EXHIBIT 4.1
FORM OF HARTFORD LIFE INSURANCE COMPANY PRINCIPAL PROTECTED MEDIUM-TERM NOTES
LINKED TO A BASKET OF INDICES
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE (HEREINAFTER
DEFINED) AND IS REGISTERED IN THE NAME OF A DEPOSITARY (AS DEFINED IN THE
INDENTURE) OR A NOMINEE OF A DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (HEREINAFTER
DEFINED) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
UNLESS ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
REGISTERED NO.: CUSIP NO.: PRINCIPAL AMOUNT: U.S.
HARTFORD LIFE INSURANCE COMPANY
EQUITY INDEXED MEDIUM-TERM NOTES
Issuance Date: Note Linked to Securities of One or More Issuers, One or More
Issue Price: Currencies, One or More Commodities, One or More Indices, or
Stated Maturity Date: any Other Instrument(s) or Measure(s) or Baskets of any of the
Settlement Date: Foregoing: [X] Yes [ ] No
Securities Exchange Listing: [ ] Yes [ ] No. If yes, Supplemental Payment(s): [ ] Yes [ ] No
indicate name(s) of Securities Exchange(s): Relevant Index or Indices:
__________________________________________. Initial Index Level(s):
Depositary: The Depository Trust Company Index Valuation Date(s):
Authorized Denominations: Off-Set Amount:
Specified Currency: Participation Rate:
Amortizing Note: [ ] Yes [ ] No. If yes, Maximum Supplemental Payment, if any:
Amortization schedule or formula: Minimum Supplemental Payment:
Additional/Other Terms Periodic Interest Note: [ ] Yes [ ] No. If yes,
Discount Note: [ ] Yes [ ] No. If yes, Interest Rate:
Total Amount of Discount: Interest Payment Dates:
Initial Accrual Period of Discount: Day Count Convention:
Interest Payment Dates: Regular Records Date(s):
Additional/Other Terms: Calculation Agent:
Redemption Provisions: [ ] Yes [ ] No. If yes, Additional/Other Terms: See attached Supplemental Payment
Initial Redemption Date: Schedule
Redemption Dates: Sinking Fund:
Initial Redemption Percentage: Survivor's Option: [ ] Yes [ ] No. If yes, Survivor's Option
Annual Redemption Percentage Reduction, if any: Rider is attached and is incorporated into this Note.
Additional/Other Terms:
Aggregate Principal Amount of the Series:
1-1 Issuance Date:
Hartford Life Insurance Company (the "COMPANY"), for value received,
hereby promises to pay to Cede & Co., or its registered assigns, the Principal
Amount specified above plus the Supplemental Payment, if any, specified below on
the Stated Maturity Date specified above and, if so specified above, to pay
interest thereon from the Issuance Date specified above or from the most recent
Interest Payment Date specified above to which interest has been paid or duly
provided for at the rate per annum as specified above, until the principal
hereof is paid or made available for payment. Unless otherwise set forth above
under "Specified Currency," payments of principal, premium, if any, and interest
hereon will be made in the lawful currency of the United States of America
("U.S. DOLLARS" or "UNITED STATES DOLLARS"). The "PRINCIPAL AMOUNT" of this Note
at any time means (1) if this Note is a Discount Note (as hereinafter defined),
the Amortized Face Amount (as hereinafter defined) at such time (as defined in
Section 3(c) on the reverse hereof) and (2) in all other cases, the Principal
Amount hereof. Capitalized terms not otherwise defined herein shall have their
meanings set forth in the Indenture, dated as of September 8, 2006, (the
"INDENTURE"), between The Bank of New York Mellon Trust Company, N.A. (successor
to JPMorgan Chase Bank, N.A.), as the indenture trustee (the "INDENTURE
TRUSTEE"), and the Company, as amended or supplemented from time to time, or on
the face hereof.
This Note is one of a duly authorized issue of securities of the
Company (herein called the "Notes"), issued and to be issued in one or more
series under the Indenture and reference is hereby made to the Indenture for a
statement of the respective rights, limitation of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Notes and of the
terms upon which the Notes are, and are to be, authenticated and delivered.
