Exhibit 10.2
 

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HANCOCK FABRICS, INC.,
as Issuer
 
Floating Rate Series A Secured Notes Due 2017
 
INDENTURE
 
Dated as of November 20, 2012
 
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
 

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CROSS-REFERENCE TABLE*
 
Trust Indenture Act Section
 
Indenture Section
310 (a)(1)
 
7.10
(a) (2)
 
7.10
(a) (3)
 
N/A
(a) (4)
 
N/A
(a) (5)
 
7.10
(b)
 
7.10
(c)
 
N/A
     
311 (a)
 
7.11
(b)
 
7.11
(c)
 
N/A
     
312 (a)
 
2.5
(b)
 
12.3
(c)
 
12.3
     
313 (a)
 
7.6
(b) (1)
 
7.6
(b) (2)
 
7.6, 7.7
(c)
 
7.6, 12.2
(d)
 
7.6
     
314 (a)
 
N/A
(b)
 
4.6, 10.10
(c) (1)
 
N/A
(c) (2)
 
N/A
(c) (3)
 
N/A
(d)
 
N/A
(e)
 
N/A
(f)
 
N/A
     
315 (a)
 
N/A
(b)
 
N/A
(c)
 
N/A
(d)
 
N/A
(e)
 
N/A
     
316 (a) (last sentence)
 
N/A
(a)(1)(A)
 
N/A
(a)(1)(B)
 
N/A
(a)(2)
 
N/A
(b)
 
N/A
(c)
 
2.13

 
 
 

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317 (a)(1)
 
N/A
(a)(2)
 
N/A
(b)
 
N/A
     
318 (a)
 
N/A
(b)
 
N/A
(c)
 
12.1
     

N/A means not applicable.
 
*           This Cross-Reference Table is not part of the Indenture.
 
 
3

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TABLE OF CONTENTS
 

    Page            
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
1
Section 1.1
DEFINITIONS
1
Section 1.2
OTHER DEFINITIONS
16
Section 1.3
INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
17
Section 1.4
RULES OF CONSTRUCTION
17
ARTICLE II
THE NOTES
18
Section 2.1
FORM AND DATING
18
Section 2.2
EXECUTION AND AUTHENTICATION
19
Section 2.3
REGISTRAR AND PAYING AGENT
20
Section 2.4
PAYING AGENT TO HOLD MONEY IN TRUST
20
Section 2.5
HOLDER LISTS
20
Section 2.6
TRANSFER AND EXCHANGE
21
Section 2.7
REPLACEMENT OF NOTES
24
Section 2.8
OUTSTANDING NOTES
25
Section 2.9
TREASURY NOTES
25
Section 2.10
TEMPORARY NOTES
25
Section 2.11
CANCELLATION
26
Section 2.12
DEFAULTED INTEREST
26
Section 2.13
RECORD DATE
26
Section 2.14
COMPUTATION OF INTEREST
26
Section 2.15
CUSIP NUMBER
26
ARTICLE III
REDEMPTION AND REPURCHASE
27
Section 3.1
NOTICES TO TRUSTEE
27
Section 3.2
SELECTION OF NOTES TO BE REDEEMED
27
Section 3.3
NOTICE OF REDEMPTION
27
Section 3.4
EFFECT OF NOTICE OF REDEMPTION
28
Section 3.5
DEPOSIT OF REDEMPTION PRICE
28
Section 3.6
NOTES REDEEMED IN PART
29
Section 3.7
OPTIONAL REDEMPTION
29

 
 
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TABLE OF CONTENTS
(continued)
Page
 
 
Section 3.8
MANDATORY REPURCHASE
29
ARTICLE IV
COVENANTS
31
Section 4.1
PAYMENT OF NOTES
31
Section 4.2
MAINTENANCE OF OFFICE OR AGENCY
32
Section 4.3
ADDITIONAL AMOUNTS
32
Section 4.4
PAYMENT CERTIFICATIONS
33
Section 4.5
COMPLIANCE CERTIFICATE
34
Section 4.6
COMPLIANCE WITH TIA
34
Section 4.7
MAINTENANCE OF EXISTENCE
34
Section 4.8
NEW COLLATERAL LOCATIONS
35
Section 4.9
COMPLIANCE WITH LAWS, REGULATIONS, ETC
35
Section 4.10
PAYMENT OF TAXES AND CLAIMS
36
Section 4.11
INSURANCE
36
Section 4.12
FINANCIAL STATEMENTS AND OTHER INFORMATION
36
Section 4.13
SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC
37
Section 4.14
ENCUMBRANCES
38
Section 4.15
INDEBTEDNESS
40
Section 4.16
LOANS, INVESTMENTS, ETC
41
Section 4.17
RESTRICTED PAYMENTS
42
Section 4.18
TRANSACTIONS WITH AFFILIATES
42
Section 4.19
COMPLIANCE WITH ERISA
43
Section 4.20
CHANGE IN BUSINESS
44
Section 4.21
LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES
44
Section 4.22
CREDIT CARD AGREEMENTS
44
Section 4.23
AFTER ACQUIRED REAL PROPERTY
44
Section 4.24
FOREIGN ASSETS CONTROL REGULATIONS, ETC
45
Section 4.25
FURTHER ASSURANCES
45
Section 4.26
LEASEHOLD ESTATES
46

 
 
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TABLE OF CONTENTS
(continued)
Page
 
 
ARTICLE V
SUCCESSORS
46
Section 5.1
MERGER, CONSOLIDATION OR SALE OF ASSETS OF HANCOCK
46
Section 5.2
SUCCESSOR CORPORATION OF HANCOCK SUBSTITUTED
47
ARTICLE VI
DEFAULTS AND REMEDIES
47
Section 6.1
EVENTS OF DEFAULT
47
Section 6.2
ACCELERATION
49
Section 6.3
OTHER REMEDIES
49
Section 6.4
WAIVER OF EXISTING DEFAULTS
49
Section 6.5
CONTROL BY MAJORITY
50
Section 6.6
LIMITATION ON SUITS
50
Section 6.7
RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT
50
Section 6.8
COLLECTION SUIT BY TRUSTEE
51
Section 6.9
TRUSTEE MAY FILE PROOFS OF CLAIM
51
Section 6.10
PRIORITIES
51
Section 6.11
UNDERTAKING FOR COSTS
52
ARTICLE VII
TRUSTEE
52
Section 7.1
DUTIES OF TRUSTEE
52
Section 7.2
RIGHTS OF TRUSTEE
53
Section 7.3
INDIVIDUAL RIGHTS OF TRUSTEE
54
Section 7.4
TRUSTEE’S DISCLAIMER
54
Section 7.5
NOTICE OF DEFAULTS
54
Section 7.6
REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES
55
Section 7.7
COMPENSATION AND INDEMNITY
55
Section 7.8
REPLACEMENT OF TRUSTEE
56
Section 7.9
SUCCESSOR TRUSTEE BY MERGER, ETC
57
Section 7.10
ELIGIBILITY; DISQUALIFICATION
57

 
 
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TABLE OF CONTENTS
(continued)
Page
 
