Document:

Note Purchase Agreement

    
      

    

    EXECUTION
      COPY

     

    ENERGIZER
      HOLDINGS, INC.

     

    $325,000,000

    Senior
      Notes

     

    $50,000,000
      4.90% Senior Notes, Series 2005-A, due September 29, 2008

    $50,000,000
      4.98% Senior Notes, Series 2005-B, due September 29, 2010

    $75,000,000
      5.09% Senior Notes, Series 2005-C, due September 29, 2012

    $150,000,000
      5.23% Senior Notes, Series 2005-D, due September 29, 2015

    _________

    

    NOTE
      PURCHASE AGREEMENT

    _________

     

    Dated
      as
      of August 1, 2005

     

    

    Series
      2005-A PPN: 29266R G*3 

    Series
      2005-B PPN: 29266R G@ 1

    Series
      2005-C PPN: 29266R G# 9 

    Series
      2005-D PPN: 29266R H* 2 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF
      CONTENTS

    

    SectionPage

     

    1.AUTHORIZATION
      OF NOTES.

    
      	 	
              1.1.

            	
              The
                Notes.

            	 

    

    
      	 	
              1.2.

            	
              Additional
                Interest.

            	 

    

     

    2.SALE
      AND
      PURCHASE OF NOTES.

    
    

    3.CLOSING.

     

    4.CONDITIONS
      TO CLOSING.

    
      	 	
              4.1.

            	
              Representations
                and Warranties.

            	 

    

    
      	 	
              4.2.

            	
              Performance;
                No Default.

            	 

    

    
      	 	
              4.3.

            	
              Compliance
                Certificates.

            	 

    

    
      	 	
              4.4.

            	
              Opinions
                of Counsel.

            	 

    

    
      	 	
              4.5.

            	
              Purchase
                Permitted By Applicable Law, etc.

            	 

    

    
      	 	
              4.6.

            	
              Sale
                of Other Notes.

            	 

    

    
      	 	
              4.7.

            	
              Payment
                of Special Counsel Fees.

            	 

    

    
      	 	
              4.8.

            	
              Private
                Placement Numbers.

            	 

    

    
      
        	 	
                4.9.

              	
                Changes
                  in Corporate Structure.

              	 

      

      
        	 	4.10.	 Subsidiary
                Guaranty.	 

      

      
        	 	4.11.	 Proceedings
                and Documents	 

      

    

     

     .

     

    5.REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

    
      	 	
              5.1.

            	
              Organization;
                Power and Authority.

            	 

    

    
      	 	
              5.2.

            	
              Authorization,
                etc.

            	 

    

    
      	 	
              5.3.

            	
              Disclosure.

            	 

    

    
      	 	
              5.4.

            	
              Organization
                and Ownership of Shares of Subsidiaries.

            	 

    

    
      	 	
              5.5.

            	
              Financial
                Statements.

            	 

    

    
      	 	
              5.6.

            	
              Compliance
                with Laws, Other Instruments, etc.

            	 

    

    
      	 	
              5.7.

            	
              Governmental
                Authorizations, etc.

            	 

    

    
      	 	
              5.8.

            	
              Litigation;
                Observance of Statutes and Orders.

            	 

    

    
      
        	 	
                5.9.

              	
                Taxes.

              	 

      

      
        	 	5.10.	 Title
                to Property; Leases.	 

      

      
        	 	5.11.	  Licenses,
                Permits, etc.	 

      

      
        	 	5.12.	 Compliance
                with ERISA.	 

      

      
        	 	5.13.	 Private
                Offering by the Company.	 

      

      
        	 	5.14.	 Use
                of Proceeds; Margin Regulations.	 

      

      
        	 	5.15.	 Existing
                Indebtedness.	 

      

      
        	 	5.16.	 Foreign
                Assets Control Regulations, Anti-Terrorism Order, etc .	 

      

      
        	 	5.17.	 Status
                under Certain Statutes.	 

      

      
        	 	5.18.	 Solvency
                of Subsidiary Guarantors.	 

      

      
        	 	5.19.	 Environmental
                Matters.	 

      

    

     

    6.REPRESENTATIONS
      OF THE PURCHASERS.

    
      	 	
              6.1.

            	
              Purchase
                for Investment.

            	 

    

    
      	 	
              6.2.

            	
              Source
                of Funds.

            	 

    

     

    7.INFORMATION
      AS TO COMPANY.

    
      	 	
              7.1.

            	
              Financial
                and Business Information.

            	 

    

    
      	 	
              7.2.

            	
              Officer’s
                Certificate.

            	 

    

    
      	 	
              7.3.

            	
              Inspection.

            	 

    

     

    8.PREPAYMENT
      OF THE NOTES.

    
      	 	
              8.1.

            	
              No
                Scheduled Prepayments.

            	 

    

    
      	 	
              8.2.

            	
              Optional
                Prepayments with Make-Whole Amount.

            	 

    

    
      	 	
              8.3.

            	
              Allocation
                of Partial Prepayments.

            	 

    

    
      	 	
              8.4.

            	
              Maturity;
                Surrender, etc.

            	 

    

    
      	 	
              8.5.

            	
              Purchase
                of Notes.

            	 

    

    
      	 	
              8.6.

            	
              Make-Whole
                Amount.

            	 

    

     

    9.AFFIRMATIVE
      COVENANTS.

    
      	 	
              9.1.

            	
              Compliance
                with Law.

            	 

    

    
      	 	
              9.2.

            	
              Insurance.

            	 

    

    
      	 	
              9.3.

            	
              Maintenance
                of Properties.

            	 

    

    
      	 	
              9.4.

            	
              Payment
                of Taxes and Claims.

            	 

    

    
      	 	
              9.5.

            	
              Corporate
                Existence, etc.

            	 

    

     

    10.NEGATIVE
      COVENANTS.

    
      
        	 	
                10.1.

              	
                Consolidated
                  Indebtedness; Indebtedness of Restricted Subsidiaries.

              	 

      

      
        	 	10.2.	 Liens.	 

      

      
        	 	10.3.	 Sale
                of Assets.	 

      

      
        	 	10.4.	 Mergers,
                Consolidations, etc.	 

      

      
        	 	10.5.	 Disposition
                of Stock of Restricted Subsidiaries.	 

      

      
        	 	10.6.	 Designation
                of Restricted and Unrestricted Subsidiaries.	 

      

      
        	 	10.7.	 Restricted
                Subsidiary Guaranties.	 

      

      
        	 	10.8.	 Nature
                of Business.	 

      

      
        	 	10.9.	 Transactions
                with Affiliates.	 

      

    

       

    11.EVENTS
      OF
      DEFAULT.

     

    12.REMEDIES
      ON DEFAULT, ETC.

    
      
        	 	12.1.	 Acceleration.	 

      

      
        	 	12.2.	 Other
                Remedies.	 

      

      
        	 	12.3.	 Rescission.	 

      

      
        	 	12.4.	 No
                Waivers or Election of Remedies, Expenses, etc.	 

      

    

      

    13.REGISTRATION;
      EXCHANGE; SUBSTITUTION OF NOTES.

    
      
        	 	13.1.	Registration
                of Notes.	 

      

      
        	 	13.2.	Transfer
                and Exchange of Notes.	 

      

      
        	 	13.3.	Replacement
                of Notes.	 

      

    

     

    14.PAYMENTS
      ON NOTES.

    
      
        	 	14.1.	Place
                of Payment.	 

      

      
        	 	14.2.	Home
                Office Payment.	 

      

    

     

    15.EXPENSES,
      ETC.

    
      
        	 	15.1.	Transaction
                Expenses.	 

      

      
        	 	15.2.	Survival.	 

      

    

       

    16.SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

     

    17.AMENDMENT
      AND WAIVER.

    
      
        	 	17.1.	Requirements.	 

      

      
        	 	17.2.	Solicitation of Holders of Notes.	 

      

      
        	 	17.3.	Binding Effect, etc.	 

      

      
        	 	17.4.	Notes held by Company, etc.	 

      

    

     

    18.NOTICES.

     

    19.REPRODUCTION
      OF DOCUMENTS.

     

    20.CONFIDENTIAL
      INFORMATION.

     

    21.SUBSTITUTION
      OF PURCHASER.

     

    22.RELEASE
      OF SUBSIDIARY GUARANTOR.

     

    23.MISCELLANEOUS.

    
      
        	 	23.1.	Successors and Assigns.	 

      

      
        	 	23.2.	Payments Due on Non-Business Days.	 

      

      
        	 	23.3.	Severability.	 

      

      
        	 	23.4.	Construction.	 

      

      
        	 	23.5.	Counterparts.	 

      

      
        	 	23.6.	Governing Law.	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      A -- Information
      Relating to Purchasers

    SCHEDULE
      B -- Defined
      Terms

    SCHEDULE
      B-1 -- Investments

    SCHEDULE
      4.9 -- Changes
      in Corporate Structure

    SCHEDULE
      5.3 -- Disclosure
      Materials

    SCHEDULE
      5.4 -- Subsidiaries
      of the Company and Ownership of Subsidiary Stock

    SCHEDULE
      5.5 -- Financial
      Statements

    SCHEDULE
      5.11 -- Licenses,
      Permits, etc.

    SCHEDULE
      5.14 -- Use
      of
      Proceeds

    SCHEDULE
      5.15 -- Indebtedness

    SCHEDULE
      10.2 -- Liens

    EXHIBIT
      1
      (a) -- Form
      of
      Series 2005-A Note

    EXHIBIT
      1
      (b) -- Form
      of
      Series 2005-B Note

    EXHIBIT
      1
      (c) -- Form
      of
      Series 2005-C Note

    EXHIBIT
      1
      (d) -- Form
      of
      Series 2005-D Note

    EXHIBIT
      1
      (e) -- Form
      of
      Subsidiary Guaranty

    
      EXHIBIT
        4.4(a)--Form
        of  Opinion of Counsel for the Company and the Subsidiary Guarantors
        
        EXHIBIT
          4.4(b) -- Form
          of
          Opinion of Special Counsel for the Purchasers

      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ENERGIZER
      HOLDINGS, INC.

    533
      Maryville University Drive

    St.
      Louis, MO 63141

    (314)
      985-2087

    Fax:
      (314) 985-2220

    

    

    

    $325,000,000

    Senior
      Notes

    

    

    $50,000,000
      4.90% Senior Notes, Series 2005-A, due September 29, 2008

    $50,000,000
      4.98% Senior Notes, Series 2005-B, due September 29, 2010

    $75,000,000
      5.09% Senior Notes, Series 2005-C, due September 29, 2012

    $150,000,000
      5.23% Senior Notes, Series 2005-D, due September 29, 2015

    

    

    Dated
      as
      of August 1, 2005

    

    

    TO
      EACH
      OF THE PURCHASERS LISTED IN

    THE
      ATTACHED SCHEDULE A:

    

    Ladies
      and Gentlemen:

    

    ENERGIZER
      HOLDINGS, INC., a Missouri corporation (the “Company”), agrees with you as
      follows:

    

    AUTHORIZATION
      OF NOTES.

     

    The
      Notes. 

    The
      Company has authorized the issue and sale of $325,000,000 aggregate principal
      amount of its Senior Notes consisting of (i) $50,000,000 aggregate principal
      amount of its 4.90% Senior Notes, Series 2005-A, due September 29, 2008 (the
      “Series 2005-A Notes”); (ii) $50,000,000 aggregate principal amount of its
      4.98% Senior Notes, Series 2005-B, due September 29, 2010 (the “Series 2005-B
      Notes”); (iii) $75,000,000 aggregate principal amount of its 5.09% Senior Notes,
      Series 2005-C, due September 29, 2012 (the “Series 2005-C Notes”); and (iv)
      $150,000,000 aggregate principal amount of its 5.23% Senior Notes, Series
      2005-D, due September 29, 2015 (the “Series 2005-D Notes”) and, together with
      the Series 2005-A Notes, the Series 2005-B Notes and the Series 2005-C Notes,
      the “Notes,” such term to include any such Notes issued in substitution therefor
      pursuant to Section 13 of this Agreement). The Notes will be substantially
      in
      the forms set out in Exhibits 1(a), 1(b), 1(c) and 1(d), 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.
      Subject to Section 22, the Notes will be guaranteed by each Subsidiary that
      is
      now or in the future becomes a signatory to the Bank Guarantees (individually,
      a
“Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”) pursuant
      to a guaranty substantially in the form of Exhibit 1(e) (the “Subsidiary
      Guaranty”).

     

    Additional
      Interest. 

