Document:

exv10w3

 

EXHIBIT 10.3

Execution
Version

 

 

STOCK PURCHASE AGREEMENT

between

PRIDE INTERNATIONAL, INC.,

REDFISH HOLDINGS S. DE R.L. DE C.V.,

PRIDE INTERNATIONAL LTD.,

PRIDE SERVICES LTD.

and

GULF OF MEXICO PERSONNEL SERVICES S. DE R.L. DE C.V.

as SELLERS

and

GP INVESTMENTS LTD.

as BUYER

 

Dated as of August 9, 2007

 

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE I PURCHASE AND SALE	 	 	2	 
	 
	 	Section 1.1	 	Purchase and Sale	 	 	2	 
	 
	 	Section 1.2	 	Time and Place of Closing	 	 	3	 
	 
	 	Section 1.3	 	Deliveries by the Sellers	 	 	3	 
	 
	 	Section 1.4	 	Deliveries by the Buyer	 	 	3	 
	 
	 	Section 1.5	 	Intellectual Property	 	 	4	 
	 
	 	Section 1.6	 	Allocation of Purchase Price	 	 	4	 
	 
	 	Section 1.7	 	Books and Records	 	 	4	 
	 
	 	Section 1.8	 	No Ongoing or Transition Services	 	 	4	 
	 
	 	Section 1.9	 	Intercompany Accounts and Agreements	 	 	5	 
	 
	 	Section 1.10	 	Distribution; Purchase Price Adjustments	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS	 	 	6	 
	 
	 	Section 2.1	 	Organization; Etc	 	 	6	 
	 
	 	Section 2.2	 	Authority Relative to this Agreement	 	 	8	 
	 
	 	Section 2.3	 	Capitalization	 	 	8	 
	 
	 	Section 2.4	 	Ownership of Shares	 	 	9	 
	 
	 	Section 2.5	 	Contracts	 	 	9	 
	 
	 	Section 2.6	 	Consents and Approvals; No Violations	 	 	10	 
	 
	 	Section 2.7	 	Financial Statements	 	 	11	 
	 
	 	Section 2.8	 	Absence of Undisclosed Liabilities	 	 	11	 
	 
	 	Section 2.9	 	Absence of Certain Changes	 	 	11	 
	 
	 	Section 2.10	 	Litigation	 	 	12	 
	 
	 	Section 2.11	 	Compliance with Law	 	 	12	 
	 
	 	Section 2.12	 	Employee Benefit Plans	 	 	12	 
	 
	 	Section 2.13	 	Employees; Labor and Employment Matters	 	 	13	 
	 
	 	Section 2.14	 	Taxes	 	 	13	 
	 
	 	Section 2.15	 	Title, Ownership and Related Matters	 	 	14	 
	 
	 	Section 2.16	 	Rigs and E&P Equipment	 	 	15	 
	 
	 	Section 2.17	 	Environmental Matters	 	 	16	 
	 
	 	Section 2.18	 	Insurance	 	 	17	 
	 
	 	Section 2.19	 	Brokers; Finders and Fees	 	 	17	 
	 
	 	Section 2.20	 	Receivables	 	 	18	 
	 
	 	Section 2.21	 	Permits	 	 	18	 
	 
	 	Section 2.22	 	Powers of Attorney; Officers and Directors	 	 	18	 
	 
	 	Section 2.23	 	Suppliers	 	 	18	 
	 
	 	Section 2.24	 	Customers	 	 	19	 
	 
	 	Section 2.25	 	Intellectual Property	 	 	19	 
	 
	 	Section 2.26	 	Representations of the Sellers Refer to the Business	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	20	 
	 
	 	Section 3.1	 	Organization; Etc	 	 	20	 
	 
	 	Section 3.2	 	Authority Relative to this Agreement	 	 	20	 
	 
	 	Section 3.3	 	Consents and Approvals; No Violations	 	 	20	 
	 
	 	Section 3.4	 	Acquisition of Shares for Investment	 	 	21	 

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	 	Section 3.5	 	Availability of Funds	 	 	21	 
	 
	 	Section 3.6	 	Litigation	 	 	21	 
	 
	 	Section 3.7	 	Balance Sheet	 	 	22	 
	 
	 	Section 3.8	 	Investigation by the Buyer; No Reliance; Sellers’ Liability	 	 	22	 
	 
	 	Section 3.9	 	Brokers; Finders and Fees	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV COVENANTS OF THE PARTIES	 	 	23	 
	 
	 	Section 4.1	 	Conduct of Business	 	 	23	 
	 
	 	Section 4.2	 	Access to Information; Confidentiality	 	 	25	 
	 
	 	Section 4.3	 	Consents; Cooperation	 	 	27	 
	 
	 	Section 4.4	 	Consultation	 	 	28	 
	 
	 	Section 4.5	 	Commercially Reasonable Efforts	 	 	28	 
	 
	 	Section 4.6	 	Public Announcements	 	 	28	 
	 
	 	Section 4.7	 	Tax Matters	 	 	29	 
	 
	 	Section 4.8	 	Withholding Taxes	 	 	34	 
	 
	 	Section 4.9	 	Employees; Employee Benefits	 	 	35	 
	 
	 	Section 4.10	 	Supplemental Disclosure	 	 	37	 
	 
	 	Section 4.11	 	Advice of Changes	 	 	37	 
	 
	 	Section 4.12	 	Performance Bonds	 	 	37	 
	 
	 	Section 4.13	 	Restricted Activities	 	 	38	 
	 
	 	Section 4.14	 	Financing	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V CONDITIONS TO CONSUMMATION OF THE PURCHASE	 	 	39	 
	 
	 	Section 5.1	 	Conditions to Each Party’s Obligations to Consummate the Purchase	 	 	39	 
	 
	 	Section 5.2	 	Further Conditions to the Sellers’ Obligations	 	 	39	 
	 
	 	Section 5.3	 	Further Conditions to the Buyer’s Obligations	 	 	40	 
	 
	 	Section 5.4	 	Frustration of Closing Conditions	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI TERMINATION AND ABANDONMENT	 	 	40	 
	 
	 	Section 6.1	 	Termination	 	 	40	 
	 
	 	Section 6.2	 	Procedure for and Effect of Termination	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII SURVIVAL AND INDEMNIFICATION	 	 	42	 
	 
	 	Section 7.1	 	Survival Periods	 	 	42	 
	 
	 	Section 7.2	 	PII’s Agreement to Indemnify	 	 	42	 
	 
	 	Section 7.3	 	Buyer’s Agreement to Indemnify	 	 	44	 
	 
	 	Section 7.4	 	Third-Party Indemnification	 	 	45	 
	 
	 	Section 7.5	 	No Setoff	 	 	46	 
	 
	 	Section 7.6	 	Insurance	 	 	46	 
	 
	 	Section 7.7	 	No Duplication	 	 	46	 
	 
	 	Section 7.8	 	Sole Remedy	 	 	46	 
	 
	 	Section 7.9	 	No Special Damages	 	 	47	 
	 
	 	Section 7.10	 	Express Negligence	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS PROVISIONS	 	 	47	 
	 
	 	Section 8.1	 	Amendment and Modification	 	 	47	 
	 
	 	Section 8.2	 	Entire Agreement; Assignment; Binding Effect	 	 	47	 

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	 	Section 8.3	 	Severability	 	 	47	 
	 
	 	Section 8.4	 	Notices	 	 	48	 
	 
	 	Section 8.5	 	Governing Law	 	 	49	 
	 
	 	Section 8.6	 	Dispute Resolution	 	 	49	 
	 
	 	Section 8.7	 	Descriptive Headings	 	 	51	 
	 
	 	Section 8.8	 	Counterparts	 	 	51	 
	 
	 	Section 8.9	 	Fees and Expenses	 	 	51	 
	 
	 	Section 8.10	 	Interpretation	 	 	51	 
	 
	 	Section 8.11	 	Third-Party Beneficiaries	 	 	52	 
	 
	 	Section 8.12	 	No Waivers	 	 	52	 
	 
	 	Section 8.13	 	Specific Performance	 	 	52	 

	 	 	 
	EXHIBIT A
	 	Form of Transition Services Agreement

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GLOSSARY OF DEFINED TERMS

	 	 	 	 	 
	Defined Terms	 	Where Defined
	 
	 	 	 	 
	AAA
	 	Section 8.6(a)(ii)
	Affected Employees
	 	Section 4.9(c)
	affiliate
	 	Section 8.10(b)(i)
	Agreement
	 	Preamble
	Alternative Financing
	 	Section 4.14
	Antitrust Regulations
	 	Section 2.6
	Auditors
	 	Section 1.10(b)
	Base Net Working Capital
	 	Section 1.10(c)
	Benefit Plans
	 	Section 4.9(d)
	Business
	 	Recitals
	Business Intellectual Property
	 	Section 2.25(a)
	Business Material Adverse Effect
	 	Section 2.1(b)
	Buyer
	 	Preamble
	Buyer Damages
	 	Section 7.2(a)
	Buyer Indemnitees
	 	Section 7.2(a)
	Buyer Material Adverse Effect
	 	Section 3.1
	Buyer Plan
	 	Section 4.9(d)
	Buyer Proprietary Information
	 	Section 4.2(d)
	Buyer Tax Benefit
	 	Section 4.7(g)
	Claim
	 	Section 7.4
	Closing
	 	Section 1.2
	Closing Date
	 	Section 1.2
	Closing Date Schedule
	 	Section 1.10(b)
	Closing Statement
	 	Section 1.10(b)
	Code
	 	Section 1.6
	Companies
	 	Recitals
	Company
	 	Recitals
	Company Contracts
	 	Section 2.5(b)
	Confidentiality Agreement
	 	Section 4.2(b)
	Contracts
	 	Section 2.5(a)
	Current Assets
	 	Section 1.10(b)
	Current Liabilities
	 	Section 1.10(b)
	Due Date
	 	Section 4.7(j)
	Due Diligence Information
	 	Section 3.8(b)
	E&P Equipment
	 	Section 2.16(b)
	E&P Services Business
	 	Recitals
	Electing Target
	 	Section 4.7(a)(iii)
	Environment
	 	Section 2.17
	Environmental Claims
	 	Section 2.17(c)
	Environmental Law
	 	Section 2.17
	Environmental Permits
	 	Section 2.17(b)
	ERISA
	 	Section 2.12(c)
	Financing
	 	Section 3.5

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	Defined Terms	 	Where Defined
	 
	 	 	 	 
	Financing Commitment
	 	Section 3.5
	Financing Modification Requirements
	 	Section 4.14
	Financial Statements
	 	Section 2.7
	Foreign Tax Credit Loss Amount
	 	Section 4.7(a)(iii)
	GAAP
	 	Section 1.10(b)
	GOMPS
	 	Preamble
	Governmental Entity
	 	Section 2.6
	HAPSA
	 	Recitals
	Hazardous Substance
	 	Section 2.17
	Law
	 	Section 2.6
	Leases
	 	Section 2.15(b)
	Liens
	 	Section 2.4
	MC
	 	Recitals
	Net Working Capital
	 	Section 1.10(b)
	Operating Employees
	 	Section 4.9(a)
	Owned Property
	 	Section 2.15(b)
	party
	 	Preamble
	Payor
	 	Section 4.7(c)(iii)
	Permits
	 	Section 2.21
	Permitted Liens
	 	Section 2.15(a)
	person
	 	Section 8.10(b)(ii)
	PetroTech
	 	Recitals
	PIBL
	 	Recitals
	PII
	 	Preamble
	PIL
	 	Preamble
	PIL Sub Shares
	 	Recitals
	PISRL
	 	Recitals
	Plans
	 	Section 2.12(a)
	PPSRL
	 	Recitals
	PPSRL Shares
	 	Recitals
	Preparer
	 	Section 4.7(c)(iii)
	Proceeding
	 	Section 2.10
	PSAL
	 	Recitals
	PSL
	 	Preamble
	PSL Sub Shares
	 	Recitals
	Purchase
	 	Section 1.1
	Purchase Price
	 	Section 1.1(e)
	Real Property
	 	Section 2.15(b)
	Recipient
	 	Section 4.7(d)(i)
	Redfish
	 	Preamble
	Release
	 	Section 2.17
	Remedial Action
	 	Section 2.17
	Representatives
	 	Section 8.6(a)(i)
	Restricted Activities
	 	Section 4.13(d)
	Rigs
	 	Section 2.16(a)
	Section 338 Schedule
	 	Section 4.7(a)(iii)

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	Defined Terms	 	Where Defined
	 
	 	 	 	 
	Seller
	 	Preamble
	Sellers
	 	Preamble
	Seller Damages
	 	Section 7.3(a)
	Seller Disclosure Letter
	 	Article II
	Seller Indemnitees
	 	Section 7.3(a)
	Seller Tax Detriment
	 	Section 4.7(g)
	Seller Trademarks and Logos
	 	Section 1.5
	Shares
	 	Recitals
	Subsidiary
	 	Section 8.10(b)(iii)
	Survival Period
	 	Section 7.1
	Target
	 	Section 4.7(a)(iii)
	Tax
	 	Section 4.7(j)
	Tax Audit
	 	Section 4.7(d)(i)
	Tax Item
	 	Section 4.7(j)
	Tax Returns
	 	Section 2.14(a)
	Technology
	 	Section 2.25(c)
	Territory
	 	Section 4.13(d)
	Transfer Taxes
	 	Section 4.7(e)
	Transition Services Agreement
	 	Section 1.8
	Twin Oaks
	 	Recitals
	Twin Oaks Shares
	 	Recitals
	Voting Company Debt
	 	Section 2.3(a)

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STOCK PURCHASE AGREEMENT

          STOCK PURCHASE AGREEMENT, dated as of August 9, 2007 (this “Agreement”), is by and between
Pride International, Inc., a Delaware corporation (“PII”), Redfish Holdings S. de R.L. de C.V., a
Mexican limited liability company and indirect, wholly owned subsidiary of PII (“Redfish”), Pride
International Ltd., a British Virgin Islands company and direct, wholly owned subsidiary of PII
(“PIL”), Pride Services Ltd., a British Virgin Islands company and indirect, wholly owned
subsidiary of PII (“PSL”), and Gulf of Mexico Personnel Services S. de R.L. de C.V., a Mexican
limited liability company and indirect, wholly owned subsidiary of PIL (“GOMPS” and, together with
PII, Redfish, PIL and PSL, sometimes collectively referred to herein as the “Sellers” and,
individually, as a “Seller”), and GP Investments Ltd., a Bermuda company (the “Buyer”). The
Sellers and the Buyer are hereinafter collectively referred to as the “parties” and each
individually as a “party.”

          WHEREAS, PII, through its direct or indirect subsidiaries Perforaciones Pride S. de R.L. de
C.V., a Mexico company (“PPSRL”), Marlin Colombia Drilling Co. Inc., a British Virgin Islands
company (“MC”), Pride South America Ltd., a British Virgin Islands company (“PSAL”), Pride
International S.R.L., an Argentina limited liability company (“PISRL”), Pride International Bolivia
Ltda., a Bolivia limited liability company (“PIBL”), PetroTech S.A.I.C., an Argentina corporation
(“PetroTech”), Hispano Americana de Petroleos S.R.L., an Argentina limited liability company
(“HAPSA”), and Twin Oaks Financial Ltd., a British Virgin Islands company (“Twin Oaks” and,
together with PPSRL, MC, PSAL, PISRL, PIBL, PetroTech and HAPSA, sometimes collectively referred to
herein as the “Companies” and, individually, as a “Company”), is engaged in (i) the land contract
drilling and workover business in Latin America, primarily in Argentina, Venezuela, Colombia,
Bolivia and Mexico, and associated assets that are used in connection with the operation of such
business and (ii) the business of providing pressure pumping, formation testing, underbalance
drilling, drilling fluids, directional drilling, fishing tools, production services and related
services to exploration and production companies in one or more of Argentina, Bolivia, Brazil,
Colombia, Ecuador, Peru and Venezuela (the “E&P Services Business” and, together with the business
described in clause (i), collectively, the “Business”);

          WHEREAS, PIL owns 100% of the issued and outstanding capital stock of PSAL and MC;

          WHEREAS, PIL, together with Jorge R. Postiglione, as third-party nominee on behalf of PIL,
owns 100% of the issued and outstanding capital stock of PISRL;

          WHEREAS, PIL and PISRL collectively own 100% of the issued and outstanding capital stock of
PIBL;

          WHEREAS, Redfish and GOMPS collectively own 100% of the issued and outstanding capital stock
of PPSRL;

          WHEREAS, PISRL and PSL collectively own 100% of the issued and outstanding capital stock of
PetroTech and HAPSA;

 

 

          WHEREAS, PII owns 100% of the issued and outstanding capital stock of Twin Oaks; and

          WHEREAS, upon the terms and subject to the conditions set forth herein, (i) PIL desires to
sell and the Buyer desires to purchase all of the then issued and outstanding capital stock of MC,
PSAL, PIBL and PISRL owned by PIL (collectively, the “PIL Sub Shares”), (ii) each of Redfish and
GOMPS desires to sell and the Buyer desires to purchase all of the then issued and outstanding
capital stock of PPSRL owned by it (the “PPSRL Shares”), (iii) PSL desires to sell and the Buyer
desires to purchase all of the then issued and outstanding capital stock of PetroTech and HAPSA
owned by PSL (collectively, the “PSL Sub Shares”), and (iv) PII desires to sell and the Buyer
desires to purchase all of the then issued and outstanding capital stock of Twin Oaks (the “Twin
Oaks Shares” and, together with the PIL Sub Shares, the PPSRL Shares and the PSL Sub Shares, the
“Shares”), after which all of the issued and outstanding capital stock of the Companies would be
owned, directly or indirectly, by the Buyer;

          NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties,
covenants and agreements contained in this Agreement, and intending to be legally bound, the
parties agree as follows:

ARTICLE I

PURCHASE AND SALE

          Section 1.1 Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, at the Closing:

     (a) PIL will sell, convey, assign, transfer and deliver to the Buyer, and the Buyer
will purchase, acquire and accept from PIL, the PIL Sub Shares;

     (b) Each of Redfish and GOMPS will sell, convey, assign, transfer and deliver to the
Buyer, and the Buyer will purchase, acquire and accept from Redfish and GOMPS, the PPSRL
Shares;

     (c) PSL will sell, convey, assign, transfer and deliver to the Buyer, and the Buyer
will purchase, acquire and accept from PSL, the PSL Sub Shares;

     (d) PII will sell, convey, assign, transfer and deliver to the Buyer, and the Buyer
will purchase, acquire and accept from PII, the Twin Oaks Shares;

     (e) The Buyer will pay to the Sellers, in consideration for the Shares, an aggregate
amount of $1,000,000,000 in cash, subject to adjustment as provided in Section 1.10. To
facilitate the Purchase (as defined below), the Buyer will pay to PII, for the account and
as agent of each of the Sellers, the amount set forth in the immediately preceding sentence,
by wire transfer of immediately available funds to an account or accounts designated in
writing by PII at least two business days prior to the Closing Date (the “Purchase Price”).

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          The transactions contemplated by this Section 1.1 are sometimes referred to as the “Purchase.”

          Section 1.2 Time and Place of Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will take place
at the offices of Baker Botts L.L.P., One Shell Plaza, 910 Louisiana Street, Houston, Texas
77002-4995, at 9:00 a.m. (central time) on the later of (i) August 31, 2007 or (ii) the first
business day following the date on which all of the conditions to each party’s obligations under
this Agreement have been satisfied or, to the extent permitted, waived (other than those conditions
that by their nature are to be satisfied on the Closing Date (as defined below), but subject to the
satisfaction or, to the extent permitted, waiver of such conditions), or at such other date, place
or time as the parties may otherwise agree. The date on which the Closing occurs and the
transactions contemplated by this Agreement become effective is referred to as the “Closing Date.”

          Section 1.3 Deliveries by the Sellers. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers will
deliver (or cause to be delivered) the following to the Buyer:

     (a) Certificates representing the Shares and/or affidavits of ownership thereof,
accompanied by stock powers duly endorsed in blank or accompanied by duly executed
instruments of transfer;

     (b) The resignations (or evidence of the removal) of the members of the Boards of
Directors (or other governing body) of each of the Companies and their respective
Subsidiaries, as requested by the Buyer, and the delivery of releases of any claim against
the Companies and their respective Subsidiaries;

     (c) A certificate of PII, executed on its behalf by the Chief Executive Officer, the
President or a Vice President of PII, certifying as to the fulfillment of the conditions set
forth in Section 5.3 hereof;

     (d) An executed counterpart of the Transition Services Agreement by PII; and

     (e) All other documents, instruments and writings required to be delivered by the
Sellers at or (to the extent not previously delivered) prior to the Closing under this
Agreement.

          Section 1.4 Deliveries by the Buyer. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Buyer will
deliver (or cause to be delivered) the following to the Sellers:

     (a) The Purchase Price, in immediately available funds, as set forth in Section 1.1 of
this Agreement;

     (b) A certificate of the Buyer, executed on its behalf by the Chief Executive Officer,
the President or a Vice President of the Buyer, certifying as to the fulfillment of the
conditions set forth in Section 5.2 hereof;

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     (c) An executed counterpart of the Transition Services Agreement by the Buyer; and

     (d) All other documents, instruments and writings required to be delivered by the Buyer
at or (to the extent not previously delivered) prior to the Closing under this Agreement.

          Section 1.5 Intellectual Property. It is expressly agreed that the Buyer is not purchasing, acquiring or otherwise obtaining any
right, title or interest in the name “Pride” or any derivative thereof, or any trade names,
trademarks, identifying logos or service marks related thereto or employing the words “Pride” or
any part or variation of any of the foregoing or any confusingly similar trade names, trademarks,
logos or service marks (collectively, the “Seller Trademarks and Logos”), and any right, title or
interest the Companies or any of their respective Subsidiaries may have in the Seller Trademarks
and Logos shall terminate as of the Closing. Neither the Buyer nor any of its affiliates shall
make any use of the Seller Trademarks and Logos from and after 90 days following the Closing,
including through the use of stationery or letterhead. The Buyer shall, at its own cost and within
90 days from the Closing Date, remove from the Rigs (as defined below) and the other properties and
assets of the Companies and their respective Subsidiaries, or paint over, any and all of the Seller
Trademarks and Logos.

          Section 1.6 Allocation of Purchase Price. Not later than 15 calendar days after the Closing Date Schedule and Closing Statement become
final and binding on the parties pursuant to Section 1.10(b), PII and the Buyer shall agree on an
allocation of the Purchase Price to the stock of each Company, subject to Section 1.6 of the Seller
Disclosure Letter. If PII and the Buyer are unable to agree on such allocation, the matters in
dispute shall, under procedures similar to those in Section 1.10(b), be submitted to Ernst & Young
LLP or such other independent accounting firm as may be approved by PII and the Buyer, which firm
shall render its opinion as to such specific matters. Except as required pursuant to applicable
Law (as defined below) or a determination (as defined in Section 1313 of the Internal Revenue Code
of 1986, as amended (the “Code”), or any similar provision of Law), none of the parties, directly
or indirectly, through a subsidiary or affiliate or otherwise, will take a position on any Tax
Return (as defined below) or in any judicial proceeding that is in any way inconsistent with the
allocation set forth in this Section 1.6.

          Section 1.7 Books and Records. The Sellers shall deliver to the Buyer at or as soon as practicable (but in any event not later
than 10 days) after the Closing all books and records of the Companies and their Subsidiaries
(including books of account, personnel and payroll records and the like), including the books and
records of the Companies relating to Taxes (as defined below) and Tax Returns. The Sellers may
retain copies of any books and records delivered to the Buyer.

          Section 1.8 No Ongoing or Transition Services. Except as provided for in the Transition Services Agreement dated the Closing Date between PII
and the Buyer, substantially in the form of Exhibit A hereto (the “Transition Services Agreement”),
at the Closing, all data processing, accounting, insurance, banking, personnel, legal,
communications and other products and services provided to the Companies or any of their respective
Subsidiaries by PII or any of

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its other affiliates, including any agreements or understandings
(written or oral) with respect thereto, will terminate.

          Section 1.9 Intercompany Accounts and Agreements. Except for accounts payable—affiliates and notes payable—affiliates reflected on the Closing
Date Schedule and except as set forth in Section 1.9 of the Seller Disclosure Letter, on or prior
to the Closing Date, all intercompany accounts, leases and other Contracts between any of the
Companies or their respective Subsidiaries, on the one hand, and PII or its affiliates (other than
the Companies or any of their respective Subsidiaries), on the other hand, shall be canceled, paid
or otherwise settled. Subject to Section 1.10 of this Agreement, no adjustment shall be made to
the Purchase Price as a result of any such cancellation.

          Section 1.10 Distribution; Purchase Price Adjustments

          (a) The parties agree that, so long as any distributions made are reflected in the Closing
Date Schedule and in any adjustments to the Purchase Price under Section 1.10(c), the Sellers shall
have the right, at or prior to the Closing, to cause any Company and its Subsidiaries to distribute
cash, accounts receivable and any other working capital items (except inventory) to the Sellers or
their affiliates, by one or more dividends, repurchases of existing stock and/or other
distributions; provided, however, that no Company or Subsidiary incorporated in Argentina will pay
a dividend or otherwise make any distribution to its shareholders.

          (b) Within 90 calendar days following the Closing, PII shall prepare, or cause to be prepared,
and deliver to the Buyer a schedule of components of combined Net Working Capital of the Companies
and the Subsidiaries thereof listed in the notes to the Financial Statements (as defined below) as
of the close of business on the Closing Date (the “Closing Date Schedule”) and a statement (the
“Closing Statement”) reflecting the calculation of any adjustment to the Purchase Price under
Section 1.10(c), accompanied by a certificate of an officer of PII to the effect that such
statement has been prepared in accordance with the terms of this Agreement. As used in this
Agreement, (i) “Net Working Capital” means the amount of combined Current Assets of the Companies
and their respective Subsidiaries minus the amount of combined Current Liabilities of the Companies
and their respective Subsidiaries; (ii) “Current Assets” means the sum of cash and cash
equivalents, net trade receivables, net parts and supplies and prepaid and other current assets
(excluding deferred mobilization costs on Rig 321); and (iii) “Current Liabilities” means the sum
of accounts payable, accounts payable—affiliates, note payable—affiliates and accrued expenses
and other current liabilities (excluding deferred mobilization revenues on Rig 321); in each case
as of the Closing Date and determined in accordance with generally accepted accounting principles
in the United States (“GAAP”) and consistent with the financial reporting policies and procedures used by the Sellers to prepare
the combined balance sheet as of December 31, 2006 included in the Financial Statements; provided,
however, that Current Assets and Current Liabilities shall not include Taxes payable, Taxes
receivable or deferred Taxes, as applicable. For the avoidance of doubt, Section 1.10(b) of the
Seller Disclosure Letter sets forth the calculation of Net Working Capital as of December 31, 2006.
The Buyer shall have a period of 45 calendar days after delivery of the Closing Date Schedule and
the Closing Statement to review (and cause Buyer’s auditors to review) such documents and make any
objections it may have in writing to PII. During such 45-day period, Buyer and its independent
auditors shall be permitted to review the working papers of PII’s

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independent auditors relating to
the Closing Date Schedule. If written objections are delivered to PII by the Buyer within such
45-day period, then the Buyer and PII shall attempt to resolve the matter or matters in dispute.
If no written objections are made by Buyer within such 45-day period, then such Closing Date
Schedule and Closing Statement shall be final and binding on the parties. If disputes with respect
to such Closing Date Schedule or such Closing Statement cannot be resolved by Buyer and PII within
30 calendar days after timely delivery of any objections thereto, then, at the request of either
Buyer or PII, the specific matters in dispute shall be submitted to Ernst & Young LLP or such other
independent accounting firm as may be approved by PII and the Buyer (the “Auditors”), which firm
shall render its opinion as to such specific matters. If no such referral is made within 45 days
after the delivery of the objections, then such Closing Date Schedule and such Closing Statement
shall be final and binding on the parties hereto. Based on such opinion, the Auditors will then
send to PII and the Buyer its determination of the specified matters in dispute, which
determination shall be final and binding on the parties hereto. Judgment may be entered upon the
determination of the Auditors in any court having jurisdiction over the party against which such
determination is to be enforced. The fees and expenses of the Auditors shall be borne one-half by
the Sellers and one-half by the Buyer.

          (c) If the Net Working Capital reflected on the Closing Date Schedule as finally determined
under Section 1.10(b) is less than $208,191,916 (“Base Net Working Capital”), then within five days
following the final determination thereof, PII will pay, or cause the applicable Seller to pay, to
the Buyer by wire transfer in immediately available funds to the account or accounts designated by
the Buyer the amount of such deficiency, plus interest thereon at 6% per annum, calculated on the
basis of the actual number of days elapsed divided by 365, from (and including) the Closing Date to
(but excluding) the date of such payment. If the Net Working Capital reflected on the Closing Date
Schedule is greater than Base Net Working Capital, then within five days following the final
determination thereof, the Buyer will pay to PII, for the account and as agent of the applicable
Seller, by wire transfer in immediately available funds to the account or accounts designated by
PII the amount of such excess, plus interest thereon at such interest rate from (and including) the
Closing Date to (but excluding) the date of such payment.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

          Except as set forth in a letter to be delivered by the Sellers to the Buyer concurrently with
the execution and delivery of this Agreement (the “Seller Disclosure Letter”), the Sellers jointly
and severally represent and warrant to the Buyer as follows.

          Section 2.1 Organization; Etc.

          (a) Each Seller (i) is duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization; (ii) has all requisite corporate or other entity power and
authority and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to own, lease and operate its properties and assets, including the Shares owned
by such Seller, and to carry on its business substantially as it is now being conducted; and

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(iii)
is duly qualified and in good standing to do business in each jurisdiction in which the nature of
its business or the ownership, operation or leasing of its properties makes such qualification
necessary, except where the failure to be so organized, existing and in good standing, to have such
power or authority or to be so qualified would not, individually or in the aggregate, adversely
affect the ability of the Sellers to consummate the transactions contemplated by this Agreement.
Each Seller has delivered or made available to the Buyer true and complete copies of its corporate
charter and bylaws (or equivalent governing documents), in each case as amended through the date of
this Agreement.

          (b) Each of the Companies and their respective Subsidiaries (i) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization; (ii) has all
requisite corporate or other entity power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to own, lease and operate its properties
and assets and to carry on the Business conducted by such Company or Subsidiary substantially as it
is now being so conducted; and (iii) is duly qualified and in good standing to do business in each
jurisdiction in which the conduct or nature of its business or the ownership, operation or leasing
of its properties makes such qualification necessary, except where the failure to be so organized,
existing and in good standing, to have such power and authority or to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect
(as defined below). The Sellers have delivered or made available to the Buyer true and complete
copies of corporate charter and bylaws (or equivalent governing documents) of the Companies and
their respective Subsidiaries, in each case as amended through the date of this Agreement. As used
in this Agreement, the term “Business Material Adverse Effect” means a material adverse change in,
or effect on, the Business or the business, assets, financial condition or results of operations of
the Companies and their respective Subsidiaries, taken as a whole; provided, however, that (1) any
adverse change or effect attributable to the announcement, pendency or consummation of the
transactions contemplated by this Agreement (including any cancellations of or delays in customer
orders or other decreases in customer demand, any reduction in revenues, any disruption in
supplier, distributor, customer, partner or similar relationships, work stoppages, any loss or
threatened loss of employees or other employee disruptions), (2) any adoption, implementation, promulgation,
repeal, modification, reinterpretation or proposal of any rule, regulation, ordinance, order,
protocol, practice or measure or any other Law of or by any government, governmental agency, court,
commission, market administrator or similar organization or other such entity, (3) the bankruptcy,
insolvency or other financial distress of any customers of any of the Companies or their
Subsidiaries, (4) changes or developments in financial or securities markets or the economy in
general, any outbreak, continuation or escalation of hostilities or the declaration by the United
States or any Latin American country of a national emergency or war, any acts of terrorism, any
other calamity or crisis or geopolitical event, or effects of weather or meteorological events, (5)
changes that are the result of factors generally affecting the principal industries and geographic
areas in which the Companies and their Subsidiaries operate, except to the extent such changes have
a disproportionate effect on the Business or the Companies and their respective Subsidiaries, taken
as a whole, compared with other participants in such industries or geographical areas, (6) changes
in the price of oil and natural gas, (7) any change in GAAP or in its interpretation or (8) any
actions taken at the Buyer’s request or contemplated by this Agreement, shall be excluded from such
determination. In addition to the foregoing, the determination of the dollar value or impact of
any change or event under the preceding sentence

7

 

shall be based solely on the actual dollar value
of such change or effect, on a dollar-for-dollar basis, and shall not take into account (i) any
multiplier valuations, including any multiple based on earnings or other financial indicia, or (ii)
any consequential damages or other consequential valuation.

          Section 2.2 Authority Relative to this Agreement. Each Seller has the corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this Agreement have been duly
and validly authorized by all requisite corporate action on the part of each of the Sellers. This
Agreement has been duly and validly executed and delivered by each of the Sellers, and assuming
this Agreement has been duly authorized, executed and delivered by the Buyer, constitutes a valid
and binding agreement of each of the Sellers, enforceable against each of the Sellers in accordance
with its terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other laws, now or hereafter in
effect, relating to or limiting creditors’ rights generally and (b) enforcement of this Agreement,
including, among other things, the remedy of specific performance and injunctive and other forms of
equitable relief, may be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.

          Section 2.3 Capitalization.

          (a) Section 2.3(a) of the Seller Disclosure Letter sets forth the number of issued and
outstanding shares of capital stock of each Company and the record and beneficial owners of its
outstanding capital stock as of the date hereof. All of such outstanding shares of capital stock
of each Company are duly authorized, validly issued, fully paid and nonassessable. Except for the
Shares, there are not, and at the Closing there will not be, any capital stock or
other equity interests in any Company issued, reserved for issuance or outstanding. Section
2.3(a) of the Seller Disclosure Letter sets forth for each Subsidiary of a Company the amount of
its authorized capital stock, the amount of its outstanding capital stock and the record and
beneficial owners of its outstanding capital stock. Except as set forth in Section 2.3(a) of the
Seller Disclosure Letter, there are no shares of capital stock or other equity securities of any
such Subsidiary issued, reserved for issuance or outstanding. The Shares are duly authorized,
validly issued, fully paid and nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of applicable Law (as defined below), the corporate charter and
bylaws (or equivalent governing documents) of any Company or any Contract to which any Company is a
party or otherwise bound. All the outstanding shares of capital stock of each Subsidiary of a
Company have been duly authorized and validly issued and are fully paid and nonassessable. There
are no bonds, debentures, notes or other indebtedness of any Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on any matters on which
holders of Shares may vote (“Voting Company Debt”). Except as set forth above, as of the date of
this Agreement, there are not any options, warrants, rights, convertible or exchangeable
securities, “phantom” stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which any Company or any of its
Subsidiaries is a party or by which any of them is bound (i) obligating such Company or any such
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or

8

 

sold, additional shares
of capital stock or other equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, such Company or of any such
Subsidiary or any Voting Company Debt, (ii) obligating such Company or any such Subsidiary to
issue, grant, extend or enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking or (iii) giving any person the right to receive any economic
benefit or right similar to or derived from the economic benefits rights accruing to holders of
Shares. As of the date of this Agreement, there are not any outstanding contractual obligations of
any Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of such Company or any such Subsidiary.

          (b) Except for its interests in the Subsidiaries of the Companies and except for the ownership
interests set forth in Section 2.3(b) of the Seller Disclosure Letter, no Company owns, directly or
indirectly, any capital stock, membership interest, partnership interest, joint venture interest or
other equity interest with a fair market value as of the date of this Agreement in excess of
$50,000 in any person.

          Section 2.4 Ownership of Shares. Immediately prior to the Closing, (a) PIL will have good and valid title to all the issued and
outstanding capital stock of PSAL and MC; (b) PIL and Jorge R. Postiglione, as third-party nominee
on behalf of PIL, will have good and valid title to 1,741,280 quotas and 470 quotas, respectively,
of PISRL, representing all the issued and outstanding capital stock of PISRL; (c) PIL and PISRL
will have good and valid title to 1,541,311 capital quotas and 269 capital quotas, respectively, of
PIBL, representing all the issued and outstanding capital stock of PIBL; (d) Redfish and GOMPS will
have good and valid title to membership interests equaling 19,751,312.41 shares and one share,
respectively, in PPSRL, representing all of the issued and outstanding capital stock of PPSRL; (e)
PISRL and PSL will have good and valid title to 519,310
shares and one share, respectively, of HAPSA, representing all the issued and outstanding capital
stock of HAPSA; (f) PISRL and PSL will have good and valid title to 188 shares and 212 shares,
respectively, of PetroTech, representing all the issued and outstanding capital stock of PetroTech;
and (g) PII will have good and valid title to all of the issued and outstanding capital stock of
Twin Oaks, in each case free and clear of all liens, pledges, charges, claims, security interests
or other encumbrances, whether consensual, statutory or otherwise (collectively, “Liens”). The
consummation of the Purchase will convey to the Buyer good and valid title to the Shares, free and
clear of all Liens, except for those created by the Buyer or arising out of ownership of the Shares
by the Buyer. Other than this Agreement, the Shares are not subject to any voting trust agreement
or other Contract restricting or otherwise relating to the voting, dividend rights or disposition
of the Shares.