 
Section 7.11
PREFERENTIAL COLLECTION OF CLAIMS AGAINST HANCOCK
57
ARTICLE VIII
SATISFACTION AND DISCHARGE; DEFEASANCE
57
Section 8.1
OPTION TO EFFECT LEGAL AND COVENANT DEFEASANCE
57
Section 8.2
LEGAL DEFEASANCE AND DISCHARGE
58
Section 8.3
COVENANT DEFEASANCE
58
Section 8.4
CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
59
Section 8.5
SATISFACTION AND DISCHARGE OF INDENTURE
60
Section 8.6
DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS
60
Section 8.7
REPAYMENT TO HANCOCK
61
Section 8.8
REINSTATEMENT
61
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
61
Section 9.1
WITHOUT CONSENT OF HOLDERS OF NOTES
62
Section 9.2
WITH CONSENT OF HOLDERS OF NOTES
62
Section 9.3
COMPLIANCE WITH TRUST INDENTURE ACT
64
Section 9.4
REVOCATION AND EFFECT OF CONSENTS
64
Section 9.5
NOTATION ON OR EXCHANGE OF NOTES
64
Section 9.6
TRUSTEE TO SIGN AMENDMENTS, ETC
64
ARTICLE X
SECURITY AND PLEDGE OF COLLATERAL
65
Section 10.1
GRANT OF SECURITY INTEREST
65
Section 10.2
REPRESENTATIONS AND WARRANTIES
65
Section 10.3
FURTHER ASSURANCES
65
Section 10.4
TRUSTEE APPOINTED ATTORNEY-IN-FACT
66
Section 10.5
TRUSTEE MAY PERFORM
66
Section 10.6
TRUSTEE’S DUTIES
66
Section 10.7
APPLICATION OF PROCEEDS
66
Section 10.8
CONTINUING LIEN
66

 
 
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TABLE OF CONTENTS
(continued)
Page
 
 
Section 10.9
CERTIFICATES AND OPINIONS
66
ARTICLE XI
SUBORDINATION OF INDENTURE DEBT AND INDENTURE DOCUMENTS
67
Section 11.1
GENERAL
67
Section 11.2
ENFORCEMENT
67
Section 11.3
PAYMENTS HELD IN TRUST
68
Section 11.4
DEFENSE TO ENFORCEMENT
68
Section 11.5
BANKRUPTCY, ETC
68
Section 11.6
LIEN SUBORDINATION
71
Section 11.7
CREDIT FACILITY LENDERS’ FREEDOM OF DEALING
73
Section 11.8
HANCOCK’S OBLIGATIONS ABSOLUTE
73
Section 11.9
TERMINATION OF SUBORDINATION
74
Section 11.10
THIRD PARTY BENEFICIARY STATUS AND AMENDMENTS AND OTHER MODIFICATIONS TO
INDENTURE DOCUMENTS
74
ARTICLE XII
MISCELLANEOUS
75
Section 12.1
TRUST INDENTURE ACT CONTROLS
75
Section 12.2
NOTICES
75
Section 12.3
COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES
76
Section 12.4
CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
76
Section 12.5
STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
76
Section 12.6
GOVERNING LAW
77
Section 12.7
LEGAL HOLIDAYS
77
Section 12.8
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
77
Section 12.9
NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
77
Section 12.10
SUCCESSORS
77

 
 
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TABLE OF CONTENTS
(continued)
Page
 
 
Section 12.11
SEVERABILITY
78
Section 12.12
COUNTERPART ORIGINALS
78
Section 12.13
TABLE OF CONTENTS, HEADINGS, ETC
78

EXHIBITS:
 
Exhibit A - Form of Note
 
Exhibit B - Form of Supplemental Indenture and Guarantee
 
 
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This INDENTURE, dated as of November 20, 2012, is between Hancock Fabrics, Inc.,
a Delaware corporation (“Hancock” or the “Company”), and Deutsche Bank National
Trust Company as the Trustee (as hereinafter defined).
 
Each party agrees as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes (as hereinafter defined):
 
ARTICLE I

 
DEFINITIONS AND INCORPORATION BY REFERENCE
 
 
SECTION 1.1
DEFINITIONS.

 
“Acceleration Notice” means a notice, following the occurrence of any Event of
Default, pursuant to which the Trustee has indicated to the Credit Facility
Agent in writing the intent of the Holders of the Notes to accelerate the Notes
and to take any Lien Enforcement Action.
 
“Accounts” means, as to Hancock and each Guarantor, all present and future
rights of such Hancock and each Guarantor to payment of a monetary obligation,
whether or not earned by performance, which is not evidenced by chattel paper or
an instrument, (a) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (b) for services rendered or to be
rendered, (c) for a secondary obligation incurred or to be incurred, or (d)
arising out of the use of a credit or charge card or information contained on or
for use with the card.
 
“Affiliate” means, with respect to a specified Person, any other Person which
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and without limiting
the generality of the foregoing, includes (a) any Person which beneficially owns
or holds five (5%) percent or more of any class of Voting Stock of such Person
or other equity interests in such Person, (b) any Person of which such Person
beneficially owns or holds five (5%) percent or more of any class of Voting
Stock or in which such Person beneficially owns or holds five (5%) percent or
more of the equity interests and (c) any director or executive officer of such
Person.  For the purposes of this definition, the term “control” (including with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
agreement or otherwise.
 
“Agent” means any Registrar, Paying Agent or co-registrar.
 
“Applicable Procedures” means, with respect to any transfer or exchange of
beneficial interests in the Global Note, the rules and procedures of the
Depository that apply to such transfer and exchange.
 
“Bank Product” means any service or facility extended to the Company or
Guarantors by any financial institution including: (a) credit cards, (b) credit
card processing services, (c) debit cards, (d) purchase cards, (e) ACH
transactions, (f) cash management, including controlled disbursement, accounts
or services, or (g) hedging agreements.
 
 
 

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“Bank Product Provider” means a financial institution that provides any Bank
Products to Hancock or a Guarantor.
 
“Bankruptcy Code” means the provisions of Title 11 of the United States Code, as
amended from time to time and any successor statute and all rules and
regulations promulgated thereunder.
 
“Bankruptcy Law” means the Bankruptcy Code, and any other bankruptcy,
reorganization or insolvency law or any other law relating to the relief of
debtors, readjustment of indebtedness, reorganization, arrangement, composition
or extension or marshalling of assets or otherwise.
 
“Blockage Notice” means a written notice delivered by the Credit Facility Agent
to the Trustee following receipt by the Credit Facility Agent of an Acceleration
Notice and indicating that it is a blockage notice pursuant to this Indenture.
 
“Board of Directors” means the Board of Directors of Hancock, or any authorized
committee of such Board of Directors.
 
“Business Day” means any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws of the
State of New York, and a day on which the Trustee is open for the transaction of
business.
 
“Capital Leases” means, as applied to any Person, any lease of (or any agreement
conveying the right to use) any property (whether real, personal or mixed) by
such Person as lessee which in accordance with GAAP, is required to be reflected
as a liability on the balance sheet of such Person.
 
“Capital Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person’s capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
 
“Cash Equivalents” means, at any time, (a) any evidence of Indebtedness with a
maturity date of ninety (90) days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers’ acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$1,000,000,000; (c) commercial paper (including variable rate demand notes) with
a maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of Hancock or any Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies,
Inc.  or at least P-1 by Moody’s Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $1,000,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within ninety (90) days or less
from the date of acquisition; provided, that, the terms of such agreements
comply with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions with Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985; and (f) investments in money
market funds and mutual funds which invest substantially all of their assets in
securities of the types described in clauses (a) through (e) above.
 
