.
Requests may be made to: 

Health
Net, Inc.

21650 Oxnard Street

Woodland Hills, California 91367

Attention: Chief Financial Officer 

A–7

  

 
 

ASSIGNMENT FORM    
  

	 	 	To assign this Security, fill in the form below:	 	 
	

 	
 	

I or we assign and transfer this Security to	
 	

 
	

 	
 	

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

 
	

 	
 	

  
 (Insert assignee's soc. sec. or tax I.D. No.)	
 	

 
	 	

and irrevocably appoint            agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.
	

  

	

Date:	

 	

  
	

 	

Your Signature:	

 	

  

	

Signature Guarantee:	
 	

  
(Signature must be guaranteed)
	

  
 Sign exactly as your name appears on the other side of this Security.

The
signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15. 

In
connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of
such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being: 

    CHECK
ONE BOX BELOW: 

	/ /	 	1	 	acquired for the undersigned's own account, without transfer; or
	

/ /	
 	

2	
 	

transferred to the Company; or
	

/ /	
 	

3	
 	

transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); or
	

/ /	
 	

4	
 	

transferred pursuant to an effective registration statement under the Securities Act; or
	

/ /	
 	

5	
 	

transferred pursuant to and in compliance with Regulation S under the Securities Act; or
	

/ /	
 	

6	
 	

transferred to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of
which letter appears as Section 2.7 of the Indenture); or
	

/ /	
 	

7	
 	

transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

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

A–8

 

 however, that if box (5), (6) or (7) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole
discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. 

	 	 	  
 Signature
	

Signature Guarantee:	
 	

 
	

  
 (Signature must be guaranteed)	
 	

  
 Signature

The
signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15. 

TO
BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED. 

    The
undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it
and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. 

	  
 Dated:	 	 

A–9

 

[TO BE ATTACHED TO GLOBAL SECURITIES] 

 
 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY    
  

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

	Date of Exchange
 
	 	Amount of decrease

in Principal Amount

of this Global Security
	 	Amount of increase

in Principal Amount

of this Global Security
	 	Principal Amount

of this Global Security

following such

decrease or increase
	 	Signature of

authorized signatory

of Trustee or

Securities Custodian

	  	 	 	 	 	 	 	 	 

A–10

 
EXHIBIT B 

[FORM
OF FACE OF EXCHANGE SECURITY] 

[Depository
Legend, if applicable] 

No.
[      ]
                                        Principal
Amount $[            ], as revised by the Schedule of Increases and Decreases in Global
Security attached hereto 

CUSIP
NO.                 

ISIN:                  

83/8%
Senior Notes Due 2011 

    Health
Net, Inc., a Delaware corporation, promises to pay to [            ], or registered assigns, the principal sum of
[            ] Dollars, as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on April 15, 2011. 

Interest
Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1 

    Additional
provisions of this Security are set forth on the other side of this Security. 

	 	 	HEALTH NET, INC.
	

 	
 	

By:
	 	 	

	TRUSTEE'S CERTIFICATE OF

AUTHENTICATION	 	 

U.S. BANK TRUST NATIONAL ASSOCIATION,

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture. 

	By	 	 
	Authorized Signatory	 	Date: [            ]  , 2001

B–1

 
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY] 

83/8%
Senior Note Due 2011 

1. Interest  

    Health Net, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. 

    The
Company will pay interest semiannually on April 15 and October 15 of each year commencing October 15, 2001. Interest on the Securities will accrue from the
most recent date to which interest has been paid on the Securities or, if no interest has been paid, from April 12, 2001. The Company shall pay interest on overdue principal or premium, if any
(plus interest on such interest to the extent lawful), at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve
30-day months. 

