Exhibit 10.2

 

 

HNI CORPORATION

 

 

$150,000,000 5.54% Series 2006-A Senior Notes

due April 6, 2016

 

 

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NOTE PURCHASE AGREEMENT

 

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DATED AS OF APRIL 6, 2006

 

 

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TABLE OF CONTENTS

 

SECTION

 

HEADING

 

PAGE

 

 

 

SECTION 1.

AUTHORIZATION OF NOTES

1

 

 

 

Section 1.1.

Description of Notes

1

Section 1.2.

Interest Rate

1

 

 

 

SECTION 2.

SALE AND PURCHASE OF NOTES; ADDITIONAL SERIES OF NOTES; SUBSIDIARY GUARANTY

2

 

 

 

Section 2.1.

Series 2006-A Notes

2

Section 2.2.

Additional Series of Notes

2

Section 2.3.

Subsidiary Guaranty

4

 

 

 

SECTION 3.

CLOSING

4

 

 

 

SECTION 4.

CONDITIONS TO CLOSING

5

 

 

 

Section 4.1.

Representations and Warranties

5

Section 4.2.

Performance; No Default

5

Section 4.3.

Compliance Certificates

5

Section 4.4.

Opinions of Counsel

6

Section 4.5.

Purchase Permitted By Applicable Law, Etc.

6

Section 4.6.

Sale of Other Notes

6

Section 4.7.

Payment of Special Counsel Fees

6

Section 4.8.

Private Placement Number

6

Section 4.9.

Changes in Corporate Structure

6

Section 4.10.

Subsidiary Guaranty

6

Section 4.11.

Funding Instructions

7

Section 4.12.

Proceedings and Documents

7

 

 

 

SECTION 5.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

7

 

 

 

Section 5.1.

Organization; Power and Authority

7

Section 5.2.

Authorization, Etc.

7

Section 5.3.

Disclosure

7

Section 5.4.

Organization and Ownership of Shares of Subsidiaries; Affiliates

8

Section 5.5.

Financial Statements; Material Liabilities

9

Section 5.6.

Compliance with Laws, Other Instruments, Etc.

9

Section 5.7.

Governmental Authorizations, Etc.

9

Section 5.8.

Litigation; Observance of Agreements, Statutes and Orders

9

Section 5.9.

Taxes

10

Section 5.10.

Title to Property; Leases

10

Section 5.11.

Licenses, Permits, Etc.

10

Section 5.12.

Compliance with ERISA

11

 

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Section 5.13.

Private Offering by the Company

12

Section 5.14.

Use of Proceeds; Margin Regulations

12

Section 5.15.

Existing Debt; Future Liens

12

Section 5.16.

Foreign Assets Control Regulations, Etc.

13

Section 5.17.

Status under Certain Statutes

13

Section 5.18.

Environmental Matters

13

Section 5.19.

Notes Rank Pari Passu

14

 

 

 

SECTION 6.

REPRESENTATIONS OF THE PURCHASER

14

 

 

 

Section 6.1.

Purchase for Investment

14

Section 6.2.

Accredited Investor

14

Section 6.3.

Source of Funds

14

 

 

 

SECTION 7.

INFORMATION AS TO COMPANY

16

 

 

 

Section 7.1.

Financial and Business Information

16

Section 7.2.

Officer’s Certificate

19

Section 7.3.

Visitation

19

 

 

 

SECTION 8.

PAYMENT OF THE NOTES

20

 

 

 

Section 8.1.

Required Prepayments

20

Section 8.2.

Optional Prepayments with Make-Whole Amount

20

Section 8.3.

Allocation of Partial Prepayments

20

Section 8.4.

Maturity; Surrender, Etc.

20

Section 8.5.

Purchase of Notes

21

Section 8.6.

Make-Whole Amount for the Series 2006-A Notes

21

 

 

 

SECTION 9.

AFFIRMATIVE COVENANTS

22

 

 

 

Section 9.1.

Compliance with Law

22

Section 9.2.

Insurance

23

Section 9.3.

Maintenance of Properties

23

Section 9.4.

Payment of Taxes and Claims

23

Section 9.5.

Corporate Existence, Etc.

23

Section 9.6.

Designation of Subsidiaries

23

Section 9.7.

Notes to Rank Pari Passu

24

Section 9.8.

Additional Subsidiary Guarantors

24

Section 9.9.

Books and Records

24

 

 

 

SECTION 10.

NEGATIVE COVENANTS

25

 

 

 

Section 10.1.

Consolidated Debt to Consolidated EBITDA

25

Section 10.2.

Priority Debt

25

Section 10.3.

Limitation on Liens

25

Section 10.4.

Sales of Asset

27

Section 10.5.

Merger and Consolidation

28

Section 10.6.

Transactions with Affiliates

29

 

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Section 10.7.

Terrorism Sanctions Regulations

29

 

 

 

SECTION 11.

EVENTS OF DEFAULT

29

 

 

 

SECTION 12.

REMEDIES ON DEFAULT, ETC.

31

 

 

 

Section 12.1.

Acceleration

31

Section 12.2.

Other Remedies

32

Section 12.3.

Rescission

32

Section 12.4.

No Waivers or Election of Remedies, Expenses, Etc.

33

 

 

 

SECTION 13.

REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

33

 

 

 

Section 13.1.

Registration of Notes

33

Section 13.2.

Transfer and Exchange of Notes

33

Section 13.3.

Replacement of Notes

34

 

 

 

SECTION 14.

PAYMENTS ON NOTES

34

 

 

 

Section 14.1.

Place of Payment

34

Section 14.2.

Home Office Payment

35

 

 

 

SECTION 15.

EXPENSES, ETC.

35

 

 

 

Section 15.1.

Transaction Expenses

35

Section 15.2.

Survival

35

 

 

 

SECTION 16.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

36

 

 

 

SECTION 17.

AMENDMENT AND WAIVER

36

 

 

 

Section 17.1.

Requirements

36

Section 17.2.

Solicitation of Holders of Notes

37

Section 17.3.

Binding Effect, Etc.

37

Section 17.4.

Notes Held by Company, Etc.

37

 

 

 

SECTION 18.

NOTICES

38

 

 

 

SECTION 19.

REPRODUCTION OF DOCUMENTS

38

 

 

 

SECTION 20.

CONFIDENTIAL INFORMATION

39

 

 

 

SECTION 21.

SUBSTITUTION OF PURCHASER

40

 

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SECTION 22.

MISCELLANEOUS

40

 

 

 

Section 22.1.

Successors and Assigns

40

Section 22.2.

Payments Due on Non-Business Days

40

Section 22.3.

Accounting Terms

41

Section 22.4.

Severability

41

Section 22.5.

Construction

41

Section 22.6.

Counterparts

41

Section 22.7.

Governing Law

41

Section 22.8.

Jurisdiction and Process; Waiver of Jury Trial

41

 

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SCHEDULE A

—

INFORMATION RELATING TO PURCHASERS

 

 

 

SCHEDULE B

—

DEFINED TERMS

 

 

 

SCHEDULE 4.9

—

Changes in Corporate Structure

 

 

 

SCHEDULE 5.3

—

Certain Disclosure Documents

 

 

 

SCHEDULE 5.4

—

Subsidiaries of the Company, Ownership of Subsidiary Stock, Affiliates

 

 

 

SCHEDULE 5.5

—

Financial Statements

 

 

 

SCHEDULE 5.11

—

Licenses, Permits, Etc.

 

 

 

SCHEDULE 5.15

—

Existing Debt

 

 

 

SCHEDULE 10.3

—

Existing Liens

 

 

 

EXHIBIT 1(a)

—

Form of 5.54% Series 2006-A Senior Notes due April 6, 2016

 

 

 

EXHIBIT 2.3

—

Form of Subsidiary Guaranty

 

 

 

EXHIBIT 4.4(a)

—

Forms of Opinion of Special Counsels to the Company

 

 

 

EXHIBIT 4.4(b)

—

Form of Opinion of Special Counsel to the Purchasers

 

 

 

EXHIBIT S

—

Form of Supplement to Note Purchase Agreement

 

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HNI CORPORATION

414 EAST THIRD STREET

P.O. BOX 1109

MUSCATINE, IA  52761-0071

EMAIL:

 

 

 

 

$150,000,000 5.54% SERIES 2006-A SENIOR NOTES
DUE APRIL 6, 2016

 

Dated as of
April 6, 2006

 

TO THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

 

Ladies and Gentlemen:

 

HNI CORPORATION, an Iowa corporation (the “Company”), agrees with the Purchasers
listed in the attached Schedule A (the “Purchasers”) to this Note Purchase
Agreement (this “Agreement”) as follows:

 

SECTION 1.                                                 AUTHORIZATION OF
NOTES.

 

Section 1.1.           Description of Notes. The Company will authorize the
issue and sale of the following Senior Notes:

 

ISSUE

 

SERIES AND/OR
TRANCHE

 

AGGREGATE
PRINCIPAL
AMOUNT

 

INTEREST RATE

 

MATURITY DATE

 

 

 

 

 

 

 

 

 

 

 

Senior Notes

 

Series 2006-A

 

$

150,000,000

 

5.54%

 

April 6, 2016

 

 

The Senior Notes described above are individually referred to as the “Series
2006-A Notes”. The Series 2006-A Notes, together with each Series of Additional
Notes which may from time to time be issued pursuant to the provisions of
Section 2.2 are collectively referred to as the “Notes” (such term shall also
include any such notes issued in substitution therefor pursuant to Section 13 of
this Agreement). The Series 2006-A Notes shall be substantially in the form set
out in Exhibit 1, with such changes therefrom, if any, as may be approved by the
Purchasers and the Company. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

 

Section 1.2.           Interest Rate. The Series 2006-A Notes shall bear
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the unpaid principal thereof from the date

 

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of issuance at their respective stated rate of interest payable semi-annually in
arrears on the 6th day of April and October and at maturity commencing on
October 6, 2006, until such principal sum shall have become due and payable
(whether at maturity, upon notice of prepayment or otherwise) and interest (so
computed) on any overdue principal, Make-Whole Amount or, to the extent
permitted by law, interest from the due date thereof (whether by acceleration or
otherwise) at the applicable Default Rate until paid.

 

SECTION 2.                                                 SALE AND PURCHASE OF
NOTES; ADDITIONAL SERIES OF NOTES; SUBSIDIARY GUARANTY.

 

Section 2.1.           Series 2006-A Notes. Subject to the terms and conditions
of this Agreement, the Company will issue and sell to each Purchaser and each
Purchaser will purchase from the Company, at the Closing provided for in
Section 3, the
Series 2006-A Notes in the principal amount specified opposite such Purchaser’s
name in Schedule A at the purchase price of 100% of the principal amount
thereof. The obligations of each Purchaser hereunder are several and not joint
obligations and no Purchaser shall have any obligation or any liability to any
Person for the performance or nonperformance by any other Purchaser hereunder.

 

Section 2.2.           Additional Series of Notes. The Company may, from time to
time, in its sole discretion but subject to the terms hereof, issue and sell one
or more additional Series of its unsecured promissory notes under the provisions
of this Agreement pursuant to a supplement (a “Supplement”) substantially in the
form of Exhibit S, provided that the aggregate principal amount of Notes of all
Series issued pursuant to all Supplements in accordance with the terms of this
Section 2.2 shall not exceed $500,000,000. Each additional Series of Notes (the
“Additional Notes”) issued pursuant to a Supplement shall be subject to the
following terms and conditions:

 

(i)            each Series of Additional Notes, when so issued, shall be
differentiated from all previous Series by the year of issuance and sequential
alphabetical designation inscribed thereon;

 

(ii)           Additional Notes of the same Series may consist of more than one
different and separate tranches and may differ with respect to outstanding
principal amounts, maturity dates, interest rates and premiums, if any, and
price and terms of redemption or payment prior to maturity, but all such
different and separate tranches of the same Series shall vote as a single class
and constitute one Series;

 

(iii)          each Series of Additional Notes shall be dated the date of issue,
bear interest at such rate or rates, mature on such date or dates, be subject to
such mandatory and optional prepayment on the dates and at the premiums, if any,
have such additional or different conditions precedent to closing, such
representations and warranties and such additional covenants as shall be
specified in the Supplement under which such Additional Notes are issued and
upon execution of any such Supplement, this Agreement shall be deemed amended
(a) to reflect such additional covenants without further action on the part of
the holders of the Notes outstanding under this Agreement, provided, that any
such additional covenants shall inure to the benefit of all holders of Notes so
long as any Additional Notes issued pursuant to such Supplement remain
outstanding, and (b) to

 

2

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reflect such representations and warranties as are contained in such Supplement
for the benefit of the holders of such Additional Notes in accordance with the
provisions of Section 16;

 

(iv)          each Series of Additional Notes issued under this Agreement shall
be in substantially the form of Exhibit 1 to Exhibit S hereto with such
variations, omissions and insertions as are necessary or permitted hereunder;

 

(v)           the minimum principal amount of any Note issued under a Supplement
shall be $100,000, except as may be necessary to evidence the outstanding amount
of any Note originally issued in a denomination of $100,000 or more;

 

(vi)          all Additional Notes shall constitute Senior Debt of the Company
and shall rank pari passu with all other outstanding Notes; and

 

(vii)         no Additional Notes shall be issued hereunder if at the time of
issuance thereof and after giving effect to the application of the proceeds
thereof, any Default or Event of Default shall have occurred and be continuing.

 

The obligations of the Additional Purchasers to purchase any Additional Notes
shall be subject to the following conditions precedent, in addition to the
conditions specified in the Supplement pursuant to which such Additional Notes
may be issued:

 

(a)           Compliance Certificate. A duly authorized Senior Financial Officer
shall execute and deliver to each Additional Purchaser and each holder of Notes
an Officer’s Certificate dated the date of issue of such Series of Additional
Notes stating that such officer has reviewed the provisions of this Agreement
(including any Supplements hereto) and setting forth the information and
computations (in sufficient detail) required to establish whether after giving
effect to the issuance of the Additional Notes and after giving effect to the
application of the proceeds thereof, the Company is in compliance with the
requirements of Sections 10.1 and 10.2 on such date (based upon the financial
statements for the most recent fiscal quarter ended prior to the date of such
certificate for which financial statements are then available).

 

(b)           Execution and Delivery of Supplement. The Company and each such
Additional Purchaser shall execute and deliver a Supplement substantially in the
form of Exhibit S hereto.

 

(c)           Representations of Additional Purchasers. Each Additional
Purchaser shall have confirmed in the Supplement that the representations set
forth in Section 6 are true with respect to such Additional Purchaser on and as
of the date of issue of the Additional Notes.

 

(d)           Execution and Delivery of Guaranty Ratification. Each Subsidiary
Guarantor with respect to which a Guaranty Release shall not have occurred shall
execute

 

3

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and deliver a Guaranty Ratification in form and substance satisfactory to the
Additional Purchasers.

 

Section 2.3.           Subsidiary Guaranty. (a) The payment by the Company of
all amounts due with respect to the Notes and the performance by the Company of
its obligations under this Agreement will be absolutely and unconditionally
guaranteed by the Subsidiary Guarantors pursuant to the Subsidiary Guaranty
Agreement dated as of even date herewith, which shall be substantially in the
form of Exhibit 2.3 attached hereto, and otherwise in accordance with the
provisions of Section 9.8 hereof (the “Subsidiary Guaranty”).

 

(b)           The holders of the Notes agree to discharge and release any
Subsidiary Guarantor from the Subsidiary Guaranty upon the written request of
the Company, provided that (i) such Subsidiary Guarantor has been released and
discharged (or will be released and discharged concurrently with the release of
such Subsidiary Guarantor under the Subsidiary Guaranty) as an obligor and
guarantor under and in respect of the Bank Credit Agreement and the Company so
certifies to the holders of the Notes in a certificate of a Responsible Officer,
(ii) at the time of such release and discharge, the Company shall deliver a
certificate of a Responsible Officer to the holders of the Notes stating that no
Default or Event of Default exists, and (iii) if any fee or other form of
consideration (other than, for the avoidance of doubt, the reimbursement of out
of pocket costs or expenses) is given to any holder of Debt under the Bank
Credit Agreement expressly for the purpose of such release, the holders of the
Notes shall receive proportional fees or consideration pro rata in respect of
the amount of Debt of the Company held by such holders in relation to the Debt
outstanding under the Bank Credit Agreement at the time such release was granted
(a “Guaranty Release”).

 

SECTION 3.                                                 CLOSING.

 

The sale and purchase of the Series 2006-A Notes to be purchased by each
Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe
Street, Chicago, Illinois 60603 at 10:00 a.m. Central time, at a closing (the
“Closing”) on April 6, 2006 or on such other Business Day thereafter on or prior
to April 15, 2006 as may be agreed upon by the Company and the Purchasers (the
“Closing Date”). On the Closing Date, the Company will deliver to each Purchaser
the Series 2006-A Notes to be purchased by such Purchaser in the form of a
single Series A Note (or such greater number of Series 2006-A Notes in
denominations of at least $100,000 as such Purchaser may request) dated the date
of the Closing Date and registered in such Purchaser’s name (or in the name of
such Purchaser’s nominee), against delivery by such Purchaser to the Company or
its order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to Account Number:  2000022977766, at Wachovia Bank N.A., Charlotte,
North Carolina, ABA Number: 053000219, in the Account Name of “HNI Corporation”.
If, on the Closing Date, the Company shall fail to tender such Series 2006-A
Notes to any Purchaser as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to any
Purchaser’s satisfaction, such Purchaser shall, at such Purchaser’s election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.

 

4

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SECTION 4.                                                 CONDITIONS TO
CLOSING.

 

Each Purchaser’s obligation to purchase and pay for the Series 2006-A Notes to
be sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser’s satisfaction, prior to or at the Closing, of the following
conditions applicable to the Closing Date:

 

Section 4.1.           Representations and Warranties.

 

(a)           Representations and Warranties of the Company. The representations
and warranties of the Company in this Agreement shall be correct when made and
at the time of the Closing.

 

(b)           Representations and Warranties of the Subsidiary Guarantors. The
representations and warranties of the Subsidiary Guarantors in the Subsidiary
Guaranty shall be correct when made and at the time of the Closing.

 

Section 4.2.           Performance; No Default. The Company and each Subsidiary
Guarantor shall have performed and complied with all agreements and conditions
contained in this Agreement and the Subsidiary Guaranty required to be performed
or complied with by the Company and each such Subsidiary Guarantor prior to or
at the Closing, and immediately after giving effect to the issue and sale of the
Series 2006-A Notes (and the application of the proceeds thereof as contemplated
by Section 5.14), no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
Section 10 hereof had such Section applied since such date.

 

Section 4.3.           Compliance Certificates.

 

(a)           Officer’s Certificate of the Company. The Company shall have
delivered to such Purchaser an Officer’s Certificate, dated the Closing Date,
certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been
fulfilled.

 

(b)           Secretary’s Certificate of the Company. The Company shall have
delivered to such Purchaser a certificate, dated the Closing Date, certifying as
to the resolutions attached thereto and other corporate proceedings relating to
the authorization, execution and delivery of the Series 2006-A Notes and this
Agreement.

 

(c)           Officer’s Certificate of the Subsidiary Guarantors. Each
Subsidiary Guarantor shall have delivered to such Purchaser an Officer’s
Certificate, dated the Closing Date, certifying that the conditions specified in
Sections 4.1(b), 4.2 and 4.9 have been fulfilled.

 

(d)           Secretary’s Certificate of the Subsidiary Guarantors. Each
Subsidiary Guarantor shall have delivered to such Purchaser a certificate, dated
the Closing Date, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Subsidiary Guaranty.

 

5

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Section 4.4.           Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the Closing
Date (a) from Jones Day and Stanley, Lande & Hunter, special counsel for the
Company, covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as such Purchaser
or its counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to the Purchasers), and (b) from Chapman and
Cutler LLP, the Purchasers’ special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.

 

Section 4.5.           Purchase Permitted By Applicable Law, Etc. On the Closing
Date such Purchaser’s purchase of Series 2006-A Notes shall (a) be permitted by
the laws and regulations of each jurisdiction to which such Purchaser is
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject such Purchaser to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was not in
effect on the date hereof. If requested by such Purchaser, such Purchaser shall
have received an Officer’s Certificate certifying as to such matters of fact
regarding the Company and its Subsidiaries as such Purchaser may reasonably
specify to enable such Purchaser to determine whether such purchase is so
permitted.

 

Section 4.6.           Sale of Other Notes. Contemporaneously with the Closing
the Company shall sell to each other Purchaser and each other Purchaser shall
purchase the Series 2006-A Notes to be purchased by it at the Closing as
specified in Schedule A.

 

Section 4.7.           Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
Date, the reasonable fees, reasonable charges and reasonable disbursements of
the Purchasers’ special counsel referred to in Section 4.4 to the extent
reflected in a statement of such counsel rendered to the Company at least one
Business Day prior to the Closing Date.

 

Section 4.8.           Private Placement Number. A Private Placement Number
issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Series 2006-A Notes.

 

Section 4.9.           Changes in Corporate Structure. Neither the Company nor
any Subsidiary Guarantor shall have changed its jurisdiction of incorporation or
organization or, except as reflected in Schedule 4.9, been a party to any merger
or consolidation, or shall have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

 

Section 4.10.        Subsidiary Guaranty. The Subsidiary Guaranty shall have
been duly authorized, executed and delivered by each Subsidiary Guarantor, shall
constitute the legal, valid

 

6

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and binding contract and agreement of each Subsidiary Guarantor and such
Purchaser shall have received a true, correct and complete copy thereof.

