Document:

Exhibit 10.1

 

 

 

HELMERICH & PAYNE,
INC.

HELMERICH & PAYNE INTERNATIONAL DRILLING CO.

 

 

$200,000,000 6.10% Senior
Notes

due July 21, 2016

 

 

 

NOTE PURCHASE AGREEMENT

 

 

Dated as of June 15,
2009

 

 

 

PPN: 42346# AE 1

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  AUTHORIZATION OF NOTES

  	
  1

  
	
   

  	
  1.1

  	
  Notes to be Issued

  	
  1

  
	
   

  	
  1.2

  	
  Guaranties

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  SALE AND PURCHASE OF
  NOTES

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CLOSING

  	
  2

  
	
   

  	
   

  	
   

  
	
  4.

  	
  CONDITIONS TO CLOSING

  	
  2

  
	
   

  	
  4.1

  	
  Representations and
  Warranties

  	
  2

  
	
   

  	
  4.2

  	
  Performance; No Default

  	
  2

  
	
   

  	
  4.3

  	
  Compliance Certificates

  	
  3

  
	
   

  	
  4.4

  	
  Opinions of Counsel

  	
  3

  
	
   

  	
  4.5

  	
  Purchase Permitted By
  Applicable Law, etc.

  	
  3

  
	
   

  	
  4.6

  	
  Sale of Other Notes

  	
  3

  
	
   

  	
  4.7

  	
  Payment of Special
  Counsel Fees

  	
  4

  
	
   

  	
  4.8

  	
  Private Placement
  Number

  	
  4

  
	
   

  	
  4.9

  	
  Changes in Corporate
  Structure

  	
  4

  
	
   

  	
  4.10

  	
  Guaranties

  	
  4

  
	
   

  	
  4.11

  	
  Funding Instructions

  	
  4

  
	
   

  	
  4.12

  	
  Proceedings and
  Documents

  	
  4

  
	
   

  	
  4.13

  	
  Credit Agreements

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS AND
  WARRANTIES OF THE COMPANY

  	
  5

  
	
   

  	
  5.1

  	
  Organization; Power and
  Authority

  	
  5

  
	
   

  	
  5.2

  	
  Authorization, etc.

  	
  5

  
	
   

  	
  5.3

  	
  Disclosure

  	
  5

  
	
   

  	
  5.4

  	
  Organization and Ownership
  of Shares of Subsidiaries

  	
  6

  
	
   

  	
  5.5

  	
  Financial Statements

  	
  6

  
	
   

  	
  5.6

  	
  Compliance with Laws,
  Other Instruments, etc.

  	
  7

  
	
   

  	
  5.7

  	
  Governmental
  Authorizations, etc.

  	
  7

  
	
   

  	
  5.8

  	
  Litigation; Observance
  of Statutes and Orders

  	
  7

  
	
   

  	
  5.9

  	
  Taxes

  	
  8

  
	
   

  	
  5.10

  	
  Title to Property;
  Leases

  	
  8

  
	
   

  	
  5.11

  	
  Licenses, Permits, etc.

  	
  8

  
	
   

  	
  5.12

  	
  Compliance with ERISA

  	
  8

  
	
   

  	
  5.13

  	
  Private Offering by the
  Company

  	
  9

  
	
   

  	
  5.14

  	
  Use of Proceeds; Margin
  Regulations

  	
  9

  
	
   

  	
  5.15

  	
  Existing Debt; Future
  Liens

  	
  10

  
	
   

  	
  5.16

  	
  Foreign Assets Control
  Regulations, etc.

  	
  10

  
	
   

  	
  5.17

  	
  Status under Certain
  Statutes

  	
  11

  
	
   

  	
  5.18

  	
  Environmental Matters

  	
  11

  
	
   

  	
  5.19

  	
  Solvency of Subsidiary
  Guarantors

  	
  11

  

 

i

 

	
  6.

  	
  REPRESENTATIONS OF THE
  PURCHASERS

  	
  12

  
	
   

  	
  6.1

  	
  Purchase for Investment

  	
  12

  
	
   

  	
  6.2

  	
  Source of Funds

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  INFORMATION AS TO
  COMPANY

  	
  13

  
	
   

  	
  7.1

  	
  Financial and Business
  Information

  	
  13

  
	
   

  	
  7.2

  	
  Officer’s Certificate

  	
  16

  
	
   

  	
  7.3

  	
  Electronic Delivery

  	
  16

  
	
   

  	
  7.4

  	
  Visitation

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  PREPAYMENT OF THE NOTES

  	
  17

  
	
   

  	
  8.1

  	
  Required Prepayments

  	
  17

  
	
   

  	
  8.2

  	
  Optional Prepayments
  with Make-Whole Amount

  	
  17

  
	
   

  	
  8.3

  	
  Mandatory Offer to
  Prepay Upon Change of Control

  	
  18

  
	
   

  	
  8.4

  	
  Allocation of Partial
  Prepayments

  	
  19

  
	
   

  	
  8.5

  	
  Maturity; Surrender,
  etc.

  	
  20

  
	
   

  	
  8.6

  	
  Purchase of Notes

  	
  20

  
	
   

  	
  8.7

  	
  Make-Whole Amount

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  AFFIRMATIVE COVENANTS

  	
  21

  
	
   

  	
  9.1

  	
  Compliance with Law

  	
  22

  
	
   

  	
  9.2

  	
  Insurance

  	
  22

  
	
   

  	
  9.3

  	
  Maintenance of
  Properties

  	
  22

  
	
   

  	
  9.4

  	
  Payment of Taxes

  	
  22

  
	
   

  	
  9.5

  	
  Corporate Existence,
  etc.

  	
  23

  
	
   

  	
  9.6

  	
  Books and Records

  	
  23

  
	
   

  	
  9.7

  	
  Liens Securing
  Obligations Under Principal Credit Agreement

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  NEGATIVE COVENANTS

  	
  23

  
	
   

  	
  10.1

  	
  Consolidated Debt

  	
  23

  
	
   

  	
  10.2

  	
  Interest Coverage Ratio

  	
  23

  
	
   

  	
  10.3

  	
  Priority Debt

  	
  24

  
	
   

  	
  10.4

  	
  Indebtedness of
  Subsidiaries

  	
  24

  
	
   

  	
  10.5

  	
  Liens

  	
  24

  
	
   

  	
  10.6

  	
  Mergers,
  Consolidations, etc.

  	
  26

  
	
   

  	
  10.7

  	
  Sale of Assets

  	
  27

  
	
   

  	
  10.8

  	
  Subsidiary Guaranty

  	
  28

  
	
   

  	
  10.9

  	
  Nature of Business

  	
  28

  
	
   

  	
  10.10

  	
  Transactions with Affiliates

  	
  28

  
	
   

  	
  10.11

  	
  Terrorism Sanctions
  Regulations

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  EVENTS OF DEFAULT

  	
  29

  
	
   

  	
   

  	
   

  
	
  12.

  	
  REMEDIES ON DEFAULT,
  ETC.

  	
  31

  
	
   

  	
  12.1

  	
  Acceleration

  	
  31

  
	
   

  	
  12.2

  	
  Other Remedies

  	
  32

  
	
   

  	
  12.3

  	
  Rescission

  	
  32

  

 

ii

 

	
   

  	
  12.4

  	
  No Waivers or Election
  of Remedies, Expenses, etc.

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  REGISTRATION; EXCHANGE;
  SUBSTITUTION OF NOTES

  	
  32

  
	
   

  	
  13.1

  	
  Registration of Notes

  	
  32

  
	
   

  	
  13.2

  	
  Transfer and Exchange
  of Notes

  	
  33

  
	
   

  	
  13.3

  	
  Replacement of Notes

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  PAYMENTS ON NOTES

  	
  34

  
	
   

  	
  14.1

  	
  Place of Payment

  	
  34

  
	
   

  	
  14.2

  	
  Home Office Payment

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  EXPENSES, ETC.

  	
  34

  
	
   

  	
  15.1

  	
  Transaction Expenses

  	
  34

  
	
   

  	
  15.2

  	
  Survival

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  SURVIVAL OF
  REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

  	
  35

  
	
   

  	
   

  	
   

  
	
  17.

  	
  AMENDMENT AND WAIVER

  	
  35

  
	
   

  	
  17.1

  	
  Requirements

  	
  35

  
	
   

  	
  17.2

  	
  Solicitation of Holders
  of Notes

  	
  36

  
	
   

  	
  17.3

  	
  Binding Effect, etc.

  	
  36

  
	
   

  	
  17.4

  	
  Notes held by Company,
  etc.

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  NOTICES

  	
  37

  
	
   

  	
   

  	
   

  
	
  19.

  	
  REPRODUCTION OF
  DOCUMENTS

  	
  37

  
	
   

  	
   

  	
   

  
	
  20.

  	
  CONFIDENTIAL
  INFORMATION

  	
  37

  
	
   

  	
   

  	
   

  
	
  21.

  	
  SUBSTITUTION OF
  PURCHASER

  	
  38

  
	
   

  	
   

  	
   

  
	
  22.

  	
  RELEASE OF SUBSIDIARY
  GUARANTOR

  	
  39

  
	
   

  	
   

  	
   

  
	
  23.

  	
  MISCELLANEOUS

  	
  39

  
	
   

  	
  23.1

  	
  Successors and Assigns

  	
  39

  
	
   

  	
  23.2

  	
  Payments Due on
  Non-Business Days

  	
  39

  
	
   

  	
  23.3

  	
  Accounting Terms

  	
  40

  
	
   

  	
  23.4

  	
  Severability

  	
  40

  
	
   

  	
  23.5

  	
  Construction

  	
  40

  
	
   

  	
  23.6

  	
  Counterparts

  	
  40

  
	
   

  	
  23.7

  	
  Governing Law

  	
  40

  
	
   

  	
  23.8

  	
  Jurisdiction and Process; Waiver of Jury Trial

  	
  40

  

 

iii

 

SCHEDULE A—Information Relating to Purchasers

SCHEDULE B—Defined Terms

 

SCHEDULE 5.3—Disclosure Materials

SCHEDULE 5.4—Subsidiaries and Ownership of Subsidiary
Stock

SCHEDULE 5.5—Financial Statements

SCHEDULE 5.12—Compliance with ERISA

SCHEDULE 5.15—Indebtedness

SCHEDULE 7.2 — Form of Compliance Certificate

SCHEDULE 10.4—Liens

 

EXHIBIT 1.1—Form of Senior Note

EXHIBIT 1.2(a)—Form of Parent Guaranty

EXHIBIT 1.2(b)—Form of Subsidiary Guaranty

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

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

 

iv

 

HELMERICH & PAYNE, INC.

HELMERICH & PAYNE INTERNATIONAL DRILLING CO.

1437 S Boulder Avenue

Suite 1400

Tulsa, OK 74119

(918) 742-5531

Fax:  (918) 742-0237

 

$200,000,000 6.10% Senior
Notes

due July 21, 2016

 

Dated as of June 15, 2009

 

TO EACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

 

Ladies and Gentlemen:

 

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

 

1.             AUTHORIZATION
OF NOTES.

 

1.1          Notes
to be Issued.

 

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

 

1.2          Guaranties.

 

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

 

 

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

 

2.             SALE
AND PURCHASE OF NOTES.

 

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

 

3.             CLOSING.

 

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

 

4.             CONDITIONS
TO CLOSING.

 

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

 

4.1          Representations
and Warranties.

 

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

 

4.2          Performance;
No Default.

 

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

 

2

 

with by it prior to or at
the Closing and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Section 5.14) no
Default or Event of Default shall have occurred and be continuing.