 
2

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“Change of Control” means (a) the transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of Hancock to any Person
or group (as such term is used in Section 13(d)(3) of the Exchange Act); (b) the
liquidation or dissolution of Hancock or the adoption of a plan by the
stockholders of Hancock relating to the dissolution or liquidation of Hancock or
Guarantor; (c) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act) of more than fifty (50%) percent of
beneficial ownership, directly or indirectly, of the voting power of the total
outstanding Voting Stock of Hancock or the Board of Directors of Hancock; (d)
during any period of two (2) consecutive years, individuals who at the beginning
of such period constituted the Board of Directors (or similar governing body) of
Hancock (together with any new directors whose nomination for election by the
stockholders of Hancock was approved by a vote of at least a majority of the
directors (or similar persons) then still in office who were either directors
(or similar persons) at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors (or similar governing body) of
Hancock then still in office; or (e) the failure of Hancock to own and control,
directly or indirectly, one hundred (100%) percent of the voting power of the
total outstanding Voting Stock of any Guarantor; provided, however, that the
issuance of the New Warrants pursuant to the Warrant Exchange or the conversion
of any Specified Warrant into Specified Common Stock pursuant to the terms of
such Specified Warrant shall not be considered a “Change of Control” hereunder.
 
“Change of Control Notice” means a notice mailed by Hancock to each Holder
describing the transaction or transactions that constitute a Change of Control
and offering to repurchase all or any part (equal to $1,000 or integral multiple
thereof if in part) of such Holder’s Notes pursuant to Section 3.8 hereof.
 
“Clearstream” means Clearstream, S.A.
 
“Code” means the Internal Revenue Code of 1986, as the same now exists or may
from time to time hereafter be amended, modified, recodified or supplemented,
together with all rules, regulations and interpretations thereunder or related
thereto.
 
“Collateral” means all assets and properties of any kind whatsoever that
constitutes collateral under the Credit Facility Documents, this Indenture or
the Collateral Documents.
 
 
3

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“Collateral Documents” means all deeds of trust, mortgages, collateral
documents, pledge agreements, and other similar documents from Hancock and each
Guarantor for the benefit of the Trustee and the Holders given to secure the
Notes pursuant to this Indenture.
 
“Commission” means the United States Securities and Exchange Commission.
 
“Corporate Trust Office” means the office of the Trustee at which the corporate
trust business of the Trustee is principally administered, which at the date of
this Indenture is located at 222 South Riverside Plaza, 25 Floor, MS CH 105-2502
Chicago, IL 60606-5808.
 
“Credit Card Agreements” means all agreements now or hereafter entered into by
Hancock or any Guarantor for the benefit of Hancock or a Guarantor, in each case
with any Credit Card Issuer or any Credit Card Processor, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
 
“Credit Card Issuer” means any person (other than Hancock or a Guarantor) who
issues or whose members issue credit cards, including, without limitation,
MasterCard or VISA bank credit or debit cards or other bank credit or debit
cards issued through MasterCard International, Inc., Visa, U.S.A., Inc.  or Visa
International and American Express, Discover, Diners Club, Carte Blanche and
other non-bank credit or debit cards, including, without limitation, credit or
debit cards issued by or through American Express Travel Related Services
Company, Inc., and Discover Financial Services, Inc.
 
“Credit Card Processor” means any servicing or processing agent or any factor or
financial intermediary who facilitates, services, processes or manages the
credit authorization, billing transfer and/or payment procedures with respect to
Hancock’s or any Guarantor’s sales transactions involving credit card or debit
card purchases by customers using credit cards or debit cards issued by any
Credit Card Issuer.
 
“Credit Facility” means, collectively, (i) the credit facility established
pursuant to the Credit Facility Loan Agreement and (ii) after such Credit
Facility Loan Agreement has been terminated and all then outstanding
Indebtedness thereunder or with respect thereto has been repaid in full in cash
and discharged, any successors to or replacements (as designated by the Board of
Directors of Hancock in its sole judgment, and evidenced by a resolution) of
such credit facility, as such successors or replacements may from time to time
be amended, renewed, supplemented, modified or replaced, including any increases
in the principal amount thereof. For the avoidance of doubt, upon any
replacement of the credit facility established pursuant to the Credit Facility
Loan Agreement, all references in this Indenture to the Credit Facility Loan
Agreement (and related terms) shall be deemed to be references to such
replacement Credit Facility and the documents related thereto, mutatis mutandis.
 
“Credit Facility Agent” means the agent for the Credit Facility Lenders under
the Credit Facility Loan Agreement.
 
“Credit Facility Debt” means all principal, interest, fees (including any
prepayment fees or premiums), costs, enforcement expenses (including legal fees
and disbursements), collateral protection expenses, other reimbursement or
indemnity obligations and all other obligations, liabilities and indebtedness of
every kind, nature and description created or evidenced by the Credit Facility
Loan Agreement or any of the other Credit Facility Document or any prior,
concurrent, or subsequent notes, instruments or agreements of indebtedness,
liabilities or obligations of any type or form whatsoever relating thereto in
favor of the Credit Facility Agent or any of the Credit Facility Secured
Parties.  Credit Facility Debt shall expressly include any and all interest
accruing or out of pocket costs or expenses incurred after the date of any
filing by or against Hancock or the Loan Parties of any petition under any
Bankruptcy Law, regardless of whether the Credit Facility Agent’s or any Credit
Facility Secured Party’s claim therefor is allowed or allowable in the case or
proceeding relating thereto.
 
 
4

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“Credit Facility Default” means an act, condition or event which with notice or
passage of time or both would constitute a Credit Facility Event of Default.
 
“Credit Facility Documents” mean collectively, (i) the Credit Facility Loan
Agreement, (ii) all “Financing Agreements” (as defined in the Credit Facility
Loan Agreement)(or any such comparable term for the loan documents executed and
delivered in connection with the Credit Facility Loan Agreement), (iii) any and
all other documents and instruments evidencing or creating the Credit Facility
Debt (including, without limitation, Hedge Agreements and Bank Products) and
(iv) all guaranties, mortgages, security agreements, pledges and other
collateral guarantying or securing directly or indirectly any Credit Facility
Debt, whether now existing or hereafter created, as each such agreement,
document or instrument may be amended, restated or otherwise modified and in
effect from time to time.
 
“Credit Facility Event of Default” means the occurrence or existence of any
event or condition described in Section 10.1 of the Credit Facility Loan
Agreement or any other “Event of Default” (howsoever defined) under any Credit
Facility Document.
 
“Credit Facility Lenders” means the financial institutions identified as Lenders
in the Credit Facility Loan Agreement.
 
“Credit Facility Loan Agreement” means that certain Loan and Security Agreement
(as amended, amended and restated, supplemented, refinanced or otherwise
modified and in effect from time to time, including any replacement agreement
therefor), dated as of August 1, 2008, among Hancock, the Guarantors, the Credit
Facility Lenders, and General Electric Capital Corporation, in its capacity as
agent thereunder.
 