    
    

    If
      the
      Debt to EBITDA Ratio at any time exceeds 3.5 to 1.00, as evidenced by an
      Officer’s Certificate delivered pursuant to Section 7.2(a), the interest rate
      payable on each series of Notes shall be increased by 0.75%, commencing on
      the
      first day of the first fiscal quarter following the fiscal quarter in respect
      of
      which such Certificate was delivered and continuing until the Company has
      provided an Officer’s Certificate pursuant to Section 7.2(a) demonstrating that,
      as of the end of the fiscal quarter in respect of which such Certificate is
      delivered, the Debt to EBITDA Ratio is not more than 3.5 to 1.0. Following
      delivery of an Officer’s Certificate demonstrating that the Debt to EBITDA Ratio
      did not exceed 3.5 to 1.0, the additional 0.75% interest shall cease to accrue
      or be payable for any fiscal quarter subsequent to the fiscal quarter in respect
      of which such Certificate is delivered. 

     

    SALE
      AND PURCHASE OF NOTES.

     

    Subject
      to the terms and conditions of this Agreement, the Company will issue and sell
      to you and each of the other purchasers named in Schedule A (the “Other
      Purchasers”), and you and the Other Purchasers will purchase from the Company,
      at the Closing provided for in Section 3, Notes of the series and in
      the
      principal amount specified opposite your name 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.

     

    CLOSING.

     

    The
      sale
      and purchase of the Notes to be purchased by you and the Other Purchasers shall
      occur at the offices of Foley & Lardner LLP, 321 North Clark Street,
      Suite 2800, Chicago, Illinois 60610-4764, at 9:00 a.m., Chicago time,
      at a
      closing (the “Closing”) on September 29, 2005 or on such other Business Day
      thereafter on or prior to October 15, 2005 as may be agreed upon by
      the
      Company and you and the Other Purchasers. At the Closing the Company will
      deliver to you the Notes to be purchased by you in the form of a single Note
      (or
      such greater number of Notes in denominations of at least $250,000 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 12331-33027 at Bank of America, San Francisco, California, ABA
      No. 121000358. If at the Closing the Company fails to tender such Notes
      to
      you as provided above in this Section 3, or any of the conditions specified
      in
      Section 4 shall not have been fulfilled to your satisfaction, you shall, at
      your
      election, be relieved of all further obligations under this Agreement, without
      thereby waiving any rights you may have by reason of such failure or such
      nonfulfillment.

     

    CONDITIONS
      TO CLOSING.

     

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

     

    Representations
      and Warranties.

     

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

     

    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
      Notes (and the application of the proceeds thereof as contemplated by Schedule
      5.14) no Default or Event of Default shall have occurred and be continuing.
      

     

    Compliance
      Certificates.

     

    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.

     

    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 Notes and the
      Agreement.

     

    Opinions
      of Counsel.

     

    You
      shall
      have received opinions in form and substance satisfactory to you, dated the
      date
      of the Closing (a) from Bryan Cave LLP, counsel for the Company and the
      Subsidiary Guarantors, covering the matters set forth in Exhibit 4.4(a) and
      covering such other matters incident to the transactions contemplated hereby
      as
      you or your counsel may reasonably request (and the Company instructs its
      counsel to deliver such opinion to you) and (b) from Foley & Lardner
      LLP, your special counsel in connection with such transactions, substantially
      in
      the form set forth in Exhibit 4.4(b) and covering such other matters incident
      to
      such transactions as you may reasonably request.

     

    Purchase
      Permitted By Applicable Law, etc.

     

    On
      the
      date of the Closing your purchase of Notes shall (i) be permitted by
      the
      laws and regulations of each jurisdiction to which you are subject, without
      recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
      Law) permitting limited investments by insurance companies without restriction
      as to the character of the particular investment, (ii) not violate any
      applicable law or regulation (including, without limitation, Regulation U,
      T or
      X of the Board of Governors of the Federal Reserve System) and (iii) not
      subject you to any tax, penalty or liability under or pursuant to any applicable
      law or regulation, 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.

     

    Sale
      of Other Notes.

     

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

     

    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.

     

    Private
      Placement Numbers.

     

    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 by Foley & Lardner LLP for
      each series of the Notes.

     

    Changes
      in Corporate Structure.

     

    Except
      as
      specified in Schedule 4.9, 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. 

     

    Subsidiary
      Guaranty.

     

    Each
      Subsidiary Guarantor shall have executed and delivered the Subsidiary Guaranty
      in favor of you and the Other Purchasers and you shall have received a copy
      of a
      fully executed counterpart thereof.

     

    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.

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants to you that:

     

    Organization;
      Power and Authority.

     

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

     

    Authorization,
      etc.

     

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

     

    The
      Subsidiary Guaranty has been duly authorized by all necessary corporate action
      on the part of each Subsidiary Guarantor and upon execution and delivery thereof
      will constitute the legal, valid and binding obligation of each Subsidiary
      Guarantor, enforceable against each Subsidiary Guarantor 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).

     

    Disclosure.

     

    The
      Company, through its agent, Banc of America Securities LLC, has delivered to
      you
      and each Other Purchaser a copy of a Private Placement Memorandum, dated
      August 2005 and the supplemental financial information referred to therein
      (the “Memorandum”), relating to the transactions contemplated hereby. Except as
      disclosed in Schedule 5.3, this Agreement, the Memorandum, the documents,
      certificates or other writings identified in Schedule 5.3 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. Except as disclosed in the Memorandum or as
      expressly described in Schedule 5.3, or in one of the documents, certificates
      or
      other writings identified therein, or in the financial statements listed in
      Schedule 5.5, since September 30, 2004, there has been no change in
      the
      financial condition, operations, business or properties of the Company or any
      Subsidiary except changes that individually or in the aggregate would not
      reasonably be expected to have a Material Adverse Effect. 

     

    Organization
      and Ownership of Shares of Subsidiaries.

     

    Schedule
      5.4 is (except as noted therein) a complete and correct list 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.

     

    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).

     

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

     

    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).

     

    Compliance
      with Laws, Other Instruments, etc.

     

    The
      execution, delivery and performance by the Company of this Agreement and the
      Notes will not (i) contravene, result in any breach of, or constitute
      a
      default under, or result in the creation of any Lien in respect of any property
      of the Company or any Restricted Subsidiary under, any Material agreement,
      or
      corporate charter or By-Laws, to which the Company or any Restricted Subsidiary
      is bound or by which the Company or any Restricted 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 Restricted Subsidiary or (iii) violate any provision
      of
      any statute or other rule or regulation of any Governmental Authority applicable
      to the Company or any Restricted Subsidiary.

     

    The
      execution, delivery and performance by each Subsidiary Guarantor of the
      Subsidiary Guaranty will not (i) contravene, result in any breach of,
      or
      constitute a default under, or result in the creation of any Lien in respect
      of
      any property of such Subsidiary Guarantor under, any agreement, or corporate
      charter or by-laws, to which such Subsidiary Guarantor is bound or by which
      such
      Subsidiary Guarantor or any of its 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 such Subsidiary Guarantor or (iii) violate
      any provision of any statute or other rule or regulation of any Governmental
      Authority applicable to such Subsidiary Guarantor.

     

    Governmental
      Authorizations, etc.

     

    No
      consent, approval or authorization of, or registration, filing or declaration
      with, any Governmental Authority is required in connection with the execution,
      delivery or performance by the Company of this Agreement or the Notes or the
      execution, delivery or performance by each Subsidiary Guarantor of the
      Subsidiary Guaranty.

     

    Litigation;
      Observance of Statutes and Orders.

     

    Except
      as
      disclosed in the Memorandum, there are no actions, suits or proceedings pending
      or, to the knowledge of the Company, threatened against or 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, would reasonably be expected to have
      a
      Material Adverse Effect.

     

    Neither
      the Company nor any Subsidiary is in default under any order, judgment, decree
      or ruling of any court, arbitrator or Governmental Authority or is in violation
      of any applicable law, ordinance, rule or regulation (including Environmental
      Laws and the USA Patriot Act) of any Governmental Authority, which default
      or
      violation, individually or in the aggregate, would reasonably be expected to
      have a Material Adverse Effect.

     

    Taxes.

     

    The
      Company and its Subsidiaries have filed all income tax returns that are required
      to have been filed in any jurisdiction, and have paid all taxes, to the extent
      such taxes are payable by them, to the extent such taxes and assessments have
      become due and payable and before they have become delinquent, except for any
      taxes and assessments (i) the amount of which is not individually or
      in the
      aggregate Material or (ii) the amount, applicability or validity of
      which
      is currently being contested in good faith by appropriate proceedings and with
      respect to which the Company or a Subsidiary, as the case may be, has
      established adequate reserves in accordance with 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 September 30, 1995.

     

    Title
      to Property; Leases.

     

    The
      Company and its Subsidiaries have good and sufficient title to their respective
      Material properties, including all such properties reflected in the most recent
      audited balance sheet referred to in Section 5.5 or purported to have been
      acquired by the Company or any Subsidiary after said date (except as sold or
      otherwise disposed of in the ordinary course of business), in each case free
      and
      clear of Liens prohibited by this Agreement, except for those defects in title
      and Liens that, individually or in the aggregate, would not have a Material
      Adverse Effect. All Material leases are valid and subsisting and are in full
      force and effect in all material respects. 

     

    Licenses,
      Permits, etc.

     

    Except
      as
      disclosed in Schedule 5.11, 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 are Material, without
      known conflict with the rights of others, except for those conflicts that,
      individually or in the aggregate, would not have a Material Adverse
      Effect.

     

    Compliance
      with ERISA.

     

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

     

    The
      present value of the aggregate benefit liabilities under each of the Plans
      (other than Multiemployer Plans) that is a defined benefit pension plan
      qualified under Code Section 401(a), determined as of the end of such Plan’s
      most recently ended plan year on the basis of the actuarial assumptions
      specified for funding purposes in such Plan’s most recent actuarial valuation
      report, did not exceed the aggregate current value of the assets of such Plan
      allocable to such benefit liabilities. The term “benefit liabilities” has the
      meaning specified in Section 4001 of ERISA and the terms “current value”
      and “present value” have the meaning specified in Section 3 of
      ERISA.

     

    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.

     

    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.

     

    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 would be imposed
      pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation
      by
      the Company in the first sentence of this Section 5.12(e) is made in reliance
      upon and subject to the accuracy of 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.

     

    Private
      Offering by the Company.

     

    Neither
      the Company nor anyone acting on its behalf has offered the Notes, the
      Subsidiary Guaranty 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 18 other Institutional Investors, each of which has been offered
      the
      Notes at a private sale for investment. Neither the Company nor anyone acting
      on
      its behalf has taken, or will take, any action that would subject the issuance
      or sale of the Notes or the execution and delivery of the Subsidiary Guaranty
      to
      the registration requirements of Section 5 of the Securities Act.

     

    Use
      of Proceeds; Margin Regulations.

     

    The
      Company will apply the proceeds of the sale of the Notes for general corporate
      purposes, including repayment of Indebtedness as set forth in Schedule 5.14.
      No
      part of the proceeds from the sale of the Notes will be used, directly or
      indirectly, for the purpose of buying or carrying any margin stock within the
      meaning of Regulation U of the Board of Governors of the Federal Reserve System
      (12 CFR 221), or for the purpose of buying or carrying or trading in 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 more than 5% 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.

     

    Existing
      Indebtedness.

     

    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 June 30,
      2005
      (except as otherwise indicated), 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 Restricted 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 Restricted 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 Restricted
      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.

     

    Foreign
      Assets Control Regulations, Anti-Terrorism Order, etc .

     

    Neither
      the sale of the Notes by the Company hereunder nor its use of the proceeds
      thereof will violate (a) the Trading with the Enemy Act, as amended, (b) 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 or (c) to the knowledge of the Company,
      the Anti-Terrorism Order. Without limiting the foregoing, neither Company nor
      any Subsidiary (i) is a blocked person described in Section 1
      of the
      Anti-Terrorism Order or (ii) engages in any dealings or transactions,
      or is
      otherwise associated, with any such person.

     

    Status
      under Certain Statutes.

     

    Neither
      the Company nor any Restricted 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.

     

    Solvency
      of Subsidiary Guarantors.

     

    After
      giving effect to the transactions contemplated herein, (i) the present
      fair
      salable value of the assets of each Subsidiary Guarantor is in excess of the
      amount that will be required to pay its probable liability on its existing
      debts
      as said debts become absolute and matured, (ii) each Subsidiary Guarantor
      has received reasonably equivalent value for executing and delivering the
      Subsidiary Guaranty, (iii) the property remaining in the hands of each
      Subsidiary Guarantor is not an unreasonably small capital, and (iv) each
      Subsidiary Guarantor is able to pay its debts as they mature.

