Document:

exv4w1

 

SECOND SUPPLEMENTAL INDENTURE

Dated as of May 15, 2003

among

GENERAL DYNAMICS CORPORATION

and

THE GUARANTORS

and

THE BANK OF NEW YORK,

as Trustee

to the

INDENTURE

Dated as of August 27, 2001

Providing for the issuance of

2.125% Notes due 2006,

3.000% Notes due 2008

and 4.250% Notes due 2013

 

          THIS SECOND SUPPLEMENTAL
INDENTURE, dated as of May 15, 2003 (this “Second
Supplemental Indenture”),
among General Dynamics Corporation, a Delaware corporation (the “Company”), the
Guarantors (as defined herein) and The Bank of New York, a New York banking
corporation, as trustee (the “Trustee”) to the Indenture, dated as of August
27, 2001 (the “Base Indenture”), among the Company, the guarantors named
therein and the Trustee, as previously supplemented by the First Supplemental
Indenture, dated as of August 27, 2001, among the Company, the guarantors named
therein and the Trustee.

          WHEREAS, the Company, the Guarantors and the Trustee have heretofore
executed and delivered the Base Indenture to provide for the issuance from time
to time of Securities (as defined in the Base Indenture) of the Company, to be
issued in one or more series;

          WHEREAS, Section 9.01(5) of the Base Indenture provides, among other
things, that the Company and the Trustee may enter into indentures supplemental
to the Base Indenture for, among other things, the purpose of establishing the
designation, form, terms and provisions of Securities of any series as provided
by Articles 2 and 3 of the Base Indenture;

          WHEREAS, the Company (i) desires the issuance of three new separate series
of Securities to be designated as hereinafter provided and (ii) has requested
the Trustee to enter into this Second Supplemental Indenture for the purpose of
establishing the designation, form, terms and provisions of the Securities of
such series;

          WHEREAS, all action on the part of the Company necessary to authorize the
issuance of said Securities under the Base Indenture and this Second
Supplemental Indenture has been duly taken.

          NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:

          That, in order to establish the designation, form, terms and provisions
of, and to authorize the authentication and delivery of, said Securities, and
in consideration of the acceptance of said Securities by the Holders thereof
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

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ARTICLE I

DEFINITIONS

          (a)   Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed thereto in the Base Indenture.

          (b)   The rules of interpretation set forth in the Base Indenture shall be
applied hereto as if set forth in full herein.

          (c)   For all purposes of this Second Supplemental Indenture, except as
otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following respective meanings (such meanings
shall apply equally to both the singular and plural forms of the respective
terms).

          “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 Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.

          “Comparable Treasury Price” means, with respect to any Redemption Date for
the Notes, the average of four Reference Treasury Dealer Quotations obtained by
the Trustee for that applicable Redemption Date, after excluding the highest
and lowest of such Reference Treasury Dealer Quotations, or, if the Trustee
obtains fewer than four Reference Treasury Dealer Quotations, the average of
all Reference Treasury Dealer Quotations obtained by the Trustee.

          “Guarantors” means, initially, American Overseas Marine Corporation, a
Delaware corporation, Bath Iron Works Corporation, a Maine corporation,
Electric Boat Corporation, a Delaware corporation, General Dynamics Armament
and Technical Products, Inc., a Delaware corporation, General Dynamics
Government Systems Corporation, a Delaware corporation, General Dynamics Land
Systems Inc., a Delaware corporation, General Dynamics Ordnance and Tactical
Systems, Inc., a Virginia corporation, Gulfstream Aerospace Corporation, a
Delaware corporation, Material Service Resources Company, a Delaware
corporation, and National Steel and Shipbuilding Company, a Nevada corporation.

          “Independent Investment Banker” means one of the Reference Treasury
Dealers, to be appointed by the Company.

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          “Notes” means the Notes due 2006, the Notes due 2008 and the Notes due
2013.

          “Notes due 2006” shall have the meaning ascribed thereto in Section 2.1(a)
hereof.

          “Notes due 2008” shall have the meaning ascribed thereto in Section 2.1(a)
hereof.

          “Notes due 2013” shall have the meaning ascribed thereto in Section 2.1(a)
hereof.

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

          “Reference Treasury Dealer” means each of Bear, Stearns & Co. Inc., Banc
of America Securities LLC (so long as they continue to be primary U.S.
Government securities dealers) and any two other primary U.S. Government
securities dealers chosen by the Company, and their respective successors. If
Bear, Stearns & Co. Inc. or Banc of America Securities LLC ceases to be a
primary U.S. Government securities dealer, the Company will appoint in its
place another nationally recognized investment banking firm that is a primary
U.S. Government securities dealer.

          “Remaining Scheduled Payments” means, with respect to each Note that the
Company is redeeming, the remaining scheduled payments of the principal thereof
and interest thereon that would be due after the related Redemption Date if
such Note were not redeemed. However, if the Redemption Date is not a scheduled
interest payment date with respect to that Note, the amount of the next
succeeding scheduled interest payment on that Note will be deemed to be reduced
by the amount of interest accrued on such Note to the Redemption Date.

          “Treasury Rate” means, with respect to any Redemption Date, the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
“H.15(519)” or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively

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traded United States Treasury securities adjusted to constant maturity
under the caption “Treasury Constant Maturities,” for the maturity
corresponding to the
Comparable Treasury Issue; provided that if no maturity is within three
months before or after the maturity date for the notes, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue will be determined and the Treasury Rate will be interpolated or
extrapolated from those yields on a straight line basis rounding to the nearest
month, or, if that release, or any successor release, is not published during
the week preceding the calculation date or does not contain such yields, the
rate per annum to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for that Redemption Date. The Treasury Rate will be
calculated on and as of the third Business Day immediately preceding the
Redemption Date.

ARTICLE II

GENERAL TERMS AND CONDITIONS OF THE NOTES

          SECTION 2.1 Designation and Principal Amount.

          (a)   There is hereby authorized three new separate series of Securities
designated the 2.125% Notes due 2006 (the “Notes due 2006”), the 3.000 % Notes
due 2008 (the “Notes due 2008”) and the 4.250% Notes due 2013 (the “Notes due
2013”).

          (b)   The aggregate principal amount of the Notes due 2006 authorized by
this Second Supplemental Indenture shall initially be $500,000,000. The
aggregate principal amount of the Notes due 2008 authorized by this Second
Supplemental Indenture shall initially be $500,000,000. The aggregate
principal amount of the Notes due 2013 authorized by this Second Supplemental
Indenture shall initially be $1,000,000,000.

          (c)   The Notes may be issued from time to time upon written order of the
Company to the Trustee for the authentication and delivery of the Notes
pursuant to Section 3.03 of the Base Indenture.

          (d)   The Notes shall have and be subject to such other terms as provided in
the Base Indenture and shall be evidenced by one or more Securities of that
series in the form of Section 4.1 with respect to the Notes due 2006, Section
4.2 with respect to the Notes due 2008 and Section 4.3 with respect to the
Notes due 2013.

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          (e)   The Notes shall be issuable in denominations of $1,000 and integral
multiples of $1,000.

          SECTION 2.2 Maturity.

