Document:

EX-10.1 Stock Purchase Agreement

 

EXHIBIT 10.1

STOCK PURCHASE AGREEMENT

     NOW COMES Delmer Fields (hereinafter referred to as “Purchaser”) and Trans-Industries, Inc.
(hereinafter referred to as the “Company”), on the 8th day of June, 2005, and enter into the
following agreement; to wit:

Background

	 	A.	 	Purchaser is or may be receiving a roll over distribution from the Company’s
Profit Sharing Plan consisting of cash, securities or a combination of both.
	 
	 	B.	 	Purchaser desires to purchase from the Company its common stock, and the
Company does agree to sell to Purchaser common stock.

     NOW THEREFORE, in consideration of the mutual covenants and conditions contained herein, the
parties do hereby agree as follows; to wit:

I. Definitions

1.1      “Common Stock” shall mean the common stock of Trans-Industries, Inc.

1.2      “Company” shall mean Trans-Industries, Inc., a Delaware corporation.

1.3      “Profit Sharing Plan” shall mean the Trans-Industries, Inc. Profit Sharing Plan.

1.4      “Purchaser” shall mean Delmer Fields, or his individual retirement account (“IRA”), or other
similar retirement or deferred compensation account.

II. Purchase of Shares of Common Stock

2.1      Cumulative Purchase Price. The Company agrees to sell, and Purchaser agrees to
purchase the Company’s common stock (the “Common Stock”) having a cumulative value of Four Hundred
Thousand ($400,000.00) Dollars.

2.2      Share Purchase Price. The per share purchase price of the Common Stock sold hereunder
shall be the higher of (1) the average purchase price of the stock as listed on the Nasdaq
exchange, or other equivalent exchange, for the 30-day period preceding the Closing Date; or (2)
the listed closing price on the day before the Closing Date.

III. Conditions Precedent to Purchaser’s Obligation to Purchase

3.1      Distribution from the Company’s Profit Sharing Plan. Purchaser’s obligation to
purchase the Common Stock hereunder is expressly contingent upon distribution of Purchaser’s vested
beneficial interest in the Company’s Profit Sharing Plan.

 

 

IV. Time of Sale

4.1      Time of Sale. The sale of the Common Stock contemplated hereunder shall occur on the
date that the Company’s Profit Sharing Plan makes its distribution/roll over to Purchaser
hereunder, or as soon thereafter as practicable.

V. The Closing Actions

5.1      The Closing. The consummation of the purchase and sale of the Common Stock and the
other transactions and deliveries contemplated by this Agreement (the “Closing”) shall take place
at the office of the Company located at 1780 Opdyke Court, Auburn Hills, Michigan 48326 on the date
that the Company’s Profit Sharing Plan makes its distribution/roll over to Purchaser hereunder, or
as soon thereafter as practicable (the “Closing Date”).

VI. Registration Rights

6.1      Registration Rights. The Company shall grant registration rights to the Purchaser with
regard to the Common Stock purchased by him hereunder. The cost of registration shall be paid by
the Company and shall occur as soon as practicable. The term “Registration” refers to a
registration effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act of 1933, as amended (the “Securities Act”), and a declaration or
ordering of effectiveness of such registration statement or document. The Purchaser has been
informed that the Company may not be able to maintain its current National Securities Exchange or
automated quotation system upon which shares of the Common Stock are currently listed. The
obligation to register shall be nullified in the event that the Company’s Common Stock does not
meet the applicable requirements to be listed on a National Securities Exchange or automated
quotation system (which shall be defined to include NASDAQ Small Cap, Bulletin Board, and Pink
Sheets).

VII. Representations and Warranties

     Purchaser represents and warrants to the Company that:

7.1      he is an “accredited investor” within the meaning of Rule 501 promulgated under the Securities
Act of 1933 (the “Securities Act”);

7.2      he has sufficient knowledge and experience in investing in companies similar to the Company so
as to be able to evaluate the risks and merits of an investment in the Company and he is able
financially to bear the risks thereof;

7.3      he has had an opportunity to discuss the Company’s business, management and financial affairs
with the Company’s management;

7.4      he is aware that:

Page 2 of 4

 

	 	(a)	 	The Common Stock represents “restricted securities” as that term is defined in
Rule 144 promulgated under the act;
	 
	 	(b)	 	The Common Stock cannot be sold or transferred without registration under the
Securities Act and any applicable state securities laws (the “State Acts”), unless
Purchaser establishes to the reasonable satisfaction of the Company that such
registration is not necessary;
	 
	 	(c)	 	any certificates which may be issued to evidence the Common Stock shall bear
the following legend, in addition to any other legend required by law:
	 
	 	 	 	“The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the “Act”), or any state securities
acts and may not be sold, transferred or otherwise disposed of unless a
registration statement under the Act and any applicable state securities
acts with respect to such shares is effective or unless the holder
establishes to the reasonable satisfaction of the Company that such shares
may be sold without registration under the Act and such acts.”

7.5      he is acquiring the Common Stock for his own account and not on behalf of any other person;

7.6      he is acquiring the Common Stock for investment and not with a view to or for sale in
connection with any distribution of the Common Stock or with the intent to divide his participation
with others or resell or otherwise participate in a distribution of the Common Stock, directly or
indirectly;

7.7      neither he no anyone acting on his behalf has paid or will pay any commission or other
remuneration to any person in connection with the purchase of Common Stock; and

7.8      he will not sell the Common Stock (i) without registration under the Act and the applicable
State Acts, unless he establishes to the satisfaction of the Company that such registration is not
necessary, or (ii) without compliance with any restrictions imposed by the Act or any applicable
State Acts.

VIII. Specific Performance

8.1      Specific Performance. In connection with any action or proceeding to enforce the terms
of this Agreement, the parties acknowledge that there will not be an adequate remedy at law and
failure to perform by either party will cause irreparable harm. Therefore, the parties consent and
agree that each shall be entitled to specific performance of the obligations of this Agreement.

IX. Miscellaneous Provisions

9.1      Counterparts; Signature Pages. This Agreement may be executed and delivered in
multiple counterparts, each of which will be deemed an original, and all of which together will
constitute one and the same instrument. This Agreement may be executed and delivered by facsimile
and

Page 3 of 4

 

with separate signature pages with the same effect as though all parties had executed and delivered
the same original signature page.

9.2      Entire Agreement. This Agreement constitutes the exclusive statement of the agreement
between the parties concerning the subject matter hereof, and supersedes all other agreements, oral
or written, between the parties concerning such subject matter. All negotiations among the parties
hereto are superseded by this Agreement, and there are no representations, warranties, promises,
understandings or agreements, oral or written, in relation to the subject matter hereof between the
parties other than those expressly set forth herein.

9.3      Amendments; Waivers. No amendment or modification of this Agreement or any provision
hereof, including the provisions of this sentence, will be effective or enforceable as against a
party hereto unless made in a written instrument which specifically references this Agreement and
which is signed by the party against whom enforcement of such amendment or modification is sought.

9.4      Binding Effect. This Agreement, when executed and delivered by both parties hereto,
will be binding upon and will inure to the benefit of each of the parties and their respective
successors, legal representatives and assigns.

9.5      Third Parties. No provision of this Agreement is intended or may be construed to
confer on any person, other than the parties hereto and their respective successors and assigns,
any rights hereunder.

9.6      Interpretation. In each place where it is used in this Agreement, the word “including”
is intended and shall be construed to mean “including but not limited to”. The section and
paragraph headings in this Agreement are intended only for convenience of reference and shall be
disregarded in interpreting the provisions of this Agreement. Whenever the context requires in
this Agreement, the masculine gender includes the feminine or neuter, the neuter gender includes
the masculine or feminine, the singular number includes the plural, and the plural number includes
the singular.

9.7      Governing Law. This Agreement and the rights and obligations of the parties hereunder
will be governed by and construed in accordance with the laws of the State of Michigan applicable
to contracts made and to be performed entirely within Michigan and without regard to the
conflicts-of-laws provisions thereof.