 

4.3          Compliance
Certificates.

 

(a)           Officer’s Certificate. 
Each of the Parent and the Company shall have delivered to you an
Officer’s Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

 

(b)           Secretary’s
Certificate.  Each of the Parent, the Company and each
Subsidiary Guarantor shall have
delivered to you a certificate certifying as to the resolutions attached
thereto and other corporate proceedings relating to the authorization,
execution and delivery of the Notes and the Agreement.

 

4.4          Opinions
of Counsel.

 

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

 

4.5          Purchase
Permitted By Applicable Law, etc.

 

On the date of the Closing your purchase of Notes
shall (i) be permitted by the laws and regulations of each jurisdiction to
which you are subject, without recourse to provisions (such as section 1405(a)(8) of
the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(ii) not violate any applicable law or regulation (including Regulation U,
T or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation that was not in effect on the date hereof.  If requested by you, you shall have received
an Officer’s Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.

 

4.6          Sale
of Other Notes.

 

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

 

3

 

4.7          Payment
of Special Counsel Fees.

 

Without limiting the provisions of Section 15.1,
the Company shall have paid on or before the Closing the fees, charges and
disbursements of your special counsel referred to in Section 4.4, to the
extent reflected in a statement of such counsel rendered to the Company at
least three Business Days prior to the Closing.

 

4.8          Private
Placement Number.

 

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

 

4.9          Changes
in Corporate Structure.

 

Neither the Parent nor the Company shall have changed
its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of
the liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

 

4.10        Guaranties.

 

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

 

4.11        Funding
Instructions.

 

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

 

4.12        Proceedings
and Documents.

 

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

 

4.13        Credit
Agreements.

 

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

 

4

 

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

 

5.             REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.

 

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

 

5.1          Organization;
Power and Authority.

 

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

 

5.2          Authorization,
etc.

 

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

 

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

 

5.3          Disclosure.

 

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

 

5

 

hereby and identified in
Schedule 5.3, and the financial statements listed in Schedule 5.5
(this Agreement, the Memorandum and such documents, certificates or other
writings and such financial statements delivered to each Purchaser prior to June 24,
2009 being referred to, collectively, as the “Disclosure Documents”), taken as
a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made.  Except as disclosed in the Disclosure
Documents, since September 30, 2008, there has been no change in the
financial condition, operations, business or properties of the Parent or any
Subsidiary, except changes that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect.

 

5.4          Organization
and Ownership of Shares of Subsidiaries.

 

(a)           Schedule 5.4 is (except as noted therein)
a complete and correct list of the Parent’s Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization, the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Parent and each other Subsidiary.

 

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

 

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

 

5.5          Financial
Statements.

 

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

 

6

 

5.6          Compliance
with Laws, Other Instruments, etc.

 

The execution, delivery and performance by the Company
and the Parent of this Agreement and by the Company of the Notes will not (i) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Parent or any
Subsidiary,  under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other Material agreement or instrument to which the
Parent or any Subsidiary,  is bound or by
which any of their respective properties may be bound or affected, (ii) conflict
with or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Parent or any Subsidiary,  or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority
applicable to the Parent or any Subsidiary, including the Company.

 

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

 

5.7          Governmental
Authorizations, etc.

 

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

 

5.8          Litigation;
Observance of Statutes and Orders.

 

(a)           There are no actions, suits or
proceedings pending or, to the knowledge of the Parent or the Company,
threatened against or affecting the Parent or any Subsidiary,  or any property of the Parent or any
Subsidiary,  in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

 

(b)           Neither the Parent nor any
Subsidiary,  is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including Environmental Laws and the USA Patriot Act) of any
Governmental Authority, which default or 

 

7

 

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

 

5.9          Taxes.

 

The Parent and its Subsidiaries have filed all income
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (i) the amount of which is not individually or in
the aggregate Material or (ii) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which the Parent or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP.  The federal income tax liabilities of the
Parent and its Subsidiaries, have been finally determined (whether by reason of
completed audits or the statute of limitations having run) for all fiscal years
up to and including the fiscal year ended September 30, 2005.

 

5.10        Title
to Property; Leases.

 

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

 

5.11        Licenses,
Permits, etc.

 

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

 

5.12        Compliance
with ERISA.

 

(a)           The Parent and each ERISA Affiliate,  have operated and administered each Plan in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to result in a
Material Adverse Effect.  Neither the
Parent nor any ERISA Affiliate,  has
incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as
defined in Section 3 of ERISA), and no event, transaction or condition has
occurred or exists that would reasonably be expected to result in the
incurrence of any such liability by the Parent or any ERISA Affiliate,  or in the imposition of any Lien on any of
the rights, properties or assets of the Parent or any ERISA Affiliate,  in either case pursuant to Title I or IV of
ERISA or to such penalty or 

 

8

 

excise tax provisions or to Section 401(a)(29) or 412 of the Code,
other than such liabilities or Liens as would not be individually or in the
aggregate Material.

 

(b)           Except as disclosed on Schedule 5.12, the
present value of the aggregate benefit liabilities under each of the Plans
(other than Multiemployer Plans), determined as of the end of such Plan’s most
recently ended plan year on the basis of the actuarial assumptions specified
for funding purposes in such Plan’s most recent actuarial valuation report, did
not exceed the aggregate current value of the assets of such Plan allocable to
such benefit liabilities.  The term “benefit
liabilities” has the meaning specified in section 4001 of ERISA and the
terms “current value” and “present value” have the meaning specified in
section 3 of ERISA.

 

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

 

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

 

(e)           The execution and delivery of this
Agreement and the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or
in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of
the Code.  The representation by the
Parent and the Company in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of your representation in Section 6.2
as to the sources of the funds used to pay the purchase price of the Notes to
be purchased by you.

 

5.13        Private
Offering by the Company.

 

None of the Parent, the Company or anyone acting on
their behalf has offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than you, the Other
Purchasers and not more than 48 other Institutional Investors, each of which
has been offered the Notes at a private sale for investment.  None of the Parent, the Company or anyone
acting on their behalf has taken, or will take, any action that would subject
the issuance or sale of the Notes to the registration requirements of section 5
of the Securities Act.

 

5.14        Use
of Proceeds; Margin Regulations.

 

The Company will apply the proceeds of the sale of the
Notes for general corporate purposes, to repay Indebtedness and to fund capital
expenditures.  No part of the proceeds
from the sale of the Notes will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for
the purpose of buying or carrying or trading in 

 

9

 

any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). 
Margin stock does not constitute more than 20% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does
not have any present intention that margin stock will constitute more than 25%
of the value of such assets.  As used in
this Section, the terms “margin stock” and “purpose of buying or carrying”
shall have the meanings assigned to them in said Regulation U.

 

5.15        Existing
Debt; Future Liens.

 

(a)           Except as described therein, Schedule
5.15 sets forth a complete and correct list of all outstanding Indebtedness of
the Parent and its Subsidiaries,  as of March 31,
2009, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or its Subsidiaries.  Neither the Parent nor any Subsidiary,  is in default and no waiver of default is
currently in effect, in the payment of any principal or interest on any
Indebtedness of the Parent or such Subsidiary, and no event or condition exists
with respect to any Indebtedness of the Parent or any Subsidiary, that is
outstanding in an aggregate principal amount in excess of $5,000,000 and that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.

 

(b)           Neither the Parent nor any Subsidiary is
a party to, or otherwise subject to any provision contained in, any instrument
evidencing Indebtedness of the Parent or such Subsidiary, any agreement
relating thereto or any other agreement (including, but not limited to, its
charter or other organizational document) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Indebtedness of the Parent,
except as specifically indicated in Schedule 5.15.

 

5.16        Foreign
Assets Control Regulations, etc.

 

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

 

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

 

10

 

(c)           No part of the proceeds from the sale of
the Notes hereunder will be used, directly or indirectly, in violation of the
United States Foreign Corrupt Practices Act of 1977, as amended, assuming in
all cases that such Act applies to the Parent.

 

5.17        Status
under Certain Statutes.

 

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

 

5.18        Environmental
Matters.

 

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

 

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

 

(c)           Neither the Parent nor any Subsidiary has
stored any Hazardous Materials on real properties now or formerly owned, leased
or operated by any of them and has not disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that would
reasonably be expected to result in a Material Adverse Effect; and

 

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

 

5.19        Solvency
of Subsidiary Guarantors.

 

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

 

11

 

6.             REPRESENTATIONS
OF THE PURCHASERS.

 

6.1          Purchase
for Investment.

 

You represent that you are purchasing the Notes for
your own account or for one or more separate accounts maintained by you or for
the account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their property
shall at all times be within your or their control.  You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.  You
represent that you are an “accredited investor” within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D
under the Securities Act.

 

6.2          Source
of Funds.

 

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

 

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

 

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

 

(c)           the Source is either (i) an
insurance company pooled separate account, within the meaning of PTE 90-1
(issued January 29, 1990), or (ii) a bank collective investment fund,
within the meaning of PTE 91-38 (issued July 12, 1991) and no employee
benefit plan or group of plans maintained by the same employer or employee
organization will, throughout your holding of the Notes, beneficially owns more
than 10% of all assets allocated to such pooled separate account or collective
investment fund; or

 

12

 

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

 

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

 

(f)            the Source is a governmental plan; or

 

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

 

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

 

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

 

7.             INFORMATION
AS TO COMPANY.

 

7.1          Financial
and Business Information

 

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

 

(a)           Quarterly Statements — within 60 days (or such shorter period
as is 15 days greater than the period applicable to the filing of the Parent’s
Quarterly Report on Form 10-Q (“Form 10-Q”) with the SEC regardless
of whether the Parent is subject to the filing requirements thereof) after the
end of each quarterly fiscal period in each fiscal 

 

13

 

year of the Parent (other than the last quarterly fiscal period of each
such fiscal year), duplicate copies of,

 

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

 

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

 

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

 

(b)           Annual Statements — within 120 days (or such shorter
period as is 15 days greater than the period applicable to the filing of the
Parent’s Annual Report on Form 10-K (the “Form 10-K”) with the SEC
regardless of whether the Parent is subject to the filing requirements thereof)
after the end of each fiscal year of the Parent, duplicate copies of,

 

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

 

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

 

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

 

14

 

(c)           SEC and Other Reports — promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Parent or any Subsidiary, to public securities
holders generally, and (ii) each regular or periodic report, each
registration statement that shall have become effective (without exhibits
except as expressly requested by such holder), and each final prospectus and
all amendments thereto filed by the Parent or any Subsidiary,  with the SEC;

 

(d)           Notice of Default or Event of Default — promptly, and in any event within five
Business Days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default, a written notice specifying the nature and
period of existence thereof and what action the Parent or the Company is taking
or proposes to take with respect thereto;

 

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

 

(i)            with respect to any Plan, any reportable
event, as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or

 

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

 

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

 

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

 

15

 

7.2          Officer’s
Certificate.

 

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

 

(a)           Covenant Compliance — the information (including detailed
calculations and reconciliations to GAAP if Agreement Accounting Principles
differ from GAAP at the time such compliance certificate is delivered) required
in order to establish whether the Parent and the Company were in compliance
with the requirements of Section 10.1 through Section 10.11,
inclusive, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and

 

(b)           Event of
Default — a statement that such officer has reviewed the relevant terms hereof
and has made, or caused to be made, under his or her supervision, a review of
the transactions and conditions of the Parent and its Subsidiaries,  from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.