          (a)   The date upon which the Notes due 2006 shall become due and payable at
final maturity, together with any accrued and unpaid interest, is May 15, 2006
(the “2006 Notes Maturity Date”).

          (b)   The date upon which the Notes due 2008 shall become due and payable at
final maturity, together with any accrued and unpaid interest, is May 15, 2008
(the “2008 Notes Maturity Date”).

          (c)   The date upon which the Notes due 2013 shall become due and payable at
final maturity, together with any accrued and unpaid interest, is May 15, 2013
(the “2013 Notes Maturity Date” and, together with the 2006 Notes Maturity Date
and the 2008 Notes Maturity Date, the “Maturity Dates”).

          SECTION
2.3 Interest.

          (a)   The Notes will bear interest at the respective Interest Rate (as
defined below) from May 15, 2003, until the principal thereof becomes due and
payable. Interest on the Notes will be payable semi-annually in arrears on the
Interest Payment Dates (as defined in the Base Indenture) with respect to the
Notes, which shall be May 15 and November 15 of each year, commencing November
15, 2003, to the Person in whose name any such Note or any predecessor Note is
registered, at the close of business on the Regular Record Date with respect to
the Notes for such interest installment, which, in the case of a Global
Security, shall be the close of business on the May 1 and November 1 next
preceding such Interest Payment Date. If the Notes are no longer in book-entry
only form, the Regular Record Dates for the Notes shall also be the close of
business on the May 1 and November 1 next preceding such Interest Payment Date.

          (b)   The interest rate in respect of the Notes due 2006 will be 2.125% per
annum (the “2006 Notes Interest Rate”). The interest rate in respect of the
Notes due 2008 will be 3.000% per annum (the “2008 Notes Interest Rate”). The
interest rate in respect of the Notes due 2013 will be 4.250% (the “2013 Notes
Interest Rate and, together with the 2006 Notes Interest Rate and 2008 Notes
Interest Rate, the “Interest Rates”).

          (c)   In the event that any Interest Payment Date with respect to the Notes
is not a Business Day, then payment of interest payable on such date will be

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made on the next succeeding day which is a Business Day, with the same force
and effect as if made on such date, and no interest shall accrue on the amount
so payable from the period from and after such Interest Payment Date.

          SECTION 2.4 Global Securities.

     Each series of Notes shall be issued in the form of one or more Global
Securities in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Notes of that series, to be registered in the name of
the Depository, or its nominee, and delivered by the Trustee to or upon the
order of the Depository for crediting to the accounts of its participants
pursuant to the written instructions of the Company. The Company upon any such
presentation shall execute one or more Global Securities in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Base Indenture and this Second Supplemental
Indenture. Payments on Notes issued as one or more Global Securities will be
made to the Depository.

ARTICLE III

REDEMPTION OF THE NOTES

          SECTION 3.1 Optional Redemption of the Notes.

          (a)   The Company may, at its option, at any time and from time to time,
redeem the Notes of any of the three series of Notes issued under this Second
Supplemental Indenture, in whole or in part, upon payment of a redemption price
equal to (A) the greater of (i) 100% of the principal amount of the Notes to be
redeemed or (ii) the sum of the present values of the Remaining Scheduled
Payments discounted to the Redemption Date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months), at the Treasury Rate plus 15
basis points in the case of the Notes due 2006, 20 basis points in the case of
the Notes due 2008 and 25 basis points in the case of the Notes due 2013, plus
(B) accrued and unpaid interest, if any, on the principal amount of Notes being
redeemed to but excluding the Redemption Date (the “Redemption Price”).

          (b)   With respect to the Notes due 2006, the Notes due 2008 and the Notes
due 2013, all references to Redemption Price in the Base Indenture shall mean
Redemption Price as defined in this Second Supplemental
Indenture.

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          SECTION 3.2 No Sinking Fund.

     The Notes are not entitled to the benefit of any sinking fund.

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ARTICLE IV

FORM OF NOTES

	 	 
	          SECTION 4.1   Form of Note due 2006

[TO BE INSERTED ON GLOBAL SECURITIES]

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

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY 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.

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	No. [____]	 	
CUSIP 369550AH1

$[____]

GENERAL DYNAMICS CORPORATION

2.125% Notes Due 2006

     GENERAL DYNAMICS CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the “Company,” which term includes
any successor corporation under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to [____] or
registered assigns, the principal sum of [____] $ [____] on May 15,
2006, and to pay interest thereon from and including May 15, 2003 or from and
including the most recent Interest Payment Date (as hereinafter defined) to
which interest has been paid or duly provided for, as the case may be.

     Interest will be paid semi-annually on May 15 and November 15 of each year
(each, an “Interest Payment Date”), commencing November 15, 2003, at the rate
of 2.125% per annum, until the principal hereof is paid or made available for
payment. The interest so payable and punctually paid or duly provided for on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the May 1 or November 1, as the case may be, immediately preceding
such Interest Payment Date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
(i) to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof is to be
given to Holders of Notes not less than 10 calendar days prior to such Special
Record Date, or (ii) in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of and interest on this
Note will be made at the offices or agencies of the Company maintained for such
purpose in the Borough of Manhattan, The City of New York; provided that
interest on this Note will be paid by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or, at
the option of the Company, by wire transfer to an account designated by such
Person in a bank located in the United States. Interest on overdue

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principal and (to the extent permitted by applicable law) on overdue installments of interest shall accrue at the rate of 2.125% per annum. Interest on this
Note shall be computed on the basis of a 360-day year of twelve 30-day months.

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

     This Note shall not be entitled to any benefit under the Indenture, or be
valid or obligatory, until the Certificate of Authentication hereof shall have
been duly signed by the Trustee acting under the Indenture.

     The provisions of this Note are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

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     IN WITNESS WHEREOF, the Company has caused this instrument to be executed
on this 15th day of May, 2003.

	 	 	 	 	 
	 	 	
GENERAL DYNAMICS

CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

	 	 	 
	Attest:
	 	 	 
	By:	 	 
	 	 	

	 	 	
Name:
	 	 	
Title:

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CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated as the Notes due
2006 herein referred to in the within-mentioned indenture.

	 	 	 	 	 
	Dated:

	 	THE BANK OF NEW YORK, as Trustee
	 	 	 	 	 
	 	 	
By:
	 	

Authorized Signatory

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(FORM OF REVERSE OF NOTE DUE 2006)

     This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the “Notes”), all issued or to be issued under
and pursuant to an Indenture dated as of August 27, 2001, duly executed and
delivered by and among the Company, the Guarantors named therein and The Bank
of New York as Trustee (the “Trustee”), as supplemented to date, including by
the Second Supplemental Indenture dated as of May 15, 2003, by and among the
Company, the Guarantors named therein and the Trustee (the Indenture, as so
supplemented, the “Indenture”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, the Guarantors named therein and the Holders of the
Notes. By the terms of the Indenture, the Notes are issuable in series that may
vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Notes is initially offered in
aggregate principal amount as specified in said Second Supplemental Indenture.