	 	 	 
	WITNESS:

	 	AGREED TO AND ACCEPTED BY:
	 
	 	 
	 
	 	 
	 
	 	 
	
/s/ Kai Kosanke
	 	/s/ Delmer Fields
	 	 	 
	

	 	DELMER FIELDS
	 
	 	 
	

	 	 
	 
	 	 
	WITNESS:

	 	AGREED TO AND ACCEPTED BY
TRANS-INDUSTRIES, INC.
	 
	 	 
	
	 	BY: /s/ Richard Solon
	 	 	 
	

	 	RICHARD SOLON
	

	 	Its Chief Executive Officer
	

	 	 

Page 4 of 4EX-4.1 Form of Medium-Term Note (Floating Rate)

 

Exhibit 4.1

[FACE OF NOTE]

CUSIP NO.

REGISTERED

PRINCIPAL AMOUNT

No. FL -

EATON CORPORATION

MEDIUM-TERM NOTE

(FLOATING RATE)

          If the registered owner of this Security (as indicated below) is The Depository Trust Company
(the “Depository”) or a nominee of the Depository, this Security is a Global Security and
the following two legends apply:

          Unless this certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) to the issuer or its agent for registration of
transfer, exchange or payment, and such certificate issued is registered in the name of CEDE & CO.,
or such other name as requested by an authorized representative of the Depository, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, since the
registered owner hereof, CEDE & CO., has an interest herein.

          Unless and until this certificate is exchanged in whole or in part for Securities in
certificated form, this certificate may not be transferred except as a whole by the Depository to a
nominee thereof or by a nominee thereof to the Depository or another nominee of the Depository or
by the Depository or any such nominee to a successor of the Depository or a nominee of such
successor.

          IF APPLICABLE, THE “TOTAL AMOUNT OF OID”, “YIELD TO MATURITY” AND
“INITIAL ACCRUAL PERIOD OID” (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE
COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT
(“OID”) RULES.

 

 

 2

	 	 	 
	ISSUE PRICE:
	 	OPTION TO ELECT REPAYMENT:   o YES  o NO
	 
	 	 
	ORIGINAL ISSUE DATE:
	 	OPTIONAL REPAYMENT DATE[S]:
	 
	 	 
	STATED MATURITY DATE:
	 	OPTIONAL REDEMPTION:  o YES  o NO
	 
	 	 
	BASE RATE:
	 	INITIAL REDEMPTION DATE:
	If LIBOR:o LIBOR Telerate
	 	 
	o LIBOR Reuters
	 	 
	o Other
	 	INITIAL REDEMPTION PERCENTAGE:
	Designated LIBOR Page:
	 	 
	Designated LIBOR Currency:
	 	 
	If CMT Rate,
	 	 
	Designated CMT Telerate Page:
	 	 
	Designated CMT Maturity Index:
	 	 
	 
	 	 
	INITIAL INTEREST RATE:
	 	ANNUAL REDEMPTION PERCENTAGE REDUCTION:
	 
	 	 
	INDEX MATURITY:
	 	MINIMUM DENOMINATION:
	 
	 	 o $2,000
	 
	 	 o Other:
	 
	 	 
	SPREAD (PLUS OR MINUS):
	 	SPECIFIED CURRENCY:
	 
	 	United States Dollars:
	 
	 	o YES     o NO
	 
	 	 
	SPREAD MULTIPLIER:
	 	Foreign Currency:
	 
	 	 
	CALCULATION AGENT:
	 	OPTION TO RECEIVE PAYMENTS
	 
	 	IN SPECIFIED CURRENCY
	 
	 	OTHER THAN U.S. DOLLARS:
	 
	 	o YES     o NO
	 
	 	 
	CALCULATION DATE:
	 	EXCHANGE RATE AGENT;
	 
	 	 
	SINKING FUND:
	 	ADDITIONAL AMOUNTS:
	 
	 	 
	MAXIMUM INTEREST RATE:
	 	DEFEASANCE:  o YES     o NO
	 
	 	 
	MINIMUM INTEREST RATE:
	 	COVENANT DEFEASANCE:  o YES     o NO
	 
	 	 
	INTEREST DETERMINATION DATE:
	 	OTHER/DIFFERENT PROVISIONS:
	 
	 	 
	INTEREST RESET PERIOD:
	 	 
	 
	 	 
	INTEREST RESET DATES:
	 	 
	 
	 	 
	INTEREST PAYMENT PERIOD:
	 	 
	 
	 	 
	REGULAR RECORD DATES:
	 	 
	 
	 	 
	INTEREST PAYMENT DATES:
	 	 
	 
	 	 
	TOTAL AMOUNT OF OID:
	 	 
	 
	 	 
	INITIAL ACCRUAL PERIOD OID:
	 	 
	 
	 	 
	YIELD TO MATURITY:
	 	 
	 
	 	 
	OPTIONAL INTEREST RATE RESET:
	 	 
	o YES     o NO
	 	 
	 
	 	 
	OPTIONAL INTEREST RATE RESET DATES:
	 	 

 

 

 3

          EATON CORPORATION, an Ohio corporation (herein referred to as the “Company”,
which term includes any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to

                     , or registered assigns, the principal sum of                      on
the Stated Maturity Date shown above (except to the extent redeemed or repaid prior to the Stated
Maturity Date) and to pay interest thereon at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above following the
Original Issue Date (if the first Interest Reset Date is later than the Original Issue Date) and
thereafter at the interest rate determined by reference to the Base Rate shown above, plus or minus
the Spread, if any, or multiplied by the Spread Multiplier, if any, shown above, or adjusted by
such other formula, if any, set forth on the face hereof, until the principal hereof is paid or
duly made available for payment. The Company will pay interest on each Interest Payment Date, if
any, specified above, commencing with the first Interest Payment Date next succeeding the Original
Issue Date, and on the Stated Maturity Date, any Redemption Date or Repayment Date (each such date
being hereinafter referred to as the “Maturity Date” with respect to the principal
repayable on such date); provided, however, that any payment of principal (or
premium, if any) or interest, if any, to be made on any Interest Payment Date or on the Maturity
Date that is not a Business Day (as defined below) shall be made on the next succeeding Business
Day (except that if the Base Rate specified above is LIBOR or EURIBOR, and such day falls in the
next succeeding calendar month, such payment will be made on the next preceding Business Day) as
described on the reverse hereof. For purposes of this Security, unless otherwise specified on the
face hereof, “Business Day” means any day that is not a Saturday or Sunday and that is
neither a legal holiday nor a day on which commercial banks are authorized or required by law,
regulation or executive order to close in The City of New York; provided, however,
that, if the Specified Currency shown above is a Foreign Currency, such day is also not a day on
which commercial banks are authorized or required by law, regulation or executive order to close in
the Principal Financial Center (as defined below) of the country issuing the Specified Currency
(or, if the Specified Currency is the euro, such day is also a day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open); provided
further that, with respect to Securities as to which LIBOR is an applicable Base Rate, such
day is also a London Business Day. “London Business Day” means a day on which commercial
banks are open for business (including dealings in the LIBOR Currency (as defined below)) in
London. “Principal Financial Center” means (i) the capital city of the country issuing the
Specified Currency or (ii) the capital city of the country to which the LIBOR Currency relates, as
applicable, except, in the case of (i) or (ii) above, that with respect to United States dollars,
Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders, Portuguese escudos, South
African rand and Swiss francs, the “Principal Financial Center” shall be The City of New York,
Sydney and (solely in the case of the Specified Currency) Melbourne, Toronto, Frankfurt, Amsterdam,
London (solely in the case of the LIBOR Currency), Johannesburg and Zurich, respectively.