     

    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 raising any claim
      against the Company or any of its Subsidiaries or any of their respective real
      properties now or formerly owned, leased or operated by any of them or other
      assets, alleging any damage to the environment or violation of any Environmental
      Laws, except, in each case, such as could not reasonably be expected to result
      in a Material Adverse Effect. Except as otherwise disclosed to you in
      writing,

     

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

     

    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

     

    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.

     

    REPRESENTATIONS
      OF THE PURCHASERS.

     

    Purchase
      for Investment.

     

    You
      represent that you are purchasing the Notes for your own account or for one
      or
      more separate accounts maintained by you or for the account of one or more
      pension or trust funds and not with a view to the distribution thereof, provided
      that the disposition of your or their property shall at all times be within
      your
      or their control. You understand that the Notes have not been registered under
      the Securities Act and may be resold only if registered pursuant to the
      provisions of the Securities Act or if an exemption from registration is
      available, except under circumstances where neither such registration nor such
      an exemption is required by law, and that the Company is not required to
      register the Notes.

     

    Source
      of Funds.

     

    You
      represent that at least one of the following statements is an accurate
      representation as to each source of funds (a “Source”) to be used by you to pay
      the purchase price of the Notes to be purchased by you hereunder:

     

    the
      Source is an “insurance company general account” (as the term is defined in the
      United States Department of Labor’s Prohibited Transaction Exemption (“PTE”)
      95-60) in respect of which the reserves and liabilities (as defined by the
      annual statement for life insurance companies approved by the National
      Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the
      general account contract(s) held by or on behalf of any employee benefit plan
      together with the amount of the reserves and liabilities for the general account
      contract(s) held by or on behalf of any other employee benefit plans maintained
      by the same employer (or affiliate thereof as defined in PTE 95-60) or by the
      same employee organization in the general account do not exceed 10% of the
      total
      reserves and liabilities of the general account (exclusive of separate account
      liabilities) plus surplus as set forth in the NAIC Annual Statement filed with
      such Purchaser’s state of domicile; or

     

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

     

    the
      Source is either (i) an insurance company pooled separate account, within the
      meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective
      investment fund, within the meaning of PTE 91-38 (issued July 12, 1991) and,
      except as you have disclosed to the Company in writing pursuant to this
      paragraph (c), 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

     

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

     

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

     

    the
      Source is a governmental plan; or

     

    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 (g);
      or

     

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

     

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

     

    INFORMATION
      AS TO COMPANY.

     

    Financial
      and Business Information.

     

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

     

    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,

     

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

     

    consolidated
      statements of earnings and stockholders’ equity 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, and

     

    consolidated
      statements of cash flows of the Company and its Subsidiaries for such quarter
      or
      (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);

     

    Annual
      Statements
      --
      within 105 days after the end of each fiscal year of the Company, duplicate
      copies of,

     

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

     

    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
      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);

     

    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;

     

    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
      Restricted Subsidiary to public securities holders generally, and (ii) each
      regular or periodic report, each registration statement (other than a
      Registration Statement on Form S-8) that shall have become effective (without
      exhibits except as expressly requested by such holder), and each final
      prospectus and all amendments (other than one relating sole to employee benefit
      plans) thereto filed by the Company or any Restricted Subsidiary with the
      Securities and Exchange Commission;

     

    Notice
      of Default or Event of Default
      --
      promptly, and in any event within five Business Days after a Responsible Officer
      obtains actual knowledge of the existence of any Default or Event of Default,
      a
      written notice specifying the nature and period of existence thereof and what
      action the Company is taking or proposes to take with respect
      thereto;

     

    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:

     

    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

     

    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

     

    any
      event, transaction or condition that would 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, would
      reasonably be expected to have a Material Adverse Effect; and

     

    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.

     

    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:

     

    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
      through Section 10.9, inclusive, during the quarterly or annual period
      covered by the statements then being furnished (including with respect to each
      such Section, where applicable, the calculations of the maximum or minimum
      amount, ratio or percentage, as the case may be, permissible under the terms
      of
      such Sections, and the calculation of the amount, ratio or percentage then
      in
      existence); and

     

    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 shall not have disclosed
      the
      existence during such period of any condition or event that constitutes a
      Default or an Event of Default or, if any such condition or event existed or
      exists (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.

     

    Inspection.

     

    The
      Company will permit the representatives of each holder of Notes that is an
      Institutional Investor:

     

    No
      Default
      -- if no
      Default or Event of Default then exists, at the expense of such holder and
      upon
      reasonable prior notice to the Company, to visit the principal executive office
      of the Company, to discuss the affairs, finances and accounts of the Company
      and
      its Subsidiaries with the Company’s officers, and, with the consent of the
      Company (which consent will not be unreasonably withheld), 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

     

    Default
      -- if a
      Default or Event of Default then exists, at the expense of the Company, to
      visit
      and inspect any of the offices or properties of the Company or any Subsidiary,
      to examine all their respective books of account, records, reports and other
      papers, to make copies and extracts therefrom, and to discuss their respective
      affairs, finances, and accounts with their respective officers and independent
      public accountants (and by this provision the Company authorizes said
      accountants to discuss the affairs, finances and accounts of the Company and
      its
      Subsidiaries), all at such times and as often as may be requested.

     

    PREPAYMENT
      OF THE NOTES.

     

    No
      Scheduled Prepayments.

     

    No
      regularly scheduled prepayments are due on the Notes prior to their stated
      maturity.

     

    Optional
      Prepayments with Make-Whole Amount.

     

    The
      Company may, at its option, upon notice as provided below, prepay at any time
      all, or from time to time any part of, the Notes of any series, in an amount
      not
      less than $1,000,000 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 of such
      series to be prepaid on such date, the principal amount of each Note of such
      series held by such holder to be prepaid (determined in accordance with Section
      8.3), and the interest to be paid on the prepayment date with respect to such
      principal amount being prepaid, and shall be accompanied by a certificate of
      a
      Senior Financial Officer as to the estimated Make-Whole Amount due in connection
      with such prepayment (calculated as if the date of such notice were the date
      of
      the prepayment), setting forth the details of such computation. Two Business
      Days prior to such prepayment, the Company shall deliver to each holder of
      Notes
      of the series to be prepaid a certificate of a Senior Financial Officer
      specifying the calculation of such Make-Whole Amount as of the specified
      prepayment date.

     

    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 such series at the time outstanding in proportion, as nearly as
      practicable, to the respective unpaid principal amounts thereof not theretofore
      called for prepayment. 

     

    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.

     

    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
      of
      any series except (a) upon the payment or prepayment of the Notes of a series
      in
      accordance with the terms of this Agreement and the Notes or (b) pursuant to
      an
      offer to purchase made by the Company or an Affiliate pro rata to the holders
      of
      all Notes of a series at the time outstanding upon the same terms and
      conditions. Any such offer shall provide each holder with sufficient information
      to enable it to make an informed decision with respect to such offer, and shall
      remain open for at least 30 Business Days. If the holders of more than 25%
      of
      the principal amount of the Notes of a series then outstanding accept such
      offer, the Company shall promptly notify the remaining holders of such fact
      and
      the expiration date for the acceptance by holders of Notes of such series of
      such offer shall be extended by the number of days necessary to give each such
      remaining holder at least ten Business Days from its receipt of such notice
      to
      accept such offer. The Company will promptly cancel all Notes acquired by it
      or
      any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant
      to any provision of this Agreement and no Notes may be issued in substitution
      or
      exchange for any such Notes.

     

    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-1 Screen”
      on the Bloomberg Financial Market Service (or such other display as may replace
      the PX-1 Screen on Bloomberg Financial Market Service) for actively traded
      U.S.
      Treasury securities having a maturity equal to the Remaining Average Life of
      such Called Principal as of such Settlement Date, or (ii) if such yields
      are not reported as of such time or the yields reported as of such time are
      not
      ascertainable, the Treasury Constant Maturity Series Yields reported, for the
      latest day for which such yields have been so reported as of the second Business
      Day preceding the Settlement Date with respect to such Called Principal, in
      Federal Reserve Statistical Release H.15 (519) (or any comparable successor
      publication) for actively traded U.S. Treasury securities having a constant
      maturity equal to the Remaining Average Life of such Called Principal as of
      such
      Settlement Date. Such implied yield will be determined, if necessary, by
      (a) converting U.S. Treasury bill quotations to bond-equivalent yields
      in
      accordance with accepted financial practice and (b) interpolating linearly
      between (1) the actively traded U.S. Treasury security with the maturity closest
      to and greater than the Remaining Average Life and (2) the actively traded
      U.S.
      Treasury security with the maturity closest to and less than the Remaining
      Average Life.

     

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

     

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

     

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

     

    AFFIRMATIVE
      COVENANTS.

     

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

     

    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 would not, individually or in the aggregate, reasonably be
      expected to have a materially adverse effect on the business, operations,
      affairs, financial condition, properties or assets of the Company and its
      Restricted Subsidiaries taken as a whole.

     

    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 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.

     

    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 would not,
      individually or in the aggregate, reasonably be expected to have a materially
      adverse effect on the business, operations, affairs, financial condition,
      properties or assets of the Company and its Restricted Subsidiaries taken as
      a
      whole.

     

    Payment
      of Taxes and Claims.

     

    The
      Company will, and will cause each Subsidiary to, file all income tax or similar
      tax returns required to be filed in any jurisdiction and to pay and discharge
      all taxes shown to be due and payable on such returns and all other taxes,
      assessments, governmental charges, or levies payable by any of them, to the
      extent such taxes and assessments have become due and payable and before they
      have become delinquent, provided that neither the Company nor any Subsidiary
      need pay any such tax or assessment or claims if (i) the amount, applicability
      or validity thereof is contested by the Company or such Subsidiary on a timely
      basis in good faith and in appropriate proceedings, and the Company or a
      Subsidiary has established adequate reserves therefor in accordance with GAAP
      on
      the books of the Company or such Subsidiary or (ii) the nonpayment of all such
      taxes and assessments in the aggregate could not reasonably be expected to
      have
      a materially adverse effect on the business, operations, affairs, financial
      condition, properties or assets of the Company and its Subsidiaries taken as
      a
      whole.

     

    Corporate
      Existence, etc.

     

    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
      of its Restricted Subsidiaries (unless merged into the Company or a Wholly-Owned
      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 a
      particular corporate existence, right or franchise could not, individually
      or in
      the aggregate, have a materially adverse effect on the business, operations,
      affairs, financial condition, properties or assets of the Company and its
      Restricted Subsidiaries taken as a whole.

     

    NEGATIVE
      COVENANTS.

     

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

     

    Consolidated
      Indebtedness; Indebtedness of Restricted Subsidiaries.

     

    The
      Company will not permit:

     

    the
      Debt
      to EBITDA Ratio to be greater than 3.5 to 1.0 at any time; provided that, for
      any period of not more than four successive fiscal quarters, such ratio may
      be
      greater than 3.5 to 1.0, but in no event greater than 4.0 to 1.0, if the Company
      pays the additional interest provided for in Section 1.2; and

     

    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 25% of Consolidated Total Capitalization. For purposes of this
      Section 10.1(b), any unsecured Indebtedness of a Restricted Subsidiary that
      is a
      Subsidiary Guarantor shall be deemed to have been incurred by such Subsidiary
      at
      the time it ceases to be a Subsidiary Guarantor.

     

    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,
      except:

     

    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;

     

    Liens
      for
      taxes, assessments or governmental charges not then due and delinquent or the
      nonpayment of which is permitted by Section 9.4;

     

    encumbrances
      in the nature of leases, subleases, zoning restrictions, easements, rights
      of
      way and other rights and restrictions of record on the use of real property
      and
      defects in title arising or incurred in the ordinary course of business, which,
      individually and in the aggregate, do not materially impair the use or value
      of
      the property or assets subject thereto or which relate only to assets that
      in
      the aggregate are not material;

     

    Liens
      incidental to the conduct of business or the ownership of properties and assets
      (including landlords’, lessors’, 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;

     

    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;

     

    Liens
      securing Indebtedness of a Restricted Subsidiary to the Company or to another
      Restricted Subsidiary and Liens securing Indebtedness of the Company to a
      Restricted Subsidiary;

     

    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 thereof
      to
      secure or provide for all or a portion of the purchase price or cost of
      construction 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 one or more officers of the Company to whom authority to enter
      into such transaction has been delegated by the board of directors of the
      Company) or cost of acquisition or construction of the property subject
      thereto;

     

    Liens
      incurred in connection with Asset Securitization Transactions;

     

    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

     

    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 25% of
      Consolidated Total Capitalization.