 

Section 4.11.        Funding Instructions. At least three Business Days prior to
the date of the Closing, each Purchaser shall have received written instructions
signed by a Responsible Officer on letterhead of the Company confirming the
information specified in Section 3 including (i) the name and address of the
transferee bank, (ii) such transferee bank’s ABA number and (iii) the account
name and number into which the purchase price for the Series 2006-A Notes is to
be deposited.

 

Section 4.12.        Proceedings and Documents. All corporate and other
organizational proceedings in connection with the transactions contemplated by
this Agreement and all documents and instruments incident to such transactions
shall be reasonably satisfactory to such Purchaser and its special counsel, and
such Purchaser and its special counsel shall have received all such counterpart
originals or certified or other copies of such documents as such Purchaser or
such special counsel may reasonably request.

 

SECTION 5.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each Purchaser, as of the date hereof and
as of the Closing Date that:

 

Section 5.1.           Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the
Series 2006-A Notes and to perform the provisions hereof and thereof.

 

Section 5.2.           Authorization, Etc. This Agreement and the Notes to be
issued on the Closing Date have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each such Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

Section 5.3.           Disclosure. The Company, through its agent, Banc of
America Securities LLC, has delivered each Purchaser a copy of a Private
Placement Memorandum, dated March, 2006 (the “Memorandum”), relating to the
transactions contemplated hereby. The Disclosure Documents (as defined below),
taken as a whole, fairly describe, in all material respects, the

 

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general nature of the business and principal properties of the Company and its
Restricted Subsidiaries. This Agreement, the Memorandum, the documents,
certificates or other writings delivered to the Purchasers by or on behalf of
the Company in connection with the transactions contemplated hereby and
identified in Schedule 5.3, and the financial statements listed in Schedule 5.5,
in each case, delivered to the Purchasers prior to March 14, 2006 (this
Agreement, the Memorandum and such documents, certificates or other writings and
such financial statements being referred to, collectively, as the “Disclosure
Documents”), taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading in the light of the circumstances under which they were made.
Except as disclosed in the Disclosure Documents, since January 1, 2005, there
has been no change in the financial condition, operations, business or
properties of the Company or any of its Restricted Subsidiaries except changes
that individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that would
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Disclosure Documents.

 

Section 5.4.           Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company’s Restricted and Unrestricted Subsidiaries,
showing, as to each Subsidiary, the correct name thereof, the jurisdiction of
its organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary, and all other material Investments of the Company and its
Restricted Subsidiaries, (ii) of the Company’s Affiliates, other than
Subsidiaries and Undisclosed Affiliates, and (iii) of the Company’s directors
and senior officers.

 

(b)           All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).

 

(c)           Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and, to the extent such
concept is applicable, in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.

 

(d)           No Subsidiary is a party to, or otherwise subject to, any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law or similar
statutes and foreign laws and regulations applicable to Foreign Subsidiaries)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its

 

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Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.

 

Section 5.5.           Financial Statements; Material Liabilities. The Company
has delivered to each Purchaser copies of the consolidated financial statements
of the Company and its Subsidiaries listed on Schedule 5.5. All of such
financial statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of
the Company and its Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments and the absence of footnotes). The Company and its
Subsidiaries do not have any Material liabilities that are not disclosed on such
financial statements or otherwise disclosed in the Disclosure Documents.

 

Section 5.6.           Compliance with Laws, Other Instruments, Etc. The
execution, delivery and performance by the Company of this Agreement and the
Series 2006-A Notes will not (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, organizational document, or any other material agreement or instrument
to which the Company or any Subsidiary is bound or by which the Company or any
Subsidiary or any of their respective properties may be bound, (b) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary, or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.

 

Section 5.7.           Governmental Authorizations, Etc. Except for filings on
Form 8-K required to be filed with the SEC as a result of the execution of this
Agreement, no consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Series 2006-A Notes.

 

Section 5.8.           Litigation; Observance of Agreements, Statutes and
Orders. (a) There are no actions, suits, governmental investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company or any Restricted Subsidiary or any property of the Company or any
Restricted Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.

 

(b)           Neither the Company nor any Restricted Subsidiary is in default
under any term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment, decree or ruling of any court, arbitrator
or Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws or the USA
Patriot Act) of any Governmental Authority, which default or violation,

 

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individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

 

Section 5.9.           Taxes. The Company and its Subsidiaries have filed all
income tax and other material tax returns that are required to have been filed
in any jurisdiction, and have paid all taxes shown to be due and payable on such
returns and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (a) the amount of which is not individually
or in the aggregate Material or (b) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that would reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of federal, state or other taxes for
all fiscal periods are adequate in accordance with GAAP. The United States
federal income tax liabilities of the Company and its Subsidiaries have been
finally determined (whether by reason of completed audits or the statute of
limitations having run) for all fiscal years up to and including the fiscal year
ended December 29, 2001.

 

Section 5.10.        Title to Property; Leases. The Company and its Restricted
Subsidiaries have good and sufficient title to their respective properties which
the Company and its Restricted Subsidiaries own or purport to own that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Restricted Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.

 

Section 5.11.        Licenses, Permits, Etc. Except as disclosed in
Schedule 5.11,

 

(a)           the Company and its Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, proprietary
software, service marks, trademarks and trade names, or rights thereto, that are
used or are necessary in the operation of their respective businesses, without
known conflict with the rights of others, except for those failures to own or
possess or conflicts that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect;

 

(b)           to the best knowledge of the Company, no product of the Company or
any of its Restricted Subsidiaries infringes any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark, trademark,
trade name or other right owned by any other Person, except for those
infringements that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect; and

 

(c)           to the best knowledge of the Company, there is no violation by any
Person of any right of the Company or any of its Restricted Subsidiaries with
respect to any

 

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patent, copyright, proprietary software, service mark, trademark, trade name or
other right owned or used by the Company or any of its Restricted Subsidiaries,
except for those violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.

 

Section 5.12.        Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan (which is not a Multiemployer
Plan) in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and would not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability for failure to comply with the provisions of Title I
of ERISA or any liability pursuant to Title IV of ERISA (other than for premium
payments to the PBGC paid in a timely manner) or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that would reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.

 

(b)           The present value of the aggregate benefit liabilities under each
of the Plans subject to Title IV of ERISA (other than Multiemployer Plans),
determined as of the beginning of such Plan’s most recent plan year (for which
such liabilities have been determined) on the basis of the actuarial assumptions
specified for funding purposes in such Plan’s most recent actuarial valuation
report, did not exceed the aggregate current value as of such determination date
of the assets of such Plan allocable to such benefit liabilities by more than
$5,000,000 in the case of any single Plan and by more than $30,000,000 in the
aggregate for all Plans. The term “benefit liabilities” has the meaning
specified in Section 4001 of ERISA and the terms “current value” and “present
value” have the meanings specified in Section 3 of ERISA.

 

(c)           The Company and its ERISA Affiliates have not incurred any
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.

 

(d)           The expected post-retirement benefit obligation (determined as of
the last day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Subsidiaries is not Material.

 

(e)           The execution and delivery of this Agreement and the issuance and
sale of the Series 2006-A Notes hereunder will not involve any transaction that
is subject to and not exempt from the prohibitions of Section 406 of ERISA or in
connection with which a tax would be imposed pursuant to
Section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
first sentence of this Section 5.12(e) is made in reliance upon and subject to
the accuracy of the Purchasers’ representation in Section 6.3 as to the sources
of the funds to be used to pay the purchase price of the Series 2006-A Notes to
be purchased by the Purchasers.

 

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Section 5.13.        Private Offering by the Company. Neither the Company nor
anyone acting on the Company’s behalf has, directly or through any agent,
offered the Series 2006-A Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than the Purchasers and not
more than twenty (20) other Institutional Investors of the type described in
clause (c) of the definition thereof, each of which has been offered the
Series 2006-A Notes in connection with a private sale for investment. Neither
the Company nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Series 2006-A Notes to the
registration requirements of Section 5 of the Securities Act or to the
registration requirements of any securities or blue sky laws of any applicable
jurisdiction.

 

Section 5.14.        Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Series 2006-A Notes to refinance existing Debt
and for general corporate purposes of the Company. No part of the proceeds from
the sale of the Series 2006-A Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 10% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 10% of the value of such assets. As used
in this Section, the terms “margin stock” and “purpose of buying or carrying”
shall have the meanings assigned to them in said Regulation U.

 

Section 5.15.        Existing Debt; Future Liens. (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of all outstanding
Debt of the Company and its Restricted Subsidiaries as of February 28, 2006
since which date there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Debt of the
Company or its Restricted Subsidiaries. Neither the Company nor any Restricted
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Company or such
Restricted Subsidiary, and no event or condition exists with respect to any Debt
of the Company or any Restricted Subsidiary, that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to cause
such Debt to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.

 

(b)           Except as disclosed in Schedule 5.15, neither the Company nor any
Restricted Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.3.

 

(c)           Neither the Company nor any Subsidiary is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Debt of the
Company or such Subsidiary, any agreement relating thereto or any other material
agreement (including, but not limited to, its charter or other organizational
document) which limits the amount of, or otherwise imposes

 

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restrictions on the incurring of, Debt of the Company, except as specifically
indicated in Schedule 5.15.

 

Section 5.16.        Foreign Assets Control Regulations, Etc. (a) Neither the
sale of the Series 2006-A Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

 

(b)           Neither the Company nor any Subsidiary is a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the
Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or,
to the knowledge of the Company, engages in any dealings or transactions with
any such Person. The Company and its Subsidiaries are in compliance, in all
material respects, with the USA Patriot Act.

 

(c)           No part of the proceeds from the sale of the Series 2006-A Notes
hereunder will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended, assuming in all cases that such Act applies to the Company.

 

Section 5.17.        Status under Certain Statutes. Neither the Company nor any
Restricted Subsidiary is an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, or is subject
to regulation under the ICC Termination Act of 1995, as amended, or the Federal
Power Act, as amended.

 

Section 5.18.        Environmental Matters. (a) Neither the Company nor any
Restricted Subsidiary has knowledge of any liability or has received any notice
of any liability, and no proceeding has been instituted raising any liability
against the Company or any of its Restricted Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them, or other assets, alleging any damage to the environment or violation of
any Environmental Laws, except, in each case, such as would not reasonably be
expected to result in a Material Adverse Effect.

 

(b)           Neither the Company nor any Restricted Subsidiary has knowledge of
any facts which would give rise to any liability, public or private, of
violation of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly owned,
leased or operated by any of them or to other assets or their use, except, in
each case, such as would not reasonably be expected to result in a Material
Adverse Effect.

 

(c)           Neither the Company nor any of its Restricted Subsidiaries has
stored any Hazardous Materials on real properties now or formerly owned, leased
or operated by any of them or has disposed of any Hazardous Materials in each
case in a manner contrary to any Environmental Laws in each case in any manner
that would reasonably be expected to result in a Material Adverse Effect.

 

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(d)           All buildings on all real properties now owned, leased or operated
by the Company or any of its Restricted Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply would not
reasonably be expected to result in a Material Adverse Effect.

 

Section 5.19.        Notes Rank Pari Passu. The obligations of the Company under
this Agreement and the Notes rank pari passu in right of payment with all other
unsecured Senior Debt (actual or contingent) of the Company, including, without
limitation, all unsecured Senior Debt of the Company described in Schedule 5.15
hereto.

 

SECTION 6.                                                 REPRESENTATIONS OF
THE PURCHASER.

 

Section 6.1.           Purchase for Investment. Each Purchaser severally
represents that it is purchasing the Series 2006-A Notes for its own account or
for one or more separate accounts maintained by it or for the account of one or
more pension or trust funds and not with a view to the distribution thereof
(other than any Notes purchased by Banc of America Securities LLC on the Closing
Date which Banc of America Securities LLC intends to resell to a “qualified
institutional buyer” pursuant to Rule 144A of the Securities Act), provided that
the disposition of such Purchaser’s or such pension or trust fund’s property
shall at all times be within such Purchaser’s or such pension or trust fund’s
control. Each Purchaser understands that the Series 2006-A Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required, nor does it intend, to register the Series 2006-A Notes.

 

Section 6.2.           Accredited Investor. Each Purchaser represents that it is
an “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act acting for its own account (and not for
the account of others) or as a fiduciary or agent for others (which others are
also “accredited investors”). Each Purchaser further represents that such
Purchaser has had the opportunity to ask questions of the Company and received
answers concerning the terms and conditions of the sale of the Series 2006-A
Notes.

 

Section 6.3.           Source of Funds. Each Purchaser severally represents that
at least one of the following statements is an accurate representation as to
each source of funds (a “Source”) to be used by such Purchaser to pay the
purchase price of the Series 2006-A Notes to be purchased by such Purchaser
hereunder:

 

(a)           the Source is an “insurance company general account” (as the term
is defined in the United States Department of Labor’s Prohibited Transaction
Class Exemption (“PTE”) 95-60, as amended) in respect of which the reserves and
liabilities (as defined by the annual statement for life insurance companies
approved by the National Association of Insurance Commissioners (the “NAIC
Annual Statement”)) for the general account contract(s) held by or on behalf of
any employee benefit plan (as defined in PTE 95-60, as amended) together with
the amount of the reserves and liabilities (as defined by the NAIC Annual
Statement) for the general account contract(s)

 

14

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held by or on behalf of any other employee benefit plans maintained by the same
employer (or affiliate thereof as defined in PTE 95-60, as amended) or by the
same employee organization in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual Statement filed with
such Purchaser’s state of domicile; or

 

(b)           the Source is an insurance company separate account that is
maintained solely in connection with such Purchaser’s fixed contractual
obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any
annuitant)) are not affected in any manner by the investment performance of the
separate account; or

 

(c)           the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1, as amended or (ii) a bank collective
investment fund, within the meaning of the PTE 91-38, as amended and, except as
disclosed by such Purchaser to the Company in writing pursuant to this
clause (c), no employee benefit plan (as defined in such PTEs) or group of plans
maintained by the same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account or collective
investment fund; or

 

(d)           the Source constitutes assets of an “investment fund” (within the
meaning of Part V of PTE 84-14, as amended (the “QPAM Exemption”)) managed by a
“qualified professional asset manager” or “QPAM” (within the meaning of Part V
of the QPAM Exemption), no assets of any employee benefit plan (as defined in
the QPAM Exemption) that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or maintained by
the same employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by such
QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a Person controlling or controlled by the QPAM (applying
the definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or
more interest in the Company and (i) the identity of such QPAM and (ii) the
names of all employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this clause (d);
or

 

(e)           the Source constitutes assets of a “plan(s)” (within the meaning
of Section IV of PTE 96-23, as amended (the “INHAM Exemption”)) managed by an
“in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM
Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are
satisfied, neither the INHAM nor a Person controlling or controlled by the INHAM
(applying the definition of “control” in Section IV(d) of the INHAM Exemption)
owns a 5% or more interest in the Company and (i) the identity of such INHAM and
(ii) the name(s) of the employee benefit plan(s) whose assets constitute the
Source have been disclosed to the Company in writing pursuant to this clause
(e); or

 

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(f)            the Source is a governmental plan; or

 

(g)           the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this clause (g);
or

 

(h)           the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.

 

As used in this Section 6.3, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall have, unless otherwise indicated, the
respective meanings assigned to such terms in section 3 of ERISA.

 

SECTION 7.                                                 INFORMATION AS TO
COMPANY.

 

Section 7.1.           Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:

 

(a)           Quarterly Statements — within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), copies of:

 

(i)            a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such quarter, and

 

(ii)           consolidated statements of income, changes in shareholders’
equity and cash flows of the Company and its Subsidiaries, for such quarter and
(in the case of the second and third quarters) for the portion of the fiscal
year ending with such quarter,

 

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments and the absence of footnotes, provided that filing with the SEC
within the time period specified above the Company’s Quarterly Report on
Form 10-Q prepared in compliance, in all material respects, with the
requirements therefor shall be deemed to satisfy the requirements of this
Section 7.1(a);

 

(b)           Annual Statements — within 105 days after the end of each fiscal
year of the Company, copies of:

 

(i)            a consolidated balance sheet of the Company and its Subsidiaries,
as at the end of such year, and

 

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(ii)           consolidated statements of income, changes in shareholders’
equity and cash flows of the Company and its Subsidiaries, for such year,

 

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, provided that
filing with the SEC within the time period specified above of the Company’s
Annual Report on Form 10-K for such fiscal year (together with the Company’s
annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in accordance, in all material respects, with the
requirements therefor shall be deemed to satisfy the requirements of this
Section 7.1(b);

 

(c)           SEC and Other Reports — except for filings referred to in
Section 7.1(a) and (b) above, promptly upon their becoming available and, to the
extent applicable, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public securities
holders generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder), and
each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission and of all press releases
and other statements made available generally by the Company or any Subsidiary
to the public concerning developments that are Material; provided, further, that
the Company shall be deemed to have made such delivery of such information and
documentation if it shall have made such information and documentation available
on “EDGAR” and on the Company’s homepage on the worldwide web (at the date of
this Agreement located at http//www.hnicorp.com) and shall have given each
holder of Notes notice of such availability;

 

(d)           Notice of Default or Event of Default — promptly, and in any event
within five Business Days after a Responsible Officer becomes aware of the
existence of any Default or Event of Default or that any Person has given any
written notice or taken any action with respect to a claimed Default or Event of
Default or that any Person has given any written notice or taken any action with
respect to a claimed default of the type referred to in Section 11(g), a written
notice specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;

 

(e)           ERISA Matters — promptly, and in any event within five Business
Days after a Responsible Officer becomes aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto:

 

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(i)            with respect to any Plan subject to Title IV of ERISA (other than
a Multiemployer Plan), any reportable event, as defined in Section 4043(c) of
ERISA and the regulations thereunder, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date thereof; or

 

(ii)           the taking by the PBGC of steps to institute, or receipt of
written notice from the PBGC threatening the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan subject to Title IV of ERISA (other than a Multiemployer
Plan), or the receipt by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or

 

(iii)          any event, transaction or condition that would result in the
incurrence of any liability by the Company or any ERISA Affiliate for failure to
comply with the provisions of Title I of ERISA or any liability pursuant to
Title IV of ERISA or the imposition of a penalty or excise tax under the
provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), or the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then existing,
would reasonably be expected to have a Material Adverse Effect;

 

(f)            Notices from Governmental Authority — promptly, and in any event
within 30 days of receipt thereof, copies of any written notice to the Company
or any Subsidiary from any federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that would reasonably be
expected to have a Material Adverse Effect;

 

(g)           Supplements  — promptly and in any event within 10 Business Days
after the execution and delivery of any Supplement, a copy thereof; and

 

(h)           Requested Information — with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.

 

Notwithstanding the foregoing, if one or more Unrestricted Subsidiaries shall
either (i) own more than 10% of the consolidated total assets of the Company and
its Subsidiaries, or (ii) account for more than 10% of the consolidated gross
revenues of the Company and its Subsidiaries, determined in each case in
accordance with GAAP, then, within the respective periods provided in
Section 7.1(a) and (b) above, the Company shall deliver to each holder of Notes
that is an Institutional Investor, unaudited financial statements of the
character and for the dates and periods as in said Sections 7.1(a) and (b)
covering such group of Unrestricted

 

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Subsidiaries (on a consolidated basis), together with a consolidating statement
reflecting eliminations or adjustments required to reconcile the financial
statements of such group of Unrestricted Subsidiaries to the financial
statements delivered pursuant to Sections 7.1(a) and (b).

 

Section 7.2.           Officer’s Certificate. Within the required time period
for delivery of financial statements under Sections 7.1(a) and 7.1(b), the
Company shall also deliver, in the manner set forth in Section 18 hereof, to
each holder of Notes a certificate of a Senior Financial Officer setting forth:

 

(a)           Covenant Compliance — the information required in order to
establish whether the Company was in compliance with the requirements of
Section 10.1 and Section 10.2 hereof and, if during any 12 consecutive months
ending during the applicable period, asset sales, leases or other dispositions
limited by Section 10.4 (and not excluded from the determination of “substantial
part”) exceed 7.5% of the book value of Consolidated Total Assets (as of the end
of the immediately preceding fiscal year), Section 10.4 hereof, during the
quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section, where applicable, the calculations
of the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence, as of the end of such period); and

 

(b)           Event of Default — a statement that such officer has reviewed the
relevant terms hereof and such review shall not have disclosed the existence
during the quarterly or annual period covered by the statements then being
furnished of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.

 

Section 7.3.           Visitation. The Company shall permit the representatives
of each holder of Notes that is an Institutional Investor:

 

(a)           No Default — if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the Company and its Subsidiaries with the Company’s officers,
and (with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Restricted Subsidiary, all at
such reasonable times and as often as may be reasonably requested in writing;
and

 

(b)           Default — if a Default or Event of Default then exists, at the
expense of the Company, to visit and inspect any of the offices or properties of
the Company or any Restricted Subsidiary, to examine all their respective books
of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective

 

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affairs, finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.

 

SECTION 8.                                                 PAYMENT OF THE NOTES.

 

Section 8.1.           Required Prepayments. The entire unpaid principal amount
of the Series 2006-A Notes shall become due and payable on April 6, 2016.

