Exhibit 10.1

 

 

 

HELMERICH & PAYNE, INC.
HELMERICH & PAYNE INTERNATIONAL DRILLING CO.

 

 

$200,000,000 6.10% Senior Notes

due July 21, 2016

 

 

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NOTE PURCHASE AGREEMENT

 

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Dated as of June 15, 2009

 

 

 

PPN: 42346# AE 1

 

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TABLE OF CONTENTS

 

1.

AUTHORIZATION OF NOTES

1

 

1.1

Notes to be Issued

1

 

1.2

Guaranties

1

 

 

 

 

2.

SALE AND PURCHASE OF NOTES

2

 

 

 

3.

CLOSING

2

 

 

 

4.

CONDITIONS TO CLOSING

2

 

4.1

Representations and Warranties

2

 

4.2

Performance; No Default

2

 

4.3

Compliance Certificates

3

 

4.4

Opinions of Counsel

3

 

4.5

Purchase Permitted By Applicable Law, etc.

3

 

4.6

Sale of Other Notes

3

 

4.7

Payment of Special Counsel Fees

4

 

4.8

Private Placement Number

4

 

4.9

Changes in Corporate Structure

4

 

4.10

Guaranties

4

 

4.11

Funding Instructions

4

 

4.12

Proceedings and Documents

4

 

4.13

Credit Agreements

4

 

 

 

 

5.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

5

 

5.1

Organization; Power and Authority

5

 

5.2

Authorization, etc.

5

 

5.3

Disclosure

5

 

5.4

Organization and Ownership of Shares of Subsidiaries

6

 

5.5

Financial Statements

6

 

5.6

Compliance with Laws, Other Instruments, etc.

7

 

5.7

Governmental Authorizations, etc.

7

 

5.8

Litigation; Observance of Statutes and Orders

7

 

5.9

Taxes

8

 

5.10

Title to Property; Leases

8

 

5.11

Licenses, Permits, etc.

8

 

5.12

Compliance with ERISA

8

 

5.13

Private Offering by the Company

9

 

5.14

Use of Proceeds; Margin Regulations

9

 

5.15

Existing Debt; Future Liens

10

 

5.16

Foreign Assets Control Regulations, etc.

10

 

5.17

Status under Certain Statutes

11

 

5.18

Environmental Matters

11

 

5.19

Solvency of Subsidiary Guarantors

11

 

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6.

REPRESENTATIONS OF THE PURCHASERS

12

 

6.1

Purchase for Investment

12

 

6.2

Source of Funds

12

 

 

 

 

7.

INFORMATION AS TO COMPANY

13

 

7.1

Financial and Business Information

13

 

7.2

Officer’s Certificate

16

 

7.3

Electronic Delivery

16

 

7.4

Visitation

17

 

 

 

 

8.

PREPAYMENT OF THE NOTES

17

 

8.1

Required Prepayments

17

 

8.2

Optional Prepayments with Make-Whole Amount

17

 

8.3

Mandatory Offer to Prepay Upon Change of Control

18

 

8.4

Allocation of Partial Prepayments

19

 

8.5

Maturity; Surrender, etc.

20

 

8.6

Purchase of Notes

20

 

8.7

Make-Whole Amount

20

 

 

 

 

9.

AFFIRMATIVE COVENANTS

21

 

9.1

Compliance with Law

22

 

9.2

Insurance

22

 

9.3

Maintenance of Properties

22

 

9.4

Payment of Taxes

22

 

9.5

Corporate Existence, etc.

23

 

9.6

Books and Records

23

 

9.7

Liens Securing Obligations Under Principal Credit Agreement

23

 

 

 

 

10.

NEGATIVE COVENANTS

23

 

10.1

Consolidated Debt

23

 

10.2

Interest Coverage Ratio

23

 

10.3

Priority Debt

24

 

10.4

Indebtedness of Subsidiaries

24

 

10.5

Liens

24

 

10.6

Mergers, Consolidations, etc.

26

 

10.7

Sale of Assets

27

 

10.8

Subsidiary Guaranty

28

 

10.9

Nature of Business

28

 

10.10

Transactions with Affiliates

28

 

10.11

Terrorism Sanctions Regulations

28

 

 

 

 

11.

EVENTS OF DEFAULT

29

 

 

 

12.

REMEDIES ON DEFAULT, ETC.

31

 

12.1

Acceleration

31

 

12.2

Other Remedies

32

 

12.3

Rescission

32

 

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12.4

No Waivers or Election of Remedies, Expenses, etc.

32

 

 

 

 

13.

REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

32

 

13.1

Registration of Notes

32

 

13.2

Transfer and Exchange of Notes

33

 

13.3

Replacement of Notes

33

 

 

 

 

14.

PAYMENTS ON NOTES

34

 

14.1

Place of Payment

34

 

14.2

Home Office Payment

34

 

 

 

 

15.

EXPENSES, ETC.

34

 

15.1

Transaction Expenses

34

 

15.2

Survival

35

 

 

 

 

16.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

35

 

 

 

17.

AMENDMENT AND WAIVER

35

 

17.1

Requirements

35

 

17.2

Solicitation of Holders of Notes

36

 

17.3

Binding Effect, etc.

36

 

17.4

Notes held by Company, etc.

36

 

 

 

 

18.

NOTICES

37

 

 

 

19.

REPRODUCTION OF DOCUMENTS

37

 

 

 

20.

CONFIDENTIAL INFORMATION

37

 

 

 

21.

SUBSTITUTION OF PURCHASER

38

 

 

 

22.

RELEASE OF SUBSIDIARY GUARANTOR

39

 

 

 

23.

MISCELLANEOUS

39

 

23.1

Successors and Assigns

39

 

23.2

Payments Due on Non-Business Days

39

 

23.3

Accounting Terms

40

 

23.4

Severability

40

 

23.5

Construction

40

 

23.6

Counterparts

40

 

23.7

Governing Law

40

 

23.8

Jurisdiction and Process; Waiver of Jury Trial

40

 

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SCHEDULE A—Information Relating to Purchasers

SCHEDULE B—Defined Terms

 

SCHEDULE 5.3—Disclosure Materials

SCHEDULE 5.4—Subsidiaries and Ownership of Subsidiary Stock

SCHEDULE 5.5—Financial Statements

SCHEDULE 5.12—Compliance with ERISA

SCHEDULE 5.15—Indebtedness

SCHEDULE 7.2 — Form of Compliance Certificate

SCHEDULE 10.4—Liens

 

EXHIBIT 1.1—Form of Senior Note

EXHIBIT 1.2(a)—Form of Parent Guaranty

EXHIBIT 1.2(b)—Form of Subsidiary Guaranty

EXHIBIT 4.4(a)—Form of Opinion of Counsel for the Company

EXHIBIT 4.4(b)—Form of Opinion of Special Counsel to the Purchasers

 

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HELMERICH & PAYNE, INC.
HELMERICH & PAYNE INTERNATIONAL DRILLING CO.
1437 S Boulder Avenue
Suite 1400
Tulsa, OK 74119
(918) 742-5531
Fax:  (918) 742-0237

 

$200,000,000 6.10% Senior Notes

due July 21, 2016

 

Dated as of June 15, 2009

 

TO EACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

 

Ladies and Gentlemen:

 

HELMERICH & PAYNE INTERNATIONAL DRILLING CO., a Delaware corporation (the
“Company”), and HELMERICH & PAYNE, INC., a Delaware corporation (the “Parent”),
agree with you as follows:

 

1.             AUTHORIZATION OF NOTES.

 

1.1          NOTES TO BE ISSUED.

 

The Company has authorized the issue and sale of $200,000,000 aggregate
principal amount of its 6.10% Senior Notes, due July 21, 2016 (the “Notes”, such
term to include any such Notes issued in substitution therefor pursuant to
Section 13 of this Agreement).  The Notes shall be substantially in the form set
out in Exhibit 1.1, with such changes therefrom, if any, as may be approved by
you, the Other Purchasers and the Company.  The Notes will be unsecured and will
rank pari passu with the Company’s unsecured Indebtedness to banks under the
Credit Agreements and with all other senior unsecured Indebtedness of 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.

 

1.2          GUARANTIES.

 

The Notes will be guaranteed (i) by the Parent pursuant to a guaranty in
substantially the form of Exhibit 1.2(a) (as it hereafter may be amended or
modified from time to time, the “Parent Guaranty”) and (ii) by each Subsidiary
that is now or in the future becomes a guarantor of, or otherwise is or becomes
obligated in respect of, any Indebtedness to banks under the Credit Agreements
(individually, a “Subsidiary Guarantor” and collectively, the “Subsidiary
Guarantors”) pursuant to a guaranty in substantially the form of
Exhibit 1.2(b) (as it hereafter

 

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may be amended or modified from time to time, the “Subsidiary Guaranty,” and,
together with the Parent Guaranty, the “Guaranties”).

 

2.             SALE AND PURCHASE OF NOTES.

 

Subject to the terms and conditions of this Agreement, the Company will issue
and sell to you and each of the other purchasers named in Schedule A (the “Other
Purchasers”), and you and the Other Purchasers will purchase from the Company,
at the Closing provided for in Section 3, Notes in the principal amount
specified opposite your names in Schedule A at the purchase price of 100% of the
principal amount thereof.  Your obligation hereunder and the obligations of the
Other Purchasers are several and not joint obligations and you shall have no
liability to any Person for the performance or non-performance by any Other
Purchaser hereunder.

 

3.             CLOSING.

 

The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Foley & Lardner LLP, Suite 2800, 321
North Clark Street, Chicago, Illinois 60654-5313 at 9:00 a.m., Chicago time, at
a closing on July 21, 2009 (the “Closing”) or on such other Business Day
thereafter, not later than July 31, 2009 as may be agreed upon by the Company
and you and the Other Purchasers.  At the Closing, the Company will deliver to
you the Notes to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you 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 208325308 at Bank of Oklahoma, N.A., Tulsa, Oklahoma,
ABA No. 103900036.  If at the Closing the Company fails to tender such Notes to
you as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.

 

4.             CONDITIONS TO CLOSING.

 

Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:

 

4.1          REPRESENTATIONS AND WARRANTIES.

 

The representations and warranties of the Parent and the Company in this
Agreement shall be correct when made and at the time of the Closing.

 

4.2          PERFORMANCE; NO DEFAULT.

 

The Parent and the Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or complied

 

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with by it prior to or at the Closing and after giving effect to the issue and
sale of the 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.

 

4.3          COMPLIANCE CERTIFICATES.

 

(A)           OFFICER’S CERTIFICATE.  EACH OF THE PARENT AND THE COMPANY SHALL
HAVE DELIVERED TO YOU AN OFFICER’S CERTIFICATE, DATED THE DATE OF THE CLOSING,
CERTIFYING THAT THE CONDITIONS SPECIFIED IN SECTIONS 4.1, 4.2 AND 4.9 HAVE BEEN
FULFILLED.

 

(B)           SECRETARY’S CERTIFICATE.  EACH OF THE PARENT, THE COMPANY AND EACH
SUBSIDIARY GUARANTOR SHALL HAVE DELIVERED TO YOU A CERTIFICATE CERTIFYING AS TO
THE RESOLUTIONS ATTACHED THERETO AND OTHER CORPORATE PROCEEDINGS RELATING TO THE
AUTHORIZATION, EXECUTION AND DELIVERY OF THE NOTES AND THE AGREEMENT.

 

4.4          OPINIONS OF COUNSEL.

 

You shall have received opinions in form and substance satisfactory to you,
dated the date of the Closing (a) from McAfee & Taft A Professional Corporation
and Steven R. Mackey, special counsel for, and General Counsel of, the Parent
and the Company, respectively, covering the matters set forth in
Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company instructs its counsel to deliver such opinion to you) and (b) from
Foley & Lardner LLP, your 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 you may reasonably request.

 

4.5          PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

 

On the date of the Closing your purchase of Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which you are 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, (ii) not violate any
applicable law or regulation (including Regulation U, T or X of the Board of
Governors of the Federal Reserve System) and (iii) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation that
was not in effect on the date hereof.  If requested by you, you shall have
received an Officer’s Certificate certifying as to such matters of fact as you
may reasonably specify to enable you to determine whether such purchase is so
permitted.

 

4.6          SALE OF OTHER NOTES.

 

Contemporaneously with the Closing, the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.

 

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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 the fees, charges and disbursements of your special
counsel referred to in Section 4.4, to the extent reflected in a statement of
such counsel rendered to the Company at least three Business Days prior to the
Closing.

 

4.8          PRIVATE PLACEMENT NUMBER.

 

A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in
cooperation with the SVO) shall have been obtained by Foley & Lardner LLP for
the Notes.

 

4.9          CHANGES IN CORPORATE STRUCTURE.

 

Neither the Parent nor the Company shall have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not 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.

 

4.10        GUARANTIES.

 

The Parent shall have executed and delivered the Parent Guaranty and each
Subsidiary Guarantor shall have executed and delivered the Subsidiary Guaranty,
and you shall have received an executed counterpart of each.

 

4.11        FUNDING INSTRUCTIONS.

 

At least three Business Days prior to the date of the Closing, you 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
Notes is to be deposited.

 

4.12        PROCEEDINGS AND DOCUMENTS.

 

All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.

 

4.13        CREDIT AGREEMENTS.

 

The requisite parties to the Principal Credit Agreement shall have either
(a) acknowledged in writing that the provisions of Section 9.7, or a
substantially similar provision, with only such changes as shall have been
approved by the agent under the Principal Credit Agreement, do not conflict with
Section 6.5 of such Credit Agreement or (b) agreed in writing to exclude this
Agreement from the application of Section 6.5 of the Principal Credit
Agreement. 

 

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Furthermore, the requisite parties to the 364-Day Credit Agreement shall have
excluded this Agreement from the application of Section 6.5 of the 364-Day
Credit Agreement.

 

5.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Each of the Company and the Parent represents and warrants to you that:

 

5.1          ORGANIZATION; POWER AND AUTHORITY.

 

Each of the Company and the Parent 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.  Each of the Company and the Parent
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, the Parent
Guaranty (in the case of the Parent) and the Notes (in the case of the Company)
and to perform the provisions hereof and thereof.

 

5.2          AUTHORIZATION, ETC.

 

This Agreement and the Notes 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 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).

 

This Agreement and the Guaranties have been duly authorized by all necessary
corporate action on the part of the Parent or each Subsidiary Guarantor, as the
case may be, and upon execution and delivery thereof will constitute the legal,
valid and binding obligation of the Parent and each Subsidiary Guarantor,
enforceable against the Parent or each Subsidiary Guarantor, as the case may be,
in accordance with their respective 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).

 

5.3          DISCLOSURE.

 

The Parent and the Company, through their agent, Wells Fargo Securities, LLC has
delivered to you and each Other Purchaser a copy of a Private Placement
Memorandum, dated June 2009 (the “Memorandum”), relating to the transactions
contemplated hereby.  This Agreement, the Memorandum and the documents,
certificates or other writings delivered to the Purchasers by or on behalf of
the Company in connection with the transactions contemplated

 

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hereby and identified in Schedule 5.3, and the financial statements listed in
Schedule 5.5 (this Agreement, the Memorandum and such documents, certificates or
other writings and such financial statements delivered to each Purchaser prior
to June 24, 2009 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 light of the circumstances under which they were made.  Except
as disclosed in the Disclosure Documents, since September 30, 2008, there has
been no change in the financial condition, operations, business or properties of
the Parent or any Subsidiary, except changes that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.

 

5.4          ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.

 

(A)           SCHEDULE 5.4 IS (EXCEPT AS NOTED THEREIN) A COMPLETE AND CORRECT
LIST OF THE PARENT’S SUBSIDIARIES, SHOWING, AS TO EACH SUBSIDIARY, THE CORRECT
NAME THEREOF, THE JURISDICTION OF ITS ORGANIZATION, THE PERCENTAGE OF SHARES OF
EACH CLASS OF ITS CAPITAL STOCK OR SIMILAR EQUITY INTERESTS OUTSTANDING OWNED BY
THE PARENT AND EACH OTHER SUBSIDIARY.

 

(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 PARENT
AND ITS SUBSIDIARIES,  HAVE BEEN VALIDLY ISSUED, ARE FULLY PAID AND
NONASSESSABLE AND ARE OWNED BY THE PARENT 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 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.

 

5.5          FINANCIAL STATEMENTS.

 

The Parent has delivered to you and each Other Purchaser copies of the
consolidated financial statements of the Parent and its Subsidiaries, listed on
Schedule 5.5.  All of said financial statements (including in each case the
related schedules and notes) fairly present in all material respects the
consolidated financial position of the Parent 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).  The
Parent and its Subsidiaries do not have any Material liabilities that are not
disclosed on such financial statements or otherwise disclosed in the Disclosure
Documents.

 

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5.6          COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

 

The execution, delivery and performance by the Company and the Parent of this
Agreement and by the Company of the Notes will not (i) 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 Parent or any Subsidiary,  under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other Material agreement or instrument to
which the Parent or any Subsidiary,  is bound or by which any of their
respective properties may be bound or affected, (ii) 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 Parent or any Subsidiary,  or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Parent or any Subsidiary, including the Company.

