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Exhibit 4.04    
  

Registration Rights Agreement  

Dated As of January 9, 2002  

among  

Questar Market Resources, Inc.
  and  

Banc of America Securities LLC  

 Merrill Lynch, Pierce, Fenner & Smith

Incorporated  

  
 

    REGISTRATION RIGHTS AGREEMENT    
  

        This Registration Rights Agreement (the "Agreement") is made and entered into this 9th day of January, 2002, among Questar Market Resources, Inc., a Utah
corporation (the "Company"), and Banc of America Securities LLC ("Banc of America Securities") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as
representatives of the Initial Purchasers named in the Purchase Agreement referred to below (collectively, the "Initial Purchasers"). 

        This
Agreement is made pursuant to the Purchase Agreement, dated January 9, 2002, among the Company and the Initial Purchasers (the "Purchase Agreement"), which provides for the
sale by the Company to the Initial Purchasers of an aggregate of $200 million principal amount of the Company's 7% Notes due 2007 (the "Securities"). In order to induce the Initial Purchasers
to enter into the Purchase Agreement, the Company has agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase Agreement. 

        In
consideration of the foregoing, the parties hereto agree as follows: 

        1.    Definitions.    

        As
used in this Agreement, the following capitalized defined terms shall have the following meanings: 

        "1933 Act" shall mean the Securities Act of 1933, as amended from time to time. 

        "1934 Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. 

        "Closing Date" shall mean the Closing Time as defined in the Purchase Agreement. 

        "Company" shall have the meaning set forth in the preamble and shall also include the Company's successors. 

        "Depositary" shall mean The Depository Trust Company, or its nominee, or any other depositary appointed by the Company,  provided, however, that such depositary must have
an address in the Borough of Manhattan, in the City of New York. 

        "Exchange Offer" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to
Section 2.1 hereof. 

        "Exchange Offer Registration" shall mean a registration under the 1933 Act effected pursuant to Section 2.1 hereof. 

        "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form), and all amendments and supplements to such registration statement, including the Prospectus contained therein, all exhibits thereto and all documents
incorporated by reference therein. 

        "Exchange Period" shall have the meaning set forth in Section 2.1 hereof. 

        "Exchange Securities" shall mean the 7% Notes due 2007 issued by the Company under the Indenture containing terms identical to the
Securities in all material respects (except for references to certain interest rate provisions, restrictions on transfers and restrictive legends), to be offered to Holders of Securities in exchange
for Registrable Securities pursuant to the Exchange Offer. 

        "Holder" shall mean an Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and
direct and indirect transferees who become registered owners of Registrable Securities under the Indenture and each Participating Broker-Dealer that holds Exchange Securities for so long as such
Participating Broker-Dealer is required to deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities. 

 

        "Indenture" shall mean the Indenture relating to the Securities, dated as of March 1, 2001, between the Company and Bank One, NA,
as Trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof. 

        "Initial Purchaser" or "Initial Purchasers" shall have the meaning set forth in the
preamble. 

        "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company and other obligors on the Securities or any Affiliate (as defined in the Indenture) of the Company shall be disregarded in determining whether
such consent or approval was given by the Holders of such required percentage amount. 

        "Participating Broker-Dealer" shall mean any Initial Purchaser and any other broker-dealer which makes a market in the Securities and
exchanges Registrable Securities in the Exchange Offer for Exchange Securities. 

        "Person" shall mean an individual, partnership (general or limited), corporation, limited liability company, trust or unincorporated
organization, or a government or agency or political subdivision thereof. 

        "Private Exchange" shall have the meaning set forth in Section 2.1 hereof. 

        "Private Exchange Securities" shall have the meaning set forth in Section 2.1 hereof. 

        "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a
Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by
reference therein. 

        "Purchase Agreement" shall have the meaning set forth in the preamble. 

        "Registrable Securities" shall mean the Securities and, if issued, the Private Exchange Securities; provided,
however, that Securities and, if issued, the Private Exchange Securities, shall cease to be Registrable Securities when (i) a Registration Statement with respect to such
Securities shall have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to such Registration Statement, (ii) such Securities have been sold to
the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the 1933 Act, (iii) such Securities shall have ceased to be outstanding or
(iv) the Exchange Offer is consummated (except in the case of Securities purchased from the Company and continued to be held by the Initial Purchasers). 

        "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. (the "NASD") registration and filing fees, including, if applicable, the
fees and expenses of any "qualified independent underwriter" (and its counsel) that is required to be retained by any holder of Registrable Securities in accordance with the rules and regulations of
the NASD, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of the NASD (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities and any filings with the NASD),
(iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the 

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listing, if any, of any of the Registrable Securities on any securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the Company and
of the independent public accountants of the Company, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance,
(vii) the fees and expenses of the Trustee, and any escrow agent or custodian, (viii) the reasonable fees and expenses of the Initial Purchasers in connection with the Exchange Offer,
including the reasonable fees and expenses of Sidley Austin Brown & Wood LLP, counsel to the Initial Purchasers, in connection therewith, (ix) the reasonable fees and
disbursements of special counsel representing the Holders of Registrable Securities, if any, and (x) any fees and disbursements of the underwriters customarily required to be paid by issuers or
sellers of securities and the fees and expenses of any special experts retained by the Company in connection with any Registration Statement, but excluding underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. 

        "Registration Statement" shall mean any registration statement of the Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. 

        "SEC" shall mean the Securities and Exchange Commission or any successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission. 

        "Shelf Registration" shall mean a registration effected pursuant to Section 2.2 hereof. 

        "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 2.2
of this Agreement which covers all of the Registrable Securities or all of the Private Exchange Securities on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may
be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein. 

        "Trustee" shall mean the trustee with respect to the Securities under the Indenture. 

        2.    Registration Under the 1933 Act.    

        2.1    Exchange Offer.    The Company shall, for the benefit of the Holders, at the Company's cost, (A) prepare
and, as soon as practicable but not later than 60 days following the Closing Date, file with the SEC an Exchange Offer Registration Statement on an appropriate form under the 1933 Act with
respect to a proposed Exchange Offer and the issuance and delivery to the Holders, in exchange for the Registrable Securities (other than Private Exchange Securities), of a like principal amount of
Exchange Securities, (B) use its reasonable best efforts to cause the Exchange Offer Registration Statement to be declared effective under the 1933 Act within 180 days of the Closing
Date and (C) use its reasonable best efforts to cause the Exchange Offer to be consummated not later than 45 days after the Exchange Offer Registration Statement becomes effective. The
Exchange Securities will be issued under the Indenture. Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate of the
Company within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering Registrable Securities acquired directly from the Company for its own account,
(c) acquired the Exchange Securities in the ordinary course of such Holder's business and (d) has no arrangements or understandings with any Person to participate in the Exchange Offer
for the purpose of distributing the Exchange Securities) to transfer such Exchange 

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Securities from and after their receipt without any limitations or restrictions under the 1933 Act and under state securities or blue sky laws. 

        In
connection with the Exchange Offer, the Company shall: 

        (a)  mail
as promptly as practicable after the Registration Statement becomes effective to each Holder a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal and related documents; 

        (b)  keep
the Exchange Offer open for acceptance for a period of not less than 20 calendar days after the date notice thereof is mailed to the Holders (or longer, if required
by applicable law or otherwise extended by us, at our option) (such period referred to herein as the "Exchange Period"); 

        (c)  utilize
the services of the Depositary for the Exchange Offer; 

        (d)  permit
Holders to withdraw tendered Registrable Securities at any time prior to 5:00 p.m. (Eastern Time), on the last business day of the Exchange Period, by
sending to the institution specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered
for exchange, and a statement that such Holder is withdrawing such Holder's election to have such Securities exchanged; 

        (e)  notify
each Holder that any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this
Agreement (except in the case of the Initial Purchasers and Participating Broker-Dealers as provided herein); and 

        (f)    otherwise
comply in all respects with all applicable laws relating to the Exchange Offer. 

        If,
prior to consummation of the Exchange Offer, the Initial Purchasers hold any Securities acquired by them and having the status of an unsold allotment in the initial distribution, the
Company upon the request of any Initial Purchaser shall, simultaneously with the delivery of the Exchange Securities in the Exchange Offer, issue and deliver to such Initial Purchaser in exchange (the
"Private Exchange") for the Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company, that are identical (except that such securities shall bear appropriate
transfer restrictions) to the Exchange Securities (the "Private Exchange Securities"). 

        The
Exchange Securities and the Private Exchange Securities shall be issued under (i) the Indenture or (ii) an indenture identical in all material respects to the Indenture
and which, in either case, has been qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), or is exempt from such qualification and shall provide that the Exchange Securities shall
not be subject to the transfer restrictions set forth in the Indenture but that the Private Exchange Securities shall be subject to such transfer restrictions. The Indenture or such indenture shall
provide that the Exchange Securities, the
Private Exchange Securities and the Securities shall vote and consent together on all matters as one class and that none of the Exchange Securities, the Private Exchange Securities or the Securities
will have the right to vote or consent as a separate class on any matter. The Private Exchange Securities shall be of the same series as and the Company shall use all commercially reasonable efforts
to have the Private Exchange Securities bear the same CUSIP number as the Exchange Securities. The Company shall not have any liability under this Agreement solely as a result of such Private Exchange
Securities not bearing the same CUSIP number as the Exchange Securities. 

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        As
soon as practicable after the close of the Exchange Offer and/or the Private Exchange, as the case may be, the Company shall: 

          (i)  accept
for exchange all Registrable Securities duly tendered and not validly withdrawn pursuant to the Exchange Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal which shall be an exhibit thereto; 

        (ii)  accept
for exchange all Securities properly tendered pursuant to the Private Exchange; 

        (iii)  deliver
to the Trustee for cancellation all Registrable Securities so accepted for exchange; and 

        (iv)  cause
the Trustee promptly to authenticate and deliver Exchange Securities or Private Exchange Securities, as the case may be, to each Holder of Registrable Securities
so accepted for exchange in a principal amount equal to the principal amount of the Registrable Securities of such Holder so accepted for exchange. 