          Section 2.5 Contracts.

          (a) Section 2.5 of the Seller Disclosure Letter lists, as of the date of this Agreement, (i)
all written agreements, commitments, contracts, leases, licenses, indentures, instruments and other
legally binding arrangements (collectively, “Contracts”) to which any Company or any of its
Subsidiaries is a party and that (1) relate to the Business, (2) involve payments by or to any
Company or any of its Subsidiaries of at least $1,000,000 over the original base term and (3) have
an original base term (excluding potential renewals) extending at least 12 months; (ii) all
Contracts to which any Company or any of its Subsidiaries is a party involving payments by or to
any Company or any such Subsidiary of at least $5,000,000 over the original

9

 

base term, other than
Contracts pursuant to which any Company or any of its Subsidiaries purchases goods or services in
the ordinary course of business; (iii) all Contracts relating to the borrowing of money by any
Company or any of its Subsidiaries (other than intercompany accounts, which shall be governed by
Section 1.9 of this Agreement) and guarantees by any Company or any of its Subsidiaries of any
obligation for the borrowing of money; (iv) all employment Contracts of any Company or any of its
Subsidiaries that have an aggregate future liability in excess of $100,000 and are not terminable
by such Company or such Subsidiary by notice of not more than 90 days for a cost of less than
$100,000; (v) all collective bargaining agreements and other Contracts of any Company or any of its
Subsidiaries with any labor organization, union or association; (vi) all Contracts under which any
Company or any of its Subsidiaries has borrowed any money from, or issued any note, bond, debenture
or other evidence of indebtedness to, any person (other than any Seller, any Company or any of
their respective Subsidiaries) in any such case which, individually or in the aggregate, is in
excess of $1,000,000; and (vii) any Contract not otherwise required to be set forth in the Seller
Disclosure Letter and under which the performance of any Company’s or any of its Subsidiaries’
obligations or the consequences of a default or termination would reasonably be expected to have a
Business Material Adverse Effect.

          (b) To the knowledge of the Sellers, all Contracts required to be listed in Section 2.5 of the
Seller Disclosure Letter (the “Company Contracts”) are valid, binding and in full force and effect
and are enforceable by the applicable Company or Subsidiary thereof in accordance with their terms,
except for such failures to be valid, binding, in full force and effect or enforceable that,
individually or in the aggregate, would not reasonably be expected to have a
Business Material Adverse Effect. The applicable Company or Subsidiary thereof has performed
all material obligations required to be performed by it to date under the Company Contracts, and it
is not (with or without the lapse of time or the giving of notice, or both) in breach or default in
any material respect thereunder and, to the knowledge of the Sellers, no other party to any Company
Contract is (with or without the lapse of time or the giving of notice, or both) in breach or
default in any material respect thereunder. None of the Sellers, the Companies or any of the
Subsidiaries of the Companies has received any notice of the intention of any party to terminate
any Company Contract. Complete and correct copies of all Company Contracts, together with all
modifications and amendments thereto, have been made available to the Buyer.

          Section 2.6 Consents and Approvals; No Violations. Except for applicable requirements of the antitrust or competition laws set forth in Section 2.6
of the Seller Disclosure Letter (the “Antitrust Regulations”), neither the execution and delivery
of this Agreement by any of the Sellers nor the consummation by any Seller of the transactions
contemplated by this Agreement will (a) conflict with or result in any breach of any provision of
corporate charter, bylaws or equivalent governing documents of any Seller, any Company or any
Subsidiary of a Company, (b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, or give rise to a loss of a material benefit under, or result in the
creation of any Lien upon the properties or assets of such Seller, Company or Subsidiary under, or
require any consent under, any Contract to which any of the Sellers, any Company or any Subsidiary
of a Company is a party or by which any of them or any of their respective properties or assets are
bound, (c) violate any law, order, judgment, writ, injunction, decree, statute, rule or regulation
(collectively, “Laws” and, individually, a “Law”) that is currently in effect and applicable to any
Seller, any

10

 

Company, any Subsidiary of a Company or any of their respective properties or assets,
or (d) require any filing, declaration or registration with, or the obtaining of any permit,
authorization, license, order, consent or approval of, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality (“Governmental Entity”), except in the case of clauses
(b), (c) and (d) of this Section 2.6 for any such violations, breaches, defaults, rights of
termination, cancellation or acceleration or requirements that, individually or in the aggregate,
would not reasonably be expected to have a Business Material Adverse Effect and would not adversely
affect the ability of the Sellers to consummate the transactions contemplated by this Agreement, or
which become applicable as a result of the business or activities in which the Buyer is or proposes
to be engaged or as a result of any acts or omissions by, or the status of or any facts pertaining
to, the Buyer.

          Section 2.7 Financial Statements. Section 2.7 of the Seller Disclosure Letter contains the audited combined balance sheets of the
Companies and the Subsidiaries listed therein as of December 31, 2006 and 2005 and the audited
combined statement of operations, statement of owner’s net investment and statement of cash flows
of the Companies and the Subsidiaries listed therein for each of the years in the three-year period
ended December 31, 2006, and the unaudited combined balance sheet as of June 30, 2007 and the
unaudited combined statement of operations, statement of owner’s net investment and statement of
cash flows of the Companies and the Subsidiaries listed therein for the six-month
period ended June 30, 2007 (collectively, the “Financial Statements”). Except as disclosed in the
notes thereto, each of such balance sheets fairly presents in all material respects the combined
financial position of the Companies and the Subsidiaries as of the date thereof, and each of such
statements of operations, owner’s net investment and cash flows fairly presents in all material
respects the combined results of operations, owner’s net investment and cash flows of the Companies
and the Subsidiaries for the period indicated, all in accordance with GAAP consistently applied
throughout the period indicated, except that the unaudited financial statements remain subject to
normal year-end adjustments and do not contain footnotes and similar disclosures otherwise required
to be in conformity with GAAP. Except as set forth in Section 2.7 of the Seller Disclosure Letter,
none of the Companies or their respective Subsidiaries has, since December 31, 2006, paid or
declared (or taken any action in furtherance of or related to) any dividend or otherwise made any
distribution to its shareholders.

          Section 2.8 Absence of Undisclosed Liabilities. Except for liabilities and obligations (a) incurred in the ordinary course of business and
consistent with past practice between December 31, 2006 and the Closing or (b) otherwise disclosed
in the Seller Disclosure Letter or contemplated by this Agreement, at the Closing, none of the
Companies nor any of their respective Subsidiaries will have any liabilities or obligations
(whether accrued, absolute, contingent, unasserted or otherwise) of a nature that would be required
to be reflected or reserved against in a combined balance sheet of the Companies and such
Subsidiaries prepared in accordance with GAAP in excess of $10,000,000 in the aggregate.

          Section 2.9 Absence of Certain Changes. Since December 31, 2006, (a) there have been no facts, changes or occurrences that, individually
or in the aggregate, have had, or would reasonably be expected to have, a Business Material Adverse
Effect, and (b) the Business has been conducted in the ordinary course consistent with past
practice.

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          Section 2.10 Litigation. Section 2.10 of the Seller Disclosure Letter sets forth a list as of the date hereof of each
pending claim, action, suit, proceeding (“Proceeding”) or, to the knowledge of the Sellers,
governmental investigation pending or, to the knowledge of the Sellers, threatened against any
Seller, any Company or any Subsidiary of a Company by or before any Governmental Entity that (a)
seeks damages, fines or penalties in excess of $100,000 for any individual Proceeding or
governmental investigation or in excess of $500,000 in the aggregate for any related Proceedings or
governmental investigations, (b) seeks any material injunctive relief or (c) relates to any of the
transactions contemplated by this Agreement. None of the Proceedings or governmental
investigations listed in Section 2.10 of the Seller Disclosure Letter would, if adversely
determined, individually or in the aggregate, have a Business Material Adverse Effect or adversely
affect the ability of the Sellers to consummate the transactions contemplated by this Agreement.
None of the Sellers, the Companies or the Subsidiaries of the Companies is in default under or
violation of any outstanding injunction, judgment, order, decree, ruling or award that would
reasonably be expected to have a Business Material Adverse Effect.

          Section 2.11 Compliance with Law. The Business is being and has been conducted in compliance in all material respects with all
applicable Laws and all applicable orders, writs, injunctions and decrees of any Governmental
Entity.

          Section 2.12 Employee Benefit Plans.

          (a) Section 2.12 of the Seller Disclosure Letter sets forth, as of the date of this Agreement,
and the Sellers have delivered or made available to the Buyer true and complete copies of, all
deferred compensation, pension, profit-sharing and retirement plans and all material employment,
bonus, retention bonus, success bonus, severance, change in control and other material employee
benefit plans, programs, arrangements and agreements maintained or with respect to which
contributions are made by, any Company, or any such plans, programs, arrangements and agreements of
PII or any of its affiliates (other than the Companies and their Subsidiaries) under which any of
the Companies may have any liability or obligation to contribute, or under which employees of any
of the Companies or their Subsidiaries hold or are entitled to receive compensation or benefits
(collectively, the “Plans”).

          (b) All Plans and their related trusts have been and are maintained in accordance with their
terms and in compliance with applicable Law in all material respects. None of the Companies or
their Subsidiaries have any commitment or obligation to establish or adopt any new or additional
Plans or to increase the benefits under any existing Plan.

          (c) None of any Company, any Subsidiary of any Company or any entity that is required to be
treated as a single employer together with any Company or any Subsidiary of any Company under
Section 414 of the Code sponsors, maintains or has any liability or obligation with respect to any
“employee pension benefit plan” (within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)) subject to Title IV of ERISA or Section 412 of
the Code that is reasonably likely to result in a material liability to any Company or any of
Subsidiary of a Company.

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          (d) Except as set forth in Section 2.12(d) of the Seller Disclosure Letter and except as
required by applicable Law, no employee of any of the Companies or their Subsidiaries is entitled
to any severance, separation, change of control, termination or bonus payment or other increased or
additional compensation or benefits as a result of any of the transactions contemplated by this
Agreement (alone or in combination with any other event) or in connection with the termination of
such employee’s employment on or after the Closing. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and thereby (alone or in combination
with any other event) and compliance by any of the Companies and any of their Subsidiaries with the
provisions hereof do not and will not require the funding of, or require an increase in the cost
of, or give rise to any other obligation of any Company or any of its Subsidiaries under, any Plan
and will not result in any breach or violation of, or default under, or limit any Company’s or any
Subsidiary’s ability to amend, modify or terminate any Plan.

          Section 2.13 Employees; Labor and Employment Matters. As of the date hereof, there are no (i) collective bargaining agreements or other labor
agreements relating to any Company or any Subsidiary of any Company or covering any employee of any
Company or any Subsidiary of any Company to which any Company or any Subsidiary of any Company is a
party or by which it is bound; (ii) unfair labor practice complaints against any Company or any
Subsidiary of any Company pending (or, to the knowledge of the Sellers, threatened) before any
Governmental Entity with respect to the Business; (iii) ongoing labor strikes, work stoppages or
lockouts affecting any Company or any Subsidiary of any Company; (iv) material labor grievances
pending against any Company or any Subsidiary of any Company; or (v) orders, judgments, writs,
injunctions or decrees specifically applicable to any Company or any Subsidiary or, other than
employment Contracts set forth in Section 2.5 of the Seller Disclosure Letter and customer
Contracts, Contracts to which any Company or any of the Subsidiaries is a party that in any way
limits or restricts the termination of any of their employees. The Companies and their
Subsidiaries are in compliance in all material respects with all applicable labor, housing,
educational cooperation, unemployment insurance, health and safety, social security and related
regulations.

          Section 2.14 Taxes.

          (a) With respect to each Company and its Subsidiaries, (i) all material returns, reports and
forms with respect to Taxes (as defined in Section 4.7(j) of this Agreement) (collectively, “Tax
Returns”) required to be filed on or before the Closing Date have been or will be timely filed in
accordance with any applicable Laws, (ii) all such Tax Returns as filed were complete and accurate
in all material respects and (iii) all Taxes due on such Tax Returns have been or will be timely
paid in full or have been or will be reserved for on the balance sheets included in the Financial
Statements.

          (b) With respect to each Company and its Subsidiaries, (i) there is no material action, suit,
proceeding, audit, written claim or assessment pending or proposed with respect to Taxes or with
respect to any Tax Return, (ii) there are no waivers or extensions of any applicable statute of
limitations for the assessment or collection of Taxes with respect to any Tax Return that remain in
effect, (iii) there is full compliance in all material respects with all requirements for the
withholding and payment over of any Taxes required to be withheld and paid over with

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respect to
payments to employees or other persons, (iv) there has not been a request made to change a method
of accounting for Tax purposes that would have an effect on the Taxes of the Company or its
Subsidiaries following the Closing, (v) the Companies and/ or their Subsidiaries have not extended
or waived the statute of limitations on any federal or any significant provincial Tax Return that
remains open at the date hereof, (vi) all Taxes which the Companies and or the Subsidiaries are
required by Law to withhold or collect have been duly withheld or collected, and have been timely
paid over to the appropriate Governmental Entities to the extent due and payable, (vii) there is no
investigation, examination or audit currently pending or threatened, regarding any Taxes relating
to the Companies and/ or their Subsidiaries, (viii) there is no request for rulings or
determination letters with respect to the Companies and/ or their Subsidiaries, (ix) there are no
Tax sharing agreements or arrangements to which the Companies or the Subsidiaries are now a party
and (x) there are no material Liens for Taxes upon the assets of any Company or any Subsidiary of any Company, except for Liens for Taxes not yet due and
payable or Liens for Taxes being contested in good faith through appropriate proceedings.

          (c) PII has treated, in its most recent filings with the U.S. Internal Revenue Service, each
of the Companies and its Subsidiaries as a corporation for U.S. federal tax purposes.

          Section 2.15 Title, Ownership and Related Matters.

          (a) Except for cash, accounts receivable and working capital items distributable by a Company
and its Subsidiaries pursuant to Section 1.10(a), each Company and its Subsidiaries have, free and
clear of all Liens, other than Permitted Liens, good title to, or rights by license, lease or other
agreement to use, all material properties and assets (or rights thereto) primarily used or held for
use in the conduct of the Business as currently conducted. This Section 2.15(a) does not relate to
real property (which is subject to Section 2.15(b) below) or Rigs or E&P Equipment (which are
subject to Section 2.16). As used in this Agreement, “Permitted Liens” means (a) statutory Liens
for current Taxes not yet due and payable or being contested in good faith by appropriate
proceedings; (b) mechanics’, carriers’, workers’, repairers’ and other similar Liens imposed by
applicable Law arising or incurred in the ordinary course of business consistent with past
practices for obligations that are not overdue or that are being contested in good faith by
appropriate proceedings; (c) other Liens that do not, and if foreclosed or otherwise executed would
not, materially interfere with the conduct of the Business; (d) Liens on leases of real property
arising from the provisions of such leases, including any agreements and/or conditions imposed on
the issuance of land use permits, zoning, business licenses, use permits or other entitlements of
various types issued by any Governmental Entity, necessary or beneficial to the continued use and
occupancy of such real property or the continuation of the Business; (e) pledges or deposits made
in the ordinary course of business consistent with past practices in connection with workers’
compensation, unemployment insurance and other social security or similar legislation; (f) deposits
to secure the performance of bids, contracts, leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of
business consistent with past practices; (g) zoning regulations and restrictive covenants and
easements of record that do not detract in any material respect from the value of real property and
do not materially and adversely affect, impair or interfere with the use of any property affected
thereby; (h) public utility easements of record, in customary form, to serve real property; (i)
landlords’ Liens in favor of landlords under the

14

 

Leases; (j) mortgages, deeds of trust and other
security instruments, and ground leases or underlying leases covering the title, interest or estate
of third-party landlords with respect to the real property subject to leases under which any
Company leases real property and to which such leases are subordinate; (k) any other Liens,
easements, rights-of-way, restrictions, rights, leases and other encumbrances affecting title
thereto, whether or not of record, which do not, and if foreclosed or otherwise executed would not,
materially detract from the value of or materially interfere with the use and operation of the
assets of the Companies and their Subsidiaries, taken as a whole; and (l) Liens, if any, created or
permitted to be imposed by the Buyer.

          (b) Each of the Companies and their respective Subsidiaries has valid and marketable title to
each parcel of real property owned in fee by such Company or Subsidiary (the “Owned Property”),
free and clear of all Liens other than Permitted Liens. Section 2.15(b) of the Seller Disclosure
Letter sets forth a complete list of all leases, subleases and other agreements under which any of
the Companies or their respective Subsidiaries uses or occupies or has the right to use or occupy
any real property that involve lease payments in excess of $50,000 per month and are not terminable
by such Company or Subsidiary that is a party thereto by notice of not more than 90 days (the
“Leases”; the property governed by such Leases, together with the Owned Property, is referred to
herein as the “Real Property”). Each of the Companies and their respective Subsidiaries has a good
and valid leasehold interest in each parcel of Real Property leased by it pursuant to the Leases,
free and clear of all Liens other than Permitted Liens.

          (c) The properties and assets owned, leased or used by the Companies and their Subsidiaries,
together with the rights and services to be provided by PII or any of its affiliates to the Buyer,
the Companies or any of their respective Subsidiaries under the Transition Services Agreement, will
be sufficient to conduct the Business immediately following the Closing in substantially the same
manner as currently conducted.

          Section 2.16 Rigs and E&P Equipment.

          (a) A listing of all the rigs owned or leased by the Companies and their Subsidiaries as of
the date hereof (the “Rigs”), and for each Rig whether it is owned or leased and whether it has
operated under contract at any time since July 1, 2006, is set forth in Section 2.16(a) of the
Seller Disclosure Letter. The Companies or their Subsidiaries have good title to, or rights by
license, lease or other agreement to use, the Rigs, free and clear of all Liens other than
Permitted Liens. The maintenance records related to the Rigs included in the “data room” prepared
in connection with the transactions contemplated hereby are true and complete in all material
respects as of the respective dates set forth therein. The Rigs in the aggregate are in
sufficiently good working order (ordinary wear and tear excepted) to conduct the Business as
currently conducted. The Sellers have no plans for the retirement or material write-down in the
value of any Rig. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.16(a), NO OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING THOSE OF VALUE, PHYSICAL CONDITION, PERFORMANCE, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, SHALL EXTEND TO THE RIGS.

          (b) A true and complete listing of all material equipment used primarily in the E&P Services
Business as of the date hereof is set forth in Section 2.16(b) of the Seller

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Disclosure Letter (the
“E&P Equipment”). The E&P Equipment in the aggregate is in sufficiently good working order
(ordinary wear and tear excepted) to conduct the Business as currently conducted. The Sellers have
no plans for the retirement or material write-down in the value of any E&P Equipment with a
replacement value of greater than $500,000. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.16(b),
NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THOSE OF VALUE, PHYSICAL CONDITION,
PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, SHALL EXTEND TO THE E&P
EQUIPMENT.

          Section 2.17 Environmental Matters. Except as have not had, and would not reasonably be expected to have, a Business Material
Adverse Effect:

     (a) The operations of the Companies and their Subsidiaries are and during the relevant
statute of limitations period have been in compliance with all applicable Environmental Laws
in the respective jurisdictions in which they operate;

     (b) The Companies and their Subsidiaries have obtained and are in compliance with all
permits, licenses and other authorizations required under applicable Environmental Laws
(“Environmental Permits”) for the continued operations of the Business, all Environmental
Permits are valid and in good standing, and none of the Companies nor any of their
respective Subsidiaries has received notice of any actual or potential change in the status
or terms and conditions of any Environmental Permit;

     (c) None of the Companies nor any of their respective Subsidiaries is subject to any
outstanding orders, suits, demands, directives, claims, liens, investigations or proceedings
by any Governmental Entity or any person respecting (A) Environmental Laws, (B) Remedial
Action or (C) any Release or threatened Release of, or exposure to, a Hazardous Substance
(“Environmental Claims”) and, to the knowledge of the Sellers, no such Environmental Claims
are threatened;

     (d) None of the Companies nor any of their respective Subsidiaries has received any
written communication alleging, with respect to any such entity, a violation of or liability
under any Environmental Law; and

     (e) There has been no Release or threatened Release of Hazardous Substances at any
location that could reasonably be expected to (i) require any Remedial Action by any of the
Companies or their Subsidiaries pursuant to any Environmental Law or (ii) form the basis of
any Environmental Claim against any of the Companies or their Subsidiaries.

     For purposes of this Agreement:

     (A) “Environment” means (i) land, including surface land, sub-surface strata, sea bed
and river bed under water (as defined in clause (ii)) and natural structures; (ii) water,
including coastal and inland water, surface waters, and ground waters; (iii) air; and (iv)
human health;

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     (B) “Environmental Law” means any Law, to the extent applicable to the person or
properties in the context of which the term is used, regulating or prohibiting Releases into
any part of the Environment, or pertaining to the protection of natural resources, the
Environment or human health, as such laws have been and may be amended or supplemented;

     (C) “Hazardous Substance” means petroleum or petroleum products, radioactive material
or wastes, asbestos in any form, urea formaldehyde foam insulation, polychlorinated
biphenyls, and any other chemical, material, substance or waste that, in relevant form or
concentration, is prohibited, limited or regulated pursuant to Environmental Law;

     (D) “Release” means any release, spill, effluent, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into or through
the Environment, or at, into, onto, through or out of any property currently or formerly
owned, operated, leased or used by the applicable party; and

     (E) “Remedial Action” means any and all actions to (i) clean up, remove, treat, or in
any other way ameliorate or address any Hazardous Substances in the Environment; (ii)
prevent the Release or threat of Release, or minimize the further Release, of any Hazardous
Substance so it does not endanger or threaten to endanger human health or the Environment;
or (iii) perform pre-remedial studies and investigations or post-remedial monitoring and
care pertaining or relating to a Release.

          Section 2.18 Insurance. The Companies and their Subsidiaries maintain policies of fire and casualty, liability and other
forms of insurance in such amounts, with such deductibles and against such risks and losses as are,
in the judgment of the Companies and their Subsidiaries, reasonable for the business and assets of
the Companies and their Subsidiaries, when considered in conjunction with PII’s total business
operations and self insurance practices. Section 2.18 of the Seller Disclosure Letter sets forth a
list of all policies of insurance maintained, owned or held by the Sellers or their affiliates on
the date of this Agreement with respect to the Business, any Company, any Subsidiary of a Company
and their respective assets and properties. Except as would not reasonably be expected to have a
Business Material Adverse Effect, all such policies are in full force and effect, all premiums due
and payable thereon have been paid (other than retroactive or retrospective premium adjustments
that are not yet, but may be, required to be paid with respect to any period ending prior to the
Closing Date), and no notice of cancellation or termination has been received with respect to any
such policy which has not been replaced on substantially similar terms prior to the date of such
cancellation. The Sellers shall keep or cause such insurance or comparable insurance to be kept in
full force and effect through the Closing Date. The Sellers have complied in all material respects
with each of such insurance policies and have not failed to give any notice or present any claim
thereunder in a due and timely manner.

          Section 2.19 Brokers; Finders and Fees. Neither the Sellers nor any Company or Subsidiary of a Company has engaged any investment
banker, agent, broker or finder in connection with this Agreement or the transactions contemplated
by this Agreement the fees of which will be paid by any Company or any of its Subsidiaries after
the Closing or by the Buyer.

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Except as set forth in Section 2.19 of the Seller Disclosure Letter,
none of the Sellers, any affiliate thereof, any Company or any Subsidiary thereof has agreed to pay
or cause to be paid to any employee, officer or director of the Sellers, any affiliate, any Company
or any Subsidiary thereof any fee or other amount in connection with
this Agreement or the transactions contemplated by this Agreement, other than any amounts solely
payable by the Sellers or any affiliate of the Sellers (other than the Companies and their
Subsidiaries).

          Section 2.20 Receivables. The accounts receivable shown in the Financial Statements, subject to changes in the ordinary
course of business from the date of the Financial Statements to the Closing Date, constitute all of
the accounts receivable of the Business and represent bona fide sales actually made on or prior to
such date in the ordinary course of the Business and consistent with past practice. Since June 30,
2007, there have not been any material write-offs as uncollectible of any customer accounts
receivable of the Companies and their Subsidiaries, except for write-offs in the ordinary course of
the Business and consistent with past practice.

          Section 2.21 Permits. As of the date hereof, except as would not reasonably be expected to have a Business Material
Adverse Effect: (i) each of the Companies and their respective Subsidiaries is in possession of all
certificates, licenses, permits, authorizations and approvals of any Governmental Entity required
to conduct its business as currently conducted (the “Permits”) and such Company or Subsidiary has
complied with the terms and conditions thereof; (ii) during the past three years, none of the
Sellers, the Companies and the Subsidiaries of any Company has received notice of any suit, action
or proceeding relating to the revocation or modification of any such Permits, and (iii) none of the
Permits will be subject to suspension, modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or the consummation of the transactions contemplated by
this Agreement. The Companies and their Subsidiaries possess all material Permits to own or hold
under lease and operate their respective assets and to conduct the Business as currently conducted.

          Section 2.22 Powers of Attorney; Officers and Directors. Section 2.22 of the Seller Disclosure Letter sets forth as of the date hereof (i) a true and
correct list of all powers of attorney granted by the Companies and their Subsidiaries since
January 1, 2002 and all persons authorized to act thereunder and (ii) a true and correct list of
all officers and directors of the Companies and their Subsidiaries.

          Section 2.23 Suppliers. Between June 30, 2007 and the date of this Agreement, none of the Companies or their
Subsidiaries has entered into or made any Contract for the purchase of any material amount of
merchandise other than in the ordinary course of business consistent with past practice. Except
for the suppliers named in Section 2.23 of the Seller Disclosure Letter, none of the Companies or
their Subsidiaries has any supplier (other than the Sellers, their affiliates, another Company or a
Subsidiary of a Company) from whom was purchased more than 5% of the total amount of goods and
services which were purchased by the Companies and their Subsidiaries, taken as a whole, during the
year ended December 31, 2006. Since June 30, 2007, none of the suppliers named in Section 2.23 of
the Seller Disclosure Letter has delivered to any Company or any Subsidiary of
any Company written notice of cancellation or termination of its relationship with such Company or
Subsidiary.

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          Section 2.24 Customers. Except for the customers named in Section 2.24 of the Seller Disclosure Letter, none of the
Companies or their Subsidiaries has any customer (other than another Company or a Subsidiary) to
whom was made more than 5% of the total sales made by the Companies and their Subsidiaries, taken
as a whole, during the year ended December 31, 2006. Since June 30, 2007, none of the customers
named in Section 2.24 of the Seller Disclosure Letter has delivered to any Company or any
Subsidiary of any Company written notice of cancellation or termination of its relationship with
such Company or Subsidiary.

          Section 2.25 Intellectual Property.

          (a) Section 2.25(a) of the Seller Disclosure Letter sets forth a true and complete list of all
material patents (including all reissues, divisions, continuations and extensions thereof),
published patent applications, trademark registrations, trademark applications, service mark
registrations, service mark applications, registered trade names, registered business names,
copyright registrations, and any license to any of the foregoing, but excluding the Seller
Trademarks and Logos, owned, used, filed by or licensed to any Company or any Subsidiary and
material to the Business (collectively, “Business Intellectual Property”). To the knowledge of the
Sellers, the Business Intellectual Property and the Technology (as defined below) represent all the
material intellectual property necessary for the operation of the Business. To the knowledge of
the Sellers, (i) a Company or a Subsidiary of a Company is the sole and exclusive owner of, or the
Companies and their Subsidiaries have a valid and enforceable right to use, without payment to any
other person, all the Business Intellectual Property, and (ii) during the past three years, none of
the Sellers, the Companies and the Subsidiaries has received any written or oral communication from
any person asserting any ownership interest in any Business Intellectual Property.

          (b) None of the Sellers, the Companies and the Subsidiaries of the Companies has granted any
license of any kind relating to any Business Intellectual Property or the marketing or distribution
thereof. None of the Sellers, the Companies and such Subsidiaries is bound by or a party to any
option, license or similar Contract relating to the Business Intellectual Property owned by any
other person for the use of such Business Intellectual Property in the conduct of the Business of
the Companies and the Subsidiaries, except for so-called “shrink-wrap” license agreements relating
to computer software licensed to a Company or a Subsidiary in the ordinary course of business. To
the knowledge of the Sellers, the conduct of the Business of the Companies and their Subsidiaries
as presently conducted does not violate, conflict with or infringe in any material respect the
intellectual property of any other person. (i) No claims are pending or, to the knowledge of the
Sellers, threatened, against any Company or any Subsidiary of a Company by any person with respect
to the ownership, validity, enforceability, effectiveness or use in the Business of the Companies
and their Subsidiaries of any Business Intellectual Property and (ii) to the knowledge of the
Sellers, during the past three years none of the Sellers,
the Companies and the Subsidiaries of the Companies has received any written or oral
communication alleging that any Company or any such Subsidiary violated any rights relating to
intellectual property of any person.

          (c) To the knowledge of the Sellers, all trade secrets, confidential information, inventions,
know-how, formulae, processes, procedures, research records, records of inventions, test
information, market surveys and marketing know-how of the Companies and their

19

 

Subsidiaries that is
material to the Business (the “Technology”) has been maintained in confidence in accordance with
protection procedures customarily used in the industry to protect rights of like importance.

          Section 2.26 Representations of the Sellers Refer to the Business. Except as expressly set forth herein, all representations and warranties of the Sellers herein
relate only to the Companies, their respective Subsidiaries, the Business and the employees of the
Business and not to any other business, assets or employees of the Sellers.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

          The Buyer hereby represents and warrants to each of the Sellers as follows:

          Section 3.1 Organization; Etc. The Buyer (a) is a corporation duly organized, validly existing and in good standing under the
laws of Bermuda, (b) has all requisite corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to own, lease and operate its
properties and assets and to carry on its business substantially as now being conducted, and (c) is
duly qualified and in good standing to do business in each jurisdiction in which the nature of its
business or the ownership, operation or leasing of its properties makes such qualification
necessary, except where the failure to be so organized, existing and in good standing, to have such
power or authority or to be so qualified would not, individually or in the aggregate, have a Buyer
Material Adverse Effect (as defined below). As used in this Agreement, the term “Buyer Material
Adverse Effect” shall mean an event, change or circumstance that would adversely affect the ability
of the Buyer to consummate the transactions contemplated by this Agreement. The Buyer has
delivered or made available to the Sellers true and complete copies of its corporate charter and
bylaws (or equivalent governing documents), in each case as amended through the date of this
Agreement.

          Section 3.2 Authority Relative to this Agreement. The Buyer has the corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this Agreement have been duly
and validly authorized by all requisite corporate action on the part of the Buyer. This Agreement
has been duly and validly executed and delivered by the Buyer and, assuming this Agreement has been
duly authorized, executed and delivered by the Sellers, constitutes a valid
and binding agreement of the Buyer, enforceable against the Buyer in accordance with its terms,
except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer or other laws, now or hereafter in effect, relating
to or limiting creditors’ rights generally and (b) enforcement of this Agreement, including, among
other things, the remedy of specific performance and injunctive and other forms of equitable
relief, may be subject to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

          Section 3.3 Consents and Approvals; No Violations. Except for applicable requirements of Antitrust Regulations, neither the execution and delivery
of this Agreement by

20

 

the Buyer nor the consummation by the Buyer of the transactions contemplated
by this Agreement will (a) conflict with or result in any breach of any provision of the corporate
charter, bylaws or equivalent governing documents of the Buyer or any of its Subsidiaries, (b)
result in a violation or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or acceleration) under, or
give rise to a loss of a material benefit under, or result in the creation of any Lien upon the
properties or assets of the Buyer or any of its Subsidiaries under, or require any consent under,
any Contract to which the Buyer or any of its Subsidiaries is a party or by which any of them or
any of their respective properties or assets are bound, (c) violate any Laws applicable to the
Buyer, any of its Subsidiaries or any of their respective properties or assets, or (d) require any
filing, declaration or registration with, or the obtaining of any permit, authorization, license,
order, consent or approval of, any Governmental Entity, except in the case of clauses (b), (c) and
(d) of this Section 3.3 for any such violations, breaches, defaults, rights of termination,
cancellation or acceleration or requirements that, individually or in the aggregate, would not have
a Buyer Material Adverse Effect, or that become applicable as a result of the business or
activities in which the Sellers are or propose to be engaged or as a result of any acts or
omissions by, or the status of or any facts pertaining to, the Sellers.

          Section 3.4 Acquisition of Shares for Investment. The Buyer is acquiring the Shares for investment and not with a view toward, or for sale in
connection with, any public distribution thereof, nor with any present intention of distributing or
selling such Shares. The Buyer agrees that the Shares may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act
of 1933, as amended, and any applicable state securities laws, except under an exemption from such
registration under such Act and such laws.

          Section 3.5 Availability of Funds. The Buyer has delivered to the Sellers true and complete copies of an executed debt commitment
letter from Citigroup Global Markets Inc. (the “Financing Commitment”), pursuant to which Citigroup
Global Markets Inc. has agreed to provide or cause to be provided an aggregate of $600,000,000 at
Closing (the “Financing”). The commitments contained in the Financing Commitment have not been
withdrawn or rescinded in any respect as of the date of this Agreement. As of the date of this
Agreement, no event has occurred which, with or without notice, lapse of time or both, would
constitute a default or breach on the part of the Buyer or its
affiliates under any term or condition of the Financing Commitment. There are no conditions
precedent relating to the funding of the full amount of the Financing, other than as set forth in
the Financing Commitment. As of the date of this Agreement, the Buyer has no reason to believe
that any of the conditions relating to the funding of the full amount of the Financing will not be
satisfied on or prior to the Closing Date. At the Closing, the Financing, together with the
Buyer’s immediately available funds, in cash, will be sufficient to provide the Companies and their
respective Subsidiaries with sufficient working capital and to pay any other amounts payable under
this Agreement and to effect the transactions contemplated by this Agreement, all without any
third-party consent or approval required.

          Section 3.6 Litigation. There is no Proceeding or, to the knowledge of the Buyer, governmental investigation pending or,
to the knowledge of the Buyer, threatened against

21

 

the Buyer or any of its Subsidiaries by or before
any Governmental Entity that, individually or in the aggregate, would have a Buyer Material Adverse
Effect.

          Section 3.7 Balance Sheet. The Buyer has delivered to the Sellers true and complete copies of the audited consolidated
balance sheets of the Buyer and its Subsidiaries as of December 31, 2006 and 2005. Except as
disclosed in the notes thereto, each of such balance sheets fairly presents in all material
respects the consolidated financial position of the Buyer and its Subsidiaries as of the date
thereof, all in accordance with GAAP consistently applied throughout the period indicated.

          Section 3.8 Investigation by the Buyer; No Reliance; Sellers’ Liability. The Buyer has conducted its own independent review and analysis of the business and prospects of
the Companies, their respective Subsidiaries and the Business. In entering into this Agreement,
the Buyer has relied solely upon its own investigation and analysis and the specific
representations and warranties of the Sellers set forth in Article II of this Agreement, and the
Buyer:

     (a) acknowledges and agrees that it has not been induced by and has not relied upon any
representations, warranties or statements, whether express or implied, made by the Sellers
or any of their respective directors, officers, shareholders, employees, affiliates,
controlling persons, agents, advisors or representatives that are not expressly set forth in
Article II of this Agreement, whether or not any such representations, warranties or
statements were made in writing or orally;

     (b) acknowledges and agrees that none of the Sellers, the Companies or any of their
respective directors, officers, shareholders, employees, affiliates, controlling persons,
agents, advisors or representatives makes or has made any representation or warranty, either
express or implied, as to the accuracy or completeness of any of the information provided or
made available to the Buyer or its directors, officers, employees, affiliates, controlling
persons, agents or representatives, including any information, document, or material
provided or made available, or statements made, to the Buyer (including its directors,
officers, employees, affiliates, controlling persons, advisors,
agents or representatives) in “data rooms,” management presentations or supplemental
due diligence information provided to the Buyer (including its directors, officers,
employees, affiliates, controlling persons, advisors, agents or representatives) in
connection with discussions or access to management of the Business or in any other form in
expectation of the transactions contemplated by this Agreement (collectively, “Due Diligence
Information”);

     (c) acknowledges and agrees that (i) the Due Diligence Information includes certain
projections, estimates and other forecasts, and certain business plan information, (ii)
there are uncertainties inherent in attempting to make such projections, estimates and other
forecasts and plans and the Buyer is familiar with such uncertainties, and (iii) the Buyer
is taking full responsibility for making its own evaluation of the adequacy and accuracy of
all projections, estimates and other forecasts and plans so furnished to it and any use of
or reliance by the Buyer on such projections, estimates and other forecasts and plans shall
be at its sole risk; and

22

 

     (d) agrees, to the fullest extent permitted by law, that none of the Sellers, the
Companies or any of their respective directors, officers, shareholders, employees,
affiliates, controlling persons, agents, advisors or representatives shall have any
liability or responsibility whatsoever to the Buyer or its directors, officers,
shareholders, employees, affiliates, controlling persons, agents, advisors or
representatives on any basis (including in contract or tort, under federal or state
securities laws or otherwise) resulting from the distribution to the Buyer, or the Buyer’s
use of, any Due Diligence Information, except that the foregoing limitations shall not apply
to the extent the Sellers make the specific representations and warranties set forth in
Article II of this Agreement, but always subject to the limitations and restrictions
contained in this Agreement.