     

    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) Dispositions
      not otherwise permitted by clauses (a) or (b) of this Section 10.3, 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 15% 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 (including the sale of receivables in an
      Asset
      Securitization Transaction) and the assets subject to such Disposition shall
      not
      be subject to or included in the foregoing limitation and computation contained
      in clause (c) of the preceding sentence to the extent that (i) such
      assets
      were acquired or constructed not more than 180 days prior to the date of 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.

     

    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:

     

    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:

     

    the
      successor formed by such consolidation or the survivor of such merger or the
      Person that acquires by conveyance, transfer, sale or lease all or substantially
      all of the assets of the Company as an entirety, as the case may be, is a
      solvent corporation 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 (y) 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 (z) 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;
      and

     

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

     

    Any
      Restricted Subsidiary may (x) merge into the Company (provided that
      the
      Company is the surviving corporation) or another Wholly-Owned Restricted
      Subsidiary or (y) sell, transfer or lease all or any part of its assets
      to
      the Company or another Wholly-Owned 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 a 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;

     

    No
      such
      conveyance, transfer, sale or lease of all or substantially all of the assets
      of
      the Company shall have the effect of releasing the Company or any successor
      corporation that shall theretofore have become such in the manner prescribed
      in
      this Section 10.4 from its liability under this Agreement or the
      Notes.

     

    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 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.

     

    Designation
      of Restricted and 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 designated 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 designated 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)
      a
      Subsidiary Guarantor may not be designated an Unrestricted Subsidiary. If a
      Restricted Subsidiary at any time ceases to be such as a result of a
      redesignation, any Liens on property of the Company or any other Restricted
      Subsidiary securing Indebtedness owed to such Restricted Subsidiary that 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.

     

    Restricted
      Subsidiary Guaranties.

     

    The
      Company will not permit any Restricted Subsidiary to become a party to the
      Bank
      Guarantees or to directly or indirectly guarantee any of the Company’s
      obligations under the Credit Agreement unless such Restricted Subsidiary is,
      or
      concurrently therewith becomes, a party to the Subsidiary Guaranty.

     

    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; provided, that the
      foregoing shall not be deemed to prohibit acquisitions by the Company or its
      Restricted Subsidiaries as long as the acquired companies are consumer products
      companies or other companies operating in businesses similar to or related
      to
      the current and future businesses conducted by the Company and its Subsidiaries,
      as well as suppliers to or distributors of products similar to those of the
      Company and its Subsidiaries.

     

    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.

     

    EVENTS
      OF DEFAULT.

     

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

     

    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

     

    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

     

    the
      Company defaults in the performance of or compliance with any term contained
      in
      or Sections 10.1 through 10.9; or

     

    the
      Company defaults in the performance of or compliance with any term
      contained herein (other than those referred to in paragraphs (a), (b)
      and
      (c) of this Section 11) and such default is not remedied within 30 days
      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

     

    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

     

    (i)
      the
      Company or any Significant 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 $30,000,000 beyond any period of grace
      provided with respect thereto, or (ii) the Company or any Significant 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 $30,000,000 or of any mortgage, indenture or other agreement
      relating thereto or any other condition exists, and as a consequence of such
      default or condition such Indebtedness has become, or has been declared, due
      and
      payable before its stated maturity or before its regularly scheduled dates
      of
      payment; or

     

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

     

    a
      court
      or governmental authority of competent jurisdiction enters an order appointing,
      without consent by the Company or any Significant Restricted 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 Restricted
      Subsidiary, or any such petition shall be filed against the Company or any
      Significant Restricted Subsidiary and such petition shall not be dismissed
      within 60 days; or

     

    a
      final
      judgment or judgments for the payment of money aggregating in excess of
      $30,000,000 are rendered against one or more of the Company and its Significant
      Restricted 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

     

    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 $30,000,000, (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, would reasonably be expected
      to
      have a Material Adverse Effect; or

     

    any
      Subsidiary Guarantor that is a Significant Restricted Subsidiary defaults in
      the
      performance of or compliance with any term contained in the Subsidiary
      Guaranty or the Subsidiary Guaranty ceases to be in full force and effect as
      a
      result of acts taken by the Company or any Subsidiary Guarantor, except as
      provided in Section 22, or is declared to be null and void in whole
      or in
      material part by a court or other governmental or regulatory authority having
      jurisdiction or the validity or enforceability thereof shall be contested by
      any
      of the Company or any Subsidiary Guarantor or any of them renounces any of
      the
      same or denies that it has any or further liability thereunder.

     

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

     

    REMEDIES
      ON DEFAULT, ETC.

     

    Acceleration.

     

    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.

     

    If
      any
      other Event of Default has occurred and is continuing, any holder or holders
      of
      a majority or more 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.

     

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

     

    Upon
      any
      Notes becoming due and payable under this Section 12.1, whether
      automatically or by declaration, such Notes will forthwith mature and the entire
      unpaid principal amount of such Notes, plus (w) all accrued and unpaid interest
      thereon and (x) any applicable 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 any 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.

     

    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.

     

    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 67% 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 any Make-Whole Amount 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 any Make-Whole
      Amount 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.

     

    No
      Waivers or Election of Remedies, Expenses, etc.

     

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

     

    REGISTRATION;
      EXCHANGE; SUBSTITUTION OF NOTES.

     

    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.

     

    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 representation set forth in
      Section 6.2.

     

    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

     

    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 $50,000,000, such Person’s own unsecured agreement of
      indemnity shall be deemed to be satisfactory), or

     

    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.

     

    PAYMENTS
      ON NOTES.

     

    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 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.

     

    Home
      Office Payment.

     

    So
      long
      as you or your nominee shall be the holder of any Note, and notwithstanding
      anything contained in Section 14.1 or in such Note to the contrary, the Company
      will pay all sums becoming due on such Note for principal, Make-Whole Amount,
      if
      any, and interest by the method and at the address specified for such purpose
      below your name in Schedule A, or by such other method or at such other address
      as you shall have from time to time specified to the Company in writing for
      such
      purpose, without the presentation or surrender of such Note or the making of
      any
      notation thereon, except that upon written request of the Company made
      concurrently with or reasonably promptly after payment or prepayment in full
      of
      any Note, you shall surrender such Note for cancellation, reasonably promptly
      after any such request, to the Company at its principal executive office or
      at
      the place of payment most recently designated by the Company pursuant to Section
      14.1. Prior to any sale or other disposition of any Note held by you or your
      nominee you will, at your election, either endorse thereon the amount of
      principal paid thereon and the last date to which interest has been paid thereon
      or surrender such Note to the Company in exchange for a new Note or Notes
      pursuant to Section 13.2. The Company will afford the benefits of this Section
      14.2 to any Institutional Investor that is the direct or indirect transferee
      of
      any Note purchased by you under this Agreement and that has made the same
      agreement relating to such Note as you have made in this Section
      14.2.

     

    EXPENSES,
      ETC.

     

    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).

     

    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.

     

    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.

     

    AMENDMENT
      AND WAIVER.

     

    Requirements.

     

    This
      Agreement, the Notes and the Subsidiary Guaranty may be amended, and the
      observance of any term hereof or of the Notes may be waived (either
      retroactively or prospectively), with (and only with) the written consent of
      the
      Company and the Required Holders, except that (a) no amendment or waiver of
      any
      of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined
      term (as it is used therein), will be effective as to you unless consented
      to by
      you in writing, and (b) no such amendment or waiver may, without the written
      consent of the holder of each Note at the time outstanding affected thereby,
      (i) subject to the provisions of Section 12 relating to acceleration
      or rescission, change the amount or time of any prepayment or payment of
      principal of, or reduce the rate or change the time of payment or method of
      computation of interest or of 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.

     

    Solicitation
      of Holders of Notes.

     

    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.

     

    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.

     

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

     

    Binding
      Effect, etc.

     

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

     

    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.

     

    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:

     

    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,

     

    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

     

    if
      to the
      Company, to the Company at its address set forth at the beginning hereof to
      the
      attention of the Office of the Treasurer, 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.

     

    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
      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 would contest the original, or
      from
      introducing evidence to demonstrate the inaccuracy of any such
      reproduction.

     

    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 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 (d) constitutes financial statements delivered
      to you under Section 7.1 that are otherwise publicly available. You will
      maintain the confidentiality of such Confidential Information in accordance
      with
      procedures adopted by you in good faith to protect confidential information
      of
      third parties delivered to you, provided that you may deliver or disclose
      Confidential Information to (i) your directors, trustees officers,
      employees, agents, attorneys and Affiliates (to the extent such disclosure
      reasonably relates to the administration of the investment represented by your
      Notes), (ii) your financial advisors and other professional advisors who agree
      to hold confidential the Confidential Information substantially in accordance
      with the terms of this Section 20, (iii) any other holder of any Note,
      (iv) any Institutional Investor to which you sell or offer to sell such
      Note or any part thereof or any participation therein (if such Person has agreed
      in writing prior to its receipt of such Confidential Information to be bound
      by
      the provisions of this Section 20), (v) any Person from which
      you
      offer to purchase any security of the Company (if such Person has agreed in
      writing prior to its receipt of such Confidential Information to be bound by
      the
      provisions of this Section 20), (vi) any federal or state regulatory
      authority having jurisdiction over you, (vii) the 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 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.

     

    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.

     

    RELEASE
      OF SUBSIDIARY GUARANTOR.

     

    You
      and
      each subsequent holder of a Note agree to release any Subsidiary Guarantor
      from
      the Subsidiary Guaranty (i) if such Subsidiary Guarantor ceases to be such
      as a
      result of a Disposition permitted by Section 10.3 or (ii) at such time as the
      banks party to the Credit Agreement release such Subsidiary from the Bank
      Guarantees; provided, however, that you and each subsequent holder will not
      be
      required to release a Subsidiary Guarantor from the Subsidiary Guaranty upon
      such Subsidiary’s release from the Bank Guarantees if (A) a Default or Event of
      Default has occurred and is continuing, (B) such Subsidiary Guarantor is to
      become a borrower under the Credit Agreement or (C) such release is
      part of
      a plan of financing that contemplates such Subsidiary Guarantor guaranteeing
      any
      other Indebtedness of the Company. Your obligation to release a Subsidiary
      Guarantor from the Subsidiary Guaranty is conditioned upon your prior receipt
      of
      a certificate from a Senior Financial Officer of the Company stating that none
      of the circumstances described in clauses (A), (B) and (C) above are
      true.

     

    MISCELLANEOUS.

     

    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.

     

    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.

     

    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.

     

    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.

     

    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.

     

    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.

     

    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,

    

    

    ENERGIZER
      HOLDINGS, INC.

    

    By:
      _______________________

    Name:
      

    Title:
      

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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
      consolidated stockholders’ equity.

    “Affiliate”means,
      at
      any time, and with respect to any Person, any other Person that at such time
      directly or indirectly through one or more intermediaries Controls, or is
      Controlled by, or is under common Control with, such first Person. As used
      in
      this definition, “Control” means the possession, directly or indirectly, of the
      power to direct or cause the direction of the management and policies of a
      Person, whether through the ownership of voting securities, by contract or
      otherwise. Unless the context otherwise clearly requires, any reference to
      an
“Affiliate” is a reference to an Affiliate of the Company.

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

    “Asset
      Securitization Transaction”means
      a
      transaction in which the Company or any Restricted Subsidiary sells receivables
      or other assets to a special purpose entity satisfying the following criteria:
      (i) such sale is pursuant to an agreement evidencing the intent of the parties
      that for accounting and all other purposes, such sale is to be treated as a
      sale
      by the Company and a purchase by such special purpose entity (and not as a
      lending transaction); (ii) the purchaser receives an opinion of nationally
      recognized counsel to the effect that, under, applicable bankruptcy, insolvency
      and similar laws (subject to assumptions and qualifications customary for
      opinions of such type), such transaction will be treated as a true sale and
      not
      as a lending transaction and that the assets of such purchasing special purpose
      entity will not be consolidated with the assets of the selling entity, the
      Company or any Affiliate of the Company; (iii) the parties to such transaction
      shall treat such transaction as a sale under FAS 125 and for all other
      accounting purposes; (iv) the purchase price shall be an amount that represents
      the reasonably equivalent value of the receivables or other assets subject
      thereto (determined as of the date of such sale); and (v) such sale shall be
      without recourse to the Company or such Restricted Subsidiary, except to the
      extent of normal and customary representations and warranties (in no event
      relating to collectibility or ultimate payment of receivables), made by the
      Company or such Restricted Subsidiary as of the date of such sale and not as
      continuing representations and warranties, and any other indicia of recourse
      (in
      no event relating to collectibility or ultimate payment of receivables)
      substantially comparable to those permitted in securitization transactions
      generally and consistent with the opinion referred to in clause
      (ii).