        Interest
on each Exchange Security and Private Exchange Security will accrue from the last date on which interest was paid on the Registrable Securities surrendered in exchange therefor
or, if no interest has been paid on the Registrable Securities, from the date of original issuance. The Exchange Offer and the Private Exchange shall not be subject to any conditions, other than
(i) that the Exchange Offer or the Private Exchange, or the making of any exchange by a Holder, does not violate applicable law or any applicable interpretation of the staff of the SEC,
(ii) the due tendering of Registrable Securities in accordance with the Exchange Offer and the Private Exchange, (iii) that each Holder of Registrable Securities exchanged in the
Exchange Offer shall have represented that all Exchange Securities to be received by it shall be acquired in the ordinary course of its business and that at the time of the consummation of the
Exchange Offer it shall have no arrangement or understanding with any person to participate in the distribution (within the meaning of the 1933 Act) of the Exchange Securities and shall have made such
other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to render the use of Form S-4 or other appropriate form under the
1933 Act available and (iv) that no action or proceeding shall have been instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer or the Private Exchange which, in the Company's judgment, would reasonably be expected to impair the ability of the Company
to proceed with the Exchange Offer or the Private Exchange. The Company shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the
Initial Purchasers shall have the right to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. 

        2.2    Shelf Registration.    (i) If, because of any changes in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC, the Company is not permitted to effect the Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason the
Exchange Offer Registration Statement is not declared effective within 180 days following the original issue of the Registrable Securities or the Exchange Offer is not consummated within
45 days after the Exchange Offer Registration Statement becomes effective, (iii) if, upon the request of any of the Initial Purchasers made within 90 days after the consummation
of the Exchange Offer with respect to Securities not eligible to be exchanged in the Exchange Offer and held by such Initial Purchaser following the consummation of the Exchange Offer or
(iv) if a Holder is not permitted to participate in the Exchange Offer or does not receive fully tradable Exchange Securities pursuant to the Exchange Offer, then in case of each of
clauses (i) through (iv) the Company shall, at its cost: 

        (a)  As
promptly as practicable, file with the SEC no later than (i) 210 days after the Closing Date or (ii) 60 days after the filing obligation
arises, whichever is later, and thereafter shall use its reasonable best efforts to cause to be declared effective as promptly as practicable but no later 

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than 240 days after the original issue of the Registrable Securities (or 90 days after a request by any Initial Purchaser), a Shelf Registration Statement relating to the offer and sale
of the Registrable Securities by the Holders from time to time in accordance with the methods of distribution elected by the Majority Holders participating in the Shelf Registration and set forth in
such Shelf Registration Statement. 

        (b)  Use
its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by
Holders for a period of two years from the date the Shelf Registration Statement is declared effective by the SEC, or for such shorter period that will terminate when all Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or cease to be outstanding or otherwise to be Registrable Securities (the "Effectiveness
Period"); provided, however, that the Effectiveness Period in respect of the Shelf Registration Statement shall be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery requirements of Rule 174 under the 1933 Act and as otherwise provided herein. 

        (c)  Notwithstanding
any other provisions hereof, use its reasonable best efforts to ensure that (i) any Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any supplement thereto complies in all material respects with the 1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement
and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any supplement to
such Prospectus (as amended or supplemented from time to time), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not misleading. 

        The
Company shall not permit any securities other than Registrable Securities to be included in the Shelf Registration Statement. The Company further agrees, if necessary, to supplement
or amend the Shelf Registration Statement, as required by Section 3(b) below, and to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC. 

        2.3    Expenses.    The Company shall pay all Registration Expenses in connection with the registration pursuant to
Section 2.1 or 2.2 hereof and shall reimburse the Holders for the reasonable fees and disbursements of a single counsel, which shall be Sidley Austin Brown & Wood LLP, to act as
counsel therefor in connection therewith. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement. 

        2.4.    Effectiveness.    (a) The Company will be deemed not have used its reasonable best efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, to become, or to remain, effective during the requisite period if the Company voluntarily takes any
action that would, or omits to take any action which omission would, result in any such Registration Statement not being declared effective or in the Holders of Registrable Securities covered thereby
not being able to exchange or offer and sell such Registrable Securities during that period as and to the extent contemplated hereby, unless such action is required by applicable law. 

        (b)  An
Exchange Offer Registration Statement pursuant to Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not be deemed
to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to an Exchange Offer Registration Statement or a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have become effective during the period of such interference, until the offering of Registrable
Securities pursuant to such Registration Statement may legally resume. 

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        2.5    Interest.    The Indenture executed in connection with the Securities will provide that in the event that
either (a) the Exchange Offer Registration Statement is not filed with the Commission on or prior to the 60th day following the Closing Date, (b) the Shelf Registration Statement is not
filed with the Commission on or prior to (i) the 210th day after the Closing Date or (ii) the 60th day after such filing obligation arises, whichever is later, (c) the Exchange
Offer Registration Statement has not been declared effective by the Commission on or prior to the 180th day following the Closing Date, (d) the Shelf Registration Statement has not been
declared effective by the Commission on or prior to the 240th day following the Closing Date (or 90 days after a request by any Initial Purchaser), (e) the Exchange Offer is not
consummated on or prior to the 45th day after the Exchange Offer Registration Statement becomes effective or (f) the Shelf Registration Statement is declared effective but thereafter ceases to
be effective or usable in connection with the resale of the Securities, provided that during any 365-day period, the Company shall be able to suspend the availability of the Shelf
Registration Statement for up to two periods of up to 45 consecutive days (except for the 45 consecutive days immediately prior to the maturity of the Securities), but for no more than an aggregate of
90 days during any 365-day period, if the Company's Board of Directors determines in good faith that there is a valid purpose for the suspension—(each such event
referred to in clauses (a) through (f) above, a "Registration Default"), the interest rate borne by the Securities shall be increased ("Additional Interest") by one-quarter of one
percent per annum upon the occurrence of each Registration Default, which rate will increase by one quarter of one percent each 90-day period that such Additional Interest continues to
accrue under any such circumstance, provided that the maximum aggregate increase in the interest rate will in no event exceed one-half of one percent (0.5%) per annum for each of the
Securities. Following the cure of all Registration Defaults the accrual of Additional Interest will cease and the interest rate will revert to the original rate. Additional Interest shall be computed
based on the actual number of days that a Registration Default occurs and is continuing. 

        The
Company shall notify the Trustee within three business days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an
"Event Date"). Additional Interest shall be paid by depositing with the Trustee, in trust, for the benefit of the Holders of Registrable Securities, on or before the applicable semiannual interest
payment date, immediately available funds in sums sufficient to pay the Additional Interest then due. The Additional Interest due shall be payable on each interest payment date to the record Holder of
Securities entitled to receive the interest payment to be paid on such date as set forth in the Indenture. Each obligation to pay Additional Interest shall be deemed to accrue from and including the
day following the applicable Event Date. 

        3.    Registration Procedures.    

        In
connection with the obligations of the Company with respect to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company shall: 

        (a)  prepare
and file with the SEC a Registration Statement, within the relevant time period specified in Section 2, on the appropriate form under the 1933 Act, which
form (i) shall be selected by the Company, (ii) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof,
(iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the SEC to be
filed therewith or incorporated by reference therein, and (iv) shall comply in all respects with the requirements of Regulation S-T under the 1933 Act, and use its reasonable
best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; 

        (b)  prepare
and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary under applicable law to keep
such Registration Statement effective for the applicable period; and cause each Prospectus to be supplemented by 

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any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provision then in force) under the 1933 Act and comply with the provisions of the
1933 Act, the 1934 Act and the rules and regulations thereunder applicable to them with respect to the disposition of all securities covered by each Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the selling Holders thereof (including sales by any Participating Broker-Dealer); 

        (c)  in
the case of a Shelf Registration, (i) notify each Holder of Registrable Securities, at least five business days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and advising such Holders that the distribution of Registrable Securities will be made in accordance with the method selected by the
Majority Holders participating in the Shelf Registration; (ii) furnish to each Holder of Registrable Securities and to each underwriter of an underwritten offering of Registrable Securities, if
any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the Holder so requests, all exhibits in order to facilitate the public sale or other disposition of the Registrable Securities;
and (iii) hereby consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; 

        (d)  use
its reasonable best efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any
Holder of Registrable Securities covered by a Registration Statement and each underwriter of an underwritten offering of Registrable Securities shall reasonably request by the time the applicable
Registration Statement is declared effective by the SEC, and do any and all other acts and things which may be reasonably necessary or advisable to enable each such Holder and underwriter to
consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Company shall not
be
required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or
(ii) take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject; 

        (e)  notify
promptly each Holder of Registrable Securities under a Shelf Registration or any Participating Broker-Dealer who has notified the Company that it is utilizing the
Exchange Offer Registration Statement as provided in paragraph (f) below and, if requested by such Holder or Participating Broker-Dealer, confirm such advice in writing promptly (i) when
a Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that
purpose, (iv) in the case of a Shelf Registration, if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and
correct in all material respects, (v) of the happening of any event or the discovery of any facts during the period a Shelf Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading, (vi) of the receipt by the Company of any notification with respect to the suspension of the 

8

 

qualification of the Registrable Securities or the Exchange Securities, as the case may be, for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and
(vii) of any determination by the Company that a post-effective amendment to such Registration Statement would be appropriate; 

        (f)    (A) in
the case of the Exchange Offer Registration Statement (i) include in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution" which section shall be reasonably acceptable to Merrill Lynch on behalf of the Participating Broker-Dealers, and which shall contain a summary statement of the positions taken or
policies made by the staff of the SEC with respect to the potential "underwriter" status of any broker-dealer that holds Registrable Securities acquired for its own account as a result of
market-making activities or other trading activities and that will be the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Securities to be received by
such broker-dealer in the Exchange Offer, whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies, in the reasonable judgment of
Merrill Lynch on behalf of the Participating Broker-Dealers and its counsel, represent the prevailing views of the staff of the SEC, including a statement that any such broker-dealer who receives
Exchange Securities for Registrable Securities pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver a prospectus meeting the requirements of the 1933 Act in connection
with any resale of such Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has delivered to the Company the notice referred to in Section 3(e), without charge, as
many copies of each Prospectus included in the Exchange Offer Registration Statement, including any preliminary prospectus, and any amendment or supplement thereto, as such Participating Broker-Dealer
may reasonably request, (iii) hereby consent to the use of the Prospectus forming part of the Exchange Offer Registration Statement or any amendment or supplement thereto, by any Person subject
to the
prospectus delivery requirements of the SEC, including all Participating Broker-Dealers, in connection with the sale or transfer of the Exchange Securities covered by the Prospectus or any amendment
or supplement thereto, and (iv) include in the transmittal letter or similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer (x) the
following provision: 