 

 

 4

          Interest on this Security will accrue from, and including, the immediately preceding Interest
Payment Date to which interest has been paid or duly provided for (or from, and including, the
Original Issue Date if no interest has been paid or duly provided for) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each an “Interest
Period”). The interest, if any, so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture and subject to certain exceptions
described herein (referred to on the reverse hereof), be paid to the person (the “Holder”)
in whose name this Security (or one or more Predecessor Securities) is registered at the close of
business on the fifteenth day (whether or not a Business Day) next preceding such Interest Payment
Date (a “Regular Record Date”); provided, however, that, if this Security
was issued between a Regular Record Date and the initial Interest Payment Date relating to such
Regular Record Date, interest, if any, for the period beginning on the Original Issue Date and
ending on such initial Interest Payment Date shall be paid on the Interest Payment Date following
the next succeeding Regular Record Date to the Holder hereof on such Regular Record Date; and
provided further that interest, if any, payable on the Maturity Date will be
payable to the person to whom the principal hereof shall be payable. Any such interest not so
punctually paid or duly provided for on any Interest Payment Date other than the Maturity Date
(“Defaulted Interest”) will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a special record date (the
“Special Record Date”) for the payment of such Defaulted Interest to be fixed by the
Trustee (referred to on the reverse hereof), notice whereof shall be given to the Holder of this
Security not less than ten days prior to such Special Record Date, or may be paid at any time in
any other lawful manner, all as more fully provided in the Indenture.

          Unless otherwise specified above, all payments in respect of this Security will be made in
U.S. dollars regardless of the Specified Currency shown above unless the Holder hereof makes the
election described below. If the Specified Currency shown above is other than U.S. dollars, the
Exchange Rate Agent (referred to on the reverse hereof) will arrange to convert any such amounts so
payable in respect hereof into U.S. dollars in the manner described on the reverse hereof;
provided, however, that the Holder hereof may, if so indicated above, elect to
receive all or a specified portion of any payment of principal, premium, if any, and/or interest ,
if any, in respect of this Security in such Specified Currency by delivery of a written request to
the corporate trust office of the Trustee in The City of New York, on or prior to the applicable
Regular Record Date or at least fifteen days prior to the Maturity Date, as the case may be. Such
request may be in writing (mailed or hand delivered) or by cable, telex or other form of facsimile
transmission. The Holder hereof may elect to receive payment in such Specified Currency for all
principal, any premium, if any, and interest payments, if any, and need not file a separate
election for each payment. Such election will remain in effect until revoked by written notice to
the Trustee, but written notice of any such revocation must be received by the Trustee on or prior
to the Regular Record Date or at least fifteen days prior to the Maturity Date, as the case may be.

 

 

 5

          Notwithstanding the foregoing, if the Company determines that the Specified Currency is not
available for making payments in respect hereof due to the imposition of exchange controls or other
circumstances beyond the Company’s control, or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public institutions of or within the
international banking community, then the Holder hereof may not so elect to receive payments in the
Specified Currency and any such outstanding election shall be automatically suspended, until the
Company determines that the Specified Currency is again available for making such payments. If the
euro has been substituted for such Specified Currency, the Company may at its option (or shall, if
so required by applicable law) without the consent of the holder of this Security effect the
payment of principal of or premium, if any, or interest on this Security in euro in lieu of such
Specified Currency in conformity with legally applicable measures taken pursuant to, or by virtue
of, the Treaty establishing the European Community, as amended. Any payment made under such
circumstances in U.S. dollars or euro where the required payment is in a Specified Currency will
not constitute a default under the Indenture.

          In the event of an official redenomination of the Specified Currency, the obligations of the
Company with respect to payments on this Security shall, in all cases, be deemed immediately
following such redenomination to provide for payment of that amount of redenominated currency
representing the amount of such obligations immediately before such redenomination. In no event
shall any adjustment be made to any amount payable hereunder as a result of any change in the value
of the Specified Currency shown above relative to any other currency due solely to fluctuations in
exchange rates.

          Until this Security is paid in full or payment therefor in full is duly provided for, the
Company will at all times maintain a Paying Agent (which Paying Agent may be the Trustee) in The
City of New York (which, unless otherwise specified above, shall be the “Place of
Payment”). The Company has initially appointed JPMorgan Chase Bank, N.A., at its office in The
City of New York as Paying Agent.

          Unless otherwise shown above, payment of interest on this Security (other than on the
Maturity Date) will be made by check mailed to the registered address of the Holder hereof as of
the Regular Record Date; provided, however, that, if (i) the Specified Currency is
U.S. dollars and this is a Global Security (as defined on the reverse hereof) or (ii) the Specified
Currency is a Foreign Currency and the Holder has elected to receive payments in such Specified
Currency as provided for above, such interest payments will be made by transfer of immediately
available funds, but only if appropriate wire transfer instructions have been received in writing
by the Trustee on or prior to the applicable Regular Record Date. Simultaneously with any election
by the Holder hereof to receive payments in respect hereof in the Specified Currency (if other than
U.S. dollars), such Holder may provide appropriate wire transfer instructions to the Trustee, and
all such payments will be made in immediately available funds to an account maintained by the payee
with a bank, but only if such bank has appropriate facilities therefor. Unless otherwise specified
above, the principal hereof (and premium, if any) and interest hereon payable on the

 

 

 6

Maturity Date will be paid in immediately available funds upon surrender of this Security at
the office of the Trustee maintained for that purpose in the Borough of Manhattan, The City of New
York (or at such other location as may be specified above). The Company will pay any
administrative costs imposed by banks in making payments in immediately available funds but, except
as otherwise provided under Additional Amounts above, any tax, assessment or governmental charge
imposed upon payments will be borne by the Holders of the Securities in respect of which such
payments are made.

 

 

          REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE
HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT
THIS PLACE.

          Unless the certificate of authentication hereon has been executed by the Trustee by manual
signature, this Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
facsimile corporate seal.

	 	 	 	 	 	 	 
	 	 	 	 	EATON CORPORATION
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	 
	

	 	 	 	 	 	Name:
	

	 	 	 	 	 	Title:
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	 
	

	 	 	 	 	 	Name:
	

	 	 	 	 	 	Title:
	 
	 	 	 	 	 	 
	[CORPORATE SEAL]	 	 	 	 
	 
	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 
	

	 	 	 	 	 	 
	

	 	Name:

Title:	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	TRUSTEE’S CERTIFICATE OF AUTHENTICATION
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	This is one of the Securities of the series designated therein
	 	 	 	 	referred to in the within-mentioned Indenture
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	JPMORGAN CHASE BANK, N.A.,
	 	 	 	 	 	 	as Trustee
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:	 	 
	

	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Authorized Officer

 

 

[REVERSE OF NOTE]

EATON CORPORATION

MEDIUM-TERM NOTE

          Section 1. General. This Security is one of a duly authorized issue of securities
(herein called the “Securities”) of the Company, issued and to be issued in one or more
series under an indenture, dated as of April 1, 1994, as it may be supplemented from time to time
(herein called the “Indenture”), between the Company and JPMorgan Chase Bank, N.A.
(formerly known as Chemical Bank), Trustee (herein called the “Trustee”, which term
includes any successor trustee under the Indenture with respect to a series of which this Security
is a part), to which Indenture and all indentures supplemental thereto, reference is hereby made
for a statement of the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to U.S.$800,000,000 (or the
equivalent thereof in one or more foreign currencies) or such other principal amount as shall be
provided pursuant to the Indenture.

          Section 2. Payments. If the Specified Currency is other than U.S. dollars and the
Holder hereof fails to elect payment in such Specified Currency in accordance with the procedures
set forth on the face hereof, the amount of U.S. dollar payments to be made in respect hereof will
be determined by the Exchange Rate Agent specified on the face hereof or a successor thereto (the
“Exchange Rate Agent”) based on the highest bid quotation in The City of New York at
approximately 11:00 A.M., New York City time, on the second Business Day preceding the applicable
payment date received by the Exchange Rate Agent from three recognized foreign exchange dealers
(one of whom may be the Exchange Rate Agent) selected by the Exchange Rate Agent and approved by
the Company for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for
settlement on such payment date in the aggregate amount of the Specified Currency payable to all
Holders of Securities scheduled to receive U.S. dollar payments and at which the applicable dealer
commits to execute a contract. If three such bid quotations are not available, payments will be
made in the Specified Currency.