 

Section 8.2.           Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes of any Series, in an amount not less
than 10% of the then outstanding aggregate principal amount of the Notes of such
Series to be prepaid (but in the case of a partial prepayment not less than
$10,000,000 or such lesser amount as shall be required to effect a partial
prepayment resulting from an offer of prepayment pursuant to Section 10.4), at
100% of the principal amount so prepaid, together with interest accrued thereon
to the date of such prepayment, plus the applicable Make-Whole Amount, if any,
determined for the prepayment date with respect to the then outstanding
aggregate principal amount of the Notes of such Series to be prepaid. The
Company will give each holder of Notes of the Series to be prepaid written
notice of each optional prepayment under this Section 8.2 not less than 30 days
and not more than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such date, the aggregate principal amount of the Notes,
designated by Series and tranche, if applicable, to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of such
notice were the date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the Company shall
deliver to each holder of Notes of the Series to be prepaid a certificate of a
Senior Financial Officer specifying the calculation of each such Make-Whole
Amount as of the specified prepayment date.

 

Section 8.3.           Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to the provisions of Section 8.2, the
principal amount of the Notes of the Series to be prepaid shall be allocated
among all of the Notes of such Series at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof. All
regularly scheduled partial prepayments made with respect to any Series of
Additional Notes pursuant to any Supplement shall be allocated as provided
therein.

 

Section 8.4.           Maturity; Surrender, Etc. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such

 

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principal amount shall cease to accrue. Any Note paid or prepaid in full shall
be surrendered to the Company and cancelled and shall not be reissued, and no
Note shall be issued in lieu of any prepaid principal amount of any Note.

 

Section 8.5.           Purchase of Notes. The Company will not and will not
permit any Affiliate that it Controls to purchase, redeem, prepay or otherwise
acquire, directly or indirectly, any of the outstanding Notes of any Series
except (a) upon the payment or prepayment of the Notes of any Series in
accordance with the terms of this Agreement (including any Supplement hereto)
and the Notes of such Series or (b) pursuant to a written offer to purchase any
outstanding Notes of any Series made by the Company or an Affiliate pro rata to
the holders of the Notes of such Series upon the same terms and conditions
(except that if such Series has more than one separate tranche, such written
offer shall be allocated among all of the separate tranches of such Series at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof but such written offer may otherwise differ
among such separate tranches and such written offer shall be made pro rata to
the holders of the same tranches of such Series upon the same terms and
conditions). The Company will promptly cancel all Notes acquired by it or any
Affiliate it Controls pursuant to any payment, prepayment or purchase of Notes
pursuant to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.

 

Section 8.6.           Make-Whole Amount for the Series 2006-A Notes. The term
“Make-Whole Amount” means with respect to any Series 2006-A Note an amount equal
to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note, minus the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings with respect to the Called Principal
of such Note:

 

“Called Principal” means, the principal of the Series 2006-A Note that is to be
prepaid pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.

 

“Discounted Value” means, the amount obtained by discounting all Remaining
Scheduled Payments from their respective scheduled due dates to the Settlement
Date with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same periodic basis
as that on which interest on such Note is payable) equal to the Reinvestment
Yield.

 

“Reinvestment Yield” means, 0.50% plus the yield to maturity calculated by using
(i) the yields reported, as of 10:00 A.M. (New York City time) on the second
Business Day preceding the Settlement Date on screen “PX-1” on the Bloomberg
Financial Market Service (or such other information service as may replace
Bloomberg) for actively traded U.S. Treasury securities having a maturity equal
to the Remaining Average Life of such Called Principal as of such Settlement
Date, or (ii) if such yields are not reported as of such time or the yields
reported as of such time are not ascertainable (including by way of
interpolation), the Treasury Constant Maturity Series Yields reported, for the
latest day

 

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for which such yields have been so reported as of the second Business Day
preceding the Settlement Date, in Federal Reserve Statistical Release H.15 (519)
(or any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date. In either case, the yield will
be determined, if necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly on a straight line basis between (1) the actively traded
U.S. Treasury security with the maturity closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security with
the maturity closest to and less than the Remaining Average Life.

 

“Remaining Average Life” means, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date and the
scheduled due date of such Remaining Scheduled Payment.

 

“Remaining Scheduled Payments” means, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date if no payment of
such Called Principal were made prior to its scheduled due date, provided that
if such Settlement Date is not a date on which interest payments are due to be
made under the terms of the Series 2006-A Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1.

 

“Settlement Date” means, the date on which such Called Principal is to be
prepaid pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.

 

SECTION 9.                                                 AFFIRMATIVE
COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 9.1.           Compliance with Law. Without limiting Section 10.7, the
Company will, and will cause each of its Subsidiaries to, comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, ERISA, the USA Patriot Act and
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

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Section 9.2.           Insurance. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated except for any non-maintenance that would not
reasonably be expected to have a Material Adverse Effect.

 

Section 9.3.           Maintenance of Properties. The Company will, and will
cause each of its Restricted Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 9.4.           Payment of Taxes and Claims. The Company will, and will
cause each of its Subsidiaries to, file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of the Company
or any Subsidiary not permitted by Section 10.3, provided that neither the
Company nor any Subsidiary need pay any such tax or assessment or claims if
(i) the amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (ii) the
non-filing or nonpayment, as the case may be, of all such taxes and assessments
in the aggregate would not reasonably be expected to have a Material Adverse
Effect.

 

Section 9.5.           Corporate Existence, Etc. Subject to Sections 10.4 and
10.5, the Company will at all times preserve and keep in full force and effect
its corporate existence, and will at all times preserve and keep in full force
and effect the corporate (or other applicable organizational) existence of each
of its Restricted Subsidiaries (unless merged into the Company or a Restricted
Subsidiary) and all rights and franchises of the Company and its Restricted
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such corporate (or
other organizational) existence, right or franchise would not, individually or
in the aggregate, to have a Material Adverse Effect.

 

Section 9.6.           Designation of Subsidiaries. The Company may from time to
time cause any Subsidiary (other than a Subsidiary Guarantor) to be designated
as an Unrestricted Subsidiary or any Unrestricted Subsidiary to be designated a
Restricted Subsidiary; provided,

 

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however, that at the time of such designation and immediately after giving
effect thereto, (a) no Default or Event of Default would exist under the terms
of this Agreement, and (b) the Company and its Restricted Subsidiaries would be
in compliance with all of the covenants set forth in this Section 9 and
Section 10 if tested on the date of such action and provided, further, that once
a Subsidiary has been designated an Unrestricted Subsidiary, it shall not
thereafter be redesignated as a Restricted Subsidiary on more than one occasion
and once a Subsidiary has been designated a Restricted Subsidiary, it shall not
thereafter be redesignated as an Unrestricted Subsidiary on more than one
occasion. Within ten (10) days following any designation described above, the
Company will deliver to each holder of the Notes a notice of such designation
accompanied by a certificate signed by a Senior Financial Officer certifying
compliance with all requirements of this Section 9.6 and setting forth all
information required in order to establish such compliance.

 

Section 9.7.           Notes to Rank Pari Passu. The Notes and all other
obligations under this Agreement of the Company are and at all times shall
remain direct and unsecured obligations of the Company ranking pari passu as
against the assets of the Company with all other Notes from time to time issued
and outstanding hereunder without any preference among themselves and pari passu
with all other present and future unsecured Senior Debt (actual or contingent)
of the Company.

 

Section 9.8.           Additional Subsidiary Guarantors. The Company will cause
any Subsidiary which is required by the terms of the Bank Credit Agreement to
become a party to, or otherwise guarantee, Debt in respect of the Bank Credit
Agreement, to enter into the Subsidiary Guaranty and deliver to each of the
holders of the Notes (concurrently with the incurrence of any such obligation
pursuant to the Bank Credit Agreement) the following items:

 

(a)           a joinder or supplemental agreement in respect of the Subsidiary
Guaranty;

 

(b)           a certificate signed by an authorized Responsible Officer of the
Company making representations and warranties to the effect of those contained
in Sections 5.4, 5.6 and 5.7, with respect to such Subsidiary and the Subsidiary
Guaranty, as applicable; and

 

(c)           an opinion of counsel (who may be in-house counsel for the
Company) addressed to each of the holders of the Notes reasonably satisfactory
to the Required Holders, to the effect that the Subsidiary Guaranty by such
Person has been duly authorized, executed and delivered and that the Subsidiary
Guaranty constitutes the legal, valid and binding contract and agreement of such
Person enforceable in accordance with its terms, except as an enforcement of
such terms may be limited by bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles.

 

Section 9.9.           Books and Records. The Company will, and will cause each
of its Restricted Subsidiaries to, maintain proper books of record and account
in conformity with GAAP and all applicable requirements of any Governmental
Authority having legal or regulatory jurisdiction over the Company or such
Restricted Subsidiary, as the case may be

 

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SECTION 10.              NEGATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 10.1.        Consolidated Debt to Consolidated EBITDA. The Company will
not at any time permit the ratio of Consolidated Debt to Consolidated EBITDA
(Consolidated EBITDA to be calculated as at the end of each fiscal quarter for
the four consecutive fiscal quarters then ended) to exceed 3.50 to 1.00.

 

Section 10.2.        Priority Debt. The Company will not at any time permit the
aggregate amount of all Priority Debt to exceed 15% of Consolidated Total Assets
(Consolidated Total Assets to be determined as of the end of the then most
recently ended fiscal quarter of the Company).

 

Section 10.3.        Limitation on Liens. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly create,
incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Company or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits (unless it makes, or
causes to be made, effective provision whereby the Notes will be equally and
ratably secured with any and all other obligations thereby secured, such
security to be pursuant to an agreement reasonably satisfactory to the Required
Holders and, in any such case, the Notes shall have the benefit, to the fullest
extent that, and with such priority as, the holders of the Notes may be entitled
under applicable law, of an equitable Lien on such property), except:

 

(a)           Liens for taxes, assessments or other governmental charges that
are not yet due and payable or the payment of which is not at the time required
by Section 9.4;

 

(b)           any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay;

 

(c)           Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords’, carriers’, warehousemen’s,
mechanics’, materialmen’s and other similar Liens for sums not yet due and
payable or being contested in good faith and for which appropriate reserves have
been established in accordance with GAAP) and Liens to secure the performance of
bids, tenders, leases, or trade contracts, or to secure statutory obligations
(including obligations under workers compensation, unemployment insurance and
other social security legislation), surety or appeal bonds or other Liens
incurred in the ordinary course of business and not in connection with the
borrowing of money;

 

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(d)           leases or subleases granted to others, easements, reservations,
rights-of-way, restrictions and other similar charges or encumbrances, in each
case incidental to the ownership of property or assets or the ordinary conduct
of the business of the Company or any of its Restricted Subsidiaries and Liens
incidental to minor survey exceptions and the like, provided that such Liens do
not, in the aggregate, materially detract from the value of such property;

 

(e)           Liens securing Debt of a Restricted Subsidiary to the Company or
to a Restricted Subsidiary;

 

(f)            Liens existing as of the date of Closing and reflected in
Schedule 10.3;

 

(g)           Liens incurred after the date of Closing given to secure the
payment of the purchase price incurred in connection with the acquisition,
construction or improvement of property (other than accounts receivable or
inventory) useful and intended to be used in carrying on the business of the
Company or a Restricted Subsidiary, including Liens existing on such property at
the time of acquisition or construction thereof or improvement thereon or Liens
incurred within 365 days of such acquisition or completion of such construction
or improvement, provided that (i) the Lien shall attach solely to the property
acquired, purchased, constructed or improved; (ii) at the time of acquisition,
construction or improvement of such property (or, in the case of any Lien
incurred within three hundred sixty-five (365) days of such acquisition or
completion of such construction or improvement, at the time of the incurrence of
the Debt secured by such Lien), the aggregate amount remaining unpaid on all
Debt secured by Liens on such property, whether or not assumed by the Company or
a Restricted Subsidiary, shall not exceed the lesser of (y) the cost of such
acquisition, construction or improvement or (z) the Fair Market Value of such
property; and (iii) at the time of such incurrence and after giving effect
thereto, no Default or Event of Default would exist;

 

(h)           any Lien existing on property of a Person immediately prior to its
being consolidated with or merged into the Company or a Restricted Subsidiary or
its becoming a Restricted Subsidiary, or any Lien existing on any property
acquired by the Company or any Restricted Subsidiary at the time such property
is so acquired (whether or not the Debt secured thereby shall have been
assumed), provided that (i) no such Lien shall have been created or assumed in
contemplation of such consolidation or merger or such Person’s becoming a
Restricted Subsidiary or such acquisition of property, (ii) each such Lien shall
extend solely to the item or items of property so acquired and, if required by
the terms of the instrument originally creating such Lien, other property which
is an improvement to or is acquired for specific use in connection with such
acquired property, and (iii) at the time of such incurrence and after giving
effect thereto, no Default or Event of Default would exist;

 

(i)            any extensions, renewals or replacements of any Lien permitted by
the preceding subparagraphs (e), (f), (g) and (h) of this Section 10.3, provided
that (i) no additional property shall be encumbered by such Liens, (ii) the
unpaid principal amount of the Debt or other obligations secured thereby shall
not be increased on or after the date

 

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of any extension, renewal or replacement, and (iii) at such time and immediately
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing;

 

(j)            Liens relating to customary rights of setoff, revocation, refund
or chargeback of banks or other financial institutions under deposit agreements
or under applicable law where the Company or its Restricted Subsidiaries
maintain deposits in the ordinary course of business;

 

(k)           Liens on accounts receivable of the Company and its Restricted
Subsidiaries to the extent such Liens arise by reason of a Permitted
Securitization Transaction; provided that no such Lien shall extend to or cover
any property of the Company or any Restricted Subsidiary other than such
accounts receivable subject to such Permitted Securitization Transaction; and

 

(l)            Liens securing Priority Debt of the Company or any Restricted
Subsidiary, provided that the aggregate principal amount of any such Priority
Debt shall be permitted by Section 10.2.

 

Section 10.4.        Sales of Assets. The Company will not, and will not permit
any Restricted Subsidiary to, sell, lease or otherwise dispose of any
substantial part (as defined below) of the assets of the Company and its
Restricted Subsidiaries; provided, however, that the Company or any Restricted
Subsidiary may sell, lease or otherwise dispose of assets constituting a
substantial part of the assets of the Company and its Restricted Subsidiaries if
such assets are sold in an arms length transaction and, at such time and after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing and an amount equal to the net proceeds received from such sale,
lease or other disposition (but only with respect to that portion of such assets
that exceeds the definition of “substantial part” set forth below) shall be used
within 365 days of such sale, lease or disposition, in any combination:

 

(1)           to acquire productive assets used or useful in carrying on the
business of the Company and its Restricted Subsidiaries and having a value at
least equal to the value of such assets sold, leased or otherwise disposed of;
and/or

 

(2)           to prepay or retire Senior Debt of the Company and/or its
Restricted Subsidiaries, provided that, to the extent any such proceeds are used
to prepay the outstanding principal amount of the Notes, such prepayment shall
be made in accordance with the terms of Section 8.2.

 

As used in this Section 10.4, a sale, lease or other disposition of assets shall
be deemed to be a “substantial part” of the assets of the Company and its
Restricted Subsidiaries if the book value of such assets, when added to the book
value of all other assets sold, leased or otherwise disposed of by the Company
and its Restricted Subsidiaries during the period of 12 consecutive months
ending on the date of such sale, lease or other disposition, exceeds 10% of the
book value of Consolidated Total Assets, determined as of the end of the fiscal
year immediately preceding such sale, lease or other disposition; provided that
there shall be excluded from any

 

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determination of a “substantial part” any (i) sale, lease or other disposition
of (x) inventory and materials in the ordinary course of business of the Company
and its Restricted Subsidiaries, (y) cash equivalents or (z) machinery, parts
and equipment no longer used or useful in the conduct of its business, (ii) any
sale or lease of assets from the Company to any Restricted Subsidiary or from
any Restricted Subsidiary to the Company or another Restricted Subsidiary,
(iii) sales of accounts receivables pursuant to any Permitted Securitization
Transaction, and (iv) any sale or transfer of property acquired or constructed
by the Company or any Restricted Subsidiary after the date of this Agreement to
any Person within 365 days following the acquisition or completion of
construction of such property by the Company or any Restricted Subsidiary if the
Company or a Restricted Subsidiary shall concurrently with such sale or
transfer, lease such property, as lessee.

 

Section 10.5.        Merger and Consolidation. The Company will not, and will
not permit any of its Restricted Subsidiaries to, consolidate with or merge with
any other Person or convey, transfer or lease substantially all of its assets in
a single transaction or series of transactions to any Person; provided that:

 

(a)           any Restricted Subsidiary may (i) consolidate with or merge with,
or convey, transfer or lease substantially all of its assets in a single
transaction or series of transactions to, (x) the Company or another Restricted
Subsidiary so long as in any merger or consolidation involving the Company, the
Company shall be the surviving or continuing corporation or (y) any other Person
so long as the survivor is a Restricted Subsidiary, or (ii) convey, transfer or
lease all of its assets in compliance with the provisions of Section 10.4; and

 

(b)           the Company may consolidate or merge with, or convey, transfer or
lease of substantially all of its assets in a single transaction or series of
transactions to, any Person so long as:

 

(i)            the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case may
be (the “Successor Corporation”), shall be a solvent entity organized and
existing under the laws of the United States of America, any State thereof or
the District of Columbia;

 

(ii)           if the Company is not the Successor Corporation, such Successor
Corporation shall have executed and delivered to each holder of Notes its
assumption of the due and punctual performance and observance of each covenant
and condition of this Agreement (and each Supplement thereto) and the Notes
(pursuant to such agreements and instruments as shall be reasonably satisfactory
to the Required Holders), and the Successor Corporation shall have caused to be
delivered to each holder of Notes (A) an opinion of nationally recognized
independent counsel, to the effect that all agreements or instruments effecting
such assumption are enforceable in accordance with their terms and (B) an
acknowledgment from each Subsidiary Guarantor that the Subsidiary Guaranty
continues in full force and effect; and

 

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(iii)          immediately after giving effect to such transaction no Default or
Event of Default would exist.

 

Section 10.6.        Transactions with Affiliates. The Company will not and will
not permit any Restricted Subsidiary to enter into directly or indirectly any
Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the Company
or another Restricted Subsidiary), except in the ordinary course (or, to the
extent not in the ordinary course, with respect to repurchases of the Company’s
capital stock owned by State Farm Mutual Automobile Insurance Company or any of
its Affiliates) and upon fair and reasonable terms that are not materially less
favorable to the Company or such Restricted Subsidiary, taken as a whole, than
would be obtainable in a comparable arm’s-length transaction with a Person not
an Affiliate.

 

Section 10.7.        Terrorism Sanctions Regulations. The Company will not and
will not permit any Subsidiary to (a) become a Person described or designated in
the Specially Designated Nationals and Blocked Persons List of the Office of
Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (b) to the
knowledge of the Company, engage in any dealings or transactions with any such
Person.

 

SECTION 11.              EVENTS OF DEFAULT.

 

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

 

(a)           the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or

 

(b)           the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or

 

(c)           the Company defaults in the performance of or compliance with any
term contained in Section 10 or any covenant in a Supplement which specifically
provides that it shall have the benefit of this paragraph (c) or any Subsidiary
Guarantor defaults in the performance of or compliance with any term of the
Subsidiary Guaranty beyond any period of grace or cure period (if any) provided
with respect thereto; or

 

(d)           the Company defaults in the performance of or compliance with any
term contained herein or in any Supplement (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied
within 30 days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default or (ii) the Company receiving written notice of such
default from any holder of a Note (any such written notice to be identified as a
“notice of default” and to refer specifically to this paragraph (d) of
Section 11); or

 

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(e)           any Subsidiary Guaranty ceases to be a legally valid, binding and
enforceable obligation or contract of a Subsidiary Guarantor (other than upon a
release of any Subsidiary Guarantor from a Subsidiary Guaranty in accordance
with the terms of Section 2.3(b) hereof), or any Subsidiary Guarantor or any
party by, through or on account of any such Person, challenges the validity,
binding nature or enforceability of any such Subsidiary Guaranty; or

 

(f)            any representation or warranty made in writing by the Company or
any Subsidiary Guarantor in this Agreement (including any Supplement) or any
Subsidiary Guaranty or by any officer of the Company or any Subsidiary Guarantor
in any writing furnished in connection with the transactions contemplated hereby
or by any Subsidiary Guaranty (in his or her capacity as such) proves to have
been false or incorrect in any material respect on the date as of which made; or

 

(g)           (i) the Company or any Restricted Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest (in the payment amount of at least
$100,000) on any Debt other than the Notes that is outstanding in an aggregate
principal amount of at least $35,000,000 beyond any period of grace provided
with respect thereto, or (ii) the Company or any Restricted Subsidiary is in
default in the performance of or compliance with any term of any instrument,
mortgage, indenture or other agreement relating to any Debt other than the Notes
in an aggregate principal amount of at least $35,000,000 or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared, due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Debt to convert such Debt into equity
interests), the Company or any Restricted Subsidiary has become obligated to
purchase or repay Debt other than the Notes before its stated maturity or before
its regularly scheduled dates of payment in an aggregate outstanding principal
amount of at least $35,000,000; or

 

(h)           the Company, any Material Subsidiary or any Subsidiary Guarantor
(i) is generally not paying, or admits in writing its inability to pay, its
debts as they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or

 

(i)            a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company, any of its Material
Subsidiaries or any Subsidiary Guarantor, a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an

 

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order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company, any of its Material Subsidiaries or
any Subsidiary Guarantor, or any such petition shall be filed against the
Company, any of its Material Subsidiaries or any Subsidiary Guarantor and such
petition shall not be dismissed within 60 days; or

 

(j)            a final judgment or judgments at any one time outstanding for the
payment of money aggregating in excess of $35,000,000 (other than to the extent
not covered by third party insurance as to which the insurer does not dispute
coverage) are rendered against one or more of the Company, its Restricted
Subsidiaries or any Subsidiary Guarantor and which judgments are not, within 60
days after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay; or

 

(k)           if (i) any Plan subject to Title IV of ERISA (other than a
Multiemployer Plan) shall fail to satisfy the minimum funding standards of ERISA
or the Code for any plan year or a waiver of such standards or extension of any
amortization period is sought or granted under Section 412 of the Code, (ii) a
notice of intent to terminate any Plan subject to Title IV of ERISA (other than
a Multiemployer Plan) shall have been or is reasonably expected to be filed with
the PBGC in a “distress termination” under Section 4041(c) of ERISA or the PBGC
shall have instituted proceedings under Section 4042 of ERISA to terminate or
appoint a trustee to administer any Plan or the PBGC shall have formally
notified the Company or any ERISA Affiliate that a Plan may become a subject of
any such proceedings, (iii) the aggregate “amount of unfunded benefit
liabilities” (within the meaning of Section 4001(a)(18) of ERISA) under all
Plans subject to Title IV of ERISA (other than a Multiemployer Plan), determined
in accordance with Title IV of ERISA, shall exceed $35,000,000, (iv) the Company
or any ERISA Affiliate shall have incurred or is reasonably expected to incur
any liability for the failure to comply with the provisions of Title I of ERISA
or any liability pursuant to Title IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan in a complete or
partial withdrawal within the meaning of Title IV of ERISA, or (vi) the Company
or any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that could increase the
liability of the Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either individually or
together with any other such event or events, would reasonably be expected to
have a Material Adverse Effect.