 

7.3          Electronic
Delivery.

 

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

 

16

 

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

 

7.4          Visitation.

 

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

 

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

 

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

 

8.             PREPAYMENT
OF THE NOTES.

 

8.1          Required
Prepayments.

 

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

 

8.2          Optional
Prepayments with Make-Whole Amount.

 

The Company may, at its option, upon notice as
provided below, prepay at any time all, or from time to time any part of, the
Notes in an amount not less than $5,000,000 in the aggregate in the case of a
partial prepayment, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount.  The Company will give
each holder of Notes to be prepaid written notice of each optional prepayment
under this Section 8.2 not less than 30 days and not more than 60 days
prior to the date fixed for such prepayment. 
Each such notice shall specify such date, the aggregate 

 

17

 

principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by
such holder to be prepaid (determined in accordance with Section 8.4), and
the interest to be paid on the prepayment date with respect to such principal
amount being prepaid, and shall be accompanied by a certificate of a Senior
Financial Officer as to the estimated Make-Whole Amount due in connection with
such prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation.  Two Business Days prior to such prepayment,
the Company shall deliver to each holder of Notes to be prepaid a certificate
of a Senior Financial Officer specifying the calculation of such Make-Whole
Amount as of the specified prepayment date.

 

8.3          Mandatory
Offer to Prepay Upon Change of Control.

 

(a)           Notice of Change of Control or Control
Event — The
Company will, within five Business Days after any Responsible Officer has
knowledge of the occurrence of any Change of Control or Control Event, give
notice of such Change of Control or Control Event to each holder of Notes
unless notice in respect of such Change of Control (or the Change of Control
contemplated by such Control Event) shall have been given pursuant to paragraph
(b) of this Section 8.3.  If a
Change of Control has occurred, such notice shall contain and constitute an
offer to prepay Notes as described in paragraph (c) of this Section 8.3
and shall be accompanied by the certificate described in paragraph (g) of
this Section 8.3.

 

(b)           Condition to Company Action — The Company will not take any action
that consummates or finalizes a Change of Control unless (i) at least 15
Business Days prior to such action it shall have given to each holder of Notes
written notice containing and constituting an offer to prepay Notes accompanied
by the certificate described in paragraph (g) of this Section 8.3,
and (ii) subject to the provisions of paragraph (d) below,
contemporaneously with such action, it prepays all Notes required to be prepaid
in accordance with this Section 8.3.

 

(c)           Offer to Prepay Notes — The offer to prepay Notes contemplated
by paragraphs (a) and (b) of this Section 8.3 shall be an offer
to prepay, in accordance with and subject to this Section 8.3, all, but
not less than all, of the Notes held by each holder (in this case only, “holder”
in respect of any Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on a date specified in such
offer (the “Proposed Prepayment Date”). 
If such Proposed Prepayment Date is in connection with an offer
contemplated by paragraph (a) of this Section 8.3, such date shall be
not less than 30 days and not more than 60 days after the date of such offer.

 

(d)           Acceptance; Rejection — A holder of Notes may accept the offer
to prepay made pursuant to this Section 8.3 by causing a notice of such
acceptance to be delivered to the Company on or before the date specified in
the certificate described in paragraph (g) of this Section 8.3.  A failure by a holder of Notes to respond to
an offer to prepay made pursuant to this Section 8.3, or to accept an
offer as to all of the Notes held by the holder, within such time period shall
be deemed to constitute rejection of such offer by such holder.

 

18

 

(e)           Prepayment — Prepayment of the Notes to be prepaid pursuant to
this Section 8.3 shall be at 100% of the outstanding principal amount of
such Notes, together with interest on such Notes accrued to the date of
prepayment and shall not require the payment of any Make-Whole Amount or
prepayment premium.  The prepayment shall
be made on the Proposed Prepayment Date except as provided in paragraph (f) of
this Section 8.3.

 

(f)            Deferral Pending Change of Control — The obligation of the Company to
prepay Notes pursuant to the offers required by paragraphs (a) and (b) and
accepted in accordance with paragraph (d) of this Section 8.3 is
subject to the occurrence of the Change of Control in respect of which such offers
and acceptances shall have been made.  In
the event that such Change of Control does not occur on or prior to the
Proposed Prepayment Date in respect thereof, the prepayment shall be deferred
until and shall be made on the date on which such Change of Control
occurs.  The Company shall keep each
holder of Notes reasonably and timely informed of (i) any such deferral of
the date of prepayment, (ii) the date on which such Change of Control and
the prepayment are expected to occur, and (iii) any determination by the
Company that efforts to effect such Change of Control have ceased or been
abandoned (in which case the offers and acceptances made pursuant to this Section 8.3
in respect of such Change of Control shall be deemed rescinded).  Notwithstanding the foregoing, in the event
that the prepayment has not been made within 90 days after such Proposed
Prepayment Date by virtue of the deferral provided for in this Section 8.3(f),
the Company shall make a new offer to prepay in accordance with paragraph (c) of
this Section 8.3.

 

(g)           Officer’s Certificate — Each offer to prepay the Notes
pursuant to this Section 8.3 shall be accompanied by a certificate,
executed by a Senior Financial Officer of the Company and dated the date of
such offer, specifying: (i) the Proposed Prepayment Date, (ii) that
such offer is made pursuant to this Section 8.3, (iii) the principal
amount of each Note offered to be prepaid, (iv) the interest that would be
due on each Note offered to be prepaid, accrued to the Proposed Prepayment
Date, (v) that the conditions of this Section 8.3 have been
fulfilled, (vi) in reasonable detail, the nature and date or proposed date
of the Change of Control and (vii) the date by which any holder of a Note
that wishes to accept such offer must deliver notice thereof to the Company,
which date shall not be earlier than three Business Days prior to the Proposed
Prepayment Date or, in the case of a prepayment pursuant to Section 8.3(b),
the date of the action referred to in Section 8.3(b)(i).

 

8.4          Allocation
of Partial Prepayments.

 

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

 

19

 

8.5          Maturity;
Surrender, etc.

 

In the case of each prepayment of Notes pursuant to
this Section 8, the principal amount of each Note to be prepaid shall
mature and become due and payable on the date fixed for such prepayment (which
shall be a Business Day), together with interest on such principal amount
accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company
shall fail to pay such principal amount when so due and payable, together with
the interest and Make-Whole Amount, if any, as aforesaid, interest on such
principal amount shall cease to accrue. 
Any Note paid or prepaid in full shall be surrendered to the Company and
canceled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.

 

8.6          Purchase
of Notes.

 

The Company will not and will not permit any Affiliate
to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any
of the outstanding Notes except (a) upon the payment or prepayment of the
Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant
to an offer to purchase made by the Company or an Affiliate pro rata to the
holders of all Notes at the time outstanding upon the same terms and
conditions.  Any such offer shall provide
each holder with sufficient information to enable it to make an informed
decision with respect to such offer, and shall remain open for at least 30
Business Days.  If the holders of more
than 25% of the principal amount of the Notes then outstanding accept such
offer, the Company shall promptly notify the remaining holders of such fact and
the expiration date for the acceptance by holders of Notes of such offer shall
be extended by the number of days necessary to give each such remaining holder
at least ten Business Days from its receipt of such notice to accept such
offer.  The Company will promptly cancel
all Notes acquired by it or any Affiliate pursuant to any payment, prepayment
or purchase of Notes pursuant to any provision of this Agreement and no Notes
may be issued in substitution or exchange for any such Notes.

 

8.7          Make-Whole
Amount.

 

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

 

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

 

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

 

20

 

“Reinvestment Yield” means, with respect to the Called
Principal of any Note, .50% over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as the “PX1 Screen” on the Bloomberg
Financial Market Service (or such other display as may replace the PX1 Screen
on Bloomberg Financial Market Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date.  Such implied
yield will be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively
traded U.S. Treasury security with the maturity closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the maturity closest to and less than the Remaining Average Life.

 

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

 

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

 

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

 

9.             AFFIRMATIVE
COVENANTS.

 

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

 

21

 

9.1          Compliance
with Law.

 

The Parent and the Company will, and will cause each
other Subsidiary to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including ERISA, the USA Patriot
Act and Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in
effect such licenses, certificates, permits, franchises and other governmental
authorizations would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

 

9.2          Insurance.

 

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

 

9.3          Maintenance
of Properties.

 

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

 

9.4          Payment
of Taxes.

 

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

 

22

 

9.5          Corporate
Existence, etc.

 

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

 

9.6          Books
and Records.

 

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

 

9.7          Liens
Securing Obligations Under Principal Credit Agreement.

 

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

 

10.          NEGATIVE
COVENANTS.

 

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

 

10.1        Consolidated
Debt.

 

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

 

10.2        Interest
Coverage Ratio.

 

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

 

23

 

10.3        Priority
Debt.

 

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

 

10.4        Indebtedness
of Subsidiaries.

 

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

 

(a)           The Company’s senior notes outstanding
under its Note Purchase Agreement dated as of August 15, 2002, the Notes
and Indebtedness incurred from time to time under the Credit Agreements;

 

(b)           Indebtedness outstanding on the date
hereof and listed on Schedule 5.15 and any extension, renewal, refunding or
refinancing thereof, provided that the principal amount outstanding at the time
of such extension, renewal, refunding or refinancing is not increased;

 

(c)           Indebtedness owed to the Parent or a
Wholly Owned Subsidiary, including the Company;

 

(d)           Guaranties by a Subsidiary of
Indebtedness of another Subsidiary or by a Subsidiary Guarantor of Indebtedness
of the Company or the Parent;

 

(e)           Indebtedness of a Subsidiary outstanding
at the time of its acquisition by the Company or the Parent, provided that (i) such
Indebtedness was not incurred in contemplation of becoming a Subsidiary and (ii) at
the time of such acquisition and after giving effect thereto, no Default or
Event of Default exists or would exist; and

 

(f)            Indebtedness not otherwise permitted by
the preceding clauses (a) through (e), provided that immediately
before and after giving effect thereto and to the application of the proceeds
thereof,

 

(i)            no Default or Event of Default exists,
and

 

(ii)           Priority Debt does not exceed 20% of
Consolidated Net Worth.

 

10.5        Liens.

 

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

 

24

 

(a)           Liens existing on property or assets of
the Parent or any Subsidiary,  as of the
date of this Agreement that are described in Schedule 10.5;

 

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

 

(c)           Liens incidental to the conduct of
business or the ownership of properties and assets (including landlords’,
lessors’, carriers’, operators’, warehousemen’s, mechanics’, materialmen’s and
other similar Liens) and Liens to secure the performance of bids, tenders,
leases or trade contracts, or to secure statutory obligations (including
obligations under workers compensation, unemployment insurance and other social
security legislation), surety or appeal bonds or other Liens of like general
nature incurred in the ordinary course of business and not in connection with
the borrowing of money;

 

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

 

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

 

(f)            Liens securing Indebtedness of a
Subsidiary to the Parent or to another Wholly Owned Subsidiary, including the
Company;

 

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

 

25

 

(h)           Liens resulting from extensions, renewals
or replacements of Liens permitted by paragraphs (a) and (g), provided
that (i) there is no increase in the principal amount or decrease in
maturity of the Indebtedness secured thereby at the time of such extension,
renewal or replacement, (ii) any new Lien attaches only to the same
property theretofore subject to such earlier Lien and (iii) immediately
after such extension, renewal or replacement no Default or Event of Default
would exist; and

 

(i)            Liens securing Indebtedness not otherwise
permitted by paragraphs (a) through (h) of this Section 10.5,
provided that, at the time of creation, assumption or incurrence thereof and
immediately after giving effect thereto and to the application of the proceeds
therefrom, Priority Debt does not exceed 20% of Consolidated Net Worth.