     The Company at its option may, at any time and from time to time, redeem
the Notes, in whole or in part, upon payment of a redemption price equal to (A)
the greater of (i) 100% of the principal amount of the Notes to be redeemed or
(ii) the sum of the present values of the Remaining Scheduled Payments
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months), at the Treasury Rate plus 15 basis
points plus (B) accrued and unpaid interest, if any, on the principal amount of
Notes being redeemed to but excluding the Redemption Date (the “Redemption
Price”). On and after the Redemption Date, interest will cease to accrue on the
notes or any portion thereof called for redemption, unless we default in the
payment of the Redemption Price and accrued interest.

     Any redemption pursuant to the preceding paragraph will be made upon not
less than 30 nor more than 60 days’ prior notice before the Redemption Date to
the Holders, at the Redemption Price. If the Notes are only partially
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate; provided, that if at the
time of redemption the Notes are registered as Global Securities, the
Depositary shall determine, in accordance with its procedures, the principal
amount of such Notes held by each Holder of Notes to be redeemed. The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the
Redemption Date or such earlier time as the Company determines, provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.

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     In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.

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

     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Notes of each series affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Notes; provided, however, that no
such supplemental indenture shall, among other things, (i) change the fixed
maturity of any Notes of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
Holder of each Note so affected, or (ii) reduce the aforesaid percentage of
Notes, the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of each Note then outstanding and
affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Notes of any series
at the time outstanding affected thereby, on behalf of all of the Holders of
the Notes of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default
in the payment of the principal of or premium, if any, or interest on any of
the Notes of such series. Any such consent or waiver by the registered Holder
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange therefore or in place hereof (whether by registration
of transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.

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

     As provided in the Indenture and subject to certain limitations therein
set forth,

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this Note is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Note for registration
of transfer at the office or agency of the Trustee in the City and State of New York accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such transfer, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
relation thereto.

     Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and the Security Registrar may deem and
treat the registered Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or any Guarantor or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.

     The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. This
Global Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. As provided in the Indenture
and subject to certain limitations herein and therein set forth, Notes of this
series so issued are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.

     All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

     THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOV-

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ERN THE INDENTURE AND
THE NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

[FORM OF TRANSFER NOTICE]

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

Please insert Taxpayer Identification No.:

Please print or typewrite name and address including zip code of assignee:

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

	 	 	 
	By:	

	 
	 
	Date:	

	 

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[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

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

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal	 	 
	 	 	Amount of	 	Amount of	 	Amount of this	 	 
	 	 	Decrease in	 	Increase in	 	Global Note	 	Signature of
	 	 	Principal	 	Principal	 	Following such	 	Authorized
	Date of	 	Amount of this	 	Amount of this	 	Decrease or	 	Signatory of
	Exchange	 	Global Note	 	Global Note	 	Increase	 	Trustee
	 
	
	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 
	
	 	

	 	

	 	

	 	 	 	SECTION 4.2 Form of Note due
2008

[TO BE INSERTED ON GLOBAL SECURITIES]

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

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. TRANSFERS OF THIS

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GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY 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.

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	No.
[     ]	 	
CUSIP 369550AJ7

$[            ]

GENERAL DYNAMICS CORPORATION

3.000% Notes Due 2008

     GENERAL DYNAMICS CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the “Company,” which term includes
any successor corporation under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to
[            ] or
registered assigns, the principal sum of
[            ] $
[            ] on May 15,
2008, and to pay interest thereon from and including May 15, 2003 or from and
including the most recent Interest Payment Date (as hereinafter defined) to
which interest has been paid or duly provided for, as the case may be.

     Interest will be paid semi-annually on May 15 and November 15 of each year
(each, an “Interest Payment Date”), commencing November 15, 2003, at the rate
of 3.000% per annum, until the principal hereof is paid or made available for
payment. The interest so payable and punctually paid or duly provided for on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the May 1 or November 1, as the case may be, immediately preceding
such Interest Payment Date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
(i) to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof is to be
given to Holders of Notes not less than 10 calendar days prior to such Special
Record Date, or (ii) in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of and interest on this
Note will be made at the offices or agencies of the Company maintained for such
purpose in the Borough of Manhattan, The City of New York; provided that
interest on this Note will be paid by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or, at
the option of the Company, by wire transfer to an account designated by such
Person in a bank located in the United States. Interest on
overdue

20

 

principal
and (to the extent permitted by applicable law) on overdue installments of interest shall accrue at the rate of 3.000% per annum. Interest on this
Note shall be computed on the basis of a 360-day year of twelve 30-day months.

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

     This Note shall not be entitled to any benefit under the Indenture, or be
valid or obligatory, until the Certificate of Authentication hereof shall have
been duly signed by the Trustee acting under the Indenture.

     The provisions of this Note are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

21

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be executed
on this 15th day of May, 2003.

	 	 	 	 	 
	 	 	GENERAL DYNAMICS

CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	 	Name:

Title:	 

	 	 	 
	Attest:	 
	 	 	 
	By: 	 	 
	 	

	 	
Name:

Title:	 

22

 

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated as the Notes due
2008 herein referred to in the within-mentioned indenture.

	 	 	 	 	 	 
	Dated:	 	 	THE BANK OF NEW YORK, as Trustee
	 	
	 	 	 
	 	 	
By:
	 	 
	 	 	 	 	

	 	 	 	 	Authorized Signatory

23

 

(FORM OF REVERSE OF NOTE DUE 2008)

     This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the “Notes”), all issued or to be issued under
and pursuant to an Indenture dated as of August 27, 2001, duly executed and
delivered by and among the Company, the Guarantors named therein and The Bank
of New York as Trustee (the “Trustee”), as supplemented to date, including by
the Second Supplemental Indenture dated as of May 15, 2003, by and among the
Company, the Guarantors named therein and the Trustee (the Indenture, as so
supplemented, the “Indenture”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, the Guarantors named therein and the Holders of the
Notes. By the terms of the Indenture, the Notes are issuable in series that may
vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Notes is initially offered in
aggregate principal amount as specified in said Second Supplemental Indenture.

     The Company at its option may, at any time and from time to time, redeem
the Notes, in whole or in part, upon payment of a redemption price equal to (A)
the greater of (i) 100% of the principal amount of the Notes to be redeemed or
(ii) the sum of the present values of the Remaining Scheduled Payments
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months), at the Treasury Rate plus 20 basis
points plus (B) accrued and unpaid interest, if any, on the principal amount of
Notes being redeemed to but excluding the Redemption Date (the “Redemption
Price”). On and after the Redemption Date, interest will cease to accrue on the
notes or any portion thereof called for redemption, unless we default in the
payment of the Redemption Price and accrued interest.

     Any redemption pursuant to the preceding paragraph will be made upon not
less than 30 nor more than 60 days’ prior notice before the Redemption Date to
the Holders, at the Redemption Price. If the Notes are only partially
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate; provided, that if at the
time of redemption the Notes are registered as Global Securities, the
Depositary shall determine, in accordance with its procedures, the principal
amount of such Notes held by each Holder of Notes to be redeemed. The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the
Redemption Date or such earlier time as the Company determines, provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.

24

 

     In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.