    “Bank
      Guarantees”means
      the
      Guarantees of the Subsidiary Guarantors of Indebtedness outstanding under the
      Credit Agreement, as such Guarantees or agreements may be amended, restated
      or
      otherwise modified, and any successors thereto.

    “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, New York are required or authorized to be
      closed.

    “Capital
      Lease”means,
      at
      any time, a lease with respect to which the lessee is required concurrently
      to
      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
      Energizer Holdings, Inc., a Missouri corporation.

    “Confidential
      Information”is
      defined in Section 20.

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

    “Consolidated
      Net Income”means,
      for any period, the net income of the Company and its Restricted Subsidiaries
      for such period determined on a consolidated basis in accordance with GAAP,
      or
      as calculated on a pro forma basis in accordance with Article XI of Securities
      and Exchange Commission Regulation S-X for any period, or portion thereof,
      where
      pro forma presentation is required pursuant to rules or regulations of the
      Securities and Exchange Commission.

    “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.

    “Credit
      Agreement”means
      the
      Revolving Credit Agreement dated as of November 16, 2004 among the Company,
      the
      lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent,
      Citibank, N.A., as documentation agent, and Bank of America, N.A., as
      syndication agent, as such agreement may be hereafter amended, restated,
      supplemented, refinanced, increased or reduced from time to time, and any
      successor credit agreement or similar facility; provided, that such term shall
      not include (i) the Multicurrency Revolving Credit Facility Agreement dated
      August 24, 2005 among Energizer Asia Investments Pte. Ltd., a Singapore
      Subsidiary of the Company, Energizer Singapore Pte. Ltd., a Singapore Subsidiary
      of the Company, Sonca Products Ltd., a Hong Kong Subsidiary of the Company,
      and
      Schick Asia Limited, a Hong Kong Subsidiary of the Company, as borrowers, the
      Company as guarantor, the lenders party thereto, Citigroup Global Markets
      Singapore Pte. Ltd. and Standard Chartered Bank as arranger, with Citicorp
      Investment Bank (Singapore) Limited, as agent, or (ii) any other credit facility
      of any Subsidiary that is not organized under the laws of the United States
      or
      any state thereof (including the District of Columbia) or any possession of
      the
      United States.

    “Debt
      to EBITDA Ratio”means,
      as
      of any date, the ratio of Consolidated Indebtedness (as of the date of
      determination) to EBITDA (for the Company’s then most recently completed four
      fiscal quarters).

    “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
      in
      Chicago, Illinois as its “base” or “prime” rate.

    “Disposition”is
      defined in Section 10.3.

    “Domestic
      Restricted Subsidiary”means
      any
      Restricted Subsidiary organized under the laws of the United States or any
      state
      thereof (including the District of Columbia).

    “EBITDA”means,
      for any period, Consolidated Net Income for such period, plus, to the extent
      deducted in calculating Consolidated Net Income, (i) all provisions for federal,
      state and other income taxes, (ii) extraordinary losses, (iii) losses on
      disposition of discontinued operations, (iv) interest expense, (v) depreciation
      and amortization expense and (vi) other noncash charges, and minus, to the
      extent added in calculating Consolidated Net Income, (x) extraordinary gains,
      (y) gains on disposition of discontinued operations and (z) other noncash
      gains.

    “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.

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

    “Governmental
      Authority”
      means
      the government of the United States of America or any state or other political
      subdivision thereof, or any jurisdiction in which the Company or any Subsidiary
      conducts all or any part of its business, or which asserts jurisdiction over
      any
      properties of the Company or any Subsidiary, or any entity exercising executive,
      legislative, judicial, regulatory or administrative functions of, or pertaining
      to, any such government.

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

    to
      purchase such indebtedness or obligation or any property constituting security
      therefor;

     

    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;

     

    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

     

    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.

    

    “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 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,

    its
      liabilities for borrowed money;

     

    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);

     

    all
      liabilities appearing on its balance sheet in accordance with GAAP in respect
      of
      Capital Leases; and

     

    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);

     

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

     

    “INHAM
      Exemption”is
      defined in Section 6.2(e).

    “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, any broker or dealer, or any
      other similar financial institution or entity, regardless of legal
      form.

    “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 ability of any Subsidiary
      Guarantor to perform its obligations under the Subsidiary Guaranty, or (d)
      the
      validity or enforceability of this Agreement, the Notes or the Subsidiary
      Guaranty.

    “Memorandum”is
      defined in Section 5.3.

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

    “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.

    “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) Indebtedness of
      Restricted Subsidiaries that are not Subsidiary Guarantors on such date (other
      than Indebtedness owed to the Company or another Restricted Subsidiary), (b)
      Indebtedness of the Company guaranteed by any Restricted Subsidiary that is
      not
      a Subsidiary Guarantor and (c) Indebtedness of the Company and its Domestic
      Restricted Subsidiaries secured by Liens not otherwise permitted by
      Sections 10.2(a) through (i) on such date. For the avoidance of doubt,
      Indebtedness outstanding under the Multicurrency Revolving Credit Facility
      Agreement dated August 24, 2005 among Energizer
      Asia Investments Pte. Ltd., a Singapore Subsidiary of the Company, Energizer
      Singapore Pte. Ltd., a Singapore Subsidiary of the Company, Sonca Products
      Ltd.,
      a Hong Kong Subsidiary of the Company, and Schick Asia Limited, a Hong Kong
      Subsidiary of the Company, as borrowers, the Company as guarantor, the lenders
      party thereto, Citigroup Global Markets Singapore Pte. Ltd. and Standard
      Chartered Bank as arranger, with Citicorp Investment Bank (Singapore) Limited,
      as agent, shall be deemed to constitute Priority Debt.

    “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”is
      defined in Section 6.2(d).

    “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:

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

    current
      assets arising from the sale of goods or services in the ordinary course of
      business;

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

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

    Investments
      in treasury stock;

    Investments
      in:

     

    obligations,
      maturing within one year from the date of acquisition, of or fully guaranteed
      by
      the United States of America or an agency thereof;

     

    state
      or
      municipal securities, maturing within one year from the date of acquisition,
      that are rated in one of the top two rating classifications by at least one
      nationally recognized rating agency;

     

    certificates
      of deposit or banker’s acceptances maturing within one year from the date of
      acquisition of or issued by Bank of America 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;

     

    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 credit rating agency of recognized national standing;

     

    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); and

     

    money
      market instrument programs that are properly classified as current assets 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 Subsidiaries and
      (b)
      that the Company has not designated an Unrestricted Subsidiary by notice in
      writing given to the holders of the Notes.

    “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
      2005-A Notes”is
      defined in Section 1.1. 

    “Series
      2005-B Notes”is
      defined in Section 1.1.

    “Series
      2005-C Notes”is
      defined in Section 1.1.

    “Series
      2005-D Notes”
      is
      defined in Section 1.1.

    “Significant
      Restricted Subsidiary”means,
      as
      of the date of determination, any Subsidiary Guarantor and any other Restricted
      Subsidiary the assets or revenues of which account for (i) more than 15% of
      the
      Consolidated Total Assets of the Company and its Restricted Subsidiaries at
      the
      end of the most recently ended fiscal period or (ii) more than 15% 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, limited liability company or joint venture if more than a 50%
      interest in the profits or capital thereof is owned by such Person or one or
      more of its Subsidiaries or such Person and one or more of its Subsidiaries
      (unless such partnership can and does ordinarily take major business actions
      without the prior approval of such Person or one or more of its Subsidiaries).
      Unless the context otherwise clearly requires, any reference to a “Subsidiary”
      is a reference to a Subsidiary of the Company.

    “Subsidiary
      Guarantor”is
      defined in Section 1.1.

    “Subsidiary
      Guaranty”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 has been so designated by notice in writing
      given
      to the holders of the Notes.

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

    “Wholly-Owned
      Restricted Subsidiary”means,
      at
      any time, any Restricted 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 Restricted
      Subsidiaries at such time.Exhibit 10.1

 

Execution Copy

 

[Letterhead of
Golden Star Resources Ltd.]

 

September 27,
2005

 

St. Jude
Resources Ltd.

Suite 200,
5405 - 48th Ave

Delta, British
Columbia, Canada

V4K 1W6

Fax: 1 604 940
6566

 

Attention: Mr. Michael
Terrell, President & C.E.O.

 

Dear Sirs:

 

	
  RE:

  	
  Proposed Business
  Combination between Golden Star Resources Ltd. and St. Jude Resources Ltd.

  

 

 

This letter agreement (the “Agreement”)
sets forth the terms and conditions under which Golden Star Resources Ltd. (“Golden Star”) and St. Jude Resources Ltd. (“St. Jude”) will complete a business combination (the “Business Combination”) whereby Golden Star will acquire 100%
of the issued and outstanding common shares of St. Jude (“St. Jude Common Shares”) and other
securities of St. Jude, subject to the terms and conditions herein contained.
For the purpose hereof, St. Jude and Golden Star are collectively referred to
as the “Parties” and individually
as a “Party” and “Material
Adverse Effect” means, in respect of a Party, any change, effect, event or occurrence
which is reasonably expected to have a material adverse effect on the business,
affairs, properties, assets, liabilities, capitalization, results of
operations, operations, prospects or condition (financial or otherwise) of the
Party and its subsidiaries (individually a “Subsidiary” and collectively, the “Subsidiaries”) taken as a whole, other than
any change, effect, event or occurrence relating to: (i) the global
economy or securities markets in general; (ii) the price of gold; (iii) the
rate at which Canadian dollars or United States dollars can be changed for any
foreign currency; (iv) the gold mining industry in general and not
specifically relating to or affecting such Party; (v) the general
political and business climate related to carrying on business in Ghana; and (vi) any
change in the trading price of the securities of a Party immediately following
and reasonably attributable to the disclosure of the Business Combination.

 

1.             THE BUSINESS COMBINATION

 

1.1          Basis of the Business Combination

 

The Parties
intend to proceed with a court sanctioned plan of arrangement of St. Jude
effected pursuant to the Canada Business
Corporations Act whereby Golden Star will directly or indirectly
acquire all of the issued and outstanding St. Jude Common Shares (and other
securities of St. Jude) following which St. Jude will become a direct or
indirect wholly-owned subsidiary of Golden Star. Notwithstanding the foregoing,
the ultimate form of Business Combination will be mutually determined by Golden
Star and St. Jude, each acting reasonably, based on tax, securities and
corporate law and other considerations. The Parties intend that the Business
Combination will be completed by December 16, 2005 (the “Effective Date”). Subject to the terms and
conditions of this Agreement, the Parties shall complete the Business
Combination on the following terms: (a) the holders of St. Jude Common
Shares will exchange their St. Jude Common Shares for common shares of Golden
Star (the “Golden Star Common Shares”)
on the basis of 0.72 Golden Star Common Shares for each one St. Jude Common
Share; and (b) the outstanding warrants and options of St. Jude (the “St. Jude Convertible Securities”) shall be exchanged for Golden Star
warrants or options, such that each holder will be entitled to receive

 

 

on the exercise thereof that number of Golden Star
Common Shares that is equal to (w) the number of St. Jude Common Shares that
would otherwise have been issuable upon the exercise thereof multiplied by (x)
0.72, with the exercise price thereof being adjusted to be the number that is
equal to (y) the exercise price of the applicable St. Jude Convertible Security
divided by (z) 0.72, provided that such options and warrants shall not expire
prior to the date on which the respective St. Jude Convertible Securities were
to expire pursuant to their respective terms or, in the event of St. Jude
options that would
otherwise expire on the completion of the Business Combination as a result of a
holder thereof ceasing to be an employee, officer or director concurrent with
the completion of the Business Combination, subject to
receipt of any necessary regulatory approvals and provided that no majority of
the minority St. Jude securityholder approval is required, the expiry date of
such options will be extended to the date that is 90 days after the date of
completion of the Business Combination.

 

1.2          Structure Subsequent to the
Business Combination

 

In conjunction
with the completion of the Business Combination:

 

(a)           the
number of directors of Golden Star shall be increased to seven (7). All of the
current directors of Golden Star shall remain directors of Golden Star and St.
Jude shall be entitled to nominate one nominee (who shall be the Chief
Executive Officer of St. Jude) to the board of directors of Golden Star and,
subject to any applicable legal requirements, Golden Star shall propose the
Chief Executive Officer of St. Jude as a director to its shareholders at its
next annual general meeting and shall solicit proxies in favour of his election
to the board of directors at such meeting;

 

(b)           Golden
Star shall determine: (i) which personnel of St. Jude will be appointed or
retained upon the completion of the Business Combination; and (ii) which
offices and personnel of St. Jude in West Africa will be maintained or retained
subsequent to the Business Combination;

 

(c)           subject
to clause (b) above, St. Jude shall use all reasonable efforts to cause
all directors and officers of St. Jude who will not be retained to resign and
sign releases in favour of St. Jude concurrently with the completion of the
Business Combination; and

 

(d)           the
existing office of St. Jude in Vancouver, British Columbia will be phased out
during the remainder of the existing lease.