 

The execution, delivery and performance by each of the Parent and each
Subsidiary Guarantor of the Guaranty to which it is a party will not
(i) 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 Parent or
such Subsidiary Guarantor under, any agreement, or corporate charter or by-laws,
to which the Parent or such Subsidiary Guarantor is bound or by which the Parent
or such Subsidiary Guarantor or any of their properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any Material order, judgment, decree, or ruling of
any court, arbitrator or Governmental Authority applicable to the Parent or such
Subsidiary Guarantor or (iii) violate any provision of any Material statute or
other rule or regulation of any Governmental Authority applicable to the Parent
or such Subsidiary Guarantor.

 

5.7          GOVERNMENTAL AUTHORIZATIONS, ETC.

 

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 Notes or the
execution, delivery or performance by the Parent of this Agreement or the Parent
Guaranty or by each Subsidiary Guarantor of the Subsidiary Guaranty.

 

5.8          LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.

 

(A)           THERE ARE NO ACTIONS, SUITS OR PROCEEDINGS PENDING OR, TO THE
KNOWLEDGE OF THE PARENT OR THE COMPANY, THREATENED AGAINST OR AFFECTING THE
PARENT OR ANY SUBSIDIARY,  OR ANY PROPERTY OF THE PARENT OR ANY 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 PARENT NOR ANY 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 ENVIRONMENTAL LAWS AND THE USA PATRIOT ACT) OF ANY
GOVERNMENTAL AUTHORITY, WHICH DEFAULT OR

 

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VIOLATION, INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT.

 

5.9          TAXES.

 

The Parent and its Subsidiaries have filed all income 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
payable by them, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Parent or a Subsidiary, as the case may be, has established adequate
reserves in accordance with GAAP.  The federal income tax liabilities of the
Parent 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 September 30, 2005.

 

5.10        TITLE TO PROPERTY; LEASES.

 

The Parent and its Subsidiaries, have good and sufficient title to their
respective Material properties, 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 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, except for those defects
in title and Liens that, individually or in the aggregate, would not have a
Material Adverse Effect.  All Material leases are valid and subsisting and are
in full force and effect in all material respects.

 

5.11        LICENSES, PERMITS, ETC.

 

The Parent and its Subsidiaries, own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and
trade names, or rights thereto, that are Material, without known conflict with
the rights of others, except for those conflicts that, individually or in the
aggregate, would not have a Material Adverse Effect.

 

5.12        COMPLIANCE WITH ERISA.

 

(A)           THE PARENT AND EACH ERISA AFFILIATE,  HAVE OPERATED AND
ADMINISTERED EACH PLAN IN COMPLIANCE WITH ALL APPLICABLE LAWS EXCEPT FOR SUCH
INSTANCES OF NONCOMPLIANCE AS HAVE NOT RESULTED IN AND COULD NOT REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  NEITHER THE PARENT NOR ANY
ERISA AFFILIATE,  HAS INCURRED ANY LIABILITY PURSUANT TO TITLE I OR IV OF ERISA
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 PARENT OR ANY ERISA AFFILIATE,  OR IN
THE IMPOSITION OF ANY LIEN ON ANY OF THE RIGHTS, PROPERTIES OR ASSETS OF THE
PARENT OR ANY ERISA AFFILIATE,  IN EITHER CASE PURSUANT TO TITLE I OR IV OF
ERISA OR TO SUCH PENALTY OR

 

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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)           EXCEPT AS DISCLOSED ON SCHEDULE 5.12, THE PRESENT VALUE OF THE
AGGREGATE BENEFIT LIABILITIES UNDER EACH OF THE PLANS (OTHER THAN MULTIEMPLOYER
PLANS), DETERMINED AS OF THE END OF SUCH PLAN’S MOST RECENTLY ENDED PLAN YEAR 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 OF THE ASSETS OF SUCH PLAN ALLOCABLE TO SUCH BENEFIT LIABILITIES. 
THE TERM “BENEFIT LIABILITIES” HAS THE MEANING SPECIFIED IN SECTION 4001 OF
ERISA AND THE TERMS “CURRENT VALUE” AND “PRESENT VALUE” HAVE THE MEANING
SPECIFIED IN SECTION 3 OF ERISA.

 

(C)           THE PARENT AND ITS ERISA AFFILIATES,  HAVE NOT INCURRED 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 POSTRETIREMENT BENEFIT OBLIGATION (DETERMINED AS OF
THE LAST DAY OF THE PARENT’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 PARENT AND ITS ERISA AFFILIATES,  IS NOT MATERIAL.

 

(E)           THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE ISSUANCE AND
SALE OF THE NOTES HEREUNDER WILL NOT INVOLVE ANY TRANSACTION THAT IS SUBJECT TO
THE PROHIBITIONS OF SECTION 406 OF ERISA OR IN CONNECTION WITH WHICH A TAX COULD
BE IMPOSED PURSUANT TO SECTION 4975(C)(1)(A)-(D) OF THE CODE.  THE
REPRESENTATION BY THE PARENT AND THE COMPANY IN THE FIRST SENTENCE OF THIS
SECTION 5.12(E) IS MADE IN RELIANCE UPON AND SUBJECT TO THE ACCURACY OF YOUR
REPRESENTATION IN SECTION 6.2 AS TO THE SOURCES OF THE FUNDS USED TO PAY THE
PURCHASE PRICE OF THE NOTES TO BE PURCHASED BY YOU.

 

5.13        PRIVATE OFFERING BY THE COMPANY.

 

None of the Parent, the Company or anyone acting on their behalf has offered the
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 you, the Other Purchasers and not more than 48 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment.  None of the Parent, the Company or anyone acting on their
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.

 

5.14        USE OF PROCEEDS; MARGIN REGULATIONS.

 

The Company will apply the proceeds of the sale of the Notes for general
corporate purposes, to repay Indebtedness and to fund capital expenditures.  No
part of the proceeds from the sale of the Notes 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

 

9

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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 20% 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 25% 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.

 

5.15        EXISTING DEBT; FUTURE LIENS.

 

(A)           EXCEPT AS DESCRIBED THEREIN, SCHEDULE 5.15 SETS FORTH A COMPLETE
AND CORRECT LIST OF ALL OUTSTANDING INDEBTEDNESS OF THE PARENT AND ITS
SUBSIDIARIES,  AS OF MARCH 31, 2009, SINCE WHICH DATE THERE HAS BEEN NO MATERIAL
CHANGE IN THE AMOUNTS, INTEREST RATES, SINKING FUNDS, INSTALLMENT PAYMENTS OR
MATURITIES OF THE INDEBTEDNESS OF THE COMPANY OR ITS SUBSIDIARIES.  NEITHER THE
PARENT NOR ANY SUBSIDIARY,  IS IN DEFAULT AND NO WAIVER OF DEFAULT IS CURRENTLY
IN EFFECT, IN THE PAYMENT OF ANY PRINCIPAL OR INTEREST ON ANY INDEBTEDNESS OF
THE PARENT OR SUCH SUBSIDIARY, AND NO EVENT OR CONDITION EXISTS WITH RESPECT TO
ANY INDEBTEDNESS OF THE PARENT OR ANY SUBSIDIARY, THAT IS OUTSTANDING IN AN
AGGREGATE PRINCIPAL AMOUNT IN EXCESS OF $5,000,000 AND THAT WOULD PERMIT (OR
THAT WITH NOTICE OR THE LAPSE OF TIME, OR BOTH, WOULD PERMIT) ONE OR MORE
PERSONS TO CAUSE SUCH INDEBTEDNESS TO BECOME DUE AND PAYABLE BEFORE ITS STATED
MATURITY OR BEFORE ITS REGULARLY SCHEDULED DATES OF PAYMENT.

 

(B)           NEITHER THE PARENT NOR ANY SUBSIDIARY IS A PARTY TO, OR OTHERWISE
SUBJECT TO ANY PROVISION CONTAINED IN, ANY INSTRUMENT EVIDENCING INDEBTEDNESS OF
THE PARENT OR SUCH SUBSIDIARY, ANY AGREEMENT RELATING THERETO OR ANY OTHER
AGREEMENT (INCLUDING, BUT NOT LIMITED TO, ITS CHARTER OR OTHER ORGANIZATIONAL
DOCUMENT) WHICH LIMITS THE AMOUNT OF, OR OTHERWISE IMPOSES RESTRICTIONS ON THE
INCURRING OF, INDEBTEDNESS OF THE PARENT, EXCEPT AS SPECIFICALLY INDICATED IN
SCHEDULE 5.15.

 

5.16        FOREIGN ASSETS CONTROL REGULATIONS, ETC.

 

(A)           NEITHER THE SALE OF THE 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 PARENT NOR ANY SUBSIDIARY (I) 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
(II) TO THE PARENT’S KNOWLEDGE, ENGAGES IN ANY DEALINGS OR TRANSACTIONS WITH ANY
SUCH PERSON.  THE PARENT AND ITS SUBSIDIARIES ARE IN COMPLIANCE, IN ALL MATERIAL
RESPECTS, WITH THE USA PATRIOT ACT.

 

10

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(C)           NO PART OF THE PROCEEDS FROM THE SALE OF THE NOTES HEREUNDER WILL
BE USED, DIRECTLY OR INDIRECTLY, IN VIOLATION OF THE UNITED STATES FOREIGN
CORRUPT PRACTICES ACT OF 1977, AS AMENDED, ASSUMING IN ALL CASES THAT SUCH ACT
APPLIES TO THE PARENT.

 

5.17        STATUS UNDER CERTAIN STATUTES.

 

Neither the Parent nor any Subsidiary is subject to regulation under the
Investment Company Act of 1940, as amended, the ICC Termination Act, as amended,
or the Federal Power Act, as amended.

 

5.18        ENVIRONMENTAL MATTERS.

 

(A)           NEITHER THE PARENT NOR ANY SUBSIDIARY, HAS KNOWLEDGE OF ANY CLAIM
OR HAS RECEIVED ANY NOTICE OF ANY CLAIM, AND NO PROCEEDING HAS BEEN INSTITUTED
RAISING ANY CLAIM AGAINST THE PARENT OR ANY OF ITS 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 COULD NOT REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(B)           NEITHER THE PARENT NOR ANY SUBSIDIARY HAS KNOWLEDGE OF ANY FACTS
WHICH WOULD GIVE RISE TO ANY CLAIM, 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 PARENT NOR ANY SUBSIDIARY HAS STORED ANY HAZARDOUS
MATERIALS ON REAL PROPERTIES NOW OR FORMERLY OWNED, LEASED OR OPERATED BY ANY OF
THEM AND HAS NOT DISPOSED OF ANY HAZARDOUS MATERIALS 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; AND

 

(D)           ALL BUILDINGS ON ALL REAL PROPERTIES NOW OWNED, LEASED OR OPERATED
BY THE PARENT OR ANY OF ITS 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.

 

5.19        SOLVENCY OF SUBSIDIARY GUARANTORS.

 

After giving effect to the transactions contemplated herein and after giving due
consideration to any rights of contribution (i) each Subsidiary Guarantor has
received fair consideration and reasonably equivalent value for the incurrence
of its obligations under the Subsidiary Guaranty, (ii) the fair value of the
assets of each Subsidiary Guarantor (both at fair valuation and at present fair
saleable value) exceeds its liabilities, (ii) each Subsidiary Guarantor is able
to and expects to be able to pay its debts as they mature, and (iii) each
Subsidiary Guarantor has capital sufficient to carry on its business as
conducted and as proposed to be conducted.

 

11

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6.             REPRESENTATIONS OF THE PURCHASERS.

 

6.1          PURCHASE FOR INVESTMENT.

 

You represent that you are purchasing the Notes for your own account or for one
or more separate accounts maintained by you or for the account of one or more
pension or trust funds and not with a view to the distribution thereof, provided
that the disposition of your or their property shall at all times be within your
or their control.  You understand that the 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 to
register the Notes.  You represent that you are an “accredited investor” within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D
under the Securities Act.

 

6.2          SOURCE OF FUNDS.

 

You represent that at least one of the following statements is an accurate
representation as to each source of funds (a “Source”) to be used by you to pay
the purchase price of the Notes to be purchased by you 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
EXEMPTION (“PTE”) 95-60) 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 TOGETHER WITH THE AMOUNT OF THE RESERVES AND LIABILITIES FOR THE GENERAL
ACCOUNT CONTRACT(S) 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)
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 YOUR STATE OF DOMICILE; OR

 

(B)           THE SOURCE IS A SEPARATE ACCOUNT THAT IS MAINTAINED SOLELY IN
CONNECTION WITH YOUR 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 (ISSUED JANUARY 29, 1990), OR (II) A
BANK COLLECTIVE INVESTMENT FUND, WITHIN THE MEANING OF PTE 91-38 (ISSUED
JULY 12, 1991) AND NO EMPLOYEE BENEFIT PLAN OR GROUP OF PLANS MAINTAINED BY THE
SAME EMPLOYER OR EMPLOYEE ORGANIZATION WILL, THROUGHOUT YOUR HOLDING OF THE
NOTES, BENEFICIALLY OWNS MORE THAN 10% OF ALL ASSETS ALLOCATED TO SUCH POOLED
SEPARATE ACCOUNT OR COLLECTIVE INVESTMENT FUND; OR

 

12

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(D)           THE SOURCE CONSTITUTES ASSETS OF AN “INVESTMENT FUND” (WITHIN THE
MEANING OF PART V OF PTE 84-14 (THE “QPAM EXEMPTION”)) MANAGED BY A “QUALIFIED
PROFESSIONAL ASSET MANAGER” OR “QPAM” (WITHIN THE MEANING OF PART V OF THE QPAM
EXEMPTION), NO EMPLOYEE BENEFIT PLAN’S ASSETS 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 (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

 

(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 6.2, the terms “employee benefit plan”, “governmental
plan” and “separate account” shall have the respective meanings assigned to such
terms in section 3 of ERISA.

 

7.             INFORMATION AS TO COMPANY.

 

7.1          FINANCIAL AND BUSINESS INFORMATION

 

The Parent will deliver to each holder of Notes that is an Institutional
Investor:

 

(A)           QUARTERLY STATEMENTS — WITHIN 60 DAYS (OR SUCH SHORTER PERIOD AS
IS 15 DAYS GREATER THAN THE PERIOD APPLICABLE TO THE FILING OF THE PARENT’S
QUARTERLY REPORT ON FORM 10-Q (“FORM 10-Q”) WITH THE SEC REGARDLESS OF WHETHER
THE PARENT IS SUBJECT TO THE FILING REQUIREMENTS THEREOF) AFTER THE END OF EACH
QUARTERLY FISCAL PERIOD IN EACH FISCAL

 

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YEAR OF THE PARENT (OTHER THAN THE LAST QUARTERLY FISCAL PERIOD OF EACH SUCH
FISCAL YEAR), DUPLICATE COPIES OF,

 

(I)            A CONSOLIDATED BALANCE SHEET OF THE PARENT AND ITS SUBSIDIARIES,
AS AT THE END OF SUCH QUARTER, AND

 

(II)           CONSOLIDATED STATEMENTS OF INCOME, SHAREHOLDERS’ EQUITY AND CASH
FLOWS OF THE PARENT 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, provided that delivery within the time period specified above of
copies of the Parent’s Form 10-Q prepared in compliance with the requirements
therefor and filed with the SEC shall be deemed to satisfy the requirements of
this Section 7.1(a);

 

(B)           ANNUAL STATEMENTS — WITHIN 120 DAYS (OR SUCH SHORTER PERIOD AS IS
15 DAYS GREATER THAN THE PERIOD APPLICABLE TO THE FILING OF THE PARENT’S ANNUAL
REPORT ON FORM 10-K (THE “FORM 10-K”) WITH THE SEC REGARDLESS OF WHETHER THE
PARENT IS SUBJECT TO THE FILING REQUIREMENTS THEREOF) AFTER THE END OF EACH
FISCAL YEAR OF THE PARENT, DUPLICATE COPIES OF,

 

(I)            A CONSOLIDATED BALANCE SHEET OF THE PARENT AND ITS SUBSIDIARIES, 
AS AT THE END OF SUCH YEAR, AND

 

(II)           CONSOLIDATED STATEMENTS OF INCOME, SHAREHOLDERS’ EQUITY AND CASH
FLOWS OF THE PARENT 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 regional or 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 the delivery within the time period specified above of the
Parent’s Form 10-K for such fiscal year (together with the Parent’s annual
report to shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in accordance with the requirements therefor and filed
with the SEC shall be deemed to satisfy the requirements of this Section (b);

 

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(C)           SEC AND OTHER REPORTS — PROMPTLY UPON THEIR BECOMING AVAILABLE,
ONE COPY OF (I) EACH FINANCIAL STATEMENT, REPORT, NOTICE OR PROXY STATEMENT SENT
BY THE PARENT OR ANY SUBSIDIARY, TO PUBLIC SECURITIES HOLDERS GENERALLY, AND
(II) EACH REGULAR OR PERIODIC REPORT, EACH REGISTRATION STATEMENT THAT SHALL
HAVE BECOME EFFECTIVE (WITHOUT EXHIBITS EXCEPT AS EXPRESSLY REQUESTED BY SUCH
HOLDER), AND EACH FINAL PROSPECTUS AND ALL AMENDMENTS THERETO FILED BY THE
PARENT OR ANY SUBSIDIARY,  WITH THE SEC;

 

(D)           NOTICE OF DEFAULT OR EVENT OF DEFAULT — PROMPTLY, AND IN ANY EVENT
WITHIN FIVE BUSINESS DAYS AFTER A RESPONSIBLE OFFICER BECOMING AWARE OF THE
EXISTENCE OF ANY DEFAULT OR EVENT OF DEFAULT, A WRITTEN NOTICE SPECIFYING THE
NATURE AND PERIOD OF EXISTENCE THEREOF AND WHAT ACTION THE PARENT OR 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 BECOMING AWARE OF ANY OF THE FOLLOWING, A
WRITTEN NOTICE SETTING FORTH THE NATURE THEREOF AND THE ACTION, IF ANY, THAT THE
PARENT OR AN ERISA AFFILIATE, PROPOSES TO TAKE WITH RESPECT THERETO:

 

(I)            WITH RESPECT TO ANY PLAN, ANY REPORTABLE EVENT, AS DEFINED IN
SECTION 4043(B) OF ERISA AND THE REGULATIONS THEREUNDER, FOR WHICH NOTICE
THEREOF HAS NOT BEEN WAIVED PURSUANT TO SUCH REGULATIONS AS IN EFFECT ON THE
DATE HEREOF; OR

 

(II)           THE TAKING BY THE PBGC OF STEPS TO INSTITUTE, OR THE THREATENING
BY THE PBGC OF THE INSTITUTION OF, PROCEEDINGS UNDER SECTION 4042 OF ERISA FOR
THE TERMINATION OF, OR THE APPOINTMENT OF A TRUSTEE TO ADMINISTER, ANY 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 COULD RESULT IN THE
INCURRENCE OF ANY LIABILITY BY THE PARENT OR AN ERISA AFFILIATE,  PURSUANT TO
TITLE I OR IV OF ERISA OR THE PENALTY OR EXCISE TAX PROVISIONS OF THE CODE
RELATING TO EMPLOYEE BENEFIT PLANS, OR IN THE IMPOSITION OF ANY LIEN ON ANY OF
THE RIGHTS, PROPERTIES OR ASSETS OF THE PARENT OR AN 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; AND

 

(F)            REQUESTED INFORMATION — WITH REASONABLE PROMPTNESS, SUCH OTHER
DATA AND INFORMATION RELATING TO THE BUSINESS, OPERATIONS, AFFAIRS, FINANCIAL
CONDITION, ASSETS OR PROPERTIES OF THE PARENT OR ANY OF ITS SUBSIDIARIES,
INCLUDING THE COMPANY OR RELATING TO THE ABILITY OF THE PARENT OR 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.