"If
the exchange offeree is a broker-dealer holding Registrable Securities acquired for its own account as a result of market-making activities or other trading activities, it will deliver a
prospectus meeting the requirements of the 1933 Act in connection with any resale of Exchange Securities received in respect of such Registrable Securities pursuant to the Exchange Offer;" and 

(y)
a statement to the effect that by a broker-dealer making the acknowledgment described in clause (x) and by delivering a Prospectus in connection with the exchange of Registrable Securities,
the broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the 1933 Act; and 

        (B)  in
the case of any Exchange Offer Registration Statement, the Company agrees to deliver to the Initial Purchasers on behalf of the Participating Broker-Dealers upon the
effectiveness of the Exchange Offer Registration Statement (i) an opinion of counsel or opinions of counsel substantially in the form attached hereto as Exhibit A, (ii) officers'
certificates substantially in the form customarily delivered in a public offering of debt securities and (iii) a comfort letter or comfort letters in customary form to the extent permitted by
Statement on Auditing Standards No. 72 of the American Institute of Certified Public Accountants (or if such a comfort letter is not permitted, an agreed upon procedures letter in customary
form) from Ernst & Young LLP, the Company's independent certified public accountants (and, if necessary, any other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial statements are, or are required to be, included in the Registration Statement), at 

9

 

least as broad in scope and coverage as the comfort letter or comfort letters delivered to the Initial Purchasers in connection with the initial sale of the Securities to the Initial Purchasers; 

        (g)  (i) in
the case of an Exchange Offer, furnish Sidley Austin Brown & Wood LLP, counsel for the Initial Purchasers, and (ii) in the case of a
Shelf Registration, furnish counsel for the Holders of Registrable Securities copies of any comment letters received from the SEC or any other request by the SEC or any state securities authority for
amendments or supplements to a Registration Statement and Prospectus or for additional information; 

        (h)  make
every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment; 

        (i)    in
the case of a Shelf Registration, furnish to each Holder of Registrable Securities, and each underwriter, if any, without charge, at least one conformed copy of each
Registration Statement and
any post-effective amendment thereto, including financial statements and schedules (without documents incorporated therein by reference and all exhibits thereto, unless requested); 

        (j)    in
the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations (consistent with the provisions of the
Indenture) and registered in such names as the selling Holders or the underwriters, if any, may reasonably request at least three business days prior to the closing of any sale of Registrable
Securities; 

        (k)  in
the case of a Shelf Registration, upon the occurrence of any event or the discovery of any facts, each as contemplated by Sections 3(e)(v) and 3(e)(vi) hereof,
as promptly as practicable after the occurrence of such an event, use its reasonable best efforts to prepare a supplement or post-effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities or
Participating Broker-Dealers, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading or will remain so qualified. At such time as such public disclosure is otherwise made or the Company determines that
such disclosure is not necessary, in each case to correct any misstatement of a material fact or to include any omitted material fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such number of copies of the Prospectus as amended or supplemented, as such Holder may reasonably request; 

        (l)    in
the case of a Shelf Registration, a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide
copies of such document to the Initial Purchasers on behalf of such Holders; and make representatives of the Company as shall be reasonably requested by the Holders of Registrable Securities, or the
Initial Purchasers on behalf of such Holders, available for discussion of such document; 

        (m)  obtain
a CUSIP number for all Exchange Securities, Private Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates for the Exchange Securities, Private Exchange Securities or the Registrable Securities, as the case may be, in a form eligible
for deposit with the Depositary; 

10

 

        (n)  (i) cause
the Indenture to be qualified under the TIA in connection with the registration of the Exchange Securities or Registrable Securities, as the case may
be, (ii) cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and (iii) execute, and use its reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; 

        (o)  in
the case of a Shelf Registration, enter into agreements (including underwriting agreements) and take all other customary and appropriate actions in order to expedite
or facilitate the disposition of such Registrable Securities and in such connection whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten
registration: 

          (i)  make
such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters in similar underwritten offerings as may be reasonably requested by them; 

        (ii)  obtain
opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority in principal amount of the Registrable Securities being sold) addressed to each selling Holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in sales of securities or underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; 

        (iii)  obtain
"cold comfort" letters and updates thereof from the Company's independent certified public accountants (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements are, or are required to be, included in the Registration Statement)
addressed to the underwriters, if any, and use reasonable efforts to have such letter addressed to the selling Holders of Registrable Securities (to the extent consistent with Statement on Auditing
Standards No. 72 of the American Institute of Certified Public Accounts), such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters to
underwriters in connection with similar underwritten offerings; 

        (iv)  enter
into a securities sales agreement with the Holders and an agent of the Holders providing for, among other things, the appointment of such agent for the selling
Holders for the purpose of soliciting purchases of Registrable Securities, which agreement shall be in form, substance and scope customary for similar offerings; 

        (v)  if
an underwriting agreement is entered into, cause the same to set forth indemnification provisions and procedures substantially equivalent to the indemnification
provisions and procedures set forth in Section 4 hereof with respect to the underwriters and all other parties to be indemnified pursuant to said Section or, at the request of any underwriters,
in the form customarily provided to such underwriters in similar types of transactions; and 

        (vi)  deliver
such documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the Holders of a majority in principal
amount of the Registrable Securities being sold and the managing underwriters, if any. 

11

 

The
above shall be done at (i) the effectiveness of such Registration Statement (and each post-effective amendment thereto) and (ii) each closing under any underwriting or
similar agreement as and to the extent required thereunder; 

        (p)  in
the case of a Shelf Registration or if a Prospectus is required to be delivered by any Participating Broker-Dealer in the case of an Exchange Offer, make available
for inspection by representatives of the Holders of the Registrable Securities, any underwriters participating in any disposition pursuant to a Shelf Registration Statement, any Participating
Broker-Dealer and any counsel or accountant retained by any of the foregoing, all financial and other records, pertinent corporate documents and properties of the Company reasonably requested by any
such persons, and cause the respective officers, directors, employees, and any other agents of the Company to supply all information reasonably requested by any such representative, underwriter,
special counsel or accountant in connection with a Registration Statement; 

        (q)  (i) in
the case of an Exchange Offer Registration Statement, a reasonable time prior to the filing of any Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to an Exchange Offer Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to the Initial Purchasers and to
counsel to the Holders of Registrable Securities and make such changes in any such document prior to the filing thereof as the Initial Purchasers or counsel to the Holders of Registrable Securities
may reasonably request and, except as otherwise required by applicable law, not file any such document in a form to which the Initial Purchasers on behalf of the Holders of Registrable Securities and
counsel to the Holders of Registrable Securities shall not have previously been advised and furnished a copy of or to which the Initial Purchasers on behalf of the Holders of Registrable Securities or
counsel to the Holders of Registrable Securities shall reasonably object; and 

        (ii)  in
the case of a Shelf Registration, a reasonable time prior to filing any Shelf Registration Statement, any Prospectus forming a part thereof, any amendment to such
Shelf Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to the Holders of Registrable Securities, to the Initial Purchasers, to counsel for the
Holders and to the underwriter or underwriters of an underwritten offering of Registrable Securities, if any, make such changes in any such document prior to the filing thereof as the Initial
Purchasers, the counsel to the Holders or the underwriter or underwriters reasonably request and not file any such document in a form to which the Majority Holders, the Initial Purchasers on behalf of
the Holders of Registrable Securities, counsel for the Holders of Registrable Securities or any underwriter shall not have previously been advised and furnished a copy of or to which the Majority
Holders, the Initial Purchasers on behalf of the Holders
of Registrable Securities, counsel to the Holders of Registrable Securities or any underwriter shall reasonably object; 

        (r)  in
the case of a Shelf Registration, use its reasonable best efforts to cause all Registrable Securities to be listed on any securities exchange on which similar debt
securities issued by the Company are then listed if requested by the Majority Holders, or if requested by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any; 

        (s)  in
the case of a Shelf Registration, use its reasonable best efforts to cause the Registrable Securities to be rated by the appropriate rating agencies, if so requested
by the Majority Holders, or if requested by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any; 

        (t)    otherwise
comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder; 

12

 

        (u)  cooperate
and assist in any filings required to be made with the NASD and, in the case of a Shelf Registration, in the performance of any due diligence investigation by
any underwriter and its counsel (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD); and 

        (v)  upon
consummation of an Exchange Offer or a Private Exchange, obtain customary opinions from counsel to the Company addressed to the Trustee for the benefit of all
Holders of Registrable Securities participating in the Exchange Offer or Private Exchange, and which includes an opinion that (i) the Company has duly authorized, executed and delivered the
Exchange Securities and/or Private Exchange Securities, as applicable, and the related indenture, and (ii) each of the Exchange Securities and related indenture constitute a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance with its respective terms (with customary exceptions). 

        In
the case of a Shelf Registration Statement, the Company may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Securities to
furnish to the Company such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Company may from time to time reasonably request in
writing. 

        In
the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Company of the happening of any event or the discovery of any facts, each of
the kind described in
Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by the Company, such Holder will deliver to the Company (at its expense) all copies in such Holder's
possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. 

        In
the event that the Company fails to effect the Exchange Offer or file any Shelf Registration Statement and maintain the effectiveness of any Shelf Registration Statement as provided
herein, the Company shall not file any Registration Statement with respect to any securities (within the meaning of Section 2(1) of the 1933 Act) of the Company other than Registrable
Securities for a period of twelve months. 

        If
any of the Registrable Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the underwriter or underwriters and manager or managers that
will manage such offering will be selected by the Majority Holders of such Registrable Securities included in such offering and shall be acceptable to the Company. No Holder of Registrable Securities
may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other
documents required under the terms of such underwriting arrangements. 