 

1.3          Definitive Agreement

 

The Parties
agree to negotiate in good faith and use best efforts to enter into a
definitive agreement providing for the Business Combination consistent with the
terms hereof (the “Definitive Agreement”)
as soon as practicable and, in any event, on or before October 17, 2005,
which shall be in form and substance satisfactory to Golden Star and St. Jude
and will contain, in addition to the provisions of this Agreement, other terms,
conditions, representations and warranties, covenants, indemnifications and
closing conditions that are customary for a transaction of this nature.

 

2.             REPRESENTATIONS AND WARRANTIES

 

2.1          Representations
and Warranties of St. Jude

 

St. Jude
hereby represents and warrants to Golden Star the following and acknowledges
that Golden Star is relying upon the representations and warranties in
connection with entering into this Agreement and participating in the Business
Combination:

 

2

 

(a)           as at September 12, 2005, its authorized capital consists of an
unlimited number of Class A common shares (voting) and an unlimited number
of Class B common shares (non-voting), of which 42,314,324 Class A common shares are issued and
outstanding and no Class B common shares are issued and outstanding;

 

(b)           to the best of St. Jude’s knowledge, other than
Michael Terrell (the “Principal Holder”)
and Crew Gold Corporation and MacKenzie Financial, no shareholder owns more
than 5% of the outstanding St. Jude Common Shares (on either an undiluted or
fully-diluted basis).  As at September 12,
2005, to the best of St. Jude’s knowledge, the Principal Holder directly or
indirectly beneficially owns or controls 2,630,850 St. Jude Common Shares and
800,000 options to purchase an aggregate of 800,000 St. Jude Common Shares;

 

(c)           it has no, nor will there be immediately prior to the completion of
the Business Combination any, options, warrants, conversion privileges, calls
or other rights, agreements, arrangements, commitments or obligations of it to
issue, sell or acquire any securities of it or securities or obligations of any
kind convertible into or exercisable or exchangeable for any securities of it
other than: (i) options to purchase an aggregate of 3,888,300 St. Jude
Common Shares issued pursuant to St. Jude’s Option Plan; (ii)  warrants to purchase an aggregate of
4,500,000 St. Jude Common Shares, and (iii) compensation options to
purchase an aggregate of 895,660 St. Jude Common Shares. The Shareholder Rights
Plan of St. Jude has terminated and is void and of no further effect, and no
successor shareholder rights plan is in force;

 

(d)           no person (which word
shall have a broad legal interpretation for the purpose of this Agreement) has
any agreement or option or any right or privilege capable of becoming an
agreement or option for the purchase from St. Jude of any material assets of
St. Jude or any of its Subsidiaries and neither St. Jude nor any of its
Subsidiaries has any agreement or option or any right or privilege capable of
becoming an agreement or option for the purchase from any person of any
securities or any assets which could reasonably be expected to be material to
St. Jude;

 

(e)           the aggregate of all
severance payments payable by St. Jude to its directors and officers under
agreements existing on the date hereof (assuming that all of such directors and
officers were to be terminated upon the completion of the Business Combination)
does not exceed CDN$1 million;

 

(f)            since December 31,
2001, it has filed with all applicable securities regulatory authorities and
stock exchanges all documents required to be filed under applicable securities
laws and stock exchange rules and all such documents at the time filed,
except to the extent that any statements contained in any such document has
been modified or superseded by a later document filed with the applicable
securities regulatory authorities and stock exchanges, did not contain any
misrepresentation (as defined in the Securities
Act (Ontario) or the Securities
Act (British Columbia)) and complied in all material respects with
the requirements of applicable laws;

 

(g)           all
members of the board of directors of St. Jude participated in the meeting held
to consider this Agreement and the Business Combination and the other
transactions contemplated hereby and have unanimously approved this Agreement,
the Business Combination and the other transactions contemplated hereby and
have unanimously determined that the Arrangement is fair to the holders of St.
Jude Common Shares (the “St. Jude
Shareholders”) and is in the best interests of St. Jude, and have
unanimously resolved to recommend that the St. Jude Shareholders vote in favour
of the Business Combination, and that each member of St. Jude’s board of
directors has advised that he intends to vote all St. Jude Common Shares held
by such director in favour of the resolution to approve the Business
Combination and will, accordingly, so represent in the St. Jude information
circular related to an St. Jude Meeting (as defined below); and

 

3

 

(h)           the board of directors of St. Jude has received on
or before the date hereof advice from St. Jude’s financial advisors indicating
that the share exchange ratio (set forth in Section 1.1) for the Business
Combination is fair, from a financial point of view, to the St. Jude
Shareholders.

 

2.2          Representations and
Warranties of Golden Star

 

Golden Star
hereby represents and warrants to St. Jude the following and acknowledges that
St. Jude is relying upon the representations and warranties in connection with
entering into this Agreement and participating in the Business Combination:

 

(a)           as at September 20,
2005, its authorized and issued capital consists of an unlimited number of
Golden Star Common Shares and an unlimited number of first preferred shares, of
which 142,887,394 Golden Star Common Shares and nil first preferred shares are
issued and outstanding;

 

(b)           as at September 20,
2005, it has no options, warrants, conversion privileges, calls or other
rights, agreements, arrangements, commitments or obligations of it to issue,
sell or acquire any securities of it or securities or obligations of any kind
convertible into or exercisable or exchangeable for any securities of it other
than: (i) employee stock options to purchase 5,438,035 Golden Star Common
Shares; (ii) warrants to purchase 8,448,334 Golden Star Common Shares; and
(iii) debentures which are convertible into an aggregate of 11,111,111
Golden Star Common Shares;

 

(c)           since December 31, 2001, it has filed with
all applicable securities regulatory authorities and stock exchanges all
documents required to be filed under applicable securities laws and stock
exchange rules and all such documents at the time filed, except to the
extent that any statements contained in any such document has been modified or
superseded by a later document filed with the applicable securities regulatory
authorities and stock exchanges, did not contain any misrepresentation (as
defined in the Securities Act (Ontario)
or the Securities Act (British
Columbia)) and complied in all material respects with the requirements of
applicable laws; and

 

(d)           as at the date hereof, no person has any agreement
or option or any right or privilege capable of becoming an agreement or option
for the purchase from Golden Star of any material assets of Golden Star or any
of its Subsidiaries and neither Golden Star nor any of its Subsidiaries has any
agreement or option or any right or privilege capable of becoming an agreement
or option for the purchase from any person of any assets which could reasonably
be expected to be material to Golden Star.

 

3.             COVENANTS OF THE PARTIES

 

3.1          Consultation

 

The Parties
agree to jointly issue a press release in mutually agreeable form with respect
to the Business Combination upon the execution of this Agreement. Each Party agrees to consult with
the other Party before issuing, and shall provide the other Party with a
reasonable prior opportunity to review and comment on, any other press release
or public statement with respect to the Business Combination. St. Jude will
consult with Golden Star prior to issuing any press release or making any
announcement regarding its mineral reserves or resources and, subject to
applicable securities laws, St. Jude agrees that it will not issue any press
release or make any announcement regarding its mineral reserves or resources
without the prior written consent of Golden Star, such consent not to be
unreasonably withheld.

 

4

 

3.2          Ordinary
Course of Business

 

Each Party
covenants and agrees with the other Party that, except as contemplated in this Agreement or the Business Combination, until the
Effective Date or the day upon which this Agreement is terminated pursuant to Section 6,
whichever is earlier:

 

(a)           it shall, and shall cause its Subsidiaries to,
conduct its and their respective businesses only in, and not take any action
other than in, the usual, ordinary and regular course of business and
consistent with past practice and in accordance with applicable laws and for
greater certainty, until the Effective Date, it shall not and shall not allow
any Subsidiary to, without the prior written consent of other Party (such
consent not to be unreasonably withheld): (i) in the case of St. Jude,
make any commitments in excess of, or enter into any contracts or group of
related contracts with a value or aggregate value (as the case may be) in
excess of, US$50,000; (ii) in the case of St. Jude, make any changes to
the senior management or senior personnel of St. Jude or any Subsidiary; and (iii) undertake
or make any decision or action which could be material to the business of the
Party and/or any Subsidiary or which could reasonably be expected to have a
Material Adverse Effect;

 

(b)           it shall not, and shall not permit any of its
Subsidiaries to, take any action, permit any action to be taken or refrain from
taking any action which would be inconsistent with this Agreement or which
could interfere with or be inconsistent with or could reasonably be expected to
impede the completion of the Business Combination;

 

(c)           it shall promptly notify the other Party of any
breach of any provision hereof, any Material Adverse Effect or any change,
effect, event or occurrence which could reasonably be expected to result in a
Material Adverse Effect or impede the completion of the Business Combination;

 

(d)           in the case of St. Jude, it shall not, and shall
not permit any Subsidiary to, directly or indirectly: (i) issue, sell,
pledge, lease, dispose of, redeem, purchase or encumber (or agree to do any of
the foregoing) any shares, options, warrants, calls, conversion privileges,
rights of any kind to acquire any shares or securities, derivative securities,
debt securities or other securities of it or any of its Subsidiaries, other
than the issue of St. Jude Common Shares pursuant to the exercise of stock
options and warrants which are outstanding on the date hereof; (ii) make
any change to its share capital; (iii) acquire or agree to acquire any
person, or acquire or dispose of or agree to acquire or dispose of any assets
which in each case are individually or in the aggregate material; (iv) satisfy
or settle any claims or liabilities which individually or in the aggregate are
material; (v) relinquish or modify any contractual rights which
individually or in the aggregate are material; or (vi) incur or commit to
provide guarantees, incur any indebtedness for borrowed money or issue any debt
securities;

 

(e)           in the case of St. Jude, it shall not, and shall
cause each of its Subsidiaries to not, enter into or modify any remuneration
terms or benefit plans, or grant any bonuses, salary increases, stock options,
pension or supplemental pension benefits, profit sharing, retirement
allowances, severance agreements, deferred or other compensation, incentive
compensation, severance or termination pay to, or make any loan to, any of its
directors, officers, employees, consultants, contractors or agents;

 

(f)            in the case of St. Jude,
it shall, and shall cause each of its Subsidiaries to, use its reasonable
commercial efforts, to preserve intact its business and goodwill and to
maintain existing relationships with officers, employees, suppliers, customers,
governmental authorities and others having business relationships with it and
its Subsidiaries; and

 

5

 

(g)           in the case of Golden Star, it shall not directly
or indirectly without the prior consent of St. Jude (such consent not to be
unreasonably withheld) make any amendment to its articles to change its share
capital.

 

3.3          Covenants
Regarding Non-Solicitation

 

3.3.1        St. Jude shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, through any officer, director,
employee, advisor, representative or agent, (a) solicit, initiate,
facilitate, engage in or respond to or encourage (including by way of
furnishing information or entering into any form of agreement, arrangement or
understanding) any inquiries, proposals or transactions
involving St. Jude and/or its Subsidiaries regarding any merger, amalgamation,
arrangement, restructuring, take-over bid, tender offer, exchange offer, sale
or purchase of substantial assets, sale or purchase of treasury shares, any
equity interest or rights or any other interests therein or thereto, business
combinations, liquidations, reorganizations or recapitalizations or similar
transactions or series of related or similar transactions which would have the
effect of any of the foregoing (any of the foregoing inquiries, proposals or
transactions being referred to as an “Acquisition Proposal”);
(b) encourage or participate in any discussions or negotiations regarding
any Acquisition Proposal; (c) accept, approve or recommend any Acquisition
Proposal; or (d) cause St. Jude or any Subsidiary to enter into any
agreement, arrangement or understanding related to any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent the board of directors of St.
Jude which receives an unsolicited and bona fide Acquisition
Proposal after the date hereof in respect of it, from considering, negotiating,
approving or recommending to its shareholders an Acquisition Proposal which the
board of directors of St. Jude determines in good faith, after consultation
with its financial and legal advisors and after receiving written advice from
counsel (copies of which shall forthwith be provided to Golden Star) that such
action would be a proper exercise of its fiduciary duties under applicable
laws, would, if consummated in accordance with its terms, result in a
transaction: (i) more favourable to its shareholders than the Business Combination (as it may be amended pursuant to Section 3.4); (ii) having
consideration with a value per St. Jude Common Share greater than the value per
St. Jude Common Share provided by the Business Combination (as it may be
amended pursuant to Section 3.4); (iii) reasonably capable of being
completed within a reasonable period of time; and (iv) which is not
contingent upon financing (any such Acquisition Proposal being referred to as a
“Superior Proposal”).