This Note will mature on the Stated Maturity Date, unless its principal (or any
installment of its principal) becomes due and payable prior to the Stated
Maturity Date, whether, as applicable, by the declaration of acceleration of
maturity, notice of redemption by the Company or otherwise; provided, that if
the Stated Maturity Date is not a Business Day, then the Maturity Date will be
the next succeeding Business Day following such Stated Maturity Date and any
payment of interest due on the Stated Maturity Date will be made on the Maturity
Date as adjusted, with the same force and effect as if made on the Stated
Maturity Date, but no additional interest shall accrue or be payable as a result
of the delayed payment; provided, further, that if due to a Market Disruption
Event or otherwise, the final Index Valuation Date is postponed so that it falls
less than three Business Days prior to or following the Stated Maturity Date,
the Maturity Date will be the third Business Day following the final Index
Valuation Date. (Any date on which this Note becomes due and payable, whether
prior or subsequent to the Stated Maturity Date is referred to as the "MATURITY
DATE").
If the Stated Maturity Date is postponed due to postponement of the Index
Valuation Date as described above, the Company shall give written notice of such
postponement and, once it has been determined, of the date to which the Maturity
Date has been rescheduled to the Indenture Trustee and the Paying Agent at their
New York offices, on which notices the Indenture Trustee and the Paying Agent
may conclusively rely. These notices shall be given no later than (i) with
respect to notice of the postponement of the Stated Maturity Date, the Business
Day immediately following the scheduled Index Valuation Date; and (ii) with
respect to notice of the date to which the Maturity Date has been rescheduled,
the Business Day immediately following the actual Index Valuation Date for
determining the Ending Index Level.
A "DISCOUNT NOTE" is any Note that has an Issue Price that is less than 100% of
the Principal Amount thereof by more than a percentage equal to the product of
0.25% and the number of full years to the Stated Maturity Date.
1-2
Unless otherwise specified above, the interest payable on each Interest
Payment Date or the Maturity Date will be the amount of interest accrued from
and including the Issuance Date or from and including the last Interest Payment
Date to which interest has been paid or duly provided for, as the case may be,
to, but excluding, such Interest Payment Date or the Maturity Date, as the case
may be.
Unless otherwise specified above, the interest payable on any Interest
Payment Date will be paid to the Holder on the Regular Record Date for such
Interest Payment Date, which Regular Record Date shall be the fifteenth (15th)
calendar day, whether or not a Business Day, immediately preceding the related
Interest Payment Date; provided that, notwithstanding any provision of the
Indenture to the contrary, interest payable on any Maturity Date shall be
payable to the Person to whom principal shall be payable; and provided, further,
that unless otherwise specified above, in the case of a Note initially issued
between a Regular Record Date and the Interest Payment Date relating to such
Regular Record Date, interest for the period beginning on the Issuance Date and
ending on such Interest Payment Date shall be paid on the Interest Payment Date
following the next succeeding Regular Record Date to the Holder on such next
succeeding Regular Record Date.
Payments of principal of, and premium, if any, and interest and other
amounts due and owing, if any, will be made through the Indenture Trustee to the
account of DTC or its nominee and will be made in accordance with depositary
arrangements with DTC.
Unless otherwise specified on the face hereof, the Holder hereof will
not be obligated to pay any administrative costs imposed by banks in making
payments in immediately available funds by the Company. Unless otherwise
specified on the face hereof, any tax assessment or governmental charge imposed
upon payments hereunder, including, without limitation, any withholding tax,
will be borne by the Holder hereof.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon shall have been
executed by the Indenture Trustee pursuant to the Indenture, this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
1-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, by manual or facsimile signature.
HARTFORD LIFE INSURANCE COMPANY
Dated:
By: ------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of Hartford Life Insurance Company referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.
As Indenture Trustee
Dated:
By: ------------------------------
authorized signatory
1-4
[REVERSE OF NOTE]
Section 1. GENERAL. This Note is one of a duly authorized issue of
Notes of the Company. The Notes of this series are issued pursuant to the
Indenture.
Section 2. CURRENCY. This Note is denominated in, and payments of
principal, premium, if any, and/or interest, if any, will be made in the
Specified Currency specified on the face hereof.
Section 3. DETERMINATION OF INTEREST AMOUNTS AND CERTAIN OTHER TERMS.
(a) PERIODIC INTEREST NOTES. If this Note is designated on the face
hereof as a Periodic Interest Note:
(i) This Note will bear interest at the rate per annum
specified on the face hereof. Interest on this Note will be computed on
the basis of a 360-day year of twelve 30-day months.
(ii) Unless otherwise specified on the face hereof, the
Interest Payment Dates for this Note will be as follows:
Interest Payment Frequency Interest Payment Dates
-------------------------- -----------------------
Monthly Fifteenth day of each
calendar month,
beginning in the first
calendar month
following the month
this Note was issued.
Quarterly Fifteenth day of every
third calendar month,
beginning in the third
calendar month
following the month
this Note was issued.
Semi-annual Fifteenth day of every
sixth calendar month,
beginning in the sixth
calendar month
following the month
this Note was issued.