2. Method of Payment  

    By at least 10:00 a.m. (New York City time) on the date on which any principal of or interest on any Security is due and payable, the Company shall
deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest when due. The Company will pay interest (except Defaulted Interest) to the Persons
who are registered Holders of Securities at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Except as described in the succeeding two sentences, the principal of,
premium, if any, and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in the City of New York, or at such other office or agency of the
Company as may be maintained for such purpose pursuant to Section 2.3 of the Indenture; provided,
however, that, at the option of the Company, each installment of interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall
appear on the Note Register. Payments in respect of Securities represented by a Global Security (including principal, premium, if any, and interest) will be made by wire transfer of immediately
available funds to the accounts specified by The Depository Trust Company. Payments in respect of Securities represented by Definitive Securities (including principal, premium, if any, and interest)
held by a Holder of at least $1,000,000
aggregate principal amount of Securities represented by Definitive Securities will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in its discretion). 

3. Paying Agent and Registrar  

    Initially, U.S. Bank Trust National Association (the "Trustee"), will act as Trustee, Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice to any Securityholder. The Company or any of its Subsidiaries may act as Paying Agent, Registrar or co-registrar. 

4. Indenture  

    The Company issued the Securities under an Indenture dated as of April 12, 2001 (as it may be amended or supplemented from time to time in accordance
with the terms thereof, the "Indenture"), 

B–2

 

between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15  U.S.C.
§§ 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those
terms. In the event of any inconsistency between the terms of this Security and the terms of the Indenture, the terms of the Indenture shall control. 

    The
Securities are general unsecured senior obligations of the Company, including (a) $400,000,000 aggregate principal amount of Securities being offered on the Issue Date
(subject to Section 2.9 of the Indenture) and (b) the Subsequent Series Securities. The Initial Securities, Subsequent Series Securities,
Private Exchange Securities and Exchange Securities will be treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on, among other things: the
Incurrence of liens by the Company or its Principal Subsidiaries on Common Stock of Principal Subsidiaries and consolidations, mergers and sales of assets of the Company. 

5. Interest Rate Adjustment  

    The interest rate payable on the Securities will be subject to adjustment from time to time if either of the Rating Agencies (as defined below) downgrades the
rating ascribed to the Securities below Investment Grade (as defined below). There will be no limit on the number of times the interest rate payable on the Securities can be adjusted up or down based
on rating changes by either Rating Agency the life of the Securities. 

    The
Securities will bear interest at the applicable interest rate from the date of issuance of the Securities up until the date on which either of the Rating Agencies downgrades the
rating ascribed to the Securities below Investment Grade (the "Step-Up Date"). Beginning with and including a Step-Up Date, the Securities will bear interest at an adjusted
interest rate per annum equal to 97/8% per annum. 

    If
on any date (the "Step-Down Date") subsequent to a step-up in the interest rate as a result of a rating change by either or both of the Rating Agencies, a
new rating change by either or both of the Rating Agencies causes the ratings ascribed to the Securities by both Rating Agencies to be above Non-Investment Grade (as defined below), the
interest payable on the Securities will be decreased to 83/8% per annum effective from and including the Step-Down Date. 

    Any
interest rate increase or decrease, as described herein, will take effect on the Step-Up Date or Step-Down Date, as applicable. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. 

    For
purposes of this "Interest Rate Adjustment" provision, the following definitions shall apply: 

    "Investment
Grade" means Baa3 (or the equivalent) or higher by Moody's or BBB- (or the equivalent) or higher by S&P or the equivalent of such ratings used by any other
Rating Agency selected as provided in the definition of the term "Rating Agencies." 

    "Non-Investment
Grade" means Ba1 (or the equivalent) or lower by Moody's or BB+ (or the equivalent) or lower by S&P or the equivalent of such ratings used by any other
Rating Agency selected as provided in the definition of the term "Rating Agencies." 

    "Rating
Agencies" means (i) Moody's Investors Service, Inc. ("Moody's") and Standard and Poor's Ratings Service ("S&P") or (ii) if Moody's or S&P or both shall
not make a rating of the Securities publicly available, a nationally recognized securities rating agency or agencies, as the case may be, selected by the issuer by notice to the trustee, which shall
be substituted for Moody's or S&P or both, as the case may be. "Rating Agency" shall mean either of the Rating Agencies. 