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

     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Notes of each series affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Notes; provided, however, that no
such supplemental indenture shall, among other things, (i) change the fixed
maturity of any Notes of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
Holder of each Note so affected, or (ii) reduce the aforesaid percentage of
Notes, the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of each Note then outstanding and
affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Notes of any series
at the time outstanding affected thereby, on behalf of all of the Holders of
the Notes of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default
in the payment of the principal of or premium, if any, or interest on any of
the Notes of such series. Any such consent or waiver by the registered Holder
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange therefore or in place hereof (whether by registration
of transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.

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

25

 

     As provided in the Indenture and subject to certain limitations therein
set forth, this Note is transferable by the registered Holder hereof on the
Security Register of the
Company, upon surrender of this Note for registration of transfer at the
office or agency of the Trustee in the City and State of New York accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such transfer, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
relation thereto.

     Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and the Security Registrar may deem and
treat the registered Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or any Guarantor or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.

     The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. This
Global Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. As provided in the Indenture
and subject to certain limitations herein and therein set forth, Notes of this
series so issued are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.

     All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

26

 

     THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THE NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

[FORM OF TRANSFER NOTICE]

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

Please insert Taxpayer Identification No.:

Please print or typewrite name and address including zip code of assignee:

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

	 	 	 
	By:	 	 
	 	
	 
	Date:	 	 
	 	
	 

27

 

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

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

	 	 	 	 	 	 	 	 	Principal
	 	 	Amount of	 	 	Amount of	 	 	Amount of this
	 	 	Decrease in	 	 	Increase in	 	 	Global Note	 	 	Signature of
	 	 	Principal	 	 	Principal	 	 	Following such	 	 	Authorized
	Date of	 	Amount of this	 	 	Amount of this	 	 	Decrease or	 	 	Signatory of
	Exchange	 	Global Note	 	 	Global Note	 	 	Increase	 	 	Trustee
	 
	
	 	 	
	 	 	
	 	 	

	 
	
	 	 	
	 	 	
	 	 	

          SECTION 4.3   Form of Note due 2013

[TO BE INSERTED ON GLOBAL SECURITIES]

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

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. TRANSFERS OF THIS

28

 

GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY 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.

29

 

	 	 	 
	No. [____]	 	
CUSIP 369550AK4

$[_____________]

GENERAL DYNAMICS CORPORATION

4.250% Notes Due 2013

     GENERAL DYNAMICS CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the “Company,” which term includes
any successor corporation under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to [_________] or
registered assigns, the principal sum of [_________] $ [_________] on May 15,
2013, and to pay interest thereon from and including May 15, 2003 or from and
including the most recent Interest Payment Date (as hereinafter defined) to
which interest has been paid or duly provided for, as the case may be.

     Interest will be paid semi-annually on May 15 and November 15 of each year
(each, an “Interest Payment Date”), commencing November 15, 2003, at the rate
of 4.250% per annum, until the principal hereof is paid or made available for
payment. The interest so payable and punctually paid or duly provided for on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the May 1 or November 1, as the case may be, immediately preceding
such Interest Payment Date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
(i) to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof is to be
given to Holders of Notes not less than 10 calendar days prior to such Special
Record Date, or (ii) in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of and interest on this
Note will be made at the offices or agencies of the Company maintained for such
purpose in the Borough of Manhattan, The City of New York; provided that
interest on this Note will be paid by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or, at
the option of the Company, by wire transfer to an account designated by such
Person in a bank located in the United States. Interest on overdue

30

 

principal and (to the extent permitted by applicable law) on overdue installments of
interest shall accrue at the rate of 4.250% per annum. Interest on this
Note shall be computed on the basis of a 360-day year of twelve 30-day months.

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

     This Note shall not be entitled to any benefit under the Indenture, or be
valid or obligatory, until the Certificate of Authentication hereof shall have
been duly signed by the Trustee acting under the Indenture.

     The provisions of this Note are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

31

 

       IN WITNESS WHEREOF, the Company has caused this instrument to be executed
on this 15th day of May, 2003.

	 	 	 	 	 
	 	 	GENERAL DYNAMICS

CORPORATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	 	Name:

Title:	 

	 	 	 
	Attest:	 
	 	 	 
	By: 	 	 
	 	

	 	
Name:

Title:	 

32

 

CERTIFICATE OF AUTHENTICATION

       This is one of the Securities of the series designated as the Notes due
2013 herein referred to in the within-mentioned indenture.

	 	 	 	 	 
	Dated: 	 	THE BANK OF NEW YORK, as Trustee
	 	
	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Authorized Signatory

33

 

(FORM OF REVERSE OF NOTE DUE 2013)

     This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the “Notes”), all issued or to be issued under
and pursuant to an Indenture dated as of August 27, 2001, duly executed and
delivered by and among the Company, the Guarantors named therein and The Bank
of New York as Trustee (the “Trustee”), as supplemented to date, including by
the Second Supplemental Indenture dated as of May 15, 2003, by and among the
Company, the Guarantors named therein and the Trustee (the Indenture, as so
supplemented, the “Indenture”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, the Guarantors named therein and the Holders of the
Notes. By the terms of the Indenture, the Notes are issuable in series that may
vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Notes is initially offered in
aggregate principal amount as specified in said Second Supplemental Indenture.

     The Company at its option may, at any time and from time to time, redeem
the Notes, in whole or in part, upon payment of a redemption price equal to (A)
the greater of (i) 100% of the principal amount of the Notes to be redeemed or
(ii) the sum of the present values of the Remaining Scheduled Payments
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months), at the Treasury Rate plus 25 basis
points plus (B) accrued and unpaid interest, if any, on the principal amount of
Notes being redeemed to but excluding the Redemption Date (the “Redemption
Price”). On and after the Redemption Date, interest will cease to accrue on the
notes or any portion thereof called for redemption, unless we default in the
payment of the Redemption Price and accrued interest.

     Any redemption pursuant to the preceding paragraph will be made upon not
less than 30 nor more than 60 days’ prior notice before the Redemption Date to
the Holders, at the Redemption Price. If the Notes are only partially
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate; provided, that if at the
time of redemption the Notes are registered as Global Securities, the
Depositary shall determine, in accordance with its procedures, the principal
amount of such Notes held by each Holder of Notes to be redeemed. The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the
Redemption Date or such earlier time as the Company determines, provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.

34

 

     In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.

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

     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Notes of each series affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Notes; provided, however, that no
such supplemental indenture shall, among other things, (i) change the fixed
maturity of any Notes of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
Holder of each Note so affected, or (ii) reduce the aforesaid percentage of
Notes, the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of each Note then outstanding and
affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Notes of any series
at the time outstanding affected thereby, on behalf of all of the Holders of
the Notes of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default
in the payment of the principal of or premium, if any, or interest on any of
the Notes of such series. Any such consent or waiver by the registered Holder
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange therefore or in place hereof (whether by registration
of transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.

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

35

 

     As provided in the Indenture and subject to certain limitations therein
set forth, this Note is transferable by the registered Holder hereof on the
Security Register of the
Company, upon surrender of this Note for registration of transfer at the
office or agency of the Trustee in the City and State of New York accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such transfer, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
relation thereto.

     Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and the Security Registrar may deem and
treat the registered Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or any Guarantor or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.