 

10.6        Mergers,
Consolidations, etc.

 

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

 

(a)           the Company may consolidate or merge with
any other Person or convey, transfer, sell or lease all or substantially all of
its assets in a single transaction or series of transactions to any Person,
provided that:

 

(i)            the successor formed by such
consolidation or the survivor of such merger or the Person that acquires by
conveyance, transfer, sale or lease all or substantially all of the assets of
the Company as an entirety, as the case may be, is a solvent corporation,
general partnership, limited partnership or limited liability company organized
and existing under the laws of the United States or any state thereof
(including the District of Columbia), and, if the Company is not such survivor
or Person, such survivor or Person shall have executed and delivered to each
holder of any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the Notes;

 

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

 

(b)           the Parent may consolidate or merge with
any other Person or convey, transfer, sell or lease all or substantially all of
its assets in a single transaction or series of transactions to any Person,
provided that:

 

(i)            the successor formed by such
consolidation or the survivor of such merger or the Person that acquires by
conveyance, transfer, sale or lease of all or substantially all of the assets
of the Parent as an entirety, as the case may be, shall be a solvent
corporation organized and existing under the laws of the United States or any
state thereof (including the District of Columbia), and, if the Parent is not
such corporation, such corporation shall have executed and delivered to each
holder of any Notes its assumption of the due and punctual performance and 

 

26

 

observance of each covenant and condition of this Agreement and the
Parent Guaranty; and

 

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

 

(c)           any Subsidiary other than the Company may
(x) merge into the Parent or the Company (provided that the Parent or the
Company is the surviving corporation) or another Wholly Owned Subsidiary or (y) sell,
transfer or lease all or any part of its assets to the Parent or the Company or
another Wholly Owned Subsidiary, or (z) merge or consolidate with, or
sell, transfer or lease all or substantially all of its assets to, any Person
in a transaction that is permitted by Section 10.7 or, as a result of
which, such Person becomes a Subsidiary; provided in each instance set forth in
clauses (x) through (z) that, immediately after giving effect
thereto, there shall exist no Default or Event of Default;

 

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

 

10.7        Sale
of Assets.

 

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

 

(a)           Dispositions in the ordinary course of
business;

 

(b)           Dispositions by a Subsidiary, to the
Parent or another Wholly Owned Subsidiary, or by the Parent or the Company to a
Wholly Owned Subsidiary that is a Subsidiary Guarantor; or

 

(c)           Dispositions not otherwise permitted by
clauses (a) or (b) of this Section 10.7, provided that the
aggregate net book value of all assets so disposed of in any fiscal year
pursuant to this Section 10.7(c) does not exceed 15% of Consolidated
Total Assets as of the end of the immediately preceding fiscal year.

 

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

 

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

 

27

 

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

 

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

 

10.8        Subsidiary
Guaranty.

 

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

 

10.9        Nature
of Business.

 

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

 

10.10      Transactions
with Affiliates.

 

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

 

10.11      Terrorism
Sanctions Regulations.

 

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

 

28

 

11.          EVENTS
OF DEFAULT.

 

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

 

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

 

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

 

(c)           the Parent or the Company defaults in the
performance of or compliance with any term contained in Section 7.1(d), Section 9.7
or Sections 10.1, 10.2, 10.3, 10.4, 10.6, 10.7 or 10.8; or

 

(d)           the Parent or the Company defaults in the
performance of or compliance with any term contained herein (other than
those referred to in paragraphs (a), (b) and (c) of this Section 11)
and such default is not remedied within 30 days or, in the case of Section 10.5
only, 5 days after the earlier of (i) a Responsible Officer obtaining
actual knowledge of such default and (ii) the Parent or the Company
receiving written notice of such default from any holder of a Note; or

 

(e)           any representation or warranty made in
writing by or on behalf of the Parent, the Company or any Subsidiary Guarantor
or by any officer of the Parent, the Company or any Subsidiary Guarantor in
this Agreement, the Parent Guaranty, the Subsidiary Guaranty or in any writing
furnished in connection with the transactions contemplated hereby or thereby
proves to have been false or incorrect in any material respect on the date as
of which made and the fact that such representation or warranty was false or
incorrect could reasonably be expected to have a Material Adverse Effect; or

 

(f)            (i) the Parent, the Company or any
Significant Subsidiary is in default (as principal or as guarantor or other
surety) in the payment of any principal of or premium or make-whole amount or
interest on any Indebtedness that is outstanding in an aggregate principal
amount in excess of $25,000,000 beyond any period of grace provided with
respect thereto, or (ii) the Parent, the Company or any Significant
Subsidiary is in default in the performance of or compliance with any term of
any evidence of any Indebtedness that is outstanding in an aggregate principal
amount in excess of $25,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such Indebtedness has become, or has been declared
(or one or more Persons are entitled to declare such Indebtedness to be), due
and payable before its stated maturity or before its regularly scheduled dates
of payment, or (iii) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of the
holder of Indebtedness to convert such Indebtedness into equity interests), (x) the
Parent, the Company or any Significant Subsidiary has become obligated to
purchase or repay Indebtedness before its regular maturity or before its
regularly scheduled dates of payment in an aggregate outstanding 

 

29

 

principal amount in excess of $25,000,000, or (y) one or more
Persons have the right to require the Parent, the Company or any Significant
Subsidiary so to purchase or repay such Indebtedness; or

 

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

 

(h)           a court or governmental authority of
competent jurisdiction enters an order appointing, without consent by the
Parent, the Company or any Significant Subsidiary, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Parent, the Company or any Significant Subsidiary, or any
such petition shall be filed against the Parent, the Company or any Significant
Subsidiary and such petition shall not be dismissed within 60 days; or

 

(i)            a final judgment or judgments for the
payment of money aggregating in excess of $25,000,000 are rendered against one
or more of the Parent, the Company and any Significant Subsidiaries, which
judgments are not, within 60 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or

 

(j)            if (i) any Plan shall fail to
satisfy the minimum funding standards of ERISA or the Code for any plan year or
part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a
notice of intent to terminate any Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Parent, the Company or
any other ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of section 4001(a)(18) of ERISA) under all Plans determined
in accordance with Title IV of ERISA, shall exceed $25,000,000, (iv) the
Parent, the Company or any other ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to employee
benefit plans, (v) the Parent, the Company or any other ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Parent or any
Subsidiary,  establishes or amends any
employee welfare benefit plan that provides post-employment welfare benefits in
a manner that would increase the 

 

30

 

liability of the Parent or any Subsidiary, thereunder; and any such event
or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, would reasonably
be expected to have a Material Adverse Effect; or

 

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

 

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

 

12.          REMEDIES
ON DEFAULT, ETC.

 

12.1        Acceleration.

 

(a)           If an Event of Default with respect to
the Parent or the Company described in paragraph (g) or (h) of Section 11
(other than an Event of Default described in clause (i) of paragraph (g) or
described in clause (vi) of paragraph (g) by virtue of the fact
that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.

 

(b)           If any other Event of Default has
occurred and is continuing, the Required Holders may at any time at their
option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.

 

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

 

Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon (including interest accrued thereon from the inception
of the Event of Default at the Default Rate) and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent permitted by
applicable law), shall all be immediately due and payable, in each and every
case without presentment, demand, protest or further notice, all of which are
hereby waived.  The Company acknowledges,
and the parties hereto agree, that each holder of a Note has the right to maintain
its investment in the Notes free from repayment by the Company (except as
herein specifically provided for) and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

 

31

 

12.2        Other
Remedies.

 

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

 

12.3        Rescission.

 

At any time after any Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the
Required Holders, by written notice to the Company, may rescind and annul any
such declaration and its consequences if (a) the Company has paid all
overdue interest on the Notes, all principal of and Make-Whole Amount, if any,
on any Notes that are due and payable and are unpaid other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest at the Default Rate in respect of the Notes, (b)  neither
the Company nor any other Person shall have paid any amounts which have become
due solely by reason of such declaration, (c) all Events of Default and
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to Section 17,
and (d) no judgment or decree has been entered for the payment of any
monies due pursuant hereto or to the Notes. 
No rescission and annulment under this Section 12.3 will extend to
or affect any subsequent Event of Default or Default or impair any right
consequent thereon.

 

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

 

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

 

13.          REGISTRATION;
EXCHANGE; SUBSTITUTION OF NOTES.

 

13.1        Registration
of Notes.

 

The Company shall keep at its principal executive
office a register for the registration and registration of transfers of
Notes.  The name and address of each
holder of one or more Notes, each transfer thereof and the name and address of
each transferee of one or more Notes shall be registered in such register.  Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be deemed
and treated as the owner 

 

32

 

and holder thereof for
all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary.  The Company
shall give to any holder of a Note that is an Institutional Investor, promptly
upon request therefor, a complete and correct copy of the names and addresses
of all registered holders of Notes.

 

13.2        Transfer
and Exchange of Notes.

 

Upon surrender of any Note at the principal executive
office of the Company for registration of transfer or exchange (and in the case
of a surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof, and if executed by
an attorney-in-fact, evidence of authority reasonably satisfactory to the
Company), within twenty Business Days thereafter, the Company shall execute and
deliver, at the Company’s expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note.  Each such new Note
shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1.1(a) or 1.1(b), as
appropriate.  Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon.  The
Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $100,000.  Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have made
the representation set forth in Sections 6.1 and 6.2.

 

13.3        Replacement
of Notes.

 

Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an
Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and

 

(a)           in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it (provided that if the
holder of such Note is, or is a nominee for, an original Purchaser or another
Institutional Investor holder of a Note with a minimum net worth of at least
$250,000,000, such Person’s own unsecured agreement of indemnity shall be
deemed to be satisfactory), or

 

(b)           in the case of mutilation, upon surrender
and cancellation thereof, within twenty Business Days thereafter, the Company
at its own expense shall execute and deliver, in lieu thereof, a new Note,
dated and bearing interest from the date to which interest shall have been paid
on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

 

33

 

14.          PAYMENTS
ON NOTES.

 

14.1        Place
of Payment.

 

Subject to Section 14.2, payments of principal,
Make-Whole Amount, if any, and interest becoming due and payable on the Notes
shall be made in Chicago, Illinois at the principal office of Wells Fargo Bank,
National Association in such jurisdiction. 
The Company may at any time, by notice to each holder of a Note, change
the place of payment of the Notes so long as such place of payment shall be
either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

 

14.2        Home
Office Payment.

 

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

 

15.          EXPENSES,
ETC.

 

15.1        Transaction
Expenses.

 

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

 

34

 

Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Notes and (c) the costs and expenses incurred in
connection with the initial filing of this Agreement and all related documents
and financial information with the SVO, provided that such costs and expenses
under this clause (c) shall not exceed $3,500.  The Company will pay, and will save you and
each other holder of a Note harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders (other than those retained by
you).

 

15.2        Survival.

 

The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.

 

16.          SURVIVAL
OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

 

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

 

17.          AMENDMENT
AND WAIVER.

 

17.1        Requirements.

 

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

 

35

 

17.2        Solicitation
of Holders of Notes.

 

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

 

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

 

(c)           Consent in
Contemplation of Transfer.  Any consent made pursuant to this Section 17.2
by the holder of any Note that has transferred or has agreed to transfer such
Note to the Company, any Subsidiary or any Affiliate of the Company and has
provided or has agreed to provide such written consent as a condition to such
transfer shall be void and of no force or effect except solely as to such
holder, and any amendments effected or waivers granted or to be effected or
granted that would not have been or would not be so effected or granted but for
such consent (and the consents of all other holders of Notes that were acquired
under the same or similar conditions) shall be void and of no force or effect
except solely as to such transferring holder.