          Section 3.9 Brokers; Finders and Fees. Neither the Buyer nor any of its affiliates has engaged any investment
banker, agent, broker or finder in connection with this Agreement or the transactions contemplated
by this Agreement the fees of which will be paid by any Seller, any Company or any of their
respective Subsidiaries.

ARTICLE IV

COVENANTS OF THE PARTIES

          Section 4.1 Conduct of Business. During the period from the date of this Agreement to the Closing Date, except
as otherwise contemplated by this Agreement or set forth in Section 4.1 of the Seller Disclosure
Letter or the transactions contemplated by this Agreement or consented to by the Buyer in writing,
which consent shall not be unreasonably withheld, the Sellers shall and shall cause each of the
Companies and their respective Subsidiaries:

          (a) to use its commercially reasonable efforts to conduct the Business in the ordinary course
consistent with past practice and, to the extent consistent therewith, use all commercially
reasonable efforts to keep intact their respective businesses, keep available the services of their
current employees and preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others with whom they deal; and

          (b) not to:

          (i) in the case of the Companies and their respective Subsidiaries only, amend its
certificate of incorporation or by-laws;

          (ii) sell, transfer, lease or otherwise dispose of any properties or assets material to
the Business, except obsolete or excess equipment sold in the ordinary course of business
and consistent with past practice;

          (iii) in the case of the Companies and their respective Subsidiaries only, make or pay
any loans, advances (other than advances in the ordinary course of business or advances to
the Sellers, the Companies or any of their respective
Subsidiaries) or capital contributions to, or investments in, any other person (other
than the Companies or any of their respective Subsidiaries);

23

 

          (iv) terminate or materially amend any Contracts material to the Business, except in
the ordinary course of business and consistent with past practice;

          (v) enter into any new Contract material to the Business other than drilling or
workover Contracts, customer Contracts, service Contracts, product purchase Contracts or
renewals of existing Contracts, in each case in the ordinary course of business, or
otherwise in the ordinary course of business;

          (vi) in the case of the Companies and their respective Subsidiaries only, enter into
any written employment agreement with any employee or increase in any manner the
compensation of any of the officers or other employees of any Company or any of its
Subsidiaries, except for such increases as are required by applicable Law, rule or
regulation or are granted in the ordinary course of business consistent with past practices
(which shall include normal periodic performance reviews and related compensation and
benefit increases);

          (vii) in the case of the Companies and their respective Subsidiaries only, adopt,
grant, amend, extend or increase the rate or terms of any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with any such officers or
employees of any Company or any of its Subsidiaries, except, in each case, for increases
required by any applicable Law, rule or regulation and except increases in the ordinary
course of business consistent with past practice;

          (viii) in the case of the Companies and the Subsidiaries only, make any change in any
of their respective present accounting methods and practices, except as required by changes
in GAAP;

          (ix) in the case of the Companies and their respective Subsidiaries only, incur or
assume any liabilities, obligations or indebtedness for borrowed money, issue any debt
securities or assume, guarantee or endorse any such liabilities, obligations or indebtedness
of any persons other than in the ordinary course of business and consistent with past
practice; provided, however, that in no event shall any Company or any of its Subsidiaries
incur or assume any long-term indebtedness for borrowed money;

          (x) in the case of the Companies and their respective Subsidiaries only, (x) declare or
pay any dividend or make any other distribution to its stockholders, whether or not upon or
in respect of any shares of its capital stock, (y) redeem or otherwise acquire any shares of
its capital stock or (z) issue any capital stock or any option, warrant or right relating
thereto or any securities convertible into or exchangeable for any shares of capital stock,
in each case except as contemplated by Section 1.9 or Section 1.10(a) and dividends,
distributions, redemptions, acquisitions and issuances solely involving the Companies and
their Subsidiaries;

          (xi) in the case of the Companies and their respective Subsidiaries only, permit, allow
or suffer any of its material assets to become subjected to any Lien other than a Permitted
Lien;

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          (xii) in the case of the Companies and their respective Subsidiaries only, cancel any
material indebtedness (individually or in the aggregate) or waive any claims or rights of
substantial value;

          (xiii) in the case of the Companies only, materially defer maintenance and other
capital expenditures;

          (xiv) in the case of the Companies and their respective Subsidiaries only, enter into
any lease of real property involving lease payments in excess of $10,000 per month, except
any renewals of existing leases in the ordinary course of business consistent with past
practice;

          (xv) in the case of the Companies and their respective Subsidiaries only, acquire by
merging or consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association or other
business organization or division thereof or, except in the ordinary course of business
consistent with past practice, otherwise acquire any assets (other than inventory) that are
material;

          (xvi) take any action (other than matters outside of the control of the Sellers and the
Companies) that would result in (a) any of the conditions set forth in Section 5.3(a) and
(b) not to be satisfied or (b) any of the representations and warranties of the Sellers
becoming untrue or incorrect in any material respect; or

          (xvii) authorize any of, or commit or agree to take, whether in writing or otherwise,
to do any of, the foregoing actions.

          Section 4.2 Access to Information; Confidentiality.

          (a) From the date of this Agreement to the Closing, except for any information that is subject
to attorney-client privilege or other privilege from disclosure or subject to a confidentiality
agreement with a third party, the Sellers will and will cause the Companies to (i) give the Buyer
and its authorized representatives access to all books, records, personnel, accountants, offices
and other facilities and properties of the Companies and their respective Subsidiaries or otherwise
relating to the Business, (ii) permit the Buyer to make such copies and inspections thereof as the
Buyer may reasonably request, and (iii) cause the Sellers’ and Companies’ officers, as applicable,
to furnish the Buyer with such financial and operating data and other information with respect to
the Business as the Buyer may from time to time reasonably request; provided, however, that any
such access shall be conducted at the Buyer’s risk and expense, at a reasonable time, under the
supervision of the Sellers’ or the Companies’ personnel and in such a manner as to maintain the
confidentiality of this Agreement and the
transactions contemplated by this Agreement and not to interfere unreasonably with the
operation of the businesses of the Sellers, the Companies or any of their respective Subsidiaries.

          (b) All such information and access shall be subject to the terms and conditions of the
Confidentiality Agreement between the Buyer and PII dated April 23, 2007 (the “Confidentiality
Agreement”). Notwithstanding anything to the contrary contained in this Agreement, none of the
Sellers, the Companies or any of their affiliates will have any obligation

25

 

to make available or provide to the Buyer or its representatives a copy of any consolidated, combined or unitary Tax
Return filed by the Sellers or any of their affiliates (excluding the Companies), or any related
material.

          (c) From and after the Closing, the Buyer will and will cause the Companies and their
Subsidiaries to (i) give the Sellers and their authorized representatives reasonable access to all
books, records, personnel, accountants, offices and other facilities and properties of the
Companies and their respective Subsidiaries or otherwise relating to the Business, (ii) permit the
Sellers to make such copies and inspections thereof as the Sellers may reasonably request, and
(iii) cause the Buyer’s and the Companies’ officers, as applicable, to furnish the Sellers with
such financial and operating data and other information with respect to the Business as the Buyer
may from time to time reasonably request, in each case (A) to comply with reporting, disclosure,
filing or other requirements imposed on the Sellers (including under applicable securities Laws) by
a Governmental Entity having jurisdiction over the Sellers, (B) for use in any Proceeding or in
order to satisfy audit, accounting, claims, regulatory, litigation, subpoena or other similar
requirements or (C) to comply with the obligations of the Sellers under this Agreement or the
Transition Services Agreement, as the case may be; provided, however, that in the event that the
Buyer determines that any such provision of access or information could be commercially
detrimental, violate any Law or agreement, or waive any attorney-client privilege, the parties
shall take all reasonable measures to permit the compliance with such obligations in a manner that
avoids any such harm or consequence.

          (d) The Sellers acknowledge that, subsequent to the Closing, they may be furnished with,
receive or otherwise have access to, proprietary information of the Buyer, the Companies or their
Subsidiaries (collectively, “Buyer Proprietary Information”). Subsequent to the Closing, the
Sellers shall not disclose, and shall maintain the confidentiality of, all Buyer Proprietary
Information. The Sellers shall use at least the same degree of care to safeguard and to prevent
the disclosure, publication, dissemination, destruction, loss or alteration of the Buyer
Proprietary Information as they employ to avoid unauthorized disclosure, publication,
dissemination, destruction, loss or alteration of their own information (or information of its
customers) of a similar nature, but in no case less than reasonable care. Except as expressly
provided herein, the Sellers shall not (A) use any Buyer Proprietary Information in any manner, (B)
make any copies of any Buyer Proprietary Information, (C) acquire any right in or assert any Lien
against any Buyer Proprietary Information, (D) sell, assign, transfer, lease, license or otherwise
dispose of any Buyer Proprietary Information to third parties or commercially exploit any Buyer
Proprietary Information, including through derivative works, or (E) refuse for any reason
(including a default or breach of this Agreement by Buyer) to promptly provide any tangible
embodiments of the Buyer Proprietary Information (including copies thereof) to Buyer if requested
to do so, in the form reasonably requested. Except as may otherwise be provided in Section 4.2(c)
or Section 4.7, none of the Buyer, the Companies and their Subsidiaries or any of
their affiliates shall be obligated to disclose any Buyer Proprietary Information to the
Sellers, and nothing contained in this Agreement shall be construed as granting to or conferring on
the Sellers, expressly or impliedly, any right, title, interest or license to any Buyer Proprietary
Information or any components thereof.

          (e) It is understood that the Sellers shall not have any liability or obligation hereunder
with respect to any Buyer Proprietary Information that (i) at the time of disclosure or

26

 

thereafter is generally available to and known by the public (other than as a result of a disclosure or other
act or omission by the Sellers or any of their affiliates or any of their respective
representatives after the Closing), or (ii) the Sellers or any of their affiliates or any of their
respective representatives are legally required (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar process or by Law, governmental
Proceeding, stock exchange rule or court order) to disclose. In the event that the Sellers or any
of their affiliates or their representatives are requested or legally required (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or similar process or by
Law, governmental Proceeding, stock exchange rule or court order) to disclose any of the Buyer
Proprietary Information, the Sellers shall provide the Buyer with prompt written notice of such
request or requirement (together with a copy of the material proposed to be disclosed) prior to any
disclosure thereof, and the Sellers shall cooperate with the Buyer so that the Buyer may seek a
protective order or other appropriate remedy or, if it so elects, waive compliance with this
Section 4.2. In the event that such protective order or other remedy is not obtained, or the Buyer
waives compliance with the provisions hereof, the Sellers or any of their affiliates or their
representatives, as the case may be, may disclose only that portion of the Buyer Proprietary
Information that is legally required to be disclosed, provided that the Buyer has been given a
reasonable opportunity to review the specifics of such disclosure before it is made. The Sellers
shall exercise all reasonable efforts to obtain assurance that confidential treatment will be
accorded the information so disclosed. Nothing provided in this Section 4.2 shall limit PII from
disclosing financial and other information with respect to the Companies or the Business in
satisfaction of its obligations as a publicly traded, exchange-listed company.

          (f) The Sellers will promptly request all persons who have heretofore executed a
confidentiality agreement in connection with such persons’ consideration of acquiring, directly or
indirectly, the Business to return or destroy all confidential information heretofore furnished to
such persons by or on behalf of the Sellers, or any affiliate thereof, and will, or will cause any
affiliate a party thereto to, enforce all obligations of such persons and all rights and remedies
of the Sellers or such affiliate under such confidentiality agreements.

     Section 4.3 Consents; Cooperation.

          (a) Each of the Sellers and the Buyer shall cooperate, and use its commercially reasonable
efforts, to make all filings and obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and other third parties necessary in connection
with the transactions contemplated by this Agreement.

          (b) The Sellers and the Buyer shall file with any applicable Governmental Entity, all filings,
reports, information and documentation required in connection with the consummation of the
transactions contemplated by this Agreement. The Sellers and the Buyer shall furnish to each
other’s counsel such necessary information and reasonable assistance as the other party may request
in connection with its preparation of any such filing or submission. The Sellers and the Buyer
shall consult with each other as to the appropriate time of making such filings and submissions and
shall use commercially reasonable efforts to make such filings and submissions at the agreed upon
time in observance of any requirements as to time of filing under applicable Law. The Sellers and
the Buyer acknowledge and agree that, within seven days after the Closing, they will each file with
the applicable Argentine Governmental Entities the filings

27

 

required under the Argentine Antitrust Regulations. Each of the Sellers and the Buyer shall furnish
to the other such necessary information and reasonable assistance as the other may request in order
to effect such filings in a timely manner.

          (c) The Sellers and the Buyer shall keep each other apprised of the status of any
communications with, and any inquiries or requests for additional information from, Governmental
Entities and shall comply promptly with any such inquiry or request.

          (d) The Sellers and the Buyer shall use their commercially reasonable efforts to vigorously
defend, lift, mitigate and rescind the effect of any litigation or administrative proceeding
adversely affecting this Agreement or the transactions contemplated by this Agreement, including
promptly appealing any adverse court or administrative order or injunction.

          (e) Notwithstanding the foregoing, prior to the Closing, without the prior written consent of
PII, the Buyer shall not, and shall cause its affiliates not to, make any filing with, or seek to
obtain any license, permit, consent, approval, authorization, qualification or order of, any
Governmental Entity in connection with the transactions contemplated hereby.

          Section 4.4 Consultation. In connection with the continuing operation of the Business between the date of this
Agreement and the Closing, the Sellers shall use commercially reasonable efforts to consult with
the representatives for the Buyer, as may from time to time be reasonably requested by the Buyer,
to report material operational developments and the general status of ongoing operations pursuant
to procedures reasonably requested by Buyer or such representatives. The Sellers acknowledge that
any such consultation shall not constitute a waiver by the Buyer of any rights it may have under
this Agreement, and that Buyer shall not have any liability or responsibility for any actions of
any Seller or any of their respective officers or directors with respect to matters that are the
subject of such consultations unless Buyer expressly consents to such action in writing.

          Section 4.5 Commercially Reasonable Efforts. Each of the Sellers and the Buyer shall cooperate, and use its
commercially reasonable efforts to take, or cause to be taken, all reasonable action, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under applicable Laws to
consummate the transactions contemplated by this Agreement. The Buyer shall not take any action
(other than matters outside of
the control of the Buyer) that would result in (a) any of the conditions set forth in Section
5.2(a) and (b) not to be satisfied or (b) any of the representations and warranties of the Buyer
becoming untrue or incorrect in any material respect.

          Section 4.6 Public Announcements. Prior to but not after the Closing, except as set forth herein or otherwise
agreed to by the parties, the parties shall not issue any report, statement or press release or
otherwise make any public statements with respect to this Agreement or the transactions
contemplated by this Agreement, except as in the reasonable judgment of the party may be required
by Law or in connection with its obligations as a publicly-held, exchange-listed company, in which
case the parties will consult with each other as to the language of any such report, statement or
press release.

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          Section 4.7 Tax Matters.

          (a) Indemnification.

          (i) Sellers’ Indemnification of the Buyer. The Sellers shall jointly and severally
indemnify the Buyer against (i) any Taxes imposed on any Company or any of its Subsidiaries
with respect to any taxable period, or portion thereof, ending on or before the Closing
Date, including Taxes payable in connection with the Proceedings listed in Section 2.10 and
Section 2.14 of the Seller Disclosure Letter, (ii) any Taxes that may be imposed on any
Company or any of its Subsidiaries as a result of being a member of a consolidated,
combined, unitary or similar group of corporations or other taxpayers at any time prior to
the Closing, and (iii) any Taxes of any other person that may be imposed upon any Company or
any of its Subsidiaries as a result of being a successor to such other person for Tax
purposes prior to the Closing or as a result of any Company or any of its Subsidiaries being
a party to a Tax sharing, Tax allocation or similar agreement prior to the Closing, but, in
each case, not including (A) any Transfer Taxes for which the Buyer is liable under Section
4.7(e) of this Agreement and (B) any Taxes, or portions thereof, resulting from a change in
Law occurring after the Closing Date.

          (ii) Buyer’s Indemnification of the Sellers. The Buyer shall indemnify the Sellers
from, against and in respect of any liability of the Sellers or their respective
Subsidiaries for (i) any Taxes imposed on any Company or any of its Subsidiaries with
respect to any taxable period, or portion thereof, beginning after the Closing Date, (ii)
any Taxes that may be imposed on any Company or any of its Subsidiaries as a result of being
a member of a consolidated, combined, unitary or similar group of corporations or other
taxpayers at any time after the Closing, (iii) any Taxes of any other person that may be
imposed upon any Company or any of its Subsidiaries as a result of being a successor to such
other person for Tax purposes after the Closing or as a result of any Company or any of its
Subsidiaries being a party to a Tax sharing, Tax allocation or similar agreement after the
Closing, (iv) any Transfer Taxes for which the Buyer is liable under Section
4.7(e) of this Agreement, (v) any Taxes, or portions thereof, resulting from a change
in Law occurring after the Closing Date and imposed on any Company or any of its
Subsidiaries with respect to any taxable period, or portion thereof, ending on or before the
Closing Date and (vi) any Tax liability resulting from an election by the Buyer under
Section 338 of the Code.

          (iii) Section 338 and Similar Elections. Not later than 30 business days after the
Closing Date Schedule and Closing Statement become final and binding on the parties pursuant
to Section 1.10(b) of this Agreement, the Sellers shall deliver to the Buyer a schedule (the
“Section 338 Schedule”) of the estimated Foreign Tax Credit Loss Amount with respect to each
Company and each of its direct and indirect subsidiaries eligible to make an election under
Section 338(g) of the Code with respect to the purchase or deemed purchase of its shares (in
each case, a “Target”). The “Foreign Tax Credit Loss Amount” with respect to any Target
shall be equal to the excess of (A) the foreign income taxes that would have been deemed
paid by PII and its subsidiaries under Section 902 of the Code (whether by reason of
Sections 301, 367(b), 960, 964(e) or 1248 or other relevant provisions of the Code) as a
result of the transactions contemplated by Section 1.1 of this Agreement or dividends paid
by PII’s subsidiaries in the taxable year that includes the Closing Date had no such
election been made with respect to the purchase of shares of Target over (B) the foreign
income taxes that will be deemed paid by PII and its subsidiaries under Section 902 of the
Code (whether by reason of Sections 301, 367(b), 960, 964(e) or 1248 or other relevant
provisions of the Code) as a result of the transactions contemplated by

29

 

Section 1.1 of this
Agreement or dividends paid by PII’s subsidiaries in the taxable year that includes the
Closing Date taking into account such election made by Buyer. The Sellers shall also
include on the Section 338 Schedule an estimate of the taxable periods in which each portion
of the lost tax benefit corresponding to the aggregate Foreign Tax Credit Loss Amount with
respect to all Targets that would have been realized by PII and its subsidiaries had no
election under Section 338(g) of the Code been made with respect to any Target. Not later
than 5 business days after the Buyer or any of its affiliates has made an election under
Section 338(g) of the Code with respect to any Target (an “Electing Target”), the Buyer
shall notify the Sellers of such election. The Buyer shall pay to PII, for the account and
as agent of each of the Sellers, that portion of the lost tax benefit corresponding to the
aggregate Foreign Tax Credit Loss Amount with respect to all Electing Targets that would
have been realized by PII and its subsidiaries in each taxable period had no elections under
Section 338(g) of the Code been made with respect to the Electing Targets. The payment with
respect to each taxable period shall be due within 30 business days after PII notifies the
Buyer of the amount with respect to such taxable period, but in no case earlier than the
date that PII or its successor files the federal income tax return for such taxable period.
If as a result of an adjustment in a Tax Audit (as defined below) or an amended Tax Return
the amounts otherwise computed above would be different, then the Buyer and PII will make
payments between them to reflect the consequences of such adjustment.

          (b) Allocation of Taxes and Earnings and Profits. To the extent permitted by Law or
administrative practice, the taxable years of the Companies and their Subsidiaries shall end at the
close of business on the Closing Date. Whenever it is necessary to determine the liability for
Taxes, or the earnings and profits, of any Company or any of its Subsidiaries for a
portion of a taxable year or period that begins before and ends after the Closing Date, the
determination of the Taxes or the earnings and profits for the portion of the year or period ending
on, and the portion of the year or period beginning after, the Closing Date shall be determined by
assuming that the taxable year or period ended at the close of business on the Closing Date, except
that (A) exemptions, allowances or deductions that are calculated on an annual basis and Taxes
imposed on the ownership, use or operation of real or personal property shall be prorated on the
basis of the number of days in the annual period elapsed through the Closing Date as compared to
the number of days in the annual period elapsing after the Closing Date, and (B) any transaction
that would be treated under the principles of Treasury Regulation Section 1.338-1(d) as occurring
at the beginning of the day following the transaction shall be treated as occurring after the
Closing Date. Whenever it is necessary to determine for any taxable period the amount of Taxes, or
portions thereof, resulting from a change in Law occurring after the Closing Date, such amount
shall equal the amount by which the Taxes imposed for such taxable period determined taking into
account such change in Law exceed the Taxes that would have been imposed for such taxable period
absent such change in Law.

30

 

          (c) Tax Returns. Except as provided in Section 4.7(e):

               (i) The Sellers shall prepare, or cause to be prepared, and file or cause to be filed
when due Tax Returns with respect to the Companies and their Subsidiaries for any taxable
period ending on or before the Closing Date. The Sellers shall bear all costs of preparing
such Tax Returns and shall timely pay any Taxes due on such Tax Returns with respect to the
Companies and their Subsidiaries for any taxable period ending on or before the Closing
Date.

               (ii) The Buyer shall prepare, or cause to be prepared, and file or cause to be filed
when due all other Tax Returns with respect to the Companies and their Subsidiaries. The
Buyer shall bear all costs of preparing such Tax Returns and shall timely pay any Taxes due
on such Tax Returns with respect to the Companies and their Subsidiaries for any taxable
period ending after the Closing Date.

               (iii) If either the Buyer or the Sellers may be liable for any portion of the Tax
payable in connection with any Tax Return to be filed by the other, the party responsible
under this Agreement for filing such return (the “Preparer”) shall prepare and deliver to
the other party (the “Payor”) a copy of such return and any schedules, work papers and other
documentation then available that are relevant to the preparation of the portion of such
return for which the Payor is or may be liable under this Agreement not later than 45 days
before the Due Date (as defined in Section 4.7(j) of this Agreement). The Preparer shall
not file such return until the earlier of either the receipt of written notice from the
Payor indicating the Payor’s consent thereto, or the Due Date.

               (iv) The Buyer shall provide the Sellers with copies of all Tax Returns filed, or
caused to be filed, by the Buyer with respect to the Companies and their Subsidiaries for
periods beginning on or before the Closing Date and ending after the Closing, and the
Sellers shall provide the Buyer with copies of all Tax Returns filed, or caused to be filed,
after the Closing Date by the Sellers with respect to the Companies and their Subsidiaries.
The Sellers shall reimburse the Buyer for all Taxes allocated to
the portion of the taxable period that ends on or before the Closing Date on such Tax
Returns, to the extent such Taxes have not been previously paid by the Sellers, any Company,
or any Subsidiary of a Company to the relevant taxing authority.

               (v) The Payor shall have the option of providing to the Preparer, at any time at least
15 days prior to the Due Date, written instructions as to how the Payor wants any, or all,
of the items for which it may be liable reflected on such Tax Return. The Preparer shall,
in preparing such return, cause the items for which the Payor is liable under this Agreement
to be reflected in accordance with the Payor’s instructions (unless, in the opinion of a
partner of an internationally recognized law or accounting firm retained by the Preparer,
complying with the Payor’s instructions would likely subject the Preparer to any criminal
penalty or a non-criminal penalty in an amount equal to at least 20% of the Tax on any such
item) and, in the absence of having received such instructions, in accordance with past
practice. The Payor shall pay to the Preparer the amount of the Taxes with respect to such
Tax Return for which the Payor is liable not later than five days before such Tax Return is
due.

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               (vi) If the Preparer fails to satisfy its obligations under this Section 4.7(c), the
Payor shall have no obligation to indemnify the Preparer for any incremental Taxes that are
reflected on any such return as a result of such failure or any related Loss, and shall
retain any and all remedies it may otherwise have that arise out of such failure.

          (d) Contest Provisions.

               (i) Notification of Contests. After the date hereof, each of the Buyer, on the one
hand, and the Sellers, on the other hand (the “Recipient”), shall notify the Sellers or the
Buyer, as the case may be, in writing within five days of receipt by the Recipient of
written notice of any pending or threatened audits, adjustments, assessments or other
proceedings (a “Tax Audit”) that may affect the liability for Taxes of such other party. If
the Recipient fails to give such prompt notice to the other party, it shall not be entitled
to indemnification for any Taxes arising in connection with such Tax Audit if such failure
to give notice adversely affects the other party’s right to participate in the Tax Audit.

               (ii) Which Party Controls.

          (A) Sellers’ Items. If such Tax Audit relates to any Taxes for which the
Sellers are liable under this Agreement, the Sellers shall, at their expense,
control the defense and settlement of such Tax Audit.

          (B) Buyer’s Items. If such Tax Audit relates to any Taxes for which the Buyer
is liable under this Agreement, the Buyer shall, at its expense, control the defense
and settlement of such Tax Audit.

          (C) Combined and Mixed Items. If such Tax Audit relates to Taxes for which
both the Sellers and the Buyer are liable under this Agreement, to the extent
practicable such Tax Items (as defined in Section 4.7(j)) will be
distinguished and each party will control the defense and settlement of those
Taxes for which it is so liable.

          (D) Inseparable Items. If such Tax Audit relates to a taxable period, or
portion thereof, beginning before and ending after the Closing Date and any Tax Item
cannot be identified as being a liability of only one party or cannot be separated
from a Tax Item for which the other party is liable, the Sellers shall control the
defense and settlement of the Tax Audit, provided that the Sellers defend the items
as reported on the relevant Tax Return, otherwise the Buyer shall control the
defense and settlement of the Tax Audit.

          (e) Transfer Taxes. All excise, sales, use, value added, transfer (including real property
transfer or gains), stamp, documentary, filing, recordation and other similar taxes, levies,
assessments, customs, duties, imposts, charges or fees, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or penalties,
resulting directly from the sale and transfer by the Sellers to the Buyer of the Shares (the
“Transfer Taxes”), shall be borne fully by the Buyer. Notwithstanding Section 4.7(c) of this
Agreement, which shall not apply to Tax Returns relating to Transfer Taxes, any Tax

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Returns that
must be filed in connection with Transfer Taxes shall be prepared and filed when due by the party
primarily or customarily responsible under the applicable local Law for filing such Tax Returns,
and such party will use its commercially reasonable efforts to provide such Tax Returns to the
other party at least 10 days prior to the Due Date for such Tax Returns. If, pursuant to the
immediately preceding sentence, a Seller is required to file a Tax Return relating to Transfer
Taxes, the Buyer shall pay to such Seller the Transfer Taxes shown as due on such Tax Return no
later than five days after a Seller has provided a copy of such Tax Return to the Buyer.

          (f) Buyer’s Claiming, Receiving or Using of Refunds, Overpayments and Prepayments. If, after
the Closing, the Buyer, any Company or any of its Subsidiaries (A) receives any refund (whether by
payment, offset, credit or otherwise) or (B) utilizes the benefit of any overpayment of Taxes
(including any overpayment that results in a value-added Tax asset or credit) that, in each case
(A) and (B), (x) relates to Taxes for which the Sellers are liable or paid by the Sellers, any
Company or any of its Subsidiaries with respect to a taxable period, or portion thereof, ending on
or before the Closing Date, or (y) is the subject of indemnification by the Sellers under this
Agreement, the Buyer shall promptly transfer, or cause to be transferred, to the Sellers the entire
amount of the refund or overpayment (including interest) received or utilized by the Buyer, any
Company or any of its Subsidiaries. For purposes of the immediately preceding sentence, a
prepayment on or before the Closing Date of Taxes for which the Buyer is liable shall be treated in
the same manner as an overpayment of Taxes for which the Sellers are liable. The Buyer agrees to
notify the Sellers within 15 days following the discovery of a right to claim any such refund or
overpayment and the receipt of any such refund or utilization of any such overpayment. The Buyer
agrees to claim any such refund or to utilize any such overpayment as soon as possible and to
furnish to the Sellers all information, records and assistance necessary to verify the amount of
the refund or overpayment.

          (g) In the event the liability of or with respect to Taxes for which the Sellers are liable
hereunder is increased and the particular item that produced such increase results,
directly or indirectly, in an actual or potential reduction in the liability of the Buyer or
its affiliates for Taxes (a “Buyer Tax Benefit”), the Buyer shall be liable for and shall pay to
the Sellers the amount of such Buyer Tax Benefit; provided that such amount shall not exceed the
amount of the additional Taxes payable by the Sellers resulting from such item (a “Seller Tax
Detriment”). Such payment shall be made within 30 days after the later of (i) the due date
(without regard to waivers or extensions) of the Tax Return for the Tax period during which the
Buyer Tax Benefit was realized or (ii) the date notice is given by the Sellers to the Buyer with
respect to such payment. In the event of the later adjustment, in whole or in part, of any item
that produced the Buyer Tax Benefit or the Seller Tax Detriment, the Sellers shall refund to the
Buyer any amount previously paid under this Section 4.7(g) that is determined not to be owing as a
result of such adjustment, or the Buyer shall further remit to the Sellers the amount of any
increase in the amount required to be paid under this Section 4.7(g) as a result of such
adjustment. The parties shall promptly notify each other of any Buyer Tax Benefit or Seller Tax
Detriment and provide details supporting the calculation of the amount thereof. The amount of any
Buyer Tax Benefit or Seller Tax Detriment shall be calculated by comparing the Taxes payable
without the adjustment in question with the Taxes payable after taking into account such
adjustment, without regard to loss carryforwards or carrybacks.

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          (h) Post-Closing Actions That Affect the Sellers’ Liability for Taxes. Neither the Buyer, any
Company nor any affiliate of any of them shall take any action (including amending any Tax Return)
on or after the Closing Date that could materially increase the Sellers’ (or Sellers’
shareholders’) liability for Taxes (including any liability of the Sellers to indemnify the Buyer
for Taxes under this Agreement and any liability of Sellers or their direct or indirect
shareholders for Taxes imposed pursuant to Sections 951 through 964 of the Code), without the prior
written consent of PII.

          (i) Assistance and Cooperation. The parties agree that, after the Closing Date:

          (i) Each party shall assist (and cause its affiliates to assist) the other party in
preparing any Tax Returns that such other party is responsible for preparing and filing;

          (ii) The parties shall cooperate fully in preparing for any Tax Audits, or disputes
with taxing authorities, relating to any Tax Returns or Taxes of any Company or any of its
Subsidiaries, including providing access, as reasonably needed, to relevant books and
records relating to Taxes at issue;

          (iii) The parties shall make available to each other and to any taxing authority as
reasonably requested all relevant books and records relating to Taxes;

          (iv) Each party shall promptly furnish the other party with copies of all relevant
correspondence received from any taxing authority in connection with any Tax Audit or
information request relating to Taxes for which such other party may have an indemnification
obligation under this Agreement; and

          (v) Except as otherwise provided in this Agreement, the party requesting assistance or
cooperation shall bear the other party’s out-of-pocket expenses in complying with such
request to the extent that those expenses are attributable to fees and other costs of
unaffiliated third-party service providers.

          (j) For purposes of this Agreement, “Tax” or “Taxes” shall mean taxes of any kind, levies or
other like assessments, customs, duties, imposts, charges or fees, including income taxes, gross
receipts, ad valorem, value added, excise, real or property, asset, sales, use, license, payroll,
transaction, capital, net worth, withholding, estimated, social security, utility, workers’
compensation, severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed or payable to the United
States, or any state, county, local or foreign government or subdivision or agency thereof,
together with any interest, penalties or additions with respect thereto and any interest in respect
of such additions or penalties; “Due Date” shall mean, with respect to any Tax Return, the date
such return is due to be filed (taking into account any valid extensions); and “Tax Item” shall
mean, with respect to Taxes, any item of income, gain, deduction, loss or credit or other tax
attribute.

          Section 4.8 Withholding Taxes. Any payments from the Buyer to the Sellers hereunder shall be made free and
clear of, and without deduction or withholding for, any Taxes,

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unless such deduction or withholding
is required by applicable Law. If the Buyer is required by applicable Law to deduct or withhold
Taxes from such payments, then the Buyer shall pay, in addition to the amount otherwise due to
Sellers hereunder, such additional amount as is necessary to ensure that the net amount actually
paid to Sellers will equal the full amount Sellers would have received had no such deduction or
withholding been required.

          Section 4.9 Employees; Employee Benefits.

          (a) The Buyer shall be permitted to offer employment to any of the employees of any subsidiary
of PII (other than the Companies and their Subsidiaries) who are identified in Section 4.9(a) of
the Seller Disclosure Letter (the “Operating Employees”), provided that the Buyer shall condition
such employment on the resignation of the Operating Employee from his or her employer that is PII
or any affiliate of PII so that the Operating Employee’s termination of employment with PII or any
affiliate of PII shall not give rise to any benefit under any applicable severance plan. The Buyer
shall indemnify and hold harmless PII and its affiliates for severance or similar benefits made to
any Operating Employee who accepts employment with the Buyer effective as of the Closing Date.

          (b) The Buyer agrees that, for a period beginning on the date of this Agreement and ending on
the third anniversary of the Closing Date, it will not, and will cause any of its affiliates not
to, directly or indirectly solicit the employment of any of the employees of PII or its affiliates,
other than the Operating Employees and the employees of the Companies and their respective
Subsidiaries; provided, however, that a general advertisement or general
solicitation for potential employees shall not be considered a breach of this Section 4.9(b),
and a decision to hire any employee of PII or its affiliates who applies in response to such
solicitation shall not be considered a breach of this Section 4.9(b).

          (c) On and after the Closing, until at least the first anniversary of the Closing, the Buyer
shall provide the employees and former employees of any Company or any of its Subsidiaries and the
Operating Employees who accept employment with the Buyer (the employees of any Company or any of
its Subsidiaries and the Operating Employees who accept employment with the Buyer are hereinafter
collectively referred to as the “Affected Employees”) with compensation and benefits substantially
similar in the aggregate than those provided by PII or the applicable affiliate of PII immediately
prior to the Closing Date.

          (d) If any Affected Employee becomes a participant in (i) any “employee benefit plan,” as such
term is defined in Section 3(3) of ERISA, (ii) any plan that would be an employee benefit plan if
it were subject to ERISA or the Code, such as plans outside the jurisdiction of the United States,
(iii) any bonus, deferred compensation, excess benefit, or incentive compensation plan, (iv) any
supplemental unemployment, sick leave, vacation pay, long-term disability, post-retirement medical
or life insurance, and (v) any other plan, program, policy, or arrangement providing benefits to
employees (collectively, “Benefit Plans”) of the Buyer or any of its affiliates (a “Buyer Plan”),
such employee shall be given credit under such Buyer Plan for all service prior to the Closing Date
with PII or the employer affiliate (to the extent such credit was given by PII or the employer
affiliate) and all service prior to the time each employee becomes such a participant, for purposes
of eligibility and vesting and for all other purposes for which such service is either taken into
account or recognized (other than for

35

 

purposes of benefit accrual under defined benefit plans);
provided, however, such service need not be credited to the extent it would result in a duplication
of benefits. The Buyer shall amend or cause to be amended any of the Buyer Plans to the extent
necessary to recognize all service of the Affected Employees as required by this Section 4.9(d).

          (e) In the event that any person who is an employee of any Company or any of its Subsidiaries
immediately prior to the Closing is discharged by the Buyer, any Company or such Subsidiary, or is
deemed discharged or can bring a claim of discharge, as of or after the Closing Date, then the
Buyer shall be responsible for any severance costs for such employee including (i) such severance
costs that become payable under applicable Law and (ii) costs as set forth in Section 4.9(e) of the
Seller Disclosure Letter. The Buyer shall be responsible and assume all liability for all notices
or payments due to any such employees, and all notices, payments, fines or assessments due to any
law (including common law), statute or ordinance of any nation or state or any regulation, policy,
protocol, proclamation or executive order promulgated by any union representing Affected Employees
or any national, federal, regional, state, local or other governmental agency, authority,
administrative agency, regulatory body, commission, instrumentality, court, official or arbitral
tribunal having governmental or quasi-governmental powers with respect to the employment, discharge
or layoff of employees by Buyer or any affiliate as of or after the Closing, including the Worker
Adjustment and Retraining Notification Act and any rules or regulations as have been issued in
connection with the foregoing.