 

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7.2          OFFICER’S CERTIFICATE.

 

Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer substantially in the form of Schedule 7.2 setting
forth:

 

(A)           COVENANT COMPLIANCE — THE INFORMATION (INCLUDING DETAILED
CALCULATIONS AND RECONCILIATIONS TO GAAP IF AGREEMENT ACCOUNTING PRINCIPLES
DIFFER FROM GAAP AT THE TIME SUCH COMPLIANCE CERTIFICATE IS DELIVERED) REQUIRED
IN ORDER TO ESTABLISH WHETHER THE PARENT AND THE COMPANY WERE IN COMPLIANCE WITH
THE REQUIREMENTS OF SECTION 10.1 THROUGH SECTION 10.11, INCLUSIVE, 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); AND

 

(B)           EVENT OF DEFAULT — A STATEMENT THAT SUCH OFFICER HAS REVIEWED THE
RELEVANT TERMS HEREOF AND HAS MADE, OR CAUSED TO BE MADE, UNDER HIS OR HER
SUPERVISION, A REVIEW OF THE TRANSACTIONS AND CONDITIONS OF THE PARENT AND ITS
SUBSIDIARIES,  FROM THE BEGINNING OF THE QUARTERLY OR ANNUAL PERIOD COVERED BY
THE STATEMENTS THEN BEING FURNISHED TO THE DATE OF THE CERTIFICATE AND THAT SUCH
REVIEW SHALL NOT HAVE DISCLOSED THE EXISTENCE DURING SUCH PERIOD 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.

 

7.3          ELECTRONIC DELIVERY.

 

Financial statements, opinions of independent certified public accountants,
other information and officers’ certificates required to be delivered by the
Parent pursuant to Sections 7.1(a), (b) or (c) and Section 7.2 shall be deemed
to have been delivered if any of the following, to the extent applicable, are
satisfied: (i) such financial statements satisfying the requirements of
Section 7.1(a) or (b) and related certificate satisfying the requirements of
Section 7.2 are delivered to you and each other holder of Notes by e-mail,
(ii) the Parent shall have timely filed such Form 10-Q or Form 10-K, satisfying
the requirements of Section 7.1(a) or (b) as the case may be, with the SEC on
“EDGAR” and shall have made such form and the related certificate satisfying the
requirements of Section 7.2 available on its home page on the worldwide web (at
the date of this Agreement located at http://www.hpinc.com), (iii) such
financial statements satisfying the requirements of Section 7.1(a) or (b) and
related certificate satisfying the requirements of Section 7.2 are timely posted
by or on behalf of the Parent on IntraLinks or on any other similar website to
which each holder of Notes has free access or (iv) the Parent shall have filed
any of the items referred to in Section 7.1(c) with the SEC on “EDGAR” and shall
have made such items available on its home page on the worldwide web or if any
of such items are timely posted by or on behalf of the Parent on IntraLinks or
on any other similar website to which each holder of Notes has free access;
provided however, that in the case of any of clause (ii), (iii) or (iv) the
Parent shall concurrently with such filing or posting give notice to each holder
of Notes of such posting or filing and provided further, that upon request of

 

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any holder, the Parent will thereafter deliver written copies of such forms,
financial statements and certificates to such holder.

 

7.4          VISITATION.

 

The Parent and the Company will 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 PARENT OR THE
COMPANY, TO VISIT THE PRINCIPAL EXECUTIVE OFFICE OF THE PARENT OR THE COMPANY,
TO DISCUSS THE AFFAIRS, FINANCES AND ACCOUNTS OF THE PARENT AND ITS
SUBSIDIARIES,  WITH THE PARENT’S AND THE COMPANY’S OFFICERS, AND, WITH THE
CONSENT OF THE PARENT AND THE COMPANY (WHICH CONSENT WILL NOT BE UNREASONABLY
WITHHELD), TO VISIT THE OTHER OFFICES AND PROPERTIES OF THE PARENT AND EACH
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 PARENT OR ANY 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 AFFAIRS, FINANCES, AND ACCOUNTS WITH THEIR RESPECTIVE
OFFICERS AND INDEPENDENT PUBLIC ACCOUNTANTS (AND BY THIS PROVISION THE PARENT
AND THE COMPANY AUTHORIZE SAID ACCOUNTANTS TO DISCUSS THE AFFAIRS, FINANCES AND
ACCOUNTS OF THE PARENT AND ITS SUBSIDIARIES, INCLUDING THE COMPANY), ALL AT SUCH
TIMES AND AS OFTEN AS MAY BE REQUESTED.

 

8.             PREPAYMENT OF THE NOTES.

 

8.1          REQUIRED PREPAYMENTS.

 

On July 21, 2012 and on each July 21 thereafter to and including July 21, 2015,
the Company will prepay $40,000,000 principal amount (or such lesser principal
amount as shall then be outstanding) of the Notes at par and without payment of
the Make-Whole Amount or any premium, provided that upon any partial prepayment
of the Notes pursuant to Section 8.2 or partial purchase of the Notes permitted
by Section 8.6, the principal amount of each required prepayment of the Notes
becoming due under this Section 8.1 on and after the date of such prepayment
shall be reduced in the same proportion as the aggregate unpaid principal amount
of the Notes is reduced as a result of such prepayment.

 

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 in an amount not less than
$5,000,000 in the aggregate in the case of a partial prepayment, at 100% of the
principal amount so prepaid, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount.  The Company will give
each holder of Notes 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

 

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principal amount of the Notes to be prepaid on such date, the principal amount
of each Note held by such holder to be prepaid (determined in accordance with
Section 8.4), 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 to be prepaid a certificate of a Senior Financial Officer specifying
the calculation of such Make-Whole Amount as of the specified prepayment date.

 

8.3          MANDATORY OFFER TO PREPAY UPON CHANGE OF CONTROL.

 

(A)           NOTICE OF CHANGE OF CONTROL OR CONTROL EVENT — THE COMPANY WILL,
WITHIN FIVE BUSINESS DAYS AFTER ANY RESPONSIBLE OFFICER HAS KNOWLEDGE OF THE
OCCURRENCE OF ANY CHANGE OF CONTROL OR CONTROL EVENT, GIVE NOTICE OF SUCH CHANGE
OF CONTROL OR CONTROL EVENT TO EACH HOLDER OF NOTES UNLESS NOTICE IN RESPECT OF
SUCH CHANGE OF CONTROL (OR THE CHANGE OF CONTROL CONTEMPLATED BY SUCH CONTROL
EVENT) SHALL HAVE BEEN GIVEN PURSUANT TO PARAGRAPH (B) OF THIS SECTION 8.3.  IF
A CHANGE OF CONTROL HAS OCCURRED, SUCH NOTICE SHALL CONTAIN AND CONSTITUTE AN
OFFER TO PREPAY NOTES AS DESCRIBED IN PARAGRAPH (C) OF THIS SECTION 8.3 AND
SHALL BE ACCOMPANIED BY THE CERTIFICATE DESCRIBED IN PARAGRAPH (G) OF THIS
SECTION 8.3.

 

(B)           CONDITION TO COMPANY ACTION — THE COMPANY WILL NOT TAKE ANY ACTION
THAT CONSUMMATES OR FINALIZES A CHANGE OF CONTROL UNLESS (I) AT LEAST 15
BUSINESS DAYS PRIOR TO SUCH ACTION IT SHALL HAVE GIVEN TO EACH HOLDER OF NOTES
WRITTEN NOTICE CONTAINING AND CONSTITUTING AN OFFER TO PREPAY NOTES ACCOMPANIED
BY THE CERTIFICATE DESCRIBED IN PARAGRAPH (G) OF THIS SECTION 8.3, AND
(II) SUBJECT TO THE PROVISIONS OF PARAGRAPH (D) BELOW, CONTEMPORANEOUSLY WITH
SUCH ACTION, IT PREPAYS ALL NOTES REQUIRED TO BE PREPAID IN ACCORDANCE WITH THIS
SECTION 8.3.

 

(C)           OFFER TO PREPAY NOTES — THE OFFER TO PREPAY NOTES CONTEMPLATED BY
PARAGRAPHS (A) AND (B) OF THIS SECTION 8.3 SHALL BE AN OFFER TO PREPAY, IN
ACCORDANCE WITH AND SUBJECT TO THIS SECTION 8.3, ALL, BUT NOT LESS THAN ALL, OF
THE NOTES HELD BY EACH HOLDER (IN THIS CASE ONLY, “HOLDER” IN RESPECT OF ANY
NOTE REGISTERED IN THE NAME OF A NOMINEE FOR A DISCLOSED BENEFICIAL OWNER SHALL
MEAN SUCH BENEFICIAL OWNER) ON A DATE SPECIFIED IN SUCH OFFER (THE “PROPOSED
PREPAYMENT DATE”).  IF SUCH PROPOSED PREPAYMENT DATE IS IN CONNECTION WITH AN
OFFER CONTEMPLATED BY PARAGRAPH (A) OF THIS SECTION 8.3, SUCH DATE SHALL BE NOT
LESS THAN 30 DAYS AND NOT MORE THAN 60 DAYS AFTER THE DATE OF SUCH OFFER.

 

(D)           ACCEPTANCE; REJECTION — A HOLDER OF NOTES MAY ACCEPT THE OFFER TO
PREPAY MADE PURSUANT TO THIS SECTION 8.3 BY CAUSING A NOTICE OF SUCH ACCEPTANCE
TO BE DELIVERED TO THE COMPANY ON OR BEFORE THE DATE SPECIFIED IN THE
CERTIFICATE DESCRIBED IN PARAGRAPH (G) OF THIS SECTION 8.3.  A FAILURE BY A
HOLDER OF NOTES TO RESPOND TO AN OFFER TO PREPAY MADE PURSUANT TO THIS
SECTION 8.3, OR TO ACCEPT AN OFFER AS TO ALL OF THE NOTES HELD BY THE HOLDER,
WITHIN SUCH TIME PERIOD SHALL BE DEEMED TO CONSTITUTE REJECTION OF SUCH OFFER BY
SUCH HOLDER.

 

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(E)           PREPAYMENT — PREPAYMENT OF THE NOTES TO BE PREPAID PURSUANT TO
THIS SECTION 8.3 SHALL BE AT 100% OF THE OUTSTANDING PRINCIPAL AMOUNT OF SUCH
NOTES, TOGETHER WITH INTEREST ON SUCH NOTES ACCRUED TO THE DATE OF PREPAYMENT
AND SHALL NOT REQUIRE THE PAYMENT OF ANY MAKE-WHOLE AMOUNT OR PREPAYMENT
PREMIUM.  THE PREPAYMENT SHALL BE MADE ON THE PROPOSED PREPAYMENT DATE EXCEPT AS
PROVIDED IN PARAGRAPH (F) OF THIS SECTION 8.3.

 

(F)            DEFERRAL PENDING CHANGE OF CONTROL — THE OBLIGATION OF THE
COMPANY TO PREPAY NOTES PURSUANT TO THE OFFERS REQUIRED BY PARAGRAPHS (A) AND
(B) AND ACCEPTED IN ACCORDANCE WITH PARAGRAPH (D) OF THIS SECTION 8.3 IS SUBJECT
TO THE OCCURRENCE OF THE CHANGE OF CONTROL IN RESPECT OF WHICH SUCH OFFERS AND
ACCEPTANCES SHALL HAVE BEEN MADE.  IN THE EVENT THAT SUCH CHANGE OF CONTROL DOES
NOT OCCUR ON OR PRIOR TO THE PROPOSED PREPAYMENT DATE IN RESPECT THEREOF, THE
PREPAYMENT SHALL BE DEFERRED UNTIL AND SHALL BE MADE ON THE DATE ON WHICH SUCH
CHANGE OF CONTROL OCCURS.  THE COMPANY SHALL KEEP EACH HOLDER OF NOTES
REASONABLY AND TIMELY INFORMED OF (I) ANY SUCH DEFERRAL OF THE DATE OF
PREPAYMENT, (II) THE DATE ON WHICH SUCH CHANGE OF CONTROL AND THE PREPAYMENT ARE
EXPECTED TO OCCUR, AND (III) ANY DETERMINATION BY THE COMPANY THAT EFFORTS TO
EFFECT SUCH CHANGE OF CONTROL HAVE CEASED OR BEEN ABANDONED (IN WHICH CASE THE
OFFERS AND ACCEPTANCES MADE PURSUANT TO THIS SECTION 8.3 IN RESPECT OF SUCH
CHANGE OF CONTROL SHALL BE DEEMED RESCINDED).  NOTWITHSTANDING THE FOREGOING, IN
THE EVENT THAT THE PREPAYMENT HAS NOT BEEN MADE WITHIN 90 DAYS AFTER SUCH
PROPOSED PREPAYMENT DATE BY VIRTUE OF THE DEFERRAL PROVIDED FOR IN THIS
SECTION 8.3(F), THE COMPANY SHALL MAKE A NEW OFFER TO PREPAY IN ACCORDANCE WITH
PARAGRAPH (C) OF THIS SECTION 8.3.

 

(G)           OFFICER’S CERTIFICATE — EACH OFFER TO PREPAY THE NOTES PURSUANT TO
THIS SECTION 8.3 SHALL BE ACCOMPANIED BY A CERTIFICATE, EXECUTED BY A SENIOR
FINANCIAL OFFICER OF THE COMPANY AND DATED THE DATE OF SUCH OFFER, SPECIFYING:
(I) THE PROPOSED PREPAYMENT DATE, (II) THAT SUCH OFFER IS MADE PURSUANT TO THIS
SECTION 8.3, (III) THE PRINCIPAL AMOUNT OF EACH NOTE OFFERED TO BE PREPAID,
(IV) THE INTEREST THAT WOULD BE DUE ON EACH NOTE OFFERED TO BE PREPAID, ACCRUED
TO THE PROPOSED PREPAYMENT DATE, (V) THAT THE CONDITIONS OF THIS SECTION 8.3
HAVE BEEN FULFILLED, (VI) IN REASONABLE DETAIL, THE NATURE AND DATE OR PROPOSED
DATE OF THE CHANGE OF CONTROL AND (VII) THE DATE BY WHICH ANY HOLDER OF A NOTE
THAT WISHES TO ACCEPT SUCH OFFER MUST DELIVER NOTICE THEREOF TO THE COMPANY,
WHICH DATE SHALL NOT BE EARLIER THAN THREE BUSINESS DAYS PRIOR TO THE PROPOSED
PREPAYMENT DATE OR, IN THE CASE OF A PREPAYMENT PURSUANT TO SECTION 8.3(B), THE
DATE OF THE ACTION REFERRED TO IN SECTION 8.3(B)(I).

 

8.4          ALLOCATION OF PARTIAL PREPAYMENTS.

 

In the case of each partial prepayment of the Notes pursuant to Section 8.2, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.

 

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8.5          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 (which shall be a Business Day),
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 principal amount shall cease to accrue.  Any Note paid or prepaid in
full shall be surrendered to the Company and canceled and shall not be reissued,
and no Note shall be issued in lieu of any prepaid principal amount of any Note.