 

As used in Section 11(k), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

 

SECTION 12.              REMEDIES ON DEFAULT, ETC.

 

Section 12.1.        Acceleration. (a) If an Event of Default with respect to
the Company described in paragraph (h) or (i) of Section 11 (other than an Event
of Default described in clause

 

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(i) of paragraph (h) or described in clause (vi) of paragraph (h) by virtue of
the fact that such clause encompasses clause (i) of paragraph (h)) has occurred,
all the Notes of every Series then outstanding shall automatically become
immediately due and payable.

 

(b)           If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in aggregate principal amount of the Notes of
any Series at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes of such Series then
outstanding to be immediately due and payable.

 

(c)           If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing with respect to any Notes, any holder
or holders of Notes at the time outstanding affected by such Event of Default
may at any time, at its or their option, by notice or notices to the Company,
declare all the Notes held by such holder or holders to be immediately due and
payable.

 

Upon any Note’s becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (i) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate during the occurrence and continuance of an Event of Default (to the full
extent permitted by applicable law)) and (ii) the applicable Make-Whole Amount,
if any, determined in respect of such principal amount (to the full extent
permitted by applicable law), shall all be immediately due and payable, in each
and every case without presentment, demand, protest or further notice, all of
which are hereby waived. The Company acknowledges, and the parties hereto agree,
that each holder of a Note has the right to maintain its investment in the Notes
free from repayment by the Company (except as herein or in any Supplement
specifically provided for) and that the provision for payment of a Make-Whole
Amount, if any, by the Company if the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.

 

Section 12.2.        Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.

 

Section 12.3.        Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of
more than 50% in aggregate principal amount of the Notes of any Series then
outstanding, by written notice to the Company, may rescind and annul any such
declaration and its consequences with respect to the Notes of such Series if
(a) the Company has paid all overdue interest on the Notes, all principal of and
applicable Make-Whole Amount, if any, on any Notes of such Series that are due
and payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any

 

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overdue interest in respect of the Notes of such Series, at the Default Rate,
(b) neither the Company nor any other Person shall have paid any amounts which
have become due solely by reason of such declaration, (c) all Events of Default
and Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (d) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to any Notes of such Series. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.

 

Section 12.4.        No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements.

 

SECTION 13.                     REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

 

Section 13.1.        Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.

 

Section 13.2.        Transfer and Exchange of Notes. Upon surrender of any Note
to the Company at the address and to the attention of the designated officer
(all as specified in Section 18(iv)), for registration of transfer or exchange
(and in the case of a surrender for registration of transfer accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or such holder’s attorney duly authorized in writing and accompanied by the
relevant name, address and other information for notices of each transferee of
such Note or part thereof), within 15 Business Days thereafter, the Company
shall execute and deliver, at the Company’s expense (except as provided below),
one or more new Notes (as requested by the holder thereof) of the same
Series (and of the same tranche if such Series has separate tranches) in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
the Note of such Series and tranche, if applicable, originally issued hereunder
or pursuant to any Supplement. Each such new Note shall be dated and bear
interest from the date to which interest shall have been paid on

 

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the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in denominations of
less than $100,000, provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, of any Series and tranche,
if applicable, one Note of such Series and tranche, if applicable, may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.3, provided, that in lieu thereof
such holder may (in reliance upon information provided by the Company, which
shall not be unreasonably withheld) make a representation to the effect that the
purchase by any holder of any Note will not constitute a non-exempt prohibited
transaction under section 406(a) of ERISA.

 

The Notes have not been registered under the Securities Act or under the
securities laws of any state and may not be transferred or resold unless
registered under the Securities Act and all applicable state securities laws or
unless an exemption from the requirement for such registration is available.

 

Section 13.3.        Replacement of Notes. Upon receipt by the Company at the
address and to the attention of the designated officer (all as specified in
Section 18(iv) of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note (which evidence shall be,
in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and

 

(a)           in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $150,000,000, such Person’s own unsecured agreement of indemnity
shall be deemed to be satisfactory), or

 

(b)           in the case of mutilation, upon surrender and cancellation
thereof,

 

the Company at its own expense shall execute and deliver not more than
15 Business Days following satisfaction of such conditions, in lieu thereof, a
new Note of the same Series (and of the same tranche if such Series has separate
tranches), dated and bearing interest from the date to which interest shall have
been paid on such lost, stolen, destroyed or mutilated Note or dated the date of
such lost, stolen, destroyed or mutilated Note if no interest shall have been
paid thereon.

 

SECTION 14.              PAYMENTS ON NOTES.

 

Section 14.1.        Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York at the principal office of Bank of
America, N.A. in such jurisdiction. The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

 

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Section 14.2.        Home Office Payment. So long as any Purchaser or Additional
Purchaser or such Purchaser’s nominee or such Additional Purchaser’s nominee
shall be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by wire transfer or other commercially reasonable method and at the address
specified for such purpose for such Purchaser on Schedule A hereto or, in the
case of any Additional Purchaser, Schedule A attached to any Supplement pursuant
to which such Additional Purchaser is a party, or by such other commercially
reasonable method or at such other address as such Purchaser or Additional
Purchaser shall have from time to time specified to the Company in writing for
such purpose, without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, such Purchaser or Additional Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by any Purchaser or Additional Purchaser or such Person’s
nominee, such Person will, at its election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits, subject to the
obligations, of this Section 14.2 to any Institutional Investor that is the
direct or indirect transferee of any Note.

 

SECTION 15.              EXPENSES, ETC.

 

Section 15.1.        Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys’ fees of a special counsel for the Purchasers or
any Additional Purchasers and, if reasonably required by the Required Holders,
local or other counsel) incurred by each Purchaser and each Additional Purchaser
and each other holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement (including any Supplement) or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation: 
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement (including
any Supplement) or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement (including any Supplement) or the Notes, or by reason of being a
holder of any Note, and (b) the costs and expenses, including financial
advisors’ fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated hereby and by the Notes. The Company will pay, and
will save each Purchaser, each Additional Purchaser and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses if any,
of brokers and finders (other than those, if any, retained by a Purchaser or
other holder in connection with its purchase of the Notes).

 

Section 15.2.        Survival. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any

 

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provision of this Agreement, any Supplement or the Notes, and the termination of
this Agreement or any Supplement.

 

SECTION 16.              SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.

 

All representations and warranties contained herein, which shall be made only as
of the date hereof and the Closing Date, or in any Supplement, which shall be
made only as of the date hereof and the date of the closing thereunder, shall
survive the execution and delivery of this Agreement, such Supplement and the
Notes, the purchase or transfer by any Purchaser or any Additional Purchaser of
any such Note or portion thereof or interest therein and the payment of any Note
and may be relied upon by any subsequent holder of any such Note, regardless of
any investigation made at any time by or on behalf of any Purchaser or any
Additional Purchaser or any other holder of any such Note. All statements
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant to this Agreement or any Supplement shall be deemed
representations and warranties of the Company under this Agreement; provided,
that the representations and warranties contained in any Supplement shall only
be made for the benefit of the Additional Purchasers which are party to such
Supplement and the holders of the Notes issued pursuant to such Supplement,
including subsequent holders of any Note issued pursuant to such Supplement, and
shall not require the consent of the holders of existing Notes. Subject to the
preceding sentence, this Agreement (including every Supplement) and the Notes
embody the entire agreement and understanding between the Purchasers and the
Additional Purchasers and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.

 

SECTION 17.              AMENDMENT AND WAIVER.

 

Section 17.1.        Requirements. (a) This Agreement (including any Supplement)
and the Notes may be amended, and the observance of any term hereof or of the
Notes may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and the Required Holders, except that
(i) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6
or 21 hereof or the corresponding provision of any Supplement, or any defined
term (as it is used in any such Section or such corresponding provision of any
Supplement), will be effective as to any holder of Notes unless consented to by
such holder of Notes in writing, and (ii) no such amendment or waiver may,
without the written consent of all of the holders of Notes at the time
outstanding affected thereby, (A) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest (if such change results in a
decrease in the interest rate) or of the Make-Whole Amount on, the Notes,
(B) change the percentage of the principal amount of the Notes the holders of
which are required to consent to any such amendment or waiver, or (C) amend any
of Sections 8, 11(a), 11(b), 12, 17 or 20.

 

(b)           Supplements. Notwithstanding anything to the contrary contained
herein, the Company may enter into any Supplement providing for the issuance of
one or more Series of Additional Notes consistent with Section 2.2 hereof
without obtaining the consent of any holder of any other Series of Notes.

 

36

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Section 17.2.        Solicitation of Holders of Notes.

 

(a)           Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof, any Supplement or of the Notes. The Company will deliver executed or
true and correct copies of each amendment, waiver or consent effected pursuant
to the provisions of this Section 17 to each holder of outstanding Notes
promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite holders of Notes.

 

(b)           Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security or provide other credit
support, to any holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any of the
terms and provisions hereof or any Supplement unless such remuneration is
concurrently paid, or security is concurrently granted or other credit support
is concurrently provided, on the same terms, ratably to each holder of Notes
then outstanding even if such holder did not consent to such waiver or
amendment.

 

(c)           Consent in Contemplation of Transfer. Any consent made pursuant to
this Section 17 by a holder of Notes that has transferred or has agreed to
transfer its Notes to the Company, any Subsidiary or any Affiliate of the
Company and has provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force or effect except solely
as to such holder, and any amendments effected or waivers granted or to be
effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other holders of Notes
that were acquired under the same or similar conditions) shall be void and of no
force or effect except solely as to such holder.

 

Section 17.3.        Binding Effect, Etc. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term “this Agreement” and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.

 

Section 17.4.        Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal

 

37

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amount of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates that it Controls shall be deemed not to be
outstanding.

 

SECTION 18.              NOTICES.

 

All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), (b) by
a recognized overnight delivery service (with charges prepaid), or (c) by
posting to IntraLinks® or a similar service reasonably acceptable to the
Required Holders if the sender on the same day sends or causes to be sent notice
of such posting by email or in accordance with clause (a) or (b) above. Any such
notice must be sent:

 

(i)            if to a Purchaser or such Purchaser’s nominee, to such Purchaser
or such Purchaser’s nominee at the address or, in the case of clause (c) above,
the email address, specified for such communications in Schedule A to this
Agreement, or at such other address or email address as such Purchaser or such
Purchaser’s nominee shall have specified to the Company in writing pursuant to
this Section 18;

 

(ii)           if to an Additional Purchaser or such Additional Purchaser’s
nominee, to such Additional Purchaser or such Additional Purchaser’s nominee at
the address or, in the case of clause (c) above, the email address, specified
for such communications in Schedule A to the applicable Supplement, or at such
other address or email address as such Additional Purchaser or such Additional
Purchaser’s nominee shall have specified to the Company in writing,

 

(iii)          if to any other holder of any Note, to such holder at such
address or, in the case of clause (c) above, the email address, as such other
holder shall have specified to the Company in writing pursuant to this
Section 18, or

 

(iv)          if to the Company, to the Company at its address or email address
set forth at the beginning hereof to the attention of Chief Financial Officer,
with copies to the Treasurer and the General Counsel, or at such other address
or email address as the Company shall have specified to the holder of each Note
in writing.

 

Notices under this Section 18 will be deemed given only when actually received.

 

SECTION 19.              REPRODUCTION OF DOCUMENTS.

 

This Agreement and all documents relating hereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed,
(b) documents received by any Purchaser at the Closing or by any Additional
Purchaser on the date of purchase of its Additional Notes (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to any Purchaser or any Additional Purchaser,
may be reproduced by such Purchaser or such Additional Purchaser by any
photographic, photostatic, electronic, digital, or other similar process and
such Purchaser or such

 

38

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Additional Purchaser may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser or
such Additional Purchaser in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.

 

SECTION 20.              CONFIDENTIAL INFORMATION.

 

For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser or any Additional Purchaser by or on
behalf of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary in
nature and that was clearly marked or labeled or otherwise adequately identified
when received by such Purchaser or Additional Purchaser as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to such
Purchaser or such Additional Purchaser prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by such
Purchaser or such Additional Purchaser or any Person acting on such Purchaser’s
or such Additional Purchaser’s behalf, (c) otherwise becomes known to such
Purchaser or such Additional Purchaser other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
such Purchaser or such Additional Purchaser under Section 7.1 that are otherwise
publicly available. Each Purchaser and each Additional Purchaser will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by such Purchaser or such Additional Purchaser in good faith
to protect confidential information of third parties delivered to such Purchaser
or such Additional Purchaser, provided that such Purchaser or such Additional
Purchaser may deliver or disclose Confidential Information to (i) such
Purchaser’s or such Additional Purchaser’s directors, trustees, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such
Purchaser’s or such Additional Purchaser’s Notes), (ii) such Purchaser’s or such
Additional Purchaser’s financial advisors and other professional advisors who
agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other holder of any
Note, (iv) any Institutional Investor to which such Purchaser or such Additional
Purchaser sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this
Section 20), (v) any Person from which such Purchaser or such Additional
Purchaser offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over such Purchaser or such Additional
Purchaser, (vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Purchaser’s or such Additional Purchaser’s
investment portfolio, or (viii) any other Person to which such delivery or
disclosure may be necessary or

 

39

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appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser or such Additional Purchaser, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation to
which such Purchaser or such Additional Purchaser is a party or (z) if an Event
of Default has occurred and is continuing, to the extent such Purchaser or such
Additional Purchaser may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under such Purchaser’s or such Additional Purchaser’s Notes, the
Subsidiary Guaranty and this Agreement. Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
the Company embodying the provisions of this Section 20.

 

SECTION 21.              SUBSTITUTION OF PURCHASER.

 

Each Purchaser and each Additional Purchaser shall have the right to substitute
any one of its Affiliates as the purchaser of the Notes that it has agreed to
purchase hereunder or under a Supplement, by written notice to the Company,
which notice shall be signed by both such Purchaser or such Additional Purchaser
and such Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement or such Supplement, as the case may be, and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, any
reference to such Purchaser or such Additional Purchaser in this Agreement
(other than in this Section 21) or such Supplement, shall be deemed to refer to
such Affiliate in lieu of such original Purchaser or such original Additional
Purchaser. If such Affiliate is so substituted as a Purchaser or an Additional
Purchaser hereunder or such Supplement and such Affiliate thereafter transfers
to such original Purchaser or such original Additional Purchaser all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, any reference to such Affiliate as a “Purchaser” or an “Additional
Purchaser” in this Agreement (other than in this Section 21) or such Supplement,
shall no longer be deemed to refer to such Affiliate, but shall refer to such
original Purchaser or such original Additional Purchaser, and such original
Purchaser or such original Additional Purchaser shall again have all the rights
of an original holder of the Notes under this Agreement or such Supplement, as
the case may be.

 

SECTION 22.              MISCELLANEOUS.

 

Section 22.1.        Successors and Assigns. All covenants and other agreements
contained in this Agreement (including all covenants and other agreements
contained in any Supplement) by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

 

Section 22.2.        Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding (but without limiting the
requirement in Section 8.4 that

 

40

--------------------------------------------------------------------------------

 

the notice of any optional prepayment specify a Business Day as the date fixed
for such prepayment), any payment of principal of or Make-Whole Amount or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day; provided that if the maturity date of any Note is a date other
than a Business Day, the payment otherwise due on such maturity date shall be
made on the next succeeding Business Day and shall include the additional days
elapsed in the computation of interest payable on such next succeeding Business
Day.

 

Section 22.3.        Accounting Terms. All accounting terms used herein (or in
any Supplement) which are not expressly defined in this Agreement (or in any
Supplement) have the meanings respectively given to them in accordance with
GAAP. Except as otherwise specifically provided herein (or in any Supplement),
(i) all computations made pursuant to this Agreement (or such Supplement) shall
be made in accordance with GAAP, and (ii) all financial statements shall be
prepared in accordance with GAAP.

 

Section 22.4.        Severability. Any provision of this Agreement (or any
Supplement) that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof (or of
such Supplement), and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

 

Section 22.5.        Construction. Each covenant contained herein (or in any
Supplement) shall be construed (absent express provision to the contrary) as
being independent of each other covenant contained herein (or in any
Supplement), so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein (or in any Supplement) refers to action to
be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

 

For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement (or in any Supplement) shall be deemed to be a part hereof (or of such
Supplement).

 

Section 22.6.        Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.

 

Section 22.7.        Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding choice-of-law principles of the law
of such State that would permit the application of the laws of a jurisdiction
other than such State.

 

Section 22.8.        Jurisdiction and Process; Waiver of Jury Trial. (a) The
Company irrevocably submits to the non-exclusive jurisdiction of any New York
State or federal court

 

41

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sitting in the Borough of Manhattan, The City of New York, over any suit, action
or proceeding arising out of or relating to this Agreement (including any
Supplement) or the Notes. To the fullest extent permitted by applicable law, the
Company irrevocably waives and agrees not to assert, by way of motion, as a
defense or otherwise, any claim that it is not subject to the jurisdiction of
any such court, any objection that it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

 

(b)           The Company consents to process being served by or on behalf of
any holder of Notes in any suit, action or proceeding of the nature referred to
in Section 22.8(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section. The
Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it.
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

 

(c)           Nothing in this Section 22.8 shall affect the right of any holder
of a Note to serve process in any manner permitted by law, or limit any right
that the holders of any of the Notes may have to bring proceedings against the
Company in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

(d)           TO THE FULLEST EXTENT PERMITTED BY LAW THE PARTIES HERETO HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT
(INCLUDING ANY SUPPLEMENT), THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH (INCLUDING ANY SUPPLEMENT) OR THEREWITH.

 

*   *   *   *   *

 

42

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The execution hereof by the Purchasers shall constitute a contract among the
Company and the Purchasers for the uses and purposes hereinabove set forth. This
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.

 

 

Very truly yours,

 

 

 

HNI CORPORATION

 

 

 

 

 

By

 /s/ Melinda C. Ellsworth

 

 

 

Name:

Melinda C. Ellsworth

 

 

Title:

Vice President, Treasurer

 

 

 

and Investor Relations

 

43

--------------------------------------------------------------------------------

 

HNI Corporation

Note Purchase Agreement

 

Accepted as of the date first written above.