          (f) If an Affected Employee is participating in a Benefit Plan sponsored by PII or any of its
subsidiaries that provides health benefits, whether or not subject to U.S. Law, immediately prior
to the Closing Date, the Buyer agrees that, upon the Closing, such Affected Employee shall be
immediately eligible to participate, without any waiting time, in a Buyer Plan that provides health
benefits, and Buyer shall credit such Affected Employee under such Buyer Plan, for the calendar
year during which the Closing Date occurs, with the deductibles, coinsurance and maximum
out-of-pocket provisions and any other applicable expenses already incurred during the portion of
the year preceding the Closing Date under the applicable Benefit Plan sponsored by PII or any of
its subsidiaries that provides health benefits. The Buyer shall be responsible and assume all
liability for obligations, if any, relating to post-retirement welfare plans covering the Affected
Employees or former employees of any Company or any of its Subsidiaries, which obligation is
summarized in Section 4.9(f) of the Seller Disclosure Letter.

          (g) The Buyer acknowledges that, at the Closing, the participation by each of the Companies
and their respective Subsidiaries in all Benefit Plans not sponsored or maintained solely by any of
the Companies and such Subsidiaries shall terminate, and the Buyer shall be solely responsible for
providing any successor or alternate plans.

          (h) The Buyer shall cause the Companies and their respective Subsidiaries to honor any
collective bargaining agreements identified on Section 2.5 of the Seller Disclosure Letter.

          (i) From and after the Closing Date, the Buyer shall be responsible for, and shall indemnify
and hold harmless, the Sellers and their respective officers, directors, employees, affiliates and
agents and the fiduciaries (including plan administrators) of the Benefit Plans, from

36

 

and against,
any and all claims, losses, damages, costs and expenses (including attorneys’ fees and expenses)
and other liabilities and obligations relating to or arising out of (i) all compensation, salaries,
commissions and vacation entitlements accrued but unpaid as of the Closing and post-Closing bonuses
due to any Affected Employee, (ii) the liabilities assumed by the Buyer under this Section 4.9 or
any failure by the Buyer to comply with the provisions of this Section 4.9, and (iii) any claims
of, or damages or penalties sought by, any Affected Employee, any national, federal, regional,
state, local or other governmental agency, authority, administrative agency, regulatory body,
commission, instrumentality, court, official or arbitral tribunal having governmental or
quasi-governmental powers on behalf of or concerning any Affected Employee, or any union
representing any Affected Employee, with respect to any act or failure to act by the Buyer to the
extent arising from the employment, discharge, layoff or termination of any Affected Employee on or
after the Closing Date.

          Section 4.10 Supplemental Disclosure. The Sellers shall have the right from time to time prior to the Closing
to supplement or amend the Seller Disclosure Letter with respect to any matter hereafter arising or
discovered that if existing or known at the date of this Agreement would have been required to be
set forth or described in such Seller Disclosure Letter. Any such supplemental or amended
disclosure will not be considered when determining whether the condition set forth in Section
5.3(a) or any other condition to Closing has been satisfied. Such supplemental or amended
disclosure will, however, for purposes of determining whether any Buyer Indemnitee is entitled to
indemnification pursuant to Section 7.2, be deemed to amend the Seller Disclosure Letter to reflect
the matters set forth in such disclosure and to have been disclosed as of the date of this
Agreement.

          Section 4.11 Advice of Changes. The Sellers, on the one hand, and the Buyer, on the other hand, will give
prompt notice to the other upon becoming aware of (i) the occurrence, or failure to occur, of any
event which would be likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect and (ii) any failure on its part to
comply with or satisfy in any material respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement on or prior to the Closing Date. Except as set forth
in Section 4.10 or Section 7.1, no notice pursuant to this Section 4.11 will affect any
representations or warranties, covenants, agreements, obligations or conditions set forth herein or
limit or otherwise affect any available remedies.

          Section 4.12 Performance Bonds. If any Seller or any of its affiliates (other than any Company or any of its
Subsidiaries) has posted a performance, local import or other similar bond, letter of credit or
other guarantee in connection with the operation of the Business, the Buyer and such Seller shall
cooperate with each other in order (i) for such Seller or any such affiliate to obtain the release
of any such bond, letter of credit or guarantee and (ii) to the extent required, for the Buyer to
obtain a substitute bond, letter of credit or guarantee or to assume such Seller’s or such
affiliate’s existing bond, letter of credit or guarantee. The Buyer shall reimburse such Seller
for all costs incurred by such Seller or any such affiliate as a result of such Seller’s or such
affiliate’s leaving a performance, local import or similar bond, letter of credit or other
guarantee in place after the Closing Date in order to permit the Buyer to operate the Business
after the Closing Date.

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          Section 4.13 Restricted Activities.

          (a) In consideration of the payment of the Purchase Price, and to further induce the Buyer to
enter into this Agreement, PII hereby agrees that, for a period commencing on the Closing Date and
continuing for a period of three years from the Closing Date, neither PII nor any of its
subsidiaries, during the period an entity is a subsidiary, will directly or indirectly, either
acting on its own behalf or through or in connection with any person, (i) engage in, invest in or
derive any profit from Restricted Activities in the Territory (each as defined below); (ii)
solicit, recruit or hire any employee of the Companies and their Subsidiaries; or (iii) solicit or
encourage any employee of the Company and such Subsidiaries to leave the employment of the Company
and such Subsidiaries; provided, however, that a general advertisement or general solicitation for
potential employees shall not be considered a breach of this Section 4.13(a), and a decision to
hire any employee of any Company or any such Subsidiary who applies in response to such
solicitation shall not be considered a breach of this Section 4.13(a). Notwithstanding the
foregoing, this Section 4.13 shall not restrict: (i) the ownership by PII or any of its
subsidiaries of less than an aggregate of 20% of any class of stock of a person engaged, directly
or indirectly, in Restricted Activities within the Territory; or (ii) the acquisition and continued ownership
by PII or any of its subsidiaries of any person that, prior to the acquisition thereof, is not an
affiliate of PII and that engages, directly or indirectly, in Restricted Activities within the
Territory (A) if such Restricted Activities within the Territory account for less than 20% of such
person’s consolidated annual revenues for its most recently completed fiscal year or (B) if PII or
such subsidiary disposes of or agrees to dispose of or discontinues such person’s business engaged
in Restricted Activities within the Territory within one year after the closing of such
acquisition.

          (b) Each Seller acknowledges and agrees that the covenants and restrictions contained in this
Section 4.13 are an essential element of the Buyer’s agreeing to acquire the Shares and pay the
Purchase Price as set forth herein, and that the Buyer would not have done so but for the agreement
by PII to comply with the terms and provisions of this Section 4.13.

          (c) Each Seller hereby agrees that the geographic and business scope and the duration of the
covenants and restrictions in this Section 4.13 are fair and reasonable. However, if any provision
of this Section 4.13 is held to be invalid or unenforceable by reason of the geographic or business
scope or duration thereof, the court or other tribunal is hereby directed to construe and enforce
this Section 4.13 as if the geographic or business scope or the duration or such provision has been
more narrowly drawn as so not to be invalid or unenforceable, and such invalidity or
unenforceability shall not affect or render invalid or unenforceable any other provision of this
Agreement.

          (d) For purposes of this Section 4.13, (i) the term “Restricted Activities” means the business
of providing (x) services using land drilling or land workover rigs or (y) pressure pumping,
formation testing, underbalance drilling, drilling fluids, directional drilling, fishing tools or
production services with respect to onshore oil and natural gas wells; and (ii) the term
“Territory” shall mean Mexico, Central America and South America.

          Section 4.14 Financing. The Buyer shall, and shall cause its affiliates to, use their commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things
necessary, appropriate or advisable to arrange the Financing on the terms

38

 

and conditions described
in the Financing Commitment (provided that the Buyer may replace or amend the Financing Commitment
to add lenders, lead arrangers, bookrunners, syndication agents or similar entities who had not
executed the Financing Commitments as of the date hereof, or otherwise replace or amend the
Financing Commitment so long as (a) after such actions, the Financing Commitment does not include
any additional conditions precedent that are not contained in the Financing Commitment provided to
the Sellers as of the date of this Agreement, and (b) such actions are not reasonably likely to
delay, or diminish the likelihood of, the Buyer obtaining the Financing (clauses (a) and (b)
together being referred to as the “Financing Modification Requirements”; for purposes of this
Agreement, the term “Financing Commitment” shall be deemed to include any such replacement or
amended financing), including using commercially reasonable efforts to (i) maintain in effect the
Financing Commitment or any Alternative Financing (as defined below), (ii) satisfy on a timely
basis all conditions applicable to the Buyer to obtaining the Financing set forth therein, (iii)
negotiate and enter into definitive agreements with respect thereto on the terms and conditions
contemplated by the Financing Commitment or any
Alternative Financing, and (iv) consummate the Financing on the terms and conditions contemplated
by the Financing Commitments or any Alternative Financing at or prior to the Closing. In the event
any portion of the Financing becomes unavailable on the terms and conditions contemplated in the
Financing Commitment, the Buyer shall, and shall cause its affiliates to, use their commercially
reasonable efforts to arrange to obtain alternative financing from alternative sources in an amount
sufficient to consummate the transactions contemplated by this Agreement on terms and conditions
that are not materially less beneficial to the Buyer than those contained in the Financing
Commitment as in effect on the date of this Agreement as determined in the reasonable good faith
judgment of the Buyer and consistent with the Financing Modification Requirements (any such
alternative financing actually obtained by the Buyer, “Alternative Financing”) as promptly as
practicable following the occurrence of such event.

ARTICLE V

CONDITIONS TO CONSUMMATION OF THE PURCHASE

          Section 5.1 Conditions to Each Party’s Obligations to Consummate the Purchase. The respective obligations of
each party to consummate the transactions contemplated by this Agreement are subject to the
condition that, after the date hereof and at or prior to the Closing Date, no statute, rule,
regulation, executive order, decree or injunction shall have been enacted, entered, promulgated or
enforced by any Governmental Entity that prohibits the consummation of the Purchase.

          Section 5.2 Further Conditions to the Sellers’ Obligations. The obligation of each of the Sellers to
consummate the transactions contemplated by this Agreement is further subject to satisfaction or
waiver in writing at or prior to the Closing Date of the following conditions:

     (a) The representations and warranties of the Buyer contained in Article III of this
Agreement shall be true and correct in all material respects as of the date of this
Agreement and at and as of the Closing Date as though such representations and warranties
were made at and as of such date (except for representations and warranties

39

 

that are as of a different date or period, which shall be true and correct in all material respects as of
such other date or period); and

     (b) The Buyer shall have performed and complied in all material respects with all
agreements and obligations required by this Agreement to be performed or complied with by it
on or prior to the Closing.

     Section 5.3 Further Conditions to the Buyer’s Obligations. The obligation of the Buyer to consummate the
transactions contemplated by this Agreement are further subject to the satisfaction or waiver in
writing at or prior to the Closing Date of the following conditions:

     (a) The representations and warranties of the Sellers contained in Article II of this
Agreement shall be true and correct in all material respects as of the date of this
Agreement and at and as of the Closing Date as though such representations and warranties
were made at and as of such date (except for representations and warranties that are as of a
different date or period, which shall be true and correct in all material respects as of
such other date or period);

     (b) The Sellers shall have performed and complied in all material respects with all
agreements and obligations required by this Agreement to be performed or complied with by it
on or prior to the Closing;

     (c) At any time after the date of this Agreement, there shall not have occurred any
facts, changes or occurrences that, individually or in the aggregate, have had, or would
reasonably be expected to have, a Business Material Adverse Effect; and

     (d) The Sellers shall have obtained and furnished to the Buyer all third-party consents
listed in Section 2.6 of the Seller Disclosure Letter and marked with an asterisk in form
and substance reasonably satisfactory to the Buyer.

     Section 5.4 Frustration of Closing Conditions. Neither the Buyer nor any Seller may rely on the failure of any
condition set forth in this Article V to be satisfied if such failure was caused by such party’s
failure to use its commercially reasonable efforts to cause the Closing to occur as required by
Section 4.5.

ARTICLE VI

TERMINATION AND ABANDONMENT

          Section 6.1 Termination. This Agreement may be terminated and the transactions contemplated by this Agreement
may be abandoned at any time prior to the Closing only:

     (a) by mutual written consent of PII and the Buyer;

     (b) by PII or the Buyer by giving written notice to the other party at any time after
October 9, 2007 if the Closing shall not have occurred by such date;

40

 

     (c) by PII or the Buyer by giving written notice to the other party if a Governmental
Entity shall have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting a material portion of the transactions
contemplated by this Agreement and such order, decree, ruling or other action shall have
become final and non-appealable;

     (d) by PII, if the Buyer breaches or fails to perform its representations, warranties
or covenants contained in this Agreement, which breach or breaches or failure or failures to
perform (i) would, individually or in the aggregate, give rise to the failure of
a condition set forth in Section 5.2(a) or (b) and (ii) cannot be cured or, if curable,
is not or are not cured within 10 days after written notice from PII; or

     (e) by the Buyer, if one or more of the Sellers breach or fail to perform their
representations, warranties or covenants contained in this Agreement, which breach or
breaches or failure or failures to perform (i) would, individually or in the aggregate, give
rise to the failure of a condition set forth in Section 5.3(a) or (b) and (ii) cannot be
cured or, if curable, is not or are not cured within 10 days after written notice from the
Buyer;

provided, however, that the party seeking termination pursuant to clause (b), (d) or (e) is not
then in breach of any of its representations, warranties, covenants or agreements contained in this
Agreement, which breaches would give rise to the failure of a condition set forth in Section 5.2(a)
or (b), if the Buyer is then seeking termination, or Section 5.3(a) or (b), if PII is then seeking
termination.

          Section 6.2 Procedure for and Effect of Termination. In the event of termination of this Agreement and
abandonment of the transactions contemplated by this Agreement by the parties under Section 6.1 of
this Agreement, written notice thereof shall be given by a party so terminating to the other party
and this Agreement shall forthwith terminate and shall become null and void and of no further
effect, and the transactions contemplated by this Agreement shall be abandoned without further
action by the Sellers or the Buyer. If this Agreement is terminated under Section 6.1 of this
Agreement:

     (a) each party shall redeliver all documents, work papers and other materials of the
other parties relating to the transactions contemplated by this Agreement, whether obtained
before or after the execution of this Agreement, to the party furnishing the same, and all
confidential information received by any party hereto with respect to the other party shall
be treated in accordance with the Confidentiality Agreement and Section 4.2(b) of this
Agreement;

     (b) all filings, applications and other submissions made pursuant hereto shall, at the
option of the Sellers, and to the extent practicable, be withdrawn from the agency or other
person to which made; and

     (c) there shall be no liability or obligation under this Agreement on the part of the
Sellers or the Buyer or any of their respective directors, officers, employees, affiliates,
controlling persons, agents or representatives, except with respect to a breach of Section
3.5 of this Agreement and except that the Sellers or the Buyer, as the case may

41

 

be, may have
liability to the other party if the basis of termination is a willful, material breach by
the Sellers or the Buyer, as the case may be, of one or more of the provisions of this
Agreement, and except that the obligations provided for in Section 6.2, Section 8.6, Section
8.9 and Section 8.13 of this Agreement shall survive any such termination.

ARTICLE VII

SURVIVAL AND INDEMNIFICATION

          Section 7.1 Survival Periods. All representations and warranties of the parties contained in this Agreement
shall survive the Closing for the Survival Period (as defined below) but, except as provided in
Section 6.2(c) of this Agreement, shall not survive any termination of this Agreement. The
representations and warranties shall survive the Closing for the relevant period (the “Survival
Period”) determined as follows: (a) the representations and warranties of the Sellers contained in
Section 2.1, Section 2.2, Section 2.3 and Section 2.4 of this Agreement and of the Buyer contained
in Section 3.1, Section 3.2, Section 3.3 and Section 3.4 of this Agreement shall survive the
Closing indefinitely; (b) the representations and warranties of the Sellers contained in Section
2.12, Section 2.13, Section 2.14 and Section 2.17 shall survive until the expiration of 90 days
following the expiration of the applicable statute of limitations or prescription period (after
giving effect to any waiver, mitigation or extension thereof); and (c) all other representations
and warranties of the Sellers contained in Article II of this Agreement and of the Buyer contained
in Article III of this Agreement shall survive until the expiration of a period of 18 months
following the Closing Date. The parties agree that no claims or causes of action may be brought
against the Sellers or the Buyer based upon, directly or indirectly, any of the representations or
warranties contained in Articles II and III of this Agreement after the applicable Survival Period
or, except as provided in Section 6.2(c) of this Agreement, any termination of this Agreement;
provided that nothing herein shall preclude Sellers or Buyer from bringing or pursuing claims after
the end of the applicable Survival Period if notice thereof is given to the other party before the
end of such Survival Period. This Section 7.1 shall not limit any covenant or agreement of the
parties, including the covenants and agreements set forth in Section 4.7 and Section 4.9 of this
Agreement. Except as expressly provided in Section 4.10, any claim by an indemnified party for
indemnification shall not be adversely affected by any investigation by or opportunity to
investigate afforded to such party, nor shall such a claim be adversely affected by such party’s
knowledge on or before the Closing of any breach of the type specified in Section 7.2(a)(i) or (ii)
or Section 7.3(a)(i) or (ii) unless it shall be determined by a final judgment of a Governmental
Entity having jurisdiction over such Proceeding that the party seeking indemnification had actual
and express knowledge of such breach on or before the Closing.

          Section 7.2 PII’s Agreement to Indemnify.

          (a) Upon the terms and subject to the conditions set forth in this Agreement, from and after
the Closing, PII shall indemnify and hold harmless the Buyer and its directors, officers,
employees, affiliates, controlling persons, agents and representatives and their successors and
assigns (collectively, the “Buyer Indemnitees”) from and against all liability, demands, claims,
actions or causes of action, assessments, losses, damages, costs and expenses

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(including reasonable
attorneys’ fees and expenses) (collectively, “Buyer Damages”) asserted against or incurred by any
Buyer Indemnitee to the extent arising out of or resulting from:

          (i) a breach of any representation or warranty contained in Article II of this
Agreement when made or at and as of the Closing Date (or at and as of such different date or
period specified for such representation or warranty) as though such representation and
warranty were made at and as of the Closing Date (or such different date or period);

          (ii) a breach of any covenant of any Sellers contained in this Agreement in each case
to the extent it relates to performance prior to the Closing;

          (iii) a breach of any covenant of any Seller contained in this Agreement in each case
to the extent it relates to performance on or after the Closing; and

          (iv) any financial advisory and finders’ fees incurred by reason of any action taken by
any Seller or otherwise arising out of the transactions contemplated by this Agreement by
any person claiming to have been engaged by such Seller.

          (b) The obligation of PII to indemnify the Buyer Indemnitees under Section 7.2(a)(i) and (ii)
of this Agreement is subject to the following limitations:

          (i) No indemnification shall be made by PII pursuant to Section 7.2(a)(i) and (ii)
unless the aggregate amount of Buyer Damages exceeds $20,000,000 and, in such event,
indemnification shall be made by PII only to the extent that the aggregate amount of Buyer
Damages exceed $20,000,000;

          (ii) In no event shall PII’s aggregate obligation to indemnify the Buyer Indemnitees
pursuant to Section 7.2(a)(i) and (ii) exceed $250,000,000 in the aggregate;

          (iii) The limitations set forth in Section 7.2(b)(i) and (ii) do not apply to any Buyer
Damages to the extent arising out of or resulting from a breach of any representation or
warranty contained in Section 2.14 of this Agreement or a breach of any covenant contained
in Section 4.7 of this Agreement;

          (iv) The amount of any Buyer Damages shall be reduced by any amount actually received
by a Buyer Indemnitee (including, for this purpose, each Company and its Subsidiaries) with
respect to such Buyer Damages under any insurance coverage or for any other party alleged to
be responsible for such Buyer Damages. The Buyer Indemnitees shall use commercially
reasonable efforts to collect any amounts available under such insurance coverage and from
such other party alleged to have responsibility. If a Buyer Indemnitee actually receives
any amount under insurance coverage or from such other party with respect to Buyer Damages
at any time subsequent to any indemnification provided by PII under this Section 7.2, then
such Buyer Indemnitee shall promptly reimburse PII for any payment made by PII in connection
with providing such indemnification up to such amount received by such Buyer Indemnitee; and

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          (v) PII shall be obligated to indemnify the Buyer Indemnitees pursuant to Section
7.2(a)(i) only for those claims giving rise to Buyer Damages as to which the Buyer
Indemnitees have given PII written notice thereof prior to the end of the Survival
Period. Any written notice delivered by a Buyer Indemnitee to PII with respect to
Buyer Damages shall set forth with as much specificity as is reasonably practicable the
basis of the claim for Buyer Damages and, to the extent reasonably practicable, a reasonable
estimate of the amount of such claim.

     Section 7.3 Buyer’s Agreement to Indemnify.

          (a) Upon the terms and subject to the conditions set forth in this Agreement, from and after
the Closing, the Buyer shall indemnify and hold harmless the Sellers and their respective
directors, officers, employees, affiliates, controlling persons, agents and representatives and
their successors and assigns (collectively, the “Seller Indemnitees”) from and against all
liability, demands, claims, actions or causes of action, assessments, losses, damages, costs and
expenses (including reasonable attorneys’ fees and expenses) (collectively, “Seller Damages”)
asserted against or incurred by any Seller Indemnitee to the extent arising out of or resulting
from:

          (i) a breach of any representation or warranty contained in Article III of this
Agreement when made or at and as of the Closing Date (or at and as of such different date or
period specified for such representation or warranty) as though such representation and
warranty were made at and as of the Closing Date (or such different date or period);

          (ii) a breach of any covenant of the Buyer contained in this Agreement in each case to
the extent it relates to performance prior to the Closing;

          (iii) a breach of any covenant of the Buyer contained in this Agreement in each case to
the extent it relates to performance on or after the Closing; and

          (iv) any financial advisory and finders’ fees incurred by reason of any action taken by
the Buyer or otherwise arising out of the transactions contemplated by this Agreement by any
person claiming to have been engaged by the Buyer.

          (b) The Buyer’s obligation to indemnify the Seller Indemnitees under Section 7.3(a)(i) and
(ii) of this Agreement is subject to the following limitations:

          (i) No indemnification shall be made by the Buyer pursuant to Section 7.3(a)(i) and
(ii) unless the aggregate amount of Seller Damages exceeds $20,000,000 and, in such event,
indemnification shall be made by the Buyer only to the extent that the aggregate amount of
Seller Damages exceeds $20,000,000;

          (ii) In no event shall the Buyer’s aggregate obligation to indemnify the Seller
Indemnitees pursuant to Section 7.3(a)(i) and (ii) exceed $250,000,000 in the aggregate;

44

 

          (iii) The amount of any Seller Damages shall be reduced by any amount actually received
by a Seller Indemnitee with respect to such Seller Damages
under any insurance coverage or from any other party alleged to be responsible for such
Seller Damages. The Seller Indemnitees shall use commercially reasonable efforts to collect
any amounts available under such insurance coverage and from such other party alleged to
have responsibility. If a Seller Indemnitee actually receives any amount under insurance
coverage or from such other party with respect to Seller Damages at any time subsequent to
any indemnification provided by the Buyer under this Section 7.3, then such Seller
Indemnitee shall promptly reimburse the Buyer, as the case may be, for any payment made by
the Buyer in connection with providing such indemnification up to such amount received by
the Seller Indemnitee; and

          (iv) The Buyer shall be obligated to indemnify the Seller Indemnitees pursuant to
Section 7.3(a)(i) only for those claims giving rise to Seller Damages as to which the Seller
Indemnitees have given the Buyer written notice thereof prior to the end of the Survival
Period. Any written notice delivered by a Seller Indemnitee to the Buyer with respect to
Seller Damages shall set forth with as much specificity as is reasonably practicable the
basis of the claim for Seller Damages and, to the extent reasonably practicable, a
reasonable estimate of the amount of such claim.

     Section 7.4 Third-Party Indemnification. The obligations of PII to indemnify the Buyer Indemnitees under
Section 7.2 of this Agreement with respect to Buyer Damages and the obligations of the Buyer to
indemnify the Seller Indemnitees under Section 7.3 of this Agreement with respect to Seller
Damages, in either case resulting from the assertion of liability by third parties (each, as the
case may be, a “Claim”), will be subject to the following terms and conditions:

     (a) Any party against whom any Claim is asserted will give the indemnifying party
written notice of any such Claim promptly after learning of such Claim, and the indemnifying
party may, at its option, undertake the defense of such Claim by counsel of its own
choosing; provided that such counsel is not reasonably objected to by the indemnified party.
Failure to give prompt notice of a Claim under this Agreement shall not affect the
indemnifying party’s obligations under this Article VII, except to the extent the
indemnifying party is materially prejudiced by such failure to give prompt notice. If the
indemnifying party, within 30 days after notice of any such Claim, or such shorter period as
is reasonably required, fails to assume the defense of such Claim, the Buyer Indemnitee or
the Seller Indemnitee, as the case may be, against whom such Claim has been made will (upon
further notice to the indemnifying party) have the right to undertake the defense,
compromise or settlement of such Claim on behalf of and for the account and risk, and at the
expense, of the indemnifying party.

     (b) Anything in this Section 7.4 to the contrary notwithstanding, the indemnifying
party shall not enter into any settlement or compromise of any action, suit or proceeding or
consent to the entry of any judgment (i) that does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to the Seller Indemnitee or the Buyer
Indemnitee, as the case may be, of a written release from all liability in respect of such
action, suit or proceeding or (ii) for other than monetary

45

 

damages to be borne by the
indemnifying party, without the prior written consent of the
Seller Indemnitee or the Buyer Indemnitee, as the case may be, which consent shall not
be unreasonably withheld.

     (c) The indemnifying party and the indemnified party shall cooperate fully in all
aspects of any investigation, defense, pretrial activities, trial, compromise, settlement or
discharge of any claim in respect of which indemnity is sought under this Article VII,
including by providing the other party with reasonable access to employees and officers
(including as witnesses) and other information.

          Section 7.5 No Setoff. Neither the Buyer nor PII shall have any right to setoff any Buyer Damages or Seller
Damages, respectively, against any payments to be made by either of them under this Agreement.

          Section 7.6 Insurance. The indemnifying party shall be subrogated to the rights of any indemnified party in
respect of any insurance relating to Buyer Damages or Seller Damages, as the case may be, to the
extent of any indemnification payments made under this Agreement, and the indemnified party shall
provide all reasonably requested assistance to the indemnifying party in respect of such
subrogation.

          Section 7.7 No Duplication. Any liability for indemnification under this Agreement shall be determined without
duplication of recovery by reason of the state of facts (i) giving rise to such liability
constituting a breach of more than one representation, warranty, covenant or agreement or (ii)
taken into account in determining any adjustment to the Purchase Price under Section 1.10(c).
Article VII shall not apply to Tax claims to the extent those claims are separately indemnified
under Section 4.7.

          Section 7.8 Sole Remedy.

          (a) The parties agree that the sole and exclusive monetary remedy of any party to this
Agreement, any Buyer Indemnitee or any Seller Indemnitee or their respective affiliates with
respect to this Agreement or any other claims relating to the Business, the events giving rise to
this Agreement and the transactions provided for in this Agreement or contemplated by this
Agreement or by any other such claims relating to the Business, events giving rise to this
Agreement and the transactions provided for in this Agreement (other than claims of, or causes of
action arising from, fraud) shall be limited to the indemnification provisions set forth in Section
4.7 and this Article VII and, in furtherance of the foregoing, each of the parties, on behalf of
itself and its affiliates, waives and releases the other parties to this Agreement (and such other
parties’ affiliates) from, to the fullest extent permitted under any applicable Law, any and all
rights, claims and causes of action it or its affiliates may have against the other parties to this
Agreement (other than claims of, or causes of action arising from, fraud) except pursuant to the
indemnification provisions set forth in Section 4.7 and this Article VII.

          (b) The parties intend that, even though indemnification and other obligations appear in
various sections and articles of this Agreement, the indemnification procedures and limitations
contained in this Article VII shall apply to all indemnity and other obligations of the

46

 

parties under this Agreement, except as provided in Section 4.7 and except to the extent expressly excluded
in this Article VII.

          Section 7.9 No Special Damages. IN NO EVENT SHALL ANY BUYER DAMAGES OR SELLER DAMAGES HEREUNDER INCLUDE
EXEMPLARY, SPECIAL, PUNITIVE, INDIRECT, REMOTE, SPECULATIVE OR CONSEQUENTIAL DAMAGES EXCEPT TO THE
EXTENT ANY SUCH DAMAGES ARE PAYABLE TO AN UNAFFILIATED THIRD PARTY IN CONNECTION WITH A THIRD PARTY
CLAIM.

          Section 7.10 Express Negligence. THE FOREGOING INDEMNITIES ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES
IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE
OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE
NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY
OF THE INDEMNIFIED PARTIES.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

          Section 8.1 Amendment and Modification. This Agreement may be amended, modified or supplemented at any time by
the parties to this Agreement, under an instrument in writing signed by all parties.

          Section 8.2 Entire Agreement; Assignment; Binding Effect. This Agreement (including the Seller Disclosure
Letter) and the Confidentiality Agreement (a) constitute the entire agreement between the parties
concerning the subject matter of this Agreement and supersede other prior agreements and
understandings, both written and oral, between the parties concerning the subject matter of this
Agreement and (b) shall not be assigned, by operation of law or otherwise, by a party, without the
prior written consent of the other parties; provided, however, that, without the prior written
consent of any other party, the Buyer may assign its right to purchase all or any portion of the
Shares to any controlled affiliate of the Buyer organized under the laws of the United States of
America, any political subdivision thereof or any State thereof, Uruguay, the Bahamas, Bermuda, the
British Virgin Islands, the Cayman Islands or any member of the European Union; provided, further,
however, that no such assignment shall limit or affect the Buyer’s obligations hereunder.. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.

          Section 8.3 Severability. The invalidity or unenforceability of any term or provision of this Agreement in any
situation or jurisdiction shall not affect the validity or enforceability of the other terms or
provisions of this Agreement or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction and the remaining terms and provisions shall
remain in full force and effect, unless doing so would result in an interpretation of this
Agreement that is manifestly unjust.

47

 

          Section 8.4 Notices. Unless otherwise provided in this Agreement, all notices and other communications under
this Agreement shall be in writing and may be given by any of the following methods: (a) personal
delivery; (b) facsimile transmission; (c) registered or certified mail, postage prepaid, return
receipt requested; or (d) overnight delivery service. Such notices and communications shall be
sent to the appropriate party at its address or facsimile number given below or at such other
address or facsimile number for such party as shall be specified by notice given under this
Agreement (and shall be deemed given upon receipt by such party or upon actual delivery to the
appropriate address, or, in case of a facsimile transmission, upon transmission by the sender and
issuance by the transmitting machine of a confirmation slip that the number of pages constituting
the notice have been transmitted without error; in the case of notices sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the
address provided for above; provided, however, that such mailing shall in no way alter the time at
which the facsimile notice is deemed received):

	 	(a)	 	if to any of the Sellers, to
	 
	 	 	 	Pride International, Inc.

5847 San Felipe

Houston, Texas 77057

Facsimile: (713) 914-9796

Attention: General Counsel

                   Legal Department
	 
	 	 	 	with a copy to
	 
	 	 	 	Baker Botts L.L.P.

One Shell Plaza

910 Louisiana Street

Houston, Texas 77002-4995

Facsimile: (713) 229-7701

Attention: J. David Kirkland, Jr.

                   Tull R. Florey

	 
	 	(b)	 	if to the Buyer, to
	 
	 	 	 	GP Investments Ltd.

Clarendon House

2 Church Street, Hamilton, HM 11

Bermuda

Facsimile: (441) 292-4720

Attention: Stephen Rossiter

                   David Cooke

48

 

	 	 	 	with a copy to
	 	 	 	Cravath, Swaine & Moore LLP

825 Eighth Avenue

Worldwide Plaza

New York, New York 10019-7475

Facsimile: (212) 474-3700

Attention: David Mercado

          Section 8.5 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of
the State of New York applicable to contracts executed in and to be performed entirely within that
state. Without prejudice to the provisions of Section 8.6, all actions and proceedings arising out
of or relating to this Agreement shall be heard and determined in any New York state or federal
court sitting in the Borough of Manhattan in the City of New York, New York, and the parties hereby
irrevocably submit to the exclusive jurisdiction of such courts in any such action or proceeding
and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each party irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to such party at its address
specified in Section 8.4. The Buyer hereby irrevocably designates, appoints and empowers
Corporation Service Company, 1133 Avenue of the Americas, New York, New York 10036, as its
designee, appointee and agent to receive, accept and acknowledge for and on its behalf service for
any and all legal process, summons, notices and documents which may be served in any such action or
proceeding which may be made on such designee, appointee and agent in accordance with legal
procedures prescribed for such courts, with respect to any action or proceeding arising out of or
relating to this Agreement. The parties agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by Law. Nothing in this Section 8.5 shall affect the right of any
party to serve legal process in any other manner permitted by Law. The consents to jurisdiction
set forth in this Section 8.5 shall not constitute general consents to service of process in the
State of New York and shall have no effect for any purpose except as provided in this Section 8.5
and shall not be deemed to confer rights on any person other than the parties.

          Section 8.6 Dispute Resolution.

          (a) Negotiation; Mediation.

          (i) In the event of any dispute or disagreement between the Sellers and the Buyer as to
the interpretation of any provision of this Agreement (or the performance of obligations
under this Agreement), the matter, on written request of either party, shall be referred to
representatives of the parties for decision, each party being represented by a senior
executive officer who has no direct operational responsibility for the matters contemplated
by this Agreement (the “Representatives”). The Representatives shall promptly meet in a good
faith effort to resolve the dispute. If the Representatives do not agree upon a decision
within 30 calendar days after reference of

49

 

the matter to them, each of the Buyer and the
Sellers shall be free to exercise the remedies available to it under Section 8.6(b).

          (ii) The Representatives may elect at any time to undertake mediation. The
Representatives may elect to utilize the commercial mediation rules of the American
Arbitration Association (“AAA”), either as written or as modified by mutual agreement. If
arbitration proceedings have been instituted, these proceedings shall be stayed until the
mediation process is terminated.

          (b) Arbitration.

          (i) Any controversy, dispute or claim arising out of or relating to this Agreement or
the transactions arising hereunder that cannot be resolved by negotiation or mediation
pursuant to Section 8.6(a) shall be settled exclusively by final and binding arbitration in
New York, New York. Such arbitration will apply the laws of the State of New York and the
commercial arbitration rules of AAA to resolve the dispute.

          (ii) Written notice of arbitration must be given within one year after the accrual of
the claim on which the notice is based. If the claiming party fails to give notice of
arbitration within that time, the claim shall be deemed to be waived.

          (iii) Such arbitration shall be conducted by three independent and impartial
arbitrators. Each party shall appoint one arbitrator, and those appointed arbitrators shall
select the third arbitrator, who shall be the presiding arbitrator. Unless the parties
agree otherwise, each arbitrator shall be a licensed attorney with at least ten years of
experience in the practice of law. If an arbitrator should die, withdraw or otherwise
become incapable of serving, a replacement shall be selected and appointed in a like manner.

          (iv) The arbitrators shall render an opinion setting forth findings of fact and
conclusions of law with the reasons therefor stated. A transcript of the evidence adduced
at the hearing shall be made and shall, upon request, be made available to either party.
The fees and expenses of the arbitrators shall be shared equally by the parties and advanced
by them from time to time as required; provided that at the conclusion of the
arbitration, the arbitrators may award costs and expenses (including the costs of the
arbitration previously advanced and the fees and expenses of attorneys, accountants and
other experts). The arbitrators shall render their award within 90 days of the conclusion
of the arbitration hearing. The arbitrators shall not be empowered to award to either party
any punitive damages in connection with any dispute between them, and each party hereby
irrevocably waives any right to recover such damages. The arbitration hearings and award
shall be maintained in confidence.

          (v) Notwithstanding anything to the contrary provided in this Section 8.6(b) and
without prejudice to the above procedures, either party may apply to any court of competent
jurisdiction for temporary injunctive or other provisional judicial relief or to
specifically enforce the terms of this Agreement. The award rendered by the arbitrators

50

 

shall be final and not subject to judicial review and judgment thereon may be entered in any
court of competent jurisdiction.

          (c) Inapplicable to Section 1.10. Notwithstanding anything to the contrary contained in this
Agreement, this Section 8.6 shall not apply to the provisions of Section 1.10(b) and (c) of this
Agreement.

          Section 8.7 Descriptive Headings. The descriptive headings used in this Agreement are inserted for convenience
of reference only and shall in no way be construed to define, limit, describe, explain, modify,
amplify, or add to the interpretation, construction or meaning of any provision of, or scope or
intent of, this Agreement nor in any way affect this Agreement.

          Section 8.8 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an
original, but any of which together shall constitute one and the same instrument. An executed
counterpart signature page to this Agreement delivered by fax or other means of electronic
transmission shall be deemed to be an original and shall be as effective for all purposes as
delivery of a manually executed counterpart.