B–3

 

6. Redemption  

    The Securities will be redeemable, at the option of the Company, at any time in whole, or from time to time in part, upon not less than 30 and not more than
60 days' prior notice mailed to each Holder of Securities to be so redeemed at such Holder's registered address, at a redemption price equal to the greater of 

	•
	100%
of the principal amount of the Securities to be redeemed; and

	•
	the
sum of the present values of the remaining scheduled payments thereon consisting of principal and interest, exclusive of interest accrued to the date
of redemption, at the rate in effect on the date of calculation of the redemption price, discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the applicable Treasury Yield (as defined below), plus 40 basis points; 

plus
accrued interest to the date of redemption. 

    For
purposes of determining the optional redemption price, the following definitions are applicable: 

    "Comparable
Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the
Securities 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 comparable
maturity to the remaining term of such Securities. 

    "Comparable
Treasury Price" means, with respect to any redemption date, 

	•
	the
bid price for the Comparable Treasury Issue, expressed as a percentage of its principal amount, at 4:00 p.m. on the third business day preceding
that redemption date, as set forth on "Telerate Page 500," or such other page as may replace Telerate Page 500; or

	•
	if
Telerate Page 500, or any successor page, is not displayed or does not contain bid prices for the Comparable Treasury Issue at that time, the average of
the Reference Treasury Dealer Quotations obtained by the Trustee for that redemption date, after excluding the highest and lowest of four such reference Treasury Dealer Quotations, or, if the Trustee
is unable to obtain at least four such Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Trustee. 

    "Independent
Investment Banker" means Chase Securities Inc. or, if such firm is unwilling or unable to select the applicable Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Trustee and reasonably acceptable to the Company. 

    "Reference
Treasury Dealer" means Chase Securities Inc. and its successors and three other primary U.S. Government Securities dealers in New York City selected by the
Independent Investment Banker (each, a "Primary Treasury Dealer"); provided, however, that if any of the
foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer. 

    "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, an average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue for the Securities, expressed in each case as a percentage of its principal amount, quoted in writing to the Trustee by such Reference Treasury Dealer at
5:00 p.m., New York City time, on the third business day preceding such Redemption Date. 

    "Treasury
Yield" means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity, computed as of the third business day immediately
preceding 

B–4

 

the Redemption Date, of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue, expressed as a percentage of its principal amount, equal to the applicable Comparable
Treasury Price for such Redemption Date. 

    In
the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed or, if the Securities are not so listed, then on a pro rata basis, by lot or by such other method
as the Trustee shall deem to be fair and appropriate (and in such manner as complies with applicable legal requirements) provided that (i) Securities and portions thereof that the Trustee
selects shall be in amounts of $1,000 or an integral multiple of $1,000 and (ii) no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less
than $1,000. If any Security is to be redeemed in part only, the notice of redemption relating to such
Security shall state the portion of the principal amount thereof to be redeemed. A new Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the redemption date, interest will cease to accrue on Securities or portions thereof called for redemption as long as the Company has
deposited with the Trustee or with a Paying Agent (or, if applicable, segregated and held in trust) money sufficient to pay the redemption price of, and accrued interest on, all the Securities which
are to be redeemed on such date. 

7. Denominations; Transfer; Exchange  

    The Securities are in registered form without coupons in denominations of principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not (A) issue, register the transfer of or exchange any Security during a period beginning at the opening of 15 days
before the day of any selection of Securities for redemption and ending at the close of business on the day of selection, (B) register the transfer of or to exchange any Security so selected
for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (C) register the transfer of or to exchange a Security between a record date and the
next succeeding interest payment date. 

8. Persons Deemed Owners  

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

9. Unclaimed Money  

    If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its
request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 

10. Defeasance  

    Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government Securities for the payment of principal, premium, if any, and interest on the Securities to redemption or maturity, as the
case may be. 