“Credit Facility Secured Parties” means collectively, (i) the Credit Facility
Agent, (ii) the Credit Facility Lenders, (iii) the Issuing Bank (as defined in
the Credit Facility Loan Agreement) and (iv) any Bank Product Provider
(including, for the avoidance of doubt, any Secured Swap Provider (as defined in
the Credit Facility Loan Agreement)).
 
“Default” means any event that is or with the passage of time or the giving of
notice or both would be an Event of Default.
 
“Definitive Notes” means Notes that are substantially in the form of the Note
attached hereto as Exhibit A, that do not include the information or text called
for by footnotes 1 and 2 thereto.
 
 
5

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“Depository” means the Depository Trust Company as the depository with respect
to the Notes, until a successor shall have been appointed and become such
Depository pursuant to the applicable provision of this Indenture, and,
thereafter, “Depository” shall mean or include such successor.
 
“Discharge of all Credit Facility Debt” means the occurrence of all of the
following: (i) termination of all commitments to extend credit that would
constitute Credit Facility Debt, (ii) final payment in full in cash of all
Credit Facility Debt and (iii) termination, cancellation or cash
collateralization (in each case, in accordance with the terms of the Credit
Facility Loan Agreement) of all outstanding Letter of Credit Obligations (as
defined in the Credit Facility Loan Agreement).
 
“Environmental Laws” means all foreign, Federal, State and local laws (including
common law), legislation, rules, codes, licenses, permits (including any
conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between Hancock or any Guarantor and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials.  The term “Environmental Laws” includes: (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
 
“Equipment” means, as to Hancock and each Guarantor, all of its now owned and
hereafter acquired equipment, wherever located, including machinery, data
processing and computer equipment (whether owned or licensed and including
embedded software), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, together with
all rules, regulations and interpretations thereunder or related thereto.
 
 
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“ERISA Affiliate” means any person required to be aggregated with Hancock, any
Guarantor or any of its or their respective Subsidiaries under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
 
“Euroclear” means the Euroclear system.
 
“Exchange Act” means the Securities Exchange Act of 1934, together with all
rules, regulations and interpretations thereunder or related thereto.
 
“Existing Indenture” means the Indenture dated as of June 17, 2008, as amended
or supplemented from time to time, by and among Hancock, the Guarantors and
Deutsche Bank National Trust Company, in its capacity as trustee thereunder.
 
“Existing Indenture Documents” means, collectively, the Existing Indenture, the
Existing Notes, the Collateral Documents (as defined in the Existing
Indenture)  and each other document or instrument executed and/or delivered in
connection therewith.
 
“Existing Notes” means those certain Floating Rate Series A Secured Notes Due
2013 issued by Hancock pursuant to the Existing Indenture.
 
“GAAP” shall mean generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied.
 
“Global Note” means a permanent global secured note that contains the legend
referred to in Section 2.6(i)(ii) hereof, and that is deposited with the Note
Custodian and registered in the name of the Depository or its nominee.
 
“Governmental Authority” means any nation or government, any state, province, or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
 
“Guarantee” means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
 
“Guarantors” means, collectively, the following (together with their respective
successors and assigns): (a) HF Merchandising, Inc., a Delaware corporation; (b)
Hancock Fabrics of MI, Inc., a Delaware corporation; (c) hancockfabrics.com,
Inc., a Delaware corporation; (d) Hancock Fabrics, LLC, a Delaware limited
liability company, (e) HF Enterprises, Inc., a Delaware corporation; (f) HF
Resources, Inc., a Delaware corporation and (g) any other Person that at any
time after the date hereof becomes a Subsidiary of Hancock; each sometimes being
referred to herein individually as a “Guarantor”.
 
 
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“Hazardous Materials” means any hazardous, toxic or dangerous substances,
materials and wastes, including hydrocarbons (including naturally occurring or
man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type
of pollutants or contaminants (including materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic under any
Environmental Law).
 
“Hedge Agreement” means an agreement between Hancock or any Guarantor and a Bank
Product Provider that is a rate swap agreement, basis swap, forward rate
agreement, commodity swap, interest rate option, forward foreign exchange
agreement, spot foreign exchange agreement, rate cap agreement, rate floor
agreement, rate collar agreement, currency swap agreement, cross-currency rate
swap agreement, currency option, any other similar agreement (including any
option to enter into any of the foregoing or a master agreement for any the
foregoing together with all supplements thereto) for the purpose of protecting
against or managing exposure to fluctuations in interest or exchange rates,
currency valuations or commodity prices; sometimes being collectively referred
to herein as “Hedge Agreements”.
 
“Holder” means a Person in whose name a Note is registered on the Registrar’s
books.
 
“Indebtedness” means, with respect to any Person, any liability, whether or not
contingent, (a) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments; (b)
representing the balance deferred and unpaid of the purchase price of any
property or services (other than an account payable to a trade creditor (whether
or not an Affiliate) incurred in the ordinary course of business of such Person
and payable in accordance with customary trade practices); (c) all obligations
as lessee under leases which have been, or should be, in accordance with GAAP
recorded as Capital Leases; (d) any contractual obligation, contingent or
otherwise, of such Person to pay or be liable for the payment of any
indebtedness described in this definition of another Person, including, without
limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof, or to maintain solvency, assets, level of income,
or other financial condition; (e) all obligations with respect to redeemable
stock and redemption or repurchase obligations under any Capital Stock or other
equity securities issued by such Person; (f) all reimbursement obligations and
other liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker’s acceptances, drafts or
similar documents or instruments issued for such Person’s account; (g) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; (i) all obligations owed by such Person under License Agreements with
respect to non-refundable, advance or minimum guarantee royalty payments; (j)
indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable therefor
as a result of such Person’s ownership interest in such entity, except to the
extent that the terms of such indebtedness expressly provide that such Person is
not liable therefor or such Person has no liability therefor as a matter of law;
and (k) the principal and interest portions of all rental obligations of such
Person under any synthetic lease or similar off-balance sheet financing where
such transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP.
 
 
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“Indenture” means this Indenture, as amended or supplemented from time to time.
 
“Indenture Debt” means all Indebtedness, Obligations or any other liabilities or
obligations arising under this Indenture and the other Indenture Documents.
 
“Indenture Documents” means, collectively, the Indenture, the Notes, the
Collateral Documents and each other document or instrument executed and/or
delivered in connection therewith.
 
“Indirect Participant” means a person who holds an interest through a
Participant.
 
“Initial Issue Date” means the first date on which any Note is issued.
 
“Intellectual Property” means, as to Hancock and each Guarantor, its now owned
and hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
applications, copyright registrations, trademarks, servicemarks, trade names,
trade styles, trademark and service mark applications, and licenses and rights
to use any of the foregoing and all applications, registrations and recordings
relating to any of the foregoing as may be filed in the United States Copyright
Office, the United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof, any political subdivision
thereof or in any other country or jurisdiction, together with all rights and
privileges arising under applicable law with respect to Hancock’s or any
Guarantor’s use of any of the foregoing; all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing; all
rights to sue for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill
(including any goodwill associated with any trademark or servicemark, or the
license of any trademark or servicemark); customer and other lists in whatever
form maintained; trade secret rights, copyright rights, rights in works of
authorship, domain names and domain name registration; software and contract
rights relating to computer software programs, in whatever form created or
maintained.
 