 

3.3.2        From and after the date hereof, St. Jude shall
immediately cease and cause to be terminated in writing any existing
discussions or negotiations with any person (other than Golden Star) with
respect to any potential Acquisition Proposal and shall, subject to Section 3.3.4,
cease to provide any other person with access to information concerning St.
Jude and its Subsidiaries and exercise all rights it has to require the return
of all confidential information. St. Jude agrees not to release or permit the
release of any person from, or waive, any confidentiality, non-solicitation or
standstill agreement to which such person is a party, unless the board of
directors of St. Jude has determined that such person has made a Superior
Proposal.

 

3.3.3        St. Jude shall promptly notify Golden Star orally
and in writing within 24 hours of any Acquisition Proposal or any amendment to
an Acquisition Proposal being received directly or indirectly by St. Jude, or
any request for non-public information relating to St. Jude or any of its
Subsidiaries, as the case may be, in connection with such an Acquisition
Proposal or for access to the properties, books and/or records of St. Jude or
any Subsidiary, by any person that informs St. Jude or such Subsidiary that it
is considering making, or has made, an Acquisition Proposal. Such written
notice shall include a copy of any written Acquisition Proposal and all
amendments thereto or, in the absence of a written Acquisition Proposal, a
description of the material terms and conditions thereof, in either case
including the identity of the person making the Acquisition Proposal.

 

6

 

3.3.4        If St. Jude receives a request for non-public
information from a person who has made or intends to make an Acquisition
Proposal and the board of directors of St. Jude determines in good faith after
consultation with financial and legal advisors that such Acquisition Proposal is, or if made would be, a Superior
Proposal, then, and only in such case, St. Jude may, subject to the execution
by such person of a confidentiality agreement containing standstill and other
provisions substantially the same as
those contained in the Confidentiality Agreement (as defined in Section 7.3), provide such person with access to non-public confidential
information regarding St. Jude; provided that St. Jude shall send a copy of any
such confidentiality agreement (including the identity of the person who has
entered into such agreement) to Golden Star as soon as practicable and in any
event within 24 hours of its execution and shall, as soon as practicable and in
any event within 24 hours, provide Golden Star with a list and copies of all
information provided to such person that was not previously provided to Golden
Star and immediately provide Golden Star with all other information that was
provided to such person.

 

3.3.5        St. Jude shall ensure that its officers, directors
and employees and those of its Subsidiaries and any financial, legal and other
advisors, agents and representatives retained by St. Jude are aware of the
provisions of this Section 3.3, and St. Jude shall be responsible for any
breach of this Section by such persons. For greater certainty, any
amendment to an Acquisition Proposal shall constitute a new Acquisition
Proposal for the purposes of this Section 3.3.

 

3.4          Notice of
Superior Proposal Determination

 

3.4.1        If St.
Jude has fully complied with Section 3.3 and this Section 3.4, St.
Jude may accept, approve, recommend or enter into any agreement, understanding
or arrangement in respect of an Acquisition Proposal and withdraw or modify in
a manner adverse to Golden Star its recommendation of the approval of the
Business Combination, if and only if it:

 

(a)           provides to Golden Star: (i) written notice
that the board of directors of St. Jude has determined that it has received and
is prepared to accept a Superior Proposal; (ii) a copy of any agreement or
other document in respect of such Superior Proposal as executed by the person
making the Superior Proposal, in each case as soon as possible but in any event
not less than five full business
days prior to acceptance of the Superior Proposal by the board of directors of
St. Jude; and (iii) in the case of an Acquisition Proposal that includes
non-cash consideration, the value or range of values attributed by the board of
directors of St. Jude, in good faith, for such non-cash consideration after
consultation with its financial advisors;

 

(b)           provides Golden Star with an opportunity (but not
the obligation), during the five
business day period referred to in Subsection 3.4.1(a) to propose to
amend this Agreement to provide for consideration having a value equivalent to
or more favourable to the St. Jude Shareholders than that of the Superior
Proposal with the result that the Superior Proposal would cease to be a
Superior Proposal; and

 

(c)           subject to Subsection 3.4.2, terminates this
Agreement pursuant to Subsection 6.1(d) and pays to Golden Star the
St. Jude Break Fee (as defined below in Subsection 5.1) as contemplated by
Section 5.2.

 

3.4.2        In the event that Golden Star agrees to amend this
Agreement in the manner described in Subsection 3.4.1, the board of
directors of St. Jude shall consider the terms of the proposed amendment, and: (i) if
the board of directors of St. Jude concludes the Superior Proposal is no longer
a Superior Proposal given the terms of the proposed amendment, St. Jude shall
not implement the proposed Superior Proposal and shall not terminate this
Agreement pursuant to Subsection 6.1(d), and shall agree to the proposed
amendments to this Agreement; or (ii) if the board of directors of St.
Jude concludes that the Acquisition Proposal would nonetheless remain a
Superior Proposal, St. Jude shall terminate this

 

7

 

Agreement in accordance with Subsection 6.1(d) and
concurrently pay to Golden Star the St. Jude Break Fee in accordance with Section 5.2,
and only thereafter St. Jude may enter into an agreement in order to implement
the Superior Proposal.

 

3.5          Access to
Information

 

Subject to the provisions of the Confidentiality
Agreement and applicable laws, upon reasonable notice, each Party shall,
and shall cause each of its Subsidiaries to, afford the other Party’s officers,
employees and advisors access, during normal business hours from the date
hereof and until the earlier of the execution of the Definitive Agreement and
the termination of this Agreement, to its properties, books, contracts and
records as well as to its management personnel, and all material information
concerning its business, properties and personnel as the other Party may
reasonably request. In addition, after the execution of the Definitive
Agreement and until the Effective Time: (i) St. Jude shall provide to
Golden Star reports of its activities including, but not limited to monthly
operating reports and monthly financial reports, as well as full and open
access on a real time basis to its offices, books and records; and (ii) Golden
Star will provide to St. Jude a copy of the monthly operating report that it
provides to Golden Star’s board of directors.

 

3.6          Covenants
in Respect of the Business Combination

 

Each Party
covenants and agrees that, except as otherwise contemplated in this Agreement,
until
the earlier of the Effective Date and the date upon which this Agreement is
terminated, it will:

 

(a)           in a timely and expeditious manner, take all
necessary actions in order to enable it to participate in and effect the
Business Combination (including the execution of the Definitive Agreement on or
before October 17, 2005) and use all commercially reasonable efforts to
satisfy (or cause the satisfaction of) the conditions precedent to the
obligations of the other Party hereunder to the extent the same are within its
control, and shall take, do, or cause to be taken or done, all other actions
and other things necessary, proper or advisable under all applicable laws to
complete the Business Combination, including using its commercially reasonable
efforts to: (i) apply for and obtain all necessary waivers, consents,
orders, authorizations and approvals, required, and make all necessary filings
and applications under, all applicable laws and with all applicable regulatory
authorities (including in West Africa) and stock exchanges; (ii) co-operate
with the other Party in connection with the performance by it of its
obligations hereunder; (iii) in the case of St. Jude, convene and hold a
meeting (a “St. Jude Meeting”) of holders of St. Jude Common Shares and
holders of St. Jude Convertible Securities, voting as single class, for the
purpose of considering the Business Combination in compliance with applicable
laws as soon as reasonably practicable and no later than December 7, 2005
or such later date (but in any case, on or before March 16, 2006) as the
Parties, acting reasonably, may agree to in writing; and (iv) in the case
of St. Jude, prepare in consultation and co-operation with Golden Star and in
compliance with applicable laws, all communications to the St. Jude
Shareholders required by applicable laws in connection with the Business
Combination, including an information circular in respect of the St. Jude
Meeting;

 

(b)           except for non-substantive communications, furnish
promptly to the other Party a copy of each document or communication delivered
to, filed with or received by, the Party under applicable laws or otherwise,
and any reports of dealings with regulatory agencies or other governmental
authorities in connection with the Business Combination or any of the
transactions contemplated hereby;

 

(c)           in the case of St. Jude, subject only to Section 3.4
and the fiduciary duties of the board of directors of St. Jude, recommend to
the St. Jude Shareholders that they approve the Business

 

8

 

Combination and solicit proxies from the St. Jude
Shareholders to vote in favour of approving the Business Combination; and

 

(d)           in the case of Golden Star, use its commercially
reasonable efforts to obtain the approval of the Toronto Stock Exchange and the
American Stock Exchange to list thereon the Golden Star Common Shares to be
issued to the St. Jude Shareholders pursuant to the Business Combination, and
to ensure that such Golden Star Common Shares are not subject to any statutory
hold period (subject only to restrictions on control block distributions) under
applicable securities laws in Canada.

 

4.             CONDITIONS

 

4.1          Mutual
Conditions

 

The obligations of the Parties to complete the
transactions contemplated hereby are subject to the fulfillment or waiver of
the following mutual conditions on or before the Effective Date or such other
time prior thereto as is specified below:

 

(a)           the execution by the Parties of the Definitive Agreement and other documents
related to the Business Combination as soon as practicable and, in any event,
no later than October 17, 2005;

 

(b)           the
Effective Date shall have occurred on or before December 16, 2005 or such later date (but
in any case, on or before March 16, 2006) as the Parties, acting
reasonably, may agree to in writing;

 

(c)           there shall be no proceeding of a judicial or
administrative nature or otherwise, brought by or before a governmental
authority, or any applicable laws proposed, enacted, promulgated or applied,
that directly or indirectly relates to the transaction contemplated hereby
which could reasonably be expected to result in a Material Adverse Effect on
the Party to which it applies or which could impede or interfere with the
completion of the Business Combination;

 

(d)           all regulatory approvals and approvals of any
other person (including any governmental authority or court, including those
necessary in West Africa), and the expiry of any waiting periods in connection
with, or required to permit, the completion of the Business Combination, the
failure to obtain which or the non-expiry of which could reasonably be expected
to cause a Material Adverse Effect on either Party or materially impede the
completion of the Business Combination, shall have been obtained or received on
terms which will not cause a Material Adverse Effect on either Party, and
reasonably satisfactory evidence thereof shall have been delivered to each
Party;

 

(e)           the
Golden Star Common Shares to be issued to the St. Jude Shareholders pursuant to
the Business Combination being approved for listing on the Toronto Stock
Exchange and the American Stock Exchange and such Golden Star Common Shares not being subject
to any statutory hold period (subject only to restrictions on control block
distributions) under applicable securities laws in Canada; and

 

(f)            the
holders of St. Jude Common Shares and the holders of the St. Jude Convertible
Securities, voting as a single class, shall have approved, in accordance with
applicable corporate laws, the Business Combination and approved or consented
to such other matters as either Golden Star or St. Jude, acting reasonably,
shall consider necessary or desirable in connection with the Business
Combination in the manner required thereby.

 

9

 

The foregoing conditions are for the mutual benefit of
each of the Parties and may be waived, in whole or in part, by any Party at any
time, provided that no Party may waive any mutual condition on behalf of the
other Party.

 

4.2          Several
Conditions

 

The obligation of each Party to complete the
transactions contemplated hereby is subject to the fulfillment by the other
Party of the following conditions on or before the Effective Date or such other
time prior thereto as is specified below:

 

(a)           each Party shall have complied in all material
respects with its covenants herein and the representations and warranties made
to such Party by the other Party in this Agreement shall be true and correct in
all material respects as of the Effective Date as if made on and as of such
date;

 

(b)           from the date hereof up to and including the
Effective Date, there shall have been no change, effect, event or occurrence
which, in the reasonable judgment of such Party, has or is reasonably likely or
expected to have a Material Adverse Effect on the other Party and/or its
Subsidiaries, on the Business Combination or on the combined business that will
result from the completion of the Business Combination; and

 

(c)           the
Party shall not have become aware of any misrepresentation, untrue statement of
a material fact, or an omission to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in the light of
the circumstances in which it was made and at the date it was made (after
giving effect to all subsequent filings in relation to all matters covered in
earlier filings) in any document filed by or on behalf of the other Party with
any regulatory authority or stock exchange in Canada or elsewhere or provided
by that Party to the other Party.

 

The foregoing conditions precedent are for the benefit
of each Party and may be waived, in whole or in part, by such Party in writing
at any time.