B–5

 

11. Amendment, Waiver  

    Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of
at least a majority in principal amount of the then outstanding Securities and (ii) any default (other than with respect to nonpayment or in respect of a provision that cannot be amended
without the written consent of each Securityholder affected) or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the then
outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to
cure any ambiguity, omission, defect or inconsistency, or to comply with Article IV of the Indenture, or to add guarantees with respect to the
Securities, or to secure the Securities, or to add additional covenants of the Company, or surrender rights and powers conferred on the Company, or to comply with any request of the SEC in connection
with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder. 

12. Defaults and Remedies  

    Under the Indenture, Events of Default include (i) default in any payment of interest or additional interest on any Security when due, continued for
30 days; (ii) default in the payment of principal or premium, if any, on any Security when due at its Stated Maturity, upon optional redemption, upon declaration or otherwise;
(iii) default by the Company in the performance of or breaches by the Company of any covenant or agreement in the Indenture or under the Securities, other than those referred to in
(i) or (ii), where such default continues for 60 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities;
(iv) (a) failure by the Company or any of its Subsidiaries to pay indebtedness for money borrowed by the Company or any of its Subsidiaries in an aggregate principal amount of at least
$50,000,000, at the later of final maturity or the expiration of any applicable grace period ("Payment Default") and such Payment Default shall not have been made, waived or extended within
30 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities or (b) acceleration of the maturity of indebtedness for
money borrowed by the Company or any of its Subsidiaries in an aggregate principal amount of at least $50,000,000, if that acceleration results from a default under the instrument giving rise to or
securing such indebtedness for money borrowed (the "cross-acceleration provision") and such indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within
30 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities; or (v) certain events of bankruptcy, insolvency or
reorganization of the Company or any Subsidiary which is a Significant Subsidiary (the "bankruptcy provisions"). 

    If
an Event of Default described in clauses (i), (ii), (iii) and (iv) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in
outstanding principal amount of the Securities by notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and
accrued and unpaid interest, if any, on all the Securities to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest shall be immediately due and payable.
If an Event of Default described in clause (v) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Securities will become and be
immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. 

    Securityholders
may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it
receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default 

B–6

 

or Event of Default in payment of principal of, premium, if any, or interest on any Security) if it determines in good faith that withholding notice is in the interests of Securityholders. 

13. Trustee Dealings with the Company  

    Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee. 

14. No Recourse Against Others  

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

15. Authentication  

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

16. Abbreviations  

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

17. CUSIP Numbers  

    Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on
the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as
printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

18. Governing Law  

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

    The
Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security.
Requests may be made to: 

Health
Net, Inc.

21650 Oxnard Street

Woodland Hills, California 91367

Attention: Chief Financial Officer 

B–7

 
ASSIGNMENT FORM 

To
assign this Security, fill in the form below: 

I
or we assign and transfer this Security to 

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

 (Insert assignee's soc. sec. or tax I.D. No.)

    and irrevocably appoint                        agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him. 

	Date:	 	 
	 	Your Signature	 	 

	

Signature Guarantee:	
 	

 

	 	 	 	 	(Signature must be guaranteed)
	

 Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. 

B–8

 

[TO BE ATTACHED TO GLOBAL SECURITIES] 

SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL SECURITY 

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

	Date of

Exchange
	 	Amount of decrease in

Principal Amount of this

Global Security
	 	Amount of increase in

Principal Amount of this

Global Security
	 	Principal Amount of this

Global Security following

such decrease or increase
	 	Signature of authorized

signatory of Trustee or

Securities Custodian

	 	 	 	 	 	 	 	 	 

B–9

QuickLinks

TABLE OF CONTENTS

CROSS-REFERENCE TABLE

ARTICLE I Definitions and Incorporation by Reference

ARTICLE II The Securities

ARTICLE III Covenants

ARTICLE IV Successor Company

ARTICLE V Redemption of Securities

ARTICLE VI Defaults and Remedies

ARTICLE VII Trustee

ARTICLE VIII Discharge of Indenture; Defeasance

ARTICLE IX Amendments

ARTICLE X Miscellaneous

ASSIGNMENT FORM

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

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