Annual Fifteenth day of every
twelfth calendar month,
beginning in the
twelfth calendar month
following the month
this Note was issued.
(iii) If any Interest Payment Date or the Maturity Date of
this Note falls on a day that is not a Business Day, the Company will
make the required payment of principal, premium, if any, and/or
interest or other amounts on the next succeeding Business Day, and no
additional interest will accrue in respect of the payment made on that
next succeeding Business Day.
(b) SUPPLEMENTAL PAYMENTS. If this Note is specified on the face hereof
as a "Note Linked to Securities of One or More Issuers, One or More Currencies,
One or More Commodities, Indices, or any other Instrument(s) or Measure(s) or
Baskets of any of the Foregoing" and as having "Supplemental Payment(s)," a
Supplemental Payment shall be payable on the Stated Maturity Date or a later
Maturity Date and shall be determined by the Calculation Agent by reference to
the relevant index or indices, as specified on the face hereof (the "Relevant
2-1
Index"), and payment of principal, premium, if any, and interest, if any, on
this Note shall be made as set forth below.
(i) DETERMINATION OF THE SUPPLEMENTAL PAYMENT: On the Index
Valuation Date or Dates set forth on the face hereof, the Calculation
Agent will determine the closing level of the Relevant Index (each a
"Periodic Valuation Level"). If there is a single Index Valuation Date,
the Periodic Valuation Level as of that date will be the Ending Index
Level. If there is more than one Index Valuation Date, the Calculation
Agent will determine the closing level of the Relevant Index for each
such day and the arithmetic average of the sum of the Periodic
Valuation Levels, divided by the number of Index Valuation Dates. This
average will be the "Ending Index Level". The "closing level" of the
Relevant Index on any Trading Day means the level of the Relevant Index
at the regular official weekday close of the principal trading
session(s) of the relevant exchange(s) or market(s) (the "Relevant
Exchanges") for the stocks or other securities or instruments included
in the Relevant Index or any Successor Index (as defined below). (As
used herein, a "Trading Day" is a day on which trading is generally
conducted on the New York Stock Exchange ("NYSE"), the American Stock
Exchange LLC (the "AMEX"), the NASDAQ Stock Market and/or any relevant
exchange or market for the Successor Index, all as determined by the
Calculation Agent.) Prior to the Stated Maturity Date, the Calculation
Agent will determine the Index Return using the following formula:
(Ending Index Level - Initial Index Level)
-----------------------------------------
Initial Index Level
If the Index Return multiplied by the Participation Rate is less than
or equal to the Off-Set Amount, if any, specified on the face of this
Note, then the Supplemental Payment will equal $0.00 (or the Minimum
Return, if any, specified on the face of this Note). If the Index
Return multiplied by the Participation Rate is greater than the Off-Set
Amount specified on the face of this Note, then the Supplemental
Payment for each $1,000 principal amount of this Note will equal the
lesser of the Maximum Return, if any, specified on the face of this
Note or the amount computed as follows:
($1,000 x Index Return x Participation Rate) -- Off-Set Amount
All calculations with respect to the Initial Index Level, the
Ending Index Level, the Index Return or any closing level will be
rounded to the nearest one hundred-thousandth, with five one-millionths
rounded upward (E.G., .876545 would be rounded to .87655); all dollar
amounts related to determination of the Supplemental Payment, if any,
per $1,000 principal amount of this Note will be rounded to the nearest
ten-thousandth, with five one hundred-thousandths rounded upward (E.G.,
.76545 would be rounded up to .7655); and all dollar amounts paid on
the aggregate principal amount of this Note will be rounded to the
nearest cent, with one-half cent rounded upward.
The Company shall provide, or shall cause the Calculation
Agent to provide, written notice to the Indenture Trustee and the
Paying Agent at their New York offices, on which notice the Indenture
Trustee and the Paying Agent may conclusively rely, of the amount of
cash to be delivered with respect to each $1,000 principal amount of
this Note, on or prior to 10:30 a.m. on the Business Day preceding the
Maturity Date.
(ii) OTHER PROVISIONS PERTAINING TO SUPPLEMENTAL PAYMENTS:
The following additional terms apply with respect to the Supplemental
Payment:
(A) RELEVANT INDEX. The entity that sponsors any Relevant
Index (the "Sponsor") is solely responsible for the
computation of that Relevant Index.
2-2
If more than one Relevant Index is specified on the face
hereof, the determinations specified above will be made using
the proportions listed next to the name of each Relevant Index
and by applying the procedures specified in the Supplemental
Payment Schedule, attached hereto.
