Document:

EXHIBIT 10.I

CONFORMED COPY

	
 

	 

DONALDSON COMPANY, INC.

$150,000,000

Senior Notes Issuable In Series

$23,000,000

6.20% Senior
Notes, Series 1998-A, Tranche 1, due July 15, 2005

$27,000,000
6.31% Senior Notes, Series 1998-A, Tranche 2, due July 15, 2008

NOTE PURCHASE AGREEMENT

Dated as of July 15, 1998

	
 

	 

Series 1998-A,
Tranche 1 PPN: 257651 A* 0 Series 1998-A, Tranche 2 PPN: 257651 A @ 8

TABLE OF
CONTENTS

Section Page 

	
 

	
 

	
 

	
 

	
 

	
 

	
1. AUTHORIZATION OF
NOTES

	
 

	
1

	
 

	
 

	
 

	
1.1.

	
Amount; Establishment of Series

	
 

	
1

	
 

	
 

	
1.2.

	
The Series 1998-A Notes

	
 

	
2

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2.

	
SALE AND PURCHASE OF SERIES 1998-A NOTES

	
 

	
2

	
 

	
 

	
 

	
 

	
 

	
 

	
3.

	
CLOSING

	
 

	
3

	
 

	
 

	
 

	
 

	
 

	
 

	
4.

	
CONDITIONS TO CLOSING

	
 

	
3

	
 

	
 

	
4.1.

	
Representations and Warranties

	
 

	
3

	
 

	
 

	
4.2.

	
Performance; No Default

	
 

	
3

	
 

	
 

	
4.3.

	
Compliance Certificates

	
 

	
3

	
 

	
 

	
4.4.

	
Opinions of Counsel

	
 

	
4

	
 

	
 

	
4.5.

	
Purchase Permitted By Applicable Law, etc

	
 

	
4

	
 

	
 

	
4.6.

	
Sale of Other Notes

	
 

	
4

	
 

	
 

	
4.7.

	
Payment of Special Counsel Fees

	
 

	
4

	
 

	
 

	
4.8.

	
Private Placement Number

	
 

	
4

	
 

	
 

	
4.9.

	
Changes in Corporate Structure

	
 

	
5

	
 

	
 

	
4.10.

	
Proceedings and Documents

	
 

	
5

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
5.

	
REPRESENTATIONS AND WARRANTIES OF THE
 COMPANY

	
 

	
5

	
 

	
 

	
5.1.

	
Organization; Power and Authority

	
 

	
5

	
 

	
 

	
5.2.

	
Authorization, etc

	
 

	
5

	
 

	
 

	
5.3.

	
Disclosure

	
 

	
6

	
 

	
 

	
5.4.

	
Organization and Ownership of Shares of
 Subsidiaries; Affiliates

	
 

	
6

	
 

	
 

	
5.5.

	
Financial Statements

	
 

	
7

	
 

	
 

	
5.6.

	
Compliance with Laws, Other Instruments,
 etc

	
 

	
7

	
 

	
 

	
5.7.

	
Governmental Authorizations, etc

	
 

	
7

	
 

	
 

	
5.8.

	
Litigation; Observance of Agreements,
 Statutes and Orders

	
 

	
8

	
 

	
 

	
5.9.

	
Taxes

	
 

	
8

	
 

	
 

	
5.10.

	
Title to Property; Leases

	
 

	
8

	
 

	
 

	
5.11.

	
Licenses, Permits, etc

	
 

	
9

	
 

	
 

	
5.12.

	
Compliance with ERISA

	
 

	
9

	
 

	
 

	
5.13.

	
Private Offering by the Company

	
 

	
10

	
 

	
 

	
5.14.

	
Use of Proceeds; Margin Regulations

	
 

	
10

	
 

	
 

	
5.15.

	
Existing Indebtedness; Future Liens

	
 

	
11

	
 

	
 

	
5.16.

	
Foreign Assets Control Regulations, etc

	
 

	
11

	
 

	
 

	
5.17.

	
Status under Certain Statutes

	
 

	
11

i

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
5.18.

	
Environmental Matters

	
 

	
11

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
6.

	
REPRESENTATIONS OF THE PURCHASERS

	
 

	
12

	
 

	
 

	
6.1.

	
Purchase for Investment

	
 

	
12

	
 

	
 

	
6.2.

	
Source of Funds

	
 

	
12

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
7.

	
INFORMATION AS TO COMPANY

	
 

	
14

	
 

	
 

	
7.1.

	
Financial and Business Information

	
 

	
14

	
 

	
 

	
7.2.

	
Officer’s Certificate

	
 

	
17

	
 

	
 

	
7.3.

	
Inspection

	
 

	
17

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.

	
PREPAYMENT OF THE NOTES

	
 

	
18

	
 

	
 

	
8.1.

	
Required Prepayments

	
 

	
18

	
 

	
 

	
8.2.

	
Optional Prepayments with Make-Whole Amount

	
 

	
18

	
 

	
 

	
8.3.

	
Allocation of Partial Prepayments

	
 

	
18

	
 

	
 

	
8.4.

	
Maturity; Surrender, etc

	
 

	
18

	
 

	
 

	
8.5.

	
Purchase of Notes

	
 

	
19

	
 

	
 

	
8.6.

	
Make-Whole Amount

	
 

	
19

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
9.

	
AFFIRMATIVE COVENANTS

	
 

	
20

	
 

	
 

	
9.1.

	
Compliance with Law

	
 

	
20

	
 

	
 

	
9.2.

	
Insurance

	
 

	
21

	
 

	
 

	
9.3.

	
Maintenance of Properties

	
 

	
21

	
 

	
 

	
9.4.

	
Payment of Taxes and Claims

	
 

	
21

	
 

	
 

	
9.5.

	
Corporate Existence, etc

	
 

	
21

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
10.

	
NEGATIVE COVENANTS

	
 

	
22

	
 

	
 

	
10.1.

	
Consolidated Indebtedness; Indebtedness of
 Restricted Subsidiaries

	
 

	
22

	
 

	
 

	
10.2.

	
Liens

	
 

	
22

	
 

	
 

	
10.3.

	
Sale of Assets

	
 

	
24

	
 

	
 

	
10.4.

	
Mergers, Consolidations, etc

	
 

	
24

	
 

	
 

	
10.5.

	
Disposition of Stock of Restricted
 Subsidiaries

	
 

	
25

	
 

	
 

	
10.6.

	
Designation of Unrestricted Subsidiaries

	
 

	
25

	
 

	
 

	
10.7.

	
Nature of Business

	
 

	
26

	
 

	
 

	
10.8.

	
Transactions with Affiliates

	
 

	
26

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
11.

	
EVENTS OF DEFAULT

	
 

	
26

	
 

	
 

	
 

	
 

	
 

	
 

	
12.

	
REMEDIES ON DEFAULT, ETC

	
 

	
28

	
 

	
 

	
12.1.

	
Acceleration

	
 

	
28

	
 

	
 

	
12.2.

	
Other Remedies

	
 

	
29

	
 

	
 

	
12.3.

	
Rescission

	
 

	
29

	
 

	
 

	
12.4.

	
No Waivers or Election of Remedies, Expenses,
 etc

	
 

	
30

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
13.

	
REGISTRATION; EXCHANGE; SUBSTITUTION OF
 NOTES

	
 

	
30

	
 

	
 

	
13.1.

	
Registration of Notes

	
 

	
30

ii

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
13.2.

	
Transfer and Exchange of Notes

	
 

	
30

	
 

	
 

	
13.3.

	
Replacement of Notes

	
 

	
31

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
14.

	
PAYMENTS ON NOTES

	
 

	
31

	
 

	
 

	
14.1.

	
Place of Payment

	
 

	
31

	
 

	
 

	
14.2.

	
Home Office Payment

	
 

	
31

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
15.

	
EXPENSES, ETC

	
 

	
32

	
 

	
 

	
15.1.

	
Transaction Expenses

	
 

	
32

	
 

	
 

	
15.2.

	
Survival

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
16.

	
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
 ENTIRE AGREEMENT

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
17.

	
AMENDMENT AND WAIVER

	
 

	
33

	
 

	
 

	
17.1.

	
Requirements

	
 

	
33

	
 

	
 

	
17.2.

	
Solicitation of Holders of Notes

	
 

	
33

	
 

	
 

	
17.3.

	
Binding Effect, etc

	
 

	
33

	
 

	
 

	
17.4.

	
Notes held by Company, etc

	
 

	
34

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
18.

	
NOTICES

	
 

	
34

	
 

	
 

	
 

	
 

	
 

	
 

	
19.

	
REPRODUCTION OF DOCUMENTS 

	
 

	
34

	
 

	
 

	
 

	
 

	
 

	
 

	
20.

	
CONFIDENTIAL INFORMATION

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
21.

	
SUBSTITUTION OF PURCHASER

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
22.

	
MISCELLANEOUS

	
 

	
36

	
 

	
 

	
22.1.

	
Successors and Assigns

	
 

	
36

	
 

	
 

	
22.2.

	
Payments Due on Non-Business Days

	
 

	
36

	
 

	
 

	
22.3.

	
Severability

	
 

	
36

	
 

	
 

	
22.4.

	
Construction

	
 

	
37

	
 

	
 

	
22.5.

	
Counterparts

	
 

	
37

	
 

	
 

	
22.6.

	
Governing Law

	
 

	
37

	
 

	
 

	
 

	
 

	
 

	
SCHEDULE A

	
—

	
Information Relating to Purchasers

	
 

	
 

	
 

	
 

	
 

	
SCHEDULE B

	
—

	
Defined Terms

	
 

	
 

	
 

	
 

	
 

	
SCHEDULE B-1

	
—

	
Existing Investments

	
 

	
 

	
 

	
 

	
 

	
SCHEDULE 5.4

	
—

	
Subsidiaries of the Company and Ownership
 of Subsidiary Stock

	
 

	
 

	
 

	
 

	
 

	
SCHEDULE 5.5

	
—

	
Financial Statements

iii

	
 

	
 

	
 

	
 

	
 

	
SCHEDULE 5.15

	
—

	
Existing Indebtedness

	
 

	
 

	
 

	
 

	
 

	
SCHEDULE 10.2

	
—

	
Existing Liens

	
 

	
 

	
 

	
 

	
 

	
EXHIBIT 1.1-A

	
—

	
Form of Senior Note

	
 

	
 

	
 

	
 

	
 

	
EXHIBIT 1.1-B

	
—

	
Form of Supplement

	
 

	
 

	
 

	
 

	
 

	
EXHIBIT 1.2(a)

	
—

	
Form of Series 1998-A, Tranche 1, Senior
 Note

	
 

	
 

	
 

	
 

	
 

	
EXHIBIT 1.2(b)

	
—

	
Form of Series 1998 -A, Tranche 2, Senior
 Note

	
 

	
 

	
 

	
 

	
 

	
EXHIBIT 4.4(a)

	
—

	
Form of Opinion of Counsel for the Company

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

iv

DONALDSON COMPANY, INC.

1400 West 94th Street

Minneapolis, Minnesota 55440

(612) 887-3131

Fax: (612) 887 3005

$150,000,000

Senior Notes Issuable In Series

$23,000,000

6.20% Senior
Notes, Series 1998-A, Tranche 1, due July 15, 2005

$27,000,000
6.31% Senior Notes, Series 1998-A, Tranche 2, due July 15, 2008

Dated as of July 15, 1998

TO EACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

Ladies and
Gentlemen:

DONALDSON
COMPANY, INC., a Delaware corporation (the “COMPANY”), agrees with you as
follows:

1.
AUTHORIZATION OF NOTES.

1.1. AMOUNT;
ESTABLISHMENT OF SERIES.

The Company is
contemplating the issue and sale of up to $150,000,000 aggregate principal
amount of its Senior Notes issuable in series (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-A, with such changes therefrom, if any, as may be approved by the
purchasers of such Notes, or series thereof, and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement. The Notes may be issued in one or
more series. Each series of Notes, other than the initial series, shall be
issued pursuant to a supplement to this Agreement

(a
“SUPPLEMENT”) in substantially the form of Exhibit 1.1-B, and shall be subject
to the following terms and conditions:

(a) the
designation of each series of Notes shall distinguish the Notes of one series
from the Notes of all other series and the designation of each tranche within a
series shall distinguish the Notes of one tranche from the Notes of all other
tranches;

(b) the Notes
of each series shall rank PARI PASSU with the Notes of all other series and the
Company’s other outstanding unsecured Indebtedness that has not been expressly
subordinated to any other Indebtedness of the Company;

(c) each
series of Notes shall be dated the date of issue, bear interest at such rate or
rates, mature on such date or dates, be subject to such mandatory prepayments
on the dates and with the Make-Whole Amounts, if any, as are provided in the
Supplement under which such Notes are issued, and shall have such additional or
different conditions precedent to closing and such additional or different representations
and warranties or other terms and provisions as shall be specified in such
Supplement;

(d) except to
the extent provided in foregoing clauses (a) through
(c), all of the provisions of this Agreement shall apply to the Notes of each
series.

The Purchasers
of the Series 1998-A Notes need not purchase subsequent series of Notes.

1.2. THE
SERIES 1998-A NOTES.

The Company
has authorized, as the initial series of Notes hereunder, the issue and sale of
$50,000,000 aggregate principal amount of Notes to be designated as its “SERIES
1998-A NOTES” (such term to include any such Notes issued in substitution
therefor pursuant to Section 13 of this Agreement). The Series 1998-A Notes
will consist of $23,000,000 aggregate principal amount of 6.20% Senior Notes,
Series 1998-A, Tranche 1, due July 15, 2005 (the “SERIES 1998-A, TRANCHE 1,
NOTES”), and $27,000,000 aggregate principal amount of 6.31% Senior Notes,
Series 1998-A, Tranche 2, due July 15, 2008 (the “SERIES 1998-A, TRANCHE 2,
NOTES”). The Series 1998-A Notes shall be substantially in the forms set out in
Exhibits 1.2(a) and (b), respectively, with such changes therefrom, if any, as
may be approved by you and the Company.

2. SALE AND
PURCHASE OF SERIES 1998-A 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, Series 1998-A 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.

2

3. CLOSING.

The sale and
purchase of the Series 1998-A Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Gardner, Carton & Douglas, Quaker
Tower, Suite 3400, 321 North Clark Street, Chicago, Illinois 60610 at 9:00
a.m., Chicago time, at a closing (the “CLOSING”) on July 15, 1998 or on such
other Business Day thereafter on or prior to July 30, 1998 as may be agreed
upon by the Company and you and the Other Purchasers. At the Closing the
Company will deliver to you the Series 1998-A Notes to be purchased by you in
the form of a single Series 1998-A Note (or such greater number of Series
1998-A Notes in denominations of at least $500,000 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
1502-5005-4130 at US Bank - Minneapolis, US Bank Place, 601 Second Avenue
South, Minneapolis, MN 55402, ABA No. 0910-0002-2. If at the Closing the Company
shall fail to tender such Series 1998-A 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 Series 1998-A 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 Company in this Agreement shall be
correct when made and at the time of the Closing.