 
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“Interest Coverage Ratio” means income before interest, taxes, depreciation and
amortization on a first in, first out (FIFO) basis for the previous twelve (12)
months divided by the interest expense incurred during the same period.
 
“Inventory” means, as to Hancock and each Guarantor, all of its now owned and
hereafter existing or acquired goods, wherever located, which (a) are leased by
it as lessor; (b) are held by it for sale or lease or to be furnished under a
contract of service; (c) are furnished by it under a contract of service; or (d)
consist of raw materials, work in process, finished goods or materials used or
consumed in its business.
 
“License Agreements” shall mean all of the agreements or other arrangements of
Hancock and each Guarantor pursuant to which Hancock or such Guarantor has a
license or other right to use any trademarks, logos, designs, representations or
other Intellectual Property owned by another person.
 
“Lien” means with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind, or any other type of preferential
arrangement that has the practical effect of creating a security interest, in
respect of such asset.
 
“Lien Enforcement Action” means (i) any action by the Credit Facility Agent or
any Credit Facility Secured Party or the Trustee or any Holder to foreclose on
the Lien of such Person in any Collateral, (ii) any action, as part of an
exercise of rights or remedies by any of the Credit Facility Agent, any Credit
Facility Secured Party, the Trustee or any Holder to take possession of, sell or
otherwise realize (judicially or non judicially) upon any Collateral (including,
without limitation, by setoff or notification of account debtors or other
Persons obligated on Collateral), and/or (iii) the commencement by the Credit
Facility Agent or any Credit Facility Secured Party or the Trustee or any Holder
of any legal proceedings against any Loan Party or with respect to any
Collateral to facilitate the actions described in clauses (i) and (ii) above;
provided that, for the avoidance of doubt, none of the following shall
constitute a Lien Enforcement Action: (A) making demand for payment or
accelerating the maturity of any Credit Facility Debt or Indenture Debt, (B) the
receipt of payments of principal of or interest on the Credit Facility Debt or
payments of other obligations arising under the Credit Facility Documents
(including the receipt and application by the Credit Facility Agent to the
Credit Facility Debt of collections of accounts receivable or proceeds of other
Collateral received from account debtors or other Persons obligated on
Collateral or through any lockbox or other cash management arrangement, whether
or not any Credit Facility Event of Default under the Credit Facility Loan
Agreement exists at the time of application), or receipt of scheduled payments
of interest on the Notes as set forth in Section 11.1 hereof, (C) the
implementation of Reserves (as defined in the Credit Facility Loan Agreement)
under the Credit Facility Loan Agreement, (D) the reduction or increase of
advance rates under the Credit Facility Loan Agreement, (E) the termination of
the Commitments (as defined in the Credit Facility Loan Agreement) or the
cessation (whether temporary or permanent) of lending under the Credit Facility
Loan Agreement due to the existence of a Credit Facility Default or Credit
Facility Event of Default, (F) sending by the Credit Facility Agent, any Credit
Facility Secured Party or any of their Affiliates of any “activation” notice
under a deposit control agreement to block access to any deposit account of a
Loan Party, or (G) the exercise by the Credit Facility Agent, any Credit
Facility Secured Party or any of their Affiliates of any right of offset with
respect to Credit Facility Debt not arising under the Credit Facility Debt
Documents.
 
 
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“Loan Parties” means collectively, Hancock, the Guarantors, any other guarantor
of all or any portion of the Credit Facility Debt or the Indebtedness evidenced
by any Indenture Documents and any other person granting a security interest in
or Lien on such Person’s assets to secure the obligations arising under the
Credit Facility Documents or the Indenture Debt.
 
“Maturity Date” means five years from the Initial Issue Date.
 
“Mortgage” shall mean a deed of trust and any other instrument issued by Hancock
or a Guarantor creating a lien in favor of Trustee with respect to the Real
Property and related assets of Hancock located in Baldwyn, Mississippi, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
 
“Multiemployer Plan” shall mean a “multi-employer plan” as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by Hancock, any Guarantor or
any ERISA Affiliate or with respect to which Hancock, any Guarantor or any ERISA
Affiliate may incur any liability.
 
“New Warrants” means the warrants to purchase an aggregate of 9,838,000 shares
of common stock of Hancock issued by Hancock pursuant to the Warrant Exchange.
 
“Note Custodian” means the Trustee, as custodian with respect to the Global
Note, or any successor entity thereto.
 
“Notes” means Hancock Floating Rate Series A Secured Notes due 2017, including,
without limitation, the Global Note.
 
“Obligations” means any principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing any Indebtedness.
 
“Officer” means, with respect to any Person, the Chairman of the Board, any Vice
Chairman, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, any Senior Vice President, or any Vice
President of such Person.
 
“Officers’ Certificate” means a certificate signed on behalf of Hancock by two
Officers of Hancock, one of whom must be the principal executive officer, the
principal financial officer or the principal accounting officer of Hancock, that
meets the requirements of Section 12.4 hereof.
 
“Opinion of Counsel” means an opinion from legal counsel who is reasonably
acceptable to the Trustee and meets the requirements of Section 12.4
hereof.  The counsel may be an employee of or counsel to Hancock, any Subsidiary
of Hancock or the Trustee.
 
 
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“Original Warrants” means the warrants to purchase an aggregate of 9,500,000
shares of common stock of Hancock issued by Hancock  pursuant to that certain
Master Warrant Agreement, dated as of June 17, 2008, among Hancock and
Continental Stock Transfer & Trust Company.
 
“Participant” means, with respect to DTC, Euroclear or Clearstream, a Person who
has an account with DTC, Euroclear or Clearstream, respectively (and, with
respect to DTC, shall include Euroclear and Clearstream).
 
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to certain
Plans and set forth in Sections 412 and 430 of the Code and Sections 302 and 303
of ERISA.
 
“Pension Plan” means an employee benefit plan (as defined in Section 3(3) of
ERISA) subject to the Pension Funding Rules which is or was at any time during
the current year or the immediately preceding six (6) years contributed to by
Hancock, any Guarantor or any ERISA Affiliate or with respect to which Hancock,
any Guarantor or any ERISA Affiliate may incur any liability, other than a
Multiemployer Plan.
 
“Permits” shall mean all material permits, licenses, approvals, consents,
certificates, orders or authorizations of any Governmental Authority required
for the lawful conduct of its business.
 