(B) MARKET DISRUPTION. Each of the following is a "Market
Disruption Event" if the Calculation Agent determines that the
actual event materially affects the Relevant Index:
o the suspension, absence or material limitation of the
trading of stocks or other securities or instruments
then constituting 20% or more of the stocks or other
securities or instruments which then comprise the
Index (or any Successor Index) on the Relevant
Exchange(s) for such securities for more than two
hours of trading during, or during the one-half hour
period preceding the close of, the principal trading
session on such Relevant Exchange; or
o a breakdown or failure in the price and trade
reporting systems of any Relevant Exchange as a
result of which the reported trading prices for
stocks or other securities or instruments then
constituting 20% or more of the stocks which then
comprise the Relevant Index (or any Successor Index)
during the one hour preceding the close of the
principal trading session on such Relevant
Exchange(s) are materially inaccurate; or
o the suspension, absence, limitation, cancellation or
repudiation of trading for more than two hours of
trading during, or during the one-half hour period
preceding the close of trading on the Relevant
Exchange in 20% or more of any options contracts
relating to stocks or other securities which then
comprise 20% or more of the value of the Relevant
Index; or
o the suspension, absence or material limitation of the
trading on the primary securities exchange, as
determined by the Calculation Agent, for trading in
options contracts, futures or exchange traded funds
related to the Relevant Index or any Successor Index
for more than two hours of trading during, or during
the one-half hour period preceding the close of, the
principal trading session on such exchange; or
o a decision to permanently discontinue trading in the
relevant futures or options contracts;
in each case as determined by the Calculation Agent in its
sole discretion; and
o the Calculation Agent's determination, in its sole
discretion, that the event(s) described above
materially interfered with the Company's ability or
the ability of any of the Company's affiliates to
adjust or unwind all or a material portion of any
hedge with respect to this Note.
For the purpose of this definition of Market Disruption Event,
unless otherwise specified on the face hereof:
o a limitation on the number of hours or days of
trading will not constitute a Market Disruption
Event, if it results from an announced change in the
regular business hours of the Relevant Exchange or
market;
o limitations pursuant to the rules of any relevant
exchange similar to NYSE Rule 80A (or any applicable
rule or regulation enacted or promulgated by any
other self-regulatory organization or any government
agency of scope similar to NYSE Rule 80A as
determined by the Calculation Agent, in its sole
discretion) on trading during significant market
2-3
fluctuations will constitute a suspension, absence or
material limitation of trading;
o a suspension of trading in futures or options
contracts on the Relevant Index by the primary
securities market trading in such contracts by reason
of
o a price change exceeding limits set by such
exchange or market,
o an imbalance of orders relating to such
contracts, or
o a disparity in bid and ask quotes relating to
such contracts
will, in each such case, constitute a suspension,
absence or material limitation of trading in futures
or options contracts related to the Relevant Index;
and
o a "suspension of trading" on any Relevant Exchange or
on the primary market on which futures or options o
contracts related to the Relevant Index are traded
will not include any time when such market is itself
closed for trading under ordinary circumstances.
If an Index Valuation Date (i) is not a Trading Day or (ii) if
there is a Market Disruption Event on such day, the applicable
Index Valuation Date will be postponed to, in the case of
clause (i), the immediately succeeding Trading Day and, in the
case of clause (ii) the next succeeding Trading Day, during
which no Market Disruption Event shall have occurred or is
continuing; PROVIDED that the Index Closing Level will not be
determined on a date later than the tenth scheduled Trading
Day after the final Index Valuation Date, and if such day is
not a Trading Day, or if there is a Market Disruption Event on
such date, the Calculation Agent will determine the Index
Closing Level on such date in accordance with the formula for
and method of calculating the Index Closing Level last in
effect prior to commencement of the Market Disruption Event
(or prior to the non-Trading Day), using the closing price
(or, if trading in the relevant securities has been materially
suspended or materially limited, the Calculation Agent's good
faith estimate of the closing price that would have
prevailed but for such suspension or limitation or non-trading
day) on such tenth scheduled Trading Day of each security most
recently constituting the Relevant Index.
(C) DISCONTINUANCE OF THE RELEVANT INDEX. If
publication of the Relevant Index is discontinued or otherwise
unavailable and the Sponsor (or another entity) publishes a
successor or substitute index that the Calculation Agent, in
its sole discretion, determines is comparable to the
discontinued Relevant Index (the new index being referred to
as a "Successor Index"), then the relevant closing levels will
be determined by reference to the Successor Index at the close
of trading on the Relevant Exchange(s) for the Successor Index
on each relevant Index Valuation Date.