 

17.3        Binding
Effect, etc.

 

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

 

17.4        Notes
held by Company, etc.

 

Solely for the purpose of determining whether the
holders of the requisite percentage of the aggregate principal amount of Notes
then outstanding approved or consented to 

 

36

 

any amendment, waiver or
consent to be given under this Agreement or the Notes, or have directed the
taking of any action provided herein or in the Notes to be taken upon the
direction of the holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be outstanding.

 

18.          NOTICES.

 

All notices and communications provided for hereunder
shall be in writing and sent (a) by telecopy if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid).  Any such notice must be sent:

 

(i)            if to you or your nominee, to you or it
at the address specified for such communications in Schedule A, or at such
other address as you or it shall have specified to the Company in writing,

 

(ii)           if to any other holder of any Note, to
such holder at such address as such other holder shall have specified to the
Company in writing, or

 

(iii)          if
to the Company, the Parent or any Subsidiary Guarantor, to the Company at its
address set forth at the beginning hereof to the attention of the Chief
Financial Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.

 

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

 

19.          REPRODUCTION
OF DOCUMENTS.

 

This Agreement and all documents relating thereto,
including (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by you
by any photographic, photostatic, electronic, digital or other similar process
and you may destroy any original document so reproduced.  The Company agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.  This
Section 19 shall not prohibit the Company or any other holder of Notes
from contesting any such reproduction to the same extent that it could contest
the original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.

 

20.          CONFIDENTIAL
INFORMATION.

 

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

 

37

 

the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary or
confidential in nature and that was clearly marked or labeled or otherwise
adequately identified when received by you as being confidential information of
the Parent or such Subsidiary, provided that such term does not include
information that (a) was publicly known or otherwise known to you prior to
the time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by you or any Person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Parent or any
Subsidiary, or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available.  You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, trustees, officers, employees, agents, attorneys and Affiliates (to
the extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(iii) any other holder of any Note, (iv) any Institutional Investor
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this Section 20),
(v) any Person from which you offer to purchase any security of the Company
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (vi) any
federal or state regulatory authority having jurisdiction over you, (vii) the
NAIC or SVO or any similar organization, or any nationally recognized rating
agency that requires access to information about your investment portfolio or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or
order applicable to you, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which you are a party or
(z) if an Event of Default has occurred and is continuing, to the extent
you may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies
under your Notes and this Agreement. 
Each holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this Section 20
as though it were a party to this Agreement. 
On reasonable request by the Company in connection with the delivery to
any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.

 

21.          SUBSTITUTION
OF PURCHASER.

 

You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate’s agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.  Upon receipt of such notice, wherever the
word “you” is used in this Agreement (other than in this Section 21), such
word shall be deemed to refer to such Affiliate in lieu of you.  In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter transfers to
you all of the Notes then held by such Affiliate, upon receipt by the Company
of notice of such transfer, 

 

38

 

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

 

22.          RELEASE
OF SUBSIDIARY GUARANTOR.

 

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

 

(a)           no Default or Event of Default exists or
will exist immediately following such release and discharge of such Subsidiary
Guarantor;

 

(b)           such Subsidiary Guarantor will not become
a borrower under either Credit Agreement;

 

(c)           such release is not part of a plan of
financing that contemplates such Subsidiary Guarantor guaranteeing any other
Indebtedness of the Company to banks; and

 

(d)           at the time of such release and
discharge, the Company delivers to each holder of Notes a certificate of a
Responsible Officer certifying (x) that such Subsidiary Guarantor has been
or is being released and discharged as guarantor or borrower under and in
respect of all applicable Credit Agreements and (y) as to the matters set
forth in clauses (a), (b) and (c).

 

23.          MISCELLANEOUS.

 

23.1        Successors
and Assigns.

 

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

 

23.2        Payments
Due on Non-Business Days.

 

Anything in this Agreement or the Notes to the
contrary notwithstanding (but without limiting the requirement in Section 8.5
that the notice of any optional prepayment specify a Business Day as the date
fixed for such prepayment), any payment of principal of or Make-Whole Amount or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day; provided that if the maturity date of any Note is a date other
than a Business Day, the payment otherwise due on such maturity date shall be
made on the next succeeding Business Day and shall include the additional days
elapsed in the computation of interest payable on such next succeeding Business
Day.

 

39

 

23.3        Accounting
Terms.

 

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

 

23.4        Severability.

 

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

 

23.5        Construction.

 

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

 

23.6        Counterparts.

 

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

 

23.7        Governing
Law.

 

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

 

23.8        Jurisdiction
and Process; Waiver of Jury Trial.

 

(a)           Each of the Parent and the Company
irrevocably submits to the non-exclusive jurisdiction of any Illinois state or
federal court sitting in the City of Chicago, over any suit, action or
proceeding arising out of or relating to this Agreement, the Parent Guaranty,
the Subsidiary Guaranty or the Notes.  To
the fullest extent permitted by applicable law, each of the Parent and the
Company irrevocably waives and agrees not to assert, by way of motion, as a
defense or otherwise, any claim that it is not subject to the jurisdiction of
any such court, any objection that it may now or hereafter have to the 

 

40

 

laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum

 

(b)           Each of the Parent and the Company
consents to process being served by or on behalf of any holder of Notes in any
suit, action or proceeding of the nature referred to in Section 23.8(a) by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, return receipt requested, to it at its
address specified in Section 18 or at such other address of which such
holder shall then have been notified pursuant to said Section.  Each of the Parent and the Company agrees
that such service upon receipt (i) shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding and
(ii) shall, to the fullest extent permitted by applicable law, be taken
and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or any reputable commercial delivery service.

 

(c)           Nothing in this Section 23.8 shall
affect the right of any holder of a Note to serve process in any manner
permitted by law, or limit any right that the holders of any of the Notes may
have to bring proceedings against the Parent or the Company in the courts of
any appropriate jurisdiction or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.

 

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

 

*    *   
*    *    *

 

41

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  HELMERICH &
  PAYNE INTERNATIONAL

  DRILLING CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  HELMERICH &
  PAYNE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

S-1

 

The
foregoing is agreed to as of the date thereof.

 

 

	
  TEACHERS INSURANCE AND ANNUITY

  	
   

  
	
  ASSOCIATION OF AMERICA

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
			

 

S-2

 

	
  GREAT-WEST
  LIFE & ANNUITY INSURANCE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LONDON
  LIFE INSURANCE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  

 

S-3

 

	
  NATIONWIDE MUTUAL INSURANCE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
			

 

S-4

 

	
  THE PAUL REVERE LIFE INSURANCE COMPANY

  	
   

  
	
  By: Provident Investment Management, LLC

  	
   

  
	
  Its: Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  UNUM LIFE INSURANCE COMPANY OF AMERICA

  	
   

  
	
  By: Provident Investment Management, LLC

  	
   

  
	
  Its: Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  

 

S-5

 

BANKERS LIFE AND CASUALTY
COMPANY

COLONIAL PENN LIFE INSURANCE
COMPANY

CONSECO LIFE INSURANCE
COMPANY

CONSECO HEALTH INSURANCE
COMPANY

WASHINGTON NATIONAL
INSURANCE COMPANY

 

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

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Timothy
  L. Powell

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  
				

 

S-6

 

	
  MASSACHUSETTS MUTUAL
  LIFE INSURANCE COMPANY

  
	
  By: Babson
  Capital Management LLC, as Investment Adviser

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  C.M. LIFE INSURANCE
  COMPANY

  	
   

  
	
  By: Babson
  Capital Management LLC, as Investment Adviser

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MASSMUTUAL ASIA LIMITED

  	
   

  
	
  By: Babson
  Capital Management LLC, as Investment Adviser

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  

 

S-7

 

	
  AMERICAN UNITED LIFE
  INSURANCE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE STATE LIFE
  INSURANCE COMPANY

  	
   

  
	
  By:

  	
  American United Life
  Insurance Company

  	
   

  
	
  Its:

  	
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PIONEER MUTUAL LIFE
  INSURANCE COMPANY

  	
   

  
	
  By:

  	
  American United Life
  Insurance Company

  	
   

  
	
  Its:

  	
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LAFAYETTE LIFE
  INSURANCE COMPANY

  	
   

  
	
  By:

  	
  American United Life
  Insurance Company

  	
   

  
	
  Its:

  	
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  

 

S-8

 

	
  NATIONAL LIFE INSURANCE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LIFE INSURANCE COMPANY OF THE SOUTHWEST

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  

 

S-9

 

	
  KNIGHTS OF COLUMBUS

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
			

 

S-10

 

	
  MODERN WOODMEN OF AMERICA

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
			

 

S-11

 

	
  THE UNION CENTRAL LIFE
  INSURANCE COMPANY

  	
   

  
	
  By: Summit Investment
  Advisors, Inc., as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Andrew S. White, Managing
  Director – Private Placements

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACACIA LIFE INSURANCE
  COMPANY

  	
   

  
	
  By Summit Investment
  Advisors, Inc., as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Andrew S. White,
  Managing Director – Private Placements

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AMERITAS LIFE INSURANCE
  CORP.

  	
   

  
	
  By: Summit Investment
  Advisors, Inc., as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Andrew S. White,
  Managing Director – Private Placements

  	
   

  
				

 

S-12

 

	
  By:  PPM
  America, Inc., as attorney in fact,

  on behalf of Jackson National Life Insurance Company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
			

 

S-13

 

SCHEDULE B

 

DEFINED TERMS

 

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

 

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

 

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

 

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

 

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

 

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

 

“Capital Lease” means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.

 

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

 

 

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

 

“Closing” is defined in Section 3.

 

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

 

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

 

“Confidential Information” 
is defined in Section 20.

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

“Disclosure Documents” is defined in Section 5.3.

 

“Disposition” is defined in Section 10.7.

 

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

 

“Electronic Delivery” is defined in Section 7.3.

 

“Environmental Laws” means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to Hazardous Materials.

 

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

 

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

 

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

 

“Event of Default” is defined in Section 11.

 

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

 

3

 

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

 

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

 

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

 

“Governmental Authority” means

 

(a)                                  the government of

 

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

 

(ii)                                  any jurisdiction in which the Parent or
any Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Parent or any Subsidiary, or

 

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

 

“Guaranty” means, with respect to any Person, any
obligation (except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person guaranteeing
or in effect guaranteeing any indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including
obligations incurred through an agreement, contingent or otherwise, by such
Person:

 

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

 

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

 

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

 

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

 

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

 

“Guaranties” is defined in Section 1.2.

 

4

 

“Hazardous Material” means any and all pollutants, toxic or
hazardous wastes or other substances that might pose a hazard to health and
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage or
filtration of which is or shall be restricted, prohibited or penalized by any
applicable law including asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum, petroleum products, lead based paint,
radon gas or similar restricted, prohibited or penalized substances.

 

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

 

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

 

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

 

(a)                                  its liabilities for borrowed money and
its redemption obligations in respect of mandatorily redeemable preferred
stock;

 

(b)                                 its liabilities for the deferred purchase
price of property acquired by such Person (excluding accounts payable arising
in the ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property);

 

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

 

(d)                                 all liabilities for borrowed money
secured by any Lien with respect to any property owned by such Person (whether
or not it has assumed or otherwise become liable for such liabilities);

 

(e)                                  all its liabilities in respect of letters
of credit or instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not representing
obligations for borrowed money) other than liabilities in respect of undrawn
amounts under letters of credit securing obligations in connection with workers’
compensation, unemployment insurance and other types of social security or
retirement benefits; and

 

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

 

Indebtedness shall be calculated for all purposes of this Agreement at
its stated principal amount, without regard to the effect of utilizing FASB No. 159
(Fair Value Option for Financial Assets and Financial Liabilities).