4.2.
PERFORMANCE; NO DEFAULT.

The Company
shall have performed and complied with all agreements and conditions contained
in this Agreement required to be performed or complied with by it prior to or
at the Closing and after giving effect to the issue and sale of the Series
1998-A Notes (and the application of the proceeds thereof as contemplated by
Section 5.14) no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
Sections 10.1 through 10.8 had such Sections applied since such date.

4.3.
COMPLIANCE CERTIFICATES.

(a) Officer’s
Certificate. 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.

3

(b)
Secretary’s Certificate. The Company 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 Series
1998-A 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 Dorsey & Whitney LLP, Counsel for the Company,
covering the matters set forth in Exhibit 4.4(a) and covering such other
matters incident to the transactions contemplated hereby as you or your counsel
may reasonably request (and the Company instructs its counsel to deliver such
opinion to you) and (b) from Gardner, Carton & Douglas, 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 Series 1998-A 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, without
limitation, Regulation T, U 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, which law or regulation
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 Series 1998-A Notes to be purchased by them at
the Closing as specified in Schedule A.

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 one Business Day prior to the Closing.

4.8. PRIVATE
PLACEMENT NUMBER.

Private
Placement numbers issued by Standard & Poor’s CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for the Series 1998-A Notes.

4

4.9. CHANGES
IN CORPORATE STRUCTURE.

The Company
shall not 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.
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.

5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company
represents and warrants to you that:

5.1.
ORGANIZATION; POWER AND AUTHORITY.

The Company is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company has the corporate power and authority to own or hold under lease the
properties it owns or holds under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Series
1998-A Notes and to perform the provisions hereof and thereof.

5.2.
AUTHORIZATION, ETC.

This Agreement
and the Series 1998-A 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 Series 1998-A 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).

5

5.3.
DISCLOSURE.

The Company,
through its agent, BancAmerica Robertson Stephens, has delivered to you and
each Other Purchaser a copy of a Private Placement Memorandum, dated June 1998
(the “MEMORANDUM”), relating to the transactions contemplated hereby. The
Memorandum fairly describes, in all material respects, the general nature of
the business and principal properties of the Company and its Subsidiaries.
Except for projections, as to which no representation or warranty is made, this
Agreement, the Memorandum, the documents, certificates or other writings delivered
to you by or on behalf of the Company in connection with the transactions
contemplated hereby and the financial statements listed in Schedule 5.5, 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. The projections
provided to you are based upon good faith estimates and assumptions believed by
the Company to be reasonable. Except as disclosed in the Memorandum or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since July 31, 1997, there has
been no change in the financial condition, operations, business or properties
of the Company or any Restricted Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.

5.4.
ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.

(a) Schedule
5.4 contains (except as noted therein) complete and correct lists (i) of the
Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof,
the jurisdiction of its organization, and the percentage of shares of each
class of its capital stock or similar equity interests outstanding owned by the
Company and each other Subsidiary, (ii) to the Company’s knowledge, of the
Company’s Affiliates, other than Subsidiaries, and (iii) of the Company’s
directors and senior officers. Each Subsidiary listed in Schedule 5.4 is a
Restricted 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 Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any Lien (except
as otherwise disclosed in Schedule 5.4).

(c) Each
Subsidiary identified in Schedule 5.4 is a corporation or other legal entity
duly organized, validly existing and 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

6

standing could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other power
and authority to own or hold under lease the properties it purports to own or
hold under lease and to transact the business it transacts and proposes to
transact.

(d) No
Subsidiary is a party to, or otherwise subject to any legal restriction or any
agreement (other than this Agreement, the agreements listed on Schedule 5.4 and
limitations imposed by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that owns
outstanding shares of capital stock or similar equity interests of such
Subsidiary.

5.5. FINANCIAL
STATEMENTS.

The Company
has delivered to you and each Other Purchaser copies of the financial
statements of the Company 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 condition of the Company and its Subsidiaries as of the respective
dates specified in such Schedule and the consolidated results of their
operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case of any
interim financial statements, to normal year-end adjustments).

5.6.
COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

The execution,
delivery and performance by the Company of this Agreement and the Series 1998-A
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
Company or any Subsidiary under, any Material agreement, or corporate charter
or By-Laws, to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound 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 Company or any
Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.

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 Series 1998-A Notes.

5.8.
LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.

(a) Except as
disclosed in Schedule 5.8, there are no actions, suits or proceedings pending
or, to the knowledge of the Company, threatened against or

7

affecting the
Company or any Subsidiary or any property of the Company 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, could reasonably be expected
to have a Material Adverse Effect.

(b) Neither
the Company 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 without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

5.9. TAXES.

The Company
and its Subsidiaries have filed all tax returns that are required to have been filed
in any jurisdiction, and have paid all taxes shown to be due and payable on
such returns and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (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 Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be expected
to have a Material Adverse Effect. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of Federal, state or other
taxes for all fiscal periods are adequate under GAAP. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended December 31, 1990.

5.10. TITLE TO
PROPERTY; LEASES.

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

5.11.
LICENSES, PERMITS, ETC.

Except as
disclosed in Schedule 5.11,

8

(a) the
Company and its Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that individually or in the aggregate are Material, without
known Material conflict with the rights of others;

(b) to the
best knowledge of the Company, no product of the Company infringes in any
Material respect any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by any
other Person; and

(c) to the
best knowledge of the Company, there is no Material violation by any Person of
any right of the Company or any of its Subsidiaries with respect to any patent,
copyright, service mark, trademark, trade name or other right owned or used by
the Company or any of its Subsidiaries.

5.12.
COMPLIANCE WITH ERISA.

(a) The
Company 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 Company 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 could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the Company
or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or in
the aggregate Material.

(b) The
present value of the aggregate benefit liabilities under each of the Plans that
are subject to Title IV of ERISA (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 by more than 5% of Adjusted
Consolidated Net Worth. 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
Company 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.

9

(d) The
expected postretirement benefit obligation (determined as of the last day of
the Company’s most recently ended fiscal year in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by section 4980B of the Code) of
the Company and its Subsidiaries is not Material or has been disclosed in the
most recent audited consolidated financial statements of the Company and its
Subsidiaries.

(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
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.

Neither the
Company nor anyone acting on its behalf has offered the Series 1998-A Notes or
any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
person other than you, the Other Purchasers and not more than 42 other
Institutional Investors, each of which has been offered the Series 1998-A Notes
at a private sale for investment. Neither the Company nor anyone acting on its
behalf has taken, or will take, any action that would subject the issuance or
sale of the Series 1998-A 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 Series 1998-A Notes to the repayment
of Indebtedness to banks. No part of the proceeds from the sale of the Series
1998-A Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 5% 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 25% or more 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
INDEBTEDNESS; FUTURE LIENS.

(a) Except as
described therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of

10

April 30,
1998, 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 Company 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 Company or
such Subsidiary that is outstanding in an aggregate principal amount in excess
of $5,000,000 and no event or condition exists with respect to any Indebtedness
of the Company 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) Except as
disclosed in Schedule 5.15, neither the Company nor any Subsidiary has agreed
or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.2.

5.16. FOREIGN
ASSETS CONTROL REGULATIONS, ETC.

Neither the
sale of the Series 1998-A Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

5.17. STATUS
UNDER CERTAIN STATUTES.

Neither the
Company nor any Subsidiary is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of
1935, as amended, the Interstate Commerce Act, as amended by the ICC
Termination Act, as amended, or the Federal Power Act, as amended.

5.18.
ENVIRONMENTAL MATTERS.

Neither the
Company nor any Subsidiary has knowledge of any claim or has received any
notice of any claim, and no proceeding has been instituted asserting any claim
against the Company or any of its Subsidiaries or any of their respective real
properties now owned, leased or operated by any of them or other assets nor, to
the knowledge of the Company or any Subsidiary, has any such proceeding been
instituted against any of their respective real properties formerly owned, for
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. Except as otherwise disclosed to you in writing,

(a) neither
the Company nor any Subsidiary has knowledge of any facts that would give rise
to any claim for violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real properties now or

11

formerly
owned, leased or operated by any of them or to other assets or their use,
except, in each case, such as could not reasonably be expected to result in a
Material Adverse Effect;

(b) neither
the Company nor any of its Subsidiaries 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 could reasonably be expected
to result in a Material Adverse Effect; and

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

6.
REPRESENTATIONS OF THE PURCHASERS.

6.1. PURCHASE
FOR INVESTMENT.

You represent
that you are purchasing the Series 1998-A 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 Series 1998-A Notes have
not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, and that the Company is not required to
register the Series 1998-A Notes.

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 Series 1998-A Notes to be purchased by you hereunder:

(a) if you are
an insurance company, the Source does not include assets allocated to any
separate account maintained by you in which any employee benefit plan (or its
related trust) has any interest, other than a separate account that is
maintained solely in connection with your fixed contractual obligations under
which the amounts payable, or credited, to such plan and 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

(b) the Source
is either (i) an insurance company pooled separate account, within the meaning
of Prohibited Transaction Exemption (“PTE”) 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE 91-38

12

(issued July
12, 1991) and, except as you have disclosed to the Company in writing pursuant
to this paragraph (b), no employee benefit plan or group of plans maintained by
the same employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective investment
fund; or

(c) the Source
constitutes assets of an “investment fund” (within the meaning of Part V of 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
paragraph (c); or

(d) the Source
is a governmental plan; or

(e) 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 paragraph (e); or

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

(g) the Source
is an “insurance company general account” as such term is defined in the
Department of Labor Prohibited Transaction Class Exemption 95-60 (issued July
12, 1995) (“PTE 95-60”) and there is no “employee benefit plan” with respect to
which the aggregate amount of such general account’s reserves and liabilities
for the contracts held by or on behalf of such employee benefit plan and all
other employee benefit plans maintained by the same employer (and affiliates
thereof as defined in
Section V(a)(1) of PTE 95-60) or by the same employee organization (in each
case determined in accordance with the provisions of PTE 95-60) exceeds 10% of
the total reserves and liabilities of such general account (as determined under
PTE 95-60) (exclusive of separate account liabilities) plus surplus as set
forth in the National Association of Insurance Commissioners Annual Statement
filed with the state of domicile of such Purchaser.

As used in
this Section 6.2, the terms “EMPLOYEE BENEFIT PLAN”, “GOVERNMENTAL PLAN”,
“PARTY IN INTEREST” and “SEPARATE ACCOUNT” shall have the respective meanings
assigned to such terms in Section 3 of ERISA.

13

7. INFORMATION
AS TO COMPANY.

7.1. FINANCIAL
AND BUSINESS INFORMATION

The Company
shall deliver to each holder of Notes that is an Institutional Investor:

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

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

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

setting forth
in each case in comparative form the figures for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance with
GAAP applicable to quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial condition 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 Company’s Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);

(b) Annual
Statements — within 120 days after the end of each fiscal year of the Company,
duplicate copies of,

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

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

setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with GAAP, and accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall state that such financial statements
present fairly, in all material respects, the financial condition 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

14

provides a
reasonable basis for such opinion in the circumstances, provided that the
delivery within the time period specified above of the Company’s Annual Report
on Form 10-K for such fiscal year (together with the Company’s annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this Section 7.1(b);

(c)
Unrestricted Subsidiaries — if, at the time of delivery of any financial
statements pursuant to Section 7.1(a) or (b), Unrestricted Subsidiaries account
for more than 10% of (i) the consolidated total assets of the Company and its
Subsidiaries reflected in the balance sheet included in such financial
statements or (ii) the consolidated revenues of the Company and its
Subsidiaries reflected in the consolidated statement of income included in such
financial statements, an unaudited balance sheet for all Unrestricted
Subsidiaries taken as whole as at the end of the fiscal period included in such
financial statements and the related unaudited statements of income,
stockholders’ equity and cash flows for such Unrestricted Subsidiaries for such
period, together with consolidating statements reflecting all eliminations or
adjustments necessary to reconcile such group financial statements to the
consolidated financial statements of the Company and its Subsidiaries;

(d) SEC and
Other Reports — promptly upon their becoming available, one copy of (i) each
financial statement, report, notice or proxy statement sent by the Company or
any Subsidiary to public securities holders generally, and (ii) each regular or
periodic report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements made available
generally by the Company or any Restricted Subsidiary to the public concerning
developments that are Material;

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

(f) ERISA
Matters — promptly, and in any event within five 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 Company 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

15

(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 Company or any 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 Company or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;

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

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

(i)
Supplements to Agreement — in the event an additional series of Notes is, or
is proposed to be, issued under this Agreement, promptly, and in any event within
10 Business Days after execution and delivery thereof, a true copy of the
Supplement pursuant to which such Notes are to be, or were, issued.

7.2. OFFICER’S
CERTIFICATE.

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

(a) Covenant
Compliance — the information (including detailed calculations) required in
order to establish whether the Company was in compliance with the requirements
of Section 10.1 during the quarterly or annual period covered by the statements
then being furnished; and

16

(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 Company and its Restricted 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 has
not 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 (including any such event or condition resulting from the failure
of the Company or any Restricted Subsidiary to comply with any Environmental
Law), 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.
INSPECTION.

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 Company, to visit the principal
executive office of the Company, to discuss the affairs, finances and accounts
of the Company and its Restricted Subsidiaries with the Company’s officers, and
(with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Restricted Subsidiary, all at
such reasonable times and as often as may be reasonably requested in writing;
and

(b) Default —
if a Default or Event of Default then exists, at the expense of the Company and
upon reasonable prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and accounts of the
Company and its Restricted Subsidiaries with the Company’s officers, and (with
the consent of the Company, which consent will not be unreasonably withheld)
its independent public accountants, and (with the consent of the Company, which
consent will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Restricted Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing.

8. PREPAYMENT
OF THE NOTES.

8.1. REQUIRED
PREPAYMENTS.

No regularly
scheduled prepayments are due on the Series 1998-A Notes prior to their stated
maturity.

17

8.2. OPTIONAL
PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes of any series, including the Series
1998-A Notes, in an amount not less than $2,000,000 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 of the series to
be prepaid written notice of each optional prepayment under this Section 8.2
not less than 30 days and not more than 60 days prior to the date fixed for
such prepayment. Each such notice shall specify such date, the aggregate
principal amount of the Notes to be prepaid on such date, the principal amount
of each Note held by such holder to be prepaid (determined in accordance with
Section 8.3), and the interest to be paid on the prepayment date with respect
to such principal amount being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Make-Whole Amount
due in connection with such prepayment (calculated as if the date of such
notice were the date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the Company shall
deliver to each holder of Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.