 

8.6          PURCHASE OF NOTES.

 

The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except (a) upon the payment or prepayment of the Notes in accordance with
the terms of this Agreement and the Notes or (b) pursuant to an offer to
purchase made by the Company or an Affiliate pro rata to the holders of all
Notes at the time outstanding upon the same terms and conditions.  Any such
offer shall provide each holder with sufficient information to enable it to make
an informed decision with respect to such offer, and shall remain open for at
least 30 Business Days.  If the holders of more than 25% of the principal amount
of the Notes then outstanding accept such offer, the Company shall promptly
notify the remaining holders of such fact and the expiration date for the
acceptance by holders of Notes of such offer shall be extended by the number of
days necessary to give each such remaining holder at least ten Business Days
from its receipt of such notice to accept such offer.  The Company will promptly
cancel all Notes acquired by it or any Affiliate 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.

 

8.7          MAKE-WHOLE AMOUNT.

 

The term “Make-Whole Amount” means, with respect to any 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 over 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:

 

“Called Principal” means, with respect to any Note, the principal of such 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, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal 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 the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

 

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“Reinvestment Yield” means, with respect to the Called Principal of any Note,
.50% over the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as the “PX1 Screen” on the Bloomberg Financial Market Service (or such other
display as may replace the PX1 Screen on Bloomberg Financial Market Service) 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, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with respect to such
Called Principal, 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.  Such implied 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 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, with respect to any Called Principal, 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 with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any  Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal 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 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, with respect to the Called Principal of any Note, 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.

 

9.             AFFIRMATIVE COVENANTS.

 

Each of the Parent and the Company covenants that so long as any of the Notes
are outstanding:

 

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9.1          COMPLIANCE WITH LAW.

 

The Parent and the Company will, and will cause each other Subsidiary to, comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including 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 reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.

 

9.2          INSURANCE.

 

The Parent will, and will cause each Subsidiary to, carry insurance (which may
be carried by the Parent on a consolidated basis) or maintain appropriate risk
management programs in such amounts, covering such risks and liabilities and
with such deductibles or self-insurance retentions as are reasonable or
customary given the nature of its business, its ability to self-insure, the
circumstances and geographic area in which such business is being conducted and
the availability of insurance coverage at commercially reasonable rates.

 

9.3          MAINTENANCE OF PROPERTIES.

 

The Parent and the Company will, and will cause each other Subsidiary 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 Parent or any 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 Parent has concluded that such discontinuance
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

9.4          PAYMENT OF TAXES.

 

The Parent and the Company will, and will cause each other Subsidiary to, file
all income tax or similar 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 payable by any
of them, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, provided that neither the Parent nor any
Subsidiary,  need pay any such tax or assessment if (i) the amount,
applicability or validity thereof is contested by the Parent or such Subsidiary
on a timely basis in good faith and in appropriate proceedings, and the Parent
or a Subsidiary,  has established adequate reserves therefor in accordance with
GAAP on the books of the Parent or such Subsidiary or (ii) the nonpayment of all
such taxes and assessments in the aggregate would not reasonably be expected to
have a Material Adverse Effect.

 

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9.5          CORPORATE EXISTENCE, ETC.

 

Each of the Parent and the Company will at all times preserve and keep in full
force and effect its corporate existence.  Subject to Sections 10.5 and 10.6,
the Parent and the Company will at all times preserve and keep in full force and
effect the corporate existence of each other Subsidiary (unless merged into the
Parent or a Wholly Owned Subsidiary, including the Company) and all rights and
franchises of the Parent and its Subsidiaries,  unless, in the good faith
judgment of the Parent, the termination of or failure to preserve and keep in
full force and effect a particular corporate existence, right or franchise would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

9.6          BOOKS AND RECORDS.

 

The Parent will, and the Parent will cause each Subsidiary to, maintain proper
books of record and account in conformity in all material respects with GAAP and
all applicable requirements of any Governmental Authority having legal or
regulatory jurisdiction over the Parent or such Subsidiary, as the case may be.

 

9.7          LIENS SECURING OBLIGATIONS UNDER PRINCIPAL CREDIT AGREEMENT.

 

If at any time the Parent or any Subsidiary creates, incurs, assumes or suffers
to exist, directly or indirectly, any Lien on its properties or assets,
including capital stock, whether now owned or hereafter acquired, in favor of
the lenders or other creditors party to the Principal Credit Agreement, to
secure obligations under the Principal Credit Agreement, the Parent,
concurrently therewith, shall make or cause to be made effective provision
whereby the Notes are secured by such Lien equally and ratably with any and all
other Indebtedness and other obligations thereby secured, pursuant to terms
reasonably acceptable to the Required Holders, provided however, that the
foregoing covenant shall not apply to Liens on the Cash Collateral Account, and
the funds held in such account, established under and pursuant to the Principal
Credit Agreement.

 

10.          NEGATIVE COVENANTS.

 

Each of the Parent and the Company covenants that so long as any of the Notes
are outstanding:

 

10.1        CONSOLIDATED DEBT.

 

The Parent will not permit Consolidated Debt to exceed 55% of Consolidated Total
Capitalization as of the end of any fiscal quarter.

 

10.2        INTEREST COVERAGE RATIO.

 

The Parent will not permit the ratio of (a) EBITDA, for the four-fiscal quarter
period then ended, to (b) Interest Expense for the four-fiscal quarter period
then ended, to be less than  2.50 to 1.00 as of the end of any fiscal quarter.

 

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10.3        PRIORITY DEBT.

 

The Parent will not at any time permit Priority Debt to exceed 20% of
Consolidated Net Worth (determined as of the end of the Parent’s most recently
completed fiscal quarter).

 

10.4        INDEBTEDNESS OF SUBSIDIARIES.

 

The Parent will not at any time permit any Subsidiary, directly or indirectly,
to create, incur, assume, guarantee, have outstanding, or otherwise become or
remain directly or indirectly liable for, any Indebtedness other than:

 

(A)           THE COMPANY’S SENIOR NOTES OUTSTANDING UNDER ITS NOTE PURCHASE
AGREEMENT DATED AS OF AUGUST 15, 2002, THE NOTES AND INDEBTEDNESS INCURRED FROM
TIME TO TIME UNDER THE CREDIT AGREEMENTS;

 

(B)           INDEBTEDNESS OUTSTANDING ON THE DATE HEREOF AND LISTED ON SCHEDULE
5.15 AND ANY EXTENSION, RENEWAL, REFUNDING OR REFINANCING THEREOF, PROVIDED THAT
THE PRINCIPAL AMOUNT OUTSTANDING AT THE TIME OF SUCH EXTENSION, RENEWAL,
REFUNDING OR REFINANCING IS NOT INCREASED;

 

(C)           INDEBTEDNESS OWED TO THE PARENT OR A WHOLLY OWNED SUBSIDIARY,
INCLUDING THE COMPANY;

 

(D)           GUARANTIES BY A SUBSIDIARY OF INDEBTEDNESS OF ANOTHER SUBSIDIARY
OR BY A SUBSIDIARY GUARANTOR OF INDEBTEDNESS OF THE COMPANY OR THE PARENT;

 

(E)           INDEBTEDNESS OF A SUBSIDIARY OUTSTANDING AT THE TIME OF ITS
ACQUISITION BY THE COMPANY OR THE PARENT, PROVIDED THAT (I) SUCH INDEBTEDNESS
WAS NOT INCURRED IN CONTEMPLATION OF BECOMING A SUBSIDIARY AND (II) AT THE TIME
OF SUCH ACQUISITION AND AFTER GIVING EFFECT THERETO, NO DEFAULT OR EVENT OF
DEFAULT EXISTS OR WOULD EXIST; AND

 

(F)            INDEBTEDNESS NOT OTHERWISE PERMITTED BY THE PRECEDING CLAUSES
(A) THROUGH (E), PROVIDED THAT IMMEDIATELY BEFORE AND AFTER GIVING EFFECT
THERETO AND TO THE APPLICATION OF THE PROCEEDS THEREOF,

 

(I)            NO DEFAULT OR EVENT OF DEFAULT EXISTS, AND

 

(II)           PRIORITY DEBT DOES NOT EXCEED 20% OF CONSOLIDATED NET WORTH.

 

10.5        LIENS.

 

The Parent and the Company will not, and will not permit any other Subsidiary
to, permit to exist, create, assume or incur, directly or indirectly, any Lien
on its properties or assets, whether now owned or hereafter acquired, other than
Liens securing obligations under the Principal Credit Agreement in compliance
with Section 9.7, except:

 

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(A)           LIENS EXISTING ON PROPERTY OR ASSETS OF THE PARENT OR ANY
SUBSIDIARY,  AS OF THE DATE OF THIS AGREEMENT THAT ARE DESCRIBED IN
SCHEDULE 10.5;

 

(B)           LIENS FOR TAXES, ASSESSMENTS OR GOVERNMENTAL CHARGES NOT THEN DUE
AND DELINQUENT OR THE NONPAYMENT OF WHICH IS PERMITTED BY SECTION 9.4;

 

(C)           LIENS INCIDENTAL TO THE CONDUCT OF BUSINESS OR THE OWNERSHIP OF
PROPERTIES AND ASSETS (INCLUDING LANDLORDS’, LESSORS’, CARRIERS’, OPERATORS’,
WAREHOUSEMEN’S, MECHANICS’, MATERIALMEN’S AND OTHER SIMILAR LIENS) 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 OF LIKE GENERAL NATURE INCURRED IN THE ORDINARY COURSE OF
BUSINESS AND NOT IN CONNECTION WITH THE BORROWING OF MONEY;

 

(D)           ENCUMBRANCES IN THE NATURE OF LEASES, SUBLEASES, ZONING
RESTRICTIONS, EASEMENTS, RIGHTS OF WAY AND OTHER RIGHTS AND RESTRICTIONS OF
RECORD ON THE USE OF REAL PROPERTY AND DEFECTS IN TITLE ARISING OR INCURRED IN
THE ORDINARY COURSE OF BUSINESS, WHICH, INDIVIDUALLY AND IN THE AGGREGATE, DO
NOT MATERIALLY IMPAIR THE USE OR VALUE OF THE PROPERTY OR ASSETS SUBJECT THERETO
OR WHICH RELATE ONLY TO ASSETS THAT IN THE AGGREGATE ARE NOT MATERIAL;

 

(E)           ANY ATTACHMENT OR JUDGMENT LIEN, UNLESS THE JUDGMENT IT SECURES
HAS NOT, WITHIN 60 DAYS AFTER THE ENTRY THEREOF, BEEN DISCHARGED OR EXECUTION
THEREOF STAYED PENDING APPEAL, OR HAS NOT BEEN DISCHARGED WITHIN 60 DAYS AFTER
THE EXPIRATION OF ANY SUCH STAY;

 

(F)            LIENS SECURING INDEBTEDNESS OF A SUBSIDIARY TO THE PARENT OR TO
ANOTHER WHOLLY OWNED SUBSIDIARY, INCLUDING THE COMPANY;

 

(G)           LIENS (I) EXISTING ON PROPERTY AT THE TIME OF ITS ACQUISITION BY
THE PARENT OR A SUBSIDIARY, AND NOT CREATED IN CONTEMPLATION THEREOF, WHETHER OR
NOT THE INDEBTEDNESS SECURED BY SUCH LIEN IS ASSUMED BY THE PARENT OR A
SUBSIDIARY; OR (II) ON PROPERTY CREATED CONTEMPORANEOUSLY WITH ITS ACQUISITION
OR WITHIN 180 DAYS OF THE ACQUISITION OR COMPLETION OF CONSTRUCTION OR
DEVELOPMENT THEREOF TO SECURE OR PROVIDE FOR ALL OR A PORTION OF THE PURCHASE
PRICE OR COST OF THE ACQUISITION, CONSTRUCTION OR DEVELOPMENT OF SUCH PROPERTY
AFTER THE DATE OF CLOSING; OR (III) EXISTING ON PROPERTY OF A PERSON AT THE TIME
SUCH PERSON IS MERGED OR CONSOLIDATED WITH, OR BECOMES A SUBSIDIARY OF, OR
SUBSTANTIALLY ALL OF ITS ASSETS ARE ACQUIRED BY, THE PARENT OR A SUBSIDIARY, 
AND NOT CREATED IN CONTEMPLATION THEREOF; PROVIDED THAT IN THE CASE OF CLAUSES
(I), (II) AND (III) SUCH LIENS DO NOT EXTEND TO ADDITIONAL PROPERTY OF THE
PARENT OR ANY SUBSIDIARY (OTHER THAN PROPERTY THAT IS AN IMPROVEMENT TO OR IS
ACQUIRED FOR SPECIFIC USE IN CONNECTION WITH THE SUBJECT PROPERTY), AND THAT THE
AGGREGATE PRINCIPAL AMOUNT OF INDEBTEDNESS SECURED BY EACH SUCH LIEN DOES NOT
EXCEED THE FAIR MARKET VALUE (DETERMINED IN GOOD FAITH BY ONE OR MORE OFFICERS
OF THE PARENT TO WHOM AUTHORITY TO ENTER INTO SUCH TRANSACTION HAS BEEN
DELEGATED BY THE BOARD OF DIRECTORS OF THE PARENT) OF THE PROPERTY SUBJECT
THERETO;

 

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(H)           LIENS RESULTING FROM EXTENSIONS, RENEWALS OR REPLACEMENTS OF LIENS
PERMITTED BY PARAGRAPHS (A) AND (G), PROVIDED THAT (I) THERE IS NO INCREASE IN
THE PRINCIPAL AMOUNT OR DECREASE IN MATURITY OF THE INDEBTEDNESS SECURED THEREBY
AT THE TIME OF SUCH EXTENSION, RENEWAL OR REPLACEMENT, (II) ANY NEW LIEN
ATTACHES ONLY TO THE SAME PROPERTY THERETOFORE SUBJECT TO SUCH EARLIER LIEN AND
(III) IMMEDIATELY AFTER SUCH EXTENSION, RENEWAL OR REPLACEMENT NO DEFAULT OR
EVENT OF DEFAULT WOULD EXIST; AND

 

(I)            LIENS SECURING INDEBTEDNESS NOT OTHERWISE PERMITTED BY PARAGRAPHS
(A) THROUGH (H) OF THIS SECTION 10.5, PROVIDED THAT, AT THE TIME OF CREATION,
ASSUMPTION OR INCURRENCE THEREOF AND IMMEDIATELY AFTER GIVING EFFECT THERETO AND
TO THE APPLICATION OF THE PROCEEDS THEREFROM, PRIORITY DEBT DOES NOT EXCEED 20%
OF CONSOLIDATED NET WORTH.

 

10.6        MERGERS, CONSOLIDATIONS, ETC.

 

The Parent and the Company will not, and will not permit any other Subsidiary
to, consolidate with or merge with any other Person or convey, transfer, sell or
lease all or substantially all of its assets in a single transaction or series
of transactions to any Person except that:

 

(A)           THE COMPANY MAY CONSOLIDATE OR MERGE WITH ANY OTHER PERSON OR
CONVEY, TRANSFER, SELL OR LEASE ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN A
SINGLE TRANSACTION OR SERIES OF TRANSACTIONS TO ANY PERSON, PROVIDED THAT:

 

(I)            THE SUCCESSOR FORMED BY SUCH CONSOLIDATION OR THE SURVIVOR OF
SUCH MERGER OR THE PERSON THAT ACQUIRES BY CONVEYANCE, TRANSFER, SALE OR LEASE
ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY AS AN ENTIRETY, AS THE
CASE MAY BE, IS A SOLVENT CORPORATION, GENERAL PARTNERSHIP, LIMITED PARTNERSHIP
OR LIMITED LIABILITY COMPANY ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED
STATES OR ANY STATE THEREOF (INCLUDING THE DISTRICT OF COLUMBIA), AND, IF THE
COMPANY IS NOT SUCH SURVIVOR OR PERSON, SUCH SURVIVOR OR PERSON SHALL HAVE
EXECUTED AND DELIVERED TO EACH HOLDER OF ANY NOTES ITS ASSUMPTION OF THE DUE AND
PUNCTUAL PERFORMANCE AND OBSERVANCE OF EACH COVENANT AND CONDITION OF THIS
AGREEMENT AND THE NOTES;

 

(II)           AFTER GIVING EFFECT TO SUCH TRANSACTION, NO DEFAULT OR EVENT OF
DEFAULT SHALL EXIST; AND

 

(B)           THE PARENT MAY CONSOLIDATE OR MERGE WITH ANY OTHER PERSON OR
CONVEY, TRANSFER, SELL OR LEASE ALL OR SUBSTANTIALLY ALL OF ITS ASSETS IN A
SINGLE TRANSACTION OR SERIES OF TRANSACTIONS TO ANY PERSON, PROVIDED THAT:

 

(I)            THE SUCCESSOR FORMED BY SUCH CONSOLIDATION OR THE SURVIVOR OF
SUCH MERGER OR THE PERSON THAT ACQUIRES BY CONVEYANCE, TRANSFER, SALE OR LEASE
OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE PARENT AS AN ENTIRETY, AS THE
CASE MAY BE, SHALL BE A SOLVENT CORPORATION ORGANIZED AND EXISTING UNDER THE
LAWS OF THE UNITED STATES OR ANY STATE THEREOF (INCLUDING THE DISTRICT OF
COLUMBIA), AND, IF THE PARENT IS NOT SUCH CORPORATION, SUCH CORPORATION SHALL
HAVE EXECUTED AND DELIVERED TO EACH HOLDER OF ANY NOTES ITS ASSUMPTION OF THE
DUE AND PUNCTUAL PERFORMANCE AND

 

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OBSERVANCE OF EACH COVENANT AND CONDITION OF THIS AGREEMENT AND THE PARENT
GUARANTY; AND

 

(II)           AFTER GIVING EFFECT TO SUCH TRANSACTION, NO DEFAULT OR EVENT OF
DEFAULT SHALL EXIST; AND

 

(C)           ANY SUBSIDIARY OTHER THAN THE COMPANY MAY (X) MERGE INTO THE
PARENT OR THE COMPANY (PROVIDED THAT THE PARENT OR THE COMPANY IS THE SURVIVING
CORPORATION) OR ANOTHER WHOLLY OWNED SUBSIDIARY OR (Y) SELL, TRANSFER OR LEASE
ALL OR ANY PART OF ITS ASSETS TO THE PARENT OR THE COMPANY OR ANOTHER WHOLLY
OWNED SUBSIDIARY, OR (Z) MERGE OR CONSOLIDATE WITH, OR SELL, TRANSFER OR LEASE
ALL OR SUBSTANTIALLY ALL OF ITS ASSETS TO, ANY PERSON IN A TRANSACTION THAT IS
PERMITTED BY SECTION 10.7 OR, AS A RESULT OF WHICH, SUCH PERSON BECOMES A
SUBSIDIARY; PROVIDED IN EACH INSTANCE SET FORTH IN CLAUSES (X) THROUGH (Z) THAT,
IMMEDIATELY AFTER GIVING EFFECT THERETO, THERE SHALL EXIST NO DEFAULT OR EVENT
OF DEFAULT;

 

No such conveyance, transfer, sale or lease of all or substantially all of the
assets of the Parent or the Company shall have the effect of releasing the
Parent or the Company or any successor corporation that shall theretofore have
become such in the manner prescribed in this Section 10.5 from its liability
under this Agreement or the Notes.