     The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. This
Global Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. As provided in the Indenture
and subject to certain limitations herein and therein set forth, Notes of this
series so issued are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.

     All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

36

 

     THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THE NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

[FORM OF TRANSFER NOTICE]

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

Please insert Taxpayer Identification No.:

Please print or typewrite name and address including zip code of assignee:

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing_________________attorney to transfer said Note on the books of
the Company with full power of substitution in the premises.

	 	 	 
	By:	 	 
	 	
	 
	Date:	 	 
	 	
	 

37

 

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

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

	 	 	 	 	 	 	 	 	Principal
	 	 	Amount of	 	 	Amount of	 	 	Amount of this
	 	 	Decrease in	 	 	Increase in	 	 	Global Note	 	 	Signature of
	 	 	Principal	 	 	Principal	 	 	Following such	 	 	Authorized
	Date of	 	Amount of this	 	 	Amount of this	 	 	Decrease or	 	 	Signatory of
	Exchange	 	Global Note	 	 	Global Note	 	 	Increase	 	 	Trustee
	 
	
	 	 	
	 	 	
	 	 	

	 
	
	 	 	
	 	 	
	 	 	

ARTICLE V

ORIGINAL ISSUE OF NOTES

          SECTION 5.1   Original Issue of Notes due 2006; Further Issuances.

          (a)   The Notes due 2006 in the initial aggregate principal amount of
$500,000,000 may, upon execution of this Second Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company pursuant to Section 3.03 of the Base Indenture
without any further action of the Company.

          (b)   The Company may, from time to time create and issue additional Notes
due 2006 under this Second Supplemental Indenture ranking equally and ratably
with the outstanding Notes due 2006 in all respects (or in all respects except
for the payment of interest accruing prior to the issue date of such additional
Notes due 2006 or except for the first payment of interest following the issue
date of such additional Notes due 2006) without notice to or the consent of the
Holders of outstanding Notes. The initially issued Notes and any additional
Notes subsequently issued shall be consolidated and form a single series with
the outstanding Notes for all purposes of this Second Supplemental Indenture
and shall have the same terms as to

38

 

status, redemption or otherwise as the outstanding Notes. Any such
additional Notes referred to in this Section 5.1 will be issued under a further
supplemental indenture.

          SECTION 5.2   Original Issue of Notes due 2008; Further Issuances.

          (a)   The Notes due 2008 in the initial aggregate principal amount of
$500,000,000 may, upon execution of this Second Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company pursuant to Section 3.03 of the Base Indenture
without any further action of the Company.

          (b)   The Company may, from time to time create and issue additional Notes
due 2008 under this Second Supplemental Indenture ranking equally and ratably
with the outstanding Notes due 2008 in all respects (or in all respects except
for the payment of interest accruing prior to the issue date of such additional
Notes due 2008 or except for the first payment of interest following the issue
date of such additional Notes due 2008) without notice to or the consent of the
Holders of outstanding Notes. The initially issued Notes and any additional
Notes subsequently issued shall be consolidated and form a single series with
the outstanding Notes for all purposes of this Second Supplemental Indenture
and shall have the same terms as to status, redemption or otherwise as the
outstanding Notes. Any such additional Notes referred to in this Section 5.2
will be issued under a further supplemental indenture.

          SECTION 5.3   Original Issue of Notes due 2013; Further Issuances.

          (a)   The Notes due 2013 in the initial aggregate principal amount of
$1,000,000,000 may, upon execution of this Second Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company pursuant to Section 3.03 of the Base Indenture
without any further action of the Company.

          (b)   The Company may, from time to time create and issue additional Notes
due 2013 under this Second Supplemental Indenture ranking equally and ratably
with the outstanding Notes due 2013 in all respects (or in all respects except
for the payment of interest accruing prior to the issue date of such additional
Notes due 2013 or except for the first payment of interest following the issue
date of such additional Notes due 2013) without notice to or the consent of the
Holders of outstanding Notes. The initially issued Notes and any additional
Notes subsequently issued shall be consolidated and form a single series with
the outstanding Notes for all purposes of this Second Supplemental Indenture
and shall have the same terms as to

39

 

status, redemption or otherwise as the
outstanding Notes. Any such additional Notes referred to in this Section 5.3
will be issued under a further supplemental indenture.

ARTICLE VI

MISCELLANEOUS

          SECTION 6.1   Ratification of Base Indenture and First Supplemental Indenture

          The Base Indenture and the First Supplemental Indenture, as supplemented
by this Second Supplemental Indenture, are in all respects ratified and
confirmed, and this Second Supplemental Indenture shall be deemed part of the
Base Indenture in the manner and to the extent herein and therein provided.

          SECTION 6.2   Trustee Not Responsible for Recitals.

          The recitals contained herein and in the Notes, except with respect to the
Trustee’s certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for the correctness of
the same. The Trustee makes no representations as to the validity or
sufficiency of this Second Supplemental Indenture or of the Notes.

          SECTION 6.3   Governing Law.

          THIS SECOND SUPPLEMENTAL INDENTURE AND EACH NOTE OF EACH SERIES CREATED
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

          SECTION 6.4   Separability.

          In case any one or more of the provisions contained in this Second
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Second
Supplemental Indenture or of the Notes, but this Second Supplemental Indenture
and the Notes shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.

40

 

          SECTION 6.5    Counterparts.

          This Second Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

41

 

           IN WITNESS WHEREOF, the parties have caused this Second Supplemental
Indenture to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.

	 	 	 	 	 	 
	 	 	GENERAL DYNAMICS CORPORATION
	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	David A. Savner
	 	 	 	 	Title:
	Vice President and General Counsel
	 	 	 	 	 	 
	 	 	AMERICAN OVERSEAS MARINE
	 	 	CORPORATION
	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	David A. Savner
	 	 	 	 	Title:
	Vice President and General Counsel
	 	 	 	 	 	 
	 	 	BATH IRON WORKS CORPORATION
	 	 	 	 	 	 
	 	 	By:	 	/s/ Thomas A. Brown

	 	 	 	 	Name:
	Thomas A. Brown
	 	 	 	 	Title:
	Vice President Finance and
	 	 	 	 	 	Administration, Treasurer and
	 	 	 	 	 	Secretary
	 	 	 	 	 	 
	 	 	ELECTRIC BOAT CORPORATION
	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	David A. Savner
	 	 	 	 	Title:
	Vice President and Secretary

42

 

	 	 	 	 	 	 	 
	 	 	GENERAL DYNAMICS ARMAMENT
	 	 	AND TECHNICAL PRODUCTS, INC.
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	 	David A. Savner
	 	 	 	 	Title:
	 	Vice President
	 	 	 	 	 	 	 
	 	 	GENERAL DYNAMICS GOVERNMENT
	 	 	SYSTEMS CORPORATION
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	 	David A. Savner
	 	 	 	 	Title:
	 	Vice President
	 	 	 	 	 	 	 
	 	 	GENERAL DYNAMICS LAND SYSTEMS
	 	 	INC.
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	 	David A. Savner
	 	 	 	 	Title:
	 	Vice President
	 	 	 	 	 	 	 