8.3.
ALLOCATION OF PARTIAL PREPAYMENTS.

In the case of
each partial prepayment of the Notes of a series, the principal amount of the
Notes of such series to be prepaid shall be allocated among all of the Notes of
every tranche of such series at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment. Each such partial prepayment pursuant to
Section 8.2 shall, in respect of the Notes of a series, be applied first to the
payment due on such Notes at final maturity and thereafter to any required
prepayments on such Notes, in inverse order of maturity.

8.4. MATURITY;
SURRENDER, ETC.

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

8.5. 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
upon the payment or prepayment of the Notes in accordance with the terms of
this Agreement and the

18

Notes. 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.

8.6.
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.

“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 “PX Screen”
on the Bloomberg Financial Market Service (or such other display as may replace
the PX 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.

19

“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.

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

9.1.
COMPLIANCE WITH LAW.

The Company
will, and will cause each Subsidiary to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including,
without limitation, 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 could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

9.2.
INSURANCE.

The Company
will, and will cause each Restricted Subsidiary to, maintain, with financially
sound and reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles, co-insurance
and self-insurance, if adequate reserves are

20

maintained
with respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.

9.3.
MAINTENANCE OF PROPERTIES.

The Company
will and will cause each Restricted 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 Company or any Restricted
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

9.4. PAYMENT
OF TAXES AND CLAIMS.

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

9.5. CORPORATE
EXISTENCE, ETC.

Subject to
Section 10.4, the Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.3 and 10.4, the Company
will at all times preserve and keep in full force and effect the corporate
existence of each Restricted Subsidiary (unless merged into the Company or
another Restricted Subsidiary) and all rights and franchises of the Company and
its Restricted Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect
such corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.

10. NEGATIVE
COVENANTS.

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

21

10.1.
CONSOLIDATED INDEBTEDNESS; INDEBTEDNESS OF RESTRICTED SUBSIDIARIES.

The Company
will not permit:

(a)
Consolidated Indebtedness to exceed 65% of Consolidated Total Capitalization at
any time; and

(b) Any
Restricted Subsidiary to incur any Indebtedness if, after giving effect thereto
and to the application of the proceeds therefrom, Priority Debt outstanding
would exceed 20% of Consolidated Total Capitalization.

10.2. LIENS.

The Company
will not, and will not permit any Restricted 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 (unless, concurrently with the
incurrence, assumption or creation of such Lien, the Company makes, or causes
to be made, effective provision whereby the Notes are equally and ratably
secured by a Lien on the same property or assets), except:

(a) Liens
existing on property or assets of the Company or any Restricted Subsidiary as
of the date of this Agreement that are described in Schedule 10.2;

(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)
encumbrances in the nature of leases, subleases, zoning restrictions,
easements, rights of way and similar charges and encumbrances 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;

(d) Liens
incidental to the conduct of business or the ownership of properties and assets
(including landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s and
other similar liens) 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;

(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;

22

(f) Liens
securing Indebtedness of a Restricted Subsidiary to the Company or to another
Restricted Subsidiary;

(g) Liens (i)
existing on property at the time of its acquisition by the Company or a
Restricted Subsidiary and not created in contemplation thereof, whether or not
the Indebtedness secured by such Lien is assumed by the Company or a Restricted
Subsidiary; or (ii) on property created contemporaneously with its acquisition
or within 180 days of the acquisition or completion of construction or improvement
thereof to secure or provide for all or a portion of the purchase price or cost
of construction or improvement 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 Restricted Subsidiary of, or substantially all
of its assets are acquired by, the Company or a Restricted 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 Company
or any Restricted Subsidiary (other than property that is an improvement to or
is acquired for specific use in connection with the subject property) and, in
the case of clause (ii) only, that the aggregate principal amount of
Indebtedness secured by each such Lien does not exceed the lesser of the fair
market value (determined in good faith by the board of directors of the Company
or by one or more officers of the Company to whom authority to enter into the
transaction has been delegated by the board of directors) or cost of
acquisition or construction of the property subject thereto;

(h) Liens
coincident to asset securitization transactions;

(i) Liens
resulting from extensions, renewals or replacements of Liens permitted by
paragraphs (a), (f), (g) and (h), 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

(j) Additional
Liens securing Indebtedness not otherwise permitted by paragraphs (a) through
(i) above, 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 outstanding does not exceed 20% of
Consolidated Total Capitalization.

10.3. SALE OF
ASSETS.

Except as
permitted by Section 10.4, the Company will not, and will not permit any
Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of,
including by way of merger (collectively a “DISPOSITION”), any assets,
including capital stock of Restricted Subsidiaries, in one or a series of
transactions, to any Person, other than (a) Dispositions in the ordinary course
of business, (b) Dispositions by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to the Company or another Restricted Subsidiary or
(c) other Dispositions not otherwise permitted by this Section 10.3, including
the sale of receivables pursuant to asset

23

securitization
transactions, provided that the aggregate net book value of all assets so
disposed of in any fiscal year pursuant to this Section 10.3(c) does not exceed
10% of Consolidated Total Assets as of the end of the immediately preceding
fiscal year. Notwithstanding the foregoing, the Company may, or may permit any
Restricted 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 Section 10.3(c) of the preceding sentence to the
extent that (i) such assets were acquired or constructed not more than 180 days
prior to Closing and are leased back by the Company or any Restricted
Subsidiary, as lessee, within 180 days of the acquisition or construction
thereof, or (ii) the net proceeds from such Disposition are within one year of
such Disposition (A) reinvested in productive assets by the Company or a
Restricted Subsidiary or (B) applied to the payment or prepayment of any
outstanding Indebtedness of the Company or any Restricted Subsidiary that is
not subordinated to the Notes. Any prepayment of Notes pursuant to this Section
10.3 shall be in accordance with Sections 8.2 and 8.3, without regard to the
minimum prepayment requirements of Section 8.2.

10.4. MERGERS,
CONSOLIDATIONS, ETC.

The Company
will not, and will not permit any Restricted 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, 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 Company is not such corporation, such corporation (x) 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 and (y) shall have caused to be delivered to each
holder of any Notes an opinion of independent counsel reasonably satisfactory
to the Required Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their terms and
comply with the terms hereof;

(ii) 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, could incur immediately thereafter $1.00 of additional Priority Debt;

24

(iii)
immediately before and after giving effect to such transaction, no Default or
Event of Default shall exist; and

(b) Any
Restricted Subsidiary may (x) merge into the Company (provided that the Company
is the surviving corporation) or another Restricted Subsidiary or (y) sell,
transfer or lease all or any part of its assets to the Company or another
Restricted 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 10.3 or, as a result of which, such Person becomes
an Restricted Subsidiary; provided in each instance set forth in clauses (x)
through (z) that, immediately before and after giving effect thereto, there
shall exist no Default or Event of Default.

10.5.
DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES.

The Company
(i) will not permit any Restricted Subsidiary to issue its capital stock, or
any warrants, rights or options to purchase, or securities convertible into or
exchangeable for, such capital stock, to any Person other than the Company or
another Restricted Subsidiary (other than directors’ qualifying shares, shares
satisfying local ownership requirements or shares for any similar statutory
purposes), and (ii) will not, and will not permit any Restricted Subsidiary to,
sell, transfer or otherwise dispose of any shares of capital stock of a
Restricted Subsidiary (other than directors’ qualifying shares, shares
satisfying local ownership requirements or shares for any similar statutory
purposes) if such sale would be prohibited by Section 10.3. If a Restricted
Subsidiary at any time ceases to be such as a result of a sale or issuance of
its capital stock, any Liens on property of the Company or any other Restricted
Subsidiary securing Indebtedness owed to such Restricted Subsidiary, which is
not contemporaneously repaid, together with such Indebtedness, shall be deemed
to have been incurred by the Company or such other Restricted Subsidiary, as
the case may be, at the time such Restricted Subsidiary ceases to be a
Restricted Subsidiary.

10.6.
DESIGNATION OF UNRESTRICTED SUBSIDIARIES.

The Company
may designate any Restricted Subsidiary as an Unrestricted Subsidiary and any
Unrestricted Subsidiary as a Restricted Subsidiary; provided that, (a) if such
Subsidiary initially is a Restricted Subsidiary, then such Restricted
Subsidiary may be subsequently designated as an Unrestricted Subsidiary and
such Unrestricted Subsidiary may be subsequently designated as a Restricted
Subsidiary, but no further changes in designation may be made, (b) if such
Subsidiary initially is an Unrestricted Subsidiary, then such Unrestricted
Subsidiary may be subsequently designated as a Restricted Subsidiary and such
Restricted Subsidiary may be subsequently designated as an Unrestricted
Subsidiary, but no further changes in designation may be made, (c) immediately
before and after designation of a Restricted Subsidiary as an Unrestricted
Subsidiary there exists no Default or Event of Default and (d) after
designation of a Restricted Subsidiary as an Unrestricted Subsidiary, the Company
could incur an additional $1.00 of Priority Debt.

25

10.7. NATURE
OF BUSINESS.

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

10.8.
TRANSACTIONS WITH AFFILIATES.

The Company
will not and will not permit any Restricted Subsidiary to enter into directly
or indirectly any Material transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Restricted Subsidiary), except
upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than would be obtainable in a comparable arm’s-length
transaction with a Person not an Affiliate.

11. EVENTS OF
DEFAULT.

An “EVENT OF
DEFAULT” shall exist if any of the following conditions or events shall occur
and be continuing:

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

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

(c) the
Company defaults in the performance of or compliance with any term contained in
Section 7.1(e) or Sections 10.1 through 10.8; or

(d) 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
after the earlier of (i) a Responsible Officer obtaining actual knowledge of
such default and (ii) 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 Company or by
any officer of the Company in this Agreement or in any writing furnished in
connection with the transactions contemplated hereby proves to have been false
or incorrect in any material respect on the date as of which made; or

26

(f) (i) the
Company or any Restricted Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an
aggregate principal amount in excess of 5% of Adjusted Consolidated Net Worth
(as of the end of the most recently completed fiscal period of the Company)
beyond any period of grace provided with respect thereto, or (ii) the Company
or any Restricted Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Indebtedness that is outstanding in an
aggregate principal amount in excess of 5% of Adjusted Consolidated Net Worth
(as of the end of the most recently completed fiscal period of the Company) 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, 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 giving of notice of optional redemption, the passage
of time or the right of the holder of Indebtedness to convert such Indebtedness
into equity interests), the Company or any Restricted 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
principal amount in excess of 5% of Adjusted Consolidated Net Worth (as of the
end of the most recently completed fiscal period of the Company); or

(g) 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 authorizing any of the foregoing; or

(h) a court or
governmental authority of competent jurisdiction enters an order appointing, without
consent by 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 Company or any Significant Subsidiary, or any such petition
shall be filed against 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 5% of
Adjusted Consolidated Net Worth (as of the end of the most recently completed
fiscal period of the Company) are rendered against one or more of the

27

Company and
its 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 Company or any ERISA
Affiliate that a Plan may become a subject of any such proceedings, (iii) the
aggregate “amount of unfunded benefit liabilities” (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed 5% of Adjusted Consolidated Net Worth (as of
the end of the most recently completed fiscal period of the Company), (iv) the
Company or any 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 Company
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and any
such event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect.

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 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, any holder or holders of
more than 50% in principal amount of the Notes at the time outstanding may at
any time at its or 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

28

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 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.

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 holders of more than 50% in principal amount of the
Notes then outstanding, 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 in respect of the Notes, at the Default Rate, (b) 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 (c) 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

29

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

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 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), the Company shall execute and deliver, at the
Company’s expense (except as provided below), one or more new Notes (as
requested by the holder thereof) of the same series 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 Note established
for such series. 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 $500,000, 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 $500,000. 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 representations set forth in
Sections 6.1(to the extent such representation is required for such transfer)
and 6.2.

30

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,

the Company at
its own expense shall execute and deliver, in lieu thereof, a new Note of the
same series, 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.

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 Bank of America National Trust & Savings 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

31

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 one special counsel
for you and the Other Purchasers collectively 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, without limitation: (a) the reasonable 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,
and (b) the costs and expenses, including financial advisors’ fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary
or in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and will save 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 Company pursuant to this Agreement shall be deemed
representations and warranties of 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.

32

17. AMENDMENT
AND WAIVER.

17.1.
REQUIREMENTS.

This Agreement
and the Notes may be amended, and the observance of any term hereof or of the
Notes may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and the Required Holders, except that
(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.

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 or 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.

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

33

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
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, 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, without limitation, (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, microfilm, microcard, miniature photographic 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

34

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 Company or any Subsidiary in connection
with the transactions contemplated by or otherwise pursuant to this Agreement
that is proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified in writing when received by you as being
confidential or nonpublic information of the Company 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 Company or any Subsidiary or a Person known to you to
be under an obligation of confidentiality to the Company, 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 (to
the extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (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 supervisory jurisdiction
over you, (vii) the National Association of Insurance Commissioners 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

35

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, 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.
MISCELLANEOUS.

22.1.
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, without limitation, any subsequent holder of a Note)
whether so expressed or not.

22.2. PAYMENTS
DUE ON NON-BUSINESS DAYS.

Anything in
this Agreement or the Notes to the contrary notwithstanding, 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.

22.3.
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.

36

22.4.
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.

22.5.
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.

22.6.
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.

* * * * *

37

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 and the Company.

Very truly
yours,

DONALDSON COMPANY, INC.

By:

Name:

Title:

38

The foregoing
is agreed to
as of the date thereof.

METROPOLITAN LIFE INSURANCE
COMPANY

By:

 Name:

Title:

PRINCIPAL LIFE INSURANCE
COMPANY

By:

 Name:

Title:

By:

 Name:

Title:

TMG LIFE INSURANCE COMPANY

By:

 Name:

Title:

By:

 Name:

Title:

39

STATE FARM LIFE INSURANCE COMPANY

By:

 Name:

Title:

By:

 Name:

Title:

AMERITAS LIFE INSURANCE CORP.

By: Ameritas
Investment Advisors, Inc., as Agent

By:

 Name: Patrick J. Henry

Title: Vice President - Fixed Income Securities

AMERITAS VARIABLE LIFE INSURANCE
COMPANY

By: Ameritas
Investment Advisors, Inc., as Agent

By:

 Name: Patrick J. Henry

Title: Vice President - Fixed Income Securities

40

SCHEDULE A

INFORMATION RELATING TO PURCHASERS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name
 and Address of Purchaser

	
 

	
  Principal
 Amount of

 Notes to be Purchased

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
 

	
 

	
METROPOLITAN LIFE INSURANCE

 COMPANY

	
 

	
$22,000,000

 Series 1998-A, Tranche 2

(1) All
payments by wire transfer of immediately available funds to:

Metropolitan
Life Insurance Company, Corporate Investments Account No. 002-2-410591

The Chase Manhattan Bank

Metropolitan Branch

33 East 23rd Street

New York, NY 10010

ABA # 021000021

providing
sufficient information, including PPN, to identify the source and application
of funds and requesting the bank to send a credit advice thereof to
Metropolitan Life Insurance Company.