“Permitted Acquisitions” means the purchase by Hancock or a Guarantor after the
date hereof of all or substantially all of the assets of any Person or a
business or division of such Person (including pursuant to a merger with such
Person or the formation of a wholly owned Subsidiary solely for such purpose
that is merged with such Person) or of all or a majority of the Capital Stock
(such assets or Person being referred to herein as the “Acquired Business”) and
in one or a series of transaction that satisfies each of the following
conditions:
 
(a)           the Acquired Business shall be an operating company that engages
in a line of business substantially similar to the business that Hancock and the
Guarantors are engaged in on the date hereof,
 
(b)           (i) the aggregate consideration paid for or in connection with the
assets or shares of the Acquired Business shall not exceed $17,250,000
(calculated after giving effect to all payments or other consideration paid in
respect of such acquisition and after giving effect to the assumption of all
Indebtedness in connection with such acquisition), and (ii) the aggregate
consideration paid for or in connection with all Permitted Acquisitions shall
not exceed $34,500,000 (calculated after giving effect to all payments or other
consideration paid in respect of all Permitted Acquisitions and after giving
effect to the assumption of all Indebtedness in connection with all Permitted
Acquisitions),
 
(c)           in the case of the acquisition of the Capital Stock of another
Person, the board of directors (or other comparable governing body) of such
other Person shall have duly approved such acquisition and such Person shall not
have announced that it will oppose such acquisition or shall not have commenced
any action which alleges that such acquisition will violate applicable law.
 
 
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“Permitted Dispositions” means each of the following:
 
(a)           sales of Inventory in the ordinary course of business,
 
(b)           the sale or other disposition of Equipment (including worn-out or
obsolete Equipment or Equipment no longer used or useful in the business of
Hancock or any Guarantor) so long as such sales or other dispositions do not
involve Equipment having an aggregate fair market value in excess of $575,000
for all such Equipment disposed of in any fiscal year of Hancock,
 
(c)           sales or other dispositions by Hancock or any Guarantor of assets
in connection with the closing or sale of a retail store location of Hancock or
a Guarantor in the ordinary course of Hancock’s or such Guarantor’s business
which consist of leasehold interests in the premises of such store, the
Equipment and fixtures located at such premises and the books and Records
relating exclusively and directly to the operations of such store; provided,
that, as to each and all such sales and closings, (i) after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing, and (ii) such sale shall be on commercially reasonable prices and
terms in a bona fide arm’s length transaction,
 
(d)           the grant by Hancock or any Guarantor after the date hereof of a
non-exclusive license to any person for the use of any Intellectual Property
consisting of trademarks owned by Hancock or such Guarantor; provided ,that , as
to any such license, each of the following conditions is satisfied, (i) such
licenses shall be on commercially reasonable prices and terms in a bona fide
arms’ length transactions, (ii) the rights of the licensee shall not adversely
affect, limit or restrict the rights of Trustee to sell or otherwise dispose of
any Inventory or other Collateral, and (iii) as of the date of the grant of any
such license, and after giving effect thereto, no Default or Event of Default
shall exist or have occurred,
 
(e)           sales, transfers and dispositions of assets of Hancock or a
Guarantor to Hancock or another Guarantor, in each case to the extent permitted
under this Indenture; and
 
(f)            the sale or other dispositions of any Real Property permitted
under the Credit Facility Documents.
 
“Permitted Investments” shall mean each of the following:
 
(a)           the endorsement of instruments for collection or deposit in the
ordinary course of business;
 
(b)           Investments in cash or Cash Equivalents;
 
(c)           the existing Investments of Hancock and each Guarantor as of the
date hereof in its Subsidiaries, provided, that, neither Hancock nor any
Guarantor shall have any further obligations or liabilities to make any capital
contributions or other additional investments or other payments to or in or for
the benefit of any of such Subsidiaries;
 
 
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(d)           loans and advances by Hancock or any Guarantor to employees of
Hancock or such Guarantor not to exceed the principal amount of $287,500 in the
aggregate at any time outstanding for: (i) reasonably and necessary work-related
travel or other ordinary business expenses to be incurred by such employee in
connection with their work for Hancock or such Guarantor and (ii) reasonable and
necessary relocation expenses of such employees (including home mortgage
financing for relocated employees);
 
(e)           stock or obligations issued to Hancock or any Guarantor by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to Hancock or such Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; and
 
(f)           obligations of account debtors to Hancock or any Guarantor arising
from Accounts which are past due and are evidenced by a promissory note made by
such account debtor payable to Hancock or such Guarantor.
 
“Permitted Lien” means the Liens permitted pursuant to Section 4.14 of this
Indenture.
 
“Person” or “person” means any individual, sole proprietorship, partnership,
corporation (including any corporation which elects subchapter S status under
the Code), limited liability company, limited liability partnership, business
trust, unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or political
subdivision thereof.
 
“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which Hancock or any Guarantor sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or, in the case of a
Multiemployer Plan, has made contributions at any time during the immediately
preceding six (6) plan years or with respect to which Hancock or any Guarantor
may incur liability.
 
“Proceeding” means any voluntary or involuntary insolvency, bankruptcy,
receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or any other proceeding for the
liquidation, dissolution or other winding up of a Person.
 
“Real Property” means all now owned and hereafter acquired real property of
Hancock and each Guarantor, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in the Mortgage.
 
“Records” means, as to Hancock and each Guarantor, all of its present and future
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Hancock or any
Guarantor with respect to the foregoing maintained with or by any other person).
 
 
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“Responsible Officer,” when used with respect to the Trustee, means any officer
of the Trustee with direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
 
“Restricted Payment” means (a) any cash dividend or other cash distribution
other than an intercompany cash dividend, direct or indirect, on account of any
shares of any class of Capital Stock of Hancock or any of its Subsidiaries, as
the case may be, now or hereafter outstanding, (b) any redemption, retirement,
sinking fund or similar payment on account of, or purchase or other acquisition
for value, direct or indirect, of any shares of any class of Capital Stock of
Hancock or any of its Subsidiaries, except for any redemption, retirement,
sinking funds or similar payment payable solely in such shares of that class of
stock or in any class of stock junior to that class, (c) any cash payment made
to redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire any shares of any class
of Capital Stock of Hancock or any of its Subsidiaries now or hereafter
outstanding, or (d) any payment (including, without limitation, any payment of
management, consulting, monitoring or advisory fees) to any Affiliate of Hancock
or any Guarantor except to the extent expressly permitted in this Indenture.
 
“Securities Act” means the United States Securities Act of 1933, as amended.
 
“Senior Credit Facility Payment Event of Default” means a Credit Facility Event
of Default arising under Section 10.1(a)(i) of the Credit Facility Loan
Agreement or any other “Event of Default” (howsoever defined) arising as a
result of the failure to make any payment to any Credit Facility Secured Party
as and when required under any of the Credit Facility Documents.
 
“Significant Subsidiary” means any Subsidiary that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
this Indenture.
 
“Specified Common Stock” means the shares of common stock of Hancock issuable
upon exercise of the Specified Warrants.
 
“Specified Warrants” means, collectively, the Original Warrants in existence on
the date hereof after giving effect to the Warrant Exchange and the New
Warrants.
 
“Standstill Termination Date” means the date which is the earlier of: (i) one
hundred and eighty (180) days following the date on which the Credit Facility
Agent has delivered to the Trustee a Blockage Notice and (ii) ten (10) Business
Days following the date on which the Credit Facility Agent has received an
Acceleration Notice from the Trustee and prior to the end of such ten-Business
Day period the Credit Facility Agent has failed to deliver to the Trustee a
Blockage Notice.
 
 
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“Stated Maturity” means, when used with respect to any Indebtedness or any
installment of interest thereon, the date specified in the instrument evidencing
or governing such Indebtedness as the fixed date on which the principal of such
Indebtedness or such installment of interest is due and payable.
 