        4.    Indemnification; Contribution.    

        (a)  The
Company agrees to indemnify and hold harmless the Initial Purchasers, each Holder, each Participating Broker-Dealer, each Person who participates as an underwriter
(any such Person being an "Underwriter") and each Person, if any, who controls any Holder or Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows: 

          (i)  against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all 

13

 

documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading,
or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; 

        (ii)  against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 4(d) below) any such settlement is effected with the written consent of the Company; and 

        (iii)  against
any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by any indemnified party), reasonably incurred in
investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Holder or Underwriter expressly
for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). 

        (b)  Each
Holder severally, but not jointly, agrees to indemnify and hold harmless the Company, the Initial Purchasers, each Underwriter and the other selling Holders, and
each of their respective directors and officers, and each Person, if any, who controls the Company, the Initial Purchasers, any Underwriter or any other selling Holder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a)
hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by such Holder
expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided,
however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Shelf Registration Statement. 

14

  

        (c)  Each
indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of
which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially
prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the
indemnified party, which consent shall not be unreasonably withheld) also be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable for the fees and expenses
of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect
of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. 

        (d)  If
at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii) effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least
30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date
of such settlement. 

        (e)  If
the indemnification provided for in this Section 4 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Holders and the Initial Purchasers on the
other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. 

        The
relative fault of the Company on the one hand and the Holders and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Holders or the Initial Purchasers and
the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 

        The
Company, the Holders and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation
(even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this
Section 4. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include
any legal or other expenses reasonably 

15

 

incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. 

        Notwithstanding
the provisions of this Section 4, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the
Securities sold by it were offered exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. 

        No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. 

        For
purposes of this Section 4, each Person, if any, who controls an Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Initial Purchaser or Holder, and each director of the Company, and each Person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Initial Purchasers' respective obligations to contribute pursuant
to this Section 4 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A to the Purchase Agreement and not joint. 

        5.    Miscellaneous.    

        5.1    Rule 144 and Rule 144A.    The Company shall use its best efforts to file the reports required to
be filed by it under the 1933 Act and the 1934 Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Registrable
Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such
further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration
under the 1933 Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Registrable Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Registrable Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 5 shall be deemed to require the
Company to register any of its securities pursuant to the 1934 Act. 

        5.2    No Inconsistent Agreements.    The Company hereby agrees that any Registration Statement shall, unless
otherwise agreed upon by the Initial Purchasers, include only those Registrable Securities required to be included thereunder pursuant to the terms of this Agreement. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its Registrable Securities that is inconsistent with the rights granted to the Holders
herein or otherwise conflicts with the provisions hereof. 

        5.3    Amendments and Waivers.    The provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding Registrable Securities. 

        5.4    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing
by hand delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such Holder to 

16

 

the Company by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the Purchase Agreement with respect to the
Initial Purchasers; and (b) if to the Company, initially at the Company's address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in
accordance with the provisions of this Section 5.4. 

        All
such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; two business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight
delivery. 

        Copies
of all such notices, demands, or other communications shall be concurrently delivered by the person giving the same to the Trustee under the Indenture, at the address specified in
such Indenture. 

        5.5    Successor and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors,
assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders;  provided that nothing herein shall be deemed to permit
any assignment, transfer or other disposition of Registrable Securities in violation of the terms
of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof. 

        5.6    Third Party Beneficiaries.    The Initial Purchasers (even if the Initial Purchasers are not Holders of
Registrable Securities) shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. Each Holder of Registrable Securities shall
be a third party beneficiary to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder. 

        5.7.    Specific Enforcement.    The parties hereto acknowledge that there may be no adequate remedy at law if any
party fails to perform any of its obligations hereunder and that each party may be irreparably harmed by any such failure, and accordingly agree that each party, in addition to any other remedy to
which it may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of any other party under this Agreement in accordance with the terms and conditions of
this Agreement, in any court of the United States or any State thereof having jurisdiction. 

        5.8.    Restriction on Resales.    Until the expiration of two years after the original issuance of the Securities,
the Company will not, and will cause its "affiliates" (as such term is defined in Rule 144(a)(1) under the 1933 Act) not to, resell any Securities which are "restricted securities" (as such
term is defined under Rule 144(a)(3) under the 1933 Act) that have been reacquired by any of them and shall immediately upon any purchase of any such Securities submit such Securities to the
Trustee for cancellation. 

        5.9    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

17

 

        5.10    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. 

        5.11    GOVERNING LAW.    THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF. 

        5.12    Severability.    In the event that any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby. 

18

 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 

	 	 	QUESTAR MARKET RESOURCES, INC.
	

 	
 	

By:	
 	

/s/  G. L. NORDLOH      

	 	 	 	 	Name:	 	G. L. Nordloh
	 	 	 	 	Title:	 	President and Chief Executive Officer

	Confirmed and accepted as of the date first above written:	 	 
	

BANC OF AMERICA SECURITIES LLC

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED	
 	

 
	

BY: BANC OF AMERICA SECURITIES LLC	
 	

 
	

By:	
 	

/s/  LILY CHANG      
	
 	

 
	Name:	 	Lily Chang	 	 
	Title:	 	Principal	 	 
	

BY: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED	
 	

 
	

By:	
 	

/s/  ROBERT L. JONES      
	
 	

 
	Name:	 	Robert L. Jones	 	 
	Title:	 	Managing Director	 	 

        For
themselves and as representatives of the other Initial Purchasers named in the Purchase Agreement. 

19

 
 

Exhibit A    
  

 
  Form of Opinion of Counsel    
  

Banc
of America Securities LLC

Merrill Lynch, Pierce, Fenner & Smith

        Incorporated

as representatives

c/o Merrill Lynch, Pierce, Fenner & Smith

            Incorporated

Merrill Lynch World Headquarters

Four World Financial Center

Floor 15

New York, New York 10080 

Ladies
and Gentlemen: 

        We
have acted as counsel for Questar Market Resources, Inc., a Utah corporation (the "Company"), in connection with the sale by the Company to the Initial Purchasers (as defined
below) of $200,000,000 aggregate principal amount of 7% Notes due 2007 (the "Notes") of the Company pursuant to the Purchase Agreement dated January 9, 2002 (the "Purchase Agreement") among the
Company and Banc of America Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers named in the Purchase Agreement
(collectively, the "Initial Purchasers") and the filing by the Company of an Exchange Offer Registration Statement (the "Registration Statement") in connection with an Exchange Offer to be effected
pursuant to the Registration Rights Agreement (the "Registration Rights Agreement"), dated January 9, 2002 between the Company and the Initial Purchasers. This opinion is furnished to you
pursuant to Section 3(f)(B) of the Registration Rights Agreement. Unless otherwise defined herein, capitalized terms used in this opinion that are defined in the Registration Rights Agreement
are used herein as so defined. 

        We
have examined such documents, records and matters of law as we have deemed necessary for purposes of this opinion. In rendering this opinion, as to all matters of fact relevant to
this opinion, we have assumed the completeness and accuracy of, and are relying solely upon, the representations and warranties of the Company set forth in the Purchase Agreement and the statements
set forth in
certificates of public officials and officers of the Company, without making any independent investigation or inquiry with respect to the completeness or accuracy of such representations, warranties
or statements, other than a review of the certificate of incorporation, by-laws and relevant minute books of the Company. 

        Based
on and subject to the foregoing, we are of the opinion that: 

        1.    The
Exchange Offer Registration Statement and the Prospectus (other than the financial statements, notes or schedules thereto and other financial data and supplemental
schedules included or incorporated by reference therein or omitted therefrom and the Form T-1, as to which such counsel need express no opinion), comply as to form in all material
respects with the requirements of the 1933 Act and the applicable rules and regulations promulgated under the 1933 Act. 

        2.    We
have participated in the preparation of the Registration Statement and the Prospectus and in the course thereof have had discussions with representatives of the
Underwriters, officers and other representatives of the Company and Ernst & Young LLP, the Company's independent public accountants, during which the contents of the Registration
Statement and the Prospectus were discussed. We have not, however, independently verified and are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectus. Based on our participation as described above, nothing has come to our attention that would lead us to believe that the
Registration Statement (except for financial statements and schedules and other financial data included therein as to which we make no statement) contained an untrue statement of a material fact or
omitted to state a material fact required 

to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or any amendment or supplement thereto (except for financial statements and schedules and other
financial data included therein, as to which such counsel need make no statement), at the time the Prospectus was issued, at the time any such amended or supplemented Prospectus was issued or at the
Closing Time, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. 

        This
opinion is being furnished to you solely for your benefit in connection with the transactions contemplated by the Registration Rights Agreement, and may not be used for any other
purpose or relied upon by any person other than you. Except with our prior written consent, the opinions herein expressed are not to be used, circulated, quoted or otherwise referred to in connection
with any transactions other than those contemplated by the Registration Rights Agreement by or to any other person. 

Very
truly yours, 

QuickLinks

Exhibit 4.04

REGISTRATION RIGHTS AGREEMENT

Exhibit A

Form of Opinion of Counsel<Page>

                                                                   EXHIBIT 10.12

                                     FORM OF

                       SENIOR SUBORDINATED PROMISSORY NOTE

            THE SUBORDINATED INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT RANKS
            PARI PASSU WITH CERTAIN OTHER SUBORDINATED INDEBTEDNESS OF THE MAKER
            AND IS OTHERWISE SUBJECT TO CERTAIN OTHER RESTRICTIONS SET FORTH IN
            THAT CERTAIN SUBORDINATED INDEBTEDNESS INTERCREDITOR AGREEMENT,
            DATED AS OF SEPTEMBER 28, 2000, BY AND AMONG THE MAKER HEREOF, THE
            PAYEE NAMED HEREIN, CERTAIN OTHER HOLDERS) OF INDEBTEDNESS OF THE
            MAKER AND THE GUARANTORS OF SUCH INDEBTEDNESS, AS SUCH AGREEMENT MAY
            BE AMENDED FROM TIME TO TIME.

            THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
            AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
            TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
            EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
            SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
            REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS

            INTEGRATED DEFENSE TECHNOLOGIES, INC.

            12% SENIOR SUBORDINATED PROMISSORY NOTE
                              DUE DECEMBER 31, 2007

$ ____________                                               New York, New York
                                                             September 28, 2000

      FOR VALUE RECEIVED, the undersigned, Integrated Defense Technologies,
Inc., a Delaware corporation (the "BORROWER"), hereby promises to pay to the
order of [

<Page>

      ], or its registered assigns (the "HOLDER"), the principal sum of
[________________________ ($___________) on December 31, 2007 (the "MATURITY
DATE"), with interest thereon from time to time as provided herein.

            1. PURCHASE AGREEMENT. This Senior Subordinated Promissory Note (the
"NOTE") IS one of the notes issued by the Borrower, on the date hereof, pursuant
to the Securities Purchase Agreement (the "PURCHASE AGREEMENT"), dated as of the
date hereof, by and among the Borrower, J.H. Whitney Mezzanine Fund, L.P., J.H.
Whitney Market Value Fund, L.P., GreenLeaf Capital, L.P., First Union Investors,
Inc. and BNY Capital Partners, L.P., and is subject to the terms thereof. This
Note together with the other notes issued by the Borrower on the date hereof
pursuant to the Purchase Agreement and together with all promissory notes issued
pursuant to Section 12 hereof or thereof are hereinafter referred to as the
"NOTES." The Holder is entitled to the benefits of this Note and the Purchase
Agreement, as it relates to the Note, and may enforce the agreements of the
Borrower contained herein and therein and exercise the remedies provided for
hereby and thereby or otherwise available in respect hereto and thereto.
Capitalized terms used herein without definition are used herein with the
meanings ascribed to such terms in the Purchase Agreement.

            2. INTEREST. The Borrower promises to pay interest ("INTEREST") on
the principal amount of this Note at the rate of 12% per annum (the "INTEREST
RATE"). Interest on this Note shall accrue from and including the date of
issuance through and until repayment of the principal amount of this Note and
payment of all Interest in full, and shall be computed on the basis of a 360-day
year of twelve 30-day months. Interest shall be paid quarterly on each March 31,
June 30, September 30 and December 31 of each year or, if any such date shall
not be a Business Day, on the next succeeding Business Day to occur after such
date (each date upon which interest shall be so payable, an "INTEREST PAYMENT
Date"), beginning on December 31, 2000, by wire transfer of immediately
available funds to an account at a bank designated by the Holder.

                  (a) DEFAULT RATE OF INTEREST. Notwithstanding the foregoing
provisions of this Section 2, but subject to applicable law, any overdue
principal of and overdue Interest on this Note shall bear interest, payable on
demand in immediately available funds, for each day from the date payment
thereof was due to the date of actual payment, at a rate equal to the sum of (i)
the Interest Rate and (ii) an additional 2% per annum, and, upon and during the
occurrence of an Event of Default (as hereinafter defined), this Note shall bear
interest, from the date of the occurrence of such Event of Default until such
Event of Default is cured or waived, payable on demand in immediately available
funds, at a rate equal to the sum of (i) the Interest Rate and (ii) an
additional 2% per annum. Subject to applicable law, any interest that shall
accrue on overdue interest on this Note as provided in the preceding sentence
and shall not have been paid in full on or before the next Interest Payment Date
to occur after the date on which the overdue interest became due and payable
shall itself be deemed to be overdue interest on this Note to which the
preceding sentence shall apply.

<Page>

                  (b) In the event that any interest rate(s) provided for in
this Section 2, shall be determined to be unlawful, such interest rate(s) shall
be computed at the highest rate permitted by applicable law. Any payment by the
Borrower of any interest amount in excess of that permitted by law shall be
considered a mistake, with the excess being applied to the principal amount of
this Note without prepayment premium or penalty.

            3. MANDATORY PREPAYMENT/REDEMPTION.

                  (a) INITIAL PUBLIC OFFERING. Subject to the subordination
provisions of Section 7 hereof, upon the consummation of an Initial Public
Offering (as hereinafter defined), the Borrower agrees to prepay the outstanding
principal amount of this Note in accordance with the redemption prices (the
"MANDATORY REDEMPTION PRICES") set forth below (expressed as a percentage of the
outstanding principal amount of this Note), together with Interest accrued
thereon through the date of such prepayment. If the consummation of an Initial
Public Offering shall occur during the consecutive 12-month period immediately
preceding August 1, of the calendar year set forth below, the Mandatory
Redemption Price shall be determined based upon the percentage of the
outstanding principal amount of this Note which corresponds to the period in
question; PROVIDED, HOWEVER, that in no event shall such percentage for any
twelve month period payable to the Holder of this Note exceed the maximum
permitted by any regulation applicable to such Holder, which limitation, if any,
shall not be applicable to any other Note or holder thereof.

<Table>
<Caption>

               Period                        Mandatory Redemption Price
               ------                        --------------------------
<S>                                                <C>
               2001                                106%
               2002                                105%
               2003                                104%
               2004                                103%
               2005                                102%
               2006 and thereafter                 100%
</Table>

The Borrower shall pay the Mandatory Redemption Price, together with Interest
accrued thereon, within 3 Business Days after receipt by the Borrower or any of
its Subsidiaries of the proceeds of such Initial Public Offering. For the
purposes hereof, "INITIAL PUBLIC OFFERING" means the sale by the Borrower or any
Subsidiary of the Borrower of capital stock to the public pursuant to a
registration statement on Form S- l or otherwise (other than a registration
statement on Form S-4 or S-8 or any similar or successor form filed) under the
Securities Act in which the issuer receives any Net Cash Proceeds. For the
purposes hereof, "NET CASH PROCEEDS" means (x) the cash proceeds in respect of
an Initial Public Offering MINUS (y) reasonable brokerage commissions or
underwriting fees and other reasonable fees and expenses (including, without
limitation, reasonable fees, charges and disbursements of counsel and reasonable
fees and expenses of investment bankers) relating to such Initial Public
Offering.

<Page>

                  (b) CHANGE OF CONTROL. Subject to the subordination provisions
of Section 7 hereof, upon a Change of Control (as hereinafter defined), the
Borrower agrees to prepay the outstanding principal amount of this Note in
accordance with the Mandatory Redemption Prices set forth in Section 3(a) above,
together with Interest accrued thereon through the date of such prepayment, such
payment to be made upon the occurrence of such Change of Control. The Mandatory
Redemption Price with respect to a Change of Control shall be determined based
upon the percentage of outstanding principal amount of this Note which
corresponds to the period during which the Change of Control occurs. For the
purposes hereof, "CHANGE OF CONTROL" means (i) any transaction or series of
transactions in which The Veritas Capital Fund, L.P. and/or its Affiliates
("VERITAS") ceases to beneficially own at least 75% of the limited liability
company interests of IDT Holding L.L.C., a Delaware limited liability company
("IDT HOLDING"), or 1DT Holding ceases to own at least 100% of the outstanding
capital stock of the Borrower (other than capital stock of the Borrower owned by
the holders of the Warrants), (ii) the sale of all or substantially all of the
assets of the Borrower or any of its Subsidiaries, the operations of which in
the reasonable judgment of the Holder would constitute a material part of the
business or operations of the Borrower and its Subsidiaries, taken as a whole,
(iii) the liquidation of the Borrower or any of its Subsidiaries (other than the
Inactive Subsidiaries), the operations of which in the reasonable judgment of
the Holder would constitute a material part of the business or operations of the
Borrower and its Subsidiaries, taken as a whole, or (iv) the combination of the
Borrower or any of its Subsidiaries, the operations of which in the reasonable
judgment of the Holder would constitute a material part of the business or
operations of the Borrower and its Subsidiaries, taken as a whole, with another
entity, as a result of which (A) the shareholders of the Borrower directly or
indirectly, hold less than 50%> of the total of all voting shares outstanding or
(B) directors of the Borrower constitute less than a majority of the Board of
Directors of the combined entity; PROVIDED, HOWEVER, that any of the events
described above as applied to a Subsidiary of a the Borrower shall be deemed to
be a Change in Control only if such event is also an Event of Default; or (v) a
"Change of Control" as such term is defined in the Credit Agreement described in
the definition of Senior Indebtedness in Section 7(a) below.

                  (c) NOTICE. TO the extent possible, the Borrower shall give
written notice to the Holder of any mandatory prepayment pursuant to this
Section 3 at least fifteen (15) Business Days prior to the date of such
prepayment. Such notice shall be given in the manner specified in Section 11.2
of the Purchase Agreement.

                  (d) PARI PASSU PAYMENT. All payments made under this Section 3
shall be made pari passu with respect to all of the Notes.

            4. OPTIONAL PREPAYMENT/REDEMPTION.

                  (a) Subject to the subordination provisions of Section 7
hereof, upon notice given to the Holder as provided in Section 4(b), the
Borrower, at its option, may prepay all or any portion of the principal amount
of this Note at any time, by paying to the Holder an amount equal to the
redemption prices (the "OPTIONAL REDEMPTION PRICES") set forth below

<Page>

(expressed as a percentage of the outstanding principal amount being prepaid,
from time to time) together with Interest accrued and unpaid thereon to the date
fixed for such prepayment, and costs and expenses (including, without
limitation, reasonable fees, charges and disbursements of counsel), if any,
associated with such prepayment; PROVIDED, HOWEVER, each prepayment of less than
the full outstanding balance of the principal amount of this Note shall be in an
aggregate principal amount of this Note or $500,000 or a whole multiple thereof;
and PROVIDED, FURTHER, that unless this Note and all Notes shall be paid in
full, the aggregate principal balance of the Notes outstanding at any time shall
be at least $5,000,000. If such prepayment is to be made by the Borrower to the
Holder during the consecutive 12-month period immediately preceding August 1, of
the calendar year set forth below, the Optional Redemption Price shall be
determined based upon the percentage of the outstanding principal amount of this
Note and which corresponds to period in question; PROVIDED, HOWEVER, that in no
event shall such percentage for any twelve month period payable to the Holder of
this Note exceed the maximum permitted by any regulation applicable to such
Holder, which limitation, if any, shall not be applicable to any other Note or
holder thereof.