          If the Specified Currency is other than U.S. dollars and the Holder hereof has elected
payment in such Specified Currency in accordance with the procedures set forth on the face hereof
and the Specified Currency is not available due to the imposition of exchange controls or to other
circumstances beyond the Company’s control, the Company will be entitled to satisfy its obligations
to the Holder of this Security by making such payment in U.S. dollars on the basis of the noon
buying rate in The City of New York for cable transfers of such Specified Currency as certified for
customs purposes (or, if not so certified as otherwise determined) by the Federal Reserve Bank of
New York (the “Market Exchange Rate”) as computed by the Exchange Rate Agent on the second
Business Day prior to the applicable payment date or, if the Market Exchange Rate is then not
available, on the basis of the most recently available Market Exchange

 

 

 2

Rate or as otherwise indicated above. Any payment made under such circumstances in U.S.
dollars where the required payment is in a Specified Currency will not constitute a default under
the Indenture.

          All determinations referred to above made by the Exchange Rate Agent shall be at its sole
discretion (except to the extent expressly provided that any determination is subject to approval
by the Company) and, in the absence of manifest error, shall be conclusive for all purposes and
binding on the Holder of this Security and the Exchange Rate Agent shall have no liability
therefor.

          All currency exchange costs will be borne by the Company.

          Section 3. Interest Rate Calculations. Unless otherwise set forth on the face
hereof, the following provisions of this Section 3 shall apply to the calculation of interest on
this Security. If the first Interest Reset Date is later than the Original Issue Date, this
Security will bear interest from its Original Issue Date to the first Interest Reset Date at the
Initial Interest Rate set forth on the face hereof. Thereafter, the interest rate hereon for each
Interest Reset Period (as defined below) will be determined by reference to the Base Rate set forth
on the face hereof, as adjusted by the Spread, the Spread Multiplier or other formula, if any, set
forth on the face hereof.

          As set forth on the face hereof, this Security may also have either or both of the following:
(i) a maximum limitation, or ceiling, on the rate at which interest may accrue during any Interest
Period (as defined below) (“Maximum Interest Rate”); and (ii) a minimum limitation, or
floor, on the rate at which interest may accrue during any Interest Period (“Minimum Interest
Rate”). In addition to any Maximum Interest Rate that may be set forth on the face hereof, the
interest rate on this Security will in no event be higher than the maximum rate permitted by New
York law, as the same may be modified by United States law of general application.

          The rate of interest hereon will be reset daily, weekly, monthly, quarterly,
semiannually or annually or at another interval (each, an “Interest Reset Period”), as set
forth on the face hereof. The date or dates on which interest will be reset (each, an
“Interest Reset Date”) will be, if this Security resets (i) daily, each Business Day; (ii)
weekly, the Wednesday of each week (unless the Base Rate set forth on the face hereof is the
Treasury Rate, in which case the Tuesday of each week (except as provided below)); (iii) monthly,
the third Wednesday of each month; (iv) quarterly, the third Wednesday of each of the four months
set forth on the face hereof; (v) semiannually, the third Wednesday of each of the two months set
forth on the face hereof; and (vi) annually, the third Wednesday of the month of each year set
forth on the face hereof; provided, however, that (a) if the first Interest Reset
Date is later than the Original Issue Date, the interest rate in effect from the Original Issue
Date to the first Interest Reset Date will be the Initial Interest Rate as set forth on the face
hereof and (b) the interest rate in effect for the ten days immediately prior to the Maturity Date
will be that in effect on the tenth day preceding the

 

 

 3

Maturity Date. If the Base Rate set forth on the face hereof is the Treasury Rate and a
Treasury auction shall fall on the Interest Reset Date for this Security, then such Interest Reset
Date shall instead be the first Business Day immediately following such Treasury auction. If any
Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date
shall be postponed to the next succeeding Business Day, except that, if the Base Rate set forth on
the face hereof is LIBOR or EURIBOR, if such Business Day is in the next succeeding calendar month,
such Interest Reset Date shall be the immediately preceding Business Day.

          The interest payable hereon on each Interest Payment Date and on the Maturity Date shall be
the amount of interest accrued from, and including, the Original Issue Date or the next preceding
Interest Payment Date in respect of which interest, if any, has been paid or duly provided for, as
the case may be, to, but excluding, the next succeeding Interest Payment Date or the Maturity Date,
as the case may be (each such period, an “Interest Period”). If the Maturity Date falls on
a day which is not a Business Day, the payment of principal, premium, if any, and interest, if any,
with respect to the Maturity Date will be paid on the next succeeding Business Day with the same
force and effect as if made on the Maturity Date, and no interest shall accrue on the amount so
payable as a result of such delayed payment. If an Interest Payment Date other than the Maturity
Date falls on a day that is not a Business Day, such Interest Payment Date will be postponed to the
next day that is a Business Day and interest will accrue for the period of such postponement
(except if the Base Rate specified above is LIBOR or EURIBOR, and such day falls in the next
succeeding calendar month, such Interest Payment Date will be advanced to the immediately preceding
Business Day), it being understood that, to the extent this sentence is inconsistent with Section
112 of the Indenture, the provisions of this sentence shall apply in lieu of such Section.

          Accrued interest will be calculated by multiplying the principal amount hereof by an accrued
interest factor. Such accrued interest factor will be computed by adding the interest factor
calculated for each day in the Interest Period or from the last date from which accrued interest is
being calculated. The interest factor for each such day is computed by dividing the interest rate
applicable on such day by 360, if the Base Rate set forth on the face hereof is the CD Rate,
Commercial Paper Rate, EURIBOR, Federal Funds Rate, Prime Rate or LIBOR (each as described below),
or by the actual number of days in the year, if the Base Rate set forth on the face hereof is the
Treasury Rate or the CMT Rate (each as described below). The interest rate applicable to any day
that is an Interest Reset Date is the interest rate as determined, in accordance with the
procedures hereinafter set forth, with respect to the Interest Determination Date (as defined
below) pertaining to such Interest Reset Date. The interest rate applicable to any other day is
the interest rate for the immediately preceding Interest Reset Date (or, if none, the Initial
Interest Rate, as set forth on the face hereof).

          All percentages resulting from any calculation with respect hereto will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of
a percentage point rounded upward (e.g., 7.123455% (or 0.07123455) being rounded to
7.12346% (or 0.0712346) and 7.123454% (or 0.07123454) being rounded to

 

 

 4

7.12345% (or 0.0712345)), and all currency amounts used in or resulting from such calculation
will be rounded to the nearest one-hundredth of a unit (with five one-thousandths of a unit being
rounded upwards).

          Interest will be payable on, if this Security resets (i) daily, weekly or monthly, the third
Wednesday of each month; (ii) quarterly, the third Wednesday of the four months set forth on the
face hereof; (iii) semiannually, the third Wednesday of the two months set forth on the face
hereof; and (iv) annually, the third Wednesday of the month set forth on the face hereof (each, an
“Interest Payment Date”), and in each case, on the Maturity Date.

          If the Base Rate set forth on the face hereof is the CD Rate, the CMT Rate, the Commercial
Paper Rate, the Federal Funds Rate or the Prime Rate, the “Interest Determination Date”
pertaining to an Interest Reset Date for this Security will be the second Business Day immediately
preceding such Interest Reset Date; if the Base Rate set forth on the face hereof is EURIBOR (or
LIBOR when the Index Currency is euros), the “Interest Determination Date” pertaining to an
Interest Reset Date for this Security shall be the second TARGET Settlement Day prior to such
Interest Reset Date; if the Base Rate set forth on the face hereof is LIBOR (other than for LIBOR
Notes for which the Index Currency is euros), the “Interest Determination Date” pertaining
to an Interest Reset Date for this Security will be the second London Business Day immediately
preceding such Interest Reset Date unless the Designated LIBOR Currency is British pounds sterling,
in which case the “Interest Determination Date” will be such Interest Reset Date; and if the Base
Rate set forth on the face hereof is the Treasury Rate, the “Interest Determination Date”
pertaining to an Interest Reset Date for this Security will be the day of the week in which such
Interest Reset Date falls on which Treasury bills (as defined below) would normally be auctioned.
Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the following Tuesday, except that sometimes
such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction
is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining
to the Interest Reset Date occurring in the next succeeding week.