 

4.3          Golden Star
Conditions

 

The obligations of Golden Star to complete the
transactions contemplated hereby are subject to the fulfillment or waiver of
the following conditions on or before the time as is specified below:

 

(a)           on or before the date of entering into the
Definitive Agreement, Golden Star shall have entered into one or more lock-up
and support agreements (in form and substance satisfactory to Golden Star
acting reasonably) with the Principal Holder and the directors, senior officers
and other holders of St. Jude securities, which in the aggregate shall
represent not less than 10% of the issued and outstanding St. Jude Common
Shares, options and warrants and the parties thereto (other than Golden Star)
shall not have breached any of the representations, warranties or covenants of
such agreements. Such lock-up and support agreements will provide, among other
things, that such persons will not transfer their St. Jude securities without
the prior written consent of Golden Star and will irrevocably vote all such St.
Jude securities in favour of approving, or tender their St. Jude securities to,
the Business Combination or otherwise support the Business Combination,
provided that such agreements will only terminate on the termination of this
Agreement or the Definitive Agreement (if it has superseded this Agreement);

 

(b)           on or
prior to the date hereof, the board of directors of St. Jude shall have
unanimously approved the Business Combination and shall have unanimously
recommended the Business Combination to the St. Jude Shareholders, and on or
prior to the Effective Date shall not have withdrawn or changed any of its
recommendations in a manner adverse to Golden Star or which could impede

 

10

 

the
completion of the Business Combination, and shall not have made a
recommendation to the St. Jude Shareholders not to accept the Business Combination;

 

(c)           on or
prior to the Effective Date, holders of no greater than 5% of the outstanding
St. Jude Common Shares at the time of the vote shall have dissented to the
Business Combination; and

 

(d)           on or
prior to the Effective Date, Golden Star shall be satisfied, acting reasonably,
that all applications (including those disclosed to Golden Star in a letter of
even date herewith) made by St. Jude or its directors, officers, agents and
representatives on its behalf, for the acquisition or renewal of mineral
properties or licenses or permits related to mineral properties, are for the
benefit of and will be held by St. Jude upon completion of the Business
Combination.

 

The foregoing conditions are for the exclusive benefit
of Golden Star and may be waived, in whole or in part, by Golden Star at any
time.

 

5.             BREAK FEES AND EXPENSES

 

5.1          Interpretation

 

For the
purposes of this Section 5:

 

“St. Jude Break Fee” shall mean a fee of
CDN$4,000,000.

 

“St. Jude  Fee
Event” shall mean the occurrence of any of the following:

 

(a)           the
termination of this Agreement by Golden Star pursuant to Subsection 6.1(b)(i) (only
in the case of a breach by St. Jude of any provision of Sections 3.2(d), 3.3 or
3.4, but excluding any immaterial breach of a provision of Section 3.3
which would not have a material impact on the timing or likelihood of
completing the Business Combination) or Subsection 6.1(e);

 

(b)           the
termination of this Agreement pursuant to Subsection 6.1(d); or

 

(c)           if all
of the following occur: (i) an Acquisition Proposal shall have been made
to St. Jude or made known to the St. Jude Shareholders generally or shall have
been made directly to St. Jude Shareholders or any person shall have publicly
announced an intention to make an Acquisition Proposal in respect of St. Jude; (ii) this
Agreement is terminated; and (iii) St. Jude completes any Acquisition
Proposal during the term of this Agreement or within 12 months following the
termination of this Agreement.

 

5.2          St. Jude Break Fee

 

St. Jude shall
pay to Golden Star the St. Jude Break Fee in immediately available funds no
later than one business day after the first to occur of any St. Jude Fee Event
or, in the event of the St. Jude Fee Event set out in subparagraph (c) of
the definition of St. Jude Fee Event, no later than one business day following
completion of the Acquisition Proposal.

 

5.3          Expense Reimbursement

 

(a)           If the
Agreement is terminated by Golden Star pursuant to Subsection 6.1(b)(i) (other
than in the case of a termination pursuant to Subsection 6.1(b)(i) which
would constitute a St. Jude Fee Event, in which case St. Jude shall pay Golden
Star the St. Jude Break Fee in accordance with

 

11

 

Section 5.2),
St. Jude shall forthwith pay to Golden Star within one (1) business day of
such termination the amount of CDN$500,000 in immediately available funds.

 

(b)           If
this Agreement is terminated by St. Jude pursuant to Subsection 6.1(b)(i),
Golden Star shall forthwith pay to St. Jude within one (1) business day of
such termination the amount of CDN$500,000 in immediately available funds.

 

5.4          Liquidated Damages

 

(a)           St.
Jude acknowledges that the payment amount set out in Section 5.2 is a
payment of liquidated damages which is a genuine pre-estimate of the damages which
Golden Star will suffer or incur as a result of the event giving rise to such
damages and the resultant termination of this Agreement and is not a
penalty.  St. Jude hereby irrevocably and
unconditionally waives any right it may have to raise as a defence that any
such liquidated damages are excessive or punitive.

 

(b)           Each
Party acknowledges that the payment amount set out in Section 5.3 is a
payment of liquidated damages which is a genuine pre-estimate of the damages
which the other Party will suffer or incur as a result of the event giving rise
to such damages and the resultant termination of this Agreement and is not a
penalty, and each party hereby irrevocably and unconditionally waives any right
it may have to raise as a defence that any such liquidated damages are
excessive or punitive. Notwithstanding any provision of this Subsection 5.4(b) to
the contrary, payment by one Party to the other Party pursuant to Section 5.3
shall not be in lieu of any damages or any other payment or remedy available at
law or in equity in the event of any wilful or intentional breach by the Party
making the payment of any of its obligations or covenants under this Agreement.

 

(c)           The
provisions of this Section 5 shall survive the termination of this
Agreement.

 

6.             TERMINATION

 

6.1          Termination

 

This Agreement
may be terminated immediately:

 

(a)           by the
mutual written consent of Golden Star and St. Jude;

 

(b)           by
either Party, upon providing written notice to the other:

 

(i)            at
any time if the other Party is in breach of any of its representations,
warranties, covenants or other agreements contained in this Agreement in any
material respect, and such breach is not capable of being cured or is not cured
by the breaching Party within three
business days of the giving of notice of such breach by the other Party to the
breaching Party;

 

(ii)           at any
time after 5:00 p.m. (Toronto time) on October 17, 2005 if, having acted in good faith, the Definitive
Agreement has not been executed; or

 

(iii)          if any
of the conditions for the benefit of the terminating Party contained in this
Agreement is not satisfied or waived on or before December 16, 2005 (or such later date (but
in any case, on or before March 16, 2006) as the Parties, acting
reasonably, may agree to in writing) or such other time
prior thereto as is specified in this Agreement, 

 

12

 

provided
that the terminating Party is not then in breach of any representations,
warranties and covenants herein contained in any material respect;

 

(c)           by
Golden Star or St. Jude if any of the following have occurred:

 

(i)            if
the approval of the St. Jude Shareholders has not been obtained by December 7,
2005 or such
later date (but in any case, on or before March 16, 2006) as the Parties,
acting reasonably, may agree to in writing; or

 

(ii)           if
upon a vote at a duly held St. Jude Meeting or any adjournment or postponement
thereof to obtain the approval of the holders of St. Jude Common Shares and the
holders of St. Jude Convertible Securities (voting as a single class) of the
Business Combination or any matter that could reasonably be expected to
facilitate it, the approval of the holders of St. Jude Common Shares and
holders of St. Jude Convertible Securities, voting as a single class, is not
obtained in accordance with applicable laws;

 

(d)           by
either Party, upon the determination by St. Jude after conclusion of the
process set out in Section 3.3 that an Acquisition Proposal constitutes a
Superior Proposal, the provision of notice to Golden Star of a Superior
Proposal as required by Section 3.4 and the time period for Golden Star to
propose an amendment to the Agreement as contemplated by Section 3.4 has
elapsed; or

 

(e)           by
Golden Star, if the board of directors of St. Jude (i) has withdrawn or
changed any of its recommendations to the St. Jude Shareholders in a manner
adverse to Golden Star or which would impede the completion of the Business
Combination, or has made a recommendation to the St. Jude Shareholders not to
accept or approve the Business Combination, or (ii) has not submitted the
Business Combination for approval to St. Jude Shareholders on or prior to December 7,
2005 (or
such later date (but in any case, on or before March 16, 2006) as the
Parties, acting reasonably, may agree to in writing), provided that Golden Star
has provided, on a timely basis, information regarding Golden Star required by
applicable securities laws for inclusion in the management information circular
of St. Jude to be used at the St. Jude Meeting, or (iii) has
failed to solicit proxies in favour of approving the Business Combination, or (iv) has
resolved to do any of the foregoing.

 

In the event of termination of this
Agreement by either Party as provided in this Section 6,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of either Party, except with respect to Sections 5.2,
5.3, 5.4, 7.2, and 7.3 which provisions shall survive the termination; provided
that notwithstanding anything to the contrary contained in this Agreement,
neither Party shall be (i) relieved or released from any liability or
damages arising out of any breach of this Agreement prior to such termination
or (ii) precluded from seeking injunctive relief to restrain any breach or
threatened breach of this Agreement or otherwise to obtain specific performance
of any provision of this Agreement.

 

7.             MISCELLANEOUS

 

7.1          General Provisions

 

The Parties
agree that the following provisions shall apply to this agreement:

 

(a)           time
is of the essence in this Agreement;

 

(b)           this
Agreement will enure to the benefit of and be binding upon the respective
successors and permitted assigns of the Parties. This Agreement is not
assignable by a Party without the prior

 

13

 

written
consent of the other Party, provided that Golden Star may assign all or any
part of its rights or obligations under this Agreement to a direct or indirect
Subsidiary of Golden Star;

 

(c)           the
right and remedies of the Parties hereunder are cumulative and are in addition
to, and not in substitution for, any other rights and remedies available at law
or in equity or otherwise;

 

(d)           this
Agreement (together with the Confidentiality Agreement) constitutes the entire
agreement between the Parties with respect to the subject matter hereof and
cancels and supersedes any prior understandings and agreements between the
Parties with respect thereto and there are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied or
statutory, between the Parties other than as expressly set forth in this
Agreement; and

 

(e)           this
Agreement shall be governed by and construed in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable therein.

 

7.2          Expenses

 

Except as
provided in Section 5.3, each Party will pay its own expenses incurred in
connection with this Agreement and the transactions contemplated herein.

 

7.3          Extension of Confidentiality
Agreement

 

The Parties
agree that the confidentiality agreement dated October 27, 2003 entered
into between Golden Star and St. Jude (the “Confidentiality
Agreement”) shall be extended by replacing the reference to “twenty-four
(24) months” as set forth in section 8 of the Confidentiality Agreement,
with a reference to “thirty six (36) months” so that the Confidentiality
Agreement expires October 27, 2006. The Parties acknowledge that this
Agreement and the Business Combination is subject to the Confidentiality
Agreement.

 

7.4          Severance Payments

 

Following the
completion of the Business Combination, Golden Star will cause St. Jude to
honour all severance agreements referred to in Subsection 2.1(e).

 

7.5          Notices

 

Any demand,
notice or other communication to be given in connection with this Agreement
must be communicated confidentially and in writing and will be sufficiently
given if delivered personally or sent by facsimile addressed: (i) if to
Golden Star, to the attention of Mr. Peter Bradford to the address or
facsimile thereof set forth on the first page of this Agreement; or (ii) if
to St. Jude, to the attention of Mr. Michael Terrell to the address or
facsimile thereof set forth on the first page of this Agreement; or to
such other address or facsimile as the relevant Party may advise by notice in
writing given pursuant to this Section.

 

7.6          Counterparts

 

This Agreement
may be executed in any number of counterparts, manually or by facsimile, each
of which will be deemed to be an original and all of which taken together will
be deemed to constitute one and the same instrument.

 

* * * * * * *
*

 

14

 

Kindly signify
your acceptance of the terms contained herein by signing the enclosed duplicate
copy of this letter in the place indicated below and returning such executed
copy to Golden Star by no later than 5:00 p.m. (Toronto time) on September 27,
2005, failing which this letter will be of no force or effect.

 

	
   

  	
  Yours truly,

  
	
   

  	
  GOLDEN
  STAR RESOURCES LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter J. Bradford

  	
   

  
	
   

  	
   

  	
  Name: Peter J. Bradford

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President and
  Chief Executive

  Officer

  
	
   

  	
   

  	
   

  
	
  Accepted and
  agreed, as of this 27 day of September, 2005.

  	
   

  
	
   

  	
   

  
	
  ST.
  JUDE RESOURCES LTD.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael A. Terrell

  	
   

  	
   

  
	
   

  	
  Name: Michael A. Terrell

  	
   

  
	
   

  	
  Title: President and Chief Executive
  Officer

  	
   

  
							

 

15

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