          Section 8.9 Fees and Expenses. Whether or not this Agreement and the transactions contemplated by this
Agreement are consummated, and except as otherwise expressly set forth in this Agreement, all costs
and expenses (including legal and financial advisory fees and expenses) incurred in connection
with, or in anticipation of, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.

          Section 8.10 Interpretation.

          (a) The phrase “to the knowledge of the Sellers” or any similar phrase shall mean such facts
and other information that as of the date of this Agreement are actually known
to the persons listed in Section 8.10 of the Seller Disclosure Letter. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this Agreement. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to
be followed by the words “without limitation.”

          (b) As used in this Agreement:

          (i) “affiliate” of any person means another person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common control with,
such first person.

          (ii) “person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, Governmental Entity or other entity.

          (iii) “Subsidiary” of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is

51

 

sufficient to
elect at least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person or by another Subsidiary of such first person.

          Section 8.11 Third-Party Beneficiaries. This Agreement is solely for the benefit of the Sellers, their
respective successors and permitted assigns and the Seller Indemnitees, with respect to the
obligations of the Buyer under this Agreement, and for the benefit of the Buyer, its successors and
permitted assigns and the Buyer Indemnitees, with respect to the obligations of the Sellers, under
this Agreement, and for the benefit of the Affected Employees under Section 4.9, and this Agreement
shall not be deemed to confer upon or give to any other third party any remedy, claim of liability
or reimbursement, cause of action or other right.

          Section 8.12 No Waivers. Except as otherwise expressly provided in this Agreement, no failure to exercise,
delay in exercising, or single or partial exercise of any right, power or remedy by any party, and
no course of dealing between the parties, shall constitute a waiver of any such right, power or
remedy. No waiver by a party of any default, misrepresentation, or breach of warranty or covenant
under this Agreement, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant under this Agreement or
affect in any way any rights arising by virtue of any such prior or subsequent occurrence. No
waiver shall be valid unless in writing and signed by the party against whom such waiver is sought
to be enforced.

          Section 8.13 Specific Performance. The parties to this Agreement agree that if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached, irreparable damage
would occur, no adequate remedy at law would exist and damages would be difficult to determine, and
that the parties shall be entitled to specific performance of the terms of this Agreement and
immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a
remedy, in addition to any other remedy at law or in equity.

52

 

          IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly signed as of
the date first above written.

	 	 	 	 	 
	 	SELLERS

PRIDE INTERNATIONAL, INC.

 	 
	 	By:  	/s/ Brian C. Voegele
 	 
	 	 	Name:  	Brian C. Voegele 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 	 
	 
	 	REDFISH HOLDINGS S. DE R.L. DE C.V.

 	 
	 	By:  	/s/ Alejandro Cestero
 	 
	 	 	Name:  	Alejandro Cestero 	 
	 	 	Title:  	Attorney-in-fact 	 
	 
	 	PRIDE INTERNATIONAL LTD.

 	 
	 	By:  	/s/ Brian C. Voegele
 	 
	 	 	Name:  	Brian C. Voegele 	 
	 	 	Title:  	President 	 
	 
	 	PRIDE SERVICES LTD.

 	 
	 	By:  	/s/ Brian C. Voegele
 	 
	 	 	Name:  	Brian C. Voegele 	 
	 	 	Title:  	President 	 
	 
	 	GULF OF MEXICO PERSONNEL SERVICES S.
DE R.L. DE C.V.

 	 
	 	By:  	/s/ Alejandro Cestero
 	 
	 	 	Name:  	Alejandro Cestero 	 
	 	 	Title:  	Attorney-in-fact 	 

53

 

	 	 	 	 	 

	 	 	 	 	 
	 	BUYER

GP INVESTMENTS LTD.

 	 
	 	By:  	/s/ Octavio Pereira Lopes
 	 
	 	 	Name:  	Octavio Pereira Lopes 	 
	 	 	Title:  	Attorney-in-fact 	 

54

 

	 	 	 	 	 

Exhibit A

(Transition Services

Agreement)

     Pride agrees to furnish
supplementally a copy of this Exhibit A to the Commission upon request.exv4w1

 

Exhibit
4.1

 

FORM OF

FIRST SUPPLEMENTAL INDENTURE

by and between

CHAMPION ENTERPRISES, INC.

AND

WELLS FARGO BANK, N.A.

as Trustee

 

Dated as of November 2, 2007

 

Supplemental to Indenture for Senior Debt Securities

Dated as of November 2, 2007

2.75% Convertible Senior Notes due 2037

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	ARTICLE 1
	 	 	 	 
	Definitions
	 	 	 	 
	 
	 	 	 	 
	Section 1.01. Scope of First Supplemental Indenture
	 	 	2	 
	Section 1.02. Definitions
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 2
	 	 	 	 
	Issue, Description, Execution, Registration
	 	 	 	 
	and Exchange of Notes
	 	 	 	 
	Section 2.01. Designation and Amount
	 	 	9	 
	Section 2.02. Form of Notes
	 	 	9	 
	Section 2.03. Date and Denomination of Notes; Payments of Interest
	 	 	10	 
	Section 2.04. Payments of Additional Interest
	 	 	11	 
	Section 2.05. Exchange and Registration of Transfer of Notes; Depositary
	 	 	11	 
	Section 2.06. CUSIP Numbers
	 	 	13	 
	Section 2.07. Additional Notes; Repurchases
	 	 	13	 
	Section 2.08. Contingent Debt Tax Treatment
	 	 	13	 
	Section 2.09. Calculation of Tax Original Issue Discount
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 3
	 	 	 	 
	Particular Covenants of the Company
	 	 	 	 
	 
	 	 	 	 
	Section 3.01. Payment of Principal, Premium, Interest and Additional Interest
	 	 	14	 
	Section 3.02. Maintenance of Office or Agency
	 	 	14	 
	Section 3.03. Existence
	 	 	15	 
	Section 3.04. Stay, Extension and Usury Laws
	 	 	15	 
	Section 3.05. Compliance Certificate; Statements as to Defaults
	 	 	15	 
	Section 3.06. Additional Interest
	 	 	15	 
	Section 3.07. Further Instruments and Acts
	 	 	15	 
	Section 3.08. Reporting Obligations
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 4
	 	 	 	 
	Defaults and Remedies
	 	 	 	 
	 
	 	 	 	 
	Section 4.01. Additional Events of Default
	 	 	16	 
	Section 4.02. Sole Remedy for Failure to Report
	 	 	17	 
	 
	 	 	 	 
	ARTICLE 5
	 	 	 	 
	Noteholders’ Meetings
	 	 	 	 
	 
	 	 	 	 
	Section 5.01. Purpose of Meetings
	 	 	18	 
	Section 5.02. Call of Meetings by Trustee
	 	 	18	 

 

 

Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page
	Section 5.03. Call of Meetings by Company or Noteholders
	 	 	19	 
	Section 5.04. Qualifications for Voting
	 	 	19	 
	Section 5.05. Regulations
	 	 	19	 
	Section 5.06. Voting
	 	 	20	 
	Section 5.07. No Delay of Rights by Meeting
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 6
	 	 	 	 
	Modifications and amendments
	 	 	 	 
	 
	 	 	 	 
	Section 6.01. Modifications and Amendments Without Consent of Noteholders
	 	 	20	 
	Section 6.02. Modifications and Amendments With Consent of Noteholders
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 7
	 	 	 	 
	Consolidation, Merger, Sale, Conveyance and Lease
	 	 	 	 
	 
	 	 	 	 
	Section 7.01. Company May Consolidate, Etc.
	 	 	22	 
	Section 7.02. Successor Corporation to Be Substituted
	 	 	22	 
	Section 7.03. Opinion of Counsel to Be Given Trustee
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 8
	 	 	 	 
	Conversion of Notes
	 	 	 	 
	 
	 	 	 	 
	Section 8.01. Right to Convert
	 	 	23	 
	Section 8.02. Conversion Procedure
	 	 	23	 
	Section 8.03. Increased Applicable Conversion Rate Applicable to Certain Notes
Surrendered in Connection with Make-Whole Fundamental Changes
	 	 	27	 
	Section 8.04. Adjustment of Base Conversion Rate
	 	 	29	 
	Section 8.05. Shares to Be Fully Paid
	 	 	38	 
	Section 8.06. Effect of Reclassification, Consolidation, Merger or Sale
	 	 	38	 
	Section 8.07. Certain Covenants
	 	 	40	 
	Section 8.08. Responsibility of Trustee
	 	 	41	 
	Section 8.09. Notice to Holders Prior to Certain Actions
	 	 	41	 
	Section 8.10. Shareholder Rights Plans
	 	 	42	 
	 
	 	 	 	 
	ARTICLE 9
	 	 	 	 
	Repurchase of Notes at Option of Holders
	 	 	 	 
	
	 	 	 	 
	Section 9.01. Repurchase at Option of Holders
	 	 	42	 
	Section 9.02. Repurchase at Option of Holders upon a Fundamental Change
	 	 	45	 
	Section 9.03. Withdrawal of Repurchase Notice or Fundamental Change Repurchase Notice
	 	 	48	 
	Section 9.04. Deposit of Repurchase Price or Fundamental Change Repurchase Price
	 	 	48	 

 ii 

 

 

Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page
	ARTICLE 10
	 	 	 	 
	Optional Redemption of the Notes by the Company
	 	 	 	 
	 
	 	 	 	 
	Section 10.01. Optional Redemption
	 	 	49	 
	Section 10.02. Selection of Notes to Be Redeemed
	 	 	50	 
	Section 10.03. Notice of Redemption
	 	 	50	 
	 
	 	 	 	 
	ARTICLE 11
	 	 	 	 
	Interest Reduction
	 	 	 	 
	Section 11.01. Interest Reduction
	 	 	50	 
	Section 11.02.
Interest Reduction Notification
	 	 	51	 
	 
	 	 	 	 
	ARTICLE 12
	 	 	 	 
	Miscellaneous Provisions
	 	 	 	 
	 
	 	 	 	 
	Section 12.01. Ratification and Incorporation of Original Indenture
	 	 	51	 
	Section 12.02. Governing Law
	 	 	51	 
	Section 12.03. Payments on Business Days
	 	 	51	 
	Section 12.04. No Security Interest Created
	 	 	51	 
	Section 12.05. Trust Indenture Act
	 	 	51	 
	Section 12.06. Benefits of Indenture
	 	 	52	 
	Section 12.07. Calculations
	 	 	52	 
	Section 12.08. Table of Contents, Headings, Etc
	 	 	52	 
	Section 12.09. Execution in Counterparts
	 	 	52	 
	Section 12.10. Severability
	 	 	52	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A            Form of Note
	 	 	A-1	 
	Exhibit B            Form of Notice of Conversion
	 	 	B-1	 
	Exhibit C            Form of Fundamental Change Repurchase Notice
	 	 	C-1	 
	Exhibit D            Form of Assignment and Transfer
	 	 	D-1	 
	Exhibit E            Form of Repurchase Notice
	 	 	E-1	 

 iii 

 

 

     FIRST SUPPLEMENTAL INDENTURE dated as of November 2, 2007 between Champion Enterprises, Inc.,
a Michigan corporation, as issuer (hereinafter sometimes called the “Company”, as more fully set
forth in Section 1.02), and Wells Fargo Bank, N.A., a national banking association organized and
existing under the laws of the United States of America, as trustee (hereinafter sometimes called
the “Trustee”, as more fully set forth in Section 1.02).

W I T N E S S E T H:

     WHEREAS, this First Supplemental Indenture is supplemental to the Original Indenture; and

     WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issue of its
2.75% Convertible Senior Notes due 2037 (hereinafter sometimes called the “Notes”), initially in an
aggregate principal amount not to exceed $180,000,000, and in
order to provide the terms and conditions upon which the Notes are to be authenticated, issued and
delivered, the Company has duly authorized the execution and delivery of this First Supplemental
Indenture; and

     WHEREAS,
pursuant to Section 2.01 of the Original Indenture, the Company may establish one or
more series of Securities from time to time as authorized by a supplemental indenture of which the
Notes shall be one such series; and

     WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note, the
Form of Notice of Conversion, the Form of Fundamental Change Repurchase Notice, the Form of
Repurchase Notice and the Form of Assignment and Transfer to be borne by the Notes are to be
substantially in the forms hereinafter provided for; and

     WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in the
Indenture provided, the valid, binding and legal obligations of the Company, and to constitute
these presents a valid agreement according to its terms, have been done and performed, and the
execution of this First Supplemental Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.

     NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

     That in order to declare the terms and conditions upon which the Notes are, and are to be,
authenticated, issued and delivered, and in consideration of the premises and of the purchase and
acceptance of the Notes by the holders thereof, the Company covenants and agrees with the Trustee
for the equal and proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:

 

 

ARTICLE 1

Definitions

     Section 1.01. Scope of First Supplemental Indenture. The changes, modifications and
supplements to the Original Indenture affected by this First Supplemental Indenture shall be
applicable only with respect to, and shall only govern the terms of, the Notes, which shall be
limited to $180,000,000 aggregate principal amount Outstanding at any time and which
may be issued from time to time, and shall not apply to any other Securities that may be issued
under the Original Indenture unless a supplemental indenture with respect to such other Securities
specifically incorporates such changes, modifications and supplements. The provisions of the First
Supplemental Indenture shall supersede any corresponding or inconsistent provisions in the Original
Indenture.

     Section 1.02. Definitions. The terms defined in this Section 1.02 (except as herein otherwise expressly
provided or unless the context otherwise requires) for all purposes of this First Supplemental
Indenture and for purposes of the Original Indenture as it relates to the Notes shall have the
respective meanings specified in this Section 1.02. Except as otherwise provided in this First
Supplemental Indenture, all words, terms and phrases defined in the Original Indenture (but not
otherwise defined herein) shall have the same meaning herein as in the Original Indenture. All
other terms used in this First Supplemental Indenture that are defined in the Trust Indenture Act
or that are by reference therein defined in the Securities Act (except as herein otherwise
expressly provided or unless the context otherwise requires) shall have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the
execution of this First Supplemental Indenture. The words “herein,” “hereof,” “hereunder,” and
words of similar import refer to this First Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision. The terms defined in this Article include the
plural as well as the singular.“Additional Interest” shall have the meanings specified in Section
4.02.

     “Applicable Conversion Rate” means, for each $1,000 principal amount of Notes to be converted,
the sum of the Daily Conversion Rate Fractions for each Trading Day during the 20 Trading Days in
the relevant Observation Period for such Notes.

     “Base Conversion Price” on any day means, for each $1,000 principal amount of Notes, a dollar
amount (initially, approximately $20.97) equal to $1,000 divided by the Base Conversion Rate in
effect on such day.

     “Base Conversion Rate” means, for each $1,000 principal amount of Notes, 47.6954 shares of
Common Stock, subject to adjustment as set forth herein.

     “Bid Solicitation Agent” means the agent of the Company appointed to obtain quotations for the
Notes as set forth under the definition of Trading Price, which such agent shall
at no time be an Affiliate of the Company. The Company may, from time to time, change the Bid
Solicitation Agent.

2

 

     “Capital Stock” means, for any entity, any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
stock issued by that entity.

     “close of business” means 5:00 p.m. (New York City time).

     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Commission” means the Securities and Exchange Commission.

     “Common Equity” of any Person means Capital Stock of such Person that is generally entitled
(a) to vote in the election of directors of such Person or (b) if such Person is not a corporation,
to vote or otherwise participate in the selection of the governing body, partners, managers or
others that will control the management or policies of such Person.

     “Common Stock” means, subject to Section 8.06, shares of common stock of the Company, par
value $1.00 per share, at the date of this First Supplemental Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and that have no
preference in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and that are not subject to
redemption by the Company; provided that if at any time there shall be more than one such resulting
class, the shares of each such class then so issuable shall be substantially in the proportion that
the total number of shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such reclassifications.

     “Company” means Champion Enterprises, Inc., a Michigan corporation, and subject to the
provisions of Article 7, shall include its successors and assigns.

     “Company Notice” shall have the meaning specified in Section 9.01(b).

     “Company Order” means a written order of the Company, signed by (a) the Company’s Chief
Executive Officer, President, Executive or Senior Vice President, Managing Director or any Vice
President (whether or not designated by a number or numbers or word or words added before or after
the title “Vice President”) and (b) any such other officer designated in clause (a) of this
definition or the Company’s Treasurer or Assistant Treasurer or Secretary or any Assistant
Secretary, and delivered to the Trustee.

     “Contingent Debt Regulations” shall have the meaning specified in Section 2.08(a).

     “Continuing Director” means a director who either was a member of the Board of Directors on
October 29, 2007 or who becomes a member of the Board of Directors subsequent to that date and
whose election, appointment or nomination for election by the shareholders of
the Company, is duly approved by a majority of the Continuing Directors on the Board of
Directors at the time of such approval, either by a specific vote or by approval of the proxy
statement issued by the Company on behalf of the entire Board of Directors in which such individual
is named as nominee for director.

     “Conversion Agent” shall have the meaning specified in Section 3.02.

3

 

     “Conversion Date” shall have the meaning specified in Section 8.02(c).

     “Conversion Obligation” shall have the meaning specified in Section 8.01.

     “Custodian” means Wells Fargo Bank, N.A., as custodian for The Depository Trust Company, with
respect to the Notes in global form, or any successor entity thereto.

     “Daily Conversion Rate Fraction” means, in respect of any conversion of Notes, a number of
shares of Common Stock for each Trading Day during the relevant Observation Period determined as
follows:

          (a) if the Last Reported Sale Price of the Common Stock on such Trading Day is less than or
equal to the Base Conversion Price, the Daily Conversion Rate Fraction for such Trading Day shall
be equal to the Base Conversion Rate divided by 20; and

          (b) if the Last Reported Sale Price of the Common Stock on such Trading Day is greater than
the Base Conversion Price, the Daily Conversion Rate Fraction for such Trading Day shall be equal
to 1/20th of the following:

	 	 	 	 	 
	 

	 	Last Reported Sale Price	 	 
	 
	 	of our Common Stock on such Trading Day	 	 
	Base Conversion Rate +
	 	– Base Conversion Price
	 	x Incremental Share Factor
	 
	 	 	 	 
	 
	 	Last Reported Sale Price	 	 
	 
	 	of our Common Stock on such Trading Day	 	 

     Notwithstanding the foregoing, if the Daily Conversion Rate Fraction for any Trading Day in
the relevant Observation Period would otherwise be greater than the Daily Share Cap, the Daily Conversion Rate
Fraction for such Trading Day shall be equal to the Daily Share Cap.

     “Daily Share Cap” means, in respect of each $1,000 principal amount of Notes, one-twentieth of
86.8056, subject to adjustment in the same manner as the Base Conversion Rate as set forth herein.

     “Defaulted Interest” means any interest on any Note that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date.

     “Designated Institution” shall have the meaning specified in Section 8.02(k).

     “Distributed Property” shall have the meaning specified in Section 8.04(c).

     “Effective Date” shall have the meaning specified in Section 8.03(a).

     “Ex-Dividend Date” means, with respect to any issuance, dividend or distribution in which the
holders of Common Stock (or other security) have the right to receive any cash, securities or other
property, the first date on which the shares of the Common Stock (or other security) trade on the
applicable exchange or in the applicable market, regular way, without the right to receive the
issuance, dividend or distribution in question.

4

 

     “Fundamental Change” means the occurrence after the original issuance of the Notes of any of
the following events:

     (a) any “person” or “group” (within the meaning of Section 13(d) of the Exchange Act) other
than the Company, its Subsidiaries or the employee benefit plans of the Company or any such
Subsidiary, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing
that such person or group has become the direct or indirect ultimate “beneficial owner,” as defined
in Rule 13d-3 under the Exchange Act, of the Company’s Common Equity representing more than 50% of
the voting power of the Company’s Common Equity;

     (b) consummation of any share exchange, exchange offer, tender offer, consolidation or merger
of the Company or similar transaction pursuant to which the Common Stock will be converted into
cash, securities or other property (other than any transaction or event pursuant to which holders
of Common Stock immediately prior to such transaction or event have the entitlement to exercise,
directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock
entitled to vote generally in elections of directors of the continuing or surviving or successor
Person immediately after the consummation of such transaction or event) or any sale, lease or other
transfer in one transaction or a series of transactions of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person other than
one of the Company’s Subsidiaries;

     (c) Continuing Directors cease to constitute at least a majority of the Board of Directors;

     (d) the shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or

     (e) the Common Stock ceases to be listed on a United States national or regional securities
exchange.

For purposes of this definition, whether a “person” is a “beneficial owner” shall be determined in
accordance with Rule 13d-3 under the Exchange Act and “person” includes any syndicate or group that
would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

     Notwithstanding the foregoing, a Fundamental Change shall not be deemed to have occurred if at
least 90% of the consideration, excluding cash payments for fractional shares, in the share
exchange, exchange offer, tender offer, consolidation, merger, binding share exchange, sale, lease
or other transfer consists of shares of Publicly Traded Securities, and as a result of such share
exchange, exchange offer, tender offer, consolidation, merger, sale, lease or other transfer, the
Notes become convertible into such Publicly Traded Securities, excluding cash payments for
fractional shares (subject to the provisions of Section 8.02(a)).

     “Fundamental Change Company Notice” shall have the meaning specified in Section 9.02(b).

     “Fundamental Change Expiration Time” shall have the meaning specified in Section 9.02(b)(ix).

5

 

     “Fundamental Change Repurchase Date” shall have the meaning specified in Section 9.04(a).

     “Fundamental Change Repurchase Notice” shall have the meaning specified in Section 9.02(a)(i).

     “Fundamental Change Repurchase Price” shall have the meaning specified in Section 9.02(a).

     “Global Note” shall have the meaning specified in Section 2.05(b).

     “Incremental Share Factor” means initially 39.1102, subject to the same proportional
adjustment as the Base Conversion Rate as set forth herein.

     “Indenture” means the Original Indenture, as amended and supplemented by this First
Supplemental Indenture and, if further amended or supplemented as herein provided, as so amended or
supplemented.

     “interest” means, when used with reference to the Notes, any interest payable under the terms
of the Notes, including (unless context otherwise requires) Defaulted Interest, if any, and
Additional Interest, if any.

     “Interest Payment Date” means each May 1 and November 1 of each year, beginning on May 1,
2008.

     “Interest Record Date,” with respect to any Interest Payment Date, shall mean the April 15 or
October 15 (whether or not such day is a Business Day) immediately preceding the applicable May 1
or November 1 Interest Payment Date, respectively.

     “Last Reported Sale Price” of the Common Stock on any date means the closing sale price per
share (or if no closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid and the average ask prices) on
that date as reported in composite transactions for the principal U.S. national or regional
securities exchange on which the Common Stock is listed for trading. If the Common Stock is not
listed for trading on a U.S. national or regional securities exchange on the relevant date, then
the “Last Reported Sale Price” will be the last quoted bid price for the Common Stock in the
over-the-counter market on the relevant date as reported by the National Quotation Bureau or
similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” will be
the average of the mid-point of the last bid and ask prices for the Common Stock on the relevant
date from each of at least three nationally recognized independent investment banking firms
selected by the Company for this purpose.

     “Make-Whole Conversion Rate Adjustment” shall have the meaning specified in Section 8.03(a).

     “Make-Whole Fundamental Change” means any transaction or event that constitutes a Fundamental
Change as described in clause (a) or (b) of the definition thereof (determined without regard to
the parenthetical “(other than any transaction or event pursuant to which

6

 

holders of Common Stock
immediately prior to such transaction or event have the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power of all shares of Capital Stock entitled to vote
generally in elections of directors of the continuing or surviving or successor Person immediately
after the consummation of such transaction or event)” in such clause (b)).

     “Maturity Date” means November 1, 2037.

     “Merger Event” shall have the meaning specified in Section 8.06.

     “Note” or “Notes” shall mean any note or notes, as the case may be, authenticated and
delivered under this First Supplemental Indenture.

     “Noteholder” or “holder,” as applied to any Note, or other similar terms (but excluding the
term “beneficial holder”), shall mean any person in whose name at the time a particular Note is
registered on the Note Register.

     “Note Register” shall have the meaning specified in Section 2.05(a).

     “Note Registrar” shall have the meaning specified in Section 2.05(a).

     “Notice of Conversion” shall have the meaning specified in Section 8.02(b).

     “Observation Period” means, with respect to any Note surrendered for conversion, the twenty
consecutive Trading Day period beginning, on and including, the second Trading Day after the
Conversion Date for such Note; provided that with respect to any Conversion Date that is on or
after the twenty-fourth Scheduled Trading Day immediately preceding the Maturity Date, the
“Observation Period” shall mean the twenty consecutive Trading Days beginning on,
and including, the twenty-second Scheduled Trading Day immediately preceding the Maturity
Date.

     “open of business” means 9:00 a.m. (New York City time).

     “Original Indenture” means the indenture for Senior Debt Securities dated as of November 2,
2007 by and between the Company and the Trustee.

     “Paying Agent” shall have the meaning specified in Section 3.02.

     “Publicly Traded Securities” means shares of common stock or American Depositary Receipts in
respect of common stock that are traded on a U.S. national securities exchange or that will be so
traded when issued or exchanged in connection with a Fundamental Change.

     “Record Date” shall have the meaning specified in Section 8.04(f).

     “Redemption Date” shall have the meaning specified in Section 10.01(a).

     “Redemption Price” shall have the meaning specified in Section 10.01(a).

     “Reference Property” shall have the meaning specified in Section 8.06(b).

7

 

     “Repurchase Date” shall have the meaning specified in Section 9.01(a).

     “Repurchase Notice” shall have the meaning specified in Section 9.01(c)(i).

     “Repurchase Price” shall have the meaning specified in Section 9.01(a).

     “Scheduled Trading Day” means any day that is scheduled to be a Trading Day.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

     “Spin-Off” shall have the meaning specified in Section 8.04(c).

     “Stock Price” means (a) in the case of a Make-Whole Fundamental Change constituting a share
exchange, exchange offer, tender offer, consolidation, merger or similar transaction described in
clause (b) of the definition of Fundamental Change in which holders of Common Stock receive solely
cash consideration in connection with such Make-Whole Fundamental Change, the amount of cash paid
per share of the Common Stock and (b) in the case of all other Make-Whole Fundamental Changes, the
average of the Last Reported Sale Prices per share of Common Stock over the period of five
consecutive Trading Days ending on the Trading Day immediately preceding the Effective Date of such
Make-Whole Fundamental Change. The Board of Directors will make appropriate adjustments, in its
good faith determination, to account for any adjustment to the Base Conversion Rate that becomes
effective, or any event requiring an
adjustment to the Base Conversion Rate where the Ex-Dividend Date of the event occurs, during
such five consecutive Trading Day period.

     “Successor Company” shall have the meaning specified in Section 7.01(a).

     “Tax Original Issue Discount” means the amount of ordinary interest income on a Security that
must be accrued as original issue discount for U.S. federal income tax purposes pursuant to
Treasury regulation Section 1.1275-4 or any successor thereto.

     “Trading Day” means a day during which trading in the Common Stock generally occurs on the
principal U.S. national or regional securities exchange on which the Common Stock is listed for
trading; provided that if the Common Stock is not listed for trading on a U.S. national or regional
securities exchange, “Trading Day” will mean a Business Day.

     “Trading Price” with respect to the Notes, on any date of determination means the average of
the secondary market bid quotations obtained by the Bid Solicitation Agent for $5.0 million
principal amount of Notes at approximately 3:30 p.m., New York City time, on such determination
date from three independent nationally recognized securities dealers selected by the Company;
provided that if three such bids cannot reasonably be obtained by the Bid Solicitation Agent, but
two such bids are obtained, then the average of the two bids shall be used, and if only one such
bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used. If the
Bid Solicitation Agent cannot reasonably obtain at least one bid for $5.0 million principal amount
of Notes from any such nationally recognized securities dealer or the Company determines in its
reasonable judgment that the bids are not indicative of the secondary market value of the Notes,
then the Trading Price per $1,000 principal amount of Notes will

8

 

equal (1) the Applicable
Conversion Rate of the Notes as of such determination date multiplied by (2) the average Last
Reported Sale Price of the Common Stock for the five consecutive Trading Days ending on such
determination date. Solely for purposes of determining the Trading Price of the Notes as set forth
in the immediately preceding sentence, the “Applicable Conversion Rate” on any day will be (a) if
the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding such day
is less than or equal to the Base Conversion Price, the Base Conversion Rate and (b) if such Last
Reported Sale Price is greater than the Base Conversion Price, the Base Conversion Rate plus a
number of shares of Common Stock equal to the product of (i) the Incremental Share Factor and (ii)
(A) the difference between such Last Reported Sale Price and the Base Conversion Price divided by
(B) such Last Reported Sale Price.

     “Trigger Event” shall have the meaning specified in Section 8.04(c).

     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, as it was in force at
the date of execution of this First Supplemental Indenture, except as provided in Section 8.06;
provided, however, that in the event the Trust Indenture Act of 1939 is amended after the date
hereof, the term “Trust Indenture Act” shall mean, to the extent required by such amendment, the
Trust Indenture Act of 1939, as so amended.

     “Trustee” means the Person named as the “Trustee” in the first paragraph of this First
Supplemental Indenture until a successor Trustee shall have become such pursuant to the applicable
provisions of this First Supplemental Indenture, and thereafter “Trustee” shall mean or include
each Person who is then a Trustee hereunder.

     “Weighted Average Consideration” shall have the meaning specified in Section 8.06(c)(iv).

ARTICLE 2

Issue, Description, Execution, Registration

and Exchange of Notes

     Section 2.01. Designation and Amount. The Notes shall be designated as the “2.75%
Convertible Senior Notes due 2037.” The Notes that may be authenticated and delivered under this
First Supplemental Indenture is initially limited to $180,000,000 subject to Section 2.07 and except for Notes authenticated and delivered
upon registration or transfer of, or in exchange for, or in lieu of other Notes pursuant to Section
2.05, Section 8.02, Section 9.04, Section 10.02 hereof
and Section 2.07 of the Original Indenture

9

 

     Section 2.02. Form of Notes. The Notes and the Trustee’s certificate of authentication to be
borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, which
are incorporated in and made a part of this First Supplemental Indenture.

     Any of the Notes may have such letters, numbers or other marks of identification and such
notations, legends or endorsements as the officers executing the same may approve (execution
thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions
of this First Supplemental Indenture, or as may be required to comply with any law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any securities exchange or
automated quotation system on which the Notes may be listed or designated for issuance, or to
conform to usage or to indicate any special limitations or restrictions to which any particular
Notes are subject.

     The Global Note shall represent such principal amount of the Outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate principal amount of
Outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of
Outstanding Notes represented thereby may from time to time be increased or reduced to
reflect repurchases, conversions, transfers or exchanges permitted hereby. Any endorsement of
the Global Note to reflect the amount of any increase or decrease in the amount of Outstanding
Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the
Trustee, in such manner and upon instructions given by the holder of such Notes in accordance with
this First Supplemental Indenture. Payment of principal, accrued and unpaid interest, and
Additional Interest, if any, and premium, if any (including any Fundamental Change Repurchase
Price, Repurchase Price or Redemption Price), on the Global Note shall be made to the holder of
such Note on the date of payment, unless a record date or other means of determining holders
eligible to receive payment is provided for herein.

     The terms and provisions contained in the form of Note attached as Exhibit A hereto shall
constitute, and are hereby expressly made, a part of this First Supplemental Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery of this First
Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.

     Section 2.03. Date and Denomination of Notes; Payments of Interest. The Notes shall be
issuable in registered form without coupons in denominations of $1,000 principal amount and
integral multiples thereof. Each Note shall be dated the date of its authentication and shall bear
interest from the date specified on the face of the form of Note attached as Exhibit A hereto.
Interest on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day
months.

     The Person in whose name any Note (or its Predecessor Security) is registered on the Note
Register at the close of business on any Interest Record Date with respect to any Interest Payment
Date shall be entitled to receive the interest payable on such Interest Payment Date. Interest
(including Additional Interest, if any) shall be payable at the office or agency of the Company
maintained by the Company for such purposes in the United States, which shall initially be the
office of the Paying Agent at Corporate Trust Services, MAC
N9303-121, Corporate Trust Services, North Star East – 12th
floor, 608 - 2nd Avenue South,
Minneapolis, MN 55479. The Company shall pay interest (including Additional Interest, if any) (a)
on any Notes in certificated form by check mailed to the address

10

 

of the Person entitled thereto as
it appears in the Note Register (or upon written application by such Person to the Trustee and
Paying Agent (if different from the Trustee) not later than the relevant Interest Record Date, by
wire transfer in immediately available funds to such Person’s account within the United States, if
such Person is entitled to interest on an aggregate principal in excess of $1,000,000, which
application shall remain in effect until the Noteholder notifies the Trustee and Paying Agent to
the contrary) or (b) on any Global Note by wire transfer of immediately available funds to the
account of the Depositary or its nominee.

     Section 2.04. Payments of Additional Interest. If required by Section 4.02, each Note shall
pay Additional Interest in the manner set forth herein. Whenever in this First Supplemental
Indenture there is mentioned, in any context, the payment of the principal of, premium, if any, or
interest on, or in respect of, any Note, such mention shall be deemed to include mention of the
payment of “Additional Interest” provided for in Section 4.02 to the extent that, in such context,
Additional Interest is, was or would be payable in respect thereof and express mention of the
payment of Additional Interest (if applicable) in any provisions hereof shall not be construed
as excluding Additional Interest in those provisions hereof where such express mention is not made.

     Section 2.05. Exchange and Registration of Transfer of Notes; Depositary.

     (a) The Company shall cause to be kept at the Corporate Trust Office a register (the register
maintained in such office or in any other office or agency of the Company designated pursuant to
Section 3.02 being herein sometimes collectively referred to as the “Note Register”, which Note
Register shall constitute a Security Register (as such term is defined in the Original Indenture))
in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. Such register shall be in written form or in
any form capable of being converted into written form within a reasonable period of time. The
Trustee is hereby appointed “Note Registrar” and Security Registrar (as such term is defined in the
Original Indenture) for the purpose of registering Notes and transfers of Notes as herein provided.
The Company may appoint one or more co-registrars in accordance with Section 3.02.

     Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at any such office or agency
maintained by the Company pursuant to Section 3.02. Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that
the Noteholder making the exchange is entitled to receive, bearing registration numbers not
contemporaneously outstanding.

     None of the Company, the Trustee, the Note Registrar or any co-registrar shall be required to
exchange or register a transfer of (i) any Notes surrendered for conversion or, if a portion of any
Note is surrendered for conversion, such portion thereof surrendered for conversion or (ii) any
Notes, or a portion of any Note, surrendered for repurchase (and not withdrawn) in accordance with
Article 9 hereof.

     All Notes issued upon any registration of transfer or exchange of Notes in accordance with
this First Supplemental Indenture shall be the valid obligations of the Company, evidencing

11

 

the
same debt, and entitled to the same benefits under this First Supplemental Indenture as the Notes
surrendered upon such registration of transfer or exchange.

     (b) So long as the Notes are eligible for book-entry settlement with the Depositary, unless
otherwise required by law, all Notes shall be represented by one or more Notes in global form
(each, a “Global Note”) registered in the name of the Depositary or the nominee of the Depositary.
The transfer and exchange of beneficial interests in a Global Note that does not involve the
issuance of a definitive Note, shall be effected through the Depositary (but not the Trustee or the
Custodian) in accordance with this First Supplemental Indenture and the procedures of the
Depositary therefor.

     Notwithstanding any other provisions of the Indenture (other than the provisions set forth in
this Section 2.05(b)), a Global Note may not be transferred as a whole or in part except (i) by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary and (ii) for transfers of portions of a Global
Note in certificated form made upon request of a member of, or a participant in, the Depositary
(for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on
behalf of the Depositary in accordance with customary procedures of the Depositary and in
compliance with this Section.

     The Depositary shall be a clearing agency registered under the Exchange Act. The Company
initially appoints The Depository Trust Company to act as Depositary with respect to the Global
Note. Initially, the Global Note shall be issued to the Depositary, registered in the name of Cede
& Co., as the nominee of the Depositary, and deposited with the
Trustee as Custodian for the Depositary.

     If (i) the Depositary notifies the Company at any time that the Depositary is unwilling or
unable to continue as depositary for the Global Notes and a successor depositary is not appointed
within 90 calendar days, (ii) the Depositary ceases to be registered as a clearing agency under the Exchange
Act and a successor depositary is not appointed within 90 calendar days or (iii) an Event of Default in
respect of the Notes has occurred and is continuing, and any Noteholder has requested that the
Notes be issued in definitive form in exchange for a Global Note, the Company will execute, and the
Trustee, upon receipt of an Officers’ Certificate and a Company Order for the authentication and
delivery of Notes, will authenticate and deliver Notes in definitive form to each person that the
Depositary identifies as a beneficial owner of the related Notes (or a portion thereof) in an
aggregate principal amount equal to the principal amount of such Global Note, in exchange for such
Global Note, and upon delivery of the Global Note to the Trustee such Global Note shall be
canceled.

     Definitive Notes issued in exchange for all or a part of the Global Note pursuant to this
Section 2.05(b) shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such definitive
Notes to the Persons in whose names such definitive Notes are so registered.