(2) All other
communications:

Metropolitan
Life Insurance Company Fixed Income Investments

334 Madison Avenue, P.O. Box 633

Convent Station, NJ 07961-0633

Attention: Private Placement Unit

Telecopier Number: (973) 254-3050

Tax ID
#13-5581829

Schedule A

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name
 and Address of Purchaser

	
 

	
  Principal
 Amount of

 Notes to be Purchased

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
 

	
 

	
PRINCIPAL LIFE INSURANCE

 COMPANY

	
 

	
$10,000,000

 Series 1998-A, Tranche 1

	
 

	
 

	
 

	
 

	
 

	
711
 High Street

 Des Moines, IA 50392-0800

 Attention: Investment Department - Secuirities

 Fax: (515) 248-2490

 Tel: (515) 248-3495

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Address
 for all communications is as above,

 except notices of payment with respect to the

 notes, which shall be addressed to:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Principal
 Life Insurance Company

 711 High Street

 Des Moines, IA 50392-0960

 Attention: Investment Accounting - Secuirities

 Fax: (515) 248-2643

 Tel: (515) 247-0689

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
All
 payments are to be by bank wire transfer of

 immediately available funds to:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Norwest
 Bank Iowa, N.A.

 7th & Walnut Streets

 Des Moines, IA 50309

 ABA # 073000228 OBI PFGSE (S) B0061681 ( )

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
For
 credit to Principal Life Insurance Company

 Account No. 032395

	
 

	
 

2

Schedule A

With the
following accompanying information:

Name of
Company: Donaldson Company, Inc. Description of Security: $23,000,000 Series
1998-A, Tranche 1, Senior Notes due July 15, 2005 Issuance Date: __________________________
Security Number: 257651 A* 0

Bond Number: 16-B-61681

due Date and Application (as among principal, premium and interest) of the
payment being made.

Notes to be
delivered to the Law Department of Purchaser

Taxpayer ID #42-0127290

3

Schedule A

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name
 and Address of Purchaser

	
 

	
  Principal
 Amount of

 Notes to be Purchased

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
TMG
 LIFE INSURANCE COMPANY

 c/o The Mutual Group (U.S.), Inc. 

 401 North Executive Drive, Suite 300

 Brookfield, WI 53008-0503

 Attention: Connie Keller

 Phone: (414) 641-4022

 Facsimile: (414) 641-4055

	
 

	
$5,000,000

 Series 1998-A, Tranche 1

(1) All
payments on account of the Notes shall be made by wire or interbank transfer of
immediately available funds to:

Norwest Bank Minnesota, N.A.

ABA# 091000019

BNF A/C: 0840245

 BNF: Trust Clearing Account

REF: ATTN: Income Collections

TRUST ACCOUNT: 12250600

 Service Experts PPN: 257651 A* 0

(2) All
notices in respect of payment shall be delivered to:

TMG Life
Insurance Company

c/o The Mutual Group (U.S.), Inc.

Attention: Tamie Greenwood

401 North Executive Drive, Suite 300

Brookfield, WI 53008-0503

Phone: (414) 641-4027

Facsimile: (414) 641-4055

(3) All other
communications shall be delivered to:

TMG Life
Insurance Company

c/o The Mutual Group (U.S.), Inc.

401 North Executive Drive, Suite 300

Brookfield, WI 53008-0503

Phone: (414) 641-4027

Facsimile: (414) 641-4055

Name of
Nominee in which Notes are to be issued: TMG Life Insurance Company

Taxpayer I.D.
#: 45-0208990

4

Schedule A

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name
 and Address of Purchaser

	
 

	
  Principal
 Amount of

 Notes to be Purchased

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
STATE FARM LIFE INSURANCE 

 COMPANY

	
 

	
$5,000,000

 Series 1998-A, Tranche 1

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$5,000,000

 Series 1998-A, Tranche 2

	
 

	
 

	
 

	
 

	
 

	
WIRE
 TRANSFER INSTRUCTIONS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Chase Manhattan Bank

 ABA No. 021000021

 SSG Private Income Processing

 A/C #900-9-000200

 For Credit To Account Number G 06893

 Ref. PPN: 257651 A* 0 (Series 1998-A, Tranche 1)

	
 

PPN: 257651 A
@ 8 (Series 1998-A, Tranche 2) Rate: 6.20% (Series 1998-A, Tranche 1) 6.31%
(Series 1998-A, Tranche 2) Maturity Date: July 15, 2005 (Series 1998-A, Tranche
1) July 15, 2008 (Series 1998-B, Tranche 2)

SEND NOTICES TO:

State Farm
Life Insurance Company

Investment Dept. E-10

One State Farm Plaza

Bloomington, IL 61710

SEND CONFIRMATIONS TO:

State Farm
Life Insurance Company

Investment Accounting Dept. D-3

One State Farm Plaza

Bloomington, IL 61710

5

Schedule A

SEND THE ORIGINAL (VIA REGISTERED MAIL) TO:

Chase
Manhattan Bank

Attn: Barbara Walsh

(North America Insurance)

3 Chase Metrotech Center - 6th Floor

Brooklyn, New York 11245

SEND AN ADDITIONAL COPY OF THE ORIGINAL
SECURITY TO:

State Farm
Life Insurance Company

One State Farm Plaza E-8

Bloomington, IL 61710

Attn: Investment Legal E-8

Larry Rottunda, Investment Counsel

Tax ID
#37-0533090

6

Schedule A

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name
 and Address of Purchaser

	
 

	
  Principal
 Amount of

 Notes to be Purchased

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
 

	
 

	
AMERITAS LIFE INSURANCE 

 CORP.

	
 

	
$2,000,000

 Series 1998-A, Tranche 1

(1) All
payments by wire trans- fer of immediately available funds to:

U.S. Bank

ABA# 104-000-029

Ameritas Life Insurance Corp. Acct# 1-494-0070-0188

Re: Description of Note; Principal & Interest Breakdown

with
sufficient information

to identify the source and

application of such funds.

(2) All
notices of payments and written confirmations of such wire transfers:

Ameritas Life
Insurance Corp. 5900 “O” Street

Lincoln, NE 68510-2234

Fax Number (402) 467-6970

Attn: James Mikus

(3) All other
communications:

Ameritas Life
Insurance Corp. 5900 “O” Street

Lincoln, NE 68510-2234

Attn: James Mikus

Tax ID Number:
47-0098400

7

Schedule A

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name
 and Address of Purchaser

	
 

	
  Principal
 Amount of

 Notes to be Purchased

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
 

	
 

	
AMERITAS VARIABLE LIFE INSURANCE 

 COMPANY

	
 

	
$1,000,000

 Series 1998-A, Tranche 1

	
 

	
5900
 “O” Street

 Lincoln, NE 68510-2234

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(1)     All
 payments by wire trans-

	
 

	
 

	
 

	
fer of Federal or other immediately

 available funds to:

	
 

	
 

	
 

	
 

	
 

	
 

	
Bankers Trust Company

 ABA# 021-001-033

 Attn: Private Placement Processing

	
 

FCC: Ameritas
Variable Life Insurance Company Acct: 097223

Re: Description of Note; Principal & Interest Breakdown with sufficient
information

with
sufficient information

to identify the source and

application of such funds.

(2) All
notices of payments and written confirmations of such wire transfers:

Ameritas
Variable Life Insurance Company c/o Ameritas Life Insurance Corp. 5900 “O”
Street

Lincoln, NE 68510-2234

Fax Number (402) 467-6970

Attn: James Mikus

(3) All other
communications:

Ameritas Variable Life Insurance Company

Ameritas Life
Insurance Corp. 5900 “O” Street

Lincoln, NE 68510-2234

Attn: James Mikus

Tax ID Number:
47-0657746

8

Schedule A

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:

“ADJUSTED
CONSOLIDATED NET WORTH” means, as of any date, consolidated stockholders’
equity of the Company and its Restricted Subsidiaries on such date, determined
in accordance with GAAP, less the amount by which outstanding Restricted
Investments on such date exceed 10% of the consolidated stockholders’ equity of
the Company and its Restricted Subsidiaries, determined in accordance with
GAAP.

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

“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.

“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 Donaldson Company, Inc., a Delaware corporation.

Schedule B

“CONFIDENTIAL
INFORMATION” is defined in Section 20.

“CONSOLIDATED
INDEBTEDNESS” means, as of any date, Indebtedness of the Company and its
Restricted Subsidiaries as of such date determined on a consolidated basis in
accordance with GAAP.

“CONSOLIDATED
TOTAL ASSETS” means, as of any date, the assets and properties of the Company
and its Restricted Subsidiaries as of such date determined on a consolidated
basis in accordance with GAAP.

“CONSOLIDATED
TOTAL CAPITALIZATION” means, as of any date, the sum of Consolidated
Indebtedness and Adjusted Consolidated Net Worth as of such date.

“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 Bank of America National Trust & Savings Association in Chicago,
Illinois as its “base” or “prime” rate.

“DOMESTIC
RESTRICTED SUBSIDIARY” means any Restricted Subsidiary organized under the laws
of the United States or any State thereof (including the District of Columbia),
substantially all of whose assets and business are located or transacted in the
United States.

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

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

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

“EVENT OF
DEFAULT” is defined in Section 11.

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

2

Schedule B

“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 Company or any Subsidiary conducts all or any part of
its business, or which otherwise has jurisdiction over any properties of the
Company 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 and representations and warranties made in connection with the
securitization of assets) 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 (without limitation)
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.

3

Schedule B

“HAZARDOUS
MATERIAL” means any and all pollutants, toxic or hazardous wastes or any other
substances that might pose a hazard to health or 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 Environmental
Law (including, without limitation, asbestos, urea formaldehyde foam insulation
and polychlorinated biphenyls).

“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;

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

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

Indebtedness
of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP. Indebtedness of the Company or a Restricted
Subsidiary shall not include Indebtedness of the Company to a Restricted
Subsidiary or Indebtedness of a Restricted Subsidiary to the Company or to
another Restricted Subsidiary.

“INSTITUTIONAL
INVESTOR” means (a) any original purchaser of a Note and (b) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, or any other
similar financial institution or entity, regardless of legal form.

4

Schedule B

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

“LIEN” means,
with respect to any Person, any mortgage, lien, pledge, charge, security
interest or other encumbrance, or any interest or title of any vendor, lessor,
lender or other secured party to or of such Person under any conditional sale
or other title retention agreement 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 8.6.

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

“MATERIAL
ADVERSE EFFECT” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Restricted Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.

“MEMORANDUM”
is defined in Section 5.3.

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

“NOTES” is
defined in Section 1.1.

“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.

“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.

5

Schedule B

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

“PRIORITY
DEBT” means, as of any date, the sum (without duplication) of (a) unsecured
Indebtedness of Domestic Restricted Subsidiaries on such date (other than
Indebtedness owed to the Company or another Restricted Subsidiary or
Indebtedness of a Person outstanding at the time such Person is merged or
consolidated with, or becomes, a Restricted Subsidiary) and (b) Indebtedness of
the Company and its Domestic Restricted Subsidiaries secured by Liens permitted
by Section 10.2(j) on such date.

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

“PURCHASER”
means each purchaser listed in Schedule A.

“QPAM
EXEMPTION” means Prohibited Transaction Class Exemption 84-14 issued by the
United States Department of Labor.

“REQUIRED
HOLDERS” means, at any time, the holders of at least a majority 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.

“RESTRICTED
INVESTMENTS” means all Investments of the Company and its Restricted
Subsidiaries, other than:

(a) property
or assets to be used or consumed in the ordinary course of business;

(b) assets
arising from the sale of goods or services in the ordinary course of business;

(c)
Investments in Restricted Subsidiaries or in any Person which, as a result
thereof, becomes a Restricted Subsidiary;

6

Schedule B

(d)
Investments existing as of the date of this Agreement that are listed in the
attached Schedule B-1;

(e)
Investments in treasury stock;

(f)
Investments in:

(i)
obligations, maturing within one year from the date of acquisition, of or fully
guaranteed by (A) the United States of America or an agency thereof or (B)
Canada or a province thereof;

(ii)
tax-exempt securities, having an effective maturity within one year from the
date of acquisition, which are rated in one of the top two rating
classifications by at least one nationally recognized rating agency;

(iii)
certificates of deposit or banker’s acceptances maturing within one year from
the date of acquisition issued by Bank of America National Trust & Savings
Association or other commercial banks whose long-term unsecured debt obligations
(or the long-term unsecured debt obligations of the bank holding company owning
all of the capital stock of such bank) are rated in one of the top three rating
classifications by at least one nationally recognized rating agency;

(iv)
commercial paper maturing within 270 days from the date of issuance that, at
the time of acquisition, is rated in one of the top two rating classifications
by at least one nationally recognized rating agency;

(v) repurchase
agreements, having a term of not more than 90 days and fully collateralized
with obligations of the type described in clause (i), with a bank satisfying
the requirements of clause
(iii) or a broker-dealer registered as such under the Exchange Act whose
long-term unsecured debt obligations are rated in one of the top three rating
classifications by at least one nationally recognized rating agency; and

(vi) cash or
cash equivalents and money market instrument programs that are properly
classified as current assets in accordance with GAAP.

For purposes
of this Agreement, an Investment shall be valued at the lesser of
(i) cost and (ii) the value at which such Investment is shown on the books of
the Company and its Restricted Subsidiaries in accordance with GAAP.

“RESTRICTED
SUBSIDIARY” means any Subsidiary (a) of which at least a majority of the voting
securities are owned by the Company and/or one or more Wholly-Owned Restricted

7

Schedule B

Subsidiaries
and of which the Company has management control and (b) which the Company has
not designated an Unrestricted Subsidiary.

“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.

“SERIES 1998-A
NOTES” is defined in Section 1.2.

“SIGNIFICANT
SUBSIDIARY” means, as of the date of determination, any Restricted Subsidiary
the assets or revenues of which account for more than 10% of the Consolidated
Total Assets of the Company and its Restricted Subsidiaries at the end of the
most recently ended fiscal period or more than 10% of the consolidated revenues
of the Company and its Restricted Subsidiaries for the most recently completed
four fiscal quarters.

“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 or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries (unless such
partnership can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a “Subsidiary” is a
reference to a Subsidiary of the Company.

“SUPPLEMENT”
is defined in Section 1.1.

“THIS
AGREEMENT” OR “THE AGREEMENT” is defined in Section 17.3.

“UNRESTRICTED
SUBSIDIARY” means any Subsidiary of the Company that the Company has designated
an Unrestricted Subsidiary by notice in writing given to the holders of the
Notes.

“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.