<Table>
<Caption>

           Period                             Optional Redemption Price
           ------                             -------------------------

<S>                                                 <C>
           2001                                     106%
           2002                                     105%
           2003                                     104%
           2004                                     103
           2005                                     102%
           2006 and thereafter                      100%
</Table>

                  (b) The Borrower shall give written notice of prepayment of
this Note, or any portion thereof, pursuant to this Section 4 not less than 10
nor more than 60 days prior to the date fixed for such prepayment. Such notice
of prepayment pursuant to this Section 4 shall be given in the manner specified
in Section 11.2 of the Purchase Agreement. Upon notice of prepayment pursuant to
this Section 4 being given by the Borrower, the Borrower covenants and agrees
that it will prepay, on the date therein fixed for prepayment, this Note or the
portion hereof so called for prepayment, at the outstanding principal amount of
this Note thereof or the portion thereof so called for prepayment together with
Interest accrued and unpaid thereon to the date fixed for such prepayment,
together with the costs and expenses referred to in Section 4(a).

                  (c) All optional prepayments under this Section 4 shall
include payment of accrued Interest on the principal amount of this Note so
prepaid and shall be applied first to all costs, expenses and indemnities
payable under the Purchase Agreement, then to payment of default interest, if
any, then to payment of Interest, and thereafter to principal.

                  (d) PARI PASSU PAYMENT. All payments made under this Section 4
shall be made pari passu with respect to all of the Notes.

<Page>

            5. AMENDMENT. Amendments and modifications of this Note may be made
only in the manner provided in Section 11.4 of the Purchase Agreement.

            6. DEFAULTS AND REMEDIES.

                  (a) EVENTS OF DEFAULt. An "EVENT OF DEFAULT" shall occur if:

                        (i) the Borrower shall default in the payment of the
principal of any of the Notes, when and as the same shall become due and
payable, whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise; or

                        (ii) the Borrower shall default in the payment of any
installment of Interest on any of the Notes according to its terms, when and as
the same shall become due and payable and such default shall continue for a
period of 10 days; or

                        (iii) the Borrower or any of its Subsidiaries shall
default in the due observance or performance of any covenant to be observed or
performed pursuant to (x) Section 8.1 of the Purchase Agreement and such default
shall continue for a period of 10 days, or (y) Sections 8.2(a), 8.3, 8.8, 8.10,
8.11, 8,12 or Article 9 of the Purchase Agreement and provided, however, that a
default under Article 9 which does not or is not likely to have a material
adverse effect on the Borrower or any of its Subsidiaries taken as a whole shall
become an Event of Default only if such default shall continue for a period of
30 days; or

                        (iv) the Borrower or any of its Subsidiaries shall
default in the due observance or performance of any other covenant, condition or
agreement on the part of the Borrower or any Subsidiaries to be observed or
performed pursuant to the terms hereof or pursuant to the terms of the Purchase
Agreement or any of the Transaction Documents (other than those referred to in
clauses (i), (ii) or (iii) of this Section 6(a)), and such default shall
continue for 45 days after the earliest of (A) the date the Borrower is required
pursuant to the Transaction Documents or otherwise to give notice thereof to the
Holder (whether or not such notice is actually given) or (B) the date of written
notice thereof, specifying such default and, if such default is capable of being
remedied, requesting that the same be remedied, shall have been given to the
Borrower by the Holder; or

                        (v) any representation, warranty or certification made
by or on behalf of the Borrower or any of its Subsidiaries in the Purchase
Agreement, this Note, the Transaction Documents or in any certificate or other
document delivered pursuant hereto or thereto shall have been incorrect in any
material respect when made; or

                        (vi) any event or condition shall occur that results in
(A) the acceleration of the maturity of any Indebtedness of the Borrower or any
of its Subsidiaries (including the Senior Indebtedness), or (B) a default of any
Indebtedness of the Borrower or any of its Subsidiaries (other than Senior
Indebtedness), in either case in a principal amount aggregating $1,000,000 or
more; or

<Page>

                        (vii) any uninsured damage to or loss, theft or
destruction of any assets of the Borrower or any of its Subsidiaries shall occur
that is in excess of $1,000,000; or

                        (viii) involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(a) relief in respect of the Borrower, or any Subsidiary of the Borrower, or of
a substantial part of their property or assets, under the United States Code, as
now constituted or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (b) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower, or any Subsidiary of the Borrower, or for a substantial part of their
property or assets, or (c) the winding up or liquidation of the Borrower, or any
Subsidiary of the Borrower; and such proceeding or petition shall continue
undismissed for 60 days, or an order or decree approving or ordering any of the
foregoing shall be entered; or

                        (ix) The Borrower or any Subsidiary of the Borrower
shall (a) voluntarily commence any proceeding or file any petition seeking
relief under the United States Code, as now constituted or hereafter amended, or
any other Federal or state bankruptcy, insolvency, receivership or similar law,
(b) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
paragraph (viii) of this Section 6(a), (c) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for such, or for a substantial part of its property or assets,
(d) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (e) make a general assignment for the benefit
of creditors, (f) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (g) take any action for the
purpose of effecting any of the foregoing; or

                        (x) one or more judgments for the payment of money in an
aggregate amount in excess of 5300,000 (to the extent not covered by insurance)
shall be rendered against the Borrower or any of its Subsidiaries and the same
shall remain undischarged for a period of 30 days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Borrower, or any Subsidiary of
the Borrower to enforce any such judgment; or

                        (xi) (i) there shall be a default under any Government
Contract or other Significant Customer Contract; (ii) a notice of termination
shall have been issued under any Government Contract or other Significant
Customer Contract; or (iii) a cure notice issued under any Government Contract
or other Significant Customer Contract shall remain uncured beyond (x) the
expiration of the time period available to the Borrower or any Subsidiary of the
Borrower pursuant to such Government Contract or other Significant Customer
Contract and/or such cure notice (as the case may be), to cure the noticed
default, or (y) the date on which the other contracting party is entitled to
exercise its rights and remedies under the Government Contract or other
Significant Customer Contract as a consequence of such default; or

<Page>

                        (xii) (i) the Borrower or any of its Subsidiaries is
debarred or suspended from contracting with Governmental Authority; (ii) a
notice of debarment or suspension shall have been issued to the Borrower or any
Subsidiary of the Borrower; or (iii) a notice OF termination for default or the
actual termination for default of any Government Contract or other Significant
Customer Contract shall have been issued to or received by the Borrower or any
Subsidiary of the Borrower; or (iv) an investigation or inquiry by any
Governmental Authority relating to the Borrower or any Subsidiary OF the
Borrower and involving fraud, deception or willful misconduct shall have been
commenced in connection with any Government Contract or other Significant
Customer Contract or the activities of the Borrower or any Subsidiary of the
Borrower.

                  (b) ACCELERATION. If an Event of Default occurs under Section
6(a)(viii) or (ix), then the outstanding principal of and all accrued Interest
on this Note shall automatically become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived. IF any other Event of Default occurs and is continuing the
Holder, by written notice to the Borrower, may declare the principal of and
accrued Interest on this Note to be immediately due and payable. Upon such
declaration, such principal and Interest shall become immediately due and
payable. The Holder may rescind an acceleration and its consequences if all
existing Events of Default have been cured or waived, except nonpayment OF
principal or Interest that has become due solely because of the acceleration,
and if the rescission would not conflict with any judgment or decree. Any notice
or rescission shall be given in the manner specified in Section 11.2 of the
Purchase Agreement.

            7. SUBORDINATION. The Subordinated Indebtedness (as hereinafter
defined) shall at all times be wholly subordinate and junior in right and order
of payment to the payment in full of all Senior Indebtedness in cash to the
extent and in the manner provided in this Section 7. This Section 7 shall
constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders of the Senior Indebtedness, and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.

                  (a) DEFINITIONS. As used in this Section 7, the following
terms shall have the following meanings:

            "INDEBTEDNESS" SHALL have the meaning assigned to that term in the
      Purchase Agreement.

            "SENIOR COVENANT DEFAULT" shall mean any event of default as defined
      under any agreement pertaining to Senior Indebtedness of the Borrower or
      any Guarantor, other than a Senior Payment Default.

            "SENIOR DEFAULT" SHALL mean a Senior Payment Default or a Senior
      Covenant Default.

<Page>

            "SENIOR INDEBTEDNESS" MEANS all indebtedness, obligations
      (including, without limitation, Hedging Agreements (as defined in the
      Credit Agreement) in favor of the lenders thereunder) and liabilities of
      the Borrower, including, without limitation, all principal, interest,
      premiums, if any, costs, expenses, indemnitees and fees, currently
      outstanding or incurred in the future pursuant to the Credit Agreement
      (the "CREDIT AGREEMENT") dated as of September 28, 2000, among the
      Borrower, IDT Holding, LLC, the subsidiaries of the Borrower as may from
      time to time become parties thereto, the several banks and other financial
      institutions as may from time to time become parties thereto (each a
      "Lender") and First Union National Bank ("First Union"), as the
      Administrative Agent, CIBC World Markets Corp. ("CIBC") as Syndication
      Agent, Credit Lyonnais New York Branch as Documentation Agent, and First
      Union Securities, Inc. and CIBC, as co-lead arrangers and joint
      bookrunners and any related documents, including without limitation, all
      "Obligations" as defined therein, and all amendments, restatements,
      renewals, extensions, increases, refinancings, modifications or refundings
      thereof with the same or different lenders or agents from time to time;
      together with all post-petition interest, if any, whether or not an
      allowed claim, PROVIDED, HOWEVER, in no event shall the aggregate
      principal amount of Senior Indebtedness exceed $190,000,000. To the extent
      any payment of Senior Indebtedness (whether by or on behalf of the
      Borrower or any Guarantor, as proceeds of security or enforcement of any
      right of set-off or otherwise) is declared to be fraudulent or
      preferential, set aside or required to be paid to a trustee, receiver or
      similar party under any bankruptcy, insolvency, receivership, fraudulent
      conveyance or similar law, then if such payment is recovered by or paid
      over to, such trustee, receiver or other similar party, the Senior
      Indebtedness or part thereof originally intended to be satisfied shall be
      deemed to be reinstated and outstanding as if such payment had not
      occurred, but only as to the applicability of the provisions of this
      Section 7 with respect to any payment of principal and interest received
      by the Holder (i) on or at any time subsequent to the date the Holder
      receives written notice from the Administrative Agent of any recovery from
      the Administrative Agent or any Lender, or (ii) following the commencement
      of any bankruptcy or insolvency proceeding or the appointment of any
      receiver, in each case with respect to the Borrower or any of its
      Subsidiaries, or (iii) within 100 days following the payment of Senior
      Indebtedness so declared to be fraudulent or preferential, set aside or
      required to be paid to a trustee, receiver a similar party, or (iv) within
      370 days following the closing date of the Original Credit Agreement; in
      each case to the extent not otherwise declared to be fraudulent or
      preferential, set aside or required to be paid to a trustee, receiver or
      similar party under any bankruptcy, insolvency, receivership, fraudulent
      conveyance or similar law.