If the Calculation Agent selects a Successor Index, the
Calculation Agent will cause written notice to be promptly
furnished to the Company, the Indenture Trustee and the Holder
of this Note of the change to the Successor Index.
If publication of the Relevant Index is discontinued prior to,
and such discontinuation is continuing on an Index Valuation
Date and the Calculation Agent determines that no Successor
Index is available, then the Calculation Agent will notify the
Company and the Indenture Trustee and will calculate the
appropriate closing levels. These calculations by the
Calculation Agent will be in accordance with the formula for
and method of calculating the Relevant Index last in effect
prior to its discontinuance using the closing price (or, if
trading in the relevant securities has been materially
suspended or materially limited, its good faith estimate of
the closing price that would have
2-4
prevailed but for such suspension or limitation) at the close
of the principal trading session on such date of each security
most recently composing the Relevant Index or Successor Index,
as applicable. If a Successor Index is selected or the
Calculation Agent calculates a level as a substitute for the
Relevant Index, that Successor Index or level will be
substituted for the Relevant Index for all purposes.
(D) ALTERATION OF METHOD OF CALCULATION OF INDEX. If
at any time the method of calculating the Relevant Index or a
Successor Index, or the level thereof, is changed in a
material respect in the Calculation Agent's discretion, or if
the Relevant Index or a Successor Index is in any other way
modified so that the Relevant Index or such Successor Index
does not, in the reasonable opinion of the Calculation Agent,
fairly represent the level of the Relevant Index or such
Successor Index had such changes or modifications not been
made, then the Calculation Agent will, at the close of
business in New York City on each date on which the Index
Closing Level is to be determined, make such calculations and
adjustments as, in the good faith judgment of the Calculation
Agent, may be necessary in order to arrive at a level of a
stock index comparable to the Relevant Index or such Successor
Index, as the case may be, as if such changes or modifications
had not been made, and the Calculation Agent will calculate
the Index Closing Level with reference to the Relevant Index
or such Successor Index, as adjusted.
(iii) ALTERNATE SUPPLEMENTAL PAYMENT CALCULATION IN CASE OF AN
EVENT OF DEFAULT. In case an Event of Default with respect to this Note
shall have occurred and be continuing, the amount declared due and
payable for each $1,000 principal amount of this Note upon any
acceleration of this Note shall be determined by the Calculation Agent
and shall be an amount in cash equal to $1,000 plus the Supplemental
Payment, calculated as if the date of acceleration were the final Index
Valuation Date, plus, if applicable, any accrued and unpaid interest on
this Note to the date the principal hereof is paid or made available
for payment. If more than one Index Valuation Date is specified on the
face of this Note, then for each Index Valuation Date scheduled to
occur after the date of acceleration, the Trading Days immediately
preceding the date of acceleration (in such number equal to the number
of Index Valuation Dates in excess of one) shall be the corresponding
Index Valuation Dates, unless otherwise specified in the applicable
pricing supplement. If the maturity of this Note is accelerated because
of an Event of Default as described above, the Company shall provide,
or shall cause the Calculation Agent to provide, written notice to the
Indenture Trustee at its New York office, on which notice the Indenture
Trustee may conclusively rely, and to the Holder of the cash amount due
with respect to each $1,000 principal amount of this Note as promptly
as possible and in no event later than two Business Days after the date
of acceleration.
(iv) CALCULATION AGENT. All determinations made by the
Calculation Agent hereunder shall be made at the sole discretion of the
Calculation Agent and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holder of this Note, the
Indenture Trustee and the Company. The Company may appoint a different
Calculation Agent from time to time without notice to or consent of the
Holder of this Note.
(c) DISCOUNT NOTES. If this Note is specified on the face hereof as a
"Discount Note":
(i) PRINCIPAL AND INTEREST. This Note will bear interest in
the same manner as set forth in Section 3(a) above, and payments of
principal and interest shall be made as set forth on the face hereof.
Discount Notes may not bear any interest currently or may bear interest
at a rate that is below market rates at the time of issuance. The
difference between the Issue Price of a Discount Note and par is
referred to as the "DISCOUNT".