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     At such time as all interests in a Global Note have been converted, canceled, redeemed,
repurchased or transferred, such Global Note shall be, upon receipt thereof, canceled by the
Trustee in accordance with standing procedures and instructions existing between the Depositary and
the Custodian. At any time prior to such cancellation, if any interest in a Global Note is
exchanged for definitive Notes, converted, canceled, repurchased or transferred to a transferee who
receives definitive Notes therefor or any definitive Note is exchanged or transferred for part of
such Global Note, the principal amount of such Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian, be appropriately
reduced or increased, as the case may be, and an endorsement shall be made on
such Global Note, by the Trustee or the Custodian, at the direction of the Trustee, to reflect
such reduction or increase.

     None
of the Company, the Trustee, nor any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

     Section 2.06. CUSIP Numbers. The Company in issuing the Notes may use “CUSIP” numbers (if
then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in all notices issued to
Noteholders as a convenience to holders of the Notes; provided, that any such notice may state that
no representation is made as to the correctness of such numbers either as printed on the Notes or
on such notice and that reliance may be placed only on the other identification numbers printed on
the Notes. The Company will promptly notify the Trustee in writing of any change in the “CUSIP”
numbers.

     Section 2.07. Additional Notes; Repurchases. The Company may, without the consent of the
Noteholders and notwithstanding Section 2.01, reopen this First Supplemental Indenture and issue
additional Notes hereunder with the same terms and with the same CUSIP number as the Notes
initially issued hereunder in an unlimited aggregate principal amount, which will form the same
series with the Notes initially issued hereunder; provided that no such additional Notes may be
issued unless the additional Notes will be part of the same issue as the Notes initially issued
hereunder for U.S. federal income tax purposes. Prior to the issuance of any such additional
Notes, the Company shall deliver to the Trustee a Company Order, an Officers’ Certificate and an
Opinion of Counsel, such Officers’ Certificate and Opinion of Counsel to cover such matters, in
addition to those required by Section 13.07 of the Original Indenture, as the Trustee shall
reasonably request. The Company may also from time to time repurchase the Notes in open market
purchases or negotiated transactions without prior notice to Noteholders.

     Section 2.08. Contingent Debt Tax Treatment.

     (a) The Company and each Noteholder, by acquiring a beneficial interest in a Note, agree (i)
to treat the Note as indebtedness for U.S. federal income tax
purposes that is subject to Treasury regulation Section 1.1275-4 or
any successor thereto (the “Contingent Debt
Regulations”), (ii) that each Noteholder shall be bound by the Company’s application of the
Contingent Debt Regulations to the Note, including the Company’s determination of the “comparable
yield” and “projected payment schedule” within the meaning of the Contingent Debt Regulations,
(iii) to treat the cash and the fair market value of any Common Stock received

13

 

upon the conversion
of the Note as a contingent payment for purposes of the Contingent Debt Regulations, (iv) to accrue
interest with respect to the outstanding Note as Tax Original Issue Discount according to the
“noncontingent bond method” set forth in the Contingent Debt Regulations, using the comparable
yield of 9.73% compounded semi-annually and (v) that the Company and each Noteholder will not take
any position on any U.S. federal income tax return that is inconsistent with (i), (ii), (iii) or
(iv) unless required by applicable law. A Noteholder may
obtain the issue price, the amount of Tax Original Issue Discount, issue date, yield to
maturity, comparable yield and projected payment schedule for the Notes, as determined by the
Company pursuant to the Contingent Debt Regulations, by submitting a written request to the Company
at the following address: Champion Enterprises, Inc., 2701 Cambridge Court, Suite 300, Auburn
Hills, MI 48326, Attention: Investor Relations.

     (b) Each Note shall bear a legend relating to U.S. federal income tax matters in the form set
forth in Exhibit A.

     Section 2.09.
Calculation of Tax Original Issue Discount. The
Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice
specifying the amount of Tax Original Issue Discount (including daily rates and accrual periods)
accrued on outstanding Notes as of the end of such year and (ii) such other specific information
relating to such Tax Original Issue Discount as may then be required under the Code or the Treasury
regulations promulgated thereunder.

ARTICLE 3

Particular Covenants of the Company

     Section 3.01. Payment of Principal, Premium, Interest and Additional Interest. The Company
covenants and agrees that it will cause to be paid the principal of and premium, if any (including
the Fundamental Change Repurchase Price, the Repurchase Price and Redemption Price), and accrued
and unpaid interest and Additional Interest, if any, on each of the Notes at the places, at the
respective times and in the manner provided herein and in the Notes. Each installment of interest,
and Additional Interest, if any, on the Notes, may be paid by mailing checks for the amount payable
to Noteholders entitled thereto as they shall appear on the registry books of the Company; provided
that, with respect to any Noteholder with an aggregate principal amount in excess of $1,000,000, at
the application of such holder in writing to the Trustee and Paying Agent (if different from the
Trustee) not later than the relevant Interest Record Date, interest and Additional Interest, if
any, on such holder’s Notes shall be paid by wire transfer in immediately available funds to such
holder’s account in the United States, which application shall remain in effect until the
Noteholder notifies the Trustee and Paying Agent to the contrary; provided further that payment of
interest and Additional Interest, if any, made to the Depositary shall be paid by wire transfer in
immediately available funds in accordance with such wire transfer instructions and other procedures
provided by the Depositary from time to time.

     Section 3.02. Maintenance of Office or Agency. The Company will maintain in the United
States, an office or agency where the Notes may be surrendered for registration of transfer or
exchange or for presentation for payment, repurchase or redemption (“Paying Agent”) or for
conversion (“Conversion Agent”) and where notices and demands to or upon the

14

 

Company in respect of
the Notes and the Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or agency. If at any time
the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust Office or the office
or agency of the Trustee.

     The Company may also from time to time designate co-registrars one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; provided that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency in the United
States, for such purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other office or agency.
The terms “Paying Agent” and “Conversion Agent” include any such additional or other offices or
agencies, as applicable.

     The Company hereby initially designates the Trustee as the Paying Agent, Note Registrar,
Custodian, Bid Solicitation Agent and Conversion Agent and the Corporate Trust Office and the
office or agency of the Trustee each shall be considered as one such office or agency of the
Company for each of the aforesaid purposes.

     Section 3.03. Existence. Subject to Article 7, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate existence.

     Section 3.04. Stay, Extension and Usury Laws. The Company covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law or other law that would
prohibit or forgive the Company from paying all or any portion of the principal of or interest on
the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that
may affect the covenants or the performance of the Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.

     Section 3.05. Compliance Certificate; Statements as to Defaults. The Company shall deliver
to the Trustee within 120 calendar days after the end of each fiscal year of the Company (beginning with the
fiscal year ending on December 31, 2007) an Officers’
Certificate stating whether or not each  signer
thereof has knowledge of any failure by the Company to comply with all conditions and covenants
then required to be performed under the Indenture and, if so, specifying each such failure and the
nature thereof.

     In addition, the Company shall deliver to the Trustee, as soon as possible and in any event
within thirty calendar days after the Company becomes aware of the occurrence of any Event of Default or
Default, an Officers’ Certificate setting forth the details of such Event of Default or Default,
its status and the action that the Company proposes to take with respect thereto.

15

 

     Section 3.06. Additional Interest. If Additional Interest is payable by the Company, the
Company shall deliver to the Trustee an Officers’ Certificate to that effect stating (a) the amount
of such Additional Interest that is payable and (b) the date on which such interest is payable.
Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a
certificate, the Trustee may assume without inquiry that no such Additional Interest is payable.

     Section 3.07. Further Instruments and Acts. Upon request of the Trustee, the Company will
execute and deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purposes of this First Supplemental
Indenture.

     Section 3.08. Reporting Obligations. (a) The Company shall deliver to the Trustee (unless
such reports have been filed within the time period set forth below on the Commission’s Electronic
Data Gathering, Analysis and Retrieval system), within 15 calendar days after the Company would
have been required to file with the Commission, copies of its annual reports and of information,
documents and other reports (or copies of such portions of any of the foregoing as the Commission
may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant
to Section 13 or 15(d) of the Exchange Act.

     (b) In the event and for as long as the Company is not subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, it shall continue to provide the Trustee with reports
containing substantially the same information as would have been required to be filed with the
Commission had the Company continued to have been subject to such reporting requirements and also
mail such documents to each Noteholder at such Noteholder’s registered address, upon the request of
any Noteholder or beneficial holder of the Notes or the Common Stock issued upon conversion
thereof. In such event, such reports shall be provided within
15 calendar days after the dates, applicable
to a registrant that is not an accelerated filer or a large accelerated filer, on which the Company
would have been required to provide reports had it continued to have been subject to Section 13 or
15(d) of the Exchange Act.

     (c) The Company also shall comply with the other provisions of Section 314(a) of the Trust
Indenture Act.

ARTICLE 4

Defaults and Remedies

     Section 4.01. Additional Events of Default. In addition to those Events of Default set forth
in Section 6.01 of the Original Indenture, the following events shall also be Events of Default with
respect to the Notes:

     (a) failure by the Company to comply with its obligations under Article 7;

     (b) failure by the Company to issue a Fundamental Change Company Notice when such notice
becomes due in accordance with Section 9.02(b);

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     (c) failure by the Company to comply with its obligations to repurchase the Notes as required
under Article 9;

     (d) failure by the Company to comply with its obligations to redeem the Notes under Article 10
after the Company exercises its option to redeem the Notes;

     (e) default by the Company or any Subsidiary of the Company in the payment of the principal or
interest on any mortgage, agreement or other instrument under which there may be outstanding, or by
which there may be secured or evidenced, any debt for money borrowed in excess of $40 million in
the aggregate of the Company and/or any of its Subsidiaries, whether such debt now exists or shall
hereafter be created, resulting in such debt becoming or being declared due and payable, and such
acceleration shall not have been rescinded or annulled within thirty
calendar days after written notice of
such acceleration has been received by the Company or such Subsidiary;

     (f) a final judgment for the payment of $40 million or more rendered against the Company or
any of its Subsidiaries, and such amount is not covered by insurance or indemnity or not discharged
or stayed within sixty calendar days after (i) the date on which the right to appeal thereof has expired if
no such appeal has commenced, or (ii) the date on which all rights to appeal have been
extinguished;

     (g) the Company or any Subsidiary of the Company that is a “significant subsidiary” (as
defined in Regulation S-X under the Exchange Act) or any group of Subsidiaries of the Company that
in the aggregate would constitute a “significant subsidiary” shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with respect to the Company or
any such Subsidiary or group of Subsidiaries or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of the Company or any such Subsidiary or group of
Subsidiaries or any substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due; or

     (h) an involuntary case or other proceeding shall be commenced against the Company or any
Subsidiary of the Company that is a “significant subsidiary” (as defined in Regulation S-X under
the Exchange Act) or any group of Subsidiaries of the Company that in the aggregate would
constitute a “significant subsidiary” seeking liquidation, reorganization or other relief with
respect to the Company or such Subsidiary or group of Subsidiaries or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of the Company or such
Subsidiary or group of Subsidiaries or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period of ninety
consecutive days.

     Section 4.02. Sole Remedy for Failure to Report. Notwithstanding any other provision of the
Indenture, the sole remedy for an Event of Default relating to the failure to comply with the
reporting obligations under Section 3.08 of this First Supplemental Indenture, or any failure

17

 

to
comply with the requirements of Section 314(a)(1) of the Trust
Indenture Act, will for the 120 calendar days
after the occurrence of such an Event of Default consist exclusively of the right to receive
additional interest on the principal amount of the Notes at a rate equal to 0.25% per annum (the
“Additional Interest”). This Additional Interest will be payable in the same manner and subject to
the same terms as other interest payable under this First Supplemental Indenture. The Additional
Interest will accrue on all Outstanding Notes from, and including, the date on which an Event of
Default relating to a failure to comply with Section 3.08 or Section 314(a)(1) of the Trust
Indenture Act first occurs to, but not including, the 120th calendar day thereafter (or such earlier date on
which the Event of Default relating to the reporting obligations under Section 3.08 or Section
314(a)(1) of the Trust Indenture Act shall have been cured or
waived). On such 120th calendar day (or
earlier, if the Event of Default relating to such reporting obligations is cured or waived prior to
such 120th calendar day), such Additional Interest will cease to accrue and, unless such Event of Default
has been cured or waived, the Notes will be subject to acceleration as provided
in the Indenture. For the avoidance of doubt, the provisions of this Section 4.02 will not affect
the rights of Noteholders in the event of the occurrence of any other Event of Default.

     In
order to elect to pay the Additional Interest as the sole remedy
during the first 120 calendar days
after the occurrence of an Event of Default relating to the failure to comply with Section 3.08 or
the requirements of Section 314(a)(1) of the Trust Indenture Act, the Company must notify all
Noteholders and the Trustee and Paying Agent in writing of such election on or before the close of
business on the date on which such Event of Default occurs, which
will be the 60th calendar day after
receipt by the Company of notice of its failure to so comply.

ARTICLE 5

Noteholders’ Meetings

     Section 5.01. Purpose of Meetings. A meeting of Noteholders may be called at any time and
from time to time pursuant to the provisions of this Article 5 for any of the following purposes:

     (a) to give any notice to the Company or to the Trustee or to give any directions to the
Trustee permitted under this First Supplemental Indenture, or to consent to the waiving of any
Default or Event of Default hereunder and its consequences, or to take any other action authorized
to be taken by Noteholders pursuant to any of the provisions of
Article 4 of this First Supplemental Indenture and Article 6 of the
Original Indenture;

     (b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of
Article 7 of the Original Indenture;

     (c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to
the provisions of Section 6.02 of this First Supplemental
Indenture and Section 9.02 of the Original
Indenture; or

     (d) to take any other action authorized to be taken by or on behalf of the holders of any
specified aggregate principal amount of the Notes under any other provision of this First
Supplemental Indenture or under applicable law.

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     Section 5.02. Call of Meetings by Trustee. The Trustee may at any time call a meeting of
Noteholders to take any action specified in Section 5.01, to be held at such time and at such place
as the Trustee shall determine. Notice of every meeting of the Noteholders, setting forth the time
and the place of such meeting and in general terms the action proposed to be taken at such meeting
and the establishment of any record date pursuant to Section 8.01 of the Original Indenture, shall
be mailed to holders of such Notes at their addresses as they shall appear on the Note Register.
Such notice shall also be mailed to the Company. Such notices shall be mailed not less than twenty
nor more than ninety calendar days prior to the date fixed for the meeting.

     Any meeting of Noteholders shall be valid without notice if the holders of all Notes then
Outstanding are present in person or by proxy or if notice is waived before or after the meeting by
the holders of all Notes Outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.

     Section 5.03. Call of Meetings by Company or Noteholders. In case at any time the Company,
pursuant to a Board Resolution, or the holders of at least 10% in aggregate principal amount of the
Notes then Outstanding, shall have requested the Trustee to call a meeting of Noteholders, by
written request setting forth in reasonable detail the action proposed to be taken at the meeting,
and the Trustee shall not have mailed the notice of such meeting
within twenty calendar days after receipt
of such request, then the Company or such Noteholders may determine the time and the place for such
meeting and may call such meeting to take any action authorized in Section 5.01, by mailing notice
thereof as provided in Section 5.02.

     Section 5.04. Qualifications for Voting. To be entitled to vote at any meeting of
Noteholders a Person shall (a) be a holder of one or more Notes on the record date pertaining to
such meeting or (b) be a Person appointed by an instrument in writing as proxy by a holder of one
or more Notes on the record date pertaining to such meeting. The only Persons who shall be
entitled to be present or to speak at any meeting of Noteholders shall be the Persons entitled to
vote at such meeting and their counsel and any representatives of the Trustee and its counsel and
any representatives of the Company and its counsel.

     Section 5.05. Regulations. Notwithstanding any other provisions of this First Supplemental
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of Notes and of
the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the right to vote, and
such other matters concerning the conduct of the meeting as it shall think fit.

     The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting,
unless the meeting shall have been called by the Company or by Noteholders as provided in Section
5.03, in which case the Company or the Noteholders calling the meeting, as the case may be, shall
in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the holders of a majority in principal amount of the Notes
represented at the meeting and entitled to vote at the meeting.

     Subject
to the provisions of Section 8.04 of the Original Indenture, at any meeting of
Noteholders each Noteholder or proxyholder shall be entitled to one vote for each $1,000

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principal
amount of Notes held or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Note challenged as not Outstanding and ruled by the
chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to
vote other than by virtue of Notes held by it or instruments in writing as aforesaid duly
designating it as the proxy to vote on behalf of other Noteholders. Any meeting of Noteholders
duly called pursuant to the provisions of Section 5.02 or Section 5.03 may be adjourned from time
to time by the holders of a majority of the aggregate principal amount of Notes represented at the
meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without
further notice.

     Section 5.06. Voting. The vote upon any resolution submitted to any meeting of Noteholders
shall be by written ballot on which shall be subscribed the signatures of the Noteholders or of
their representatives by proxy and the Outstanding principal amount of the Notes held or
represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes
who shall count all votes cast at the meeting for or against any resolution and who shall make and
file with the secretary of the meeting their verified written reports in duplicate of all votes
cast at the meeting. A record in duplicate of the proceedings of each meeting of Noteholders shall
be prepared by the secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in Section 5.02. The record shall show the
principal amount of the Notes voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.

     Any record so signed and verified shall be conclusive evidence of the matters therein stated.

     Section 5.07. No Delay of Rights by Meeting. Nothing contained in this Article 5 shall be
deemed or construed to authorize or permit, by reason of any call of a meeting of Noteholders or
any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in
the exercise of any right or rights conferred upon or reserved to the Trustee or to the Noteholders
under any of the provisions of this First Supplemental Indenture or of the Notes.

ARTICLE 6

Modifications and amendments

     Section 6.01. Modifications and Amendments Without Consent of Noteholders. In addition to the
matters described in the proviso to Section 9.01 of the Original Indenture, the Company and the
Trustee may from time to time and at any time enter into an
indenture, supplemental indenture or amendment to this First
Supplemental Indenture (which shall conform to the provisions of the Trust Indenture Act as then in effect),
without the consent of the Noteholders, for one or more of the following purposes:

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     (a) to provide for the assumption by a Successor Company of the obligations of the Company
under this Indenture pursuant to Article 7; and

     (b) to make provisions with respect to the conversion of the Notes as required by Section
8.06.

     Upon the written request of the Company, accompanied by a Board Resolution authorizing the
execution of such indenture, supplemental indenture or amendment, the Trustee is hereby authorized to join with the Company
in the execution of any such indenture, supplemental indenture or
amendment, to make any further appropriate agreements and
stipulations that may be therein contained and to accept the conveyance, transfer and assignment of
any property thereunder, but the Trustee shall not be obligated to, but may in its discretion,
enter into any indenture, supplemental indenture or amendment that affects the Trustee’s own rights, duties or immunities
under the Indenture or otherwise.

     Any
indenture, supplemental indenture or amendment to this First Supplemental
Indenture authorized by the provisions of this Section 6.01 may be executed
by the Company and the Trustee without the consent of the holders of any of the Notes at the time
outstanding, notwithstanding any of the provisions of
Section 6.02 or Section 9.02 of the Original
Indenture.

     Section 6.02. Modifications and Amendments With Consent of Noteholders. With the consent
(evidenced as provided in Section 8.01 of the Original Indenture) of the holders of at least a
majority in aggregate principal amount of the Notes at the time Outstanding (determined in
accordance with Article 8 of the Original Indenture and including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), the
Company, when authorized by a Board Resolution and the Trustee, at the Company’s expense, may from
time to time enter into an indenture, supplemental indenture or
amendment to this First Supplemental Indenture or the Notes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of this
First Supplemental Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; provided, however, that in addition to the matters described in
the proviso to Section 9.02 of the Original Indenture, with respect to the Notes, no such amendment
shall, without the consent of each Noteholder affected hereby:

     (a) make any change that impairs or adversely affects the conversion rights of any Notes;

     (b) modify the redemption or repurchase provisions contained in Article 9 and Article 10,
respectively, in a manner adverse to the Noteholders;

     (c) reduce any amount payable upon redemption or repurchase of any Note (including the
Fundamental Repurchase Price, the Repurchase Price and the Redemption Price) or change the time at
which or circumstances under which the Notes may or shall be redeemed or repurchased; or

     (d) reduce the Fundamental Change Repurchase Price, Repurchase Price or Redemption Price of
any Note or amend or modify in any manner adverse to the holders of the Notes the Company’s
obligation to make such payments, whether through an amendment or waiver of provisions in the
covenants, definitions or otherwise.

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     It shall not be necessary for the consent of the Noteholders under this Section 6.02 to
approve the particular form of any proposed indenture, supplemental
indenture or amendment to this First
Supplemental Indenture, but it shall be sufficient if such consent
shall approve the substance thereof. After an indenture, supplemental
indenture or amendment under this First Supplemental Indenture
becomes effective, the Company shall send to the holders a notice
briefly describing such indenture, supplemental indenture or
amendment, as applicable. However, the failure to give such notice to all the holders, or any defect in the
notice, will not impair or affect the validity of such indenture,
supplemental indenture or amendment.

ARTICLE 7

Consolidation, Merger, Sale, Conveyance and Lease

     Section 7.01. Company May Consolidate, Etc. on Certain Terms.

     Subject to the provisions of Section 7.02, the Company shall not consolidate with, merge with
or into, or convey, transfer or lease its properties and assets substantially as an entirety to
another Person, unless:

     (a) the resulting, surviving or transferee Person (the “Successor Company”) if not the Company
shall be a corporation organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia, and the Successor Company (if not the Company) shall
expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes, and the Indenture;
and

     (b) immediately after giving effect to such transaction, no Default shall have occurred and be
continuing under the Indenture.

     Upon any such consolidation, merger, conveyance, transfer or lease the resulting, surviving or
transferee (by conveyance, lease or otherwise) Person (if not the Company) shall succeed to, and
may exercise every right and power of, the Company under the Indenture.

     For purposes of this Section 7.01, the conveyance, transfer or lease of the properties and
assets of one or more Subsidiaries of the Company substantially as an entirety to another Person,
which properties and assets, if held by the Company instead of such Subsidiaries, would constitute
the properties and assets of the Company substantially as an entirety on a consolidated basis,
shall be deemed to be the transfer of the properties and assets of the Company substantially as an
entirety to another Person.

     Section 7.02. Successor Corporation to Be Substituted. In case of any such consolidation,
merger, conveyance, transfer or lease and upon the assumption by the Successor Company, by
supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the due and punctual payment of the principal of and premium, if any, accrued and
unpaid interest and accrued and unpaid Additional Interest, if any, on all of the Notes, the due
and punctual delivery or payment, as the case may be, of any consideration due upon conversion of
the Notes and the due and punctual performance of all of the covenants and conditions of the
Indenture to be performed by the Company, such Successor Company shall succeed to and be
substituted for the Company, with the same effect as if it had been named

22

 

herein as the party of
the first part. Such Successor Company thereupon may cause to be signed, and may issue either in
its own name or in the name of the Company any or all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the
order of such Successor Company instead of the Company and subject to all the terms, conditions and
limitations in the Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause
to be authenticated and delivered, any Notes that previously shall have been signed and delivered
by the officers of the Company to the Trustee for authentication, and any Notes that such Successor
Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the
Notes so issued shall in all respects have the same legal rank and benefit under the Indenture as
the Notes theretofore or thereafter issued in accordance with the terms of the Indenture as though
all of such Notes had been issued at the date of the execution hereof. In the event of any such
consolidation, merger, conveyance or transfer (but not in the case of a lease), the Person named as
the “Company” in the first paragraph of this First Supplemental Indenture or any successor that
shall thereafter have become such in the manner prescribed in this Article 7 may be dissolved,
wound up and liquidated at any time thereafter and, except in the case of a lease, such Person
shall be released from its liabilities as obligor and maker of the Notes and from its obligations
under the Indenture.

     In case of any such consolidation, merger, conveyance, transfer or lease, such changes in
phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may
be appropriate.

     Section 7.03. Opinion of Counsel to Be Given Trustee. No merger, consolidation, conveyance,
transfer or lease shall be effective unless the Trustee shall receive an Officers’ Certificate and
an Opinion of Counsel as conclusive evidence that any such consolidation, merger, conveyance,
transfer or lease and any such assumption and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, complies with the provisions of this
Article 7.

ARTICLE 8

Conversion of Notes

     Section 8.01. Right to Convert. Noteholders shall have the right, at such holder’s option,
to convert all or any portion (if the portion to be converted is $1,000 principal amount or an
integral multiple thereof) of such holder’s Note at any time prior to the close of business on the
Business Day immediately preceding the Maturity Date at the Applicable Conversion Rate per $1,000
principal amount Note (subject to the conversion procedures of Section 8.02, the “Conversion
Obligation”).

     Section 8.02. Conversion Procedure.

     (a) Subject to this Section 8.02, the Company will satisfy the Conversion Obligation with
respect to each $1,000 principal amount of Notes surrendered for conversion in shares of fully paid
Common Stock and cash, if applicable, as follows:

23

 

     (i) The Company will, except as provided in Section 8.02(k), deliver to each converting
Noteholder, on the third Trading Day immediately following the last day of the related
Observation Period, a number of shares of Common Stock equal to the Applicable Conversion
Rate.

     (ii) The Company will also, except as provided in Section 8.02(k), deliver to each
converting Noteholder cash in lieu of fractional shares of Common Stock pursuant to Section
8.02(j) below.

     (iii) The Applicable Conversion Rate shall be determined by the Company promptly
following the last day of the Observation Period. Promptly after such determination of the
Applicable Conversion Rate and the corresponding number of shares of Common Stock and the
amount of cash deliverable in lieu of fractional shares, in each case, to be delivered or
paid in respect of the relevant Conversion Obligation, the Company shall notify the Trustee
and the Conversion Agent of such number of shares of Common Stock and such amount of cash in
lieu of fractional shares of Common Stock.
The Trustee and the Conversion Agents shall have no responsibility for any such
determination.

     (b) Before any holder of a Note shall be entitled to convert the same as set forth above, such
holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in
effect at that time and, if required, pay funds equal to interest payable on the next Interest
Payment Date to which such holder is not entitled as set forth in Section 8.02(h) and, if required,
all transfer or similar taxes, if any, as set forth Section 8.02(e) and (ii) in the case of a Note
issued in certificated form, (1) complete and manually sign and deliver an irrevocable notice to
the Conversion Agent in the form on the reverse of such certificated Note (or a facsimile thereof)
(Exhibit B hereto) (a “Notice of Conversion”) at the office of the Conversion Agent and shall state
in writing therein the principal amount of Notes to be converted and the name or names (with
addresses) in which such holder wishes the certificate or certificates for the shares of Common
Stock to be delivered upon settlement of the Conversion Obligation to be registered, (2) surrender
such Notes, duly endorsed to the Company or in blank, at the office of the Conversion Agent, (3) if required, pay funds equal to
interest payable on the next Interest Payment Date to which such holder is not entitled as set
forth in Section 8.02(h), (4) if required, furnish appropriate endorsements and transfer documents,
and (5) if required, pay all transfer or similar taxes, if any, as set forth in Section 8.02(e).
The Trustee (and if different, the relevant Conversion Agent) shall notify the Company of any
conversion pursuant to this Article 8 on the date of such conversion. No Notice of Conversion with
respect to any Notes may be surrendered by a holder thereof if such holder has also delivered a
Fundamental Change Repurchase Notice or Repurchase Notice to the Company in respect of such Notes
and not validly withdrawn such Fundamental Change Repurchase Notice or Repurchase Notice, as the
case may be, in accordance with Section 9.03. In addition, if the Company calls notes for
redemption in accordance with Article 10, a holder may convert the Notes called for redemption at
any time prior to the close of business on the Business Day immediately prior to the Redemption
Date.

     If more than one Note shall be surrendered for conversion at one time by the same holder, the
Conversion Obligation with respect to such Notes, if any, that shall be payable upon

24

 

conversion
shall be computed on the basis of the aggregate principal amount of the Notes (or specified
portions thereof to the extent permitted thereby) so surrendered.

     (c) A Note shall be deemed to have been converted immediately prior to the close of business
on the date (the “Conversion Date”) that the holder has complied with the requirements set forth in
Section 8.02(b) above. The delivery of shares of Common Stock and the payment of cash, if any, in
lieu of fractional shares, pursuant to Section 8.02(a) in satisfaction of the Conversion Obligation
shall be made by the Company in no event later than the date specified in Section 8.02(a) by
issuing or causing to be issued, and delivering to the Conversion Agent or to such holder, or such
holder’s nominee or nominees, certificates or a book-entry transfer through the Depositary for the
number of full shares of Common Stock, and by paying any cash in lieu of fractional shares, to the
holder of a Note surrendered for conversion, or such holder’s nominee or nominees, to which such
holder shall be entitled as part of such Conversion Obligation.

     (d) In case any Note shall be surrendered for partial conversion, the Company shall execute
and the Trustee shall authenticate and deliver to or upon the written order of the holder of the
Note so surrendered, without charge to such holder, a new Note or Notes in authorized denominations
in an aggregate principal amount equal to the unconverted portion of the surrendered Note.

     (e) If a holder submits a Note for conversion, the Company shall pay all documentary, stamp or similar issue or transfer tax, if any, that may be imposed by the United States or any political subdivision thereof or
taxing authority thereof or therein with respect to the issuance of shares of Common Stock, upon
the conversion. However, the holder shall pay any such tax that is due because the holder requests
any such shares of Common Stock to be issued in a name other than the holder’s name. The
Conversion Agent may refuse to deliver the certificates representing the shares of Common Stock
being issued in a name other than the holder’s name until the Trustee receives a sum sufficient to
pay any tax that will be due because the shares are to be issued in a name other than the holder’s
name. Nothing herein shall preclude any tax withholding required by law or regulations.

     (f) Except as provided in Section 8.04, no adjustment shall be made for dividends on any
shares issued upon the conversion of any Note as provided in this Article.

     (g) Upon the conversion of an interest in a Global Note, the Trustee, or the Custodian at the
direction of the Trustee, shall make a notation on such Global Note as to the reduction in the
principal amount represented thereby. The Company shall notify the Trustee in writing of any
conversion of Notes effected through any Conversion Agent other than the Trustee.

     (h) Upon conversion, a Noteholder shall not receive any separate cash payment for accrued and
unpaid interest and Additional Interest, if any, except as set forth below. The Company’s
settlement of the Conversion Obligations as described above shall be deemed to satisfy its
obligation to pay the principal amount of the Note and accrued and unpaid interest and Additional
Interest, if any, to, but not including, the Conversion Date. As a result, accrued and unpaid
interest and Additional Interest, if any, to, but not including, the Conversion Date shall be
deemed to be paid in full rather than cancelled, extinguished or forfeited. Notwithstanding the
preceding sentence, if Notes are converted after the close of business on a Interest Record Date

25

 

but prior to the open of business on the immediately following Interest Payment Date, holders
of such Notes as of the close of business on the Interest Record Date will receive the interest and
Additional Interest, if any, payable on such Notes on the corresponding Interest Payment Date
notwithstanding the conversion. Notes surrendered for conversion during the period from the close
of business on any Interest Record Date but prior to the open of business on the immediately
following Interest Payment Date must be accompanied by payment of an amount equal to the interest
and Additional Interest, if any, payable on the Notes so converted; provided, however, that no such
payment shall be required (1) if the Company has specified a Fundamental Change Repurchase Date,
Repurchase Date or Redemption Date that is after a Interest Record Date but on or prior to the
Business Day immediately following the related Interest Payment Date, (2) to the extent of any
overdue interest, if any, existing at the time of conversion with respect to such Note or (3) if
the Notes are surrendered for conversion after the close of business on the Interest Record Date
immediately preceding the Maturity Date and before the close of business on the Business Day
immediately preceding the Maturity Date. Except as described above, no payment or adjustment will
be made for accrued and unpaid interest and Additional Interest, if any, on converted Notes.

     (i) The Person in whose name the certificate for any shares of Common Stock delivered upon
conversion is registered shall be treated as a shareholder of record as of the close of business on
the last Trading Day of the Observation Period; provided, however, if the last Trading Day of the
Observation Period occurs on any date when the stock transfer books of the Company shall be closed,
such occurrence shall not be effective to constitute the Person or Persons entitled to receive any
such shares of Common Stock due upon conversion as the record holder or holders of such shares of
Common Stock on such date, but such occurrence shall be effective to constitute the Person or
Persons entitled to receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on which such stock transfer books
are open. Upon conversion of Notes, such Person shall no longer be a Noteholder.

     (j) No fractional shares of Common Stock shall be issued upon conversion of any Note or Notes.
For each Note surrendered for conversion, the number of full shares that shall be issued upon
conversion thereof shall be computed on the basis of the Applicable Conversion Rate for the
applicable Observation Period and any fractional shares remaining after such computation shall be
paid in cash. If more than one Note shall be surrendered for conversion at one time by the same
holder, the number of full shares that shall be issued upon conversion thereof shall be computed on
the basis of the aggregate principal amount of the Notes (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock that would otherwise be issued upon
conversion of any Note or Notes (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction (calculated to the nearest one-100th of a share), as
determined by the Company, in an amount equal to the same fraction of the Last Reported Sale Price
of the Common Stock on the last Trading Day of the applicable Observation Period.

     (k) When a Noteholder surrenders Notes for conversion, the Company may direct, in writing, the
Conversion Agent to surrender such Notes to a financial institution designated by the Company (the
“Designated Institution”) for exchange in lieu of conversion. In order to accept any Notes
surrendered for conversion, the Designated Institution must agree to deliver, in

26

 

exchange for such Notes, a number of shares of Common Stock based upon the Applicable
Conversion Rate in full satisfaction of the Conversion Obligation, as
determined pursuant to Section 8.02(a). By
the close of business on the Scheduled Trading Day immediately preceding the start of the
Observation Period, the Company will provide written notification to the Noteholder surrendering
Notes for conversion that it has directed the Designated Institution to make an exchange in lieu of
conversion. If the Designated Institution accepts any such Notes, it will deliver the appropriate
number of shares of Common Stock to the Conversion Agent, and the Conversion Agent will deliver
those shares of Common Stock to the converting Noteholder. Any Notes exchanged by the Designated
Institution will remain Outstanding. If the Designated Institution agrees to accept any Notes for
exchange but does not timely deliver the related shares of Common Stock, or if such Designated
Institution does not accept the Notes for exchange, the Company will, as promptly as practical
thereafter (but in any event, no later than the fourth Trading Day immediately following the last
Trading Day of the relevant Observation Period) convert the Notes into a number of shares of Common
Stock based on the Applicable Conversion Rate, as determined pursuant
to Section 8.02(a). The Company’s designation of a Designated Institution to which the Notes may be submitted for exchange does not
require the Designated Institution to accept any Notes. The Company will not pay any consideration
to, or otherwise enter into any agreement with, the Designated Institution for or with respect to
such designation.

     Section 8.03. Increased Applicable Conversion Rate Applicable to Certain Notes Surrendered in
Connection with Make-Whole Fundamental Changes.

     (a) Notwithstanding anything herein to the contrary, the Applicable Conversion Rate applicable
to each Note that is surrendered for conversion, in accordance with
this Article 8, at any time from, and
including, the Effective Date of a Make-Whole Fundamental Change until, and including, the close of
business on the Business Day immediately prior to the related Fundamental Change Repurchase Date
(or, in the case of a Make-Whole Fundamental Change that does not constitute a Fundamental Change
by virtue of the parenthetical in clause (b) of the definition thereof, the 45th calendar day immediately
following the Effective Date of such Make-Whole Fundamental Change) corresponding to such
Make-Whole Fundamental Change, shall be increased to an amount equal to the Applicable Conversion
Rate that would, but for this Section 8.03, otherwise apply to such Note
pursuant to this Article 8, plus an amount
equal to the Make-Whole Conversion Rate Adjustment.