8

Schedule B

SCHEDULE B-1

EXISTING INVESTMENTS

	
 

	
 

	
 

	
 

	
Loan
 to AFS Inc. in the amount of

	
$200,000

	
 

	
 

	
 

	
 

	
Loan
 Guarantee to AFS Inc. in the amount of

	
$100,000

	
 

	
 

	
 

	
 

	
Loan
 to Craig Phillips in the amount of

	
$750,000

	
 

	
 

	
 

	
 

	
Loan
 to Douglas Smyth dba. Tubtec

	
$305,000

Schedule B-1

SCHEDULE 5.4

SUBSIDIARIES AND OWNERSHIP

OF SUBSIDIARY STOCK

Schedule 5.4

SCHEDULE 5.5

FINANCIAL STATEMENTS

Audited
consolidated balance sheets of the Company and its Subsidiaries as of July 31,
1997, 1996, 1995, 1994, 1993 and 1992, and the related consolidated statements
of earnings, changes in shareholders’ equity and cash flows for each of the
years then ended.

Unaudited
consolidated balance sheets of the Company and its Subsidiaries as of January
31, 1998 and 1997, the consolidated statements of earnings for the three months
ended January 31, 1998 and 1997 and the six months ended January 31, 1997 and
1998, and the consolidated statements of cash flows for the six months ended
January 31, 1998 and 1997.

Schedule 5.5

SCHEDULE 5.15

EXISTING INDEBTEDNESS

(Principal Amounts in Excess of $5,000,000)

	
 

	
 

	
 

	
 

	
Donaldson
 Company Multi-Currency Revolver

	
$55,000,000

	
 

	
 

	
Donaldson
 Coordination Center NV

	
$9,319,000

	
 

	
 

	
Schedule 5.15

SCHEDULE 10.2

EXISTING LIENS

Capital Leases
in an aggregate amount of $325,000

Donaldson Europe NV Mortgage $182,000

Schedule 10.2

EXHIBIT 1.1-A

[FORM OF NOTE]

DONALDSON COMPANY, INC.

[____]% SENIOR NOTE DUE [__________, ____]

	
 

	
 

	
 

	
 

	
No.
 [_____]

	
[Date]

	
 

	
$[_______]

	
PPN[______________]

	
 

	
 

	
 

	
FOR VALUE RECEIVED, the undersigned,
 DONALDSON COMPANY, INC. (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 [_____], [_____], 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 [____]% per annum from the date hereof, payable semiannually, on
[______] [____] and [______][____] in each year, commencing with the [______]
[____] or [______] [____] 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)
[_____]% or (ii) 2% over the rate of interest publicly announced by Bank of
America National Trust & Savings 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 Bank of America National Trust & Savings 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 July 15, 1998
[and a Supplement thereto dated as of [________], [________]](as from time to
time further amended and supplemented, the “Note Purchase Agreement”), between
the Company and the respective Purchasers named therein, and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Sections 6.1(to the extent such representation is
required for such transfer) and 6.2 of the Note Purchase Agreement. The Notes
have not been registered under the Securities Act of 1933, as amended.

Exhibit 1.1-A

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

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

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

This Note
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of 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.

DONALDSON COMPANY, INC.

By:   

Title:

2

Exhibit 1.1-A

EXHIBIT 1.1-B

[FORM OF SUPPLEMENT]

SUPPLEMENT TO NOTE PURCHASE AGREEMENT

THIS
SUPPLEMENT is entered into as of [ ], [ ] (this “Supplement”) between Donaldson
Company, Inc., a Delaware corporation (the “COMPANY”), and the Purchasers
listed in the attached Schedule A (the “PURCHASERS”).

R E C I T A L S

A. The Company
has entered into a Note Purchase Agreement dated as of July 15, 1998 with the
purchasers listed in Schedule A thereto [and one or more supplements or
amendments thereto] (as heretofore amended and supplemented, the “NOTE PURCHASE
AGREEMENT”); and

B. The Company
desires to issue and sell, and the Purchasers desire to purchase, an additional
series of Notes (as defined in the Note Purchase Agreement) pursuant to the
Note Purchase Agreement and in accordance with the terms set forth below;

NOW,
THEREFORE, the Company and the Purchasers agree as follows:

1.
Authorization of the New Series of Notes. The Company has authorized the issue
and sale of $[ ] aggregate principal amount of Notes to be designated as its
[__]% Senior Notes, Series [ ], due [ ], [ ] (the “SERIES [ ] NOTES”, such term
to include any such Notes issued in substitution therefor pursuant to Section
13 of the Note Purchase Agreement). The Series [ ] Notes shall be substantially
in the form set out in Exhibit 1, with such changes therefrom, if any, as may
be approved by you and the Company.

2. Sale and
Purchase of Series [ ] Notes. Subject to the terms and conditions of this
Supplement and the Note Purchase Agreement, the Company will issue and sell to
each of the Purchasers, and the Purchasers will purchase from the Company, at
the Closing provided for in Section 3, Series [ ] Notes in the principal amount
specified opposite their respective names in Schedule A at the purchase price
of 100% of the principal amount thereof. The obligations of the Purchasers
hereunder are several and not joint obligations and no Purchaser shall have any
liability to any Person for the performance or non-performance by any other
Purchaser hereunder.

Exhibit 1.1-B

3. Closing.
The sale and purchase of the Series [ ] Notes to be purchased by the Purchasers
shall occur at the offices of Gardner, Carton & Douglas, Quaker Tower,
Suite 3400, 321 North Clark Street, Chicago, Illinois 60610 at 9:00 a.m.,
Chicago time, at a closing (the “CLOSING”) on [ ], [ ] or on such other
Business Day thereafter on or prior to [ ], [ ] as may be agreed upon by the
Company and the Purchasers. At the Closing the Company will deliver to each
Purchaser the Series [ ] Notes to be purchased by it in the form of a single
Note (or such greater number of Series [ ] Notes in denominations of at least
$500,000 as such Purchaser may request) dated the date of the Closing and
registered in its name (or in the name of its nominee), against delivery by
such Purchaser to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number [__________]
at
[_________________] Bank, [Insert Bank address, ABA number for wire transfers,
and any other relevant wire transfer information]. If at the Closing the
Company shall fail to tender such Series [ ] Notes to a Purchaser as provided
above in this Section 3, or any of the conditions specified in Section 4 of the
Note Purchase Agreement, as modified or expanded by Section 4 hereof, shall not
have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at
its election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights it may have by reason of such failure or
such nonfulfillment.

4. Conditions
to Closing. Each Purchasers obligation to purchase and pay for the Series [ ]
Notes to be sold to it at the Closing is subject to the fulfillment to its satisfaction,
prior to or at the Closing, of the conditions set forth in Section 4 of the
Note Purchase Agreement, as hereafter modified, and to the following additional
conditions:

[Set forth any
modifications and additional conditions.]

5.
Representations and Warranties of the Company. The Company represents and
warrants to the Purchasers that each of the representations and warranties
contained in Section 5 of the Note Purchase Agreement is true and correct as of
the date hereof (i) except that all references to “Purchaser” and “you” therein
shall be deemed to refer to the Purchasers hereunder, all references to “this
Agreement” shall be deemed to refer to the Note Purchase Agreement as
supplemented by this Supplement, all references to “Notes” therein shall be
deemed to include the Series [ ] Notes, and (ii) except for changes to such
representations and warranties or the Schedules referred to therein, which
changes are set forth in the attached Schedule 5.

6.
Representations of the Purchasers. Each Purchaser confirms to the Company that
the representations set forth in Section 6 of the Note Purchase Agreement are
true and correct as to such Purchaser.

2

Exhibit 1.1-B

7. Mandatory
Prepayment of the Series [ ] Notes. [The Series [ ] Notes are not subject to mandatory
prepayment by the Company.] [On [ ], [ ] and on each [ ] thereafter to and
including [ ], [ ] the Company will prepay $[ ] principal amount (or such
lesser principal amount as shall then be outstanding) of the Series [ ] Notes
at par and without payment of the Make-Whole Amount or any premium.]

8.
Applicability of Note Purchase Agreement. Except as otherwise expressly
provided herein (and expressly permitted by the Note Purchase Agreement), all
of the provisions of the Note Purchase Agreement are incorporated by reference
herein and shall apply to the Series [ ] Notes as if expressly set forth in
this Supplement.

IN WITNESS
WHEREOF, the Company and the Purchasers have caused this Supplement to be
executed and delivered as of the date set forth above.

DONALDSON COMPANY, INC.

By:   

Title:

[ADD PURCHASER SIGNATURE BLOCKS]

3

Exhibit 1.1-B

Schedule A to
Supplement

INFORMATION RELATING TO PURCHASERS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name
 and Address of Purchaser

	
 

	
Principal
 Amount of Series

[  ] Notes to be Purchased

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
 

	
 

	
[NAME OF PURCHASER]

	
 

	
$

	
 

	
 

	
 

	
 

	
 

	
(1)     All
 payments by wire transfer

	
 

	
 

	
 

	
of immediately available

 funds to:

	
 

	
 

	
 

	
 

	
 

	
with sufficient information

 to identify the source and

 application of such funds.

	
 

	
 

	
 

	
 

	
 

	
 

	
(2)     All
 notices of payments and

	
 

	
 

	
 

	
written confirmations of such

	
 

wire
transfers:

(3) All other
communications:

4

Exhibit 1.1-B

Schedule 5 to
Supplement

EXCEPTIONS TO REPRESENTATIONS

AND WARRANTIES

5

Exhibit 1.1-B

Exhibit 1 to
Supplement

[FORM OF SERIES [ ] NOTE]

6

Exhibit 1.1-B

EXHIBIT 1.2(a)

[FORM OF SERIES 1998-A, TRANCHE 1, NOTE]

DONALDSON COMPANY, INC.

	
 

	
 

	
 

	
 

	
6.20% Senior Note, Series 1998, Tranche 1

 Due July 15, 2005

	
 

	
 

	
 

	
 

	
No.
 [_____]

	
[Date]

	
 

	
$[_______]

	
PPN[______________]

	
 

	
 

	
 

	
FOR VALUE RECEIVED, the undersigned,
 DONALDSON COMPANY, INC. (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 15, 2005, 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
6.20% per annum from the date hereof, payable semiannually, on July 15 and
January 15 in each year, commencing with the July 15 or January 15 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) 8.20% or (ii) 2% over the
rate of interest publicly announced by Bank of America National Trust &
Savings 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 Bank of America National Trust & Savings 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 Notes (herein called the “Notes”) issued pursuant to a Note
Purchase Agreement, dated as of July 15, 1998 as from time to time amended and
supplemented, the “Note Purchase Agreement”), between the Company and the
respective Purchasers named therein, and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (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 (to the extent such representation is
required for such transfer) and 6.2 of the Note

Exhibit 1.2(a)

Purchase
Agreement. The Notes have not been registered under the Securities Act of 1933,
as amended.

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

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

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

This Note
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of 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.

DONALDSON COMPANY, INC.

By:   

Title:

2

Exhibit 1.2(a)

EXHIBIT 1.2(b)

[FORM OF SERIES 1998-A, TRANCHE 2, NOTE]

DONALDSON COMPANY, INC.

	
 

	
 

	
 

	
 

	
6.31% Senior Note, Series 1998, Tranche 2

 Due July 15, 2008

	
 

	
 

	
 

	
 

	
No.
 [_____]

	
[Date]

	
 

	
$[_______]

	
PPN[______________]

	
 

	
 

	
 

	
FOR VALUE RECEIVED, the undersigned,
 DONALDSON COMPANY, INC. (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 15, 2008, 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
6.31% per annum from the date hereof, payable semiannually, on July 15 and
January 15 in each year, commencing with the July 15 or January 15 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) 8.31% or (ii) 2% over the rate of
interest publicly announced by Bank of America National Trust & Savings
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 Bank of America National Trust & Savings 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 Notes (herein called the “Notes”) issued pursuant to a Note
Purchase Agreement, dated as of July 15, 1998 as from time to time amended and
supplemented, the “Note Purchase Agreement”), between the Company and the
respective Purchasers named therein, and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (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 (to the extent such representation is
required for such transfer) and 6.2 of the Note

Exhibit 1.2(b)

Purchase
Agreement. The Notes have not been registered under the Securities Act of 1933,
as amended.

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

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

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

This Note
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of 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.

DONALDSON COMPANY, INC.

By:   

Title:

2

Exhibit 1.2(b)

EXHIBIT 4.4(a)

FORM OF OPINION OF COUNSEL

TO THE COMPANY

The opinion of
Dorsey & Whitney LLP, counsel for the Company, shall be to the effect that:

1. The Company
is a corporation duly incorporated, validly existing in good standing under the
laws of Delaware, and has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted and to
enter into and perform the Note Purchase Agreement.

2. The Note
Purchase Agreement and the Notes have been duly authorized by proper corporate
action on the part of the Company, have been duly executed and delivered by an
authorized officer of the Company, and constitute the legal, valid and binding
agreements of the Company, enforceable in accordance with their terms, except
to the extent that enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.

3. The
offering, sale and delivery of the Notes do not require the registration of the
Notes under the Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.

4. No
authorization, approval or consent of, and no designation, filing, declaration,
registration and/or qualification with, any United States federal or Minnesota
state Governmental Authority is necessary or required in connection with the
execution, delivery and performance by the Company of the Note Purchase
Agreement or the offering, issuance and sale by the Company of the Notes.

5. The
issuance and sale of the Notes by the Company, the performance of the terms and
conditions of the Notes and the Note Purchase Agreement and the execution and
delivery of the Note Purchase Agreement do not conflict with, or result in any
breach or violation of any of the provisions of, or constitute a default under,
or result in the creation or imposition of any Lien on, the property of the
Company or any Subsidiary pursuant to the provisions of (i) the Certificate of
Incorporation or By-laws of the Company,
(ii) any loan agreement known to such counsel to which the Company or any
Subsidiary is a party or by which any of them or their property is bound,
pursuant to which Indebtedness in an amount in excess of $5,000,000 is

Exhibit 1.2(b)

outstanding,
(iii) any other Material agreement or instrument known to such counsel to which
the Company or any Subsidiary is a party or by which any of them or their
property is bound, (iv) any United States federal or Minnesota state law
(including usury laws) or regulation applicable to the Company, or (v) to the
knowledge of such counsel, any order, writ, injunction or decree of any court
or Governmental Authority applicable to the Company.

6. Except as
disclosed in Schedule 5.8 to the Note Purchase Agreement, to the knowledge of
such counsel, there are no actions, suits or proceedings pending or overtly
threatened against, or affecting the Company or any Subsidiary, at law or in
equity or before or by any Governmental Authority, which are likely to result,
individually or in the aggregate, in a Material Adverse Effect.

7. Neither the
Company nor any Subsidiary is (i) a “public utility company” or a “holding
company,” or an “affiliate” or a “subsidiary company” of a “holding company,”
or an “affiliate” of such a “subsidiary company,” as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended (the “1935 Act”),
(ii) a “public utility” as defined in the Federal Power Act, as amended, or
(iii) an “investment company” or an “affiliated person” thereof, as such terms
are defined in the Investment Company Act of 1940, as amended (the “1940 Act”).