          Unless otherwise set forth on the face hereof, the “Calculation Date”, where
applicable, pertaining to an Interest Determination Date is the earlier of (i) the tenth calendar
day after such Interest Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day and (ii) the Business Day immediately preceding the applicable Interest
Payment Date or the Maturity Date, as the case may be.

          The Company will appoint and enter into an agreement with an agent (a “Calculation
Agent”) to calculate the rate of interest on the Securities of this series which bear interest
at a floating rate. Unless otherwise set forth on the face hereof, JPMorgan Chase Bank, N.A. will
be the Calculation Agent. At the request of the Holder hereof, the Calculation Agent will provide
the interest rate then in effect and, if determined, the interest rate that will become effective
on the next Interest Reset Date.

 

 

 5

          Subject to applicable provisions of law and except as specified herein, with respect to
each Interest Determination Date, the rate of interest shall be the rate determined by the
Calculation Agent in accordance with the provisions of the applicable heading below.

          Determination of CD Rate. If the Base Rate set forth on the face hereof is the CD
Rate, this Security will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread, Spread Multiplier or other formula, if
any, set forth on the face hereof. Unless otherwise set forth on the face hereof, the “CD
Rate” means, with respect to any Interest Determination Date pertaining thereto, the rate on
such date for negotiable certificates of deposit having the Index Maturity set forth on the face
hereof as published in H.15(519) (as defined below), under the heading “CDs (secondary
market)” or, if not yet published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on such Interest
Determination Date for negotiable certificates of deposit having the Index Maturity set forth on
the face hereof as published in H.15 Daily Update (as defined below) or such other recognized
electronic source used for the purpose of displaying such rate, under the caption “CDs
(secondary market)”. If by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date such rate is not yet published in H.15(519), H.15 Daily Update
or such other recognized electronic source, the CD Rate on such Interest Determination Date will be
calculated by the Calculation Agent and will be the average of the secondary market offered rates
as of 10:00 A.M., New York City time, on such Interest Determination Date, of three leading
non-bank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected
by the Calculation Agent (after consultation with the Company) for negotiable certificates of
deposit of major United States money market banks of the highest credit standing (in the market for
negotiable certificates of deposit) having a remaining maturity closest to the Index Maturity set
forth on the face hereof in a denomination of U.S. $5,000,000; provided, however,
that, if fewer than three dealers are quoting as mentioned in this sentence, the interest rate for
the period commencing on the Interest Reset Date following such Interest Determination Date will be
the interest rate in effect on such Interest Determination Date. “H.15(519)” means the
weekly statistical release designated as such, or any successor publication, published by the Board
of Governors of the Federal Reserve System. “H.15 Daily Update” means the daily update of
H.15(519), available through the world-wide web site of the Board of Governors of the Federal
Reserve System at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.

          Determination of Commercial Paper Rate. If the Base Rate set forth on the face
hereof is the Commercial Paper Rate, this Security will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper Rate and the Spread,
Spread Multiplier or other formula , if any, set forth on the face hereof. Unless otherwise set
forth on the face hereof, the “Commercial Paper Rate” means, with respect to any Interest
Determination Date pertaining thereto, the Money Market Yield (calculated as described below) of
the rate on such date for commercial paper having the Index Maturity set forth on the face

 

 

 6

hereof, as such rate shall be
published in H.15(519) under the caption “Commercial Paper X  Nonfinancial” or, if not yet published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the Commercial Paper Rate shall be
the Money Market Yield of the rate on such Interest Determination Date for commercial paper having
the Index Maturity set forth on the face hereof as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying such rate, under the caption
“Commercial Paper X  Nonfinancial”. If by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date such rate is not yet published in
H.15(519), H.15 Daily Update or such other recognized electronic source, the Commercial Paper Rate
on such Interest Determination Date shall be calculated by the Calculation Agent and shall be the
Money Market Yield of the average of the offered rates as of 11:00 A.M., New York City time, on
such Interest Determination Date of three leading dealers in U.S. dollar commercial paper in The
City of New York selected by the Calculation Agent (after consultation with the Company) for
commercial paper having the Index Maturity set forth on the face hereof placed for an industrial
issuer whose bond rating is “Aa”, or the equivalent, from a nationally recognized securities rating
agency; provided, however, that, if fewer than three dealers are quoting as
mentioned in this sentence, the interest rate for the period commencing on the Interest Reset Date
following such Interest Determination Date will be the interest rate in effect on such Interest
Determination Date.

          “Money Market Yield” shall be a yield (expressed as a percentage) calculated in
accordance with the following formula:

	 	 	 	 	 
	

	 	MONEY MARKET YIELD =
	 	  D  x  360    x  100
	

	 	 	 	    360  -  (D  x  M)

where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount
basis and expressed as a decimal; and “M” refers to the actual number of days in the Interest
Period for which interest is being calculated.

          Determination of EURIBOR Notes. If the Base Rate specified on the face hereof
is “EURIBOR,” this Security will bear interest for each Interest Reset Period at the interest rate
calculated with reference to EURIBOR and the Spread, Spread Multiplier or other formula, if any,
set forth on the face hereof. For any Interest Determination Date, EURIBOR with respect to this
Security shall be the rate for deposits in euros as sponsored, calculated and published jointly by
the European Banking Federation and ACI — The Financial Market Association, or any company
established by the joint sponsors for purposes of compiling and publishing those rates, for the
Index Maturity specified on the face hereof as that rate appears on the display on Moneyline
Telerate, or any successor service, on page 248 or any other page as may replace page 248 on that
service (“Telerate Page 248”) as of 11:00 a.m., Brussels time.

          The following procedures shall be followed if the rate cannot be determined as described
above:

 

 

 7

     (i) If the above rate does not appear, the Calculation Agent shall request the
principal Euro-zone office of each of four major banks in the Euro-zone interbank market, as
selected by the Calculation Agent (after consultation with the Company), to provide the
Calculation Agent with its offered rate for deposits in euros, at approximately 11:00 a.m.,
Brussels time, on the Interest Determination Date, to prime banks in the Euro-zone interbank
market for the Index Maturity specified on the face hereof commencing on the applicable
Interest Reset Date, and in a principal amount not less than the equivalent of U.S.$1
million in euro that is representative of a single transaction in euro, in that market at
that time. If at least two quotations are provided, EURIBOR shall be the arithmetic mean of
those quotations.

     (ii) If fewer than two quotations are provided, EURIBOR shall be the arithmetic mean of
the rates quoted by four major banks in the Euro-zone interbank market, as selected by the
Calculation Agent (after consultation with the Company), at approximately 11:00 a.m.,
Brussels time, on the applicable Interest Reset Date for loans in euro to leading European
banks for a period of time equivalent to the Index Maturity specified on the face hereof
commencing on that Interest Reset Date in a principal amount not less than the equivalent of
U.S.$1 million in euro.

     (iii) If the banks so selected by the Calculation Agent are not quoting as set forth
above, the EURIBOR rate for that Interest Determination Date shall remain the EURIBOR for
the immediately preceding Interest Reset Period, or, if there was no Interest Reset Period,
the rate of interest payable shall be the Initial Interest Rate set forth on the face
hereof.

          “Euro-zone” means the region comprised of member states of the European Union that
adopt the single currency in accordance with the relevant treaty of the European Union, as amended.