 

10.7        SALE OF ASSETS.

 

Except as permitted by Section 10.6, the Parent and the Company will not, and
will not permit any other Subsidiary to, sell, lease, transfer or otherwise
dispose of, including by way of merger (collectively a “Disposition”), any
assets, including capital stock of Subsidiaries, in one or a series of
transactions, to any Person, other than:

 

(A)           DISPOSITIONS IN THE ORDINARY COURSE OF BUSINESS;

 

(B)           DISPOSITIONS BY A SUBSIDIARY, TO THE PARENT OR ANOTHER WHOLLY
OWNED SUBSIDIARY, OR BY THE PARENT OR THE COMPANY TO A WHOLLY OWNED SUBSIDIARY
THAT IS A SUBSIDIARY GUARANTOR; OR

 

(C)           DISPOSITIONS NOT OTHERWISE PERMITTED BY CLAUSES (A) OR (B) OF THIS
SECTION 10.7, PROVIDED THAT THE AGGREGATE NET BOOK VALUE OF ALL ASSETS SO
DISPOSED OF IN ANY FISCAL YEAR PURSUANT TO THIS SECTION 10.7(C) DOES NOT EXCEED
15% OF CONSOLIDATED TOTAL ASSETS AS OF THE END OF THE IMMEDIATELY PRECEDING
FISCAL YEAR.

 

Notwithstanding the foregoing, the Parent or the Company may, or may permit any
other Subsidiary to, make a Disposition and the assets subject to such
Disposition shall not be subject to or included in the foregoing limitation and
computation contained in clause (c) of the preceding sentence to the extent that
the net proceeds from such Disposition are within 365 days of such Disposition:

 

(A) reinvested in tangible assets to be used in the existing business of the
Parent or a Subsidiary,  or

 

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(B) applied to the payment or prepayment of the Notes and any other outstanding
Indebtedness of the Company that is pari passu or senior to the Notes.

 

For purposes of foregoing clause B, the Company shall offer to prepay (on a
Business Day not less than 30 or more than 60 days following such offer) the
Notes, on a pro rata basis with the other Indebtedness that the Company elects
to include in such offer, at a price of 100% of the principal amount of the
Notes to be prepaid (without any Make-Whole Amount or premium), together with
interest accrued to the date of prepayment; provided that if any holder of the
Notes declines or rejects such offer, the proceeds that would have been paid to
such holder shall be offered pro rata to the other holders of the Notes that
have accepted the offer.  A failure by a holder of Notes to respond in writing
not later than 10 Business Days prior to the proposed prepayment date to an
offer to prepay made pursuant to this Section 10.7 shall be deemed to constitute
rejection of such offer by such holder.  Solely for the purposes of foregoing
clause (B), whether or not such offers are accepted by the holders, the entire
principal amount of the Notes subject thereto shall be deemed to have been
prepaid.

 

10.8        SUBSIDIARY GUARANTY.

 

The Parent and the Company will not permit any Subsidiary to become a borrower
or a guarantor of Indebtedness owed to banks under the Credit Agreements unless
such Subsidiary is, or concurrently therewith becomes, a party to the Subsidiary
Guaranty.

 

10.9        NATURE OF BUSINESS.

 

The Parent and the Company will not, and will not permit any other Subsidiary
to, engage in any business if, as a result, the general nature of the business
in which the Parent and its Subsidiaries,  taken as a whole, would then be
engaged would be substantially changed from the general nature of the business
of the Parent and its Subsidiaries,  taken as a whole, as described in the
Memorandum.

 

10.10      TRANSACTIONS WITH AFFILIATES.

 

The Parent and the Company will not, and will not permit any other Subsidiary
to, enter into directly or indirectly any Material transaction or Material group
of related transactions (including the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Parent, the Company or another Subsidiary), except upon fair and
reasonable terms no less favorable to the Parent or such Subsidiary,  than would
be obtainable in a comparable arm’s-length transaction with a Person not an
Affiliate.

 

10.11      TERRORISM SANCTIONS REGULATIONS.

 

The Parent 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) knowingly engage in any dealings or transactions
with any such Person.

 

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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 PARENT OR THE COMPANY DEFAULTS IN THE PERFORMANCE OF OR
COMPLIANCE WITH ANY TERM CONTAINED IN SECTION 7.1(D), SECTION 9.7 OR SECTIONS
10.1, 10.2, 10.3, 10.4, 10.6, 10.7 OR 10.8; OR

 

(D)           THE PARENT OR THE COMPANY DEFAULTS IN THE PERFORMANCE OF OR
COMPLIANCE WITH ANY TERM CONTAINED HEREIN (OTHER THAN THOSE REFERRED TO IN
PARAGRAPHS (A), (B) AND (C) OF THIS SECTION 11) AND SUCH DEFAULT IS NOT REMEDIED
WITHIN 30 DAYS OR, IN THE CASE OF SECTION 10.5 ONLY, 5 DAYS AFTER THE EARLIER OF
(I) A RESPONSIBLE OFFICER OBTAINING ACTUAL KNOWLEDGE OF SUCH DEFAULT AND
(II) THE PARENT OR THE COMPANY RECEIVING WRITTEN NOTICE OF SUCH DEFAULT FROM ANY
HOLDER OF A NOTE; OR

 

(E)           ANY REPRESENTATION OR WARRANTY MADE IN WRITING BY OR ON BEHALF OF
THE PARENT, THE COMPANY OR ANY SUBSIDIARY GUARANTOR OR BY ANY OFFICER OF THE
PARENT, THE COMPANY OR ANY SUBSIDIARY GUARANTOR IN THIS AGREEMENT, THE PARENT
GUARANTY, THE SUBSIDIARY GUARANTY OR IN ANY WRITING FURNISHED IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY PROVES TO HAVE BEEN FALSE OR
INCORRECT IN ANY MATERIAL RESPECT ON THE DATE AS OF WHICH MADE AND THE FACT THAT
SUCH REPRESENTATION OR WARRANTY WAS FALSE OR INCORRECT COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; OR

 

(F)            (I) THE PARENT, THE COMPANY OR ANY SIGNIFICANT 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 ON ANY INDEBTEDNESS
THAT IS OUTSTANDING IN AN AGGREGATE PRINCIPAL AMOUNT IN EXCESS OF $25,000,000
BEYOND ANY PERIOD OF GRACE PROVIDED WITH RESPECT THERETO, OR (II) THE PARENT,
THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY IS IN DEFAULT IN THE PERFORMANCE OF OR
COMPLIANCE WITH ANY TERM OF ANY EVIDENCE OF ANY INDEBTEDNESS THAT IS OUTSTANDING
IN AN AGGREGATE PRINCIPAL AMOUNT IN EXCESS OF $25,000,000 OR OF ANY MORTGAGE,
INDENTURE OR OTHER AGREEMENT RELATING THERETO OR ANY OTHER CONDITION EXISTS, AND
AS A CONSEQUENCE OF SUCH DEFAULT OR CONDITION SUCH INDEBTEDNESS HAS BECOME, OR
HAS BEEN DECLARED (OR ONE OR MORE PERSONS ARE ENTITLED TO DECLARE SUCH
INDEBTEDNESS TO BE), 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 INDEBTEDNESS TO CONVERT SUCH INDEBTEDNESS
INTO EQUITY INTERESTS), (X) THE PARENT, THE COMPANY OR ANY SIGNIFICANT
SUBSIDIARY HAS BECOME OBLIGATED TO PURCHASE OR REPAY INDEBTEDNESS BEFORE ITS
REGULAR MATURITY OR BEFORE ITS REGULARLY SCHEDULED DATES OF PAYMENT IN AN
AGGREGATE OUTSTANDING

 

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PRINCIPAL AMOUNT IN EXCESS OF $25,000,000, OR (Y) ONE OR MORE PERSONS HAVE THE
RIGHT TO REQUIRE THE PARENT, THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY SO TO
PURCHASE OR REPAY SUCH INDEBTEDNESS; OR

 

(G)           THE PARENT, THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY (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

 

(H)           A COURT OR GOVERNMENTAL AUTHORITY OF COMPETENT JURISDICTION ENTERS
AN ORDER APPOINTING, WITHOUT CONSENT BY THE PARENT, THE COMPANY OR ANY
SIGNIFICANT SUBSIDIARY, 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 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 PARENT, THE COMPANY
OR ANY SIGNIFICANT SUBSIDIARY, OR ANY SUCH PETITION SHALL BE FILED AGAINST THE
PARENT, THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY AND SUCH PETITION SHALL NOT BE
DISMISSED WITHIN 60 DAYS; OR

 

(I)            A FINAL JUDGMENT OR JUDGMENTS FOR THE PAYMENT OF MONEY
AGGREGATING IN EXCESS OF $25,000,000 ARE RENDERED AGAINST ONE OR MORE OF THE
PARENT, THE COMPANY AND ANY SIGNIFICANT SUBSIDIARIES, 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

 

(J)            IF (I) ANY PLAN SHALL FAIL TO SATISFY THE MINIMUM FUNDING
STANDARDS OF ERISA OR THE CODE FOR ANY PLAN YEAR OR PART THEREOF 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
SHALL HAVE BEEN OR IS REASONABLY EXPECTED TO BE FILED WITH THE PBGC OR THE PBGC
SHALL HAVE INSTITUTED PROCEEDINGS UNDER ERISA SECTION 4042 TO TERMINATE OR
APPOINT A TRUSTEE TO ADMINISTER ANY PLAN OR THE PBGC SHALL HAVE NOTIFIED THE
PARENT, THE COMPANY OR ANY OTHER 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 DETERMINED IN ACCORDANCE WITH TITLE IV OF ERISA, SHALL EXCEED $25,000,000,
(IV) THE PARENT, THE COMPANY OR ANY OTHER ERISA AFFILIATE SHALL HAVE INCURRED OR
IS REASONABLY EXPECTED TO INCUR ANY LIABILITY PURSUANT TO TITLE I OR IV OF ERISA
OR THE PENALTY OR EXCISE TAX PROVISIONS OF THE CODE RELATING TO EMPLOYEE BENEFIT
PLANS, (V) THE PARENT, THE COMPANY OR ANY OTHER ERISA AFFILIATE WITHDRAWS FROM
ANY MULTIEMPLOYER PLAN, OR (VI) THE PARENT OR ANY SUBSIDIARY,  ESTABLISHES OR
AMENDS ANY EMPLOYEE WELFARE BENEFIT PLAN THAT PROVIDES POST-EMPLOYMENT WELFARE
BENEFITS IN A MANNER THAT WOULD INCREASE THE

 

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LIABILITY OF THE PARENT 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; OR

 

(K)           THE PARENT OR ANY SUBSIDIARY GUARANTOR DEFAULTS IN THE PERFORMANCE
OF OR COMPLIANCE WITH ANY TERM CONTAINED IN THE PARENT GUARANTY OR THE
SUBSIDIARY GUARANTY OR EITHER OF THE GUARANTIES CEASES TO BE IN FULL FORCE AND
EFFECT, EXCEPT AS PROVIDED IN SECTION 22 (AS TO THE SUBSIDIARY GUARANTY), OR IS
DECLARED TO BE NULL AND VOID IN WHOLE OR IN MATERIAL PART BY A COURT OR OTHER
GOVERNMENTAL OR REGULATORY AUTHORITY HAVING JURISDICTION OR THE VALIDITY OR
ENFORCEABILITY THEREOF SHALL BE CONTESTED BY ANY OF THE PARENT, THE COMPANY OR
ANY SUBSIDIARY GUARANTOR OR ANY OF THEM RENOUNCES ANY OF THE SAME OR DENIES THAT
IT HAS ANY OR FURTHER LIABILITY THEREUNDER.

 

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

 

12.          REMEDIES ON DEFAULT, ETC.

 

12.1        ACCELERATION.

 

(A)           IF AN EVENT OF DEFAULT WITH RESPECT TO THE PARENT OR THE COMPANY
DESCRIBED IN PARAGRAPH (G) OR (H) OF SECTION 11 (OTHER THAN AN EVENT OF DEFAULT
DESCRIBED IN CLAUSE (I) OF PARAGRAPH (G) OR DESCRIBED IN CLAUSE (VI) OF
PARAGRAPH (G) BY VIRTUE OF THE FACT THAT SUCH CLAUSE ENCOMPASSES CLAUSE (I) OF
PARAGRAPH (G)) HAS OCCURRED, ALL THE NOTES THEN OUTSTANDING SHALL AUTOMATICALLY
BECOME IMMEDIATELY DUE AND PAYABLE.

 

(B)           IF ANY OTHER EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, THE
REQUIRED HOLDERS MAY AT ANY TIME AT THEIR OPTION, BY NOTICE OR NOTICES TO THE
COMPANY, DECLARE ALL THE NOTES 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, 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
IT OR THEM TO BE IMMEDIATELY DUE AND PAYABLE.

 

Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon (including interest accrued thereon from the inception of the Event of
Default at the Default Rate) and (y) the Make-Whole Amount 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 specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that 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.

 

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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.

 

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 Required Holders, by written notice to
the Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes 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 overdue interest at the Default Rate in respect of the
Notes, (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 the Notes.  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.

 

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 reasonable
attorneys’ fees, expenses and disbursements.

 

13.          REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

 

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

 

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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.

 

13.2        TRANSFER AND EXCHANGE OF NOTES.

 

Upon surrender of any Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof, and if executed by an attorney-in-fact,
evidence of authority reasonably satisfactory to the Company), within twenty
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) 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 Exhibit 1.1(a) or 1.1(b), as appropriate.  Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on 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, one Note 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 Sections 6.1 and
6.2.

 

13.3        REPLACEMENT OF NOTES.

 

Upon receipt by the Company 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 INSTITUTIONAL INVESTOR HOLDER OF A NOTE
WITH A MINIMUM NET WORTH OF AT LEAST $250,000,000, 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, WITHIN TWENTY BUSINESS DAYS THEREAFTER, THE COMPANY AT ITS OWN EXPENSE
SHALL EXECUTE AND DELIVER, IN LIEU THEREOF, A NEW NOTE, 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.

 

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14.          PAYMENTS ON NOTES.

 

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 Chicago,
Illinois at the principal office of Wells Fargo Bank, National Association 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.

 

14.2        HOME OFFICE PAYMENT.

 

So long as you or your 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 the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you 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, you 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 you or your nominee you will, at your 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 of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.

 

15.          EXPENSES, ETC.

 

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 and, if reasonably required, local or other counsel) incurred by
you and each Other Purchaser or 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 or the Notes (whether or not such amendment, waiver
or consent becomes effective), including: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any
rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes, or by reason of being a holder of any Note, (b) the
costs and expenses, including financial advisors’ fees, incurred in connection
with the insolvency or bankruptcy of the Company or any

 

34

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Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes and (c) the costs and expenses
incurred in connection with the initial filing of this Agreement and all related
documents and financial information with the SVO, provided that such costs and
expenses under this clause (c) shall not exceed $3,500.  The Company will pay,
and will save you 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 retained by you).

 

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

 

16.          SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

 

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by you of
any Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of you or any other holder of a
Note.  All statements contained in any certificate or other instrument delivered
by or on behalf of the Parent or the Company pursuant to this Agreement shall be
deemed representations and warranties of the Parent and the Company under this
Agreement.  Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.

 

17.          AMENDMENT AND WAIVER.

 

17.1        REQUIREMENTS.

 

This Agreement, the Notes, the Parent Guaranty and the Subsidiary Guaranty 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 (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to you unless
consented to by you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding affected
thereby, (i) 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 or of the Make-Whole Amount on, the Notes, (ii) 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 (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.