	 	 	GENERAL DYNAMICS ORDNANCE
	 	 	AND TACTICAL SYSTEMS, INC.
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	 	David A. Savner
	 	 	 	 	Title:
	 	Vice President

43

 

	 	 	 	 	 	 	 
	 	 	GULFSTREAM AEROSPACE
	 	 	CORPORATION
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	 	David A. Savner
	 	 	 	 	Title:
	 	Vice President
	 	 	 	 	 	 	 
	 	 	MATERIAL SERVICE RESOURCES
	 	 	COMPANY
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Michael E. Stanczak

	 	 	 	 	Name:
	 	Michael E. Stanczak
	 	 	 	 	Title:
	 	President
	 	 	 	 	 	 	 
	 	 	NATIONAL STEEL AND SHIPBUILDING
	 	 	COMPANY
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Savner

	 	 	 	 	Name:
	 	David A. Savner
	 	 	 	 	Title:
	 	Senior Vice President
	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, as Trustee
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Geovanni Barris

	 	 	 	 	Name:
	 	Geovanni Barris
	 	 	 	 	Title:
	 	Vice President, Corporate
	 	 	 	 	 	 	Trust Administration

441993 Stock Plan for Non-Employee Directors

 

Exhibit 4.1

LINCOLN NATIONAL CORPORATION

1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

(As Amended and Restated Effective May 8, 2003)

ARTICLE I — PURPOSE OF PLAN

1.1 Purpose of Plan. Lincoln National Corporation (the “Corporation”) has
adopted the 1993 Stock Plan for Non-Employee Directors (the “Plan”) to provide
for payment in shares of the Corporation’s Common Stock (“Stock”) of a portion
of the retainer fee payable to members of the Board of Directors of the
Corporation who are not employees of the Corporation or any of its affiliates
or subsidiaries (“Non-Employee Directors”) and to allow Non-Employee Directors
and directors of any of the Corporation’s affiliates or subsidiaries (“Non-LNC
Directors”) to elect to defer receipt of all or a portion of their retainer
and/or meeting fees. The Plan also provides a restricted stock bonus in the
form of Restricted Stock for Non-Employee Directors, and for the granting to
Non-Employee Directors of nonqualified options to purchase Stock and Stock
equivalents. The Plan is intended to provide Non-Employee Directors with a
larger equity interest in the Corporation in order to attract and retain
well-qualified individuals to serve as Non-Employee Directors and to enhance
the identity of interests between Non-Employee Directors and the shareholders
of the Corporation.

ARTICLE II — ELIGIBILITY AND PARTICIPATION

2.1 Eligibility and Participation. Only Non-Employee Directors of the
Corporation and Non-LNC Directors shall be eligible to participate in the Plan,
and participation in the Plan is mandatory for all Non-Employee Directors.
Except as specifically provided herein, a Non-Employee Director may not elect
to increase or decrease the portion of the retainer fee payable in Stock.

ARTICLE III — RETAINER STOCK AWARDS AND DEFERRAL ELECTIONS

3.1 Retainer Stock Awards.

	(a)	 	Amount of Award. On each July 1 after the Effective Date through and
including July 1, 2004 (each such date hereinafter a “Grant Date”), in
lieu of the retainer fee payable to a Non-Employee Director with respect
to the calendar quarter beginning on the Grant Date determined without
regard to the Plan (“Retainer”), and in consideration for services
rendered as a Non-Employee Director, the Corporation shall issue to each
Non-Employee Director a whole number of shares of Stock (a “Stock Award”)
equal to the number of shares determined by dividing (a) the sum of (i)
twenty-five percent (25%) of the Retainer established by resolution of the
Board of Directors of the Corporation and payable for services prior to
July 1, 1995, plus (ii) one hundred percent (100%) of any increase in the
Retainer adopted by the Board of Directors of the Corporation for services

 

	 	 	after July 1, 1995 (provided, however, that this clause (ii) shall take
effect with respect to each such increase only upon the effective date of
such increase), by (b) the Fair Market Value of the Stock on such Grant
Date. For purposes of this Plan, the “Fair Market Value” of Stock on any
business day shall be the average of the high and low sales prices of the
Stock quoted on the New York Exchange Composite Listing on the next
preceding business day on which there were such quotations for the day in
question. To the extent that the formula described in this Section
3.1(a) does not result in a whole number of shares of Stock, the result
shall be rounded upwards to the next whole number such that no fractional
shares of Stock shall be issued under the Plan. Such shares shall be
restricted from sale or transfer as provided in Section 3.1(b).
	 
	(b)	 	Restrictions on Stock Awards. A stock certificate representing the Stock
Award shall be registered in each Non-Employee Director’s name. The
Non-Employee Director shall have all rights and privileges of a
shareholder as to such Stock Award, including the right to vote such
Restricted Shares, except that the following restrictions shall apply: (i)
no dividends shall be payable on the shares, however, a Dividend
Equivalent Payment, as defined in Article V, below, shall be credited to
an account established under the Plan, invested in Stock Units, as
described under Section 3.2(b) and shall have the same restrictions as the
relevant restricted shares, (ii) none of the Restricted Shares may be
sold, transferred, assigned, pledged, or otherwise encumbered or disposed
of during the Restricted Period, and (iii) except as provided in Section
3.1(c), all of the Restricted Shares and Dividend Equivalent Payments
shall be forfeited and all rights of the Non-Employee Director to such
Restricted Shares shall terminate without further obligation on the part
of the Corporation and its subsidiaries upon the Non-Employee Director’s
ceasing to be a director of the Corporation and its subsidiaries.
	 
	(c)	 	Termination of Directorship.

	 	(i)	 	Vesting of Shares. If a Non-Employee Director ceases to be a
director of the Corporation and its subsidiaries by reason of
Disability, Death, Retirement or Change of Control, the Restricted
Shares granted to and Dividend Equivalent Payments on such shares
accumulated for such Non-Employee Director shall immediately vest.
If a Non-Employee Director ceases to be a director of the
Corporation and its subsidiaries for any other reason, the
Non-Employee Director shall immediately forfeit all Restricted
Shares, except to the extent that a majority of the Board of
Directors of the Corporation other than the Non-Employee Director
approves the vesting of such Restricted Shares. Upon vesting,
except as provided in Article XI, all restrictions applicable to
such Restricted Shares shall lapse.
	 
	 	(ii)	 	Disability. For purposes of this Section 3.1(c),
“Disability” shall mean a permanent and total disability as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended.
	 
	 	(iii)	 	Retirement. For purposes of this Section 3.1(c),
“Retirement” shall mean ceasing to be a director of the Company (A)
on or after age 70, or (B) on or after age 65

 

	 	 	 	with the consent of a majority of the members of the Board of
Directors of the Corporation other than the Non-Employee Director.
	 
	 	(iv)	 	Change of Control. For purposes of this Section 3.1(c),
“Change of Control” shall have the same meaning as in the Lincoln
National Corporation Executives’ Severance Benefit Plan on the date
that is six (6) months immediately preceding the “Change of
Control.”