8. The
issuance of the Notes and the intended use of the proceeds of the sale of the
Notes do not violate or conflict with Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

The opinion of
Dorsey & Whitney LLP shall cover such other matters relating to the sale of
the Notes as the Purchasers may reasonably request. With respect to matters of
fact on which such opinion is based, such counsel shall be entitled to rely on
appropriate certificates of public officials and officers of the Company. For
purposes of its opinion as to enforceability of the Note Purchase Agreement and
the Notes contained in paragraph 2, such counsel may assume that the Note
Purchase Agreement and the Notes are governed by the laws of the State of
Minnesota.

2

Exhibit 1.2(b)

EXHIBIT 4.4(b)

FORM OF OPINION OF SPECIAL COUNSEL

TO THE PURCHASERS

The opinion of
Gardner, Carton & Douglas, special counsel to the Purchasers, shall be to
the effect that:

1. The Company
is a corporation organized and validly existing in good standing under the laws
of the State of Delaware, with all requisite corporate power and authority, in
the case of the Company, to enter into the Agreement and to issue and sell the
Notes.

2. The
Agreement and the Notes have been duly authorized by proper corporate action on
the part of the Company, have been duly executed and delivered by an authorized
officer of the Company, and constitute the legal, valid and binding agreements
of the Company, enforceable in accordance with their terms, except to the
extent that enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.

3. Based upon
the representations set forth in the Agreement, the offering, sale and delivery
of the Notes do not require the registration of the Notes under the Securities
Act of 1933, as amended, nor the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.

4. The issuance
and sale of the Notes and compliance with the terms and provisions of the Notes
and the Agreement will not conflict with or result in any breach of any of the
provisions of the Certificate of Incorporation or By-Laws of the Company.

5. No approval,
consent or withholding of objection on the part of, or filing, registration or
qualification with, any governmental body, Federal or state, is necessary in
connection with the execution and delivery of the Note Purchase Agreement or
the Notes.

The opinion of
Gardner, Carton & Douglas also shall state that the opinion of Dorsey &
Whitney, delivered to you pursuant to the Agreement, is satisfactory in form
and scope to Gardner, Carton & Douglas, and, in its opinion, the Purchasers
and it are justified in relying thereon and shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request.

Exhibit 4.4(b)indenture.htm

     

    Exhibit
      (4.1)

    =
      = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
      = =
      = = = = = = =

    

    EIGHTH
      SUPPLEMENTAL INDENTURE

    

    FROM

    

    WISCONSIN
      PUBLIC SERVICE CORPORATION

    

    TO

    

    U.S.
      BANK NATIONAL ASSOCIATION

    (SUCCESSOR
      TO FIRSTAR BANK, NATIONAL ASSOCIATION AND

    FIRSTAR
      BANK, MILWAUKEE, N.A., NATIONAL ASSOCIATION)

    

    TRUSTEE

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

    

    Dated
      as of
      December 1, 2008

    

    SUPPLEMENTAL
      TO INDENTURE

    Dated
      as of December 1, 1998

    Senior
      Debt
      Securities

    

    

    =
      = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
      = =
      = = = = = = =

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      EIGHTH
      SUPPLEMENTAL INDENTURE is made as of the 1st
      day of
      December, 2008, by and between WISCONSIN PUBLIC SERVICE CORPORATION, a
      corporation duly organized and existing under the laws of the State of Wisconsin
      (the “Company”), and U.S. BANK NATIONAL ASSOCIATION (successor to Firstar Bank,
      National Association and Firstar Bank Milwaukee, N.A., National Association),
      a
      national banking association duly organized and existing under the laws of
      the
      United States, as trustee (the “Trustee”).

    RECITALS
      OF THE COMPANY:

    WITNESSETH:  that

     

    The
      Company has
      heretofore executed and delivered its Indenture (hereinafter referred to as
      the
“Indenture”), made as of December 1, 1998; and

     

    Section
      3.1 of the
      Indenture provides that Securities may be issued from time to time in series
      pursuant to a supplemental indenture specifying the terms of each series of
      Securities; and

     

    The
      Company desires
      to establish a series of Securities to be designated “Senior Notes, 6.375%
      Series Due December 1, 2015 (the “Securities of the Series due 2015”);
      and

     

    Section
      10.1 of the
      Indenture provides that the Company and the Trustee may enter into indentures
      supplemental thereto for the purposes, among others, of establishing the form
      or
      terms of Securities of any series and adding to the covenants of the Company;
      and

     

    The
      execution and
      delivery of this Eighth Supplemental Indenture (herein, this “Supplemental
      Indenture”) has been duly authorized by a Board Resolution;

     

    NOW,
      THEREFORE,
      this Supplemental Indenture

     

    WITNESSETH,
      that,
      in order to set forth the terms and conditions upon which Securities of the
      Series due 2015 are, and are to be, authenticated, issued and delivered, and
      in
      consideration of the sum of one dollar duly paid to it by the Trustee at the
      execution of this Supplemental Indenture, the receipt whereof is hereby
      acknowledged, the Company covenants and agrees with the Trustee for the equal
      and proportionate benefit of the respective Holders from time to time of such
      Securities as follows:

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      I

    RELATION
      TO INDENTURE; DEFINITIONS

    SECTION
      1.1 

     

    This
      Supplemental
      Indenture constitutes an integral part of the Indenture.

     

    SECTION
      1.2 

     

    For
      all purposes of
      this Supplemental Indenture:

     

    (a) Capitalized
      terms
      used but not otherwise defined herein shall have the respective meanings
      assigned to such terms in the Indenture;

     

    (b) All
      references
      herein to Articles and Sections, unless otherwise specified, refer to the
      corresponding Articles and Sections of this Supplemental Indenture;
      and

     

    (c) The
      terms “hereof,”
“herein,” “hereby,” “hereto,” “hereunder,” and “herewith” refer to this
      Supplemental Indenture.

     

    ARTICLE
      II

    THE
      SECURITIES

     

    There
      is hereby
      established a series of Securities pursuant to Section 3.01 of the Indenture
      as
      follows:

     

    (a) The
      title of the
      Securities of the series hereby established is “Senior Notes, 6.375% Series Due
      December 1, 2015.”

     

    (b) The
      aggregate
      principal amount of the Securities of the Series due 2015 which may be
      authenticated and delivered under the Indenture (except for Securities
      authenticated and delivered upon registration of transfer of, or in exchange
      for, or in lieu of other Securities of such series pursuant to Sections 2.05,
      3.04, 3.05, 3.06, 10.06 or 12.07) shall initially be limited to One Hundred
      and
      Twenty-Five Million Dollars ($125,000,000), subject to the right of the Company
      to reopen the Securities of the Series due 2015 for the issuance of additional
      Securities of the Series due 2015 on the terms and subject to the conditions
      specified below.

     

    (c) The
      Company shall
      have the right to reopen the Securities of the Series due 2015 for the issuance
      of additional Securities of such series (“Additional Securities of the Series
      due 2015”).  The issuance of any Additional Securities of the Series
      due 2015 shall constitute a further issuance of, and will be consolidated with,
      the Securities of the Series due 2015, so as to form a single
      series.  The Additional Securities of the Series due 2015 shall be
      substantially in the form hereinafter recited, but may contain such changes
      as
      may be appropriate to reflect their date or dates of issuance.  Where
      appropriate references to the Securities of the Series due 2015 in this
      Supplemental Indenture shall be deemed to include the Additional Securities
      of
      the Series due 2015.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (d) The
      Securities of
      the Series due 2015 are to be issued in permanent global form without
      coupons.  The beneficial owners of interests in such permanent Global
      Security or Securities may not exchange such interests for Securities of such
      series other than in the manner provided in Section 2.05 of the
      Indenture.  The Depositary for the Securities of the Series due 2015
      shall be The Depositary Trust Company.

     

    (e) The
      Stated Maturity
      of the Securities of the Series due 2015 is December 1, 2015.

     

    (f) The
      Securities of
      the Series due 2015 shall bear interest at the rate of 6.375% per annum, and
      such interest shall accrue from December 5, 2008 (or from the most recent
      Interest Payment Date to which interest on the Securities of the Series due
      2015
      has been paid or provided for).  The Interest Payment Dates for the
      Securities of the Series due 2015 shall be June 1 and December 1 in each year
      commencing June 1, 2009, and the Regular Record Date for the interest payable
      on
      any Interest Payment Date shall be the fifteenth day (whether or not a Business
      Day) preceding such Interest Payment Date.

     

    (g) Principal
      of and
      interest on the Securities of the Series due 2015 shall be payable in U.S.
      Dollars at the Corporate Trust Office of the Trustee.

     

    (h) The
      Securities of
      the Series due 2015 are subject to redemption in whole at any time or in part
      from time to time at the option and direction of the Company at a Redemption
      Price equal to the greater of (i) 100% of the principal amount of the Securities
      of the Series due 2015 to be redeemed or (ii) the sum of the present values
      of
      the remaining scheduled payments of principal and interest thereon (exclusive
      of
      interest accrued to the date of redemption), discounted to the Redemption Date
      on a semi-annual basis (assuming a 360 day year of twelve 30-day months) at
      the
      Treasury Rate as hereinafter defined, plus fifty hundredths of one percent
      (0.50%) plus in each case accrued and unpaid interest to the Redemption
      Date.  Such Redemption Date shall be set forth in an Officers’
Certificate delivered to the Trustee on or before the Redemption Date and upon
      which the Trustee may conclusively rely.

     

    For
      purposes of
      this paragraph (h):

     

    “Treasury
      Rate”
means, with respect to any Redemption Date, the rate per annum equal to the
      semiannual equivalent yield to maturity or interpolated (on a day count basis)
      of the Comparable Treasury Issue, assuming a price for the Comparable Treasury
      Issue (expressed as a percentage of its principal amount) equal to the
      Comparable Treasury Price for such Redemption Date.

     

    “Comparable
      Treasury Issue” means the United States Treasury security or securities selected
      by an Independent Investment Banker as having an actual or interpolated maturity
      comparable to the remaining term of the Notes that would be utilized, at the
      time of selection and in accordance with customary financial practice, in
      pricing new issues of corporate debt securities of comparable maturity to the
      remaining term of the Notes.

     

    “Independent
      Investment Banker” means one of the Reference Treasury Dealers appointed by the
      Trustee after consultation with the Company.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Comparable
      Treasury Price” means, with respect to any Redemption Date, (i) the average
      of the Reference Treasury Dealer Quotations for the Redemption Date, after
      excluding the highest and lowest Reference Treasury Dealer Quotations for the
      Redemption Date, or (ii) if the Trustee obtains fewer than four Reference
      Treasury Dealer Quotations, the average of all the quotations which the Trustee
      obtains.

     

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

     

    “Reference
      Treasury
      Dealer” means any primary U.S. Government securities dealer in the United States
      (a “Primary Treasury Dealer”) selected by the Company.

     

    (i) The
      Securities of
      the Series due 2015 shall not be subject to any sinking fund and shall not
      be
      redeemable at the option of the Holders thereof.

     

    (j) The
      Securities of
      the Series due 2015 shall initially be issued in whole in the form of one or
      more Global Securities.  If individual securities of the Series due
      2015 are issued under the conditions specified in Section 2.05 of the Indenture,
      individual certificates will be issued in denominations of $1,000 or any
      integral multiple thereof.

     

    (k) The
      Related Series
      of Collateral Bonds being delivered to the Trustee in connection with the
      issuance of the Securities of the Series due 2015 is the Company’s First
      Mortgage Bonds, Collateral Series H.

     

    Such
      Securities of
      the Series due 2015 and Additional Securities of the Series due 2015, if any,
      shall be initially authenticated and delivered from time to time upon delivery
      to the Trustee of the documents required by Section 3.1 of the Indenture and
      the
      form of Securities for the Securities of the Series due 2015 and Additional
      Securities of the Series due 2015, if any, substantially in the form of Security
      attached hereto as Appendix I, which is incorporated herein by
      reference.

     

    ARTICLE
      III

    TRANSFER
      OF COLLATERAL BONDS

     

    The
      Company hereby
      issues, delivers and transfers to the Trustee in connection with the issuance
      of
      the Securities of the Series due 2015 One Hundred and Twenty-Five Million
      Dollars ($125,000,000) aggregate principal amount of a related issue of
      Collateral Bonds of the Company designated “First Mortgage Bonds, Collateral
      Series H” (each, a “Related Issue,” as to the series of Securities it
      secures, and, the “Collateral Bonds”), which has been fully registered in the
      name of the Trustee in such capacity, to be held in trust for the benefit of
      the
      Holders from time to time of the Related Issue of Securities and, if such
      transfer does not constitute a sale of the Collateral Bonds to the Trustee,
      the
      Company hereby grants a perfected security interest in the Collateral Bonds
      for
      the benefit of such Holders, in each case as security for any and all
      obligations of the Company under the Indenture, this Supplemental Indenture
      and
      the Related Issue of Securities, including but not limited to (1) the full
      and
      prompt payment of the interest

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    on,
      principal of,
      and premium, if any, on such Related Issue of Securities when and as the same
      shall become due and payable in accordance with the terms and provisions of
      the
      Indenture and this Supplemental Indenture and such Related Issue of Securities,
      either at the Stated Maturity thereof, upon acceleration of the maturity thereof
      or upon redemption, and (2) the full and prompt payment of any interest on
      such
      Related Issue of Securities when and as the same shall become due and payable
      in
      accordance with the terms and provisions of the Indenture and this Supplemental
      Indenture and such Related Issue of Securities.  The Trustee shall
      enforce all of its rights under the First Mortgage Indenture as a holder of
      each
      Related Issue of Collateral Bonds transferred to it as provided in this
      Article III for the benefit of the Holders of the respective Related Issue
      of Securities and the proceeds of the enforcement of such rights shall be
      applied by the Trustee to satisfy the Company’s obligations under the Indenture,
      this Supplemental Indenture, and such Related Issue of Securities.

     

    The
      Company shall
      make payments of the principal of, and premium or interest on each of the
      Collateral Bonds to the Trustee, which payments shall be applied by the Trustee
      to satisfaction of all obligations then due on the respective Related Issue
      of
      Securities.

     

    The
      Collateral
      Bonds shall not be sold or transferred by the Trustee until the earlier of
      the
      Release Date or the prior retirement of the Related Issue of Securities through
      redemption, repurchase or otherwise.  Without limiting the generality
      of the foregoing, in no event shall the Collateral Bonds be sold or become
      the
      absolute property of any person in violation of the applicable provisions of
      Section 201.04(2) of the Wisconsin Statutes or any successor statutory
      provision.  The “Release Date” shall be the date that all First
      Mortgage Bonds of the Company issued and outstanding under the First Mortgage
      Indenture, other than the Collateral Bonds, have been retired (at, before or
      after the maturity thereof) through payment, redemption or otherwise, provided
      that no Default or Event of Default has occurred and, at such time, is
      continuing under the Indenture.