 

 

 

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY

 

 

 

 

 

By

 /s/

Mark E. Kishler

 

 

Name:

Mark E. Kishler

 

 

Its Authorized Representative

 

 

 

 

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY For Its Group Annuity Separate
Account

 

 

 

 

 

By

 /s/

Mark E. Kishler

 

 

Name:

Mark E. Kishler

 

 

Its Authorized Representative

 

 

 

METROPOLITAN LIFE INSURANCE COMPANY

 

 

 

 

 

By

 /s/

Judith A. Gulotta

 

 

Name:

Judith A. Gulotta

 

 

Title:

Director

 

 

 

 

 

THRIVENT FINANCIAL FOR LUTHERANS

 

 

 

 

 

By

 /s/

Alan D. Onstad

 

 

Name:

Alan D. Onstad

 

 

Title:

Associate Portfolio Manager

 

44

--------------------------------------------------------------------------------

 

 

STATE FARM LIFE INSURANCE COMPANY

 

 

 

 

 

By

 /s/

Jeff Attwood

 

 

Name:

Jeff Attwood

 

 

Title:

Investment Officer

 

 

 

 

 

By

 /s/

Larry Rottunda

 

 

Name:

Larry Rottunda

 

 

Title:

Assistant Secretary

 

 

 

 

 

STATE FARM LIFE AND ACCIDENT ASSURANCE
COMPANY

 

 

 

 

 

By

 /s/

Jeff Attwood

 

 

Name:

Jeff Attwood

 

 

Title:

Investment Officer

 

 

 

 

 

By

 /s/

Larry Rottunda

 

 

Name:

Larry Rottunda

 

 

Title:

Assistant Secretary

 

 

 

 

 

ALLIANZ LIFE INSURANCE COMPANY OF NORTH
AMERICA

 

 

 

By:

Allianz of America, Inc. as the authorized
signatory and investment manager

 

 

 

 

 

 

By

 /s/

Gary Brown

 

 

 

Name:

Gary Brown

 

 

 

Title:

Assistant Treasurer

 

45

--------------------------------------------------------------------------------

 

 

CONSECO HEALTH INSURANCE COMPANY

 

CONSECO SENIOR HEALTH INSURANCE
COMPANY

 

COLONIAL PENN LIFE INSURANCE COMPANY

 

 

 

By:

40/86 Advisors, Inc., acting as Investment
Advisor:

 

 

 

 

 

 

By

/s/

Timothy L. Powell

 

 

Name:

Timothy L. Powell

 

 

Title:

Vice President

 

 

 

 

 

 

 

AMERICAN FAMILY LIFE INSURANCE COMPANY

 

 

 

 

 

By

/s/

Phillip Hannifan

 

 

Name:

Phillip Hannifan

 

 

Title:

Investment Director

 

46

--------------------------------------------------------------------------------

 

 

UNITED OF OMAHA LIFE INSURANCE COMPANY

 

 

 

 

 

By

 /s/

Kent Knudsen

 

 

Name:

Kent Knudsen

 

 

Title:

Senior Vice President

 

 

 

 

 

COMPANION LIFE INSURANCE COMPANY

 

 

 

 

 

By

 /s/

Kent Knudsen

 

 

Name:

Kent Knudsen

 

 

Title:

Authorized Signer

 

 

 

 

 

THE STATE LIFE INSURANCE COMPANY

 

 

 

By

American United Life Insurance Company,

Its Agent

 

 

 

 

 

 

By

 /s/

Kent R. Adams

 

 

 

Name:

Kent R. Adams

 

 

 

Title:

V.P. Fixed Income Securities

 

 

 

 

 

AMERICAN UNITED LIFE INSURANCE COMPANY

 

 

 

 

 

By

 /s/

Kent R. Adams

 

 

Name:

Kent R. Adams

 

 

Title:

V.P. Fixed Income Securities

 

47

--------------------------------------------------------------------------------

 

 

PIONEER MUTUAL LIFE INSURANCE COMPANY

 

 

 

By

American United Life Insurance Company,
Its Agent

 

 

 

 

 

 

By

 /s/ Kent R. Adams

 

 

 

Name:

Kent R. Adams

 

 

 

Title:

V.P. Fixed Income Securities

 

 

 

 

 

PRINCIPAL LIFE INSURANCE COMPANY

 

 

 

By:

Principal Global Investors, LLC, a

Delaware limited liability company,

its authorized signatory

 

 

 

 

 

 

By

 /s/

Karen A. Pearston

 

 

 

Its:

Karen A. Pearston

 

 

Second Vice President &

 

 

Counsel

 

 

 

 

By

 /s/

James C. Fifield

 

 

 

Its:

James C. Fifield, Counsel

 

 

 

VANTISLIFE INSURANCE COMPANY, a

Connecticut company

 

 

 

By:

Principal Global Investors, LLC a

Delaware limited liability company,

its authorized signatory

 

 

 

 

 

 

By

/s/

Karen A. Pearston

 

 

 

Name:

Karen A. Pearston

 

 

 

Title:

Second Vice President &

 

 

Counsel

 

 

 

 

By

/s/

James C. Fifield

 

 

 

Name:

James C. Fifield

 

 

 

Title:

Counsel

 

48

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SCHEDULE A

(to Note Purchase Agreement)

[Intentionally Removed]

 

--------------------------------------------------------------------------------

 

DEFINED TERMS

 

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

 

“Additional Notes” is defined in Section 2.2.

 

“Additional Purchasers” means purchasers of Additional Notes.

 

“Affiliate” means, at any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of such
first Person or any Subsidiary of such first Person or any Person of which such
first Person and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
Unless the context otherwise clearly requires, any reference to an “Affiliate”
is a reference to an Affiliate of the Company.

 

“Anti-Terrorism Order” means Executive Order No. 13,224 of October 24, 2001,
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

 

“Bank Credit Agreement” means the Credit Agreement dated as of January 28, 2005
by and among the Company, certain Subsidiaries of the Company named therein,
Wachovia Bank, National Association, as administrative agent, and the other
financial institutions party thereto, as amended, restated, joined, supplemented
or otherwise modified from time to time, and any renewals, extensions or
replacements thereof, which constitute the primary bank credit facility of the
Company and its Subsidiaries.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York are required or authorized to be closed.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to account for as a capital lease in accordance with GAAP.

 

“Capital Lease Obligation” means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.

 

“Closing” is defined in Section 3.

 

“Closing Date” is defined in Section 3.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

 

SCHEDULE B

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

“Company” is defined in the first paragraph of this Agreement and includes any
successor that becomes such in the manner prescribed in Section 10.5.

 

“Confidential Information” is defined in Section 20.

 

“Consolidated Debt” means as of any date of determination the total amount of
all Debt of the Company and its Restricted Subsidiaries outstanding on such
date, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such
period, plus, to the extent deducted in computing such Consolidated Net Income
and without duplication, (a) depreciation, depletion, if any, and amortization
expense for such period, (b) Consolidated Interest Expense for such period,
(c) income tax expense for such period, and (d) other non cash charges for such
period, all as determined on a consolidated basis in accordance with GAAP. For
purposes of calculating Consolidated EBITDA for any period of four consecutive
quarters, if during such period the Company or any Restricted Subsidiary shall
have engaged in a Material acquisition or disposition of any Person (or all or
substantially all of the assets of any Person), Consolidated EBITDA for such
period shall be calculated after giving pro forma effect thereto as if such
transaction occurred on the first day of such period; provided that such
calculation shall also give effect to adjustments for expected synergies that
would have existed during such period and non-recurring expenses as reasonably
determined by the Company in good faith.

 

“Consolidated Interest Expense” means, for any period, the gross interest
expense of the Company and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, for any period, the consolidated net income (or
loss) of the Company and its Restricted Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP.

 

“Consolidated Total Assets” means, as of any date of determination, the total
amount of all assets of the Company and its Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Debt” means, with respect to any Person, without duplication,

 

(a)                                  its liabilities for borrowed money;

 

(b)                                 its liabilities for the deferred purchase
price of property acquired by such Person (excluding accounts payable and other
accrued liabilities arising in the ordinary

 

B-2

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course of business but including, without limitation, all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property);

 

(c)                                  the principal portion of its Capital Lease
Obligations;

 

(d)                                 its liabilities for borrowed money secured
by any Lien with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities); provided that so
long as such liabilities are non-recourse to such Person, only that portion of
such liabilities that are secured shall constitute Debt; and

 

(e)                                  Guarantees by such Person with respect to
liabilities of a type described in any of clauses (a) through (d) hereof.

 

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.

 

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

 

“Default Rate” means with respect to any Notes that rate of interest that is 2%
per annum above the rate of interest stated in clause (a) of the first paragraph
of such Note.

 

“Disclosure Documents” is defined in Section 5.3.

 

“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.

 

“Event of Default” is defined in Section 11.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm’s-length sale at
such time between an informed

 

B-3

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and willing buyer and an informed and willing seller (neither being under a
compulsion to buy or sell), as reasonably determined in the good faith opinion
of a Responsible Officer.

 

“Foreign Subsidiary” means any Subsidiary other than a Subsidiary that is
organized under the laws of any state or commonwealth of the United States of
America.

 

“GAAP” means those generally accepted accounting principles as in effect from
time to time in the United States of America; provided that, if the Company
notifies the Required Holders that the Company wishes to amend any negative
covenants (or any definition hereof) to eliminate the effect of any change in
generally accepted accounting principles on the operation of such covenant or
definition, then the Company’s compliance with such covenant or the meaning of
such definition shall be determined on the basis of generally accepted
accounting principles in effect immediately before the relevant change in
generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended  in a manner satisfactory to the
Company and the Required Holders.

 

“Governmental Authority” means

 

(a)                                  the government of

 

(i)                                     the United States of America or any
state or other political subdivision thereof, or

 

(ii)                                  any jurisdiction in which the Company or
any Restricted Subsidiary conducts all or any part of its business, or which has
jurisdiction over any properties of the Company or any Restricted Subsidiary, or

 

(b)                                 any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, any such government.

 

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:

 

(a)                                  to purchase such Debt or obligation or any
property constituting security therefor primarily for the purpose of assuring
the owner of such Debt or obligation of the ability of any other Person to make
payment of such Debt or obligation;

 

(b)                                 to advance or supply funds (i) for the
purchase or payment of such Debt or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement condition of
any other Person or otherwise to advance or make available funds for the
purchase or payment of such Debt or obligation;

 

B-4

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(c)                                  to lease properties or to purchase
properties or services primarily for the purpose of assuring the owner of such
Debt or obligation of the ability of any other Person to make payment of the
Debt or obligation; or

 

(d)                                 otherwise to assure the owner of such Debt
or obligation against loss in respect thereof.

 

In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor, provided that the
amount of such Debt outstanding for purposes of this Agreement shall not exceed
the lesser of (i) maximum amount of Debt that is the subject of such Guaranty
and (ii) any stated maximum recourse amount of such Guaranty.

 

“Guaranty Release” is defined in Section 2.3.

 

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
other substances that pose a hazard to health and safety, the removal of which
may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is
restricted, prohibited or penalized by any applicable law including, but not
limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.

 

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.

 

“Institutional Investor” means (a) any original purchaser of a Note, (b) any
holder of more than $2,000,000 of the aggregate principal amount of the Notes
then outstanding, and (c) any bank, trust company, savings and loan association
or other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.

 

“Investments” shall mean all investments, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares of
capital stock, Debt or other obligations or securities or by loan, advance,
capital contribution or otherwise.

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement (other than an operating lease) or
Capital Lease, upon or with respect to any property or asset of such Person
(including, in the case of stock, shareholder agreements, voting trust
agreements and all similar arrangements).

 

“Make-Whole Amount” shall have the meaning (i) set forth in Section 8.6 with
respect to any Series A Note and (ii) set forth in the applicable Supplement
with respect to any other Series of Notes.

 

B-5

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“Material” means material in relation to the business, operations, financial
condition, assets or properties of the Company and its Restricted Subsidiaries
taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, financial condition, assets or properties of the Company and its
Restricted Subsidiaries taken as a whole, (b) the ability of the Company to
perform its obligations under this Agreement (including any Supplement) and the
Notes, (c) the ability of the Subsidiary Guarantors, taken as a whole, to
perform their obligations under the Subsidiary Guaranty or (d) the validity or
enforceability of this Agreement (including any Supplement), the Notes or the
Subsidiary Guaranty.

 

“Material Subsidiary” means, at any time, any Restricted Subsidiary of the
Company which, together with all other Restricted Subsidiaries of such
Restricted Subsidiary, accounts for more than (i) 15% of the consolidated assets
of the Company and its Restricted Subsidiaries or (ii) 15% of consolidated
revenue of the Company and its Restricted Subsidiaries.

 

“Memorandum” is defined in Section 5.3.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in Section 4001(a)(3) of ERISA).

 

“Notes” is defined in Section 1.

 

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

 

“Paoli Securitization” means the factoring arrangement established pursuant to
the Factoring Agreement, dated as of January 5, 2004, between Paoli, Inc., an
Iowa corporation and Subsidiary, and The CIT Group/Commercial Services, Inc., as
such agreement may be amended, supplemented, restated or otherwise modified from
time to time.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

 

“Permitted Securitization Transaction” means the Paoli Securitization and any
other transaction or group of transactions typically referred to as a
securitization in which the Company or any Restricted Subsidiary sells, directly
or indirectly through another Person, its accounts receivable on a limited
recourse basis (i.e., other than for recourse relating to, e.g., certain bad
acts or breaches of representations or warranties) provided that (i) each such
transaction is treated as a legal true sale to a special purpose bankruptcy
remote entity that obtains debt financing to finance the purchase price or, in
the case of the Paoli Securitization, to the purchaser under the factoring
agreement, (ii) each such transaction qualifies as a sale under GAAP, (iii) the
aggregate amount of the financings (including, without limitation, loans,
revolving loans and revolving commitments) in connection with such transactions
(other than the Paoli Securitization) does not exceed $100,000,000 at any time
and (iv) in the case of the Paoli Securitization, the aggregate outstanding
balance of all receivables sold pursuant to such

 

B-6

--------------------------------------------------------------------------------

 

transaction for which payment has not been received by Paoli, Inc. does not
exceed $50,000,000 at any time.

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.

 

“Plan” means an “employee benefit plan” (as defined in Section 3(3) of ERISA)
that is or, within the preceding five years, has been established or maintained,
or to which contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA Affiliate or with
respect to which the Company or any ERISA Affiliate may have any liability.

 

“Priority Debt” means (without duplication), as of the date of any determination
thereof, the sum of (i) all unsecured Debt of Restricted Subsidiaries (including
all Guaranties of Debt of the Company but excluding (x) Debt owing to the
Company or any other Restricted Subsidiary, (y) Debt outstanding at the time
such Person became a Restricted Subsidiary (other than an Unrestricted
Subsidiary which is designated as a Restricted Subsidiary pursuant to
Section 9.6 hereof), provided that such Debt shall have not been incurred in
contemplation of such Person becoming a Restricted Subsidiary, and (z) all
Guaranties of Debt of the Company by any Restricted Subsidiary which has also
guaranteed the Notes and (ii) all Debt of the Company and its Restricted
Subsidiaries secured by Liens other than Debt secured by Liens permitted by
subparagraphs (a) through (k), inclusive, of Section 10.3.

 

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

 

“PTE” is defined in Section 6.3(a).

 

“Purchasers” means the purchasers of the Notes named in Schedule A hereto.

 

“QPAM Exemption” is defined in Section 6.3(d).

 

“Qualified Institutional Buyer” means any Person who is a qualified
institutional buyer within the meaning of such term as set forth in
Rule 144(a)(1) under the Securities Act.

 

“Required Holders” means, at any time, the holders of not less than 51% in
principal amount of each Series of Notes at the time outstanding, voting as
separate classes (exclusive of Notes then owned by the Company or any of its
Affiliates that it Controls and any Notes held by parties who are contractually
required to abstain from voting with respect to matters affecting the holders of
the Notes).

 

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

 

“Restricted Subsidiary” means any Subsidiary in which:  (i) at least a majority
of the voting securities are owned by the Company and/or one or more Restricted
Subsidiaries, and

 

B-7

--------------------------------------------------------------------------------

 

(ii) the Company has not designated an Unrestricted Subsidiary on the Closing
Date or in accordance with Section 9.6.

 

“SEC” means the Securities and Exchange Commission of the United States, or any
successor thereto.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time.

 

“Senior Debt” means, as of the date of any determination thereof, all
Consolidated Debt, other than Subordinated Debt.

 

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer, assistant treasurer, comptroller or controller of
the Company.

 

“Series” means any series of Notes issued pursuant to this Agreement or any
Supplement hereto.

 

“Series 2006-A Notes” is defined in Section 1 of this Agreement.

 

“Source” is defined in Section 6.3.

 

“Subordinated Debt” means all unsecured Debt of the Company that shall contain
or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the obligations of the Company under this Agreement, any Supplement
or the Notes).

 

“Subsidiary” means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.

 

“Subsidiary Guarantor” means each Subsidiary that is party to the Subsidiary
Guaranty.

 

“Subsidiary Guaranty” is defined in Section 2.3 of this Agreement.

 

“Supplement” is defined in Section 2.2 of this Agreement.

 

“tranche” means all Notes of a Series having the same maturity, interest rate
and schedule for mandatory prepayments.

 

B-8

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“Undisclosed Affiliate” means, at any time and with respect to the Company, any
Person (a) that beneficially owns or holds, directly or indirectly, 10% or more
of any class of voting or equity interests of the Company or (b) that is an
Affiliate of any such Person; provided that, at such time, (i) in the case of
clause (a), such Person shall not have given written notice to the Company of
its 10% or greater holding in the Company and, in the case of clause (b), such
Affiliate of such Person shall not have given the Company written notice of its
affiliation to the Company, (ii) such Person or Affiliate of such Person shall
not have made a filing with the SEC with respect to its 10% or greater holding
in the Company or (iii) the Company shall not otherwise have knowledge of such
holding or affiliation to the Company.

 

“Unrestricted Subsidiary” means any Subsidiary so designated by the Company.

 

“USA Patriot Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

 

B-9

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SCHEDULES 4.9, 5.3, 5.4, 5.5, 5.11, 5.15 and 10.3

[Intentionally Removed]

 

--------------------------------------------------------------------------------

 

[FORM OF SERIES A NOTE]

 

HNI CORPORATION

 

5.54% SERIES 2006-A SENIOR NOTE, SERIES A, DUE APRIL 6, 2016

 

No. [              ]

 

[Date]

$[                   ]

 

PPN 404251 A* 1

 

FOR VALUE RECEIVED, the undersigned, HNI CORPORATION (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Iowa, hereby promises to pay to [                                           ] or
registered assigns, the principal sum of [                                    ]
DOLLARS (or so much thereof as shall not have been prepaid) on April 6, 2016
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance hereof at the rate of 5.54% per annum from the date
hereof, payable semi-annually, on the 6th day of April and October in each year
and at maturity, commencing on October 6, 2006, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law, at a rate
per annum from time to time equal to 2% above the stated rate, on any overdue
payment of interest and, during the continuance of an Event of Default, on the
unpaid balance hereof and on any overdue payment of any Make-Whole Amount,
payable semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand).

 

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of Bank of America, N.A. in New York, New York or at such other
place as the Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreement referred to below.

 

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated as of April 6, 2006 (as from time
to time amended, supplemented or otherwise modified, the “Note Purchase
Agreement”), between the Company and the respective Purchasers named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, to have (i) agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreement and (ii) made the
representations set forth in Sections 6.2 and 6.3 of the Note Purchase
Agreement, provided, that in lieu of the representations set forth in
Section 6.3 such holder may (in reliance upon information provided by the
Company, which shall not be unreasonably withheld) make a representation to the
effect that the purchase by any holder of any Note will not constitute a
non-exempt prohibited transaction under section 406(a) of ERISA. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

 

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and

 

EXHIBIT 1 (a)

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

 

This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

 

Pursuant to the Subsidiary Guaranty Agreement dated as of April 6, 2006 (as
amended, restated or otherwise modified from time to time, the “Subsidiary
Guaranty”), certain Subsidiaries of the Company have absolutely and
unconditionally guaranteed payment in full of the principal of, Make-Whole
Amount, if any, and interest on this Note and the performance by the Company of
its obligations contained in the Note Purchase Agreement all as more fully set
forth in said Subsidiary Guaranty.

 

If an Event of Default occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the issuer and holder hereof shall be governed by, the law of the State of New
York excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.

 

 

HNI CORPORATION

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

E-1(a)-2

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FORM OF SUBSIDIARY GUARANTY

 

SUBSIDIARY GUARANTY AGREEMENT

 

Dated as of April 6, 2006

 

from

 

THE SUBSIDIARY GUARANTORS NAMED HEREIN

 

for the benefit of

 

THE HOLDERS OF THE NOTES

 

RE:

 

$150,000,000 5.54% SERIES 2006-A SENIOR NOTES DUE APRIL 6, 2016

 

OF

 

HNI CORPORATION

 

EXHIBIT 2.3

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

SECTION

 

HEADING

 

PAGE

 

 

 

SECTION 1.

GUARANTY

2

 

 

 

SECTION 2.

REPRESENTATIONS AND WARRANTIES

3

 

 

 

SECTION 3.

SUBSIDIARY GUARANTOR’S OBLIGATIONS UNCONDITIONAL

5

 

 

 

SECTION 4.

FULL RECOURSE OBLIGATIONS; PARI PASSU RANKING

10

 

 

 

SECTION 5.

WAIVER

10

 

 

 

SECTION 6.

WAIVER OF SUBROGATION

11

 

 

 

SECTION 7.

SUBORDINATION

12

 

 

 

SECTION 8.

EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.

12

 

 

 

SECTION 9.

TERM OF GUARANTY

13

 

 

 

SECTION 10.

CONTRIBUTION

13

 

 

 

SECTION 11.

LIMITATION OF LIABILITY

14

 

 

 

SECTION 12.

NEGATIVE PLEDGE

14

 

 

 

SECTION 13.

SUPPLEMENTAL AGREEMENT

14

 

 

 

SECTION 14.

DEFINITIONS AND TERMS GENERALLY

15

 

 

 

SECTION 15.

NOTICES

16

 

 

 

SECTION 16.

AMENDMENTS, ETC.

16

 

 

 

SECTION 17.

CONSENT TO JURISDICTION; SERVICE OF PROCESS

16

 

E-2.3-i

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SECTION 18.

WAIVER OF JURY TRIAL

17

 

 

 

SECTION 19.

SURVIVAL

17

 

 

 

SECTION 20.

SEVERABILITY

18

 

 

 

SECTION 21.

SUCCESSORS AND ASSIGNS

18

 

 

 

SECTION 22.

TABLE OF CONTENTS; HEADINGS

18

 

 

 

SECTION 23.

COUNTERPARTS

18

 

 

 

SECTION 24.

GOVERNING LAW

18

 

 

 

SECTION 25.

RELEASE

19

 

 

 

SECTION 26.

COVENANT COMPLIANCE

19

 

E-2.3-ii

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SUBSIDIARY GUARANTY AGREEMENT, dated as of April 6, 2006 (the “Guaranty”), from
each of:

 

(i)            Allsteel Inc., an Illinois corporation,

(ii)           Hearth & Home Technologies Inc., an Iowa corporation,

(iii)          Paoli Inc., an Iowa corporation,

(iv)          River Bend Capital Corporation, an Iowa corporation,

(v)           The HON Company, an Iowa corporation, and

(vi)          such Subsidiaries as shall become parties hereto in accordance
with Section 13 hereof (each a “Subsidiary Guarantor” and collectively the
“Subsidiary Guarantors”),

 

for the benefit of the holders from time to time of the Notes (as defined below)
(the “Holders”). Capitalized terms used herein are defined in Section 14 hereof
or the Note Purchase Agreement referred to below.