“Subsidiary” or “subsidiary” means, with respect to any Person, any corporation,
limited liability company, limited liability partnership or other limited or
general partnership, trust, association or other business entity of which an
aggregate of at least a majority of the outstanding Capital Stock or other
interests entitled to vote in the election of the board of directors of such
corporation (irrespective of whether, at the time, Capital Stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.
 
“Subsidiary Guarantee” means an unconditional guarantee of the Notes and this
Indenture in the form set forth as Exhibit B hereof given by any Subsidiary or
other Person pursuant to the terms of this Indenture or any supplement hereto.
 
“Supplemental Indenture” means a supplement to this Indenture substantially in
the form of Exhibit B hereto.
 
“Trust Indenture Act” or “TIA” means the United States Trust Indenture Act of
1939 (15 U.S.C.  Sections 77aaa-77bbbb) as in effect on the date on which this
Indenture is qualified under the Trust Indenture Act, except as provided in
Section 9.3 hereof.
 
“Trustee” means the party named as such in the preamble to this Indenture or any
successor entity by merger, acquisition, consolidation or otherwise, until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
 
“UCC” means the Uniform Commercial Code as in effect in any applicable
jurisdiction and any successor statute, as in effect from time to time (except
that terms used herein which are defined in the Uniform Commercial Code as in
effect in such jurisdiction on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute except as
the Trustee may otherwise determine).
 
“Voting Stock” shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
 
 
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“Warrant Exchange” means the exchange of the Original Warrants for the New
Warrants on the date hereof pursuant to a privately negotiated exchange under
Section 3(a)(9) of the Securities Act between Hancock and certain holders of the
Original Warrants.
 
 
SECTION 1.2
OTHER DEFINITIONS.

 
TERM
 
DEFINED IN SECTION
“Additional Amounts”
 
4.3
“Change of Control Offer”
 
3.8
“Change of Control Offer Period”
 
3.8
“Change of Control Payment”
 
3.8
“Change of Control Purchase Date”
 
3.8
“Covenant Defeasance”
 
8.3
“Custodian”
 
6.1
“DIP Financing”
 
11.5
“DTC”
 
2.3
“Event of Default”
 
6.1
“Excluded Taxes”
 
4.3
“Group of Subsidiaries”
 
6.1
“Investment”
 
4.16
“Legal Defeasance”
 
8.2
“Notice of Default”
 
6.1
“Paying Agent”
 
2.3
“Payment Default”
 
6.1
“Registrar”
 
2.3
“Release Event”
 
11.6
“Tax” or “Taxes”
 
4.3
“Voided Payment”
 
11.9

 
SECTION 1.3
INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

 
Whenever this Indenture refers to a provision of the Trust Indenture Act, the
provision is incorporated by reference in and made a part of this
Indenture.  The following Trust Indenture Act terms used in this Indenture have
the following meanings:
 
“indenture securities” means the Notes;
 
“indenture security Holder” means a Holder of a Note;
 
“indenture to be qualified” means this Indenture;
 
“indenture trustee” or “institutional trustee” means the Trustee; and
 
“obligor” on the Notes means Hancock and any successor thereto.
 
 
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All other terms used in this Indenture that are defined by the Trust Indenture
Act, defined by the Trust Indenture Act reference to another statute or defined
by Commission rule under the Trust Indenture Act have the meanings so assigned
to them.
 
 
SECTION 1.4
RULES OF CONSTRUCTION.

 
Unless the context otherwise requires:
 
(1)           a term has the meaning assigned to it;
 
(2)           an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
 
(3)           “or” is not exclusive;
 
(4)           “including” means “including without limitation;”
 
(5)           words in the singular include the plural, and in the plural
include the singular;
 
(6)           provisions apply to successive events and transactions; and
 
(7)           references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement or successor sections or rules
adopted by the Commission from time to time.
 
ARTICLE II

 
THE NOTES
 
 
SECTION 2.1
FORM AND DATING.

 
(a)           Form of Notes.  The Notes and the Trustee’s certificate of
authentication shall be substantially in the form set forth in Exhibit A
hereto.  The Notes may have notations, legends or endorsements required by law,
stock exchange rule or usage.  Each Note shall be dated the date of its
authentication.  The Notes shall be in denominations of $1,000 and integral
multiples thereof.
 
The terms and provisions contained in the Notes shall constitute, and are hereby
expressly made, a part of this Indenture; and Hancock and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
 
(b)           Global Note.  If so instructed by Hancock, the Notes shall be
issued initially in the form of the Global Note.  In the absence of such
instructions, the Notes shall be issued initially as Definitive Notes in
accordance with Section 2.6 hereof.  Any such Global Note shall be deposited on
behalf of the purchasers of the Notes represented thereby with the Note
Custodian, and registered in the name of the Depository or a nominee of the
Depository, duly executed by Hancock and authenticated by the Trustee as
hereinafter provided.  The aggregate principal amount of the Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depository or its nominee as hereinafter provided.
 
 
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The Global Note shall represent such of the outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Notes from time to time endorsed thereon and that the aggregate
amount of outstanding Notes represented thereby may from time to time be reduced
or increased, as appropriate, to reflect exchanges, redemptions and transfers of
interests.  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 Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.6 hereof.
 
Except as set forth in Section 2.6 hereof, the Global Note may be transferred,
in whole and not in part, only to a nominee of the Depository or to a successor
of the Depository or its nominee.
 
(c)           Book-Entry Provisions.  This Section 2.1(c) shall apply only to
the Global Note deposited with or on behalf of the Depository.
 
Hancock shall execute and the Trustee shall, in accordance with this Section
2.1(c), authenticate and deliver the Global Note that (i) shall be registered in
the name of the Depository or the nominee of the Depository and (ii) shall be
delivered by the Trustee to the Depository or pursuant to the Depository’s
instructions or held by the Note Custodian.
 
Participants shall have no rights either under this Indenture with respect to
the Global Note held on their behalf by the Depository or by the Note Custodian
as custodian for the Depository or under the Global Note, and the Depository may
be treated by Hancock, the Trustee and any agent of Hancock or the Trustee as
the absolute owner of the Global Note for all purposes whatsoever.  Nothing
herein shall prevent Hancock, the Trustee or any agent of Hancock or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its
Participants, the operation of customary practices of such Depository governing
the exercise of the rights of an owner of a beneficial interest in the Global
Note.
 
(d)           Definitive Notes.  Notes issued in certificated form shall be
substantially in the form of Exhibit A attached hereto.
 
(e)           Provisions Applicable to Forms of Notes.  The Notes may also have
such additional provisions omissions, variations or substitutions as are not
inconsistent with the provisions of this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with this Indenture, any applicable law or
with any rules made pursuant thereto or with the rules of any securities
exchange or governmental agency or as may be determined consistently herewith by
the Officers of Hancock executing such Notes, as conclusively evidenced by their
execution of such Notes.  All Notes will be otherwise substantially identical
except as provided herein.
 
 
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Subject to the provisions of this Article II, a Holder of the Global Note may
grant proxies and otherwise authorize any Person to take any action that a
Holder is entitled to take under this Indenture or the Notes.
 
 
SECTION 2.2
EXECUTION AND AUTHENTICATION.

 
Two Officers shall sign the Notes for Hancock by manual or facsimile signature.
 