3.2 Deferral of Retainer and/or Fees.

	(a)	 	Deferral Elections. Commencing on the effective date of the Plan,
payment of all or part of the Retainer (excluding Stock Awards pursuant to
Section 3.1(a)) and/or fees payable to a Non-Employee Director for
meetings of the Board of Directors of the Corporation or Board Committees
or for extraordinary services may be deferred by election of the
Non-Employee Director. Payment of all or a part of any retainer and/or
fees payable to a Non-LNC Director by an affiliate or subsidiary of the
Corporation for meetings of the Board of Directors of the subsidiary or
affiliate or for board committees or for extraordinary services, may also
be deferred commencing with the adoption of the Plan by the affiliate or
subsidiary. Each such election must be made prior to the start of the
calendar year for which the Retainer and/or fees will be paid and must be
irrevocable for the affected calendar year; except that each newly elected
Non-Employee Director shall be permitted to elect deferred payment of all
or a portion of any prospective Retainer and/or fees (such election must
be made before the Non-Employee Director shall have been officially
elected). In addition, each election to defer payment of any amount of
the Retainer and/or fees payable in cash must be made in a manner that
complies with Section 16 of the Securities Exchange Act of 1934 (“1934
Act”), as the same may be hereafter amended.
	 
	(b)	 	Crediting Stock Units to Accounts. Amounts deferred pursuant to Section
3.2(a) shall be credited as of the date of the deferral to a bookkeeping
reserve account maintained by the Corporation (“Account”) in units which
are equivalent in value to shares of Stock (“Stock Units”). The number of
Stock Units credited to an Account with respect to any Non-Employee
Director shall equal a number of Stock Units equal to any deferred cash
amount divided by the Fair Market Value of the Stock on the date on which
such cash amount would have been paid but for the deferral election
pursuant to Section 3.2(a).
	 
	(c)	 	Fully Vested Stock Units. All Stock Units credited to a Non-Employee
Director’s Account pursuant to this Section 3.2 shall be at all times
fully vested and nonforfeitable.
	 
	(d)	 	Payment of Stock Units. Stock Units credited to a Non-Employee
Director’s Account pursuant to this Article III shall be payable (in
accordance with his or her written election) in an equal number of shares
of Stock or cash, in a single lump sum distribution or annual installment
payments, as soon as practicable after service as a Non-Employee Director
terminates.

 

	(e)	 	Payment of Stock Units Upon a Change of Control. Stock Units credited to
a Non-Employee Director’s Account shall be automatically distributed in a
single lump sum amount of shares of Stock, with fractional Stock Units
being distributed in cash, upon a Change of Control.

ARTICLE IV — RESTRICTED STOCK BONUS

4.1 Restricted Stock Bonus for Non-Employee Directors on July 1, 1994. Each
Non-Employee Director serving as such on the date of shareholder approval of
the Plan shall be awarded a whole number of restricted Shares of Stock (a
“Stock Bonus”) equal to $10,000 divided by Fair Market Value of Common Stock in
consideration for services rendered as a Non-Employee Director of the
Corporation and its subsidiaries. To the extent that the formula described in
this Section 4.1 does not result in a whole number of Shares of Stock, the
result shall be rounded upwards to the next whole number such that no
fractional shares shall be issued under the Plan. The restrictions on the
Stock Bonus shall be the same as those restrictions described in Section
3.1(b).

4.2 Restricted Stock Bonus for Non-Employee Directors After July 1, 1994.
Each Non-Employee Director who commences serving a new three year term after
July 1, 1994 shall be issued an additional Stock Bonus equal to $10,000 divided
by the Fair Market Value of Common Stock as of the July 1 on which he or she
begins serving a new term as a Non-Employee Director, and thereafter until the
Plan is terminated. A new Non-Employee Director who is appointed or elected to
an unexpired term, shall receive a partial Stock Bonus on the next succeeding
July 1 after his or her appointment or election to such partial term in an
amount equal to the Fair Market Value of Stock on such July 1 of $10,000
multiplied by a fraction the numerator being the number of months remaining in
the unexpired term since being so appointed or elected and the denominator
being 36. To the extent that the formula described in this Section 4.2 does
not result in a whole number of Shares of Stock, the result shall be rounded
upwards to the next whole number such that no fractional shares shall be issued
under the Plan. This Stock Bonus shall contain the same restrictions as
specified in Section 3.1(b).

ARTICLE V — DIVIDEND EQUIVALENT PAYMENTS

5.1 Dividend Equivalent Payments. As of each dividend payment date with
respect to Stock, each Non-Employee Director shall receive additional Stock
Units (“Dividend Equivalent Payment”) equal to the product of (i) the per-share
cash dividend payable with respect to each share of Stock on such date, and
(ii) the total number of Restricted Shares issued in his or her name and Stock
Units credited to his or her Account as of the record date corresponding to
such dividend payment date, divided by the Fair Market Value. Fractional Stock
Units may be awarded. The Dividend Equivalent Payments with respect to
Restricted Shares shall contain the same restrictions as specified in Section
3.1(b).

ARTICLE VI — STOCK OPTIONS

6.1 Options. The Board of Directors of the Corporation may in its discretion
grant nonqualified options to purchase Stock or Stock Units (“Options”) to
Non-Employee Directors on the following terms and conditions:

 

	(a)	 	Exercise Price. The exercise price per share of Stock purchasable under
an Option shall be determined by the Board of Directors of the Corporation
provided that such exercise price shall be not less than the Fair Market
Value of a share of Stock on the date of grant of such Option.
	 
	(b)	 	Time and Method of Exercise. The Board of Directors of the Corporation
shall determine, at the date of grant or thereafter, the time or times at
which or the circumstances under which an Option may be exercised in whole
or in part (including based on achievement by the Corporation of
performance goals and/or satisfaction by the Non-Employee Director of
future service requirements), the methods by which such exercise price may
be paid or deemed to be paid, and the form of such payment, including,
without limitation, cash, Stock, or other property (including notes or
other contractual obligations of Non-Employee Directors to make payment on
a deferred basis; however, the right of any Non-Employee Director to make
such a deferred payment shall be subject to any prohibition, restriction
or limitation imposed by applicable law). In no event, however, shall an
Option be exercisable within six months of the date on which it was
granted.
	 
	(c)	 	Exercise only by Non-Employee Director. An Option shall be exercisable
only by the Non-Employee Director or, following his or her death, by a
person who acquires the Option (from the Non-Employee Director) by will or
through the laws of descent and distribution.
	 
	(d)	 	Exercise of Option to Purchase Stock Units. The exercise of an Option to
purchase Stock Units shall be made in the manner, and on such other terms
with respect to payments of Stock Units and other matters, as may be
prescribed by the Board of Directors of the Corporation. Stock Units
received on exercise shall be credited as of the date of exercise to an
Account (as described in Section 3.2(b)). The number of Stock Units
credited to an Account on behalf of a Non-Employee Director as a result of
his or her exercise of an Option shall equal (i) the difference (which
shall not be below zero) between the exercise price of the Option and the
Fair Market Value of the Stock on the date of exercise, multiplied by (ii)
the number of shares of Stock subject to the Option, divided by (iii) the
Fair Market Value of the Stock on the date of exercise.

6.2 Option Agreements. Each Option shall be evidenced by an agreement
between the Corporation and the Non-Employee Director setting forth all the
relevant terms and conditions applicable to the Option. An agreement executed
by a Non-Employee Director may be different from one executed by another
Non-Employee Director and/or an agreement previously executed by the
Non-Employee Director.