            "SENIOR PAYMENT DEFAULT" shall mean any default in the payment of
      any Senior Indebtedness.

            "SUBORDINATED INDEBTEDNESS" shall mean (i) the principal of,
      premium, if any and Interest on the Notes and any fees related thereto;
      and (ii) any other obligations of the Borrower or any Guarantor arising
      out of or in connection with the Purchase Agreement,

<Page>

      this Note or the other Transaction Documents, including, without
      limitation, indemnification obligations and contribution obligations
      pursuant to Section 7 of the Purchase Agreement.

                  (b) GENERAL. UPON the maturity of any Senior Indebtedness by
lapse of time, acceleration, required prepayment or otherwise, all Senior
Indebtedness shall first be paid in full in cash before any payment is made on
account of the Subordinated Indebtedness or by the Borrower or Affiliate of the
Borrower to acquire, redeem, retire or purchase this Note and any other
liabilities or obligations in connection herewith or arising hereunder. Prior to
such maturity (i) the Borrower may prepay this Note to the extent permitted
under the Credit Agreement in accordance with the provisions of Section 3 or
Section 4 only so long as no Senior Default has occurred and is continuing or
would occur as a result of any such prepayment and (ii) the Holder may receive
any distributions provided for in Section 7(e)(ii) hereof.

                  (c) LIMITATION ON PAYMENT.

                        (i) Upon receipt by the Borrower and the Holder of a
Blockage Notice (as defined below), then unless and until (1) all Senior
Defaults that gave rise to the Blockage Notice shall have been remedied or
waived in writing or shall have ceased to exist, or (2) the Senior Indebtedness
in respect of which such Senior Defaults shall have occurred shall have been
paid in full in cash, no direct or indirect payment (in cash, property,
securities or by set-off or otherwise) of or on account of the principal of,
premium, if any, or Interest on this Note or as a sinking fund for this Note or
in respect of any redemption, retirement, purchase or other acquisition of this
Note or any other payment on account of Subordinated Indebtedness shall be made
during any period prior to the expiration of the Blockage Period (as defined
below). Notwithstanding the foregoing, all interest paid with respect to this
Note prior to the giving of the Blockage Notice in question by the Holder hereof
may be kept by such Holder.

                        (ii) For purposes of this Section 7, a "BLOCKAGE NOTICE"
is a notice of a Senior Default that has occurred and is continuing, given to
the Borrower and the Holder by the Administrative Agent, on behalf of holders of
a majority in principal amount of the Senior Indebtedness then outstanding (or
their authorized agent); PROVIDED, HOWEVER, that not more than two (2) effective
Blockage Notices shall be given within any 365 day period and not more than four
(4) effective Blockage Notices shall be given pursuant to the provisions of this
Section 7; and PROVIDED, FURTHER, HOWEVER, that no Senior Default existing on
the date on which any Blockage Notice is given shall, unless the same shall have
ceased to exist for a period of at least 90 consecutive days, be used as a basis
for any subsequent Blockage Notice.

                        (iii) For purposes of this Section 7, a "BLOCKAGE
PERIOD" with respect to a Blockage Notice is the period commencing upon the date
of the Borrower's receipt of such Blockage Notice and having a duration as
follows:

                        (1) 360 days, if the Senior Default to which the
      Blockage Notice refers is a Senior Payment Default; or

<Page>

                        (2) 180 days if the Senior Default to which the Blockage
      Notice refers is a Senior Covenant Default.

                  (d) LIMITATION ON REMEDIES. As long as any Senior Indebtedness
remains outstanding, upon the occurrence of an Event of Default under this Note,
the Holder shall not, unless the holders of any Senior Indebtedness shall have
caused such Senior Indebtedness to become due prior to its stated maturity or
any Event of Default pursuant to Section 6(a)(viii) or (ix) of this Note shall
have commenced with respect to the Borrower, declare or join in any declaration
of this Note to be due and payable by reason of such Event of Default or
otherwise take any action against either the Borrower (including, without
limitation, commencing any legal action against the Borrower or filing or
joining in the filing of any insolvency petition against the Borrower) during
the period (a "REMEDY STANDSTILL PERIOD") beginning upon the date of written
notice (a "REMEDY NOTICE") of occurrence of an Event of Default from the Holder
to the Borrower and the Administrative Agent on behalf of the holders of the
Senior Indebtedness and ending on the earlier to occur of: (i) the acceleration
of the Senior Indebtedness which such Blockage Notice relates, (ii) 90 days
after the receipt by the Administrative Agent of the Remedy Notice or (iii) such
time as the holders of Senior Indebtedness (or any requisite percentage thereof)
consent in writing to the termination of the Remedy Standstill Period. During
the Remedy Standstill Period, the Holders shall be prohibited from accelerating
the Notes and shall be prohibited from enforcing any of their default remedies
with respect thereto (including any right to sue the Borrower or to file or
participate in the filing of any involuntary bankruptcy petition against the
Borrower) until the Remedy Standstill Period shall cease to be in effect;
provided that any Blockage Period (if not also terminated) shall continue for
the full period notwithstanding the termination or expiration of the Remedy
Standstill Period.

            Notwithstanding the foregoing, the Remedy Standstill Period shall be
inapplicable or cease to be effective if an Event of Default pursuant to Section
6(a)(viii) or (ix) shall have occurred with respect to the Borrower or its
Subsidiaries. In addition, any Remedy Standstill Period shall cease to be
effective if at any time during such period: (i) substantial assets of the
Borrower or its Subsidiaries are offered for sale, sold or otherwise disposed of
outside of the ordinary course of business for less than fair value or (ii)
payment or any distribution of any character, whether in cash, securities or
other property of the Borrower or its Subsidiaries shall be made to or received
outside of the ordinary course of business by any creditor on any Indebtedness
which is on the same level of priority with or junior and subordinate in right
of payment to this Note.

            Upon the expiration or termination of any Blockage Remedy Standstill
Period, the Holder shall be entitled to exercise any of its rights with respect
to this Note other than any right to accelerate the maturity date of this Note
based upon the occurrence of any Event of Default in respect thereto which has
been cured or otherwise remedied during the Blockage Period.

<Page>

                  (e) SUBORDINATION UPON CERTAIN EVENTS. Upon the occurrence of
any Event of Default with respect to the Borrower or its Subsidiaries under
Sections 6(a)(viii) or (ix) of this Note:

                        (i) Upon any payment or distribution of any and all
assets of the Borrower or its Subsidiaries of any kind or character to creditors
thereof, holders of Senior Indebtedness shall be entitled to receive
indefeasible payment in full in cash of all obligations with respect to the
Senior Indebtedness before the Holder shall be entitled to receive any payment
in respect of the Subordinated Indebtedness.

                        (ii) Until all Senior Indebtedness is paid in full in
cash, any distribution to which the Holder would be entitled but for this
Section 7 shall be made to the holders of Senior Indebtedness, as their
interests may appear, except that the Holder may, pursuant to a plan of
reorganization under Chapter 11 of the Bankruptcy Code of 1978, as amended, or
any similar provision of any successor legislation thereto, receive securities
that are subordinate to the Senior Indebtedness to at least the same extent as
this Note if pursuant to such plan the distributions to the holders of the
Senior Indebtedness in the form of cash, securities or other property, by
set-off or otherwise, provide for payment of the full amount of the allowed
claim of the holders of the Senior Indebtedness.

                        (iii) For purposes of this Section 7, a distribution may
consist of cash, securities or other property, by set-off or otherwise.

                  (f) PAYMENTS AND DISTRIBUTIONS RECEIVED. If the Holder shall
have received any payment from or distribution of assets of the Borrower or any
of its Subsidiaries in respect of the Subordinated Indebtedness in contravention
of the terms of this Section 7 before all Senior Indebtedness is paid in full in
cash, then and in such event such payment or distribution shall be received and
held in trust for and shall be promptly paid over or delivered to the holders of
Senior Indebtedness to the extent necessary to pay all such Senior Indebtedness
in full in cash.

                  (g) PROOFS OF CLAIM. If, while any Senior Indebtedness is
outstanding, any Event of Default under Section 6(a)(viii) or (ix) of this Note
occurs with respect to the Borrower or its Subsidiaries, the Holder shall duly
and promptly take such action as any holder of Senior Indebtedness may
reasonably request to collect any payment with respect to this Note for the
account of the holders of the Senior Indebtedness and to file appropriate claims
or proofs of claim in respect of this Note. Upon the failure of the Holder to
take any such action, each holder of Senior Indebtedness is hereby irrevocably
authorized and empowered (in its own name or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution referred to in respect of this Note and to file claims and proofs
of claim and take such other action as it may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the holder with
respect to this Note.

<Page>

                  (h) SUBROGATION. After all amounts payable under or in respect
of Senior Indebtedness are paid in full in cash and the commitments under the
Credit Agreement shall have been terminated, the Holder shall be subrogated to
the rights of holders of Senior Indebtedness to receive payments or
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Holder have been applied to the payment of Senior
Indebtedness. A distribution made under this Section 7 to a holder of Senior
Indebtedness which otherwise would have been made to the Holder is not, as
between the Borrower and the Holder, a payment by the Borrower on Senior
Indebtedness.