2-5
(ii) REDEMPTION; REPAYMENT; ACCELERATION. In the event a
Discount Note is redeemed, repaid or accelerated, the amount payable to
the Holder of such Discount Note will be equal to the sum of: (A) the
Issue Price (increased by any accruals of Discount) and, in the event
of any redemption of such Discount Note, if applicable, multiplied by
the Initial Redemption Percentage (as adjusted by the Annual Redemption
Percentage Reduction, if applicable); and (B) any unpaid interest
accrued on such Discount Note to the Maturity Date ("AMORTIZED FACE
AMOUNT"). Unless otherwise specified on the face hereof, for purposes
of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for
a Discount Note, a Discount will be accrued using a constant yield
method. The constant yield will be calculated using a 30-day month,
360-day year convention, a compounding period that, except for the
Initial Period (as defined below), corresponds to the shortest period
between Interest Payment Dates for the applicable Discount Note (with
ratable accruals within a compounding period), a coupon rate equal to
the initial coupon rate applicable to the applicable Discount Note and
an assumption that the maturity of such Discount Note will not be
accelerated. If the period from the date of issue to the first Interest
Payment Date for a Discount Note (the "INITIAL PERIOD") is shorter than
the compounding period for such Discount Note, a proportionate amount
of the yield for an entire compounding period will be accrued. If the
Initial Period is longer than the compounding period, then the period
will be divided into a regular compounding period and a short period
with the short period being treated as provided above.
Section 4. REDEMPTION. Unless otherwise so indicated on the face hereof
and in a Redemption Schedule attached hereto, this Note may not be redeemed
prior to the Stated Maturity Date, except as set forth in the Indenture.
Section 5. SINKING FUNDS AND AMORTIZING NOTES. Unless specified on the
face hereof, this Note will not be subject to, or entitled to the benefit of,
any sinking fund. If this Note is specified on the face hereof as an "Amortizing
Note", this Note will bear interest in the same manner as set forth in Section
3(a) above, and payments of principal, premium, if any, and interest will be
made as set forth on the face hereof and/or in accordance with Schedule I
attached hereto. The Company will make payments combining principal, premium (if
any) and interest, if applicable, on the dates and in the amounts set forth in
the table appearing in Schedule I attached to this Note or in accordance with
the formula specified on the face hereof. Payments made hereon will be applied
first to interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof.
Section 6. MODIFICATIONS AND WAIVERS. The Indenture contains provisions
permitting the Company and the Indenture Trustee (1) at any time and from time
to time without notice to, or the consent of, the Holders of any Notes issued
under the Indenture to enter into one or more supplemental indentures for
certain enumerated purposes and (2) with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes affected
thereby, to enter into one or more 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 modifying in any manner the rights of Holders
of Notes under the Indenture; provided, that, with respect to certain enumerated
provisions, no such supplemental indenture shall be entered into without the
consent of the Holder of each Note affected thereby. Any such consent or waiver
by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Note or such other
Notes.
Section 7. OBLIGATIONS UNCONDITIONAL. No reference herein to the
Indenture and no provisions of this Note or of the Indenture shall impair the
right of each Holder of any Note, which is absolute and unconditional, to
receive payment of the principal of, and any interest on, and premium, if any,
on, such Note on the respective Stated Maturity Date or redemption date thereof
and to institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.
2-6
Section 8. EVENTS OF DEFAULT. If an Event of Default with respect to
the Notes of this series shall occur and be continuing, the principal of, and
all other amounts payable on, the Notes of this series may be declared due and
payable, or may be automatically accelerated, as the case may be, in the manner
and with the effect provided in the Indenture In the event that this Note is a
Discount Note, the amount of principal of this Note that becomes due and payable
upon such acceleration shall be equal to the amount calculated as set forth in
Section 3(d) hereof.
Section 9. WITHHOLDING; NO ADDITIONAL AMOUNTS. All amounts due in
respect of this Note will be made free and clear of any applicable withholding
or deduction for or on account of any present or future taxes, duties, levies,
assessments or other governmental charges of whatever nature imposed or levied
by or on behalf of any governmental authority, unless such withholding or
deduction is required by law. The Company will not pay any additional amounts to
the Holder of this Note in respect of any such withholding or deduction, any
such withholding or deduction will not give rise to an Event of Default or any
independent right or obligation to redeem this Note and the Holder will be
deemed for all purposes to have received cash in an amount equal to the portion
of such withholding or deduction that is attributable to such Holder's interest
in this Note as equitably determined by the Company.
Section 10. LISTING. Unless otherwise specified on the face hereof,
this Note will not be listed on any securities exchange.
Section 11. NO RECOURSE AGAINST CERTAIN PERSONS. No recourse shall be
had for the payment of any principal, interest or any other sums at any time
owing under the terms of this Note, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture against the
Nonrecourse Parties, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
personal liability being, by the acceptance hereof and as part of the
consideration for issue hereof, expressly waived and released.
Section 12. MISCELLANEOUS.
(a) This Note is issuable only as a registered Note without coupons
in denominations of $1,000 and any integral multiple of $1,000 in excess
thereof, or, if the specified currency of this Note is Canadian dollars, the
approximate Canadian dollar equivalent of $1,000 and any integral multiple of
such $1,000 equivalent in excess thereof, unless otherwise specified on the face
of this Note.