 

WHEREAS, HNI Corporation, an Iowa corporation (the “Company”), will authorize
the issue and sale of $150,000,000 5.54% Series 2006-A Senior Notes due April 6,
2016 (the “Series 2006-A Notes”) pursuant to a Note Purchase Agreement, dated as
of the date hereof (as amended, modified or supplemented from time to time, the
“Note Purchase Agreement”) among the Company and the purchasers named therein.

 

WHEREAS, Section 2.2 of the Note Purchase Agreement provides for the issuance by
the Company of Additional Notes (as such term is defined in the Note Purchase
Agreement) of one or more separate series from time to time in an aggregate
principal amount not to exceed $500,000,000.

 

WHEREAS, the Additional Notes, together with the Series 2006-A Notes, are
collectively referred to as the “Notes”.

 

WHEREAS, each of the Subsidiary Guarantors is a Subsidiary of the Company.

 

WHEREAS, the Company has agreed that certain of its Subsidiaries will guarantee
its respective obligations under the Notes and the Note Purchase Agreement.

 

WHEREAS, the Subsidiary Guarantors each acknowledge that they will derive
substantial benefits from the issuance of the Notes.

 

NOW, THEREFORE, in consideration of the premises and to induce the Holders to
purchase the Notes, each of the Subsidiary Guarantors, intending to be legally
bound, hereby agrees for the benefit of the Holders, as follows:

 

--------------------------------------------------------------------------------

 

SECTION 1.                GUARANTY.

 

Each Subsidiary Guarantor with all other Subsidiary GuarantorS, hereby
absolutely, unconditionally and irrevocably guarantees, jointly and severally,
as a primary obligor and not merely as a surety, to each Holder and its
successors and assigns, the full and punctual payment and performance when due,
whether at stated maturity, by acceleration or otherwise, of the principal of
and the applicable Make-Whole Amount, if any, and interest on (including,
without limitation, interest, whether or not an allowable claim, accruing after
the date of filing of any petition in bankruptcy, or the commencement of any
bankruptcy, insolvency or similar proceeding relating to the Company) the Notes
and all other amounts under the Note Purchase Agreement and all other
obligations, agreements and covenants of the Company now or hereafter existing
under the Note Purchase Agreement whether for principal, the applicable
Make-Whole Amount (if any), interest (including interest accruing or becoming
owing both prior to and subsequent to the commencement of any proceeding against
or with respect to the Company under any chapter of Title 11 of the United
States Code), indemnification payments, expenses (including reasonable
attorneys’ fees and expenses) or otherwise, and all reasonable costs and
expenses, if any, incurred by any Holder in connection with enforcing any rights
under this Guaranty (all such obligations being the “Guaranteed Obligations”),
and agrees to pay any and all reasonable expenses incurred by each Holder in
enforcing this Guaranty; provided that, notwithstanding anything contained
herein or in the Note Purchase Agreement to the contrary, the maximum liability
of each Subsidiary Guarantor hereunder and under the Note Purchase Agreement
shall in no event exceed such Guarantor’s Maximum Guaranteed Amount, and
provided further, each Subsidiary Guarantor shall be unconditionally required to
pay all amounts demanded of it hereunder prior to any determination of such
Maximum Guaranteed Amount and the recipient of such payment, if so required by a
final non-appealable order of a court of competent jurisdiction, shall then be
liable for the refund of any excess amounts. If any such rebate or refund is
ever required, all other Subsidiary Guarantors (and the Company) shall be fully
liable for the repayment thereof to the maximum extent allowed by applicable
law. This Guaranty is an absolute, unconditional, present and continuing
guaranty of payment and not of collectibility and is in no way conditioned upon
any attempt to collect from the Company or any other action, occurrence or
circumstance whatsoever. Each Subsidiary Guarantor agrees that the Guaranteed
Obligations may at any time and from to time exceed the Maximum Guaranteed
Amount of such Subsidiary Guarantor without impairing this Guaranty or affecting
the rights and remedies of the Holders hereunder.

 

Notwithstanding any stay, injunction or other prohibition preventing such action
against the Company, if for any reason whatsoever the Company shall fail or be
unable duly, punctually and fully to perform and (in the case of the payment of
Guaranteed Obligations) pay such amounts as and when the same shall become due
and (in the case of the payment of Guaranteed Obligations) payable or to perform
or comply with any other Guaranteed Obligation, whether or not such failure or
inability shall constitute an “Event of Default” under the Note Purchase
Agreement or the Notes, each Subsidiary Guarantor will forthwith (in the case of
the payment of Guaranteed Obligations) pay or cause to be paid such amounts to
the Holders, in lawful money of the United States of America, at the place
specified in the Note Purchase Agreement, or perform or comply with such
Guaranteed Obligations or cause such Guaranteed Obligations to be performed or
complied with, (in the case of the payment of Guaranteed Obligations) together

 

E-2.3-2

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with interest (in the amounts and to the extent required under such Notes) on
any amount due and owing; provided that, for the avoidance of doubt, any failure
by any Subsidiary Guarantor to do so shall not constitute an Event of Default,
except and to the extent the failure of the Company to do so constitutes an
Event of Default.

 

SECTION 2.                REPRESENTATIONS AND WARRANTIES.

 

Each Subsidiary Guarantor hereby represents and warrants as follows:

 

(a)           All representations and warranties contained in the Note Purchase
Agreement that relate to such Subsidiary Guarantor are true and correct in all
respects and are incorporated by reference with the same force and effect as
though set forth herein in full.

 

(b)           Such Subsidiary Guarantor acknowledges that any default in the due
observance or performance by such Subsidiary Guarantor of any covenant,
condition or agreement contained herein (if, after the running of any applicable
notice and opportunity to cure periods provided in the Note Purchase Agreement,
such default or event of default remains uncured) shall constitute an Event of
Default.

 

(c)           There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or expressly waived.

 

(d)           Such Subsidiary Guarantor has, independently and without reliance
upon the Holders and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty. Such Subsidiary Guarantor has investigated fully the benefits and
advantages which will be derived by it from execution of this Guaranty, and the
Board of Directors (or equivalent governing body) of such Subsidiary Guarantor
has decided that a direct and/or an indirect benefit will accrue to such
Subsidiary Guarantor by reason of the execution of this Guaranty.

 

(e)           (i) This Guaranty is not given with actual intent to hinder, delay
or defraud any Person to which such Subsidiary Guarantor is or will become, on
or after the date hereof, indebted; (ii) such Subsidiary Guarantor has received
at least a reasonably equivalent value in exchange for the giving of this
Guaranty; (iii) such Subsidiary Guarantor is not insolvent on the date hereof
and will not become insolvent as a result of the giving of this Guaranty;
(iv) such Subsidiary Guarantor is not engaged in a business or transaction, nor
is about to engage in a business or transaction, for which any property
remaining with such Subsidiary Guarantor constitutes an unreasonably small
amount of capital; and (v) such Subsidiary Guarantor does not intend to incur
debts that will be beyond such Subsidiary Guarantor’s ability to pay as such
debts mature.

 

(f)            Each Subsidiary Guarantor is a corporation or other legal entity
duly organized and validly existing under the laws of its state of organization,
and has the requisite power, authority and legal right under the laws of its
state of organization to conduct its business as presently conducted and to
execute,  deliver and perform its obligations under this Guaranty.

 

E-2.3-3

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(g)           The execution, delivery and performance of this Guaranty have been
duly authorized by all necessary corporate (or other organizational) action on
the part of each Subsidiary Guarantor, and does not require any consent or
approval of, or the giving of notice to, or the taking of any other action in
respect of, any stockholder, other equity holder or trustee or holder of any
indebtedness or obligations of such Subsidiary Guarantor. This Guaranty
constitutes a legal, valid and binding obligation of each Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms,
except that such enforceability is subject to any limitations arising from
bankruptcy, insolvency, liquidation, moratorium, reorganization and other
similar laws of general application relating to or affecting the rights of
creditors or pledgees and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

 

(h)           The execution, delivery and performance of this Guaranty does not
and will not conflict with or result in any violation of or default under any
provision of the Articles or Certificate of Incorporation or Formation or
by-laws or partnership agreement or operating agreement or other organizational
document, as the case may be, of any Subsidiary Guarantor, or any indenture,
mortgage, deed of trust, instrument, law, rule or regulation binding on any
Subsidiary Guarantor or to which a Subsidiary Guarantor is a party or by which
any of its assets or property is bound.

 

(i)            The execution, delivery and performance of this Guaranty does not
and will not result in violation of any judgment or order applicable to any
Subsidiary Guarantor or result in the creation or imposition of any Lien on any
of the properties or revenues of any Subsidiary Guarantor pursuant to any
requirement of law or any indenture, mortgage, deed of trust or other instrument
to which such Subsidiary Guarantor is a party or by which any of its property is
bound.

 

(j)            The execution, delivery and performance of this Guaranty do not
and will not conflict with and do not and will not require any consent, approval
or authorization of, or registration or filing with, any governmental authority
or agency of the state of organization of any Subsidiary Guarantor or of the
United States or any State.

 

(k)           There are no pending or, to the knowledge of any Subsidiary
Guarantor, threatened actions or proceedings against or affecting such
Subsidiary Guarantor or any of its properties by or before any court or
administrative agency or arbiter that would adversely affect the ability of the
Subsidiary Guarantors, taken as a whole, to perform their obligations hereunder
or call into question the validity or enforceability of this Guaranty.

 

(l)            Each Subsidiary Guarantor’s obligations under this Guaranty are
at least pari passu in right of payment with all other unsecured claims of the
general creditors against such Subsidiary Guarantor.

 

(m)          No Subsidiary Guarantor is in breach of or default under or with
respect to any instrument, document or agreement binding upon such Subsidiary
Guarantor or any of its property which breach or default is reasonably probable
to have a Material Adverse Effect or result in the creation of a Lien on any
property of such Subsidiary Guarantor other than Liens

 

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permitted under Section 10.3 of the Note Purchase Agreement. Each Subsidiary
Guarantor is in compliance with all applicable requirements of law except such
non-compliance as would not have a Material Adverse Effect.

 

(n)           The execution, delivery and performance by each Subsidiary
Guarantor of this Guaranty will not render such Subsidiary Guarantor insolvent,
nor is it being made in contemplation of such Subsidiary Guarantor’s insolvency,
and the Subsidiary Guarantor does not have an unreasonably small capital.

 

SECTION 3.                SUBSIDIARY GUARANTOR’S OBLIGATIONS UNCONDITIONAL.

 

(a)           This Guaranty shall constitute a guarantee of payment, performance
and compliance and not of collection, and each Subsidiary Guarantor specifically
agrees that it shall not be necessary, and that such Subsidiary Guarantor shall
not be entitled to require, before or as a condition of enforcing the liability
of such Subsidiary Guarantor under this Guaranty or requiring payment or
performance of the Guaranteed Obligations by any Subsidiary Guarantor hereunder,
or at any time thereafter, that any Holder:  (a) file suit or proceed to obtain
or assert a claim for personal judgment against the Company or any other Person
that may be liable for or with respect to any Guaranteed Obligation; (b) make
any other effort to obtain payment or performance of any Guaranteed Obligation
from the Company or any other Person that may be liable for or with respect to
such Guaranteed Obligation, except for the making of the demands, when
appropriate, described in Section 1; (c) foreclose against, or seek to realize
upon security now or hereafter existing for such Guaranteed Obligations;
(d) except to the extent set forth in Section 1, exercise or assert any other
right or remedy to which such Holder is or may be entitled in connection with
any Guaranteed Obligation or any security or other guaranty therefor; or
(e) assert or file any claim against the assets or property of the Company or
any other Person liable for any Guaranteed Obligation. Each Subsidiary Guarantor
agrees that this Guaranty shall be continuing, and that the Guaranteed
Obligations will be paid and performed in accordance with their terms and the
terms of this Guaranty, and are the primary, absolute and unconditional
obligations of such Subsidiary Guarantor, irrespective of the value,
genuineness, validity, legality, regularity or enforceability or lack thereof of
any part of the Guaranteed Obligations or any agreement or instrument relating
to the Guaranteed Obligations or this Guaranty, or the existence of any
indemnities with respect to the existence of any other guarantee of or security
for any of the Guaranteed Obligations, or any substitution, release or exchange
of any other guarantee of or security for any of the Guaranteed Obligations,
and, to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of
this Section 3 that the obligations of each Subsidiary Guarantor hereunder shall
be irrevocable, primary, absolute and unconditional under any and all
circumstances.

 

(b)           Each Subsidiary Guarantor hereby expressly waives notice of
acceptance of and reliance upon this Guaranty, diligence, presentment, demand of
payment or performance, protest and all other notices (except as otherwise
provided for in Section 1) whatsoever, any requirement that the Holders exhaust
any right, power or remedy or proceed against the Company or against any other
Person under any other guarantee of, or security for, or any other agreement,
regarding any of the Guaranteed Obligations. Each Subsidiary Guarantor further
agrees that, subject solely

 

E-2.3-5

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to the requirement of making demands under Section 1, the occurrence of any
event or other circumstance that might otherwise vary the risk of the Company or
such Subsidiary Guarantor or constitute a defense (legal or equitable) available
to, or a discharge of, or a counterclaim or right of set-off by, the Company or
such Subsidiary Guarantor (other than the full and indefeasible due payment and
performance of the Guaranteed Obligations), shall not affect the liability of
any Subsidiary Guarantor hereunder.

 

(c)           The obligations of each Subsidiary Guarantor under this Guaranty
are not subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment or defense based upon any claim such
Subsidiary Guarantor or any other Person may have against the Company, any
Holder or any other Person, and shall remain in full force and effect without
regard to, and shall not be released, discharged or in any way affected by, any
circumstances or condition whatsoever (whether or not such Subsidiary Guarantor
or the Company shall have any knowledge or notice thereof), including:

 

(i)            any renewal, extension, modification, increase, decrease,
alteration or rearrangement of all or any part of the Guaranteed Obligations or
any instrument executed in connection therewith, or any contract or
understanding with the Company, the Holders, or any of them, or any other
Person, pertaining to the Guaranteed Obligations;

 

(ii)           any adjustment, indulgence, forbearance or compromise that might
be granted or given by any Holder to the Company or any other Person liable on
the Guaranteed Obligations, or the failure of any Holder to assert any claim or
demand or to exercise any right or remedy against the Company or any other
Person under the provisions of the Note Purchase Agreement, the Notes or
otherwise; or any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, the Note Purchase Agreement, the
Notes, any guarantee or any other agreement;

 

(iii)          the insolvency, bankruptcy arrangement, adjustment, composition,
liquidation, disability, dissolution or lack of power of the Company or any
other Person at any time liable for the payment of all or part of the Guaranteed
Obligations; or any dissolution of the Company or any other such Person, or any
change, restructuring or termination of the organizational structure or
existence of the Company or any other such Person, or any sale, lease or
transfer of any or all of the assets or property of the Company or any other
such Person, or any change in the shareholders, partners, equity holders or
members of the Company or any other such Person; or any default, failure or
delay, willful or otherwise, in the performance of the Guaranteed Obligations;

 

(iv)          the invalidity, illegality or unenforceability of all or any part
of the Guaranteed Obligations, or any document or agreement executed in
connection with the Guaranteed Obligations, for any reason whatsoever, including
the fact that the Guaranteed Obligations, or any part thereof, exceed the amount
permitted by law, the act of creating the Guaranteed Obligations or any part is
ultra vires, the officers or representatives executing the documents or
otherwise creating the Guaranteed Obligations acted in excess of their
authority, the Guaranteed Obligations violate

 

E-2.3-6

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applicable usury laws, the Company or any other Person has valid defenses,
claims or offsets (whether at law, in equity or by agreement) which render the
Guaranteed Obligations wholly or partially uncollectible from the Company or any
other Person, the creation, performance or repayment of the Guaranteed
Obligations (or the execution, delivery and performance of any document or
instrument representing part of the Guaranteed Obligations or executed in
connection with the Guaranteed Obligations or given to secure the repayment of
the Guaranteed Obligations) is illegal, uncollectible, legally impossible or
unenforceable, or the documents or instruments pertaining to the Guaranteed
Obligations have been forged or otherwise are irregular or not genuine or
authentic;

 

(v)           any full or partial release of the liability of the Company on the
Guaranteed Obligations or any part thereof, of any co-guarantors, or of any
other Person now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee or assure the
payment of the Guaranteed Obligations or any part thereof, it being recognized,
acknowledged and agreed by each Subsidiary Guarantor that such Subsidiary
Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other Person, and such Subsidiary Guarantor has not
been induced to enter into this Guaranty on the basis of a contemplation,
belief, understanding or agreement that any parties other than the Company will
be liable to perform the Guaranteed Obligations, or that the Holders will look
to other parties to perform the Guaranteed Obligations;

 

(vi)          the taking or accepting of any other security, collateral or
guaranty, or other assurance of payment, for all or any part of the Guaranteed
Obligations;

 

(vii)         any release, surrender, exchange, subordination, deterioration,
waste, loss or impairment (including negligent, unreasonable or unjustifiable
impairment) of any collateral, property or security, at any time existing in
connection with, or assuring or securing payment of, all or any part of the
Guaranteed Obligations;

 

(viii)        the failure of any Holder or any other Person to exercise
diligence or reasonable care in the preservation, protection, enforcement, sale
or other handling or treatment of all or any part of such collateral, property
or security;

 

(ix)           the fact that any collateral, security, security interest or Lien
contemplated or intended to be given, created or granted as security for the
repayment of the Guaranteed Obligations shall not be properly perfected or
created, or shall prove to be unenforceable or subordinate to any other security
interest or Lien, it being recognized and agreed by each Subsidiary Guarantor
that such Subsidiary Guarantor is not entering into this Guaranty in reliance
on, or in contemplation of the benefits of, the validity, enforceability,
collectibility or value of any of the collateral;

 

(x)            any payment by the Company to any Holder being held to constitute
a preference under any Fraudulent Conveyance Law, or for any reason any Holder
being required to refund such payment or pay such amount to the Company or
someone else;

 

E-2.3-7

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(xi)           any other action taken or omitted to be taken with respect to the
Guaranteed Obligations, or the security and collateral therefor, whether or not
such action or omission prejudices such Subsidiary Guarantor or increases the
likelihood that such Subsidiary Guarantor will be required to pay the Guaranteed
Obligations pursuant to the terms hereof, it being the unambiguous and
unequivocal intention of such Subsidiary Guarantor that it shall be obligated to
pay the Guaranteed Obligations when due, notwithstanding any occurrence,
circumstance, event, action or omission whatsoever, whether or not contemplated,
and whether or not otherwise or particularly described herein, except for the
full and final indefeasible payment and satisfaction of the Guaranteed
Obligations in cash;

 

(xii)          the fact that all or any of the Guaranteed Obligations cease to
exist by operation of law, including by way of a discharge, limitation or
tolling thereof under applicable bankruptcy laws;

 

(xiii)         any other circumstance (including any statute of limitations)
that might in any manner or to any extent otherwise constitute a defense
available to, vary the risk of, or operate as a discharge of, the Company or any
Person as a matter of law or equity;

 

(xiv)        any change in the ownership of any shares of capital stock (or
other equity interests) of the Company, or any change in the relationship
between the Company and such Subsidiary Guarantor or any termination of any such
relationship;

 

(xv)         any default, failure or delay, willful or otherwise, in the
performance by the Company, any Subsidiary Guarantor or any other Person of any
obligations of any kind or character whatsoever under the Note Purchase
Agreement or any other agreement;

 

(xvi)        any merger or consolidation of the Company or any Subsidiary
Guarantor or any other Person into or with any other Person or any sale, lease,
transfer or other disposition of any of the assets or property of the Company,
any Subsidiary Guarantor or any other Person to any other Person, or any change
in the ownership of any shares or partnership interests or other equity
interests of the Company, any Subsidiary Guarantor or any other Person;

 

(xvii)       in respect of the Company, any Subsidiary Guarantor or any other
Person, any change of circumstances, whether or not foreseen or foreseeable,
whether or not imputable to the Company, any Subsidiary Guarantor or any other
Person, or other impossibility of performance through fire, explosion, accident,
labor disturbance, floods, droughts, embargoes, wars (whether or not declared),
civil commotion, acts of God or the public enemy, delays or failure of suppliers
or carriers, inability to obtain materials, action of any Federal or state
regulatory body or agency, change of law or any other causes affecting
performance, or any other force majeure, whether or not beyond the control of
the Company, any Subsidiary Guarantor or any other Person and whether or not of
the kind hereinbefore specified; or

 

E-2.3-8

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(xx)          any other occurrence, circumstance, or event whatsoever, whether
similar or dissimilar to the foregoing, whether foreseen or unforeseen, and any
other circumstance which might otherwise constitute a legal or equitable defense
or discharge of the liabilities of a guarantor or surety or which might
otherwise limit recourse against such Subsidiary Guarantor;

 

provided that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures, circumstances
or omissions, though not specifically mentioned above, it being the purpose and
intent of this Guaranty and the parties hereto that the obligations of each
Subsidiary Guarantor shall be absolute and unconditional and shall not be
discharged, impaired or varied except by the payment and performance of all
obligations of the Company under the Note Purchase Agreement and the Notes in
accordance with their respective terms as each may be amended or modified from
time to time. Without limiting the foregoing, it is understood that repeated and
successive demands may be made and recoveries may be had hereunder as and when,
from time to time, the Company or any Subsidiary Guarantor shall default under
or in respect of the terms of the Note Purchase Agreement and that
notwithstanding recovery hereunder for or in respect of any given default or
defaults by the Company or any Subsidiary Guarantor under the Note Purchase
Agreement, this Guaranty shall remain in full force and effect and shall apply
to each and every subsequent default. All waivers herein contained shall be
without prejudice to the Holders at their respective options to proceed against
the Company, any Subsidiary Guarantor or other Person, whether by separate
action or by joinder.