 

5

 

“Institutional Investor” means (a) any original purchaser of
a Note, (b)  any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form, and (c) any Related Fund
of any holder of any Note.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Memorandum” is defined in Section 5.3.

 

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

 

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

 

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

 

6

 

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

 

“Notes” is defined in Section 1.

 

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

 

“Other Purchasers” is defined in Section 2.

 

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

 

“Parent Guaranty” is defined in Section 1.2.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

“PTE” is defined in Section 6.2(a).

 

“Purchaser” means each purchaser listed in Schedule A.

 

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

 

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

 

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

 

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

Agreement.

 

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

 

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

 

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

 

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

 

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

 

“Source” is defined in Section 6.2.

 

“Subsidiary” means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership, joint
venture or limited liability company if more than a 50% interest in the profits
or capital thereof is owned by such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries (unless such partnership or
limited liability company can and does ordinarily take major business 

 

8

 

actions without the prior
approval of such Person or one or more of its Subsidiaries).  Unless the context otherwise clearly
requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the
Parent.

 

“Subsidiary Guarantor” is defined in Section 1.2.

 

“Subsidiary Guaranty” is defined in Section 1.2.

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

EXHIBIT 1.1

 

[FORM OF
SENIOR NOTE]

 

HELMERICH & PAYNE INTERNATIONAL DRILLING
CO.

 

6.10% Senior Note, due July 21, 2016

 

	
  No. R-[    ]

  	
   

  	
  July 21, 2009

  
	
  $[              ]

  	
   

  	
  PPN 42346# AE 1

  

 

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

 

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

 

This Note is one of a series of Senior Notes (herein
called the “Notes”) issued pursuant to a Note Purchase Agreement dated as of June 15,
2009 (as from time to time amended, the “Note Purchase Agreement”), between the
Company, the Parent and the respective Purchasers named therein and is entitled
to the benefits thereof.  Each holder of
this Note will be deemed, by its acceptance hereof, (i) to have agreed to
the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) to have made the representations set forth in
Sections 6.1 and 6.2 of the Note Purchase Agreement.  Unless otherwise indicated, capitalized terms
used in this Note shall have the meanings ascribed in the Note Purchase
Agreement.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  HELMERICH &
  PAYNE INTERNATIONAL DRILLING CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT 1.2(a)

 

[FORM OF PARENT GUARANTY]

 

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

 

W  I
T  N  E  S  S  E  T  H:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

or dishonor, (d) any right to the enforcement,
assertion or exercise by any of the Holders of any right, power, privilege or
remedy conferred in the Note Purchase Agreement or any other Note Document or
otherwise, (e) any requirement of diligence on the part of any of the
Holders, (f) any requirement to exhaust any remedies or to mitigate the
damages resulting from any default under any Note Document, (g) any notice
of any sale, transfer or other disposition by any of the Holders of any right,
title to or interest in the Note Purchase Agreement or in any other Note
Document and (h) any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release or defense of a guarantor or
surety or which might otherwise limit recourse against the Guarantor.

 

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

 

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

 

4

 

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

 

SECTION 9. 
Notices.  All notices and
communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice
by a recognized overnight delivery service (charges prepaid), or (b) by
registered or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges
prepaid).  Any such notice must be sent
to the address specified in the Note Purchase Agreement, or in each case at
such other address as the Company, any Holder or the Guarantor shall from time
to time designate in writing to the other parties.  Any notice so addressed shall be deemed to be
given when actually received.

 

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

 

SECTION 11. 
Submission to Jurisdiction.

 

(a)        The Guarantor
irrevocably submits to the non-exclusive jurisdiction of any Illinois state or
federal court, over any suit, action or proceeding arising out of or relating
to this Guaranty, the Note Purchase Agreement or the Notes.  To the fullest extent permitted by applicable
law, The Guarantor irrevocably waives and agrees not to assert, by way of
motion, as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.

 

(b)        The
Guarantor consents to process being served by or on behalf of any holder of
Notes in any suit, action or proceeding of the nature referred to in Section 11(a) by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, return receipt requested, to it at its
address specified in Section 18 of the Note Purchase Agreement or at such
other address of which such holder shall then have been notified pursuant to
said Section.  The Guarantor agrees that
such service upon receipt (i) shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding and (ii) shall,
to the fullest extent permitted by applicable law, be taken and held to be
valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or any reputable commercial delivery service.

 

5

 

(c)         Nothing
in this Section 11 shall affect the right of any holder of a Note to serve
process in any manner permitted by law, or limit any right that the holders of
any of the Notes may have to bring proceedings against the Guarantor in the
courts of any appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.

 

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

 

SECTION 12. 
Miscellaneous.  Any
provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  To the extent
permitted by applicable law, the Guarantor hereby waives any provision of law
that renders any provisions hereof prohibited or unenforceable in any
respect.  The terms of this Guaranty
shall be binding upon, and inure to the benefit of, the Guarantor and the
Holders and their respective successors and assigns.  No term or provision of this Guaranty may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Guarantor and the Required Holders.  The section and paragraph headings in this
Guaranty and the table of contents are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions
hereof, and all references herein to numbered sections, unless otherwise
indicated, are to sections in this Guaranty. 
This Guaranty shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of
Illinois excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.

 

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

 

 

	
   

  	
  HELMERICH &
  PAYNE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

6

 

EXHIBIT 1.2(b)

 

[FORM OF
SUBSIDIARY GUARANTY]

 

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

 

W  I
T  N  E  S  S  E  T  H:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)        the execution, delivery and performance
of this Guaranty will not (i) contravene, result in any breach of, or constitute
a default under, or result in the creation of any Lien in respect of any
property of such Guarantor under any indenture, mortgage, deed of trust, loan,
credit agreement, corporate charter or by-laws, or any other agreement
evidencing Indebtedness, (ii) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of such Guarantor under, any other agreement or instrument to
which such Guarantor is bound or by which such Guarantor or any of its
properties may be bound or affected, except as could not reasonably be expected
to have a Material Adverse Effect, (iii) conflict with or result in a
breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to such Guarantor, except as could not reasonably be expected to have a
Material Adverse Effect, or (iv) violate any provision of any statute or
other rule or regulation of any 

 

5

 

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

 

(e)         no consent, approval or authorization of,
or registration, filing or declaration with, any Governmental Authority is
required in connection with the execution, delivery or performance by such
Guarantor of this Guaranty;

 

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

 

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

 

SECTION 10.  Notices.   All notices and communications provided for
hereunder shall be in writing and sent (a) by telecopy if the sender on
the same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (b) by registered or certified mail
with return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid).  Any such notice must be sent to the address
specified in the Note Purchase Agreement, or in each case at such other address
as the Company, any Holder or such Guarantor shall from time to time designate
in writing to the other parties.  Any
notice so addressed shall be deemed to be given when actually received.

 

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

 

SECTION 12.  Submission
to Jurisdiction.

 

(a)         Each Guarantor irrevocably submits to the
non-exclusive jurisdiction of any Illinois state or federal court, over any
suit, action or proceeding arising out of or relating to this Guaranty, the
Note Purchase Agreement or the Notes.  To
the fullest extent permitted by applicable law, each Guarantor irrevocably
waives and agrees not to assert, by way of motion, as a defense or otherwise,
any claim that it is not subject to the jurisdiction of any such court, any
objection that it may now or hereafter have to the 

 

6

 

laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.

 

(b)        Each Guarantor consents to process being
served by or on behalf of any holder of Notes in any suit, action or proceeding
of the nature referred to in Section 12(a) by mailing a copy thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, return receipt requested, to it at its address specified in Section 18
of the Note Purchase Agreement or at such other address of which such holder
shall then have been notified pursuant to said Section.  Each Guarantor agrees that such service upon
receipt (i) shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding and (ii) shall, to the
fullest extent permitted by applicable law, be taken and held to be valid
personal service upon and personal delivery to it.  Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or any reputable commercial delivery service.

 

(c)         Nothing in this Section 12 shall
affect the right of any holder of a Note to serve process in any manner
permitted by law, or limit any right that the holders of any of the Notes may
have to bring proceedings against any Guarantor in the courts of any
appropriate jurisdiction or to enforce in any lawful manner a judgment obtained
in one jurisdiction in any other jurisdiction.

 

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

 

SECTION 13.  Miscellaneous.  Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law,
each Guarantor hereby waives any provision of law that renders any provisions
hereof prohibited or unenforceable in any respect.  The terms of this Guaranty shall be binding
upon, and inure to the benefit of, each Guarantor and the Holders and their
respective successors and assigns.  No
term or provision of this Guaranty may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by each
Guarantor and the Required Holders.  The
section and paragraph headings in this Guaranty are for convenience of
reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof, and all references herein to numbered sections, unless
otherwise indicated, are to sections in this Guaranty.  This Guaranty shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of Illinois excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.

 

7

 

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

 

 

	
   

  	
  HELMERICH &
  PAYNE DEL ECUADOR, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  HELMERICH &
  PAYNE (COLOMBIA) DRILLING CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

8AMENDED AND RESTATED AGREEMENT

         THIS AMENDED AND RESTATED AGREEMENT ("Agreement") by and among
CORNERSTONE BANK, a New Jersey chartered commercial bank (the "Bank"),
CORNERSTONE FINANCIAL CORPORATION, a New Jersey business corporation (the
"Company, and collectively with the Bank, the "Employer") and GEORGE W. MATTEO,
JR., an individual (the "Executive").

                              W I T N E S S E T H :

         WHEREAS, Employer employs Executive as its President and Chief
Executive Officer; and

         WHEREAS, Employer and the Executive desire to enter in an agreement
regarding, among other things, the employment of and services to be rendered by
the Executive.

                                   AGREEMENT:

         NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

1.    EMPLOYMENT. The Executive is hereby employed on the terms and conditions
set forth in this Agreement.

2.    DUTIES OF EXECUTIVE. The Executive shall perform and discharge well and
faithfully such duties as an executive officer of Employer as may be assigned to
the Executive from time to time by the Boards of Directors of Employer. The
Executive shall be employed as Chairman and Chief Executive Officer of Employer,
and shall be a member of such other management committees as the Executive may
choose, and shall hold such other titles as may be given to him from time to
time by the Boards of Directors of Employer. The Executive shall devote his full
time, attention and energies to the business of Employer and shall not, during
the Employment Period (as defined in Section 3 hereof), be employed or involved
in any other business activity, whether or not such activity is pursued for
gain, profit or other pecuniary advantage; provided, however, that this Section
2 shall not be construed as preventing the Executive from (a) investing the
Executive's personal assets, (b) acting as a member of the Board of Directors of
any other corporation or as a member of the Board of Trustees of any other
organization, or (c) being involved in any other substantial activity with the
prior written approval of the Boards of Directors of the Employer.