                  (i) RELATIVE RIGHTS. This Section defines the relative rights
of the Holder and the holders of Senior Indebtedness. Nothing in this Section
shall: (1) impair, as between the Borrower and the Holder, the obligation of the
Borrower, which is absolute and unconditional, to pay principal of and interest
(including default interest) on this Note in accordance with its terms; (2)
affect the relative rights of the Holder and creditors of the Borrower or any of
its Subsidiaries other than holders of Senior Indebtedness or (3) prevent the
Holder from exercising its available remedies upon a default or Event of
Default, subject to the rights, if any, under this Section 7 of holders of
Senior Indebtedness.

                  (j) SUBORDINATION MAY NOT BE IMPAIRED BY THE BORROWER. No
right of any holder of any Senior Indebtedness to enforce the subordination of
the. Indebtedness evidenced by this Note shall be impaired by any failure to act
by the Borrower or such holder of Senior Indebtedness or by the failure of the
Borrower or such holder to comply with this Note. The provisions of this Section
7 shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Senior Indebtedness is rescinded or must
otherwise be returned by any holder of Senior Indebtedness as a result of the
insolvency, bankruptcy or reorganization of the Borrower or any of its
Subsidiaries or otherwise, all as though such payment had not been made.

                  (k) PAYMENTS. A payment with respect to principal of or
interest on the Subordinated Indebtedness shall include, without limitation,
payment of principal of, and Interest on this Note, any depositing of funds for
the defeasance of the Subordinated Indebtedness, any sinking fund and any
payment on account of mandatory prepayment or optional prepayment provisions.

                  (l) SECTION NOT TO PREVENT EVENTS OF DEFAULT. The failure to
make a payment on account of principal of or interest on or other amounts
constituting Subordinated Indebtedness by reason of any provision of this
Section 7 shall not be construed as preventing the occurrence of an Event of
Default under Section 6.

                  (m) SUBORDINATION NOT IMPAIRED; BENEFIT OF SUBORDINATION. The
Holder agrees and consents that without notice to or assent by such Holder, and
without affecting the liabilities and obligations of the Borrower and the rights
and benefits of the holders of the Senior Indebtedness set forth in this Section
7:

<Page>

                        (i) The obligations and liabilities of the Borrower and
its Subsidiaries and any other party or parties for or upon the Senior
Indebtedness may, from time to time, be increased, renewed, refinanced,
extended, modified, amended, restated, compromised, supplemented, terminated,
waived or released, PROVIDED in all cases, the maximum outstanding principal
amount of Senior Indebtedness shall not exceed $190,000,000;

                        (ii) The holders of Senior Indebtedness, and any
representative or representatives acting on behalf thereof, may exercise or
refrain from exercising any right, remedy or power granted by or in connection
with any agreements relating to the Senior Indebtedness; and

                        (iii) Any balance or balances of funds with any holder
of Senior Indebtedness at any time outstanding to the credit of the Borrower and
any collateral in which a security interest has been granted to any holder of
Senior Indebtedness may, from time to time, in whole or in part, be surrendered
or released;

all as the holders of the Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the subordination of
the Subordinated Indebtedness to the Senior Indebtedness provided for herein.

                  (n) MODIFICATION OF SECTION 7. The provisions of this Section
7 and all definitions referred to or pertaining to defined terms used in this
Section 7 whether or not such definitions are set forth in this Note, are for
the benefit of the holders from time to time of Senior Indebtedness and, so long
as any Senior Indebtedness remains unpaid, may not be modified, rescinded or
canceled in whole or in part without the prior written consent thereto of all
holders of Senior Indebtedness. No modification of this Section 7 in this Note
shall be valid unless a similar modification has been agreed to and made in the
other Notes.

                  (o) COVENANTS OF HOLDER. Until all of the Senior Indebtedness
has been fully paid in cash:

                        (i) Upon the occurrence and during the continuance of a
Senior Default, the Holder shall not release, exchange, extend the time of
payment of; compromise, set off or otherwise discharge any part of this Note or
modify or amend this Note; PROVIDED, however, that at such time or times as the
actions referred to in this Section 7(o)(i) may be taken by the Holder, such
Holder shall give the holders of Senior Indebtedness five Business Days prior
written notice before taking any of such actions.

                        (ii) The Holder hereby undertakes and agrees for the
benefit of the holders of Senior Indebtedness that, upon the occurrence and
during the continuance of a Senior Default, it shall take any actions reasonably
requested by any holder of Senior Indebtedness to effectuate the full benefit of
the subordination contained herein.

<Page>

                        (iii) Until the Senior Indebtedness is paid in full in
cash and notwithstanding anything contained in the Transaction Documents, or the
Senior Loan Agreements to the contrary, the Holder shall not, without the prior
written consent of Administrative Agent, agree to any amendment, modification or
supplement to the Notes which (w) increases the maximum principal amount of the
Notes or rate of interest on any of the Notes (it being understood that the
imposition of a default rate of interest contained in the Notes as in effect on
the date hereof shall not be restricted by this clause (w)), (x) accelerates the
dates (including maturity dates) upon which payments of principal or interest on
the Notes are due, (y) makes more restrictive or adds any event of default or
any covenant with respect to the Notes or (z) changes the redemption or
prepayment provisions of the Notes.

                  (p) NO CONTEST OF SENIOR INDEBTEDNESS; NO SECURITY FOR
SUBORDINATED INDEBTEDNESS. The Holder agrees that it will not, and will not
encourage any other Person (as defined in the Credit Agreement) to, at any time,
contest the validity, perfection, priority or enforceability of the Senior
Indebtedness or Liens (as defined in the Credit Agreement) in the Collateral
granted to Administrative Agent pursuant to the Credit Agreement, or the other
Credit Documents or accept or take any collateral security for the Subordinated
Indebtedness.

                  (q) MISCELLANEOUS.

                        (i) To the extent permitted by applicable law, the
Holder and the Borrower hereby waive (1) notice of acceptance hereof by the
holders of the Senior Indebtedness, and (2) all diligence in the collection or
protection of or realization upon the Senior Indebtedness.

                        (ii) the Borrower and the Holder hereby expressly agree
that the holders of Senior Indebtedness may enforce any and all rights derived
herein by suit, either in equity or law, for specific performance of any
agreement contained in this Section 7 or for judgment at law and any other
relief whatsoever appropriate to such action or procedure.

                        (iii) The Holder acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the issuance of this Note,
and each holder of Senior Indebtedness shall be deemed conclusively to have
relied upon such subordination provisions in acquiring and continuing to hold
such Senior Indebtedness.

            8.    USE OF PROCEEDS. The Borrower shall use the principal amount
of this Note in accordance with the permitted uses described in Section 8.10 of
the Purchase Agreement.

            9.    SUITS. OR ENFORCEMENT.

                  (a) Subject to Section 7 and Sections 3(d) and 4(d), upon the
occurrence of any one or more Events of Default, the Holder of this Note may
proceed to protect

<Page>

and enforce its rights hereunder by suit in equity, action at law or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in the Purchase Agreement or this Note or in aid of the
exercise of any power granted in the Purchase Agreement or this Note, or may
proceed to enforce the payment of this Note, or to enforce any other legal or
equitable right of the Holders of this Note.

                  (b) In case of any default under this Note, the Borrower will
pay to the Holder such amounts as shall be sufficient to cover the costs and
expenses of such Holder due to such default, as provided in Article 7 of the
Purchase Agreement.

            10.   REMEDIES CUMULATIVE. No remedy herein conferred upon the
Holder is intended to be exclusive of any other remedy and each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.

            11.   REMEDIES NOT WAIVED. No course of dealing between the Borrower
and the Holder or any delay on the part of the Holder in exercising any rights
hereunder shall operate as a waiver of any right.

            12.   TRANSFER.

                  (a) The term "HOLDER" as used herein shall also include any
transferee of this Note whose name has been recorded by the Borrower in the Note
Register. Each transferee of this Note acknowledges that this Note has not been
registered under the Securities Act, and may be transferred only pursuant to an
effective registration under the Securities Act or pursuant to an applicable
exemption from the registration requirements of the Securities Act and subject
to the pledge by the Holder of this Note pursuant to the terms of the
partnership agreement or other agreement of the Holder pursuant to which the
Holder issued any indebtedness.

                  (b) The Borrower shall maintain a register (the "NOTE
REGISTER") in its principal offices for the purpose of registering the Notes and
any transfer thereof, which register shall reflect and identify, at all times,
the ownership of any interest in the Note. Upon the issuance of this Note, the
Borrower shall record the name of the initial purchaser of this Note in the Note
Register as the first Holder. Upon surrender for registration of transfer or
exchange of this Note at the principal offices of the Borrower, the Borrower
shall, at its expense, execute and deliver one or more new Notes of like tenor
and of denominations of at least $500,000 (except as may be necessary to reflect
any principal amount of this Note not evenly divisible by $500,000) of alike
aggregate principal amount of this Note, registered in the name of the Holder or
a transferee or transferees. Every Note surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by written instrument of
transfer duly executed by the Holder of such Note or such holder's attorney duly
authorized in writing.

<Page>

                  (c) This Note may be transferred or assigned, in whole or in
part, by the Holder at any time.

            13.   REPLACEMENT OF NOTE. On receipt by the Borrower of an
affidavit of an authorized representative of the Holder stating the
circumstances of the loss, theft, destruction or mutilation of this Note (and in
the case of any such mutilation, on surrender and cancellation of such Note),
the Borrower, at its expense, will promptly execute and deliver, in lieu
thereof, a new Note of like tenor. If required by the Borrower, such Holder must
provide an indemnity bond or other indemnity sufficient in the judgment of the
Borrower to protect the Borrower from any loss which it may suffer if a lost,
stolen or destroyed Note is replaced.

            14.   COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Borrower shall bind its successors and assigns, whether so expressed or not.

            15.   GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.

            16.   SEVERABILITY. IF any one or more OF the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.

            17.   HEADINGS. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

                                 INTEGRATED DEFENSE TECHNOLOGIES, INC.

                                 By:  _______________________________________
                                      Name:
                                      Title:

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