     As used herein, “Make-Whole Conversion Rate Adjustment” shall mean, with respect
to a Make-Whole Fundamental Change and each applicable Note, the amount set forth in the following table
that corresponds to the effective date of such Make-Whole Fundamental Change (the “Effective Date”)
and the Stock Price for such Make-Whole Fundamental Change:

Make-Whole Conversion Rate Adjustment

(per $1,000 principal amount of Notes)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Stock Price	 
	Effective Date	 	$11.52	 	 	$15.00	 	 	$20.00	 	 	$25.00	 	 	$30.00	 	 	$35.00	 	 	$40.00	 	 	$45.00	 	 	$50.00	 	 	$60.00	 	 	$70.00	 	 	$80.00	 	 	$90.00	 	 	$100.00	 	 	$125.00	 	 	$150.00	 	 	$175.00	 	 	$200.00	 
	November 2, 2007
	 	 	39.1102	 	 	 	32.1896	 	 	 	28.8095	 	 	 	21.8398	 	 	 	16.6211	 	 	 	13.2635	 	 	 	10.9561	 	 	 	9.2870	 	 	 	8.0296	 	 	 	6.2680	 	 	 	5.0953	 	 	 	4.2579	 	 	 	3.6290	 	 	 	3.1389	 	 	 	2.2827	 	 	 	1.7298	 	 	 	1.3447	 	 	 	1.0627	 

27

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Stock Price	 
	Effective Date	 	$11.52	 	 	$15.00	 	 	$20.00	 	 	$25.00	 	 	$30.00	 	 	$35.00	 	 	$40.00	 	 	$45.00	 	 	$50.00	 	 	$60.00	 	 	$70.00	 	 	$80.00	 	 	$90.00	 	 	$100.00	 	 	$125.00	 	 	$150.00	 	 	$175.00	 	 	$200.00	 
	November 1, 2008
	 	 	39.1102	 	 	 	29.7671	 	 	 	26.1360	 	 	 	19.3338	 	 	 	14.3841	 	 	 	11.2965	 	 	 	9.2296	 	 	 	7.7668	 	 	 	6.6839	 	 	 	5.1941	 	 	 	4.2177	 	 	 	3.5262	 	 	 	3.0087	 	 	 	2.6056	 	 	 	1.9004	 	 	 	1.4431	 	 	 	1.1229	 	 	 	0.8876	 
	November 1, 2009
	 	 	39.1102	 	 	 	26.9981	 	 	 	22.9177	 	 	 	16.3003	 	 	 	11.6978	 	 	 	8.9625	 	 	 	7.2071	 	 	 	6.0065	 	 	 	5.1411	 	 	 	3.9805	 	 	 	3.2346	 	 	 	2.7100	 	 	 	2.3177	 	 	 	2.0116	 	 	 	1.4733	 	 	 	1.1214	 	 	 	0.8736	 	 	 	0.6904	 
	November 1, 2010
	 	 	39.1102	 	 	 	23.8111	 	 	 	18.8907	 	 	 	12.4956	 	 	 	8.3970	 	 	 	6.1694	 	 	 	4.8473	 	 	 	3.9969	 	 	 	3.4096	 	 	 	2.6479	 	 	 	2.1654	 	 	 	1.8245	 	 	 	1.5672	 	 	 	1.3645	 	 	 	1.0037	 	 	 	0.7653	 	 	 	0.5964	 	 	 	0.4710	 
	November 1, 2011
	 	 	39.1102	 	 	 	20.1151	 	 	 	13.4314	 	 	 	7.4344	 	 	 	4.2753	 	 	 	2.9057	 	 	 	2.2332	 	 	 	1.8499	 	 	 	1.5984	 	 	 	1.2709	 	 	 	1.0535	 	 	 	0.8935	 	 	 	0.7697	 	 	 	0.6708	 	 	 	0.4929	 	 	 	0.3744	 	 	 	0.2900	 	 	 	0.2271	 
	November 1, 2012
	 	 	39.1102	 	 	 	18.9261	 	 	 	2.2707	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 

     provided, however, that:

     (i) if the actual Stock Price of such Make-Whole Fundamental Change is between two
Stock Prices listed in the table above under the column titled “Stock Price,” or if the
actual Effective Date of such Make-Whole Fundamental Change is between two Effective Dates
listed in the table above in the row immediately below the title “Effective Date,” then the
Make-Whole Conversion Rate Adjustment for such Make-Whole Fundamental Change shall be
determined by the Company by linear interpolation between the Make-Whole Conversion Rate
Adjustment set forth for such higher and lower Stock Prices, or for such earlier and later
Effective Dates based on a 365 day year, as applicable;

     (ii) if the actual Stock Price of such Make-Whole Fundamental Change is greater than
$200 per share (subject to adjustment in the same manner as the Stock Price as provided in
clause (iii) below), or if the actual Stock Price of such Make-Whole Fundamental Change is
less than $11.52 per share (subject to adjustment in the same manner as the Stock Price as
provided in clause (iii) below), then the Make-Whole Conversion Rate Adjustment shall be
equal to zero and this Section 8.03 shall not require the Company to increase the Applicable Conversion
Rate with respect to such Make-Whole Fundamental Change;

     (iii)
if an event occurs that requires, pursuant to this Article 8 (other than solely pursuant
to this Section 8.03), an adjustment to the Applicable Conversion Rate, then, on the date and at the
time such adjustment is so required to be made, each price set forth in the table above
under the column titled “Stock Price” shall be deemed to be adjusted so that such Stock
Price, at and after such time, shall be equal to the product of (1) such Stock Price as in
effect immediately before such adjustment to such Stock Price and (2) a fraction whose
numerator is the Base Conversion Rate in effect immediately before such adjustment to the
Base Conversion Rate and whose denominator is the Base Conversion Rate to be in effect, in
accordance with this Article 8, immediately after such adjustment to the Base Conversion Rate;

     (iv) in the case of a Make-Whole Fundamental Change that is a Fundamental Change
pursuant to clause (b) of the definition thereof pursuant to which the Common Stock will be
converted into cash, securities or other property, upon effectiveness of such Make-Whole
Fundamental Change, the Notes will be convertible into Reference
Property as described in Section 8.06;

     (v) each Make-Whole Conversion Rate Adjustment set forth in the table above shall be
adjusted in the same manner in which, and for the same events for which,

28

 

     the Base Conversion
Rate is to be adjusted pursuant to Section 8.03 through Section 8.04; and

     (vi) in no event will the total number of shares of Common Stock issuable upon
conversion of the Notes exceed 86.8056 per $1,000 principal amount of Notes, subject to
adjustment in the same manner as the Base Conversion Rate pursuant to
Section 8.04.

     (b) As soon as practicable after the Company determines the anticipated Effective Date of any
proposed Make-Whole Fundamental Change, the Company shall mail to each Noteholder, the Trustee and
the Conversion Agent written notice of, and shall issue a press release indicating, and publicly
announce, through a public medium that is customary for such announcements, and publish on the
Company’s website, the anticipated Effective Date of such proposed Make-Whole Fundamental Change.
Each such press release notice, announcement and publication shall also state that in connection
with such Make-Whole Fundamental Change, the Company shall increase, in accordance herewith, the
Applicable Conversion Rate applicable to Notes entitled as provided herein to such increase (along
with a description of how such increase shall be calculated and the time periods during which Notes
must be surrendered in order to be entitled to such increase). No later than the actual Effective
Date of each Make-Whole Fundamental Change, the Company shall mail to each Noteholder, the Trustee
and the Conversion Agent written notice of, and shall issue a press release indicating, and
publicly announce, through a public medium that is customary for such announcements, and publish on
the Company’s website, such Effective Date and the amount by which the Applicable Conversion Rate
has been so increased.

     Nothing
in this Section 8.03 shall prevent an adjustment to the Base Conversion Rate pursuant to Section 8.04 in
respect of a Make-Whole Fundamental Change.

     Section 8.04. Adjustment of Base Conversion Rate. The Base Conversion Rate shall be adjusted
from time to time by the Company as follows:

     (a) In case the Company shall issue shares of Common Stock as a dividend or distribution on
shares of Common Stock to all holders of the outstanding Common Stock, or if the Company effects a
share split or share combination, the Base Conversion Rate will be adjusted based on the following
formula:

where

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Base Conversion Rate in effect immediately prior to the open of
business on the Ex-Dividend Date for such dividend or distribution, or the open of
business on the effective date of such share split or share combination, as the case
may be;

29

 

	 	 	 	 	 	 	 
	 

	 	CR’
	 	=
	 	the new Base Conversion Rate in effect immediately after the open of business
on the Ex-Dividend Date for such dividend or distribution, or the open of business on
the effective date of such share split or share combination, as the case may be;
	 

	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of shares of Common Stock outstanding immediately prior to the
open of business on the Ex-Dividend Date for such dividend or distribution, or the open
of business on the effective date of such share split or share combination, as the case
may be; and
	 

	 	 	 	 	 	 
	 

	 	OS’
	 	=
	 	the number of shares of Common Stock outstanding immediately after such
dividend or distribution, or the open of business on the effective date of such share
split or share combination, as the case may be.

     Such adjustment shall become effective immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution, or the effective date for such share split or
share combination. If any dividend or distribution of the type
described in this Section 8.04(a) is declared but
not so paid or made, or any split or combination of the type
described in this Section 8.04(a) is announced but
the outstanding shares of Common Stock are not split or combined, as the case may be, the Base
Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors
determines not to pay such dividend or distribution, or split or combine the outstanding shares of
Common Stock, as the case may be, to the Base Conversion Rate that would then be in effect if such
dividend or distribution had not been declared or such share split or share combination had not
been announced.

     (b) In case the Company shall distribute to all or substantially all holders of its Common
Stock any rights or warrants entitling them for a period of not more than forty-five calendar days
after the Record Date of such distribution to subscribe for or purchase shares of the Common Stock
at a price per share less than the Last Reported Sale Price of the Common Stock on the Trading Day
immediately preceding the Record Date for such distribution, the Base Conversion Rate shall be
adjusted based on the following formula:

where

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Base Conversion Rate in effect immediately prior to the open of
business on the Ex-Dividend Date for such distribution;
	 

	 	 	 	 	 	 
	 

	 	CR’
	 	=
	 	the new Base Conversion Rate in effect immediately after the open of business
on the Ex-Dividend Date for such distribution;
	 

	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of shares of the Common Stock that are outstanding immediately
prior to the open of business on the Ex-Dividend Date for such distribution;

30

 

	 	 	 	 	 	 	 
	 

	 	X
	 	=
	 	the total number of shares of the Common Stock issuable pursuant to such
rights or warrants; and
	 

	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	the number of shares of the Common Stock equal to the aggregate price payable
to exercise such rights or warrants, divided by the average of the
Last Reported Sale Prices of Common Stock over the ten consecutive Trading
Day period ending on the Trading Day immediately preceding the Ex-Dividend
Date for such distribution of such rights or warrants.

Such adjustment shall be successively made whenever any such rights or warrants are distributed and
shall become effective immediately after the open of business on the Ex-Dividend Date for such
distribution. The Company shall not issue any such rights or warrants in respect of shares of the
Common Stock held in treasury by the Company. To the extent that shares of the Common Stock are
not delivered after the expiration of such rights or warrants, the Base Conversion Rate shall be
readjusted to the Base Conversion Rate that would then be in effect had the adjustments made upon
the issuance of such rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. If such rights or warrants are not so issued, the Base
Conversion Rate shall again be adjusted to be the Base Conversion Rate that would then be in effect
if such distribution had not been declared.

In determining whether any rights or warrants entitle the holders to subscribe for or purchase
shares of the Common Stock at less than such Last Reported Sale Price of the Common Stock, and in
determining the aggregate offering price of such shares of the Common Stock, there shall be taken
into account any consideration received by the Company for such rights or warrants and any amount
payable on exercise or conversion thereof, the value of such consideration, if other than cash, to
be determined by the Board of Directors. In no event shall the Base Conversion Rate be decreased
pursuant to this Section 8.04(b).

     (c) In case the Company shall distribute shares of its Capital Stock, evidences of its
indebtedness or other of its assets or property other than (i) dividends or distributions covered
by Section 8.04(a) or Section 8.04(b), (ii) dividends or distributions paid exclusively in cash, and (iii) Spin-Offs to which
the provisions set forth below in this Section 8.04(c) shall apply (any of such shares of Capital Stock,
indebtedness, or other asset or property hereinafter in this Section
8.04(c) called the “Distributed Property”),
to all or substantially all holders of its Common Stock, then, in each such case, the Base
Conversion Rate shall be adjusted based on the following formula:

where

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Base Conversion Rate in effect immediately prior to the open of
business on the Ex-Dividend Date for such distribution;
	 

	 	 	 	 	 	 
	 

	 	CR’
	 	=
	 	the new Base Conversion Rate in effect immediately after the open of business
on the Ex-Dividend Date for such distribution;

31

 

	 	 	 	 	 	 	 
	 

	 	SP0
	 	=
	 	the average of the Last Reported Sale Prices of the Common Stock over the
ten consecutive Trading Day period ending on the Trading Day immediately preceding the
Ex-Dividend Date for such distribution; and
	 

	 	 	 	 	 	 
	 

	 	FMV
	 	=
	 	the fair market value (as determined by the Board of Directors or a committee
thereof) of the shares of Capital Stock, evidences of indebtedness, assets or property
distributed with respect to each outstanding share of the Common Stock on the
Ex-Dividend Date for such distribution.

Such adjustment shall become effective immediately prior to the open of business on the Ex-Dividend
Date for such distribution; provided that if “FMV” as set forth above is equal to or greater than
“SP0” as set forth above, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Noteholder shall receive on the date on which the Distributed Property is
distributed to holders of the Common Stock, for each $1,000 principal amount of Notes upon
conversion, the amount of Distributed Property such holder would have received had such holder
owned a number of shares of Common Stock equal to the Applicable Conversion Rate on the Record Date
for such distribution. If such distribution is not so paid or made, the Base Conversion Rate shall
again be adjusted to be the Base Conversion Rate that would then be in effect if such dividend or
distribution had not been declared. If the Board of Directors or a committee thereof determines “FMV” for purposes of
this Section 8.04(c) by reference to the actual or when issued trading market for any securities, it must in
doing so consider the prices in such market over the same period used in computing the Last
Reported Sale Prices of the Common Stock over the ten consecutive Trading Day period ending on the
Trading Day immediately preceding the Ex-Dividend Date for such distribution.

With
respect to an adjustment pursuant to this Section 8.04(c) where there has been a dividend or other
distribution on the Common Stock of shares of Capital Stock of any class or series, or similar
equity interest, of or relating to a Subsidiary or other business unit of the Company (a
“Spin-Off”), the Base Conversion Rate in effect immediately before the close of business on the
tenth Trading Day immediately following, and including, the effective date of the Spin-Off will be
increased based on the following formula:

where

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Base Conversion Rate in effect immediately prior to the close of
business on the tenth Trading Day immediately following, and including, the effective
date of the Spin-Off;
	 

	 	 	 	 	 	 
	 

	 	CR’
	 	=
	 	the new Base Conversion Rate in effect immediately after the close of
business on the tenth Trading Day immediately following, and including, the effective
date of the Spin-Off;

32

 

	 	 	 	 	 	 	 
	 

	 	FMV0
	 	=	 	the average of the Last Reported Sale Prices of the Capital Stock or
similar equity interest distributed to holders of the Common Stock applicable to one
share of the Common Stock over the first ten consecutive Trading Day period immediately
following, and including, the effective date of the Spin-Off; and
	 

	 	 	 	 	 	 
	 
	 	MP0	 	 	 	the average of the Last Reported Sale Prices of the Common Stock over the
first ten consecutive Trading Day period immediately following, and including, the
effective date of the Spin-Off.

The adjustment to the Base Conversion Rate under the preceding paragraph shall become effective
immediately prior to the open of business on the day immediately following the tenth Trading Day
immediately following, and including, the effective date of the
Spin-Off; provided that, for
purposes of determining the Base Conversion Rate, in respect of any conversion during the ten
Trading Days immediately following, and including, the effective date of any Spin-Off, references
in the portion of this Section 8.04(c) related to Spin-Offs to ten Trading Days shall be deemed replaced with
such lesser number of Trading Days as have elapsed between the effective date of such Spin-Off and
the Conversion Date for such conversion.

     Rights or warrants distributed by the Company to all holders of its Common Stock entitling the
holders thereof to subscribe for or purchase shares of the Company’s Capital Stock, including
Common Stock, (either initially or under certain circumstances), which rights or warrants, until
the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred
with such shares of the Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of the Common Stock, shall be deemed not to have been distributed for
purposes of this Section 8.04 (and no adjustment to the Base Conversion Rate under this Section 8.04 will be required)
until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to have been distributed and an appropriate adjustment (if any is required) to the Base
Conversion Rate shall be made under this Section 8.04(c). If any such right or warrant, including any such
existing rights or warrants distributed prior to the date of this First Supplemental Indenture, are
subject to events, upon the occurrence of which such rights or warrants become exercisable to
purchase different securities, evidences of indebtedness or other assets, then the date of the
occurrence of any and each such event shall be deemed to be the date of distribution and
Ex-Dividend Date with respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the holders thereof). In
addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any
Trigger Event or other event (of the type described in the preceding sentence) with respect thereto
that was counted for purposes of calculating a distribution amount for which an adjustment to the
Base Conversion Rate under this Section 8.04 was made, (1) in the case of any such rights or warrants that
shall all have been redeemed or repurchased without exercise by any holders thereof, the Base
Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to
the per share redemption or repurchase price received by a holder or holders of Common Stock with
respect to such rights or warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants that shall have expired or been terminated without exercise by any

33

 

holders thereof, the Base Conversion Rate shall be readjusted as if such rights and warrants had
not been issued.

     For
purposes of this Section 8.04(c), Section 8.04(a), and Section
8.04(b), any dividend or distribution to which this Section 8.04(c) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase
shares of Common Stock to which Section 8.04(b) applies (or both), shall be deemed instead to be (1) a dividend
or distribution of the evidences of indebtedness, assets or shares of capital stock other
than such shares of Common Stock or rights or warrants to which
Section 8.04(c) applies (and any Base
Conversion Rate adjustment required by this Section 8.04(c) with respect to such dividend or distribution shall
then be made) immediately followed by (2) a dividend or distribution of such shares of Common Stock
or such rights or warrants (and any further Base Conversion Rate
adjustment required by Section 8.04(a) and Section 8.04(b)
with respect to such dividend or distribution shall then be made), except (A) the Ex-Dividend Date
of such dividend or distribution shall be substituted as “the Ex-Dividend Date,” “the Ex-Dividend
Date for such distribution of such rights or warrants” and “the Ex-Dividend Date for such
distribution” within the meaning of Section 8.04(a) and Section
8.04(b) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed “outstanding immediately prior to the Ex-Dividend Date
for such dividend or distribution, or the effective date of such share split or share combination,
as the case may be” within the meaning of Section 8.04(a) or “outstanding immediately prior to the Ex-Dividend
Date for such dividend or distribution” within the meaning of
Section 8.04(b).

     (d) If any cash dividend or distribution is made to all or substantially all holders of its
Common Stock, the Base Conversion Rate shall be adjusted based on the following formula:

where

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Base Conversion Rate in effect immediately prior to the open of
business on the Ex-Dividend Date for such dividend or distribution;
	 

	 	 	 	 	 	 
	 

	 	CR’
	 	=
	 	the new Base Conversion Rate in effect immediately after the open of business
on the Ex-Dividend Date for such dividend or distribution;
	 

	 	 	 	 	 	 
	 

	 	SP0
	 	=
	 	the Last Reported Sale Price of the Common Stock on the Trading Day
immediately preceding the Ex-Dividend Date for such dividend or distribution; and
	 

	 	 	 	 	 	 
	 

	 	C
	 	=
	 	the amount in cash per share of Common Stock the Company so distributes to
holders of its Common Stock.

Such adjustment shall become effective immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution; provided that if the portion of the cash
so distributed applicable to one share of the Common Stock is equal to or greater

34

 

than
SP0 as set forth above, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Noteholder shall have the right to receive on the date on which
the relevant cash dividend or distribution is distributed to holders of Common Stock, for
each $1,000 principal amount of Notes upon conversion, the amount of cash such holder would
have received had such holder owned a number of shares equal to the Applicable Conversion
Rate on the Record Date for such distribution. If such dividend or distribution is not so
paid or made, the Base Conversion Rate shall again be adjusted to be the Base Conversion
Rate that would then be in effect if such dividend or distribution had not been declared.

     For
the avoidance of doubt, for purposes of this Section 8.04(d), in the event of any
reclassification of the Common Stock, as a result of which the Notes become convertible into
more than one class of Common Stock, if an adjustment to the Base Conversion Rate is
required pursuant to this Section 8.04(d), references in this Section to one share of Common Stock or Last
Reported Sale Price of one share of Common Stock shall be deemed to refer to a unit or to
the price of a unit consisting of the number of shares of each class of Common Stock into
which the Notes are then convertible equal to the numbers of shares of such class issued in
respect of one share of Common Stock in such reclassification. The above provisions of this
paragraph shall similarly apply to successive reclassifications.

     (e) If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or
exchange offer for the Common Stock and the cash and value of any other consideration included in
the payment per share of the Common Stock exceeds the average of the Last Reported Sale Prices of
the Common Stock over the ten consecutive Trading Day period commencing on, and including, the
Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to
such tender or exchange offer, the Base Conversion Rate shall be increased based on the following
formula:

where

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Base Conversion Rate in effect immediately prior to the close of
business on the last Trading Day of the period of ten consecutive Trading Days
commencing on, and including, the Trading Day next succeeding the date such tender or
exchange offer expires;
	 

	 	 	 	 	 	 
	 

	 	CR’
	 	=
	 	the new Base Conversion Rate in effect immediately after the close of
business on the last Trading Day of the period of ten consecutive Trading Days
commencing on, and including, the Trading Day next succeeding the date such tender or
exchange offer expires;
	 

	 	 	 	 	 	 
	 

	 	AC
	 	=
	 	the aggregate value of all cash and any other consideration (as determined by
the Board of Directors or a committee thereof) paid or payable for shares of Common Stock purchased in such
tender or exchange offer;

35

 

	 	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of shares of Common Stock outstanding immediately prior to the
date such tender or exchange offer expires;
	 

	 	 	 	 	 	 
	 

	 	OS’
	 	=
	 	the number of shares of Common Stock outstanding immediately after the date
such tender or exchange offer expires (after giving effect to such tender offer or
exchange offer); and
	 

	 	 	 	 	 	 
	 

	 	SP’
	 	=
	 	the average of the Last Reported Sale Prices of Common Stock over the ten
consecutive Trading Day period commencing on, and including, the
Trading Day next succeeding the date such tender or exchange offer expires,

such adjustment to become effective immediately prior to the open of business on the day
immediately following the tenth Trading Day immediately following, but excluding, the date such
tender or exchange offer expires; provided that, for purposes of determining the Base Conversion
Rate, in respect of any conversion during the ten Trading Days immediately following, but
excluding, the date that any such tender or exchange offer expires,
references in this Section 8.04(e) to ten
Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed
between the date that such tender or exchange offer expires and the Conversion Date for such
conversion. If the Company is obligated to purchase shares pursuant to any such tender or exchange
offer, but the Company is permanently prevented by applicable law from effecting any or all or any
portion of such purchases or all such purchases are rescinded, the Base Conversion Rate shall again
be adjusted to be the Base Conversion Rate that would then be in effect if such tender or exchange
offer had not been made or had been made only in respect of the purchases that had been effected.
In no event shall the Base Conversion Rate be decreased pursuant to
this Section 8.04(e).

     (f) For purposes of this Section 8.04, the term “Record Date” shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock (or other security)
have the right to receive any cash, securities or other property or in which the Common Stock (or
other applicable security) is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of shareholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).

     (g) Except as stated herein, the Company shall not adjust the Base Conversion Rate for the
issuance of shares of its Common Stock or any securities convertible into or exchangeable for
shares of its Common Stock or the right to purchase shares of its Common Stock or such convertible
or exchangeable securities.

     (h) In
addition to those required by clauses Section 8.04(a), (b), (c), (d) and (e) of this Section 8.04, and to the extent
permitted by applicable law and subject to the applicable rules of the New York Stock Exchange, the
Company from time to time may increase the Base Conversion Rate by any amount for a period of at
least twenty Business Days if the Board of Directors determines that such increase would be in the
Company’s best interest. In addition, the Company may also (but is not required to) increase the
Base Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock in connection with any dividend

36

 

or distribution of shares (or rights to
acquire shares) or similar event. Whenever the Base Conversion Rate is increased pursuant to the
preceding sentence, the Company shall mail to the holder of each Note at its last address appearing
on the Note Register provided for in Section 2.05 a notice of the increase at
least fifteen calendar days prior to the date the increased Base Conversion Rate takes effect, and such
notice shall state the increased Base Conversion Rate and the period during which it will be in
effect.

     (i) The Base Conversion Rate will not be adjusted:

     (i) upon the issuance of any shares of the Common Stock pursuant to any present or
future plan providing for the reinvestment of dividends or interest payable on the Company’s
securities and the investment of additional optional amounts in shares of the Common Stock
under any plan;

     (ii) upon the issuance of any shares of the Common Stock or restricted stock units or
options or rights (including shareholder appreciation rights) to purchase those shares
pursuant to any present or future employee, director or consultant benefit plan or program
of or assumed by the Company or any of the Company’s Subsidiaries;

     (iii) upon the issuance of any shares of the Common Stock pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security not described in clause
(ii) of this subsection and outstanding as of the date the Notes were first issued;

     (iv) for a change in the par value of the Common Stock;

     (v) for accrued and unpaid interest, including Additional Interest, if any; or

     (vi) for any transactions described in this Section 8.04 if Noteholders participate (as a result
of holding the Notes, and at the same time as holders of Common Stock participate) in such
transactions as if such Noteholders held a number shares of Common Stock equal to the
Applicable Conversion Rate at the time such adjustment would be required, multiplied by the
principal amount (expressed in thousands) of Notes held by such Noteholder, without having
to convert their Notes.

     (j) All
calculations and other determinations under this Article 8 shall be made by the Company and
shall be made to the nearest one-ten thousandth (1/10,000th) of a share.

     (k) At any time the Base Conversion Rate is adjusted as described in this Section 15.04, the
Incremental Share Factor and Daily Share Cap will be adjusted based on the following formula:

37

 

where,

	 	 	 	 	 	 	 
	 

	 	CR0
	 	=
	 	the Base Conversion Rate in effect immediately
prior to such adjustment;
	 
	 	 	 	 	 	 
	 

	 	CR’
	 	=
	 	the new Base Conversion Rate in effect
immediately after such adjustment;
	 
	 	 	 	 	 	 
	 

	 	ISF0
	 	=
	 	the Incremental Share Factor, or Daily Share Cap,
as applicable, in effect immediately prior to
such adjustment; and
	 
	 	 	 	 	 	 
	 

	 	ISF’
	 	=
	 	the Incremental Share Factor, or Daily Share Cap,
as applicable, in effect immediately after to
such adjustment.

     (l) Whenever the Base Conversion Rate, Incremental Share Factor and Daily Share Cap are
adjusted as herein provided, the Company shall promptly file with the Trustee and any Conversion
Agent other than the Trustee an Officers’ Certificate setting forth the Base Conversion Rate,
Incremental Share Factor and Daily Share Cap after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the
Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Base Conversion Rate, Incremental Share Factor or Daily Share
Cap and may assume without inquiry that the last, Base Conversion Rate, Incremental Share Factor
and Daily Share Cap of which it has knowledge is still in effect. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the Base Conversion Rate,
Incremental Share Factor and Daily Share Cap setting forth the adjusted Base Conversion Rate,
Incremental Share Factor and Daily Share Cap and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Base Conversion Rate, Incremental
Share Factor and Daily Share Cap to the holder of each Note at its last address appearing on the
Note Register provided for in Section 2.05. of this First Supplemental
Indenture, within ten calendar days of the effective date of such adjustment. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.

     (m) For purposes of this Section 8.04, the number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Company but shall include shares issuable in respect
of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not
pay any dividend or make any distribution on shares of Common Stock held in the treasury of the
Company.

     Section 8.05. Shares to Be Fully Paid. The Company shall provide, free from preemptive
rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of
Common Stock to provide for conversion of the Notes from time to time as such Notes are presented
for conversion.

     Section 8.06. Effect of Reclassification, Consolidation, Merger or Sale.

     Upon the occurrence of (i) any reclassification or change of the outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a split, subdivision or combination covered by Section 8.04(a)), (ii) any
consolidation, merger or combination involving the Company, or (iii) any sale or conveyance of all
or substantially all of the property and assets of the Company to any other Person, in each case as
a result of which holders of Common Stock shall be entitled to receive

38

 

cash, securities or other
property or assets with respect to or in exchange for such Common Stock (any such event a “Merger
Event”), then:

     (a) The Company or the successor or purchasing Person, as the case may be, shall execute with
the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force
at the date of execution of such supplemental indenture if such supplemental indenture is then
required to so comply) permitted under Section 6.01(b)providing for the
conversion and settlement of the Notes as set forth in this First Supplemental
Indenture. Such supplemental indenture shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article 8. If, in the case of any
Merger Event, the Reference Property includes shares of stock or other securities and assets of a
corporation other than the successor or purchasing corporation, as the case may be, in such
reclassification, change, consolidation, merger, combination, sale or conveyance, then such
supplemental indenture shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the holders of the Notes as the Board of
Directors shall reasonably consider necessary by reason of the foregoing, including to the extent
required by the Board of Directors and practicable the provisions providing for the repurchase
rights set forth in Article 9 herein.

     In the event the Company shall execute a supplemental indenture pursuant to this Section 8.06, the
Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the reasons
therefore, the kind or amount of cash, securities or property or asset that will comprise the
Reference Property after any such Merger Event, any adjustment to be made with respect thereto and
that all conditions precedent have been complied with, and shall promptly mail notice thereof to
all Noteholders. The Company shall cause notice of the execution of such supplemental indenture to
be mailed to each Noteholder, at its address appearing on the Note Register provided for in this
First Supplemental Indenture, within twenty calendar days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of such supplemental indenture.

     (b) Notwithstanding
the provisions of Section 8.02(a), and subject to the provisions of
Section 8.01 and Section 8.03, at the
effective time of such Merger Event, (i) the right to convert each $1,000 principal amount of Notes
into shares of Common Stock based on the Applicable Conversion Rate will be changed to a right to
convert such Note into the kind and amount of shares of stock, securities or other property or
assets (including cash or any combination thereof) that a holder of a number of shares of Common
Stock equal to the Applicable Conversion Rate immediately prior to such transaction would have
owned or been entitled to receive (the “Reference Property”) and (ii) the related Conversion
Obligation shall be settled as set forth under clause (c) below. The Company shall not become a
party to any Merger Event unless its terms are consistent with this
Section 8.06. None of the foregoing
provisions shall affect the right of a holder of Notes to convert its Notes into shares of Common
Stock, as set forth in Section 8.01 and Section 8.02 prior to the effective date of such Merger Event.

     (c) If the Notes are convertible into cash and Reference Property as set forth above, the
related Conversion Obligation, with respect to each $1,000 principal amount of Notes surrendered
for conversion after the effective date of any such Merger Event, shall be settled in

39

 

units of
Reference Property and cash in lieu of fractional shares, if any, in
accordance with Section 8.02(a) as follows:

     (i)
The Company shall deliver, on the third Trading Day immediately
following the last Trading
Day of the related Observation Period, Reference Property and cash in lieu of any fractional
shares, if any, equal to the sum of the Daily Conversion Rate Fractions for each of the
twenty Trading Days during the related Observation Period; provided that (1) such Daily
Conversion Rate Fractions, will be determined as if references in such definitions to “the
Last Reported Sale Price of the Common Stock”
were references instead “the Last Reported Sale Price of a unit of Reference Property
composed of the kind and amount of shares of stock, securities or other property or assets
(including cash or any combination thereof) that a holder of one share of Common Stock
immediately prior to such transaction would have owned or been entitled to receive based on
the Weighted Average Consideration” and (2) the Last Reported Sale Price shall be determined
with respect to such a unit of Reference Property.

     (ii) The Company will deliver the cash in lieu of fractional units of Reference
Property as set forth pursuant to Section 8.02(j); provided that the amount of such cash shall be
determined as if references in such Section to “the Last Reported Sale Price of the Common
Stock” were a reference instead to “the Last Reported Sale Price of a unit of Reference
Property composed of the kind and amount of shares of stock, securities or other property or
assets (including cash or any combination thereof) that a holder of one share of Common
Stock immediately prior to such transaction would have owned or been entitled to receive
based on the Weighted Average Consideration.”

     (iii) The Applicable Conversion Rate shall be determined by the Company promptly
following the last day of the Observation Period.

     (iv)
For purposes of this Section 8.06, the “Weighted Average Consideration” shall mean the
weighted average of the types and amounts of consideration received by the holders of the
Common Stock entitled to receive cash, securities or other property or assets with respect
to or in exchange for such Common Stock in any Merger Event who affirmatively make such an
election.

     (v) The Company shall notify the holders of the Weighted Average Consideration as soon
as practicable after the Weighted Average Consideration is determined.

     (d) The above provisions of this Section shall similarly apply to successive Merger Events.

     Section 8.07. Certain Covenants.

     (a) The Company covenants that all shares of Common Stock issued upon conversion of Notes will
be fully paid and non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.

40

 

     (b) The Company covenants that, if any shares of Common Stock to be provided for the purpose
of conversion of Notes hereunder require registration with or approval of any governmental
authority under any federal or state law before such shares may be validly issued upon conversion,
the Company shall, to the extent then permitted by the rules and interpretations of the Commission,
secure such registration or approval, as the case may be.

     (c) The Company further covenants that if at any time the Common Stock shall be listed on any
national securities exchange or automated quotation system the Company shall, if permitted and
required by the rules of the relevant exchange or automated quotation system, list and keep listed,
so long as the Common Stock shall be so listed on such exchange or automated quotation system, any
Common Stock issuable upon conversion of the Notes.

     Section 8.08 . Responsibility of Trustee. The Trustee and any other Conversion Agent shall
not at any time be under any duty or responsibility to any Noteholder to determine the Applicable
Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any
adjustment (including any increase) of the Base Conversion Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the same. The Trustee
and any other Conversion Agent shall not be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any securities, property or cash that may
at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other
Conversion Agent make no representations with respect thereto. Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver
any shares of Common Stock or stock certificates or other securities or property or cash upon the
surrender of any Note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article. Without limiting the
generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 8.06 relating either to the kind or amount of shares of
stock or securities or property (including cash) receivable by Noteholders upon the conversion of
their Notes after any event referred to in such Section 8.06 or to any adjustment to be made with
respect thereto, but, subject to the provisions of Section 7.01 of the Original Indenture, may
accept (without any independent investigation) as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the
Company shall be obligated to file with the Trustee prior to the execution of any such supplemental
indenture) with respect thereto.

     Section 8.09. Notice to Holders Prior to Certain Actions. In case:

     (a) the Company shall declare a dividend (or any other distribution) on its Common Stock that
would require an adjustment in the Base Conversion Rate pursuant to Section 8.04; or

     (b) the Company shall authorize the granting to all of the holders of its Common Stock of
rights or warrants to subscribe for or purchase any share of any class or any other rights or
warrants; or

41

 

     (c) of any reclassification of the Common Stock of the Company (other than a subdivision or
combination of its outstanding Common Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or

     (d) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

the Company shall cause to be filed with the Trustee and to be mailed to each Noteholder at its
address appearing on the Note Register, provided for in Section 2.05 of this First Supplemental
Indenture, as promptly as possible but in any event at least twenty calendar days prior to the applicable
date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is expected to become
effective or occur, and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or
winding-up. Failure to give such notice, or any defect therein, shall not affect the legality or
validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.

     Section 8.10 . Shareholder Rights Plans. Each share of Common Stock, if any, issued upon
conversion of Notes pursuant to this Article 8 shall be entitled to receive the appropriate number
of rights, if any, and the certificates representing the Common Stock issued upon such conversion
shall bear such legends, if any, in each case as may be provided by the terms of any shareholder
rights plan adopted by the Company, as the same may be amended from time to time. If at the time of
conversion, however, the rights have separated from the shares of Common Stock in accordance with
the provisions of the applicable shareholder rights agreement so that the holders of the Notes
would not be entitled to receive any rights in respect of Common Stock, if any, issuable upon
conversion of the Notes, the Base Conversion Rate will be adjusted at the time of separation as if
the Company has distributed to all holders of Common Stock, shares of Capital Stock of the Company,
evidence of indebtedness or assets as provided in Section 8.04(c), subject to readjustment in the
event of the expiration, termination or redemption of such rights.

ARTICLE 9

Repurchase of Notes at Option of Holders

     Section 9.01. Repurchase at Option of Holders.

     (a) Notes or portions thereof shall be repurchased by the Company at the option of the holder
for cash on each of November 1, 2012, November 1, 2017, November 1, 2022, November 1, 2027 and
November 1, 2032 (each, a “Repurchase Date”), at a purchase price (the “Repurchase Price”) equal to
100% of the principal amount of the Notes to be repurchased, plus

42

 

accrued and unpaid interest thereon to, but excluding, such Repurchase Date. If the
Repurchase Date is on a date that is after an Interest Record Date and on or prior to the Interest
Payment Date to which such Interest Record Date relates, the Repurchase Price will be equal to 100%
of the principal amount of the Notes to be repurchased, and the Company will pay any accrued and
unpaid interest to, but excluding, the Repurchase Date to the Noteholder of record on the relevant
Interest Record Date, which may or may not be the same Person to whom the Company will pay the
Repurchase Price.

     (b) Within 20 Business Days prior to any Repurchase Date, the Company will send a notice (the
“Company Notice”) by electronic transmission or by first class mail to the Trustee and to each holder (and to beneficial owners
as required by applicable law). The notice shall include a form of repurchase notice to be
completed by a holder and shall state:

     (i) the Repurchase Date;

     (ii) the Repurchase Price and the Base Conversion Rate;

     (iii) the name and address of the Trustee, (or other Paying Agent appointed by the
Company) and the Conversion Agent;

     (iv) that Notes as to which a Repurchase Notice has been given may be converted only in
accordance with Article 8 and the terms of the Notes if the applicable Repurchase Notice has
been withdrawn in accordance with the terms of this Article 9;

     (v) that Notes must be surrendered to the Paying Agent to collect payment;

     (vi) that the Repurchase Price for any Note as to which a Repurchase Notice has been
given and not withdrawn will be paid promptly following the later of the Repurchase Date and
the time of surrender of such Note as described in paragraph (v) above;

     (vii) the procedures the holder must follow to exercise its repurchase rights under
this Section 9.01 and a brief description of those rights;

     (viii) briefly, the conversion rights with respect to the Notes;

     (ix) the procedures for withdrawing a Repurchase Notice; and

     (x) the CUSIP number of the Notes.