3.    TERM OF EMPLOYMENT. The Executive's employment under this Agreement shall
be for a period (the "Employment Period") commencing on the date of this
Agreement and, except as provided for under Section 6 hereof, ending on March
31, 2010, provided that on the first and each subsequent annual anniversary date
of the termination or ending date of this Agreement, and unless a party has
given the other party written notice at least sixty (60) days prior to such
anniversary date that such party does not agree to renew this Agreement, the
term of this Agreement and the Employment Period shall be deemed renewed for a
term ending one (1) year subsequent to such anniversary date, unless sooner
terminated in accordance with this Section 5 hereof or one of the following
provisions:

<PAGE>

      (a)   The Executive's employment under this Agreement may be terminated at
any time during the Employment Period for "Cause" (as herein defined), by action
of the Boards of Directors of Employer, upon giving notice of such termination
to the Executive at least fifteen (15) days prior to the date upon which such
termination shall take effect. As used in this Agreement, "Cause" means any of
the following events:

                    (i) Violation of any law, rule or regulation (other than
     traffic violations or similar minor offenses) that reflects adversely on
     the reputation of the Company, any felony conviction, any violation of law
     involving fraud, dishonesty or moral turpitude, or which would otherwise,
     in the reasonable discretion of Employer's Boards of Directors, reflect
     negatively on the reputation of Employer, or any violation of any written
     agreement or order with or issued by any regulatory authority having
     jurisdiction over Employer;

                    (ii)  The Executive willfully fails to follow the lawful
     instructions of the Boards of Directors of Employer after the Executive's
     receipt of written notice of such instructions, other than a failure
     resulting from the Executive's incapacity because of physical or mental
     illness; or

                    (iii) Executive's ineligibility to serve as an officer of
     director of a bank or a publicly-held corporation under any Federal or
     state law or regulation or order of the Securities and Exchange Commission
     or any bank regulatory agency having jurisdiction over the Bank or the
     Executive.

If the Executive's employment is terminated under the provisions of this Section
3(a), then all rights of the Executive under Section 4 hereof shall cease as of
the effective date of such termination.

      (b)   The Executive's employment under this Agreement may be terminated at
any time during the Employment Period without "Cause" (as defined in Section
3(a) hereof), by action of the Boards of Directors of Employer, upon giving
notice of such termination to the Executive at least thirty (30) days prior to
the date upon which such termination shall take effect. If the Executive's
employment is terminated under the provisions of this Section 3(b), then the
Executive shall be entitled to receive the compensation and benefits set forth
in Section 6 or Section 7 hereof, whichever shall be applicable. To the extent
the Executive becomes entitled to and receives the payment and benefits set
forth in Section 6 or 7, such payments and benefits shall constitute liquidated
damages for any possible breach of this Agreement by the Employer and shall
represent the maximum extent of liability therefore that the Executive can claim
against the Employer or any of its affiliates or Directors.

                                       2
<PAGE>

     (c)   If the Executive dies, the Executive's employment under this Agreemen
shall be deemed terminated as of the date of the Executive's death, and all
rights of the Executive under Section 4 hereof shall cease as of the date of
such termination and any benefits payable to the Executive shall be determined
in accordance with the retirement and insurance programs of Employer then in
effect.

      (d)   If the Executive is incapacitated by accident, sickness, or
otherwise so as to render the Executive mentally or physically incapable of
performing the services required of the Executive under Section 2 of this
Agreement for a continuous period of five (5) months, then, upon the expiration
of such period or at any time thereafter, by action of the Boards of Directors
of Employer, the Executive's employment under this Agreement may be terminated
immediately upon giving the Executive notice to that effect. If the Executive's
employment is terminated under the provisions of this Section 3(d), then all
rights of the Executive under Section 4 hereof shall cease as of the last
business day of the week in which such termination occurs and any benefits
payable to the Executive shall be determined in accordance with the retirement
and insurance programs of Employer then in effect.

      (e)   The Executive may resign for "Good Reason" (as herein defined). As
used in this Agreement, "Good Reason" means any of the following:

                    (i)   Any reduction in title, change in reporting structure
     or significant reduction in the Executive's responsibilities, authority or
     status, including such responsibilities and authority as the same may be
     increased at any time during the term of this Agreement, or the assignment
     to the Executive of duties inconsistent with the Executive's status as
     Chairman and Chief Executive Officer of Employer;

                    (ii)  Any reassignment of the Executive which necessitates
     or requires the Executive to move his principal residence;

                    (iii) Any removal of the Executive from office or any
     material adverse change in the terms and conditions of the Executive's
     employment, except for either a termination of the Executive's employment
     under the provisions of Section 3(a) hereof;

                    (iv)  Any reduction in the Executive's annual base salary as
     in effect on the date hereof or as the same may be increased from time to
     time;

                    (v)   Following a Change in Control, any failure of Employer
     to provide the Executive with benefits at least as favorable as those
     enjoyed by the Executive under any of the retirement, life insurance,
     medical, health and accident, disability or other employee plans of
     Employer in which the Executive participated at the time of the Change in
     Control, or the taking of any action that would materially reduce any of
     such benefits in effect at the time of the Change in Control;

                    (vi)  Any failure of Employer to provide the Executive with
     benefits at least as favorable as those received by any comparable
     executive employees of Employer under any of the retirement, life
     insurance, medical, health and accident, disability or other employee
     benefit plans or policies of Employer, unless such reduction is part of a
     reduction applicable to all comparable executive employees;

                                       3
<PAGE>

                    (vii) Any material failure to obtain a satisfactory
     agreement from any successor to assume and agree to perform this Agreement,
     as contemplated in Section 14 hereof;

                    (viii) Any breach of a material provision of this Agreement
      on the part of the Bank.

Provided that the Executive has given Employer written notice of any event
constituting Good Reason and such event remains uncured for thirty (30) days
after such notice, Executive may, at the option of the Executive, resign from
employment with Employer under this Agreement by delivering notice in writing
(the "Notice of Termination") delivered to Employer (or its successor), and the
provisions of either Section 6 or Section 7 hereof shall thereupon apply.
Section 6 shall apply where "Good Reason" resulted from or occurred
contemporaneous with a Change in Control as defined by Section 5 hereof. Section
7 shall apply in all other instances where "Good Reason" exists. Should
Executive resign for any reason other than those specified in Sections (e)(i)
thru (viii), it shall be considered a voluntary resignation and all rights of
Executive under Section 4 shall cease as of the date of such voluntary
resignation.

4.       EMPLOYMENT PERIOD COMPENSATION.

      (a) SALARY. For services performed by the Executive under this Agreement,
Employer shall pay (or cause to be paid to) the Executive a salary, during the
Employment Period, at no less than the following rate:

                  From the effective date hereof to March 1, 20010 -
$_____________, with adjustments thereafter as determined by the Board of
Directors of the Company.

      (b)   BONUS. Executive shall be eligible to participate in any bonus plan
implemented by Employer (commencing at such time as the Boards of Directors of
Employer - in its sole and absolute discretion - decides to implement such a
plan) for executive employees, on terms no less favorable than that applicable
to any comparable executive employees of Employer. Notwithstanding the
foregoing, in lieu of Executive's participation in any bonus plan established
for any other comparable executive employees, Employer may establish a bonus
plan specific to Executive, which shall be at least as favorable to Executive as
any plan applicable to any or all comparable executive employees.

      (c)   OTHER BENEFITS. Employer will provide the Executive, during the
Employment Period, with insurance, vacation, retirement, and other fringe
benefits, which benefits are, in the aggregate, not less favorable than those
received by any comparable executive employees of Employer.

      (d)   STOCK-BASED COMPENSATION. Upon adoption by the shareholders of the
Company of an equity compensation plan, the Executive shall be granted an option
award to purchase 45,000 shares of Company common stock. Such options shall vest
ratably over a three year period commencing on the first anniversary of the date
of grant; provided, however that the grant agreement evidencing such options
shall provide that vesting shall accelerate, and the options shall become
immediately excisable, and remain exercisable for the period provided for under
the terms of such equity compensation plan, upon the termination of Executive's
employment hereunder due to Executive's death, his disability (as described
under Section 3(d) hereof), termination by Employer without Cause, termination
by Executive for Good Reason or in the event of a Change in Control (as defined
below).

                                       4
<PAGE>

      (e)   OTHER MATTERS.

                    (i)   The Executive shall be entitled to the use of an
     automobile and/or automobile allowances consistent with his title and
     responsibilities, as determined in the reasonable discretion of the Boards
     of Directors of Employer.

                    (ii)  The Executive shall be paid or reimbursed for country
     club dues and business-related expenses in accordance with policies and
     procedures adopted by the Boards of Directors of Employer.

5.    CHANGE IN CONTROL.

      (a)   As used in this Agreement, "Change in Control" means a change of
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as enacted and in force on the
date hereof, whether or not the Bank is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if:

                     (i)   Any "person" (including a group acting in concert, as
     the term "person" is defined in Section 13(d) of the Exchange Act, as
     enacted and in force on the date hereof) becomes the beneficial owner" (as
     that term is defined in Rule 13d-3, as enacted and in force on the date
     hereof, under the Exchange Act) of securities of the Company representing
     thirty five (35%) percent or more of the combined voting power of the
     Company's securities then outstanding;

                    (ii)  There occurs a merger, consolidation or other business
     combination or reorganization to which the Company is a party, whether or
     not approved in advance by the Board of Directors of the Company in which
     (A) the members of the Board of Directors of the Company immediately
     preceding the consummation of such transaction do not constitute a majority
     of the members of the Board of Directors of the resulting corporation and
     of any parent corporation thereof immediately after the consummation of
     such transaction, and (B) the shareholders of the Company immediately
     before such transaction do not hold fifty-one (51%) percent or more of the
     voting power of securities of the resulting corporation;

                    (iii) There occurs a sale, exchange, transfer, or other
     disposition of substantially all of the assets of the Company to another
     entity, whether or not approved in advance by the Board of Directors of the
     Company, and as a result of such transaction the shareholders of the
     Company immediately before such transaction do not hold fifty-one (51%)
     percent or more of the voting power of securities of the resulting
     corporation;

      (iv) A plan of liquidation or dissolution, other than pursuant to
     bankruptcy or insolvency, is adopted; or

                                       5
<PAGE>

      (v)   During a period of two (2) consecutive years, individuals who at the
     beginning of such period constitute the Board of Directors of the Company
     cease to constitute a majority of such Board (unless the election or
     nomination of each new director was approved by a vote of at least
     fifty-one (51%) percent of directors who were directors at the beginning of
     such period).

6.    RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT AFTER CHANGE IN CONTROL. In
the event that during the twenty-four (24) months following a Change in Control
Executive resigns from employment for Good Reason or Executive's employment is
terminated without Cause, Executive shall be absolutely entitled to receive the
amounts and benefits set forth in this section. Notwithstanding the provisions
of Section 3 hereof, following a Change in Control, this Agreement shall be
deemed to have a term of twenty-four (24) months from the consummation of such
Change in Control.

      (a)   For a period of two (2) years from the date of termination of
employment, Executive shall be paid his Current Compensation at Termination.

                    (i)   For purposes of this section, the term "Current
     Compensation at Termination" means the sum of (A) the greatest of the
     Executive's base salary as of the date of termination of employment (or
     prior to any reduction thereof resulting in Good Reason for resignation)
     and for any of the three (3) immediately preceding calendar years, and (B)
     a dollar amount equal to the highest of the awards Executive received as
     bonuses in any of the three (3) calendar years preceding the year in which
     the termination of employment occurs, or preceding and including the year
     of termination of a bonus was previously paid in said year.

      (b)   Amounts required to be paid to Executive under Section 6(a) shall be
paid in equal monthly installments, beginning on the later of (i) thirty (30)
days following the date of termination of employment, or (ii) the receipt by the
Company of the approval of payment of such amounts by any applicable regulatory
agency to the extent such approval is required at that time.