          Determination of Federal Funds Rate. If the Base Rate set forth on the face hereof is
the Federal Funds Rate, this Security will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and the Spread, Spread Multiplier
or other formula, if any, set forth on the face hereof. Unless otherwise set forth on the face
hereof, the “Federal Funds Rate” means, with respect to any Interest Determination Date
pertaining thereto, the rate on such date for federal funds as published in H.15(519) under the
caption “Federal Funds (Effective)” as such rate is displayed on Moneyline Telerate on page
120 (or any other page as may replace such page on such service) (“Telerate Page 120”). If such
rate does not appear on Telerate Page 120 or is not yet published in H.15(519) by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal
Funds Rate will be the rate on such Interest Determination Date as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying such rate, under the
caption “Federal Funds (Effective)”. If by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date such rate does not appear on
Telerate Page 120 or is not yet published in H.15(519), H.15 Daily Update or such other

 

 

 8

recognized electronic source, the Federal Funds Rate for such Interest Determination Date will
be calculated by the Calculation Agent and will be the average of the rates for the last
transaction in overnight Federal Funds arranged by three leading dealers of Federal Funds
transactions in The City of New York, which dealers have been selected by the Calculation Agent
(after consultation with the Company), as of 9:00 A.M., New York City time, on such Interest
Determination Date; provided, however, that, if fewer than three dealers are
quoting as mentioned in this sentence, the interest rate for the period commencing on the Interest
Reset Date following such Interest Determination Date will be the interest rate in effect on such
Interest Determination Date.

          Determination of LIBOR. If the Base Rate set forth on the face hereof is LIBOR, this
Security will bear interest for each Interest Reset Period at the interest rate calculated with
reference to LIBOR and the Spread, Spread Multiplier or other formula, if any, set forth on the
face hereof. Unless otherwise set forth on the face hereof, “LIBOR” means the rate
determined by the Calculation Agent in accordance with the following provisions:

     (i) If “LIBOR Reuters” is specified on the face hereof, LIBOR will be the average of
the offered rates for deposits in the LIBOR Currency having the Index Maturity set forth on
the face hereof on the applicable Interest Reset Date, as such rates appear on the
Designated LIBOR Page as of 11:00 A.M., London time, on that Interest Determination Date, if
at least two such offered rates appear on the Designated LIBOR Page.

     (ii) If “LIBOR Telerate” is specified on the face hereof, LIBOR will be the rate for
deposits in the LIBOR Currency having the Index Maturity set forth on the face hereof on the
applicable Interest Reset Date, as such rate appears on the Designated LIBOR Page as of
11:00 A.M., London time, on that Interest Determination Date. If such rate does not appear,
LIBOR for such Interest Determination Date will be determined as described in (iii) below.

     (iii) If the Designated LIBOR Page by its terms provides only for a single rate,
that single rate will be used regardless of whether the foregoing provisions require more
than one rate. With respect to an Interest Determination Date, if LIBOR Reuters is the
applicable method for determining LIBOR and fewer than two offered rates (or no rate, if
applicable) appear on the Designated LIBOR Page as specified in (i) above or if LIBOR
Telerate is the applicable method for determining LIBOR and no rate appears on the
Designated LIBOR Page as specified in (ii) above, then LIBOR will be determined on the basis
of the offered rates at which deposits in the LIBOR Currency for the period of the Index
Maturity set forth on the face hereof on the Interest Determination Date and in a principal
amount that is representative of a single transaction in that market at that time are
offered by four major banks in the London interbank market at approximately 11:00 AM.,
London time, for the period commencing on the Interest Reset Date to prime banks in the
London interbank market. The Calculation Agent will select the four banks and request the
principal London office of each of those banks to provide a quotation of its rate for
deposits in the LIBOR Currency. If at least two quotations are provided,

 

 

 9

LIBOR for that Interest Determination Date will be the average of those quotations. If
fewer than two quotations are provided as mentioned above, LIBOR will be the average of the
rates quoted by three major banks in the Principal Financial Center selected by the
Calculation Agent at approximately 11:00 A.M. in the Principal Financial Center, on the
Interest Determination Date for loans to leading European banks in the LIBOR Currency having
the Index Maturity set forth on the face hereof, for the period commencing on the Interest
Reset Date and in a principal amount that is representative for a single transaction in the
LIBOR Currency in that market at that time. The Calculation Agent will select the three
banks referred to above. If fewer than three banks selected by the Calculation Agent are
quoting as mentioned above, the interest rate for the period commencing on the Interest
Reset Date following such Interest Determination Date will be the interest rate in effect on
such Interest Determination Date.

     “LIBOR Currency” means the Designated LIBOR Currency specified on the face
hereof as to which LIBOR shall be calculated or, if no such currency is specified on the
face hereof, United States dollars.

     “Designated LIBOR Page” means, if “LIBOR Reuters” is specified on the face
hereof, the display on the Reuters Monitor Money Rates Service (or any successor service) on
the page specified on the face hereof (or any other page as may replace such page on such
service) for the purpose of displaying the London interbank rates of major banks for the
LIBOR Currency; or if “LIBOR Telerate” is specified on the face hereof or neither “LIBOR
Reuters” nor “LIBOR Telerate” is specified on the face hereof as the method of calculating
LIBOR, the display on Moneyline Telerate, Inc. (or any successor service, “Telerate”) on the
page specified on the face hereof (or any other page as may replace such page on such
service) for the purpose of displaying the London interbank rates of major banks for the
LIBOR Currency.

          Determination of Prime Rate. If the Base Rate set forth on the face hereof is
the Prime Rate, this Security will bear interest for each Interest Reset Period at the interest
rate calculated with reference to the Prime Rate and the Spread, Spread Multiplier or other
formula, if any, set forth on the face hereof. Unless otherwise set forth on the face hereof, the
“Prime Rate” means, with respect to any Interest Determination Date pertaining thereto, the
rate on such date as published in H.15(519) under the caption “Bank Prime Loan” or, if not
yet published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the rate on such Interest Determination Date as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying such rate, under the
caption “Bank Prime Loan.”

          If the rate is not published in H.15 (519), H.15 Daily Update or another recognized electronic
source by 3:00 P.M., New York City time, on the Calculation Date, then the Calculation Agent will
determine the Prime Rate to be the average of the rates of interest publicly announced by each bank
that appears on the Reuters Screen US PRIME1 Page as that

 

 

10

bank’s prime rate or base lending rate as in effect for that Interest Determination Date. If
at least one rate but fewer than four rates appear on the Reuters Screen US PRIME1 Page on the
Interest Determination Date, then the Prime Rate will be the average of the prime rates or base
lending rates quoted (on the basis of the actual number of days in the year divided by a 360-day
year) as of the close of business on the Interest Determination Date by three major money center
banks in the City of New York selected by the Calculation Agent. If the banks selected by the
Calculation Agent are not quoting as mentioned above, the interest rate for the period commencing
on the Interest Reset Date following such Interest Determination Date will be the interest rate in
effect on such Interest Determination Date.

          “Reuters Screen US PRIME1 Page” means the display designated as Page “USPRIME1” on the
Reuters Monitor Money Rates Service (or any successor service, or such other page as may replace
the USPRIME1 Page on that service) for the purpose of displaying prime rates or base lending rates
of major United States banks.

          Determination of Treasury Rate. If the Base Rate set forth on the face hereof is the
Treasury Rate, this Security will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Treasury Rate and the Spread, Spread Multiplier or other formula,
if any, set forth on the face hereof. Unless otherwise set forth on the face hereof, the
“Treasury Rate” means, with respect to any Interest Determination Date pertaining thereto,
the rate for the auction of direct obligations of the United States (“Treasury bills”) held
on such Interest Determination Date having the Index Maturity set forth on the face hereof under
the caption “INVESTMENT RATE” on the display on Moneyline Telerate on page 56 (or any other page as
may replace such page on such service) (“Telerate Page 56”) or page 57 (or any other page
as may replace such page on such service) (“Telerate Page 57”) by 3:00 P.M., New York City
time, on the Calculation date for that Interest Determination Date.

          The following procedures will be followed if the Treasury Rate cannot be determined as
described above:

          If the rate is not published by 3:00 P.M., New York City time, on the Calculation Date, the
Treasury Rate will be the Bond Equivalent Yield of the auction rate of such Treasury bills as
published in H.15 Daily Update or such recognized electronic source used for the purpose of
displaying such rate under the caption “U.S. Government securities/ Treasury bills/Auction high.”