 

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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 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, 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
UNLESS SUCH REMUNERATION IS CONCURRENTLY PAID, OR SECURITY IS CONCURRENTLY
GRANTED, 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 17.2 BY THE HOLDER OF ANY NOTE THAT HAS TRANSFERRED OR HAS
AGREED TO TRANSFER SUCH NOTE 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 TRANSFERRING HOLDER.

 

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” or “the Agreement” and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

 

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

 

36

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

 

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), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid).  Any such notice must be sent:

 

(I)            IF TO YOU OR YOUR NOMINEE, TO YOU OR IT AT THE ADDRESS SPECIFIED
FOR SUCH COMMUNICATIONS IN SCHEDULE A, OR AT SUCH OTHER ADDRESS AS YOU OR IT
SHALL HAVE SPECIFIED TO THE COMPANY IN WRITING,

 

(II)           IF TO ANY OTHER HOLDER OF ANY NOTE, TO SUCH HOLDER AT SUCH
ADDRESS AS SUCH OTHER HOLDER SHALL HAVE SPECIFIED TO THE COMPANY IN WRITING, OR

 

(III)          IF TO THE COMPANY, THE PARENT OR ANY SUBSIDIARY GUARANTOR, TO THE
COMPANY AT ITS ADDRESS SET FORTH AT THE BEGINNING HEREOF TO THE ATTENTION OF THE
CHIEF FINANCIAL OFFICER, OR AT SUCH OTHER 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.

 

19.          REPRODUCTION OF DOCUMENTS.

 

This Agreement and all documents relating thereto, including (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by you at the Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, electronic,
digital or other similar process and you 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 you 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.

 

20.          CONFIDENTIAL INFORMATION.

 

For the purposes of this Section 20, “Confidential Information” means
information delivered to you by or on behalf of the Parent or any Subsidiary in
connection with

 

37

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the transactions contemplated by or otherwise pursuant to this Agreement that is
proprietary or confidential in nature and that was clearly marked or labeled or
otherwise adequately identified when received by you as being confidential
information of the Parent or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any Person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Parent or any
Subsidiary, or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available.  You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, trustees, officers, employees, agents,
attorneys and Affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
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 you sell or offer 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 you offer 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 you,
(vii) the NAIC or SVO or any similar organization, or any nationally recognized
rating agency that requires access to information about your investment
portfolio or (viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule, regulation
or order applicable to you, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which you are a party or
(z) if an Event of Default has occurred and is continuing, to the extent you 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 your
Notes 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.

 

21.          SUBSTITUTION OF PURCHASER.

 

You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement 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, wherever the word “you” is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you.  In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,

 

38

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wherever the word “you” is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.

 

22.          RELEASE OF SUBSIDIARY GUARANTOR.

 

Each holder of a Note fully releases and discharges from the Subsidiary Guaranty
each Subsidiary Guarantor, immediately and without any further act, (i) if such
Subsidiary Guarantor ceases to be such as a result of a disposition permitted by
Sections 10.6 or 10.7 or (ii) upon such Subsidiary Guarantor being released and
discharged as a co-obligor, borrower or guarantor under and in respect of all
Credit Agreements; provided, that under the circumstances contemplated by clause
(ii):

 

(A)           NO DEFAULT OR EVENT OF DEFAULT EXISTS OR WILL EXIST IMMEDIATELY
FOLLOWING SUCH RELEASE AND DISCHARGE OF SUCH SUBSIDIARY GUARANTOR;

 

(B)           SUCH SUBSIDIARY GUARANTOR WILL NOT BECOME A BORROWER UNDER EITHER
CREDIT AGREEMENT;

 

(C)           SUCH RELEASE IS NOT PART OF A PLAN OF FINANCING THAT CONTEMPLATES
SUCH SUBSIDIARY GUARANTOR GUARANTEEING ANY OTHER INDEBTEDNESS OF THE COMPANY TO
BANKS; AND

 

(D)           AT THE TIME OF SUCH RELEASE AND DISCHARGE, THE COMPANY DELIVERS TO
EACH HOLDER OF NOTES A CERTIFICATE OF A RESPONSIBLE OFFICER CERTIFYING (X) THAT
SUCH SUBSIDIARY GUARANTOR HAS BEEN OR IS BEING RELEASED AND DISCHARGED AS
GUARANTOR OR BORROWER UNDER AND IN RESPECT OF ALL APPLICABLE CREDIT AGREEMENTS
AND (Y) AS TO THE MATTERS SET FORTH IN CLAUSES (A), (B) AND (C).

 

23.          MISCELLANEOUS.

 

23.1        SUCCESSORS AND ASSIGNS.

 

All covenants and other agreements contained in this Agreement by or on behalf
of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including any subsequent holder of a Note) whether so
expressed or not.

 

23.2        PAYMENTS DUE ON NON-BUSINESS DAYS.

 

Anything in this Agreement or the Notes to the contrary notwithstanding (but
without limiting the requirement in Section 8.5 that 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.

 

39

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23.3        ACCOUNTING TERMS.

 

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

 

23.4        SEVERABILITY.

 

Any provision of this Agreement 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, 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.

 

23.5        CONSTRUCTION.

 

Each covenant contained herein shall be construed (absent express provision to
the contrary) as being independent of each other covenant contained herein, 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 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.

 

23.6        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.

 

23.7        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 Illinois
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.

 

23.8        JURISDICTION AND PROCESS; WAIVER OF JURY TRIAL.

 

(A)           EACH OF THE PARENT AND THE COMPANY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY ILLINOIS STATE OR FEDERAL COURT SITTING IN THE
CITY OF CHICAGO, OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE PARENT GUARANTY, THE SUBSIDIARY GUARANTY OR THE NOTES. 
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARENT AND 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

 

40

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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 OF THE PARENT AND 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 23.8(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.  EACH OF THE PARENT AND 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 23.8 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
PARENT OR 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)           THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.

 

*    *    *    *    *

 

41

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If you are in agreement with the foregoing, please sign the form of agreement on
the accompanying counterpart of this Agreement and return it to the Company,
whereupon the foregoing shall become a binding agreement between you, the Parent
and the Company.

 

 

Very truly yours,

 

 

 

HELMERICH & PAYNE INTERNATIONAL
DRILLING CO.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

HELMERICH & PAYNE, INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

S-1

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

 

The foregoing is agreed to as of the date thereof.

 

 

TEACHERS INSURANCE AND ANNUITY

 

ASSOCIATION OF AMERICA

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-2

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

 

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

LONDON LIFE INSURANCE COMPANY

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-3

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

 

NATIONWIDE MUTUAL INSURANCE COMPANY

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-4

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

 

THE PAUL REVERE LIFE INSURANCE COMPANY

 

By: Provident Investment Management, LLC

 

Its: Agent

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

UNUM LIFE INSURANCE COMPANY OF AMERICA

 

By: Provident Investment Management, LLC

 

Its: Agent

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-5

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BANKERS LIFE AND CASUALTY COMPANY

COLONIAL PENN LIFE INSURANCE COMPANY

CONSECO LIFE INSURANCE COMPANY

CONSECO HEALTH INSURANCE COMPANY

WASHINGTON NATIONAL INSURANCE COMPANY

 

By: 40|86 Advisors, Inc. acting as Investment Advisor

 

 

By:

 

 

Name:

Timothy L. Powell

 

Title:

Vice President

 

 

S-6

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MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By: Babson Capital Management LLC, as Investment Adviser

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

C.M. LIFE INSURANCE COMPANY

 

By: Babson Capital Management LLC, as Investment Adviser

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

MASSMUTUAL ASIA LIMITED

 

By: Babson Capital Management LLC, as Investment Adviser

 

By:

 

 

Name:

 

Title:

 

 

S-7

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AMERICAN UNITED LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

By:

 

Its:

 

 

 

 

 

THE STATE LIFE INSURANCE COMPANY

 

By:

American United Life Insurance Company

 

Its:

Agent

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

 

 

 

 

 

 

PIONEER MUTUAL LIFE INSURANCE COMPANY

 

By:

American United Life Insurance Company

 

Its:

Agent

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

 

 

 

 

 

 

LAFAYETTE LIFE INSURANCE COMPANY

 

By:

American United Life Insurance Company

 

Its:

Agent

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

 

S-8

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

 

NATIONAL LIFE INSURANCE COMPANY

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

LIFE INSURANCE COMPANY OF THE SOUTHWEST

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-9

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

 

KNIGHTS OF COLUMBUS

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-10

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

 

MODERN WOODMEN OF AMERICA

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-11

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

 

THE UNION CENTRAL LIFE INSURANCE COMPANY

 

By: Summit Investment Advisors, Inc., as Agent

 

 

 

 

 

By:

 

 

 

Andrew S. White, Managing Director – Private Placements

 

 

 

 

 

ACACIA LIFE INSURANCE COMPANY

 

By Summit Investment Advisors, Inc., as Agent

 

 

 

 

 

By:

 

 

 

Andrew S. White, Managing Director – Private Placements

 

 

 

 

 

AMERITAS LIFE INSURANCE CORP.

 

By: Summit Investment Advisors, Inc., as Agent

 

 

 

 

 

By:

 

 

 

Andrew S. White, Managing Director – Private Placements

 

 

S-12

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

 

By:  PPM America, Inc., as attorney in fact,
on behalf of Jackson National Life Insurance Company

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

S-13

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

 

SCHEDULE B

 

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:

 

“Acquisition” means the purchase by the Parent or any Subsidiary of any
business, including the purchase of associated assets or operations or the
Equity Interests of a Person.

 

“Affiliate” means, at any time, and with respect to any Person, 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.  As used in this definition, “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. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of the Parent.

 

“Agreement Accounting Principles” means GAAP, provided that, with respect to the
calculations for purposes of determining compliance with the covenants set forth
in Sections 10.1 through 10.5 and Section 10.7, such term means generally
accepted accounting principles in effect as of the date of the Closing applied
on a basis consistent with that used in the preparation of the most recent
audited consolidated financial statements of the Company listed in Schedule
5.5.  In any event, Indebtedness shall be calculated for all purposes of this
Agreement at its stated principal amount, without regard to the effect of
utilizing FASB No. 159 (Fair Value Option for Financial Assets and Financial
Liabilities).

 

“Anti-Terrorism Order” means Executive Order 13224 of September 23, 2001,
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)).

 

“Business Day” means (a) for the purposes of Section 8.6 only, any day other
than a Saturday, a Sunday or a day on which commercial banks in New York City
are required or authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which commercial banks in Chicago, Illinois or New York City 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 recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

 

“Change of Control” means an event or series of events by which any person or
“group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
(such person or persons hereinafter referred to as an “Acquiring Person”)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than 50% of the voting power of the then
outstanding Voting Stock of the Parent.  Notwithstanding the foregoing, a
“Change of Control” shall not be deemed to have occurred if, immediately
following such

 

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

 

Change of Control, the Parent (or the Acquiring Person if it has acquired
substantially all of the assets of the Parent, or the resulting or surviving
Person if it has merged or consolidated with the Parent and the Parent is not
the surviving entity) has a rating of BBB- or higher by Standard & Poor’s Rating
Services or Baa3 or higher by Moody’s Investor Service or an equivalent rating
by another rating agency of recognized national standing if the Parent (or
Acquiring Person, resulting or surviving Person) has only a single rating or, if
it has two or more ratings, at least a majority of the ratings are BBB- or
higher by Standard & Poor’s Rating Services or Baa3 or higher by Moody’s
Investor Service or an equivalent rating by another rating agency of recognized
national standing. As used in this paragraph “rating” of a Person means a rating
of long-term unsubordinated unsecured debt of such Person.

 

“Closing” 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.

 

“Company” means Helmerich & Payne International Drilling Co., a Delaware
corporation.

 

“Confidential Information”  is defined in Section 20.

 

“Consolidated Debt” means, as of any date, outstanding Indebtedness of the
Parent and its Subsidiaries as of such date, determined on a consolidated basis
in accordance with Agreement Accounting Principles.

 

“Consolidated Net Income” means, for any period, the net income for such period
of the Parent and its Subsidiaries, after taxes, as determined on a consolidated
basis in accordance with Agreement Accounting Principles, excluding, however,
extraordinary items, including (i) any net non-cash gain or loss during such
period arising from the sale, exchange, retirement or other disposition of
capital assets (such term to include all fixed assets and all securities) other
than in the ordinary course of business, and (ii) any write up or write down of
assets.

 

“Consolidated Net Worth” means, as of any date, the consolidated stockholders’
equity of the Parent and its Subsidiaries as of such date, determined in
accordance with Agreement Accounting Principles.

 

“Consolidated Total Assets” means, as of any date, the assets and properties of
the Parent and its Subsidiaries as of such date, determined on a consolidated
basis in accordance with Agreement Accounting Principles.

 

“Consolidated Total Capitalization” means, as of any date, the sum of
Consolidated Debt and Consolidated Net Worth as of such date.

 

“Control Event” means the execution by the Parent of a definitive written
agreement that, when fully performed by the parties thereto, would result in a
Change of Control.

 

2

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“Credit Agreement” and “Credit Agreements” mean either or both of the 364-Day
Credit Agreement and the Principal Credit Agreement.

 

“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 that rate of interest that is the greater of (i) 2% per
annum above the rate of interest stated in clause (a) of the first paragraph of
the Notes or (ii) 2% over the rate of interest publicly announced by Wells Fargo
Bank, National Association as its “base” or “prime” rate.

 

“Disclosure Documents” is defined in Section 5.3.

 

“Disposition” is defined in Section 10.7.

 

“EBITDA” means, for any period without duplication, the sum of (a) Consolidated
Net Income for such period plus (b) to the extent deducted in determining
Consolidated Net Income, Interest Expense, taxes, depreciation, amortization and
other non-recurring, non-cash charges and other non-cash extraordinary items for
such period minus (c) to the extent included in determining Consolidated Net
Income, non-recurring gains (including gains on the sale of Marketable
Securities), in each case determined in accordance with Agreement Accounting
Principles; provided that such EBITDA shall be subject to pro forma adjustments
for Acquisitions and Non-Ordinary Course Asset Sales assuming that such
transactions had occurred on the first day of the determination period, which
adjustments shall be made in accordance with the guidelines for pro forma
presentations set forth by the SEC.

 

“Electronic Delivery” is defined in Section 7.3.

 

“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 Materials.

 

“Equity Interest” means with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock,
membership interests or partnership interests (or any other ownership interests)
of such Person.

 

“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.

 

3

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“Form 10 K” is defined in Section 7.1(b).

 

“Form 10 Q” is defined in Section 7.1(a).

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.

 

“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 PARENT OR
ANY SUBSIDIARY CONDUCTS ALL OR ANY PART OF ITS BUSINESS, OR WHICH ASSERTS
JURISDICTION OVER ANY PROPERTIES OF THE PARENT OR ANY 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
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including obligations incurred through an
agreement, contingent or otherwise, by such Person:

 

(A)                                  TO PURCHASE SUCH INDEBTEDNESS OR OBLIGATION
OR ANY PROPERTY CONSTITUTING SECURITY THEREFOR;

 

(B)                                 TO ADVANCE OR SUPPLY FUNDS (I) FOR THE
PURCHASE OR PAYMENT OF SUCH INDEBTEDNESS 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 INDEBTEDNESS OR OBLIGATION;

 

(C)                                  TO LEASE PROPERTIES OR TO PURCHASE
PROPERTIES OR SERVICES PRIMARILY FOR THE PURPOSE OF ASSURING THE OWNER OF SUCH
INDEBTEDNESS OR OBLIGATION OF THE ABILITY OF ANY OTHER PERSON TO MAKE PAYMENT OF
THE INDEBTEDNESS OR OBLIGATION; OR

 

(D)                                 OTHERWISE TO ASSURE THE OWNER OF SUCH
INDEBTEDNESS OR OBLIGATION AGAINST LOSS IN RESPECT THEREOF.

 

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

 

“Guaranties” is defined in Section 1.2.

 

4

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“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
other substances that might 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 or
shall be restricted, prohibited or penalized by any applicable law including
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.

 

“Hedging Arrangement” means a hedge, call, swap, collar, floor, cap, option,
forward sale or purchase or other contract or similar arrangement (including any
obligations to purchase or sell any commodity or security at a future date for a
specific price) which is entered into to reduce or eliminate or otherwise
protect against the risk of fluctuations in prices or rates, including interest
rates, foreign exchange rates, commodity prices and securities prices.

 

“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.

 

“Indebtedness” with respect to any Person means, at any time, without
duplication,

 

(A)                                  ITS LIABILITIES FOR BORROWED MONEY AND ITS
REDEMPTION OBLIGATIONS IN RESPECT OF MANDATORILY REDEEMABLE PREFERRED STOCK;

 

(B)                                 ITS LIABILITIES FOR THE DEFERRED PURCHASE
PRICE OF PROPERTY ACQUIRED BY SUCH PERSON (EXCLUDING ACCOUNTS PAYABLE ARISING IN
THE ORDINARY COURSE OF BUSINESS BUT INCLUDING ALL LIABILITIES CREATED OR ARISING
UNDER ANY CONDITIONAL SALE OR OTHER TITLE RETENTION AGREEMENT WITH RESPECT TO
ANY SUCH PROPERTY);

 

(C)                                  ALL LIABILITIES APPEARING ON ITS BALANCE
SHEET IN ACCORDANCE WITH GAAP IN RESPECT OF CAPITAL LEASES;

 

(D)                                 ALL 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);

 

(E)                                  ALL ITS LIABILITIES IN RESPECT OF LETTERS
OF CREDIT OR INSTRUMENTS SERVING A SIMILAR FUNCTION ISSUED OR ACCEPTED FOR ITS
ACCOUNT BY BANKS AND OTHER FINANCIAL INSTITUTIONS (WHETHER OR NOT REPRESENTING
OBLIGATIONS FOR BORROWED MONEY) OTHER THAN LIABILITIES IN RESPECT OF UNDRAWN
AMOUNTS UNDER LETTERS OF CREDIT SECURING OBLIGATIONS IN CONNECTION WITH WORKERS’
COMPENSATION, UNEMPLOYMENT INSURANCE AND OTHER TYPES OF SOCIAL SECURITY OR
RETIREMENT BENEFITS; AND

 

(F)                                    ANY GUARANTY OF SUCH PERSON WITH RESPECT
TO LIABILITIES OF A TYPE DESCRIBED IN ANY OF CLAUSES (A) THROUGH (E) HEREOF.