(b) Prior to due presentment for registration of transfer of this
Note, the Company, the Indenture Trustee, the Registrar, the Paying Agent, any
Agent, and any other agent of the Company or the Indenture Trustee may treat the
Person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment as herein provided and for all other purposes, whether or
not this Note shall be overdue, and none of the Company, the Indenture Trustee,
the Registrar, the Paying Agent, any Agent, or any other agent of the Company or
the Indenture Trustee shall be affected by notice to the contrary.
(c) The Notes of this series are being issued by means of a book-
entry-only system with no physical distribution of certificates to be made
except as provided in the Indenture. The book-entry system maintained by DTC
will evidence ownership of the Notes of this series, with transfers of ownership
affected on the records of DTC and its participants pursuant to rules and
procedures established by DTC and its participants. The Company and the
Indenture Trustee will recognize Cede & Co., as nominee of DTC, as the
registered owner of the Notes of this series, as the Holder of the Notes of this
series for all purposes, including payment of principal, premium (if any) and
interest, notices and voting. Transfer of principal, premium (if any) and
interest to participants of DTC will be the responsibility of DTC, and transfer
of principal, premium (if any) and interest to beneficial holders of the Notes
of this series by participants of DTC will be the responsibility of such
participants and other nominees of such beneficial holders. So long as the
book-entry system is in effect, the selection of any Notes to be redeemed or
2-7
repaid will be determined by DTC pursuant to rules and procedures established by
DTC and its participants. Neither the Company nor the Indenture Trustee will be
responsible or liable for such transfers or payments or for maintaining,
supervising or reviewing the records maintained by DTC, its participants or
persons acting through such participants.
(d) This Note or portion hereof may not be exchanged for Definitive
Notes, except in the limited circumstances provided for in the Indenture. The
transfer or exchange of Definitive Notes shall be subject to the terms of the
Indenture. No service charge will be made for any 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.
Section 13. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
2-8
SUPPLEMENTAL PAYMENT SCHEDULE
1. The procedures described in Section 3(b)(i) of this Note for
determining the Supplemental Payment are hereby replaced in its entirety as
follows:
DETERMINATION OF THE SUPPLEMENTAL PAYMENT: For each Relevant Index, the
Calculation Agent shall separately determine the Index Return (as defined below)
pursuant to this Section. On the Basket Valuation Date set forth on the face
hereof, the Calculation Agent will determine the closing level of each Relevant
Index, which will be the "Ending Index Level" and will then determine the "Index
Return" for the Relevant Index on the Basket Valuation Date using the following
formula:
Ending Index Level - Initial Index Level
----------------------------------------
Initial Index Level
The "Basket Return" as calculated by the Calculation Agent, is the percentage
change in the closing level of the Basket calculated by comparing (i) the Basket
Closing Level (as defined below) on the Basket Valuation Date (the "Ending
Basket Level") to (ii) the Basket Closing Level on the Trade Date (the "Initial
Basket Level"). The "closing level" of the Relevant Index on any Trading Day
means the level of the Relevant Index at the regular official weekday close of
the principal trading sessions of the relevant exchanges or markets (the
"Relevant Exchanges") for the stocks or other securities or instruments included
in the Relevant Index or any successor index. The Basket Return will be
calculated using the following formula:
Basket Return = Ending Basket Level - Initial Basket Level
------------------------------------------
Initial Basket Level
If the Basket Return multiplied by $1,000 multiplied by the Participation Rate
(the "Basket-linked Supplemental Payment") is greater than the Maximum
Supplemental Payment, if any, as specified on the face of this Note, then the
Supplemental Payment for each $1,000 principal amount of this Note will equal
the Basket-linked Supplemental Payment.
The "Basket Closing Level" on any Trading Day will be determined by the
Calculation Agent and will be calculated as follows:
100 x [1 + (Nikkei 225 Index Return x Nikkei 225 Index Weighting) +
(S&P Index Return x S&P Index Weighting ) + (STOXX Index Return x
STOXX Index Weighting)]
As used herein, a "Trading Day" is a day, as determined by the Calculation
Agent, on which trading is generally conducted with respect to each Basket Index
or the relevant successor index, the primary exchange or market for trading of
any security (or any combination thereof) then included in such Basket Index or
such successor index, as applicable.