 

(d)           Each Subsidiary Guarantor hereby consents and agrees that any
Holder or Holders from time to time, with or without any further notice to or
assent from any other Subsidiary Guarantor may, without in any manner affecting
the liability of any Subsidiary Guarantor under this Guaranty, and upon such
terms and conditions as any such Holder or Holders may deem advisable:

 

(i)            extend in whole or in part (by renewal or otherwise), modify,
change, compromise, release or extend the duration of the time for the
performance or payment of any debt, liability or obligation of the Company or
any Subsidiary Guarantor or of any other Person secondarily or otherwise liable
for any debt, liability or obligations of the Company on the Note Purchase
Agreement or the Notes, or waive any Default or Event of Default with respect
thereto, or waive, modify, amend or change any provision of any other agreement
or waive this Guaranty; or

 

(ii)           sell, release, surrender, modify, impair, exchange or substitute
any and all property, of any nature and from whomsoever received, held by, or
for the benefit of, any such Holder as direct or indirect security for the
payment or performance of any debt, liability or obligation of the Company, any
Subsidiary Guarantor or of any other Person secondarily or otherwise liable for
any debt, liability or obligation of the Company on the Note Purchase Agreement
or the Notes; or

 

E-2.3-9

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(iii)          settle, adjust or compromise any claim of the Company or any
Subsidiary Guarantor against any other Person secondarily or otherwise liable
for any debt, liability or obligation of the Company on the Note Purchase
Agreement or the Notes; or

 

(iv)          purchase Additional Notes form time to time from the Company
pursuant to the terms and provisions of the Note Purchase Agreement.

 

Each Subsidiary Guarantor hereby ratifies and confirms any such extension,
renewal, change, sale, release, waiver, surrender, exchange, modification,
amendment, impairment, substitution, settlement, adjustment, compromise or
purchase and that the same shall be binding upon it, and hereby waives, to the
fullest extent permitted by law, any and all defenses, counterclaims or offsets
which it might or could have by reason thereof, it being understood that such
Subsidiary Guarantor shall at all times be bound by this Guaranty and remain
liable hereunder.

 

(e)           All rights of any Holder may be transferred or assigned at any
time in accordance with the Note Purchase Agreement and shall be considered to
be transferred or assigned at any time or from time to time upon the transfer of
such Note in accordance with the Note Purchase Agreement without the consent of
or notice to the Subsidiary Guarantors under this Guaranty.

 

(f)            No Holder shall be under any obligation:  (i) to marshal any
assets or property in favor of the Subsidiary Guarantors or in payment of any or
all of the liabilities of the Company or any Subsidiary Guarantor under or in
respect of the Notes or the obligations of the Company and the Subsidiary
Guarantors under the Note Purchase Agreement or (ii) to pursue any other remedy
that the Subsidiary Guarantors may or may not be able to pursue themselves and
that may lighten the Subsidiary Guarantors’ burden, any right to which each
Subsidiary Guarantor hereby expressly waives.

 

SECTION 4.                FULL RECOURSE OBLIGATIONS; PARI PASSU RANKING.

 

Subject to the Maximum Guaranteed Amount, the obligations of each Subsidiary
Guarantor set forth herein constitute the full recourse obligations of such
Subsidiary Guarantor enforceable against it to the full extent of all its assets
and properties.

 

The respective obligations under this Guaranty of the Subsidiary Guarantors are
and at all times shall remain direct and unsecured obligations of the Subsidiary
Guarantors ranking pari passu as against the assets of the Subsidiary Guarantors
without any preference among themselves and pari passu with all other present
and future unsecured Debt (actual or contingent) of the Subsidiary Guarantors
which is not expressed to be subordinate or junior in rank to any other
unsecured Debt of the Subsidiary Guarantors.

 

SECTION 5.                WAIVER.

 

Each Subsidiary Guarantor unconditionally waives, to the extent permitted by
applicable law:

 

(a)           notice of any of the matters referred to in Section 3;

 

E-2.3-10

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(b)           notice to such Subsidiary Guarantor of the incurrence of any of
the Guaranteed Obligations, notice to such Subsidiary Guarantor of any breach or
default by the Company or such Subsidiary Guarantor with respect to any of the
Guaranteed Obligations or any other notice that may be required, by statute,
rule of law or otherwise, to preserve any rights of any Holder against such
Subsidiary Guarantor;

 

(c)           presentment to the Company or such Subsidiary Guarantor or of
payment from the Company or such Subsidiary Guarantor with respect to any Note
or other Guaranteed Obligation or protest for nonpayment or dishonor;

 

(d)           any right to the enforcement, assertion, exercise or exhaustion by
any Holder of any right, power, privilege or remedy conferred in any Note, the
Note Purchase Agreement or otherwise;

 

(e)           any requirement of diligence on the part of any Holder;

 

(f)            any requirement to mitigate the damages resulting from any
default under the Notes or the Note Purchase Agreement;

 

(g)           any notice of any sale, transfer or other disposition of any
right, title to or interest in any Note or other Guaranteed Obligation by any
Holder, assignee or participant thereof, or in the Note Purchase Agreement;

 

(h)           any release of any Subsidiary Guarantor from its obligations
hereunder resulting from any loss by it of its rights of subrogation hereunder;
and

 

(i)            any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release or defense of a guarantor or
surety or which might otherwise limit recourse against such Subsidiary
Guarantor.

 

SECTION 6.                WAIVER OF SUBROGATION.

 

Notwithstanding any payment or payments made by any Subsidiary Guarantor
hereunder, or any application by any Holder of any security or of any credits or
claims, no Subsidiary Guarantor will assert or exercise any rights of any Holder
or of such Subsidiary Guarantor against the Company to recover the amount of any
payment made by such Subsidiary Guarantor to any Holder hereunder by way of any
claim, remedy or subrogation, reimbursement, exoneration, contribution,
indemnity, participation or otherwise arising by contract, by statute, under
common law or otherwise, and such Subsidiary Guarantor shall not have any right
of recourse to or any claim against assets or property of the Company or any
other Subsidiary Guarantor, in each case unless and until the Guaranteed
Obligations have been indefeasibly paid in full. Until such time (but not
thereafter), each Subsidiary Guarantor hereby expressly waives any right to
exercise any claim, right or remedy which such Subsidiary Guarantor may now have
or hereafter acquire against the Company or any other Subsidiary Guarantor that
arises under the Notes, the Note Purchase Agreement or from the performance by
any Subsidiary Guarantor of the guaranty hereunder including any claim, remedy
or right of subrogation, reimbursement,

 

E-2.3-11

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exoneration, contribution, indemnification or participation in any claim, right
or remedy of any Holder against the Company or any Subsidiary Guarantor, or any
security that any Holder now has or hereafter acquires, whether or not such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise. If any amount shall be paid to a Subsidiary Guarantor
by the Company or another Subsidiary Guarantor after payment in full of the
Guaranteed Obligations, and all or any portion of the Guaranteed Obligations
shall thereafter be reinstated in whole or in part and any Holder is required to
repay any sums received by any of them in payment of the Guaranteed Obligations,
this Guaranty shall be automatically reinstated and such amount shall be held in
trust for the benefit of the Holders and shall forthwith be paid to the Holders
to be credited and applied to the Guaranteed Obligations, whether matured or
unmatured. The provisions of this paragraph shall survive the termination of
this Guaranty, and any satisfaction and discharge of the Company by virtue of
any payment, court order or any Federal or state law.

 

SECTION 7.                SUBORDINATION.

 

If any Subsidiary Guarantor is or becomes the holder of any indebtedness payable
by the Company or another Subsidiary Guarantor, each Subsidiary Guarantor hereby
subordinates all indebtedness owing to it from the Company or such other
Subsidiary Guarantor to all indebtedness of the Company to the Holders, and
agrees that, during the continuance of any Event of Default, it shall not accept
any payment on the same until payment in full of the Guaranteed Obligations and
shall in no circumstance whatsoever attempt to set-off or reduce any obligations
hereunder because of such indebtedness. If any amount shall nevertheless be paid
in violation of the foregoing to a Subsidiary Guarantor by the Company or
another Subsidiary Guarantor prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the Holders
and shall forthwith be paid to the Holders to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured.

 

SECTION 8.                EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.

 

(a)           If after receipt of any payment of, or proceeds of any security
applied (or intended to be applied) to the payment of all or any part of, the
Guaranteed Obligations, any Holder is for any reason compelled to surrender or
voluntarily surrenders (under circumstances in which it believes it could
reasonably be expected to be so compelled if it did not voluntarily surrender),
such payment or proceeds to any Person (i) because such payment or application
of proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds or
(ii) for any other similar reason, including, without limitation, (x) any
judgment, decree or order of any court or administrative body having
jurisdiction over any Holder or any of their respective properties or (y) any
settlement or compromise of any such claim effected by any Holder with any such
claimant (including the Company), then the Guaranteed Obligations or part
thereof intended to be satisfied shall be reinstated and continue, and this
Guaranty shall continue in full force as if such payment or proceeds had not
been received, notwithstanding any revocation thereof or the cancellation of any
Note or any other instrument evidencing any Guaranteed Obligations or otherwise,
and the Subsidiary Guarantors, jointly and severally, shall be liable to pay the
Holders, and hereby do indemnify the Holders and hold them harmless for,

 

E-2.3-12

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the amount of such payment or proceeds so surrendered and all expenses
(including reasonable attorneys’ fees, court costs and expenses attributable
thereto) incurred by any Holder in defense of any claim made against any of them
that any payment or proceeds received by any Holder in respect of all or part of
the Guaranteed Obligations must be surrendered. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of the Company by virtue of any payment, court order or any Federal or
state law.

 

(b)           If an event permitting the acceleration of the maturity of any of
the Guaranteed Obligations shall at any time have occurred and be continuing,
and such acceleration shall at such time be prevented by reason of the pendency
against the Company or any other Person of any case or proceeding contemplated
by Section 8(a) hereof, then, for the purpose of defining the obligation of any
Subsidiary Guarantor under this Guaranty, the maturity of the principal amount
of the Guaranteed Obligations shall be deemed to have been accelerated with the
same effect as if an acceleration had occurred in accordance with the terms of
such Guaranteed Obligations, and such Subsidiary Guarantor shall forthwith pay
such principal amount, all accrued and unpaid interest thereon, and all other
Guaranteed Obligations, due or that would have become due but for such case or
proceeding, without further notice or demand.

 

SECTION 9.                TERM OF GUARANTY.

 

This Guaranty and all guarantees, covenants and agreements of each Subsidiary
Guarantor contained herein shall continue in full force and effect and shall not
be discharged until such time as all of the principal of and interest on the
Notes, the other Guaranteed Obligations and other independent payment
obligations of such Subsidiary Guarantor under this Guaranty shall be
indefeasibly paid in cash and performed in full, and all of the agreements of
each of the other Subsidiary Guarantors hereunder shall be duly and indefeasibly
paid in cash and performed in full.

 

SECTION 10.              CONTRIBUTION.

 

In order to provide for just and equitable contribution among the Subsidiary
Guarantors, each Subsidiary Guarantor agrees that, to the extent any Subsidiary
Guarantor makes any payment hereunder on any date which, when added to all
preceding payments made by such Subsidiary Guarantor hereunder, would result in
the aggregate payments by such Subsidiary Guarantor hereunder exceeding its
Percentage (as defined below) of all payments then or theretofore made by all
Subsidiary Guarantors hereunder, such Subsidiary Guarantor shall have a right of
contribution against each other Subsidiary Guarantor whose aggregate payments
then or theretofore made hereunder are less than its Percentage of all payments
by all Subsidiary Guarantors then or theretofore made hereunder, in an amount
such that, after giving effect to any such contribution rights, each Subsidiary
Guarantor will have paid only its Percentage of all payments by all Subsidiary
Guarantors then or theretofore made hereunder. In addition to and without
limiting Section 6 hereof, such contribution rights shall be subordinate and
subject in right of payment to the Guaranteed Obligations and all other
indebtedness owed to any Holder and, except as provided in the next sentence, no
Subsidiary Guarantor shall exercise such rights of contribution until all
Guaranteed Obligations have been indefeasibly paid in cash and performed in
full. Furthermore, each Subsidiary Guarantor hereby unconditionally and

 

E-2.3-13

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irrevocably agrees that in the event any payment shall be required to be made to
any Holder under this Guaranty, such Subsidiary Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each other Subsidiary
Guarantor so as to maximize the aggregate amount paid to the Holders under or in
respect of the Notes and the Note Purchase Agreement. A Subsidiary Guarantor’s
“Percentage” on any date shall mean the percentage obtained by dividing (a) the
Adjusted Net Assets of such Subsidiary Guarantor on such date by (b) the sum of
the Adjusted Net Assets of all Subsidiary Guarantors on such date. “Adjusted Net
Assets” means, for each Subsidiary Guarantor on any date, the lesser of (i) the
amount by which the fair value of the property of such Subsidiary Guarantor
exceeds the total amount of liabilities, including contingent liabilities, but
excluding liabilities under this Guaranty, of such Subsidiary Guarantor on such
date and (ii) the amount by which the present fair salable value of the assets
of such Subsidiary Guarantor on such date exceeds the amount that will be
required to pay the probable liability of such Subsidiary Guarantor on its
debts, excluding debt in respect of this Guaranty, as they become absolute and
matured.

 

SECTION 11.              LIMITATION OF LIABILITY.

 

Each Subsidiary Guarantor hereby confirms that it is the intention of such
Subsidiary Guarantor that the guarantee by such Subsidiary Guarantor pursuant to
this Guaranty not constitute a fraudulent transfer or conveyance for purposes of
Title 11 of the United States Code, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar applicable Federal or state law
(all such statutes and laws are collectively referred to as “Fraudulent
Conveyance Laws”). To effectuate the foregoing intention, each Subsidiary
Guarantor hereby irrevocably agrees that the obligations of such Subsidiary
Guarantor under this Guaranty shall be limited to the amount as will, after
giving effect to all rights to receive any collections from or payments by or on
behalf of any other Subsidiary Guarantor in respect of the obligations of such
other Subsidiary Guarantor pursuant to Section 10 hereof, result in the
obligations of such Subsidiary Guarantor under this Guaranty not constituting
such a fraudulent transfer or conveyance. In the event that the liability of any
Subsidiary Guarantor hereunder is limited pursuant to this Section 11 to an
amount that is less than the total amount of the Guaranteed Obligations, then it
is understood and agreed that the portion of the Guaranteed Obligations for
which such Subsidiary Guarantor is liable hereunder shall be the last portion of
the Guaranteed Obligations to be repaid.

 

SECTION 12.              NEGATIVE PLEDGE.

 

No Subsidiary Guarantor will, directly or indirectly, create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien on
its assets or property during the pendency of this Guaranty except for Liens
permitted by Section 10.3 of the Note Purchase Agreement.

 

SECTION 13.              SUPPLEMENTAL AGREEMENT.

 

Upon execution and delivery by a Subsidiary of a Supplemental Agreement
substantially in the form of Exhibit A hereto, such Subsidiary shall become a
Subsidiary Guarantor hereunder

 

E-2.3-14

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with the same force and effect as if originally named as a Subsidiary Guarantor
herein. The execution and delivery of any such instrument shall not require the
consent of any other Subsidiary Guarantor hereunder or of any Holder. The rights
and obligations of each Subsidiary Guarantor hereunder shall remain in full
force and effect notwithstanding the addition of any new Subsidiary Guarantor as
a party to this Guaranty.

 

SECTION 14.              DEFINITIONS AND TERMS GENERALLY.

 

(a)           Unless otherwise defined herein, capitalized terms defined in the
Note Purchase Agreement are used herein as defined therein. In addition, the
following terms shall have the following meanings.

 

“Adjusted Net Assets” has the meaning specified in Section 10 hereof.

 

“Fraudulent Conveyance Laws” has the meaning specified in Section 11 hereof.

 

“Guaranteed Obligations” has the meaning specified in Section 1 hereof.

 

“Guaranty” has the meaning specified in the introduction hereto.

 

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1 of
the Note Purchase Agreement.

 

“Holders” has the meaning specified in the introduction hereto.

 

“Maximum Guaranteed Amount” shall mean, for each Subsidiary Guarantor, the
maximum amount which any Subsidiary Guarantor could pay under this Guaranty
without having such payment set aside as a fraudulent transfer or conveyance or
similar action under Fraudulent Conveyance Law.

 

“Note Purchase Agreement” has the meanings specified in the Recitals hereto.

 

“Notes” has the meanings specified  in the Recitals hereto.

 

“Percentage” has the meaning specified in Section 10 hereof.

 

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

 

“Subsidiary Guarantor” has the meaning specified in the introduction hereto.

 

(b)           Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.”  All references herein to Articles,

 

E-2.3-15

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Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Guaranty unless the context
shall otherwise require.

 

SECTION 15.              NOTICES.

 

All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), (b) by
a recognized overnight delivery service (with charges prepaid), or (c) by
posting to IntraLinks® or a similar service reasonably acceptable to the
Required Holders if the sender on the same day sends or causes to be sent notice
of such posting by email or in accordance with clause (a) or (b) above. Any such
notice must be sent:

 

(a)           if to any Holder, at the address (or, in the case of clause (c)
above, the email address) set forth in the Note Purchase Agreement, or at such
other address (or, in the case of clause (c) above, the email address) as any
such Holder shall from time to time designate to the Company, or

 

(b)           if to a Subsidiary Guarantor, at the address or email address of
such Subsidiary Guarantor set forth on the signature pages hereto or at such
other address or email address as such Subsidiary Guarantor shall from time to
time designate in writing to each Holder.

 

NOTICES UNDER THIS SECTION 14 WILL BE DEEMED GIVEN ONLY WHEN ACTUALLY RECEIVED.

 

SECTION 16.              AMENDMENTS, ETC.

 

No amendment, alteration, modification or waiver of any term or provision of
this Guaranty, nor consent to any departure by any Subsidiary Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and consented to by the Required Holders and the applicable Subsidiary
Guarantor; provided, however, that (i) any amendment, alteration, modification
or waiver of the terms and conditions contained in Section 1 hereof shall
require consent from all Holders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given, (ii) any Supplemental Agreement executed pursuant to Section 13 shall not
require the consent of any Holder or any Subsidiary Guarantor and (iii) the
Holders agree to release any Subsidiary Guarantor from this Guaranty when and as
required under, and upon satisfaction of the terms and conditions of, Section
2.3(b) of the Note Purchase Agreement.

 

SECTION 17.              CONSENT TO JURISDICTION; SERVICE OF PROCESS.

 

(a)           Each Subsidiary Guarantor irrevocably submits to the nonexclusive
in personam jurisdiction of any New York State or federal court sitting in New
York City, over any suit, action or proceeding arising out of or relating to
this Guaranty or the Notes. To the fullest extent it may effectively do so under
applicable law, each Subsidiary Guarantor irrevocably waives and

 

E-2.3-16

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agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the in personam jurisdiction of any such court, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.

 

(b)           Each Subsidiary Guarantor agrees, to the fullest extent it may
effectively do so under applicable law, that a final judgment in any suit,
action or proceeding of the nature referred to in paragraph (a) of this Section
17 brought in any such court shall be conclusive and binding upon such party,
subject to rights of appeal and may be enforced in the courts of the United
States of America or the State of New York (or any other courts to the
jurisdiction of which such party is or may be subject) by a suit upon such
judgment.

 

(c)           Each Subsidiary Guarantor consents to process being served by or
on behalf of any Holder in any suit, action or proceeding of the nature referred
to in paragraph (a) of this Section 17 by mailing a copy thereof by registered
or certified mail, postage prepaid, return receipt requested, to the address of
each Subsidiary Guarantor specified in Section 15 or at such other address of
which such Holder shall then have been notified pursuant to said Section. Each
Subsidiary Guarantor agrees that such service upon receipt (i) shall be deemed
in every respect effective service of process upon it in any such suit, action
or proceeding and (ii) shall, to the full extent permitted by law, be taken and
held to be valid personal service upon and personal delivery to such party.
Notices under this paragraph (c) of this Section 17 shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or any reputable commercial delivery service.

 

(d)           Nothing in this Section 17 shall affect the right of any holder of
Notes to serve process in any manner permitted by law, or limit any right that
the holders of any of the Notes may have to bring proceedings against any
Subsidiary Guarantor in the courts of any appropriate jurisdiction or to enforce
in any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.

 

SECTION 18.              WAIVER OF JURY TRIAL.

 

EACH SUBSIDIARY GUARANTOR AND BY ITS ACCEPTANCE HEREOF EACH HOLDER, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IRREVOCABLY AND UNCONDITIONALLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE NOTE PURCHASE
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT
MATTER OF ANY OF THE FOREGOING.

 

SECTION 19.              SURVIVAL.

 

All warranties, representations and covenants made by each Subsidiary Guarantor
herein or in any written certificate or other instrument required to be
delivered by it or on its behalf hereunder or under the Note Purchase Agreement
shall be considered to have been relied upon by the Holders and shall survive
the execution and delivery of this Guaranty, regardless of any

 

E-2.3-17

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investigation made by any Holder or on such Holder’s behalf. All statements in
any such certificate or other instrument shall constitute warranties and
representations by such Subsidiary Guarantor hereunder.