 

INDEBTEDNESS SHALL BE CALCULATED FOR ALL PURPOSES OF THIS AGREEMENT AT ITS
STATED PRINCIPAL AMOUNT, WITHOUT REGARD TO THE EFFECT OF UTILIZING FASB NO. 159
(FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES).

 

5

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“Institutional Investor” means (a) any original purchaser of a Note, (b)  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, and (c) any Related Fund of any holder of any Note.

 

“Interest Expense” means, for any period and with respect to any Person, total
interest expense (net of interest income) whether paid or accrued, including all
commissions, discounts, and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing, fees owed with respect to the
Notes, the interest component under Capital Leases and net costs under Hedging
Arrangements, all as determined in conformity with Agreement Accounting
Principles.

 

“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 or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

 

“Make-Whole Amount” is defined in Section 8.7.

 

“Marketable Securities” means readily marketable publicly-traded securities,
including any stock or other equity security publicly-traded on the New York
Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers Automated Quotation System (NASDAQ) and any other stock
traded on a recognized over-the-counter market.

 

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

 

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

 

“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).

 

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

 

“NAIC Annual Statement” is defined in Section 6.2(a).

 

6

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“Non-Ordinary Course Asset Sales” means, any sales, conveyances, or other
transfers by the Parent or any Subsidiary (a) of any division of the Parent or
any Subsidiary, (b) of the Equity Interest in a Subsidiary by the Parent or any
other Subsidiary or (c) of any assets of the Parent or any Subsidiary, whether
in a transaction or related series of transactions, outside the ordinary course
of business.

 

“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.

 

“Other Purchasers” is defined in Section 2.

 

“Parent” means Helmerich & Payne, Inc., a Delaware corporation.

 

“Parent Guaranty” is defined in Section 1.2.

 

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

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.

 

“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.

 

“Prepayment Offer” is defined in Section 8.2(b)(i).

 

“Principal Credit Agreement” means the Credit Agreement dated as of December 18,
2006 among the Company, the Parent, Wells Fargo Bank, National Association, as
Administrative Agent, Issuing Lender and Swingline Lender, JPMorgan Chase Bank,
N.A, as Syndication Agent, The Bank Of Tokyo-Mitsubishi UFJ, Ltd, Citibank, N.A
and Fortis Capital Corp., as Co-Documentation Agents, and the other lenders
party thereto, as such agreement may be hereafter amended, modified, extended,
restated, supplemented, refinanced, increased or reduced from time to time, and
any successor credit agreement or similar facility.

 

“Priority Debt” means, as of any date, the sum (without duplication) of
(a) Indebtedness of the Parent and its Subsidiaries secured by Liens not
otherwise permitted by Section 9.7 or Sections 10.5(a) through (h), and
(b) Indebtedness of a Subsidiary that is not a Subsidiary Guarantor and that is
not otherwise permitted by Sections 10.4(a) through (e).

 

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

 

7

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“Proposed Prepayment Date” is defined in Section 8.3(c).

 

“PTE” is defined in Section 6.2(a).

 

“Purchaser” means each purchaser listed in Schedule A.

 

“QPAM Exemption” is defined in Section 6.2(d).

 

“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (i) invests in Securities or bank loans, and (ii) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.

 

“Required Holders” means, at any time, the holders of at least 51% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company or any of its Affiliates).

 

“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.

 

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

 

“Securities” or “Security” shall have the meaning specified in Section 2(1) of
the Securities Act.

 

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

 

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

 

“Significant Subsidiary” means, as of the date of determination, any Subsidiary
Guarantor and any other Subsidiary that would at such time constitute a
“significant subsidiary” (as such term is defined in Regulation S-X of the SEC
as in effect on the date of the Closing) of the Parent, including the Company,
but excluding Helmerich & Payne de Venezuela, C.A.

 

“Source” is defined in Section 6.2.

 

“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, joint venture or limited
liability company 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 or limited liability
company can and does ordinarily take major business

 

8

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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 Parent.

 

“Subsidiary Guarantor” is defined in Section 1.2.

 

“Subsidiary Guaranty” is defined in Section 1.2.

 

“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.

 

“this Agreement” or “the Agreement” is defined in Section 17.3.

 

“364-Day Credit Agreement” means the 364-Day Credit Agreement dated as of
January 21, 2009 among the Company, the Parent, Wells Fargo Bank, National
Association, as Administrative Agent, and the other lenders party thereto, as
such agreement may be hereafter amended, modified, extended, restated,
supplemented, refinanced, increased or reduced from time to time.

 

“USA Patriot Act” means Public Law 107-56 of the United States of America,
United and Strengthening America by Providing Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT) Act of 2001.

 

“Voting Stock” means, with respect to any Person, any class of shares of stock
or other Equity Interests of such Person having general voting power under
ordinary circumstances to elect a majority of the board of directors or other
managing entities, as appropriate, of such Person (irrespective of whether or
not at the time stock of any other class or classes or other Equity Interests of
such Person shall have or might have voting power by reason of the happening of
any contingency).

 

“Wholly Owned Subsidiary” means, at any time, any Subsidiary 100% of all of the
Equity Interests (except directors’ qualifying shares) and voting interests of
which are owned by any one or more of the Company and the Company’s other Wholly
Owned  Subsidiaries at such time.

 

9

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EXHIBIT 1.1

 

[FORM OF SENIOR NOTE]

 

HELMERICH & PAYNE INTERNATIONAL DRILLING CO.

 

6.10% Senior Note, due July 21, 2016

 

No. R-[    ]

 

July 21, 2009

$[              ]

 

PPN 42346# AE 1

 

FOR VALUE RECEIVED, the undersigned, HELMERICH & PAYNE INTERNATIONAL DRILLING
CO. (herein called the “Company”), a corporation organized and existing under
the laws of the State of Delaware, promises to pay to [         ], or registered
assigns, the principal sum of $[              ] on July 21, 2016, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 6.10% per annum from the date hereof,
payable semiannually, on July 21 and January 21 in each year, commencing with
the July 21 or January 21 next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreement referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) 8.10% or (ii) 2%
over the rate of interest publicly announced by Wells Fargo Bank, National
Association from time to time in Chicago, Illinois as its “base” or “prime”
rate.

 

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 Wells Fargo Bank, National Association in Chicago, Illinois
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 a Note Purchase Agreement dated as of June 15, 2009 (as from time to
time amended, the “Note Purchase Agreement”), between the Company, the Parent
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,
(i) to have agreed to the confidentiality provisions set forth in Section 20 of
the Note Purchase Agreement and (ii) to have made the representations set forth
in Sections 6.1 and 6.2 of the Note Purchase Agreement.  Unless otherwise
indicated, capitalized terms used in this Note shall have the meanings ascribed
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 registered in the name of,
the transferee.  Prior to due presentment for registration of transfer, the

 

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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 also 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.

 

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.

 

Payment of the principal of, and interest and Make-Whole Amount, if any, on this
Note, and all other amounts due under the Note Purchase Agreement, is guaranteed
pursuant to the terms of Guaranties dated as of June 15, 2009 of the Parent and
certain Subsidiaries of the Company.

 

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 Illinois 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.

 

 

HELMERICH & PAYNE INTERNATIONAL DRILLING CO.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT 1.2(a)

 

[FORM OF PARENT GUARANTY]

 

THIS GUARANTY (this “Guaranty”) dated as of June 15, 2009 is made by HELMERICH &
PAYNE, INC., a Delaware corporation (the “Guarantor”), in favor of the holders
from time to time of the Notes hereinafter referred to, including each purchaser
named in the Note Purchase Agreement hereinafter referred to, and their
respective successors and assigns (collectively, the “Holders” and each
individually, a “Holder”).

 

W I T N E S S E T H:

 

WHEREAS, HELMERICH & PAYNE INTERNATIONAL DRILLING CO., a Delaware corporation
(the “Company”), the Guarantor and the initial Holders have entered into a Note
Purchase Agreement dated as of June 15, 2009 (the Note Purchase Agreement as
amended, supplemented, restated or otherwise modified from time to time in
accordance with its terms and in effect, the “Note Purchase Agreement”);

 

WHEREAS, the Note Purchase Agreement provides for the issuance by the Company of
$200,000,000 aggregate principal amount of Notes (as defined in the Note
Purchase Agreement);

 

WHEREAS, the Company is a Wholly Owned Subsidiary of the Guarantor and the
Guarantor will derive substantial benefits from the purchase by the Holders of
the Company’s Notes;

 

WHEREAS, it is a condition precedent to the obligation of the Holders to
purchase the Notes that the Guarantor shall have executed and delivered this
Guaranty to the Holders and it is and will be a condition to the sale of
subsequent series of the Notes that this Guaranty run in favor of the holders of
such subsequent series of Notes; and

 

WHEREAS, the Guarantor desires to execute and deliver this Guaranty to satisfy
the conditions described in the preceding paragraph;

 

NOW, THEREFORE, in consideration of the premises and other benefits to the
Guarantor, and of the purchase of the Company’s Notes by the Holders, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Guarantor makes this Guaranty as follows:

 

SECTION 1.  Definitions.  Any capitalized terms not otherwise herein defined
shall have the meanings ascribed to them in the Note Purchase Agreement.

 

SECTION 2.  Guaranty.  The Guarantor unconditionally and irrevocably guarantees
to the Holders the due, prompt and complete payment by the Company of the
principal of, Make-Whole Amount, if any, and interest on, and each other amount
due under, the Notes or the Note Purchase Agreement, when and as the same shall
become due and payable (whether at stated maturity or by required or optional
prepayment or by declaration or otherwise) in accordance with the terms of the
Notes and the Note Purchase Agreement (the Notes and the Note Purchase

 

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Agreement being sometimes hereinafter collectively referred to as the “Note
Documents” and the amounts payable by the Company under the Note Documents, and
all other monetary obligations of the Company thereunder, being sometimes
collectively hereinafter referred to as the “Obligations”).  This Guaranty is a
guaranty of payment and not just of collectibility and is in no way conditioned
or contingent upon any attempt to collect from the Company or upon any other
event, contingency or circumstance whatsoever.  If for any reason whatsoever the
Company shall fail or be unable duly, punctually and fully to pay such amounts
as and when the same shall become due and payable, the Guarantor, without
demand, presentment, protest or notice of any kind, will forthwith pay or cause
to be paid such amounts to the Holders under the terms of such Note Documents,
in lawful money of the United States, at the place specified in the Note
Purchase Agreement, or perform or comply with the same or cause the same to be
performed or complied with, together with interest (to the extent provided for
under such Note Documents) on any amount due and owing from the Company.  The
Guarantor, promptly after demand, will pay to the Holders the reasonable costs
and expenses of collecting such amounts or otherwise enforcing this Guaranty,
including, without limitation, the reasonable fees and expenses of counsel.

 

SECTION 3.  Guarantor’s Obligations Unconditional.  The obligations of the
Guarantor under this Guaranty shall be primary, absolute and unconditional
obligations of the Guarantor, shall not be subject to any counterclaim, set-off,
deduction, diminution, abatement, recoupment, suspension, deferment, reduction
or defense based upon any claim the Guarantor or any other person may have
against the Company or any other person, and to the full extent permitted by
applicable law shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Guarantor or the Company shall have any
knowledge or notice thereof), including:

 

(a)        any termination, amendment or modification of or deletion from or
addition or supplement to or other change in any of the Note Documents or any
other instrument or agreement applicable to any of the parties to any of the
Note Documents;

 

(b)        any furnishing or acceptance of any security, or any release of any
security, for the Obligations, or the failure of any security or the failure of
any person to perfect any interest in any collateral;

 

(c)         any failure, omission or delay on the part of the Company to conform
or comply with any term of any of the Note Documents or any other instrument or
agreement referred to in paragraph (a) above, including, without limitation,
failure to give notice to the Guarantor of the occurrence of a “Default” or an
“Event of Default” under any Note Document;

 

(d)        any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in any Note Document,
or any other waiver, consent, extension, indulgence, compromise, settlement,
release or other action or inaction under or in respect of any of the Note
Documents or any other instrument or agreement referred to in paragraph
(a) above or any obligation or liability of the Company, or any exercise or
non-exercise of any right, remedy, power or privilege

 

2

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under or in respect of any such instrument or agreement or any such obligation
or liability;

 

(e)         any failure, omission or delay on the part of any of the Holders to
enforce, assert or exercise any right, power or remedy conferred on such Holder
in this Guaranty, or any such failure, omission or delay on the part of such
Holder in connection with any Note Document, or any other action on the part of
such Holder;

 

(f)         any voluntary or involuntary bankruptcy, insolvency, reorganization,
arrangement, readjustment, assignment for the benefit of creditors, composition,
receivership, conservatorship, custodianship, liquidation, marshaling of assets
and liabilities or similar proceedings with respect to the Company, the
Guarantor or to any other person or any of their respective properties or
creditors, or any action taken by any trustee or receiver or by any court in any
such proceeding;

 

(g)         any discharge, termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of any of the Note
Documents or any other agreement or instrument referred to in paragraph
(a) above or any term hereof;

 

(h)        any merger or consolidation of the Company or the Guarantor into or
with any other corporation, or any sale, lease or transfer of any of the assets
of the Company or the Guarantor to any other person;

 

(i)          any change in the ownership of any shares of capital stock of the
Company or any change in the corporate relationship between the Company and the
Guarantor, or any termination of such relationship;

 

(j)         any release or discharge, by operation of law, of the Guarantor from
the performance or observance of any obligation, covenant or agreement contained
in this Guaranty; or

 

(k)        any other occurrence, circumstance, happening 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 the Guarantor.

 

SECTION 4.  Full Recourse Obligations.  The obligations of the Guarantor set
forth herein constitute the full recourse obligations of the Guarantor
enforceable against it to the full extent of all its assets and properties.

 

SECTION 5.  Waiver.  The Guarantor unconditionally waives, to the extent
permitted by applicable law, (a) notice of any of the matters referred to in
Section 3, (b) notice to the Guarantor of the incurrence of any of the
Obligations, notice to the Guarantor or the Company of any breach or default by
the Company with respect to any of the Obligations or any other notice that may
be required, by statute, rule of law or otherwise, to preserve any rights of the
Holders against the Guarantor, (c) presentment to or demand of payment from the
Company or the Guarantor with respect to any amount due under any Note Document
or protest for nonpayment

 

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or dishonor, (d) any right to the enforcement, assertion or exercise by any of
the Holders of any right, power, privilege or remedy conferred in the Note
Purchase Agreement or any other Note Document or otherwise, (e) any requirement
of diligence on the part of any of the Holders, (f) any requirement to exhaust
any remedies or to mitigate the damages resulting from any default under any
Note Document, (g) any notice of any sale, transfer or other disposition by any
of the Holders of any right, title to or interest in the Note Purchase Agreement
or in any other Note Document and (h) 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 the
Guarantor.

 

SECTION 6.  Subrogation, Contribution, Reimbursement or Indemnity.  Until one
year and one day after all Obligations have been indefeasibly paid in full, the
Guarantor agrees not to take any action pursuant to any rights which may have
arisen in connection with this Guaranty to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code, as amended,
including section 509 thereof, under common law or otherwise) of any of the
Holders against the Company or against any collateral security or guaranty or
right of offset held by the Holders for the payment of the Obligations. Until
one year and one day after all Obligations have been indefeasibly paid in full,
the Guarantor agrees not to take any action pursuant to any contractual, common
law, statutory or other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against the Company which may have
arisen in connection with this Guaranty.  So long as the Obligations remain, if
any amount shall be paid by or on behalf of the Company to the Guarantor on
account of any of the rights waived in this paragraph, such amount shall be held
by the Guarantor in trust, segregated from other funds of the Guarantor, and
shall, forthwith upon receipt by the Guarantor, be turned over to the Holders
(duly endorsed by the Guarantor to the Holders, if required), to be applied
against the Obligations, whether matured or unmatured, in such order as the
Holders may determine.  The provisions of this paragraph shall survive the term
of this Guaranty and the payment in full of the Obligations.

 

SECTION 7.  Effect of Bankruptcy Proceedings, etc.  This Guaranty shall continue
to be effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the sums due to any of the Holders
pursuant to the terms of the Note Purchase Agreement or any other Note Document
is rescinded or must otherwise be restored or returned by the Holder upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or any other person, or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to the Company or other person or any substantial part of its property, or
otherwise, all as though such payment had not been made.  If an event permitting
the acceleration of the maturity of the principal amount of the Notes 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 a case or proceeding under a bankruptcy or insolvency law, the
Guarantor agrees that, for purposes of this Guaranty and its obligations
hereunder, the maturity of the principal amount of the Notes and all other
Obligations shall be deemed to have been accelerated with the same effect as if
any Holder had accelerated the same in accordance with the terms of the Note
Purchase Agreement or other applicable Note Document, and the Guarantor shall
forthwith pay such principal amount, Make-Whole Amount, if any, and interest
thereon and any other amounts guaranteed hereunder without further notice or
demand.