          If the rate is not published by 3:00 P.M., New York City time, on the Calculation Date
and cannot be determined as described in the immediately preceding paragraph, the Treasury Rate
will be the Bond Equivalent Yield of the auction rate of such Treasury bills as otherwise announced
by the United States Department of Treasury.

          If the results of the most recent auction of Treasury bills having the Index Maturity set
forth on the face hereof are not published or announced as described above by 3:00 P.M., New York
City time, on the Calculation Date, or if no auction is held on the Interest

 

 

11

Determination Date, then the Treasury Rate will be the Bond Equivalent Yield on such Interest
Determination Date of Treasury bills having the Index Maturity set forth on the face hereof as
published in H.15(519) under the caption “U.S. Government securities/Treasury bills/Secondary
market” or, if not yet published by 3:00 p.m., New York City time, on the related Calculation Date,
the rate on such Interest Determination Date of such Treasury Bills as published in H.15 Daily
Update, or such other recognized electronic source used for the purpose of displaying such rate,
under the caption “U.S. Government securities/Treasury bills/Secondary market.”

          If such rate is not published in H.15 (519), H.15 Daily Update or another recognized
electronic source, then the Calculation Agent will determine the Treasury Rate to be the Bond
Equivalent Yield of the average of the secondary market bid rates, as of approximately 3:30 P.M.,
New York City time, on the Interest Determination Date of three leading primary United States
government securities dealers for the issue of Treasury bills with a remaining maturity closest to
the Index Maturity set forth on the face hereof. The Calculation Agent will select the three
dealers referred to above.

          If fewer than three dealers are quoting as described above, the interest rate for the period
commencing on the Interest Reset Date following such Interest Determination Date will be the
interest rate in effect on such Interest Determination Date.

          “Bond Equivalent Yield” means a yield (expressed as a percentage) calculated in accordance
with the following formula:

	 	 	 	 	 
	

	 	Bond Equivalent Yield    =  
	 	  D  x  N    x  100
	

	 	 	 	 
	

	 	 	 	360  -  (D  x  M)

where “D” refers to the applicable per annum rate for Treasury bills quoted on a bank discount
basis, “N” refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in
the applicable Interest Reset Period.

          Determination of CMT Rate. If the Base Rate set forth on the face hereof is
the CMT Rate, this Security will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CMT Rate and the Spread, Spread Multiplier, or other formula, if
any, set forth on the face hereof. Unless otherwise set forth on the face hereof, the “CMT
Rate” means, with respect to any Interest Determination Date pertaining thereto, the rate
displayed on the Designated CMT Telerate Page (as defined below) under the caption “. . . Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45
P.M.”, under the column for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7051 or any successor page, the rate on such Interest Determination
Date and (ii) if the Designated CMT Telerate Page is 7052 or any successor page, the rate for the
weekly or the monthly average, as applicable, ended immediately preceding the week or month in
which the related Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page, or if not displayed by 3:00 P.M., New York City time, on the

 

 

12

Calculation Date pertaining to such Interest Determination Date, then the interest rate for
such Interest Determination Date shall be the rate for the Designated CMT Maturity Index as
published in H.15(519). If such rate is no longer published, or if not published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest Determination Date, then the
interest rate for such Interest Determination Date shall be the rate for the Designated CMT
Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) as may
then be published by either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines (with the concurrence of
the Company) to be comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in H.15(519). If such information is not provided by 3:00 P.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, then the interest rate for
such Interest Determination Date shall be calculated by the Calculation Agent and shall be a yield
to maturity, based on the arithmetic average of the secondary market closing offer side prices as
of approximately 3:30 P.M., New York City time, on such Interest Determination Date, reported by
three leading primary United States government securities dealers (each, a “Reference
Dealer”) in The City of New York, for the most recently issued direct noncallable fixed rate
obligations of the United States (“U.S. Treasury Notes”) with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. The three Reference Dealers shall be determined
by (i) the selection of five Reference Dealers by the Calculation Agent (after consultation with
the Company) and (ii) the elimination of the Reference Dealers providing the highest (or, in the
event of equality, one of the highest) and the lowest (or, in the event of equality, one of the
lowest) quotations for such Interest Determination Date. If the Calculation Agent cannot obtain
three such U.S. Treasury Note quotations, the interest rate for such Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield to maturity based on the
arithmetic average of the secondary market offer side prices as of approximately 3:30 P.M., New
York City time, on the Interest Determination Date reported, according to their written records, by
three Reference Dealers in The City of New York, selected in the manner described above, for U.S.
Treasury Notes with an original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT
Maturity Index, which has an outstanding balance of at least $100 million. If only three or four
of such Reference Dealers are quoting as described above, then the interest rate shall be based on
the arithmetic average of the offer side prices so obtained from all such Reference Dealers,
without eliminating the Reference Dealers providing the highest and the lowest of such quotes. If
fewer than three such Reference Dealers are quoting as described above, the interest rate for the
period commencing on the Interest Reset Date following such Interest Determination Date will be the
interest rate in effect on such Interest Determination Date. If two such U.S. Treasury Notes have
remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the
U.S. Treasury Note with the shorter remaining term to maturity shall be used.

     “Designated CMT Telerate Page” means the display on Moneyline Telerate on the
page set forth on the face hereof (or any other page as may replace such page on that

 

 

13

service for the purpose of displaying treasury constant maturities as reported in
H.15(519)). If no such page is so specified, the Designated CMT Telerate Page shall be
7052.

     “Designated CMT Maturity Index” means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified on the face
hereof with respect to which the CMT Rate will be calculated. If no such maturity is so
specified, the Designated CMT Maturity Index shall be two years.

          References herein to “U.S. dollars” or “U.S. $” or “$” are to the
currency of the United States of America.

          Section 4. Redemption. If so specified on the face hereof, the Company may at its
option redeem this Security in whole or from time to time in part in increments of $1,000 (provided
that any remaining principal amount of this Security shall not be less than the Minimum
Denomination specified on the face hereof) on or after the date designated as the Initial
Redemption Date on the face hereof at 100% of the unpaid principal amount hereof or the portion
thereof redeemed (or, if this Security is a Discount Security, such lesser amount as is provided
for below) multiplied by the Initial Redemption Percentage specified on the face hereof, together
with accrued interest to the Redemption Date. Such Initial Redemption Percentage shall decline at
each anniversary of the Initial Redemption Date by an amount equal to the Annual Redemption
Percentage Reduction, if any, specified on the face hereof until the Redemption Price is 100% of
the unpaid principal amount hereof. The Company may exercise such option by causing the Trustee to
mail a notice of such redemption at least 30 but not more than 60 days prior to the Redemption
Date. In the event of redemption of this Security in part only, a new Security or Securities for
the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof. If less than all of the Securities with like tenor and terms to this Security
are to be redeemed, the Securities to be redeemed shall be selected by the Trustee by such method
as the Trustee shall deem fair and appropriate. However, if less than all the Securities of the
series with differing tenor and terms to this Security are to be redeemed, then the Company in its
sole discretion shall select the particular Securities to be redeemed and shall notify the Trustee
in writing thereof at least 45 days prior to the relevant Redemption Date.

          Section 5. Repayment. If so specified on the face hereof, this Security shall
be repayable prior to the Stated Maturity Date at the option of the Holder on each applicable
Optional Repayment Date shown on the face hereof at a repayment price equal to 100% of the
principal amount to be repaid, together with accrued interest to the Repayment Date. In order for
this Security to be repaid, the Trustee must receive at least 30 but not more than 45 days prior to
an Optional Repayment Date, this Security with the form attached hereto entitled “Option to
Elect Repayment” duly completed. Any tender of this Security for repayment shall be
irrevocable. The repayment option may be exercised by the Holder of this Security in whole or in
part in increments of $1,000 (provided that any remaining principal amount of this Security shall
not be less than the Minimum Denomination specified on the face hereof). Upon any

 

 

14

partial repayment, this Security shall be canceled and a new Security or Securities for the
remaining principal amount hereof shall be issued in the name of the Holder of this Security.