     

    A
      copy of the form of Collateral Bond is attached hereto as Appendix II and
      its terms are hereby incorporated by reference herein.

     

    ARTICLE
      IV

    MISCELLANEOUS

     

    SECTION
      4.1 

     

    The
      Trustee has
      accepted the amendment of the Indenture effected by this Supplemental Indenture
      and agrees to execute the trust created by the Indenture as hereby amended,
      but
      only upon the terms and conditions set forth in the Indenture, including the
      terms and provisions defining and limiting the liabilities and responsibilities
      of the Trustee, and without limiting the generality of the foregoing, the
      Trustee shall not be responsible in any manner whatsoever for or with respect
      of
      any of the recitals or statements contained herein, all of which recitals or
      statements are made solely by the Company, or for or with respect to (a) the
      validity or sufficiency of this Supplemental Indenture or any of the terms
      or
      provisions hereof, (b) the proper authorization hereof by the Company by
      corporate action or otherwise, and (c) the due execution hereof by the
      Company.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    SECTION
      4.2 

     

    This
      Supplemental
      Indenture shall be construed in connection with and as a part of the
      Indenture.

     

    SECTION
      4.3 

     

    (a) If
      any provision of
      this Supplemental Indenture conflicts with another provision of the Indenture
      required to be included in indentures qualified under the Trust Indenture Act
      of
      1939, as amended (as enacted prior to the date of this Supplemental Indenture),
      by any of the provisions of Sections 310 to 317, inclusive, of said act, such
      required provision shall control.

     

    (b) In
      case any one or
      more of the provisions contained in this Supplemental Indenture or in the
      Securities issued hereunder should be invalid, illegal, or unenforceable in
      any
      respect, the validity, legality and enforceability of the remaining provisions
      contained herein and therein shall not in any way be affected, impaired,
      prejudiced or disturbed thereby.

     

    SECTION
      4.4 

     

    Whenever
      in this
      Supplemental Indenture either of the parties hereto is named or referred to,
      such name or reference shall be deemed to include the successors or assigns
      of
      such party, and all the covenants and agreements contained in this Supplemental
      Indenture by or on behalf of the Company or by or on behalf of the Trustee
      shall
      bind and inure to the benefit of the respective successors and assigns of such
      parties, whether so expressed or not.

     

    SECTION
      4.5 

     

    (a) This
      Supplemental
      Indenture may be simultaneously executed in several counterparts, and all such
      counterparts executed and delivered, each as an original, shall constitute
      but
      one and the same instrument.

     

    (b) The
      descriptive
      headings of the several Articles of this Supplemental Indenture were formulated,
      used and inserted in this Supplemental Indenture for convenience only and shall
      not be deemed to affect the meaning or construction of any of the provisions
      hereof.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, WISCONSIN PUBLIC SERVICE CORPORATION has caused this
      Supplemental Indenture to be executed by its Chairman, Chief Executive Officer,
      President, Vice Chairman or a Vice President, or any other officer selected
      by
      the Board of Directors, and its corporate seal to be hereunto affixed, duly
      attested by its Secretary or an Assistant Secretary, and U.S. BANK NATIONAL
      ASSOCIATION, as Trustee as aforesaid, has caused this Supplemental Indenture
      to
      be executed by one of its authorized signatories, as of December 1,
      2008.

    WISCONSIN
      PUBLIC
      SERVICE

       CORPORATION

    

    [SEAL]

    

    By: /s/
      Charles A. Schrock  

    Charles
      A. Schrock

    President
      and Chief Executive
      Officer

    

    

    

    

    ATTEST:

    

    

    
/s/
      Barth J. Wolf

    Barth
      J. Wolf

    Secretary

    

    U.S.
      BANK NATIONAL
      ASSOCIATION

    

    

    

    By: /s/
      Peter M. Brennan 

    Peter
      M. Brennan

    Vice
      President

    

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    APPENDIX
      I

                           $___________

    

    CUSIP:
      No.
      976843-BG6

    

    THIS
      SECURITY IS A
      GLOBAL SECURITY REGISTERED IN THE NAME OF THE DEPOSITARY (REFERRED TO HEREIN)
      OR
      A NOMINEE THEREOF AND UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
      FOR
      THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT
      BE
      TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
      OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
      DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY
      OR
      A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.*

     

    UNLESS
      THIS
      CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
      TRUST
      COMPANY, A NEW YORK CORPORATION (55 WATER STREET, NEW YORK, NEW YORK), TO THE
      TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
      ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY AND
      ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
      FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
      REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.*

    
 

      
      ________________________________

       

      *  To
        be
        included so long as Security is a Global Security.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    WISCONSIN
      PUBLIC SERVICE CORPORATION

    Senior
      Note, 6.375% Series Due December 1, 2015

     

    

    WISCONSIN
      PUBLIC
      SERVICE CORPORATION, a corporation duly organized and existing under the laws
      of
      Wisconsin (herein called the “Company,” which term includes any successor
      corporation under the Indenture hereinafter referred to), for value received,
      hereby promises to pay to ____________________, or registered assigns, the
      principal sum of ____________________ on December 1, 2015 and to pay
      interest thereon from December 5, 2008 or from the most recent Interest Payment
      Date to which interest has been paid or duly provided for, semi-annually on
      June 1 and December 1 in each year, commencing June 1, 2009 at
      the rate of 6.375% per annum, until the principal hereof is paid or made
      available for payment and (to the extent that the payment of such interest
      shall
      be legally enforceable) at the rate of 6.375% per annum on any overdue principal
      and premium and on any overdue installment of interest.  The interest
      so payable, and punctually paid or duly provided for, on any Interest Payment
      Date will, as provided in such Indenture, be paid to the Person in whose name
      this Security (or one or more Predecessor Securities) is registered at the
      close
      of business on the Regular Record Date for such interest, which shall be the
      close of business on the fifteenth calendar day next preceding such Interest
      Payment Date (whether or not such day is a Business Day).  Any such
      interest not so punctually paid or duly provided for will forthwith cease to
      be
      payable to the Holder on such Regular Record Date and may either be paid to
      the
      Person in whose name this Security (or one or more Predecessor Securities) is
      registered at the close of business on a Special Record Date for the payment
      of
      such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
      given to Holders of Securities of this series not less than 10 days prior to
      such Special Record Date, or be paid at any time in any other lawful manner
      not
      inconsistent with the requirements of any securities exchange on which the
      Securities of this series may be listed, and upon such notice as may be required
      by such exchange, all as more fully provided in said Indenture.

     

    Payment
      of the
      principal of (and premium, if any) and any such interest on this Security will
      be made at the office or agency of the Trustee maintained for that purpose,
      in
      Milwaukee, Wisconsin, in Dollars, provided, however, that at the option of
      the
      Company payment of interest may be made by wire transfer of immediately
      available funds into the account specified by the Depositary so long as this
      note is in the form of Global Security and otherwise by check mailed to the
      address of the Person entitled thereto as such address shall appear in the
      Security Register.

     

    Prior
      to the
      Release Date (as hereinafter defined), the Securities will be secured by First
      Mortgage Bonds, Collateral Series H (the “Collateral Bonds”), issued and
      delivered by the Company to the Trustee for the benefit of the Holders of the
      Securities (as defined herein), issued under the First Mortgage and Deed of
      Trust dated January 1, 1941, from the Company to First Wisconsin Trust Company
      (subsequently succeeded by U.S. Bank National Association), Milwaukee,
      Wisconsin, as supplemented and amended by the supplemental indentures thereto
      (the “First Mortgage Indenture”).  Reference is made to the First
      Mortgage Indenture and the Indenture for a description of the rights of the
      Trustee as holder of the Collateral Bonds, the property mortgaged and pledged
      under the First Mortgage Indenture, the rights of the Company and of the
      Mortgage Trustee in respect thereof, the duties and immunities of the
      applicable

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    Mortgage
      Trustee,
      the terms and conditions upon which the Collateral Bonds are held by the Trustee
      for the benefit of the Holders of Securities, and the circumstances under which
      additional First Mortgage Bonds may be issued.

     

    From
      and after such time as all First Mortgage Bonds (other than Collateral Bonds)
      issued under the First Mortgage Indenture have been retired through payment,
      redemption or otherwise (including those First Mortgage Bonds the payment for
      which has been provided for in accordance with the First Mortgage Indenture)
      at,
      before or after the maturity thereof and provided that no default or event
      of
      default under the Indenture has occurred and is continuing (the “Release Date”),
      the Collateral Bonds shall cease to secure the Securities in any manner, and,
      at
      the option of the Company, the Securities either (a) will become unsecured
      general obligations of the Company or (b) will be secured by First Mortgage
      Bonds issued under an Indenture other than the First Mortgage
      Indenture.  In certain circumstances prior to the Release Date as
      provided in the Indenture, the Company is permitted to reduce the aggregate
      principal amount of an issue of Collateral Bonds held by the Trustee, but in
      no
      event prior to the Release Date to an amount less than the aggregate principal
      amount outstanding of the related issue of Securities initially issued
      contemporaneously with such Collateral Bonds.

     

    Reference
      is hereby
      made to the further provisions of this Security set forth on the reverse hereof,
      which further provisions shall for all purposes have the same effect as if
      set
      forth at this place.

     

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

     

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

     

    WISCONSIN
      PUBLIC
      SERVICE CORPORATION

    

    

    

    By
      __________________________________

    

    Attest:

     

    
 

    _________________________________

    

    [SEAL]

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    Form
      of Trustee’s Certificate of Authentication.

     

    Dated:  December
      5, 2008

     

    This
      is one of the
      Securities of the series designated therein referred to in the within-mentioned
      Indenture.

     

    _____________________________________________

    As
      Trustee

    

    

    By
      _____________________________________________

    Authorized
      Signatory

    

    

    Form
      of Reverse of Security.

     

    This
      Security is
      one of a duly authorized issue of securities of the Company (herein called
      the
“Securities”), issued and to be issued in one or more series under an Indenture,
      dated as of December 1, 1998 (herein called the “Indenture”), between the
      Company and a predecessor of U.S. Bank National Association, as Trustee (herein
      called the “Trustee,” which term includes any successor trustee under the
      Indenture), to which Indenture and all indentures supplemental thereto reference
      is hereby made for a statement of the respective rights, limitations of rights,
      duties and immunities thereunder of the Company, the Trustee and the Holders
      of
      the Securities and of the terms upon which the Securities are, and are to be,
      authenticated and delivered.  This Security is one of the series
      designated on the face hereof, limited in aggregate principal amount to One
      Hundred and Twenty-Five Million Dollars ($125,000,000), subject to the right
      of
      the Company to reopen the Securities of this series for the issuance of
      additional Securities of this series on the terms and subject to the conditions
      specified in the Eighth Supplemental Indenture to the Indenture.

     

    The
      Securities of
      this series are subject to redemption upon not less than 30 nor more than 45
      days’ notice by first class mail, in whole at any time or in part from time to
      time at the option of the Company at a Redemption Price equal to the greater
      of
      (i) 100% of the principal amount of the Securities of this series to be redeemed
      or (ii) the sum of the present values of the remaining scheduled payments of
      principal and interest thereon (exclusive of interest accrued to the date of
      redemption), discounted to the Redemption Date on a semi-annual basis (assuming
      a 360 day year of twelve 30-day months) at the Treasury Rate as defined in
      the
      Eighth Supplemental Indenture to the Indenture, plus fifty hundredths of one
      percent (0.50%) plus in each case accrued and unpaid interest to the Redemption
      Date.

     

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

     

    If
      any Event of Default with respect to Securities of this series shall occur
      and
      be continuing, the principal of the Securities of this series may be declared
      due and payable in the

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    manner
      and with the
      effect provided in the Indenture.  Upon payment (i) of the amount of
      principal so declared due and payable and (ii) of interest on any overdue
      principal and overdue interest (in each case to the extent that the payment
      of
      such interest shall be legally enforceable), all of the Company’s obligations in
      respect of the payment of the principal of and interest, if any, on the
      Securities of this series shall terminate.

     

    This
      Security is
      subject to Defeasance as described in the Indenture.

     

    The
      Indenture may
      be modified by the Company and the Trustee without consent of any Holder with
      respect to certain matters as described in the Indenture.  In
      addition, the Indenture permits, with certain exceptions as therein provided,
      the amendment thereof and the modification of the rights and obligations of
      the
      Company and the rights of the Holders of the Securities of each series to be
      affected under the Indenture at any time by the Company and the Trustee with
      the
      consent of the Holders of a majority in principal amount of the Securities
      at
      the time Outstanding of each series to be affected.  The Indenture
      also contains provisions permitting the Holders of a majority in principal
      amount of the Securities of each series at the time Outstanding, on behalf
      of
      the Holders of all Securities of such series, to waive certain past defaults
      under the Indenture and their consequences.  Any such consent or
      waiver by the Holder of this Security shall bind such Holder and all future
      Holders of this Security and of any Security issued upon the registration of
      transfer hereof or in exchange hereof or in lieu hereof, whether or not notation
      of such consent or waiver is made upon this Security.

     

    No
      reference herein to the Indenture and no provision of this Security or of the
      Indenture shall alter or impair the obligation of the Company, which is absolute
      and unconditional, to pay the principal of (and premium, if any) and interest
      on
      this Security at the times, place and rate, and in the coin or currency, herein
      prescribed.

     

    As
      provided in the Indenture and subject to certain limitations therein set forth,
      the transfer of this Security is registrable in the Security Register, upon
      surrender of this Security for registration of transfer at the office or agency
      of the Company in any place where the principal of (and premium, if any) and
      interest on this Security are payable, duly endorsed by, or accompanied by
      a
      written instrument of transfer in form satisfactory to the Company and the
      Security Registrar duly executed by the Holder hereof or his attorney duly
      authorized in writing, and thereupon one or more new Securities of this series,
      of authorized denominations and for the same Stated Maturity and aggregate
      principal amount, will be issued to the designated transferee or
      transferees.

     

    The
      Securities of
      this series are issuable only in registered form without coupons in
      denominations of $1,000 and any integral multiple thereof.  As
      provided in the Indenture and subject to certain limitations therein set forth,
      Securities of this series are exchangeable for a like aggregate principal amount
      of Securities of this series of a different authorized denomination, as
      requested by the Holder surrendering the same.

     

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

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Prior
      to due
      presentment of this Security for registration of transfer, the Company, the
      Trustee and any agent of the Company or the Trustee may treat the Person in
      whose name this Security is registered as the owner hereof for all purposes,
      whether or not this Security be overdue, and neither the Company, the Trustee
      nor any such agent shall be affected by notice to the contrary.