All calculations with respect to the Initial Basket Level, the Ending Basket
Level, the Basket Return, the Ending Index Level, the Index Return, or any
Basket Closing Level will be rounded to the nearest one hundred-thousandth, with
five one-millionths rounded upward (E.G., .876545 would be rounded to .87655);
all dollar amounts related to determination of the Supplemental Payment, if any,
per $1,000 principal amount of this Note will be rounded to the nearest
ten-thousandth, with five one hundred-thousandths rounded upward (E.G., .76545
would be rounded up to .7655); and all dollar amounts paid on the aggregate
principal amount of this Note will be rounded to the nearest cent, with one-half
cent rounded upward.
2-9
The Company shall provide, or shall cause the Calculation Agent to provide,
written notice to the Indenture Trustee and the Paying Agent at their New York
offices, on which notice the Indenture Trustee and the Paying Agent may
conclusively rely, of the amount of cash to be delivered with respect to each
$1,000 principal amount of this Note, on or prior to 10:30 a.m. on the Business
Day preceding the Maturity Date.
2. Delete all references in this Note to "Index Valuation Date" and
replace with "Basket Valuation Date".
3. Delete the last two paragraphs in Section 3(b)(ii)(B) and replace with
the following:
For purposes of determining whether a Market Disruption Event with respect
to a Basket Index (or the relevant successor index) exists at any time, if
trading in the security included in such Basket Index (or the relevant successor
index) is materially suspended or materially limited then the relevant
percentage contribution of that security to the level of such Basket Index (or
the relevant successor index) will be based on a comparison of:
o the portion of the level of such Basket Index (or the relevant
successor index) attributable to that security relative to
o the overall level of such Basket Index (or the relevant successor
index),
in each case immediately before the suspension or limitation.
For purposes of determining whether a Market Disruption Event with respect
to a Basket Index (or the relevant successor index) has occurred, unless
otherwise specified in the applicable pricing supplement:
o a limitation on the hours or number of days of trading will not
constitute a Market Disruption Event if it results from an announced
change in the regular business hours of the Relevant Exchange or
market, or the primary exchange or market for trading in futures or
options contracts related to such Basket Index (or the relevant
successor index);
o limitations pursuant to the rules of any Relevant Exchange that are
similar to New York Stock Exchange ("NYSE") Rule 80A (or any
applicable rule or regulation enacted or promulgated by any other
self-regulatory organization or any government agency of scope
similar to NYSE Rule 80A as determined by the Calculation Agent, in
its sole discretion) on trading during significant market
fluctuations will constitute a suspension, absence or material
limitation of trading;
o a suspension of trading in futures or options contracts on such
Basket Index (or the relevant successor index) by the primary
securities market trading in such contracts by reason of
o a price change exceeding limits set by such exchange or market,
o an imbalance of orders relating to such contracts, or
o a disparity in bid and ask quotes relating to such contracts
will, in each such case, constitute a suspension, absence or material
limitation of trading in futures or options contracts related to such
Basket Index (or the relevant successor index); and
o a "suspension, absence or material limitation of trading" on any
Relevant Exchange or on the primary market on which futures or
options contracts related to such Basket Index (or the relevant
successor index) are traded will not include any time when such
market is itself closed for trading under ordinary circumstances.
2-10
If a Basket Valuation Date is not a Trading Day, the applicable Basket Valuation
Date will be postponed to the immediately succeeding Trading Day. Further, if
there is a Market Disruption Event on a day that otherwise would be a Basket
Valuation Date, the applicable Basket Valuation Date will be postponed to the
next succeeding Trading Day, during which no Market Disruption Event shall have
occurred or is continuing; PROVIDED, however, that under no circumstance will
the Basket Closing Level be determined on a date later than the eighth scheduled
Trading Day after the final Basket Valuation Date. If such eighth day is not a
Trading Day, or if there is a Market Disruption Event on such day, the
Calculation Agent will determine the Basket Closing Level on such day in
accordance with the formula for and method of calculating the Basket Closing
Level last in effect prior to commencement of the Market Disruption Event (or
prior to the non-trading day), using the closing price of each security most
recently constituting the Basket. If trading in the relevant securities has been
materially suspended or materially limited, the Calculation Agent's good faith
estimate of the closing price for such securities that would have prevailed on
such eighth day, but for such suspension or limitation or non-trading day, will
be used).
4. Delete the first two sentences in Section 3(b)(iii) and replace with
the following:
In case an Event of Default with respect to this Note shall have occurred and be
continuing, the amount declared due and payable for each $1,000 principal amount
of this Note upon any acceleration of this Note will be equal to $1,000 plus the
Supplemental Payment, which will be calculated as if the date of acceleration
were the final Basket Valuation Date, plus, if applicable, any accrued and
unpaid interest on this Note.
2-11