 

SECTION 20.              SEVERABILITY.

 

To the fullest extent permitted under applicable law, in the event any one or
more of the provisions contained in this Guaranty should be held invalid,
illegal or unenforceable in any respect with respect to any Subsidiary
Guarantor, such Subsidiary Guarantor shall not be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired. The
parties shall endeavor in good-faith negotiations to replace any invalid,
illegal or unenforceable provisions with valid provisions, the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions. To the extent permitted by applicable law, each
Subsidiary Guarantor hereby waives any provision of law that renders any
provisions hereof invalid, illegal or unenforceable in any respect.

 

SECTION 21.              SUCCESSORS AND ASSIGNS.

 

The terms of this Guaranty shall be binding upon each Subsidiary Guarantor and
its successors and assigns and shall inure to the benefit of the Holders and
their respective successors and assigns.

 

SECTION 22.              TABLE OF CONTENTS; HEADINGS.

 

The section and paragraph headings in this Guaranty and the table of contents
are for convenience of reference only and shall not modify, define, expand or
limit any of the terms or provisions hereof, and all references herein to
numbered sections, unless otherwise indicated, are to sections in this Guaranty.

 

SECTION 23.              COUNTERPARTS.

 

This Guaranty may be executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.

 

SECTION 24.              GOVERNING LAW.

 

This Guaranty shall in all respects be governed by, and construed and
interpreted in accordance with, the laws of the State of New York, without
regard to the conflicts of laws principles of such state.

 

E-2.3-18

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SECTION 25.              RELEASE.

 

Notwithstanding any other provision hereof to the contrary, including without
limitation Section 3(c)(v), 3(c)(xiv) and 3(c)(xv), a Subsidiary Guarantor shall
be automatically released from its guaranty hereunder upon the sale or exchange
of all or substantially all of the stock (or other equity interests) or the
assets of such Subsidiary Guarantor permitted pursuant to Section 10.5 of the
Note Purchase Agreement.

 

SECTION 26.              COVENANT COMPLIANCE.

 

Each Subsidiary Guarantor agrees to comply with each of the covenants contained
herein and in the Note Purchase Agreement that imposes or purports to impose, by
reference to such Subsidiary Guarantor, express or otherwise, through agreements
with the Company, restrictions or obligations on such Subsidiary Guarantor.

 

[SIGNATURES FOLLOW]

 

E-2.3-19

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IN WITNESS WHEREOF, each party hereto has caused this Guaranty to be duly
executed as of the date first above written.

 

 

ALLSTEEL INC.

 

HEARTH & HOME TECHNOLOGIES INC.

 

PAOLI INC.

 

RIVER BEND CAPITAL CORPORATION

 

THE HON COMPANY

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Notice information for each of the above Subsidiary Guarantors:

 

 

 

Address:

c/o HNI Corporation

 

 

414 East Third Street

 

 

PO Box 1109

 

 

Muscatine, Iowa 52761-0071

 

Attention:

Treasurer and Secretary

 

 

 

 

Facsimile:

(563) 272-7237 and

 

 

(563) 272-7655

 

Email:

 

 

 

E-2.3-20

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EXHIBIT A

FORM OF SUPPLEMENTAL AGREEMENT

 

SUPPLEMENTAL AGREEMENT dated as of                         ,            from
                        , a             organized under the laws of the State of
                    (the “New Subsidiary”), for the benefit of the Holders (as
defined in the Guaranty referred to below). Capitalized terms used herein
without definition shall have the respective meanings ascribed thereto in the
Subsidiary Guaranty Agreement, dated as of April 6, 2006 (as amended,
supplemented or otherwise modified from time to time, the “Guaranty”), from: (i)
Allsteel Inc., an Illinois corporation, (ii) Hearth & Home Technologies Inc., an
Iowa corporation, (iii) Paoli Inc., an Iowa corporation, (iv) River Bend Capital
Corporation, an Iowa corporation, (v) The HON Company, an Iowa corporation, and
(vi) such other Subsidiaries (as defined below) as shall become parties thereto
in accordance therewith, for the benefit of the Holders (as such term is defined
in such Guaranty).

 

WHEREAS, HNI Corporation, an Iowa corporation (the “Company”), has authorized,
issued and sold $150,000,000 5.54% Series 2006-A Senior Notes due April 6, 2016
(the “Series 2006-A Notes”) pursuant to a Note Purchase Agreement, dated as of
April 6, 2006 (as amended, modified or supplemented from time to time, the “Note
Purchase Agreement”) among the Company and the purchasers named therein.

 

WHEREAS, Section 2.2 of the Note Purchase Agreement provides for the issuance by
the Company of Additional Notes (as such term is defined in the Note Purchase
Agreement) of one or more separate series from time to time in an aggregate
principal amount not to exceed $500,000,000.

 

WHEREAS, the Additional Notes, together with the Series 2006-A Notes, are
collectively referred to as the “Notes”.

 

WHEREAS, the New Subsidiary is a Subsidiary of the Company.

 

WHEREAS, certain existing Subsidiaries of the Company have entered into the
Guaranty.

 

WHEREAS, the Note Purchase Agreement requires that certain Subsidiaries become
party to the Guaranty (as a Subsidiary Guarantor).

 

WHEREAS, the New Subsidiary acknowledges that it has and will derive substantial
benefits from the issuance of the Notes.

 

WHEREAS, the Guaranty specifies that additional Subsidiaries may become
Subsidiary Guarantors under the Guaranty by execution and delivery of an
instrument in the form of this Agreement. The undersigned Subsidiary is
executing this Agreement in accordance with the requirements of the Note
Purchase Agreement and the Guaranty to become a Subsidiary Guarantor under the
Guaranty as consideration for the Notes previously purchased.

 

EXHIBIT A

(to Form of Subsidiary Guaranty Agreement)

 

--------------------------------------------------------------------------------

 

NOW, THEREFORE, the New Subsidiary Guarantor agrees as follows:

 

Section 1.              Guaranty. In accordance with Section 13 of the Guaranty,
the New Subsidiary by its signature hereto shall become a Subsidiary Guarantor
under the Guaranty with the same force and effect as if originally named therein
as a Subsidiary Guarantor and the New Subsidiary hereby (a) agrees to all the
terms and provisions of such Guaranty applicable to it as a Subsidiary Guarantor
thereunder, (b) represents and warrants that the representations and warranties
made by it as a Subsidiary Guarantor are true and correct on and as of the date
hereof with the same effect as though made on and as of the date hereof, (c)
acknowledges receipt of a copy of and agrees to be obligated and bound by the
terms of the Guaranty, and (d) agrees that each reference to a “Subsidiary
Guarantor” in such Guaranty shall be deemed to include the New Subsidiary.

 

Section 2.              Enforceability. The New Subsidiary hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered by
the New Subsidiary and that each of this Agreement and the Guaranty (as
supplemented hereby) constitutes a legal, valid and binding obligation of the
New Subsidiary enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the applicability of creditors’ rights
generally and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

Section 3.              Effect on Guaranty. Except as expressly supplemented
hereby, the Guaranty shall continue in full force and effect.

 

Section 4.              GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES OF SUCH
STATE.

 

Section 5.              Savings Clause. To the fullest extent permitted under
applicable law, in the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect with
respect to the New Subsidiary, no party hereto shall be required to comply with
such provision for so long as such provision is held to be invalid, illegal or
unenforceable, and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired. The
parties shall endeavor in good-faith negotiations to replace any invalid,
illegal or unenforceable provisions with valid provisions, the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

 

Section 6.              Notices. All communications to the New Subsidiary shall
be given to it at the address, email address or facsimile number set forth under
its signature hereto.

 

E-A-2

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IN WITNESS WHEREOF, the New Subsidiary has duly executed this Agreement as of
the day and year first above written.

 

 

[NEW SUBSIDIARY]

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facsimile:

(     )       -        

 

 

Email:

 

 

 

E-A-3

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FORM OF OPINION OF SPECIAL COUNSEL TO THE COMPANY

 

 

EXHIBIT 4.4(a)

(to Note Purchase Agreement)

[Intentionally Removed]

 

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FORM OF OPINION OF SPECIAL COUNSEL TO THE PURCHASERS

 

 

EXHIBIT 4.4(b)

(to Note Purchase Agreement)

[Intentionally Removed]

 

 

--------------------------------------------------------------------------------

 

HNI CORPORATION

 

 

[NUMBER] SUPPLEMENT TO NOTE PURCHASE AGREEMENT

 

Dated as of ______________________

 

 

Re:          $                                  % Series                  Senior
Notes

DUE                        

 

 

EXHIBIT S

(to Note Purchase Agreement)

 

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HNI CORPORATION

414 EAST THIRD STREET

P.O. BOX 1109

MUSCATINE, IA  52761-0071

 

Dated as of

                                         , 20      

 

To the Purchaser(s) named in

Schedule A hereto

 

Ladies and Gentlemen:

 

This [Number] Supplement to Note Purchase Agreement (the “Supplement”) is
between HNI CORPORATION, an Iowa corporation (the “Company”), and the
institutional investors named on Schedule A attached hereto (the “Purchasers”).

 

Reference is hereby made to that certain Note Purchase Agreement dated as of
April 6, 2006 (the “Note Purchase Agreement”) between the Company and the
purchasers listed on Schedule A thereto. All capitalized terms not otherwise
defined herein shall have the same meaning as specified in the Note Purchase
Agreement. Reference is further made to Section 2.2(b) of the Note Purchase
Agreement which requires that, prior to the delivery of any Additional Notes,
the Company and each Additional Purchaser shall execute and deliver a
Supplement.

 

The Company hereby agrees with the Purchaser(s) as follows:

 

1.             The Company has authorized the issue and sale of
$                     aggregate principal amount of its                % Series
            [, Tranche,] Senior Notes due               ,              (the
“Series            Notes”). The Series            Notes, together with the
Series 2006-A Notes [and the Series             Notes] initially issued pursuant
to the Note Purchase Agreement [and the            Supplement] and each series
of Additional Notes which may from time to time hereafter be issued pursuant to
the provisions of Section 2.2 of the Note Purchase Agreement, are collectively
referred to as the “Notes” (such term shall also include any such notes issued
in substitution therefor pursuant to Section 13 of the Note Purchase Agreement).
The Series               Notes shall be substantially in the form set out in
Exhibit 1 hereto with such changes therefrom, if any, as may be approved by the
Purchaser(s) and the Company.

 

2.             Subject to the terms and conditions hereof and as set forth in
the Note Purchase Agreement and on the basis of the representations and
warranties hereinafter set forth, the Company agrees to issue and sell to each
Purchaser, and each Purchaser agrees to purchase from the Company, Series
               Notes in the principal amount set forth opposite such Purchaser’s
name on Schedule A hereto at a price of 100% of the principal amount thereof on
the closing date hereinafter mentioned. The obligations of each Purchaser
hereunder are several and not

 

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joint obligations and no Purchaser shall have any obligation or any liability to
any Person for the performance or nonperformance by any other Purchaser
hereunder.

 

3.             The sale and purchase of the Series                Notes to be
purchased by each Purchaser shall occur at the offices of
[                                          ] at 10:00 A.M. Chicago time, at a
closing (the “Closing”) on               ,                or on such other
Business Day thereafter on or prior to               ,                as may be
agreed upon by the Company and the Purchasers (the “Closing Date”). At the
Closing, the Company will deliver to each Purchaser the Series               
Notes to be purchased by such Purchaser in the form of a single Series
               Note (or such greater number of Series                Notes in
denominations of at least $100,000 as such Purchaser may request) dated the
Closing Date and registered in such Purchaser’s name (or in the name of such
Purchaser’s nominee), against delivery by such Purchaser to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account number [                                          ] at
                             Bank, [Insert Bank address, ABA number for wire
transfers, and any other relevant wire transfer information]. If, at the
Closing, the Company shall fail to tender such Series                Notes to
any Purchaser as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to any Purchaser’s
satisfaction, such Purchaser shall, at such Purchaser’s election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
such Purchaser may have by reason of such failure or such nonfulfillment.

 

4.             The obligation of each Purchaser to purchase and pay for the
Series                Notes to be sold to such Purchaser at the Closing is
subject to the fulfillment to such Purchaser’s satisfaction, prior to the
Closing, of the conditions set forth in Section 4 of the Note Purchase Agreement
with respect to the Series                Notes to be purchased at the Closing,
and to the following additional conditions:

 

(a)           Except as supplemented, amended or superceded by the
representations and warranties set forth in Exhibit A hereto, each of the
representations and warranties of the Company set forth in Section 5 of the Note
Purchase Agreement shall be correct as of the Closing Date and the Company shall
have delivered to each Purchaser an Officer’s Certificate, dated the Closing
Date certifying that such condition has been fulfilled.

 

(b)           Contemporaneously with the Closing, the Company shall sell to such
Purchaser, and such Purchaser shall purchase, the Series                Notes to
be purchased by such Purchaser at the Closing as specified in Schedule A.

 

5.             [Here insert special provisions for Series               Notes
including prepayment provisions applicable to Series                Notes
(including Make-Whole Amount) and closing conditions applicable to Series
               Notes].

 

6.             Each Purchaser represents and warrants that the representations
and warranties set forth in Section 6 of the Note Purchase Agreement are true
and correct on the date hereof with respect to the purchase of the Series
               Notes by such Purchaser.

 

E-S-2

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7.             The Company and each Purchaser agree to be bound by and comply
with the terms and provisions of the Note Purchase Agreement as fully and
completely as if such Purchaser were an original signatory to the Note Purchase
Agreement.

 

The execution hereof shall constitute a contract between the Company and the
Purchaser(s) for the uses and purposes hereinabove set forth, and this agreement
may be executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.

 

 

HNI CORPORATION

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

Accepted as of                   ,                  

 

 

 

 

[VARIATION]

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

E-S-3

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INFORMATION RELATING TO PURCHASERS

 

 

NAME AND ADDRESS OF PURCHASER

 

PRINCIPAL
AMOUNT OF SERIES
            NOTES TO
BE PURCHASED

 

 

 

 

 

[NAME OF PURCHASER]

 

$

 

 

 

 

 

 

(1)

All payments by wire transfer of immediately available funds to:

 

 

 

 

 

 

 

 

 

with sufficient information to identify the source and application of such
funds.

 

 

 

 

 

 

 

 

(2)

All notices of payments and written confirmations of such wire transfers:

 

 

 

 

 

 

 

 

(3)

All other communications:

 

 

 

 

SCHEDULE A

(to Supplement)

 

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SUPPLEMENTAL REPRESENTATIONS

 

The Company represents and warrants to each Purchaser that except as hereinafter
set forth in this Exhibit A, each of the representations and warranties set
forth in Section 5 of the Note Purchase Agreement is true and correct in all
material respects as of the date hereof with respect to the Series
                 Notes with the same force and effect as if each reference to
“Series 2006-A Notes” set forth therein was modified to refer the “Series
                 Notes” and each reference to “this Agreement” therein was
modified to refer to the Note Purchase Agreement as supplemented by the
                 Supplement. The Section references hereinafter set forth
correspond to the similar sections of the Note Purchase Agreement which are
supplemented hereby:

 

Section 5.3.           Disclosure. The Company, through its agent, Banc of
America Securities LLC has delivered to each Purchaser a copy of a Private
Placement Memorandum, dated                  (the “Memorandum”), relating to the
transactions contemplated by the                  Supplement. The Disclosure
Documents (as defined below), taken as a whole, fairly describe, in all material
respects, the general nature of the business and principal properties of the
Company and its Restricted Subsidiaries. The                  Supplement, the
Note Purchase Agreement, the Memorandum, the documents, certificates or other
writings delivered to each Purchaser by or on behalf of the Company in
connection with the transactions contemplated by the Note Purchase Agreement and
the                  Supplement and identified in Schedule 5.3 to the         
Supplement, and the financial statements listed in Schedule 5.5 to the
                 Supplement (the          Supplement, the Note Purchase
Agreement, the Memorandum and such documents, certificates and other writings
and such financial statements being referred to collectively, as the “Disclosure
Documents”), taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading in the light of the circumstances under which they were made.
Except as disclosed in the Disclosure Documents, since                         ,
there has been no change  in  the  financial  condition, operations, business or
properties of the Company or any Restricted Subsidiary except changes that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that would
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Disclosure Documents.

 

Section 5.4.           Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 to the                  Supplement contains (except as noted
therein) complete and correct lists of (i) the Company’s Restricted and
Unrestricted Subsidiaries, and showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary, and all other material Investments of the
Company and its Restricted Subsidiaries, (ii) the Company’s Affiliates, other
than Subsidiaries and Undisclosed Affiliates, and (iii) the Company’s directors
and senior officers.

 

Section 5.13.        Private Offering by the Company. Neither the Company nor
anyone acting on its behalf, directly or through any agent, has offered the
Series            Notes or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached

 

EXHIBIT A
(to Supplement)

 

--------------------------------------------------------------------------------

 

or negotiated in respect thereof with, any Person other than the Purchasers and
not more than [                ] other Institutional Investors of the type
described in clause (c) of the definition thereof, each of which has been
offered the Series                  Notes at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.

 

Section 5.14.        Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Series                  Notes to
                                                 and for general corporate
purposes. No part of the proceeds from the sale of the Series                 
Notes pursuant to the                  Supplement will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 10% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 10% of the value of such assets. As used
in this Section, the terms “margin stock” and “purpose of buying or carrying”
shall have the meanings assigned to them in said Regulation U.

 

Section 5.15.        Existing Debt; Future Liens. (a) Schedule 5.15 to the
                 Supplement sets forth a complete and correct list of all
outstanding Debt of the Company and its Restricted Subsidiaries as of
                       , since which date there has been no Material change in
the amounts, interest rates, sinking funds, installment payments or maturities
of the Debt of the Company or its Restricted Subsidiaries. Neither the Company
nor any Restricted Subsidiary is in default and no waiver of default is
currently in effect, in the payment of any principal or interest on any Debt of
the Company or such Subsidiary and no event or condition exists with respect to
any Debt of the Company or any Restricted Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Debt to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.

 

[Add any additional Sections as appropriate at the time the Series
                 Notes are issued]

 

E-A-2

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[FORM OF SERIES              NOTE]

 

HNI CORPORATION

 

       % SERIES           SENIOR NOTE DUE                 

 

No. [              ]

 

[Date]

$[                      ]

 

PPN [                ]

 

FOR VALUE RECEIVED, the undersigned, HNI Corporation, an Iowa corporation
(herein called the “Company”), a corporation organized and existing under the
laws of the State of                                    , hereby promises to pay
to [                                   ], or registered assigns, the principal
sum of [                                   ] DOLLARS (or so much thereof as
shall not have been prepaid) on                                    , with
interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance hereof at the rate of        % per annum from the date
hereof, payable semiannually, on the            day of        and               
in each year, commencing on the first of such dates after the date hereof, until
the principal hereof shall have become due and payable, and (b) to the extent
permitted by law, at a rate per annum from time to time equal to [2% above the
stated rate], on any overdue payment of interest and, during the continuance of
an Event of Default, on the unpaid balance hereof and on any overdue payment of
any Make-Whole Amount, payable [semiannually] as aforesaid (or, at the option of
the registered holder hereof, on demand).

 

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at
                                   , in                                    , or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.

 

This Note is one of a series of Senior Notes (the “Notes”) issued pursuant to a
Supplement to the Note Purchase Agreement dated as of                         
           , 2006 (as from time to time amended, supplemented or modified, the
“Note Purchase Agreement”), between the Company, the Purchasers named therein
and Additional Purchasers of Notes from time to time issued pursuant to any
Supplement to the Note Purchase Agreement. This Note and the holder hereof are
entitled equally and ratably with the holders of all other Notes of all series
from time to time outstanding under the Note Purchase Agreement to all the
benefits provided for thereby or referred to therein. Each holder of this Note
will be deemed, by its acceptance hereof, to have (i) agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) made the representations set forth in Sections 6.2 and 6.3 of
the Note Purchase Agreement, provided that such holder may (in reliance upon
information provided by the Company, which shall not be unreasonably withheld)
make a representation to the effect that the purchase by such holder of any Note
will not constitute a non-exempt prohibited transaction under Section 406(a) of
ERISA. Unless otherwise indicated, capitalized terms used in this Note shall
have the respective meanings ascribed to such terms in the Note Purchase
Agreement.

 

EXHIBIT 1

(to Supplement)

 

--------------------------------------------------------------------------------

 

This Note is registered with the Company and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder’s attorney duly authorized in
writing, a new Note of the same series for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

 

[The Company will make required prepayments of principal on the dates and in the
amounts specified in the Note Purchase Agreement.]  [This Note is not subject to
regularly scheduled prepayments of principal.] This Note is [also] subject to
optional prepayment, in whole or from time to time in part, at the times and on
the terms specified in the Note Purchase Agreement, but not otherwise.

 

Pursuant to the Subsidiary Guaranty Agreement dated as of                     
         , 2006 (as amended or modified from time to time, the “Subsidiary
Guaranty”), certain Subsidiaries of the Company have absolutely and
unconditionally guaranteed payment in full of the principal of, Make-Whole
Amount, if any, and interest on this Note and the performance by the Company of
its obligations contained in the Note Purchase Agreement all as more fully set
forth in said Subsidiary Guaranty.

 

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the [State of New York] excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.

 

 

HNI CORPORATION

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

E-1-2

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