     

    The
      Indenture
      imposes certain limitations on the ability of the Company to, among other
      things, merge or consolidate with any other Person or sell, assign, transfer
      or
      lease all or substantially all of its properties or assets.  All such
      covenants and limitations are subject to a number of important qualifications
      and exceptions.  The Company must report periodically to the Trustee
      on compliance with the covenants in the Indenture.

     

    A
      director, officer, employee or shareholder, as such, of the Company shall not
      have any liability for any obligations of the Company under this Security or
      the
      Indenture or for any claim based on, in respect of, or by reason of, such
      obligations or their creation.  Each Holder, by accepting a Security,
      waives and releases all such liability.  The waiver and release are
      part of the consideration for the issuance of this Security.

     

    Pursuant
      to a
      recommendation promulgated by the Committee on Uniform Security Identification
      Procedures (“CUSIP”), the Company has caused CUSIP numbers to be printed on the
      Securities of this series as a convenience to the Holders of the Securities
      of
      this series.  No representation is made as to the correctness or
      accuracy of such numbers as printed on the Securities of this series and
      reliance may be placed only on the other identification numbers printed
      hereon.

     

    All
      capitalized
      terms used in this Security without definition which are defined in the
      Indenture shall have the meanings assigned to them in the
      Indenture.

    

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

     

    To
      assign this Security, fill in the form below:  (I) or (we) assign and
      transfer this Security to

     

    _______________________________________________________________________________________________

    (Insert
      assignee’s
      social security or tax I.D. number)

    

    

    
      _______________________________________________________________________________________________

    

     

    _______________________________________________________________________________________________

     

    
      _______________________________________________________________________________________________

       

      
        _______________________________________________________________________________________________

      

    

    (Print
      or type
      assignee’s name, address and zip code)

     

    

    and
      irrevocably
      appoint __________________________________________________________ agent to
      transfer this Security on the books of the Company.  The agent may
      substitute another to act for him.

     

     

    Dated:_______________________   Your
      Signature:
      _________________________________________________________________

    (Sign
      exactly as
      your

    name
      appears on the
      other

    side
      of this
      Security)

    Signature
      Guaranty:  __________________________________________                                                                                                                   

    [Signatures
      must be
      guaranteed by an “eligible guarantor institution” meeting the requirements of
      the Transfer Agent, which requirements will include membership or participation
      in STAMP or such other signature guarantee program as may be determined by
      the
      Transfer Agent in addition to, or in substitution for, STAMP, all in accordance
      with the Exchange Act.]

    

    Social
      Security
      Number or Taxpayer Identification

    Number:_______________________________________

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    APPENDIX
      II

     

    
 

    No.
      R-                                                                     
                                                                                                                 
$_____________

     

    (Form
      of Bond of Collateral Series H)

     

    Wisconsin
      Public Service Corporation

     

    (Incorporated
      under
      the laws of the State of Wisconsin)

    First
      Mortgage
      Bond, Collateral Series H

     

    THE
      FIRST MORTGAGE
      BONDS, COLLATERAL SERIES H (HEREINAFTER, “COLLATERAL BONDS”), REPRESENTED
      BY THIS CERTIFICATE ARE BEING ISSUED AND DELIVERED BY THE COMPANY TO U. S.
      BANK
      NATIONAL ASSOCIATION AS TRUSTEE (IN SUCH CAPACITY, THE “SENIOR TRUSTEE”) UNDER
      AN INDENTURE, DATED AS OF DECEMBER 1, 1998, BETWEEN THE COMPANY AND A
      PREDECESSOR OF THE SENIOR TRUSTEE, AS PREVIOUSLY SUPPLEMENTED AND AS
      SUPPLEMENTED BY THE EIGHTH SUPPLEMENTAL INDENTURE THERETO DATED AS OF DECEMBER
      1, 2008 (AS SO SUPPLEMENTED, THE “SENIOR INDENTURE”).  THE COLLATERAL
      BONDS ARE TO BE HELD IN TRUST AS COLLATERAL FOR THE BENEFIT OF THE HOLDERS
      OF
      THE SENIOR NOTES, 6.375% SERIES DUE DECEMBER 1, 2015 (THE “RELATED
      SECURITIES”) ISSUED PURSUANT TO THE SENIOR INDENTURE.

     

    THE
      COLLATERAL
      BONDS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED (EXCEPT TO A SUCCESSOR SENIOR
      TRUSTEE) UNTIL THE EARLIER OF THE RELEASE DATE (AS DEFINED BELOW) OR THE PRIOR
      RETIREMENT OF THE RELATED SECURITIES THROUGH REDEMPTION, REPURCHASE OR
      OTHERWISE.

     

    THE
      COMPANY SHALL
      MAKE PAYMENTS OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON, THE
      COLLATERAL BONDS, TO THE SENIOR TRUSTEE, WHICH PAYMENTS SHALL BE APPLIED BY
      THE
      SENIOR TRUSTEE TO THE SATISFACTION OF OBLIGATIONS ON THE RELATED
      SECURITIES.

     

    THE
      MATURITY DATE
      SPECIFIED ABOVE IS ALSO THE MATURITY DATE OF THE RELATED
      SECURITIES.

     

    Wisconsin
      Public
      Service Corporation, a corporation organized and existing under the laws of
      the
      State of Wisconsin (hereinafter called the Company), for value received, hereby
      promises to pay to U.S. BANK NATIONAL ASSOCIATION, as trustee for the benefit
      of
      the holders of the Related Securities, or registered assigns (in such capacity,
      the “Senior Trustee”), at the Corporate Trust Services Office of U.S. Bank
      National Association, in Milwaukee, Wisconsin, on the 1st
      day of
      December, 2015, the sum of One Hundred Twenty-Five Million Dollars
      ($125,000,000) in lawful money of the United States of America, and to pay
      interest thereon from the date hereof (i) at the rate of 0% per annum prior
      to
      December 5, 2008, and (ii) at the rate of 6.375% per annum from and after
      December 5, 2008, in like money, until

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    the
      principal
      hereof becomes due and payable, said interest being payable on the 1st
      day of
      June and on the 1st
      day of
      December in each year commencing June 1, 2009.  The principal and
      interest so payable on any June 1 or December 1 will be paid to the person
      or entity in whose name this bond is registered, at the address thereof as
      it
      appears on the Company’s books for registration and registration of
      transfer.

     

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

     

    This
      bond shall not
      be valid or become obligatory for any purpose unless and until U.S. Bank
      National Association (successor to First Wisconsin Trust Company), as Trustee
      under the Indenture, or its successors thereunder, shall have signed the
      certificate of authentication endorsed hereon.

     

    In
      Witness Whereof, Wisconsin Public Service Corporation has caused this bond
      to be
      signed in its name by the manual or facsimile signature of its President or
      a
      Vice President and its corporate seal or a facsimile thereof to be hereto
      affixed and attested by the manual or facsimile signature of its Secretary
      or an
      Assistant Secretary.

     

    Dated
      as
      of:  December 1, 2008

    Wisconsin
      public service corporation,

    

    

    By:_____________________________                                                                      
      

    _______________ President

     

    Attest:

     

    _____________________________

    ____________
      Secretary

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (Form
      of Trustee’s Certificate)

     

    This
      bond is one of
      the bonds of the series designated therein, described in the within mentioned
      Indenture and Supplemental Indenture.

    

    

    

    U.S.
      Bank National
      Association,

        As
      Trustee

    

    

    By:
      ______________________________________

    Authorized
      Signature

    

    (Text
      appearing on reverse side of bond or attached pages)

     

    This
      bond is one of
      a duly authorized issue of bonds of the Company, known as its First Mortgage
      Bonds, of the Series and designation indicated on the face hereof, which
      issue of bonds consists, or may consist, of several series of varying
      denominations, dates and tenors, all issued and to be issued under and equally
      secured (except in so far as a sinking fund, or similar fund, established in
      accordance with the provisions of the Indenture, may afford additional security
      for the bonds of any specific series) by a First Mortgage and Deed of Trust
      (herein called the “Indenture”) dated as of January 1, 1941, executed
      by the Company to First Wisconsin Trust Company (subsequently succeeded by
      U.S.
      Bank National Association, herein called the Trustee), as Trustee, to which
      Indenture and all instruments supplemental thereto reference is hereby made
      for
      a description of the property mortgaged and pledged, the nature and extent
      of
      the security, the rights of the holders of the bonds as to such security, and
      the terms and conditions upon which the bonds may be issued under the Indenture
      and any instruments supplemental thereto and are secured.  The
      principal hereof may be declared or may become due on the conditions, in the
      manner and at the time set forth in the Indenture, upon the happening of a
      completed default as in the Indenture provided.  This bond is one of a
      series created by a Supplemental Indenture (herein called the “Supplemental
      Indenture”) dated as of December 1, 2008, between the Company and the
      Trustee, which is supplemental to the Indenture.

     

    The
      Senior Trustee
      has agreed pursuant to the Senior Indenture to hold the Bonds of this Series
      as
      collateral for the benefit of the holders of the Related Securities under all
      circumstances and not to transfer (except to a successor trustee) such Bonds
      until the earlier of the Release Date or the prior retirement of the Related
      Securities through redemption, repurchase or otherwise.  “Release
      Date” means the date on which all First Mortgage Bonds of the Company issued and
      outstanding under the Indenture, other than the Bonds of this Series and other
      Bonds pledged as security for Securities issued under the Senior Indenture
      (collectively “Collateral Bonds”), have been retired (at, before or after the
      maturity thereof) through payment, redemption or otherwise provided that no
      default or event of default has occurred and is continuing under the Senior
      Indenture.  On the Release Date, the Senior Trustee shall deliver to
      the Company for cancellation all Collateral Bonds, and the Company shall cause
      the Senior Trustee to provide notice to all holders of Related Securities of
      the
      occurrence of the Release Date.  As a result, on

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    the
      Release Date,
      the Bonds of this Series shall cease to secure the Related
      Securities.  Following the Release Date, the Company shall cause the
      Indenture to be discharged, and the Company shall not issue any additional
      Collateral Bonds thereunder, and from and after the Release Date, the Company’s
      obligations in respect of the Collateral Bonds shall be satisfied and
      discharged.

     

    With
      the consent of
      the Company and to the extent permitted by and as provided in the Indenture
      and/or any instruments supplemental thereto, the rights and obligations of
      the
      Company and/or of the holders of the bonds, and/or terms and provisions of
      the
      Indenture and/or of any instruments supplemental thereto may be modified or
      altered by consent of the holders of at least seventy percent (70%) in principal
      amount of the bonds then outstanding under the Indenture and any instruments
      supplemental thereto (excluding bonds challenged and disqualified from voting
      by
      reason of the interest of the Company or of certain related persons therein
      as
      provided in the Indenture); provided that no such modification or alteration
      shall permit the extension of the maturity of the principal of this bond or
      the
      reduction in the rate of interest hereon or any other modification in the terms
      of payment of such principal or interest or the taking of certain other action
      as more fully set forth in the Indenture without the consent of the holder
      hereof.

     

    The
Company
      and the
      Trustee may deem and treat the person in whose name this bond is registered
      as
      the absolute owner hereof for the purpose of receiving payment of or on account
      of the principal hereof and interest hereon and for all other purposes, and
      shall not be affected by any notice to the contrary.

     

    The
      bonds of this
      Series are subject to redemption, prior to maturity, at the option of the
      Company in whole at any time or in part from time to time, upon payment of
      a
      redemption price equal to the greater of (i) 100% of the principal amount of
      the
      bonds to be redeemed or (ii) the sum of the present values of the remaining
      scheduled payments of principal and interest thereon (exclusive of interest
      accrued to the date of redemption), discounted to the redemption date on a
      semi-annual basis (assuming a 360 day year of twelve 30-day months) at the
      Treasury Rate (as defined in the Supplemental Indenture), plus fifty hundredths
      of one percent (0.50%) plus in each case accrued and unpaid interest to the
      redemption date, all subject to the conditions and as more fully set forth
      in
      the Indenture and the Supplemental Indenture.

     

    Notice
      of any such
      redemption shall be hand delivered or mailed not less than thirty (30) days
      prior to the redemption date to the registered owner of the bonds so to be
      redeemed, at its address as the same shall appear on the Company’s books for
      registration and registration of transfer, all subject to the conditions and
      as
      more fully set forth in the Indenture and in the Supplemental Indenture, except
      that no newspaper publication shall be required.

     

    In
      the event that an event of default under Section 6.01 of the Senior Indenture
      has occurred and is continuing, and the Senior Trustee has declared the
      principal of all of the Related Securities then outstanding immediately due
      and
      payable (or such principal has become ipso facto immediately due and payable)
      under Section 6.02 of the Senior Indenture, then the Company shall call for
      redemption and redeem all of the bonds of this series then outstanding at a
      price equal to 100% of the principal amount thereof, together with accrued
      and
      unpaid interest thereon to the redemption date.  The redemption date
      shall be the accelerated maturity date of the

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    Related
      Securities,
      and no prior notice of such redemption to the Trustee or the Senior Trustee
      shall be required.

     

    This
      bond is
      nontransferable except to the Senior Trustee and successor trustees
      thereto.  To the extent that it is transferable, it is transferable by
      the registered owner hereof in person or by attorney duly authorized in writing,
      on books of the Company to be kept for that purpose at the corporate trust
      services office of the Trustee at Milwaukee, Wisconsin, upon surrender hereof
      for cancellation at said office and upon presentation of a written instrument
      of
      transfer duly executed.  Thereupon the Company shall issue in the name
      of the transferee, and the Trustee shall authenticate and deliver, a new
      registered bond or bonds without coupons of the same maturity and interest
      rate
      and of equal aggregate principal amount.  Any such transfer shall be
      subject to the terms and conditions specified in the Indenture and the
      Supplemental Indenture.

     

    No
      recourse shall be had for the payment of principal of, premium, if any, or
      interest on this bond, or any part thereof, or of any claim based hereon or
      in
      respect hereof or of the Indenture or any instrument supplemental thereto,
      against any incorporator, or any past, present or future stockholder, officer
      or
      director of the Company or of any predecessor or successor corporation, either
      directly or through the Company, or through any such predecessor or successor
      corporation, or through any receiver or a trustee in bankruptcy, whether by
      virtue of any constitution, statute or rule of law or by the enforcement of
      any
      assessment or penalty or otherwise, all such liability being, by the acceptance
      hereof and as a part of the consideration for the issue hereof, expressly waived
      and released, as more fully provided in the Indenture.

     

    (End
      of text of bond)

     

    

    (Form
      of Prepayment
      Record)

    

    PREPAYMENT
      RECORD

    

    Principal
      Amount of
      Bond $__________________

    

    Date
      of Maturity:
      December 1, 2015

    
      	
              Prepayments
                on Principal

            	 	 	 	 
	
              Amount

            	 	
              Date

            	 	
              Balance
                

              Outstanding

            	 	
              Signature
                of Authorized 

              Officer
                and Title

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    

    
      
        
        

      

      
        19

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