          Section 6. Discount Securities. If this Security (such Security being referred to as
a “Discount Security”) (a) has been issued at an Issue Price lower, by more than a
de minimis amount (as determined under United States federal income tax rules
applicable to original issue discount instruments), than the stated redemption price at maturity
(as defined below) hereof and (b) would be considered an original issue discount security for
United States federal income tax purposes, then the amount payable on this Security in the event of
redemption by the Company, repayment at the option of the Holder or acceleration of the maturity
hereof, in lieu of the principal amount due at the Stated Maturity Date hereof, shall be the
Amortized Face Amount (as defined below) of this Security as of the date of such redemption,
repayment or acceleration. The “Amortized Face Amount” of this Security shall be the
amount equal to the sum of (a) the Issue Price (as set forth on the face hereof) plus (b) the
aggregate of the portions of the original issue discount (the excess of the amounts considered as
part of the “stated redemption price at maturity” of this Security within the meaning of Section
1273(a)(2) of the Internal Revenue Code of 1986, as amended (the “Code”), whether
denominated as principal or interest, over the Issue Price of this Security) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7)
of the Code) from the date of issue of this Security to the date of determination, minus (c) any
amount considered as part of the “stated redemption price at maturity” of this Security which has
been paid on this Security from the date of issue to the date of determination.

          Section 7. Modification and Waivers; Obligation of the Company Absolute. The
Indenture permits, with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series. Such amendment may be effected under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Securities of each series affected thereby. The Indenture also contains
provisions permitting the Holders of not less than a majority in principal amount of the
Outstanding Securities of any series at the time, on behalf of the Holders of all Outstanding
Securities of such series, to waive compliance by the Company with certain provisions of the
Indenture. Provisions in the Indenture also permit the Holders of not less than a majority in
principal amount of all Outstanding Securities of any series to waive on behalf of all of the
Holders of Securities of such series certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon the Holder of this
Security and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.

          The Securities are unsecured and rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company.

 

 

15

          No reference herein to the Indenture and no provision of this Security 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 Security at the times, place and rate,
and in the Specified Currency herein prescribed, except as set forth in Section 2 on the reverse
hereof.

          Section 8. Defeasance and Covenant Defeasance. The Indenture contains provisions for
defeasance at any time of (a) the entire indebtedness of the Company on this Security and (b)
certain restrictive covenants and the related defaults and Events of Default, upon compliance by
the Company with certain conditions set forth therein, which provisions apply to this Security,
unless otherwise specified on the face hereof.

          Section 9. Minimum Denomination. Unless otherwise provided on the face hereof, this
Security is issuable only in registered form without coupons in denominations of $2,000 or any
amount in excess thereof which is an integral multiple of $1,000. If this Security is denominated
in a Specified Currency other than U.S. dollars or is a Discount Security, this Security shall be
issuable in the denominations set forth on the face hereof.

          Section 10. Registration of Transfer. As provided in the Indenture and subject to
certain limitations herein and therein set forth, the transfer of this Security is registrable in
the Security Register upon surrender of this Security for registration of transfer at a Place of
Payment for the series of Securities of which this Security is a part, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series, of like authorized denominations and for
the same aggregate principal amount, will be issued to the designated transferee or transferees.

          If the registered owner of this Security is the Depository (such a Security being
referred to as a “Global Security”) and (i) the Depository is at any time unwilling or
unable to continue as depository and a successor depository is not appointed by the Company within
90 days following notice to the Company or (ii) an Event of Default occurs, the Company will issue
Securities in certificated form in exchange for this Global Security. In addition, the Company may
at any time, and in its sole discretion, determine not to have Securities represented by a Global
Security and, in such event, will issue Securities in certificated form in exchange in whole for
this Global Security representing such Security. In any exchange pursuant to this paragraph, the
Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and
delivery of individual Securities of this series in exchange for this Global Security, will
authenticate and deliver individual Securities of this series in certificated form in an aggregate
principal amount equal to the principal amount of this Global Security in exchange herefor.
Securities issued in exchange for this Global Security pursuant to this paragraph shall be
registered in such names and in such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or otherwise, shall instruct the Trustee.
None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any

 

 

16

responsibility or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in this Global Security or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests. For purposes of the
Indenture, this Global Security constitutes a Security issued in permanent global form. Securities
so issued in certificated form will be issued in denominations of $2,000 (or such other Minimum
Denomination specified on the face hereof) or any amount in excess thereof which is an integral
multiple of $1,000 (or such Minimum Denomination) and will be issued in registered form only,
without coupons.

          As provided in the Indenture and subject to certain limitations therein and herein set forth,
this Security is exchangeable for a like aggregate principal amount of Securities of this series of
different authorized denominations but otherwise having the same terms and conditions, as requested
by the Holder hereof surrendering the same.

          No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

          Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Holder as the owner hereof for
all purposes, whether or not this Security be overdue, and none of the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.

          Section 11. Events of Default. If an Event of Default with respect to the Securities
of the series of which this Security forms a part shall have occurred and be continuing, the
principal of this Security may be declared due and payable in the manner and with the effect
provided in the Indenture.

          Section 12. Defined Terms. All terms used in this Security which are defined
in the Indenture and are not otherwise defined herein shall have the meanings assigned to them in
the Indenture.

          Section 13. Governing Law. Unless otherwise specified on the face hereof, this Security
shall be governed by and construed in accordance with the law of the State of New York.

 

 

OPTION TO ELECT REPAYMENT

          The undersigned hereby irrevocably requests and instructs the Company to repay this Security
(or the portion thereof specified below), pursuant to its terms, on the “Optional Repayment
Date” first occurring after the date of receipt of this Security as specified below (the
“Repayment Date”), at a Repayment Price equal to 100% of the principal amount thereof,
together with interest thereon accrued to the Repayment Date, to the undersigned at:

          (Please Print or Type Name and Address of the Undersigned.)

          For this Option to Elect Repayment to be effective, this Security with the Option to Elect
Repayment duly completed must be received at least 30 but not more than 45 days prior to the
Optional Repayment Date (or, if such Repayment Date is not a Business Day, the next succeeding
Business Day) by the Company at its office or agency in The City of New York, which will be located
initially at the office of the Trustee at 4 New York Plaza, 15th Floor, New York, New
York 10004.

          If less than the entire principal amount of this Security is to be repaid, specify the portion
thereof (which shall be $1,000 or an integral multiple thereof) which
is to be repaid: $      .

          If less than the entire principal amount of this Security is to be repaid, specify the
denomination(s) of the Security(ies) to be issued for the unpaid amount ($2,000 or any integral
multiple of $1,000; provided that any remaining principal amount of this Security shall not
be less than the Minimum Denomination): $      .

Dated:                                        

	 	 	 
	

	 	 
	

	 	Note: The signature to this Option to Elect
Repayment must correspond with the name as written
upon the face of this Security in every particular
without alteration or enlargement or any change
whatsoever.

 

 

ABBREVIATIONS

          The following abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to applicable laws or
regulations:

          TEN COM — as tenants in common

          TEN ENT — as tenants by the entireties

          JT TEN  — as joint tenants with right of survivorship and not as tenants in common

          UNIF GIFT MIN ACT - Custodian

(Cust.)          (Minor)

Under Uniform Gifts to Minors Act

                                        

(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned

hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

     IDENTIFYING NUMBER OF ASSIGNEE

          Please print or type name and address, including zip code of assignee

the within Security of EATON CORPORATION and all rights thereunder and does hereby irrevocably
constitute and appoint

Attorney to transfer the said Security on the books of the within-named Company, with full power of substitution in the premises.

Dated

SIGNATURE GUARANTEED:

	 	 	 
	

	 	

	

	 	NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the Security in every
particular, without alteration or enlargement
or any change whatsoever.

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