 

4

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SECTION 8.  Term of Agreement.  This Guaranty and all guaranties, covenants and
agreements of the Guarantor contained herein shall continue in full force and
effect and shall not be discharged until such time as all of the Obligations
shall be paid and performed in full and all of the agreements of the Guarantor
hereunder shall be duly paid and performed in full.

 

SECTION 9.  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), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid).  Any such notice must be sent to the address specified
in the Note Purchase Agreement, or in each case at such other address as the
Company, any Holder or the Guarantor shall from time to time designate in
writing to the other parties.  Any notice so addressed shall be deemed to be
given when actually received.

 

SECTION 10.  Survival.  All warranties, representations and covenants made by
the Guarantor herein or in any certificate or other instrument delivered by it
or on its behalf hereunder shall be considered to have been relied upon by the
Holders and shall survive the execution and delivery of this Guaranty,
regardless of any investigation made by any of the Holders.  All statements in
any such certificate or other instrument shall constitute warranties and
representations by such Guarantor hereunder.

 

SECTION 11.  Submission to Jurisdiction.

 

(a)        The Guarantor irrevocably submits to the non-exclusive jurisdiction
of any Illinois state or federal court, over any suit, action or proceeding
arising out of or relating to this Guaranty, the Note Purchase Agreement or the
Notes.  To the fullest extent permitted by applicable law, The Guarantor
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 GUARANTOR 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 11(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 OF THE NOTE PURCHASE AGREEMENT OR
AT SUCH OTHER ADDRESS OF WHICH SUCH HOLDER SHALL THEN HAVE BEEN NOTIFIED
PURSUANT TO SAID SECTION.  THE 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 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.

 

5

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(C)         NOTHING IN THIS SECTION 11 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
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.

 

(d)        THE GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH
RESPECT TO THIS GUARANTY, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
HEREWITH OR THEREWITH

 

SECTION 12.  Miscellaneous.  Any provision of this Guaranty 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  To the extent permitted
by applicable law, the Guarantor hereby waives any provision of law that renders
any provisions hereof prohibited or unenforceable in any respect.  The terms of
this Guaranty shall be binding upon, and inure to the benefit of, the Guarantor
and the Holders and their respective successors and assigns.  No term or
provision of this Guaranty may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Guarantor and the
Required Holders.  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.  This Guaranty shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of Illinois 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.

 

IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed
as of the day and year first above written.

 

 

 

HELMERICH & PAYNE, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT 1.2(b)

 

[FORM OF SUBSIDIARY GUARANTY]

 

THIS GUARANTY (this “Guaranty”) dated as of June 15, 2009 is made by the
undersigned (each, a “Guarantor”), in favor of the holders from time to time of
the Notes hereinafter referred to, including each purchaser named in the Note
Purchase Agreement hereinafter referred to, and their respective successors and
assigns (collectively, the “Holders” and each individually, a “Holder”).

 

W I T N E S S E T H:

 

WHEREAS, HELMERICH & PAYNE, INC., a Delaware corporation (the “Company”), the
Parent and the initial Holders have entered into a Note Purchase Agreement dated
as of June 15, 2009 (the Note Purchase Agreement as amended, supplemented,
restated or otherwise modified from time to time in accordance with its terms
and in effect, the “Note Purchase Agreement”);

 

WHEREAS, the Note Purchase Agreement provides for the issuance by the Company of
$200,000,000 aggregate principal amount of Notes (as defined in the Note
Purchase Agreement);

 

WHEREAS, the Company owns, directly or indirectly, all of the issued and
outstanding capital stock or partnership interests of each Guarantor and, by
virtue of such ownership and otherwise, each Guarantor will derive substantial
benefits from the purchase by the Holders of the Company’s Notes;

 

WHEREAS, it is a condition precedent to the obligation of the Holders to
purchase the Notes that each Guarantor shall have executed and delivered this
Guaranty to the Holders; and

 

WHEREAS, each Guarantor desires to execute and deliver this Guaranty to satisfy
the conditions described in the preceding paragraph;

 

NOW, THEREFORE, in consideration of the premises and other benefits to each
Guarantor, and of the purchase of the Company’s Notes by the Holders, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, each Guarantor makes this Guaranty as follows:

 

SECTION 1.  Definitions.  Any capitalized terms not otherwise herein defined
shall have the meanings attributed to them in the Note Purchase Agreement.

 

SECTION 2.  Guaranty.  Each Guarantor, jointly and severally with each other
Guarantor, unconditionally and irrevocably guarantees to the Holders the due,
prompt and complete payment by the Company of the principal of, Make-Whole
Amount, if any, and interest on, and each other amount due under, the Notes or
the Note Purchase Agreement, when and as the same shall become due and payable
(whether at stated maturity or by required or optional prepayment or by
declaration or otherwise) in accordance with the terms of the Notes and the

 

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Note Purchase Agreement (the Notes and the Note Purchase Agreement being
sometimes hereinafter collectively referred to as the “Note Documents” and the
amounts payable by the Company under the Note Documents, and all other monetary
obligations of the Company thereunder, being sometimes collectively hereinafter
referred to as the “Obligations”).  This Guaranty is a guaranty of payment and
not just of collectibility and is in no way conditioned or contingent upon any
attempt to collect from the Company or upon any other event, contingency or
circumstance whatsoever.  If for any reason whatsoever the Company shall fail or
be unable duly, punctually and fully to pay such amounts as and when the same
shall become due and payable, each Guarantor, without demand, presentment,
protest or notice of any kind, will forthwith pay or cause to be paid such
amounts to the Holders under the terms of such Note Documents, in lawful money
of the United States, at the place specified in the Note Purchase Agreement, or
perform or comply with the same or cause the same to be performed or complied
with, together with interest (to the extent provided for under such Note
Documents) on any amount due and owing from the Company.  Each Guarantor,
promptly after demand, will pay to the Holders the reasonable costs and expenses
of collecting such amounts or otherwise enforcing this Guaranty, including,
without limitation, the reasonable fees and expenses of counsel. 
Notwithstanding the foregoing, the right of recovery against each Guarantor
under this Guaranty is limited to the extent it is judicially determined with
respect to any Guarantor that entering into this Guaranty would violate
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any state law, in which case such Guarantor shall be liable under this Guaranty
only for amounts aggregating up to the largest amount that would not render such
Guarantor’s obligations hereunder subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any state law.

 

SECTION 3.  Guarantor’s Obligations Unconditional.  The obligations of each
Guarantor under this Guaranty shall be primary, absolute and unconditional
obligations of each Guarantor, shall not be subject to any counterclaim,
set-off, deduction, diminution, abatement, recoupment, suspension, deferment,
reduction or defense based upon any claim each Guarantor or any other person may
have against the Company or any other person, and to the full extent permitted
by applicable law shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not each Guarantor or the Company shall have
any knowledge or notice thereof), including:

 

(a)         any termination, amendment or modification of or deletion from or
addition or supplement to or other change in any of the Note Documents or any
other instrument or agreement applicable to any of the parties to any of the
Note Documents;

 

(b)        any furnishing or acceptance of any security, or any release of any
security, for the Obligations, or the failure of any security or the failure of
any person to perfect any interest in any collateral;

 

(c)         any failure, omission or delay on the part of the Company to conform
or comply with any term of any of the Note Documents or any other instrument or
agreement referred to in paragraph (a) above, including, without limitation,
failure to give notice to any Guarantor of the occurrence of a “Default” or an
“Event of Default” under any Note Document;

 

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(d)        any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in any Note Document,
or any other waiver, consent, extension, indulgence, compromise, settlement,
release or other action or inaction under or in respect of any of the Note
Documents or any other instrument or agreement referred to in paragraph
(a) above or any obligation or liability of the Company, or any exercise or
non-exercise of any right, remedy, power or privilege under or in respect of any
such instrument or agreement or any such obligation or liability;

 

(e)         any failure, omission or delay on the part of any of the Holders to
enforce, assert or exercise any right, power or remedy conferred on such Holder
in this Guaranty, or any such failure, omission or delay on the part of such
Holder in connection with any Note Document, or any other action on the part of
such Holder;

 

(f)         any voluntary or involuntary bankruptcy, insolvency, reorganization,
arrangement, readjustment, assignment for the benefit of creditors, composition,
receivership, conservatorship, custodianship, liquidation, marshaling of assets
and liabilities or similar proceedings with respect to the Company, any
Guarantor or to any other person or any of their respective properties or
creditors, or any action taken by any trustee or receiver or by any court in any
such proceeding;

 

(g)        any discharge, termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of any of the Note
Documents or any other agreement or instrument referred to in paragraph
(a) above or any term hereof;

 

(h)        any merger or consolidation of the Company or any Guarantor into or
with any other corporation, or any sale, lease or transfer of any of the assets
of the Company or any Guarantor to any other person;

 

(i)            any change in the ownership of any shares of capital stock of the
Company or any change in the corporate relationship between the Company and any
Guarantor, or any termination of such relationship;

 

(j)          any release or discharge, by operation of law, of any Guarantor
from the performance or observance of any obligation, covenant or agreement
contained in this Guaranty; or

 

(k)         any other occurrence, circumstance, happening 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 any Guarantor.

 

SECTION 4.  Full Recourse Obligations.  The obligations of each Guarantor set
forth herein constitute the full recourse obligations of such Guarantor
enforceable against it to the full extent of all its assets and properties.

 

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SECTION 5.  Waiver.  Each Guarantor unconditionally waives, to the extent
permitted by applicable law, (a) notice of any of the matters referred to in
Section 3, (b) notice to such Guarantor of the incurrence of any of the
Obligations, notice to such Guarantor or the Company of any breach or default by
such Company with respect to any of the Obligations or any other notice that may
be required, by statute, rule of law or otherwise, to preserve any rights of the
Holders against such Guarantor, (c) presentment to or demand of payment from the
Company or the Guarantor with respect to any amount due under any Note Document
or protest for nonpayment or dishonor, (d) any right to the enforcement,
assertion or exercise by any of the Holders of any right, power, privilege or
remedy conferred in the Note Purchase Agreement or any other Note Document or
otherwise, (e) any requirement of diligence on the part of any of the Holders,
(f) any requirement to exhaust any remedies or to mitigate the damages resulting
from any default under any Note Document, (g) any notice of any sale, transfer
or other disposition by any of the Holders of any right, title to or interest in
the Note Purchase Agreement or in any other Note Document and (h) 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 Guarantor.

 

SECTION 6.  Subrogation, Contribution, Reimbursement or Indemnity.  Until one
year and one day after all Obligations have been indefeasibly paid in full, each
Guarantor agrees not to take any action pursuant to any rights which may have
arisen in connection with this Guaranty to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code, as amended,
including Section 509 thereof, under common law or otherwise) of any of the
Holders against the Company or against any collateral security or guaranty or
right of offset held by the Holders for the payment of the Obligations. Until
one year and one day after all Obligations have been indefeasibly paid in full,
each Guarantor agrees not to take any action pursuant to any contractual, common
law, statutory or other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against the Company which may have
arisen in connection with this Guaranty.  So long as the Obligations remain, if
any amount shall be paid by or on behalf of the Company to any Guarantor on
account of any of the rights waived in this paragraph, such amount shall be held
by such Guarantor in trust, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the Holders
(duly endorsed by such Guarantor to the Holders, if required), to be applied
against the Obligations, whether matured or unmatured, in such order as the
Holders may determine.  The provisions of this paragraph shall survive the term
of this Guaranty and the payment in full of the Obligations.

 

SECTION 7.  Effect of Bankruptcy Proceedings, etc.  This Guaranty shall continue
to be effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the sums due to any of the Holders
pursuant to the terms of the Note Purchase Agreement or any other Note Document
is rescinded or must otherwise be restored or returned by such Holder upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or any other person, or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to the Company or other person or any substantial part of its property, or
otherwise, all as though such payment had not been made.  If an event permitting
the acceleration of the maturity of the principal amount of the Notes 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 a case or proceeding

 

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under a bankruptcy or insolvency law, each Guarantor agrees that, for purposes
of this Guaranty and its obligations hereunder, the maturity of the principal
amount of the Notes and all other Obligations shall be deemed to have been
accelerated with the same effect as if any Holder had accelerated the same in
accordance with the terms of the Note Purchase Agreement or other applicable
Note Document, and such Guarantor shall forthwith pay such principal amount,
Make-Whole Amount, if any, and interest thereon and any other amounts guaranteed
hereunder without further notice or demand.

 

SECTION 8.  Term of Agreement.  This Guaranty and all guaranties, covenants and
agreements of each Guarantor contained herein shall continue in full force and
effect and shall not be discharged until the earlier to occur of (i) such time
as all of the Obligations shall be paid and performed in full and all of the
agreements of such Guarantor hereunder shall be duly paid and performed in full
and (ii) such Guarantor is released by the Holders pursuant to Section 22 of the
Note Purchase Agreement.

 

SECTION 9.  Representations and Warranties.  Each Guarantor represents and
warrants to each Holder that:

 

(a)         such Guarantor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged;

 

(b)        such Guarantor has the requisite power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guaranty, and has taken all necessary action to authorize its execution,
delivery and performance of this Guaranty;

 

(c)         this Guaranty constitutes a legal, valid and binding obligation of
such Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law);

 

(d)        the execution, delivery and performance of this Guaranty will not
(i) 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 such Guarantor
under any indenture, mortgage, deed of trust, loan, credit agreement, corporate
charter or by-laws, or any other agreement evidencing Indebtedness,
(ii) 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 such Guarantor
under, any other agreement or instrument to which such Guarantor is bound or by
which such Guarantor or any of its properties may be bound or affected, except
as could not reasonably be expected to have a Material Adverse Effect,
(iii) 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 such Guarantor, except as could not
reasonably be expected to have a Material Adverse Effect, or (iv) violate any
provision of any statute or other rule or regulation of any

 

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Governmental Authority applicable to such Guarantor, except as could not
reasonably be expected to have a Material Adverse Effect;

 

(e)         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 such Guarantor of this Guaranty;

 

(f)         except as disclosed in Section 5.8 of the Note Purchase Agreement,
no litigation, investigation or proceeding of or before any arbitrator or
governmental authority is pending or, to the knowledge of such Guarantor,
threatened by or against such Guarantor or any of its properties or revenues
(i) with respect to this Guaranty or any of the transactions contemplated hereby
or (ii) which could reasonably be expected to have a Material Adverse Effect;

 

(g)        such Guarantor (after giving due consideration to any rights of
contribution) has received fair consideration and reasonably equivalent value
for the incurrence of its obligations hereunder or as contemplated hereby and
after giving effect to the transactions contemplated herein, (i) the fair value
of the assets of such Guarantor (both at fair valuation and at present fair
saleable value) exceeds its liabilities, (ii) such Guarantor is able to and
expects to be able to pay its debts as they mature, and (iii) such Guarantor has
capital sufficient to carry on its business as conducted and as proposed to be
conducted.

 

SECTION 10.  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), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid).  Any such notice must be sent to the address specified
in the Note Purchase Agreement, or in each case at such other address as the
Company, any Holder or such Guarantor shall from time to time designate in
writing to the other parties.  Any notice so addressed shall be deemed to be
given when actually received.

 

SECTION 11.  Survival.  All warranties, representations and covenants made by
each Guarantor herein or in any certificate or other instrument delivered by it
or on its behalf hereunder shall be considered to have been relied upon by the
Holders and shall survive the execution and delivery of this Guaranty,
regardless of any investigation made by any of the Holders.  All statements in
any such certificate or other instrument shall constitute warranties and
representations by such Guarantor hereunder.

 

SECTION 12.  Submission to Jurisdiction.

 

(a)         Each Guarantor irrevocably submits to the non-exclusive jurisdiction
of any Illinois state or federal court, over any suit, action or proceeding
arising out of or relating to this Guaranty, the Note Purchase Agreement or the
Notes.  To the fullest extent permitted by applicable law, each Guarantor
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

 

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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 GUARANTOR 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 12(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 OF THE NOTE PURCHASE
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH SUCH HOLDER SHALL THEN HAVE BEEN
NOTIFIED PURSUANT TO SAID SECTION.  EACH 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 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 12 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 ANY
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.

 

(D)        EACH GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH
RESPECT TO THIS GUARANTY, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
HEREWITH OR THEREWITH.

 

SECTION 13.  Miscellaneous.  Any provision of this Guaranty which 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  To the extent permitted
by applicable law, each Guarantor hereby waives any provision of law that
renders any provisions hereof prohibited or unenforceable in any respect.  The
terms of this Guaranty shall be binding upon, and inure to the benefit of, each
Guarantor and the Holders and their respective successors and assigns.  No term
or provision of this Guaranty may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by each Guarantor and the
Required Holders.  The section and paragraph headings in this Guaranty 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.  This
Guaranty shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the State of Illinois 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.

 

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed
as of the day and year first above written.

 

 

 

HELMERICH & PAYNE DEL ECUADOR, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

HELMERICH & PAYNE (COLOMBIA) DRILLING CO.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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