      (c)   For a period of two (2) years from the date of termination of
employment, Executive shall receive a continuation of all life, disability,
medical insurance and other normal welfare benefits in effect with respect to
Executive during the two (2) calendar years prior to his termination of
employment, or, if Employer (or its successor) cannot provide such benefits
because Executive is no longer an employee, a dollar amount which after any
applicable taxes is equal to the cost to Executive of obtaining such benefits
(or substantially similar benefits).

                                       6
<PAGE>

      (d)   In the event that the amounts and benefits payable under this
Agreement, when added to other amounts and benefits which may become payable to
the Executive by the Bank and any affiliated company, are such that he becomes
subject to the excise tax provisions of Section 4999 of the Internal Revenue
Code of 1986, as amended, and regulations promulgated thereunder (the "Code"),
Employer shall pay him such additional amount or amounts as will result in his
retention (after the payment of all federal, state and local excise, employment
and income taxes on such payments and the value of such benefits) of a net
amount equal to the net amount he would have retained had the initially
calculated payments and benefits not been subject to such excise taxes under
Code Section 4999. For purposes of the preceding sentence, the Executive shall
be deemed to be subject to the highest marginal federal, relevant state and
relevant local tax rates. All calculations required to be made under this
subsection shall be made by Employer's independent public accountants, subject
to the right of Executive's representative to review the same. All such amounts
required to be paid shall be paid at the time any withholding may be required
under applicable law, and any additional amounts to which the Executive may be
entitled shall be paid or reimbursed no later than fifteen (15) days following
confirmation of such amount by Employer's accountants. In the event any amounts
paid hereunder are subsequently determined to be in error because estimates were
required or otherwise, the parties agree to reimburse each other to correct such
error, as appropriate, and to pay interest thereon at the applicable federal
rate (as determined under Code Section 1274 for the period of time such
erroneous amount remained outstanding and unreimbursed). The parties recognize
that the actual implementation of the provisions of this subsection are complex
and agree to deal with each other in good faith to resolve any questions or
disagreements arising hereunder.

      (e)   Notwithstanding any other provision of this Section, no cash
payments shall be made to Executive pursuant to this Section unless and until he
has experienced a "separation from service" with Employer and its affiliates,
within the meaning of Code Section 409A. In addition, if the Executive is a
"specified employee," within the meaning of Code Section 409A, such cash
payments shall be suspended for a period of six months from the date of such
separation from service. Any cash payments so suspended shall be made in a
single lump sum as soon as practicable following the expiration of such
six-month period.

7.    RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT WITHOUT CAUSE OR EXECUTIVE'S
RESIGNATION FOR GOOD REASON IN ABSENCE OF CHANGE IN CONTROL. In the event that
Executive's employment is terminated by Employer without Cause, or Executive
shall have resigned for Good Reason, and in either case prior to the occurrence
of a Change in Control, Executive shall be entitled to receive the amounts and
benefits set forth in this section.

     (a)   For a period of the greater of eighteen (18) months from the date of
termination of employment or the remaining term of this Agreement, Executive
shall be paid his Current Compensation.

                    (i)   For purposes of this section, the term "Current
     Compensation at Termination" means the sum of (A) Executive's base salary
     as of the date of termination of employment (or prior to any reduction
     thereof preceding termination of employment), and (B) a dollar amount equal
     to the average of the awards Executive received as bonuses for each of the
     three (3) calendar years preceding the year in which the termination of
     employment occurs, or preceding and including the year of termination of a
     bonus was previously paid in said year .

                    (ii)  Amounts required to be paid to Executive under Section
     7(a) shall be paid in equal monthly installments, beginning on the later of
     (i) thirty (30) days following the date of termination of employment, or
     (ii) the receipt by Employer of the approval of payment of such amounts by
     any applicable regulatory agency to the extent such approval is required at
     that time.

                                       7
<PAGE>

      (b)   For a period of the greater of eighteen (18) months from the date of
termination of employment, Executive shall receive a continuation of all life,
disability, medical insurance and other normal welfare benefits in effect with
respect to Executive during the two (2) calendar years prior to his termination
of employment, or, if Employer cannot provide such benefits because Executive is
no longer an employee, a dollar amount which after any applicable taxes is equal
to the cost after-tax to Executive of obtaining such benefits (or substantially
similar benefits).

      (c)   Executive shall not be required to mitigate the amount of any
payment provided for in this section by seeking employment or otherwise.

      (d)   Notwithstanding any other provision of this Section, no cash
payments shall be made to Executive pursuant to this Section unless and until he
has experienced a "separation from service" with Employer and its affiliates,
within the meaning of Code Section 409A. In addition, if the Executive is a
"specified employee," within the meaning of Code Section 409A, such cash
payments shall be suspended for a period of six (6) months from the date of such
separation from service. Any cash payments so suspended shall be made in a
single lump sum as soon as practicable following the expiration of such
six-month period.

8.    COVENANT NOT TO COMPETE: NON-SOLICITATION OF CUSTOMERS AND EMPLOVEES.

      (a)   If Executive voluntarily resigns his employment without "Good
Reason" hereunder during the term of this Agreement, Executive agrees that, for
a period of twelve (12) months following the date of the termination of his
employment, Executive shall not work directly or indirectly for or on behalf of
another insured depository institution that offers products or services similar
or equivalent to those offered by Employer in the geographic area in which
Employer or its affiliates are conducting such business at the date of
termination of Executive's employment. In addition, during such twelve (12)
month period. Executive shall not solicit customers or employees of Employer or
any of its affiliates to cease doing business, in whole or in part, or cease
employment with Employer or any of its affiliates.

      (b)   Executive further agrees that if any portion of the covenants set
forth in this Agreement or the application thereof, is construed to be invalid
or unenforceable, the remainder of the covenant or covenants shall then be given
full force and effect without regard to the invalid or unenforceable portions
thereof, whether because of the area covered, the duration thereof, or the scope
thereof. Executive further agrees that the court making such determination shall
have the power to reduce the area and/or duration, and/or limit the scope
thereof and the covenant(s) as thereafter reformed shall be enforceable in its
reduced form and binding upon Executive.

                                       8
<PAGE>

9.    ARBITRATION. Employer and the Executive recognize that in the event a
dispute should arise between them concerning the interpretation or
implementation of this Agreement, lengthy and expensive litigation will not
afford a practical resolution of the issues within a reasonable period of time.
Consequently, each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted for resolution
to the American Arbitration Association (the "Association") in Philadelphia,
Pennsylvania. Employer or the Executive may initiate an arbitration proceeding
at any time by giving notice to the others in accordance with the rules of the
Association. The Association shall designate a single arbitrator to conduct the
proceeding, but Employer or the Executive may, as a matter of right, require the
substitution of a different arbitrator chosen by the Association. Each such
right of substitution may be exercised only once. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the State of New
Jersey but shall be bound by the substantive law applicable to this Agreement.
The decision of the arbitrator, absent fraud, duress, incompetence or gross and
obvious error of fact, shall be final and binding upon the parties and shall be
enforceable in courts of proper jurisdiction. Following written notice of a
request for arbitration, Employer and the Executive shall be entitled to an
injunction restraining all further proceedings in any pending or subsequently
filed litigation concerning this Agreement, except as otherwise provided herein.
Employer will pay the costs of arbitration, including filing fees and arbitrator
expenses.

10.   NOTICES. Any notice required or permitted to be given under this Agreement
shall be deemed properly given if in writing and if mailed by registered or
certified mail, postage prepaid with return receipt requested, to the residence
of the Executive last shown on the payroll records of the Employer, in the case
of notices to the Executive, and to the principal office of the Employer, 6000
Midlantic Drive, Mount Laurel, New Jersey 08054 Attn: _______________in the case
of notices to Employer.

11.   WAIVER. No provision of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by the Executive and an executive officer of Employer
specifically designated by the Boards of Directors of Employer. No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

12.   ASSIGNMENT. This Agreement shall not be assignable by either party hereto,
except by Employer to any successor in interest to the business of Employer.

13.   ENTIRE AGREEMENT; TERMINATION OF PRIOR AGREEMENT. This Agreement contains
the entire agreement of the parties relating to the subject matter of this
Agreement and supersedes any prior agreement of the parties. Upon the execution
of this Agreement, that certain Agreement between the Bank and Executive dated
January 10, 2008 shall be superseded by this Agreement, and the parties shall be
deemed to have fully performed under such prior agreement, and no further
performance or obligations shall be owing.

14.   SUCCESSORS. BINDING AGREEMENT.

      (a)   Employer will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of Employer to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession had taken place. Failure by
Employer to obtain such assumption and agreement prior to the effectiveness of
any such succession shall constitute a breach of this Agreement and the
provisions of Section 6 hereof shall apply. As used in this Agreement,
"Employer" shall mean Employer as hereinbefore defined and any successor to the
respective business and/or assets of Employer as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.

                                       9
<PAGE>

(b)   This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators, heirs,
distributes, devisees, and legatees. If the Executive should die while any
amount is payable to the Executive under this Agreement if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee, or, if there is no such designee, to the Executive's
estate.

15.   TERMINATION. Any termination of the Executive's employment under this
Agreement or of this Agreement shall not affect the provisions of Sections 6, 7
or 8 hereof which shall survive any such termination and remain in full force
and effect in accordance with their respective terms.

16.   VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

17.   APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws (but not the law of conflict of laws) of the
State of New Jersey.

18.   HEADINGS. The headings of the Sections of this Agreement are for
convenience only and shall not control or affect the meaning or construction or
limit the scope or intent of any of the provisions of this Agreement.

19.   EFFECTIVE DATE. This Agreement shall become effective immediately, upon
the execution and delivery of this Agreement by the parties hereto.

20.   COOPERATION COVENANT. Both during and after the Employment Period, the
Executive shall cooperate fully with Employer and with any legal counsel, expert
or consultant it may retain to assist it in connection with any judicial
proceeding, arbitration, administrative proceeding, governmental investigation
or inquiry or internal audit in which Employer or any affiliate thereof,
including the Bank, may be or become involved, including full disclosure of all
relevant information and truthfully testifying on Employer's behalf (or, at the
request of Employer, on behalf of such affiliate of Employer, including the
Bank) in connection with any such proceeding or investigation.

21.   TAX WITHHOLDING. All payments made and benefits provided hereunder shall
be subject to required tax withholding. In the case of a noncash benefit,
Employer may require the Executive, as a condition of the receipt of such
benefit, to deposit sufficient funds with Employer to discharge any required
withholding obligation.

                                       10
<PAGE>

22.   REPRESENTATION OF EXECUTIVE. As an inducement to entering into this
Agreement, the Executive represents to Employer that his execution of and
performance under this Agreement will not constitute a violation by him of any
written or other contract, understanding, arrangement, duties or other
obligation pertaining to his performance of personal services, solicitation of
employees or customers, or other conduct on his part contemplated by this
Agreement.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<TABLE>
<CAPTION>
<S>                                                                <C>
Attest                                                        CORNERSTONE BANK

                                                              By: /s/
--------------------------------------------                     --------------------------------------------
                                                                 J. Richard Carnall,
                                                                 Vice Chairman of the Board

Attest:                                                       CORNERSTONE FINANCIAL CORPORATION

                                                              By: /s/
--------------------------------------------                      --------------------------------------------
                                                                  J. Richard Carnall,
                                                                  Vice Chairman of the Board

                                                                   /s/
                                                                   -------------------------------------------
                                                                   George W. Matteo, Jr.

</TABLE>

                                       11

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