ARTICLE VII — DELIVERY OF STOCK CERTIFICATES

7.1 Stock Awards. As soon as practicable following the expiration of the
restrictions, but in no event sooner than six (6) months from such Grant Date,
the Corporation shall deliver to the Non-Employee Director an unrestricted
Stock certificate with respect to the shares of Stock issued

 

pursuant to such Stock Award and Stock Bonus. During any six (6) month period
after the Grant Date and before delivery of the Stock certificate after the
restrictions have lapsed, the Non-Employee Director shall have all the rights
of a shareholder with respect to such Stock, except for the right to receive
dividend payments and except that such Stock shall not be transferable by the
Non-Employee Director other than by will or the laws of descent and
distribution.

7.2 Stock Unit Payments. The Corporation shall issue and deliver to the
Non-Employee Director cash or a Stock certificate, as elected by the
Non-Employee Director, for payment of Stock Units as soon as practicable
following the date on which Stock Units are payable in accordance with Section
3.2(d). No fractional shares will be distributed.

7.3 Stock Options. As soon as practicable following the exercise of an
Option, the Corporation shall deliver to the Non-Employee Director an
unrestricted Stock certificate with respect to the shares of Stock issued
pursuant to the exercise of such Option.

ARTICLE VIII — STOCK

8.1 Stock. The aggregate number of shares of Stock that may be issued under
the Plan, including shares issued on exercise of an Option, shall not exceed
three hundred thousand (300,000) shares (which amount reflects an appropriate
adjustment for a two-for-one stock split with respect to the Stock effected by
the Corporation in June 1999), unless such number of shares is adjusted as
provided in Article IX of this Plan. In addition to the foregoing limit, the
aggregate number of restricted shares that may be granted during the term of
the Plan shall not exceed one hundred thousand (100,000) shares (which amount
reflects an appropriate adjustment for a two-for-one stock split with respect
to the Stock effected by the Corporation in June 1999), unless such number of
shares is adjusted as provided in Article IX of this Plan. To the extent that
an award or Option lapses or the rights of the Non-Employee Director terminate
or the award is settled in cash (e.g. cash settlement of Stock Units) any
shares of Common Stock subject to such award shall again be available for the
grant of an award.

ARTICLE IX — ADJUSTMENT UPON CHANGES IN CAPITALIZATION

9.1 Adjustment Upon Changes in Capitalization. In the event of a stock
dividend, stock split or combination, reclassification, recapitalization or
other capital adjustment of shares of Stock, the aggregate number of shares of
Stock that may be issued under the Plan, the number of shares of Stock to be
issued pursuant to outstanding Stock Awards, Stock Bonuses, Stock Units and
Options, and the number of Stock Units credited to Accounts, shall each be
automatically and appropriately adjusted or modified, and the terms
of any such outstanding Stock Award, Stock Bonuses, Stock Units and
Options shall be automatically adjusted or modified accordingly. No fractional shares of Stock shall
be issued under the Plan on account of any adjustment specified herein. The
grant of Stock Awards, Stock Bonuses, Stock Units or Options pursuant to this
Plan shall not affect in any way the right or power of the Corporation to issue
additional Stock or other securities, make adjustments, reclassifications,
reorganizations or other changes in its corporate, capital or business
structure, to participate in a merger, consolidation or share exchange or to
transfer its assets or dissolve or liquidate.

 

ARTICLE X — TERMINATION OR AMENDMENT OF PLAN

10.1 In General. The Board of Directors of the Corporation may at any time
terminate, suspend or amend this Plan. However, no such amendment or
termination shall be made without shareholder approval if such approval would
be required under applicable law or the applicable rules of any stock exchange,
market or inter-dealer quotation system.

10.2 Written Consents. No amendment may adversely affect the right of any
Non-Employee Director to receive any Stock previously issued as a Stock Award
or Stock Bonus, to receive any Stock pursuant to the exercise of an outstanding
Option, or to receive any Stock of Dividend Equivalent Payments pursuant to an
outstanding Stock Unit without the written consent of such Non-Employee
Director.

10.3 Termination of Plan. Unless the Plan is sooner terminated, no Stock
Award, Stock Bonus or Option shall be granted after July 1, 2004. The
termination of the Plan shall have no effect on outstanding Stock Awards, Stock
Bonuses, Stock Units or Options.

ARTICLE XI — GOVERNMENT REGULATIONS

11.1 Government Regulations.

	(a)	 	The obligations of the Corporation to issue any Stock granted under this
Plan shall be subject to all applicable laws, rules and regulations and
the obtaining of all such approvals by governmental agencies as may be
deemed necessary or appropriate by the Board of Directors of the
Corporation.
	 
	(b)	 	Except as otherwise provided in Article X of this Plan, the Board of
Directors of the Corporation may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any governmental
authority.

ARTICLE XII — MISCELLANEOUS

12.1 Unfunded Plan. The Plan shall be unfunded with respect to the
Corporation’s obligation to pay any amounts due pursuant to Stock Units and
Dividend Equivalent Payments, and a Non-Employee Director’s rights to receive
any payment of any Stock Unit or Dividend Equivalent Payment shall be not
greater than the rights of an unsecured general creditor of the Corporation.

12.2 Assignment; Encumbrances. The right to receive a Stock Award, Stock
Bonus, Stock Unit or Option and the right to receive payment with respect to a
Stock Unit under this Plan are not assignable or transferable and shall not be
subject to any encumbrances, liens, pledges or charges of the Non-Employee
Director or his or her creditors. Any attempt to assign, transfer or
hypothecate any Restricted Stock Award, Stock Bonus, Stock Unit or Option or
any right to receive a Stock Award, Stock Bonus, Stock Unit or Option shall be
void and of no force and effect whatsoever

 

12.3 Designation of Beneficiaries. A Non-Employee Director may designate a
beneficiary or beneficiaries to receive any distributions under the Plan upon
his or her death.

12.4 Applicable Law. The validity, interpretation and administration of this
Plan and any rules, regulations, determinations or decisions made hereunder,
and the rights of any and all persons having or claiming to have any interest
herein or hereunder, shall be determined exclusively in accordance with the
laws of the State of Indiana, without regard to the choice of laws provisions
hereof.

12.5 Headings. The headings in this Plan are for reference purposes only and
shall not affect the meaning or interpretation of this Plan.

12.6 Notices. All notices or other communications made or given pursuant to
this Plan shall be in writing and shall be sufficiently made or given if
hand-delivered or mailed and addressed to any Non-Employee Director at the
address contained in the records of the Corporation or to the Corporation in
care of LNC Executive Compensation, 1300 South Clinton Street, Fort Wayne,
Indiana 46802-3506.

ARTICLE XIII — EFFECTIVE DATE OF PLAN

13.1 Effective Date of Plan. This Plan shall become effective on the date on
which it is approved by the affirmative vote of the holders of a majority of
the votes cast by shareholders of the Corporation present, or represented and
entitled to vote, at the next annual meeting of the shareholders of the
Corporation duly held in accordance with the laws of the State of Indiana.

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