     Simultaneously with the providing of such notice, the Company will promptly publish a notice
containing the information included in the Company Notice in a newspaper of general circulation in
The City of New York or publish such information on the Company’s website or through such other
public medium as the Company may use at that time.

     (c) Purchases of Notes under this Section 9.01 shall be made, at the option of the holder
thereof upon:

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     (i) delivery to the Paying Agent by the holder of a written notice of repurchase
substantially in the form set forth on the reverse of the Note as Exhibit E thereto (a
“Repurchase Notice”) during the period beginning at any time from the open of business on
the date that is 20 Business Days prior to the relevant Repurchase Date until the close of
business on the Business Day immediately preceding the Repurchase Date stating:

     (A) if certificated Notes have been issued, the certificate number of the
Notes that the holder will deliver to be purchased;

     (B) the portion of the principal amount of the Notes to be purchased, which
portion must be in principal amounts of $1,000 or an integral multiple of $1,000;
and

     (C) that such Notes shall be purchased by the Company as of the Repurchase
Date pursuant to the terms and conditions specified in the Notes and in this First
Supplemental Indenture;

provided, however, that if the Notes are not in certificated form, the Repurchase Notice
must comply with appropriate Depositary procedures; and

     (ii) book-entry transfer of such Notes (or delivery of such certificated Notes) to the
Paying Agent at any time after delivery of the Repurchase Notice (together with all
necessary endorsements) at the Corporate Trust Office of the Paying Agent in the United
States, such book-entry transfer or delivery being a condition to receipt by the holder of
the Repurchase Price therefor; provided, however, that such Repurchase Price shall be so
paid pursuant to this Section 9.01 only if the Note so delivered to the Paying Agent shall
conform in all respects to the description thereof in the related Repurchase Notice.

     (d) No Repurchase Notice with respect to any Notes may be surrendered by a holder thereof if
such holder has also tendered a Fundamental Change Repurchase Notice and not validly withdrawn such
Fundamental Change Repurchase Notice in accordance with Section 9.02.

     (e) The Company may purchase from the holder thereof, pursuant to this Section 9.01, a portion
of a Note, if the principal amount of such portion is $1,000 or an integral multiple of $1,000.
Provisions of this First Supplemental Indenture that apply to the purchase of all of a Note also
apply to the purchase of such portion of such Note.

     (f) Any repurchase by the Company contemplated pursuant to the provisions of this Section 9.01
shall be consummated by the payment of the Repurchase Price promptly following the later of the
Repurchase Date and the time of the book-entry transfer or delivery of the Note as described in
Section 9.04(a).

     (g) Notwithstanding anything herein to the contrary, any holder delivering to the Paying Agent
the Repurchase Notice contemplated by this Section 9.01 shall have the right to withdraw, in whole
or in part, such Repurchase Notice at any time prior to the close of business

44

 

on the Business Day immediately preceding the Repurchase Date by delivery of a written notice
of withdrawal to the Paying Agent in accordance with Section 9.03 below.

     (h) The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase
Notice or written notice of withdrawal thereof.

     (i) Notwithstanding the foregoing, no Notes may be repurchased by the Company at the option of
the holders if the principal amount of the Notes has been accelerated, and such acceleration has
not been rescinded, on or prior to the Repurchase Date (except in the case of an acceleration
resulting from a default by the Company in the payment of the Repurchase Price with respect to such
Notes).

     (j) In connection with any repurchase, the Company will:

     (i) comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer
rules under the Exchange Act;

     (ii) file a Schedule TO or any successor or similar schedule, if required under the
Exchange Act; and

     (iii) otherwise comply with all federal and state securities laws in connection with
any offer by the Company to purchase the Notes

     Section 9.02. Repurchase at Option of Holders upon a Fundamental Change.

     (a) If there shall occur a Fundamental Change at any time prior to the Maturity Date, then
each Noteholder shall have the right, at such holder’s option, to require the Company to repurchase
all of such holder’s Notes for cash, or any portion thereof that is an integral multiple of $1,000
principal amount, on the date (the “Fundamental Change Repurchase Date”) specified by the Company
that is not less than twenty calendar days and not more than thirty-five calendar days after the date of the
Fundamental Change Company Notice (as defined below) at a repurchase price equal to 100% of the
principal amount thereof, together with accrued and unpaid interest, including unpaid Additional
Interest, if any, thereon to, but excluding, the Fundamental Change Repurchase Date (the
“Fundamental Change Repurchase Price”). If such Fundamental Change Repurchase Date falls after a
Interest Record Date and on or prior to the corresponding Interest Payment Date, the Company shall
instead pay the principal amount to the Noteholders surrendering the Notes for repurchase pursuant
to this Section 9.02, and pay the full amount of accrued and unpaid interest, including accrued and
unpaid Additional Interest, if any, payable on such Interest Payment Date to the holder of record
on the close of business on the corresponding Interest Record Date. Repurchases of Notes under
this Section 9.02 shall be made, at the option of the holder thereof, upon:

     (i) delivery to the Paying Agent by a holder of a duly completed notice (the
“Fundamental Change Repurchase Notice”) in the form set forth on the reverse of the Note as
Exhibit C thereto on or prior to the Business Day immediately preceding the Fundamental
Change Repurchase Date; and

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     (ii) delivery or book-entry transfer of the Notes to the Paying Agent at any time after
delivery of the Fundamental Change Repurchase Notice (together with all necessary
endorsements) at the Corporate Trust Office of the Paying Agent in the United States, such
book-entry transfer or delivery being a condition to receipt by the holder of the
Fundamental Change Repurchase Price therefor; provided that such Fundamental Change
Repurchase Price shall be so paid pursuant to this Section 9.02 only if the Note so
delivered to the Paying Agent shall conform in all respects to the description thereof in
the related Fundamental Change Repurchase Notice.

     The Fundamental Change Repurchase Notice shall state:

     (A) if certificated, the certificate numbers of Notes to be delivered for
repurchase;

     (B) the portion of the principal amount of Notes to be repurchased, which must
be $1,000 or an integral multiple thereof; and

     (C) that the Notes are to be repurchased by the Company pursuant to the
applicable provisions of the Notes and this First Supplemental Indenture;

provided, however, that if the Notes are not in certificated form, the Fundamental Change
Repurchase Notice must comply with appropriate Depositary procedures.

     Any repurchase by the Company contemplated pursuant to the provisions of this Section 9.02
shall be consummated by the payment of the Fundamental Change Repurchase Price promptly following
the later of the Fundamental Change Repurchase Date and the time of the book-entry transfer or
delivery of the Note as described in Section 9.04(a).

     Notwithstanding anything herein to the contrary, any holder delivering to the Paying Agent the
Fundamental Change Repurchase Notice contemplated by this Section 9.02 shall have the right to
withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the
close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date
by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 9.03
below.

     The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental
Change Repurchase Notice or written notice of withdrawal thereof.

     (b) On or before the tenth calendar day after the occurrence of the effective date of a Fundamental
Change, the Company shall mail or cause to be mailed to all holders of record of the Notes a
written notice (the “Fundamental Change Company Notice”) of the occurrence of the effective date of
the Fundamental Change and of the repurchase right at the option of the holders arising as a result
thereof. Such mailing shall be by first class mail. The Company shall also deliver a copy of the
Fundamental Change Company Notice to the Trustee, the Paying Agent and the Conversion Agent within
five Business Days after the Effective Date of the Fundamental Change. Simultaneously with the
providing of such notice, the Company will also publish a notice containing the information set
forth in the Fundamental Change Company Notice in a newspaper of general circulation in The City of
New York or publish such

46

 

information on the Company’s website or through such other public medium as the Company may
use at that time.

     Each Fundamental Change Company Notice shall specify:

     (i) the events causing the Fundamental Change;

     (ii) the effective date of the Fundamental Change;

     (iii) the last date on which a holder may exercise the repurchase right set forth in
this Section 9.02;

     (iv) the Fundamental Change Repurchase Price;

     (v) the Fundamental Change Repurchase Date;

     (vi) the name and address of the Paying Agent and the Conversion Agent, if applicable;

     (vii) if applicable, the Base Conversion Rate, any adjustments to the Applicable
Conversion Rate;

     (viii) if applicable, that the Notes with respect to which a Fundamental Change
Repurchase Notice has been delivered by a holder may be converted only if the holder
withdraws the Fundamental Change Repurchase Notice in accordance with the terms of the
Indenture;

     (ix) that the holder must exercise the repurchase right set forth in this Section 9.02
on or prior to the close of business on the Business Day immediately preceding the
Fundamental Change Repurchase Date (the “Fundamental Change Expiration Time”);

     (x) that the holder shall have the right to withdraw any Notes surrendered prior to the
Fundamental Change Expiration Time; and

     (xi) the procedures that holders must follow to require the Company to repurchase their
Notes.

     No failure of the Company to give the foregoing notices and no defect therein shall limit the
Noteholders’ repurchase rights or affect the validity of the proceedings for the repurchase of the
Notes pursuant to this Section 9.02.

     (c) Notwithstanding the foregoing, no Notes may be repurchased by the Company at the option of
the holders upon a Fundamental Change if the principal amount of the Notes has been accelerated,
and such acceleration has not been rescinded, on or prior to the Fundamental Change Repurchase Date
(except in the case of an acceleration resulting from a default by the Company in the payment of
the Fundamental Change Repurchase Price with respect to such Notes).

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     (d) In connection with any purchase offer, the Company will:

     (i) comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer
rules under the Exchange Act;

     (ii) file a Schedule TO or any successor or similar schedule, if required under the
Exchange Act; and

     (iii) otherwise comply with all federal and state securities laws in connection with
any offer by the Company to purchase the Notes.

     Section 9.03. Withdrawal of Repurchase Notice or Fundamental Change Repurchase Notice.

     (a) A Repurchase Notice or Fundamental Change Repurchase Notice may be withdrawn by means of a
written notice of withdrawal delivered to the Corporate Trust Office of the Paying Agent in
accordance with the Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be,
at any time prior to the close of business on the Business Day immediately preceding the Repurchase
Date or the Fundamental Change Repurchase Date, as the case may be, specifying:

     (i) the certificate number, if any, of the Note in respect of which such notice of
withdrawal is being submitted, or the appropriate Depositary information if the Note in
respect of which such notice of withdrawal is being submitted is represented by a Global
Note;

     (ii) the principal amount of the Note with respect to which such notice of withdrawal
is being submitted; and

     (iii) the principal amount, if any, of such Note that remains subject to the original
Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, which portion
must be in principal amounts of $1,000 or an integral multiple of $1,000;

provided, however, that if the Notes are not in certificated form, the notice must comply with
appropriate procedures of the Depositary.

     Section 9.04. Deposit of Repurchase Price or Fundamental Change Repurchase Price. (a) The
Company will deposit with the Trustee (or other Paying Agent appointed by the Company, or if the
Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in
Section 4.03 of the Original Indenture) on or prior to 11:00 a.m., New York City time, on the
Repurchase Date or Fundamental Change Repurchase Date, as the case may be, an amount of money
sufficient to repurchase all of the Notes to be repurchased at the appropriate Repurchase Price or
Fundamental Change Repurchase Price, as the case may be. Subject to receipt of funds and/or Notes
by the Trustee (or other Paying Agent appointed by the Company), payment for Notes surrendered for
repurchase (and not withdrawn prior to the Repurchase Date or Fundamental Change Expiration Time,
as applicable) will be made on the later of (i) the Repurchase Date or Fundamental Change
Repurchase Date, as the case may be, with respect to

48

 

such Note (provided the holder has satisfied the conditions in Section 9.01 or Section 9.02,
as applicable) and (ii) the time of book-entry transfer or the delivery of such Note to the Trustee
(or other Paying Agent appointed by the Company) by the holder thereof in the manner required by
Section 9.01 or Section 9.02, as applicable, by mailing checks for the amount payable to the
holders of such Notes entitled thereto as they shall appear in the Note Register; provided,
however, that payments to the Depositary shall be made by wire transfer of immediately available
funds to the account of the Depositary or its nominee. The Trustee shall, promptly after such
payment and upon written demand by the Company, return to the Company any funds in excess of the
Repurchase Price or Fundamental Change Repurchase Price, as the case may be.

     (b) If by 11:00 a.m., New York City time, on the Repurchase Date or Fundamental Change Date,
as the case may be, the Trustee (or other Paying Agent appointed by the Company) holds money
sufficient to make payment on all the Notes or portions thereof that are to be repurchased, then
(i) such Notes will cease to be Outstanding, (ii) interest, including Additional Interest, if any,
will cease to accrue on such Notes, and (iii) all other rights of the holders of such Notes will
terminate (other than the right to receive the Repurchase Price or Fundamental Change Repurchase
Price, as the case may be, and previously accrued but unpaid interest, including Additional
Interest, if any, upon delivery of the Notes), whether or not book-entry transfer of the Notes has
been made or the Notes have been delivered to the Trustee or Paying Agent.

     (c) Upon surrender of a Note that is to be repurchased in part pursuant to Section 9.01 or
Section 9.02, as applicable, the Company shall execute and the Trustee shall authenticate and
deliver to the holder a new Note in an authorized denomination equal in principal amount to the
unrepurchased portion of the Note surrendered.

ARTICLE 10

Optional Redemption of the Notes by the Company

     Section 10.01. Optional Redemption. (a) Subject to clause (b) below, on or after November
1, 2012, the Notes shall be redeemable, in whole or in part, at the option of the Company on any
date specified by the Company in accordance with the Indenture (a “Redemption Date”), at a
redemption price equal to 100% of the principal amount of the Notes to be redeemed plus any accrued
and unpaid interest up to, but excluding, the Redemption Date (the “Redemption Price”); provided
that if the Redemption Date is on a date that is after an Interest Record Date and on or prior to
the corresponding Interest Payment Date, the Redemption Price shall be 100% of the principal amount
of the Notes redeemed but shall not include accrued and unpaid interest, and the Company shall pay
such interest on the Interest Payment Date to the Noteholder of record on the corresponding
Interest Record Date. Notwithstanding the foregoing, the Company may not redeem the Notes on any
date if the principal amount of the Notes has been accelerated, and such acceleration has not been
rescinded, on or prior to the relevant Redemption Date (except in the case of an acceleration
resulting from a default by the Company in the payment of the Redemption Price with respect to such
Notes).

     (b) The Company shall make at least 10 semi-annual interest payments (including the interest
payment on May 1, 2008) on the Notes before it can redeem the Notes at its option.

49

 

     (c) If the Company calls the Notes for redemption, the Notes or portions of the Notes to be
redeemed may be converted by the Noteholder until the close of business on the Business Day
immediately preceding the Redemption Date.

     (d) The Notes are not subject to redemption through the operation of any sinking fund.

     Section 10.02. Selection of Notes to Be Redeemed. (a) If less than all of the Notes are to
be redeemed, unless the procedures of the Depositary provide otherwise, the Trustee shall select
the Notes to be redeemed by lot, on a pro rata basis or by another method the Trustee considers
fair and appropriate (so long as such method is not prohibited by the rules of any stock exchange
or quotation association on which the Notes are then traded or quoted).

     (b) Notes and portions of Notes that the Trustee selects shall be in principal amounts of
$1,000 or an integral multiple of $1,000. Provisions of this First Supplemental Indenture that
apply to Notes called for redemption also apply to portions of Notes called for redemption. The
Trustee shall notify the Company promptly of the Notes or portions of the Notes selected to be
redeemed and, in the case of any Notes selected for partial redemption, the method it has chosen
for the selection of the Note.

     (c) If any Note selected for partial redemption is converted in part before termination of the
conversion right with respect to the portion of the Note so selected, the converted portion of such
Note shall be deemed (so far as may be) to be the portion selected for redemption. Notes that
have been converted during a selection of Notes to be redeemed may be treated by the Trustee as
Outstanding for the purpose of such selection.

     Section 10.03. Notice of Redemption. The Company shall notify each Noteholder of the
redemption in the manner provided in Section 3.02 of the Original Indenture. In addition to those
matters set forth in Section 3.02 of the Original Indenture, a notice of redemption sent to the
Noteholders shall state:

     (a) the name of the Paying Agent and Conversion Agent;

     (b) the then Applicable Conversion Rate;

     (c) that the Notes called for redemption may be converted at any time prior to the close of
business on the Business Day immediately preceding the Redemption Date;

     (d) that Noteholders who wish to convert the Notes must comply with the procedures in Section
8.01 and Section 8.02; and

     (e) in the event of the redemption of the Notes in part only, a new Note or Notes for the
unredeemed portion will be issued in the name or names of the Noteholders thereof upon surrender
thereof.

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ARTICLE 11

Interest Reduction

     Section 11.01 . Interest Reduction. (a) Beginning on November 1, 2012, during any six-month
period thereafter from November 1 to April 30 and from May 1 to October 31, if the average Trading
Price of the Notes for the five consecutive Trading Days immediately preceding the first day of the
applicable six-month interest period equals or exceeds 120% of the principal amount of the Notes,
the 2.75% interest rate for the Notes will be reduce to 2.25% solely for the relevant six-month
interest period.

     (b) The Company shall make any such calculations under clause (a) above by using the Trading
Price provided by the Bid Solicitation Agent. The Bid Solicitation Agent shall be entitled in its
sole discretion to consult with the Company and to request the assistance of the Company in
connection with the Bid Solicitation Agent’s duties pursuant to this Article 11, and the Company
agrees, if requested by the Bid Solicitation Agent, to cooperate with, and provide assistance to,
the Trustee in carrying out its duties under this Article 11.

     Section 11.02
.. Interest Reduction Notification. By the first Business Day of any such
sixth-month period in which an interest reduction described in Section 11.01 would be applicable,
the Company shall disseminate a press release containing this information or publish the
information on its website or through such other public medium as it may use at that time and at such same time
shall send written notification to the Trustee that an interest rate reduction has occurred.

ARTICLE 12

Miscellaneous Provisions

     Section 12.01 . Ratification and Incorporation of Original Indenture. As supplemented
hereby, the Original Indenture is in all respects ratified and confirmed, and the Original
Indenture and this First Supplemental Indenture shall be read, taken and construed as one and the
same instrument.

     Section 12.02 . Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE AND EACH NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF).

     Section 12.03 . Payments on Business Days. In any case where any Interest Payment Date,
Fundamental Change Repurchase Date, Repurchase Date, Redemption Date, Maturity
Date or settlement date is not a Business Day, then the required
payment or delivery will be made on the next succeeding Business Day with the same force and
effect as if made on such date, and no interest shall accrue for the period from and after such
date to that next succeeding Business Day.

     Section 12.04 . No Security Interest Created. Nothing in this First Supplemental Indenture
or in the Notes, expressed or implied, shall be construed to constitute a security

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interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted
and in effect, in any jurisdiction.

     Section 12.05 . Trust Indenture Act. This First Supplemental Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act required to be part
of and to govern indentures qualified under the Trust Indenture Act; provided that this Section
12.05 shall not require that this First Supplemental Indenture or the Trustee be qualified under
the Trust Indenture Act prior to the time such qualification is in fact required under the terms of
the Trust Indenture Act, nor shall it constitute any admission or acknowledgment by any party
hereto that any such qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act. If any provision hereof limits, qualifies or
conflicts with another provision hereof that is required to be included in an indenture qualified
under the Trust Indenture Act, such required provision shall control.

     Section 12.06 . Benefits of Indenture. Nothing in this First Supplemental Indenture or in
the Notes, expressed or implied, shall give to any Person, other than the parties hereto, any
Paying Agent, any Conversion Agent, any authenticating agent, any Note Registrar and their
successors hereunder or the Noteholders, any benefit or any legal or equitable right, remedy or
claim under this First Supplemental Indenture.

     Section 12.07 . Calculations. Except as otherwise provided herein, the Company will be
responsible for making all calculations called for under this First Supplemental Indenture and the
Notes (including any determinations of the Last Reported Sale Price of the Common Stock, accrued
interest and the Applicable Conversion Rate). The Company shall make all such calculations in good
faith and, absent manifest error; its calculations will be final and binding on Noteholders. The
Company upon request shall provide a schedule of its calculations to each of the Trustee and the
Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively
upon the accuracy of the Company’s calculations without independent verification. The Trustee shall
deliver a copy of such schedule to any Noteholder upon the written request of such Noteholder.

     Section 12.08 . Table of Contents, Headings, Etc. The table of contents and the titles and
headings of the articles and sections of this First Supplemental Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and shall in no way modify
or restrict any of the terms or provisions hereof.

     Section 12.09 . Execution in Counterparts. This First Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.

     Section 12.10 . Severability. In the event any provision of this First Supplemental
Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted
by law) the validity, legality or enforceability of the remaining provisions shall not in any way
be affected or impaired.

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     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be
duly executed as of the date first written above.

	 	 	 	 	 
	 	CHAMPION ENTERPRISES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELLS FARGO BANK, N.A., as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	Lynn M. Steiner	 
	 	 	Title:  	Vice President	 
	 

 

 

EXHIBIT A

[FORM OF FACE OF NOTE]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), THIS SECURITY IS BEING ISSUED WITH TAX ORIGINAL ISSUE DISCOUNT. THE ISSUE PRICE OF THIS
SECURITY IS $1,000 PER $1,000 OF PRINCIPAL AMOUNT, AND THE ISSUE DATE OF THIS SECURITY IS NOVEMBER
2, 2007. IN ADDITION, THIS SECURITY IS SUBJECT TO UNITED STATES FEDERAL INCOME TAX REGULATIONS
GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS. FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE
CODE, THE COMPARABLE YIELD OF THIS SECURITY IS 9.73%, COMPOUNDED SEMI-ANNUALLY (WHICH WILL BE
TREATED AS THE YIELD TO MATURITY FOR UNITED STATES FEDERAL INCOME TAX PURPOSES).

THE COMPANY AGREES TO PROVIDE PROMPTLY TO THE HOLDER OF THIS SECURITY, UPON WRITTEN REQUEST, THE
ISSUE PRICE, AMOUNT OF TAX ORIGINAL ISSUE DISCOUNT, ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD
AND PROJECTED PAYMENT SCHEDULE. ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO THE COMPANY AT THE
FOLLOWING ADDRESS: CHAMPION ENTERPRISES, INC., 2701 CAMBRIDGE COURT, SUITE 300, AUBURN HILLS, MI
48326, ATTENTION: INVESTOR RELATIONS.

A-1

 

Pursuant to Section 2.08 of the Indenture, the foregoing legend is required
for U.S. Federal income tax purposes.

A-2

 

CHAMPION ENTERPRISES, INC.

2.75% Convertible Senior Note due 2037

			
	 	 	 
	No. [                    ]
	 	$[                    ]
	 	 	 

CUSIP No. 158496 AC3

     Champion Enterprises, Inc., a corporation duly organized and validly existing under the laws
of the State of Michigan (herein called the “Company,” which term includes any successor
corporation or other entity under the Indenture referred to on the reverse hereof), for value
received hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of      
Dollars (which amount may from time to time be increased or decreased to such other
principal amounts (which, taken together with the principal amounts of all other Outstanding Notes,
shall not, unless permitted by the First Supplemental Indenture, exceed $180,000,000 in aggregate
at any time) by adjustments made on the records of the
Trustee or the Custodian of the Depositary as set forth in Schedule A hereto, in accordance with
the rules and procedures of the Depositary) on November 1, 2037, and interest thereon as set forth
in the Indenture.

     This Note shall bear interest at the rate of 2.75% per year (subject to reduction as set forth
in Article 11 of the First Supplemental Indenture and the immediately succeeding paragraph) from
November 2, 2007, or from the most recent date to which interest had been paid or provided for to,
but excluding, the next scheduled Interest Payment Date until November 1, 2037. Interest is
payable semi-annually in arrears on each May 1 and November 1, commencing May 1, 2008, to holders
of record at the close of business on the preceding April 15 and October 15 (whether or not such
day is a Business Day), respectively.

     Beginning on November 1, 2012, during any six-month period thereafter from November 1 to April
30 and from May 1 to October 31, if the average Trading Price of the Notes for the five consecutive
Trading Days immediately preceding the first day of the applicable six-month interest period equals
or exceeds 120% of the principal amount of the Notes, the 2.75% interest rate for the Notes will be
reduced to 2.25% solely for the relevant six-month interest period.

     Payment of the principal of and premium, if any, and accrued and unpaid interest and
Additional Interest, if any, on this Note shall be made at the office or agency of the Company
maintained for that purpose in the United States, in such lawful money of the United States of
America as at the time of payment shall be legal tender for the payment of public and private
debts. Each installment of interest, including Additional Interest, if any, may be paid by check
mailed to such holder’s address as it appears in the Note Register; provided, however, that, with
respect to any Noteholder with an aggregate principal amount in excess of

A-3

 

$1,000,000, at the application of such holder in writing to the Trustee and Paying Agent (if
different from the Trustee) not later than the relevant Interest Record Date, accrued and unpaid
interest and Additional Interest, if any, on such holder’s Notes shall be paid by wire transfer in
immediately available funds to such holder’s account in the United States, which application shall
remain in effect until the Noteholder notifies the Trustee and Paying Agent to the contrary;
provided that any payment to the Depositary or its nominee shall be paid by wire transfer in
immediately available funds in accordance with the wire transfer instruction supplied by the
Depositary or its nominee from time to time to the Trustee and Paying Agent (if different from
Trustee).

     Reference is made to the further provisions of this Note set forth on the reverse hereof,
including, without limitation, provisions giving the holder of this Note the right to convert this
Note into Common Stock of the Company on the terms set forth in the Indenture. Such further
provisions shall for all purposes have the same effect as though fully set forth at this place.

     This Note shall be deemed to be a contract made under the laws of the State of New York, and
for all purposes shall be construed in accordance with and governed by the laws of said State
(without regard to the conflicts of laws provisions thereof).

     This Note shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been manually signed by the Trustee or a duly authorized
authenticating agent under the Indenture.

[Remainder of page intentionally left blank]

A-4

 

     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

	 	 	 	 	 
	 	CHAMPION ENTERPRISES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Dated:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

WELLS FARGO BANK, N.A.,

as Trustee, certifies that this is one of the Notes described

in the within-named Indenture.

By:                                                            

     Authorized Officer

A-5

 

[FORM OF REVERSE OF NOTE]

CHAMPION ENTERPRISES, INC.

2.75% Convertible Senior Note due 2037

     This Note is one of a duly authorized issue of Notes of the Company, designated as its 2.75%
Convertible Senior Notes due 2037 (herein called the “Notes”), limited to the aggregate principal
amount of $180,000,000 all issued or to be issued
under and pursuant to an Indenture dated as of November 2, 2007 (herein called the “Original
Indenture”), as supplemented by the First Supplemental Indenture dated as of November 2, 2007
(herein call the “First Supplemental Indenture” and the Original Indenture, as supplemented by the
First Supplemental Indenture, the “Indenture”) by and between the Company and Wells Fargo Bank,
N.A. (herein called the “Trustee”), to which Indenture reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee,
the Company and the holders of the Notes. Additional Notes may be issued in an unlimited aggregate
principal amount, subject to certain conditions specified in the Indenture.

     In case an Event of Default, as defined in the Indenture, shall have occurred and be
continuing, the principal of, premium, if any, and interest, including Additional Interest, if any,
on all Notes may be declared, by either the Trustee or Noteholders of not less than 25% in
aggregate principal amount of Notes then Outstanding, and upon said declaration shall become, due
and payable, in the manner, with the effect and subject to the conditions provided in the
Indenture.

     Subject to the terms and conditions of the Indenture, the Company will make all payments and
deliveries in respect of the Fundamental Change Repurchase Price, the Repurchase Price and
Redemption Price and the principal amount on the Maturity Date, as the case may be, to the holder
who surrenders a Note to a Paying Agent to collect such payments in respect of the Note. The
Company will pay cash amounts in money of the United States that at the time of payment is legal
tender for payment of public and private debts.

     The Indenture contains provisions permitting the Company and the Trustee in certain
circumstances, without the consent of the holders of the Notes, and in other circumstances, with
the consent of the holders of not less than a majority in aggregate principal amount of the Notes
at the time Outstanding, evidenced as in the Indenture provided, to execute supplemental indentures
modifying the terms of the Indenture and the Notes as described therein. It is also provided in
the Indenture that, subject to certain exceptions, the holders of a majority in aggregate principal
amount of the Notes at the time Outstanding may on behalf of the holders of all of the Notes waive
any past Default or Event of Default under the Indenture and its consequences.

A-6

 

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of, premium, if any, and accrued and unpaid interest, and Additional Interest, if any, on
this Note at the place, at the respective times, at the rate and in the lawful money herein
prescribed.

     The Notes are issuable in registered form without coupons in denominations of $1,000 principal
amount and integral multiples thereof. At the office or agency of the Company referred to on the
face hereof, and in the manner and subject to the limitations provided in the Indenture, Notes may
be exchanged for a like aggregate principal amount of Notes of other authorized denominations,
without payment of any service charge but, if required by the Company or Trustee, with payment of a
sum sufficient to cover any tax, assessments or other governmental charges that may be imposed in
connection therewith as a result of the name of the Noteholder of the new Notes issued upon such
exchange of Notes being different from the name of the Noteholder of the old Notes surrendered for
such exchange.

     The Notes are not subject to redemption through the operation of any sinking fund.

     Upon the occurrence of a Fundamental Change, the holder has the right, at such holder’s
option, to require the Company to repurchase all of such holder’s Notes or any portion thereof (in
principal amounts of $1,000 or integral multiples thereof) on the Fundamental Change Repurchase
Date at a price equal to the Fundamental Change Repurchase Price.

     On or after November 1, 2012, the Notes are redeemable, in whole or in part, for cash at any
time at the Company’s option at a price equal to the Redemption Price. The Company shall make at
least 10 semi-annual interest payments (including the interest payment on May 1, 2008) on the Notes
before it can redeem the Notes at its option.

     Subject to the terms and conditions of the Indenture, the Company shall be obligated to
purchase, at the option of the holder, all or any portion of Notes held by such holder on each
Repurchase Date at a price equal to the Repurchase Price.

     Subject to the provisions of the Indenture, the holder hereof has the right, at its option,
during certain periods and upon the occurrence of certain conditions specified in the Indenture,
prior to the close of business on the Business Day immediately preceding the Maturity Date, to
convert any Notes or portion thereof that is $1,000 or an integral multiple thereof, into shares of
Common Stock, at the Applicable Conversion Rate specified in the Indenture, as adjusted from time
to time as provided in the Indenture.

     Terms used in this Note and defined in the Indenture are used herein as therein defined.

A-7

 

ABBREVIATIONS

The following abbreviations, when used in the inscription of the face of this Note, shall be
construed as though they were written out in full according to applicable laws or regulations:

	 	 	 	 	 
	TEN COM — as tenants in common	 	UNIF GIFT MIN ACT
	 
	 	 	 	 
	 

	 	 	 	Custodian
	 	 	 	 	 
	 

	 	(Cust)	 	 
	 
	 	 	 	 
	TEN ENT — as tenants by the entireties
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	(Minor)	 	 
	 
	JT TEN  — as joint tenants with right of
survivorship and not as tenants in common
	 	Uniform Gifts to Minors Act                      (State)	 	 

Additional abbreviations may also be used

though not in the above list.

A-8

 

SCHEDULE A

CHAMPION ENTERPRISES, INC.

2.75% Convertible Senior Notes due 2037

     The initial principal amount of this Global Note is $[            ]. The following increases
or decreases in this Global Note have been made:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Signature of
	 	 	Amount of decrease in	 	Amount of increase in	 	Principal Amount of this	 	authorized signatory
	Date of	 	Principal Amount of this	 	Principal Amount of this	 	Global Note following such	 	of Trustee or
	Exchange	 	Global Note	 	Global Note	 	decrease or increase	 	Custodian
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 

A-9

 

EXHIBIT B

[FORM OF NOTICE OF CONVERSION]

To: Champion Enterprises, Inc.

     The undersigned registered owner of this Note hereby exercises the option to convert this
Note, or the portion hereof (that is $1,000 principal amount or an integral multiple thereof) below
designated, into shares of Common Stock in accordance with the terms of the Indenture referred to
in this Note, and directs that shares of Common Stock issuable and deliverable upon such
conversion, together with any cash in lieu of fractional shares, and any Notes representing
any unconverted principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If any shares of Common Stock or any portion of
this Note not converted are to be issued in the name of a Person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be
paid to the undersigned on account of interest accompanies this Note.

	 	 	 	 	 
	Dated:                     
	 	 	 	 
	 

	 	 	 	 
	 
	 

	 	 	 	 
	 

	 	 	 	Signature(s)

	 	 	 
	 

Signature Guarantee
	 	 
	 
	 	 
	Signature(s) must be guaranteed
by an eligible Guarantor Institution
(banks, stock brokers, savings and
loan associations and credit unions)
with membership in an approved
signature guarantee medallion program
pursuant to Securities and Exchange
Commission Rule 17Ad-15 if shares
of Common Stock are to be issued, or
Notes to be delivered, other than
to and in the name of the registered holder.

	 	 

B-1

 

	 	 	 
	Fill in for registration of shares if
to be issued, and Notes if to
be delivered, other than to and in the
name of the registered holder:

	 	 
	 
	 	 
	 

(Name)
	 	 
	 
	 	 
	 

(Street Address)
	 	 
	 
	 	 
	 

(City, State and Zip Code)

Please print name and address
	 	 

	 	 	 	 	 
	 

	 	 	 	Principal amount to be converted (if less
than all): $___,000
	 
	 	 	 	 
	 

	 	 	 	NOTICE: The above signature(s) of the
holder(s) hereof must correspond with the
name as written upon the face of the Note in
every particular without alteration or
enlargement or any change whatever.
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Social Security or Other Taxpayer Identification Number

B-2

 

EXHIBIT C

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

To: Champion Enterprises, Inc.

The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Champion
Enterprises, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the
Company and specifying the Fundamental Change Repurchase Date and requests and instructs the
Company to repay to the registered holder hereof in accordance with the applicable provisions of
the Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion
thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2)
if such Fundamental Change Repurchase Date does not fall during the period after a Interest Record
Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest,
including Additional Interest, if any, thereon to, but excluding, such Fundamental Change
Repurchase Date.

In the case of certificated Notes, the certificate numbers of the Notes to be repurchased are as
set forth below:

	 	 	 	 	 
	Dated:                     
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature(s)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Social Security or Other Taxpayer Identification
Number
	 
	 	 	 	 
	 

	 	 	 	Principal amount to be repaid (if less than
all): $___,000
	 
	 	 	 	 
	 

	 	 	 	NOTICE: The above signature(s) of the holder(s)
hereof must correspond with the name as written
upon the face of the Note in every particular
without alteration or enlargement or any change
whatever.

C-1

 

EXHIBIT D

[FORM OF ASSIGNMENT AND TRANSFER]

For value received                      hereby sell(s), assign(s) and transfer(s) unto
                     (Please insert social security or Taxpayer Identification Number of assignee) the
within Note, and hereby irrevocably constitutes and appoints                                           attorney to
transfer the said Note on the books of the Company, with full power of substitution in the
premises.

Dated:                                         

	 	 	 
	 

Signature(s)

	 	 
	 
	 	 
	 

Signature Guarantee
	 	 

	 	 	 
	Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an approved
signature guarantee medallion program pursuant
to Securities and Exchange Commission
Rule 17Ad-15 Notes are to be delivered, other
than to and in the name of the registered holder.

	 	 

NOTICE: The signature on the assignment must correspond with the name as written upon the face of
the Note in every particular without alteration or enlargement or any change whatever.

D-1

 

EXHIBIT E

[FORM OF REPURCHASE NOTICE]

To: Champion Enterprises, Inc.

The undersigned registered owner of this Note hereby requests and instructs Champion
Enterprises, Inc. (the “Company”) to repay to the registered holder hereof on November 1, 20[___]
(the “Repurchase Date”) in accordance with the applicable provisions of the Indenture referred to
in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000
principal amount or an integral multiple thereof) below designated, and (2) if such Repurchase Date
does not fall during the period after an Interest Record Date and on or prior to the corresponding
Interest Payment Date, accrued and unpaid interest, including Additional Interest, if any, thereon
to, but excluding, such Repurchase Date.

In the case of certificated Notes, the certificate numbers of the Notes to be repurchased are as
set forth below:

	 	 	 	 	 
	Dated:                                         
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature(s)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Social Security or Other Taxpayer Identification Number
	 
	 	 	 	 
	 

	 	 	 	Principal amount to be repaid (if less than
all): $___,000

NOTICE: The above signature(s) of the holder(s) hereof must correspond with the name as written
upon the face of the Note in every particular without alteration or enlargement or any change
whatever.

E-1

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