If an Officer whose signature is on a Note no longer holds that office at the
time a Note is authenticated, the Note shall nevertheless be valid.
 
A Note shall not be valid until authenticated by the manual signature of the
Trustee.  The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.  The form of Trustee’s certificate of
authentication to be borne by the Notes shall be substantially as set forth in
Exhibit A hereto.
 
The Trustee shall, upon a written order of Hancock signed by two Officers,
authenticate Notes for original issue up to the aggregate principal amount
stated in the Notes.  The aggregate principal amount of Notes outstanding at any
time may not exceed such amount.
 
The Trustee may appoint an authenticating agent acceptable to Hancock to
authenticate the Notes.  An authenticating agent may authenticate a Note
whenever the Trustee may do so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent.  An
authenticating agent has the same rights as an Agent to deal with Hancock or an
Affiliate of Hancock.
 
 
SECTION 2.3
REGISTRAR AND PAYING AGENT.

 
Hancock shall maintain (i) an office or agency where the Notes may be presented
for registration of transfer or for exchange (“Registrar”) and (ii) an office or
agency where the Notes may be presented for payment (“Paying Agent”).  The
Registrar shall keep a register of the Notes and of their transfer and
exchange.  Hancock may appoint one or more co-registrars and one or more
additional paying agents.  The term “Registrar” includes any co-registrar and
the term “Paying Agent” includes any additional paying agent.  Hancock may
change any Paying Agent or Registrar without notice to any Holder.  Hancock
shall notify the Trustee in writing of the name and address of any agent not a
party to this Indenture.  If Hancock fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such.  Hancock or any of
its Subsidiaries may act as Paying Agent or Registrar.
 
Hancock initially appoints the Depository Trust Company (“DTC”) to act as
Depository with respect to the Global Note.
 
Hancock initially appoints the Trustee to act as the Registrar and Paying Agent
and to act as Note Custodian with respect to the Global Note.
 
 
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SECTION 2.4
PAYING AGENT TO HOLD MONEY IN TRUST.

 
Hancock shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust for the benefit of Holders and
the Trustee all money held by the Paying Agent for the payment of principal,
premium and Additional Amounts, if any, or interest on the Notes, and shall
notify the Trustee of any default by Hancock in making any such payment.  While
any such default continues, the Trustee may require a Paying Agent to pay all
money held by it to the Trustee.  Hancock at any time may require a Paying Agent
to pay all money held by it to the Trustee.  Upon payment over to the Trustee,
the Paying Agent (if other than Hancock or a Subsidiary) shall have no further
liability for the money.  If Hancock or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
and the Trustee all money held by it as Paying Agent.  Upon any Proceeding
relating to Hancock, the Trustee shall serve as Paying Agent for the Notes.
 
 
SECTION 2.5
HOLDER LISTS.

 
The Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of all Holders and
shall otherwise comply with TIA Section 312(a).  If the Trustee is not the
Registrar, Hancock shall furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Notes, and
Hancock shall otherwise comply with TIA Section 312(a).
 
 
SECTION 2.6
TRANSFER AND EXCHANGE.

 
(a)           Transfer and Exchange of Interests in the Global Note.  If, at any
time, an owner of a beneficial interest in the Global Note deposited with the
Depository (or the Note Custodian) wishes to transfer its beneficial interest in
the Global Note to a Person who is required or permitted to take delivery
thereof in the form of an interest in the Global Note, such owner shall, subject
to the Applicable Procedures, exchange or cause the exchange of such interest
for an equivalent beneficial interest in the Global Note as provided in this
Section 2.6(a).  Upon receipt by the Trustee of (1) instructions given in
accordance with the Applicable Procedures from a Participant directing the
Trustee to credit or cause to be credited a beneficial interest in the Global
Note in an amount equal to the beneficial interest in the Global Note to be
exchanged and (2) a written order given in accordance with the Applicable
Procedures containing information regarding the Participant account of the
Depository (or Euroclear or Clearstream, if applicable) to be credited with such
increase, to credit or cause to be credited to the account of the Person
specified in such instructions, a beneficial interest in the Global Note, and to
debit, or cause to be debited, from the account of the Person making such
exchange or transfer, an amount equal to the principal amount of the beneficial
interest in the Global Note that is being exchanged or transferred.
 
(b)           Transfer and Exchange of Notes.  When Definitive Notes are
presented by a Holder to the Registrar with a request to register the transfer
of the Definitive Notes or to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested only if
the Definitive Notes are presented or surrendered for registration of transfer
or exchange, are endorsed and contain a signature guarantee or are accompanied
by a written instrument of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney duly authorized in writing and
containing a signature guarantee.
 
 
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(c)           Exchange of a Beneficial Interest in a Global Note for a
Definitive Note.
 
(i)           Any Person having a beneficial interest in a Global Note may upon
request, subject to the Applicable Procedures, exchange such beneficial interest
for a Definitive Note.  The Trustee or the Note Custodian, at the direction of
the Trustee, shall, in accordance with the standing instructions and procedures
existing between the Depository and the Note Custodian, cause the aggregate
principal amount of the Global Note to be reduced accordingly and, following
such reduction, Hancock shall execute and the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the appropriate principal amount,
upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depository (or Euroclear or Clearstream, if
applicable), from the Depository or its nominee on behalf of any Person having a
beneficial interest in the Global Note.
 
(ii)           Definitive Notes issued in exchange for a beneficial interest in
a Global Note pursuant to this Section 2.6(c) shall be registered in such names
and in such authorized denominations as the Depository, pursuant to instructions
from its Participants or Indirect Participants or otherwise, shall instruct the
Trustee.  The Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered.  Following any such issuance of
Definitive Notes, the Trustee, as Registrar, shall instruct the Depository to
reduce or cause to be reduced the aggregate principal amount at maturity of the
Global Note to reflect the transfer.
 
(d)           Exchange of a Definitive Note for a Beneficial Interest in a
Global Note.  Any Person may upon request, subject to the Applicable Procedures,
exchange a Definitive Note for a beneficial interest in a Global Note.  The
Trustee or the Note Custodian, at the direction of the Trustee, shall, in
accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, cause the aggregate amount of the Global Note
to be increased accordingly.
 
(e)           Restrictions on Transfer and Exchange of Global
Note.  Notwithstanding any other provision of this Indenture, the Global Note
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
 
(f)           Authentication of Definitive Notes in Absence of Depository.  If
at any time:
 
(i)           the Depository for the Global Note notifies Hancock that the
Depository is unwilling or unable to continue as Depository for the Global Note
and a successor Depository for the Global Note is not appointed by Hancock
within 90 days after delivery of such notice; or
 
 
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(ii)          Hancock, in its sole discretion, notifies the Trustee in writing
that it elects to cause the issuance of Definitive Notes under this Indenture,
then Hancock shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Note in exchange for the Global Note.
 
(g)           Cancellation and/or Adjustment of the Global Note.  At such time
as all beneficial interests in the Global Note have been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the Global Note shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof.  At any time prior to such cancellation, if any beneficial interest
in the Global Note is exchanged for Definitive Notes, redeemed, repurchased or
cancelled, the principal amount of Notes represented by the Global Note shall be
reduced accordingly and an endorsement shall be made on the Global Note, by the
Trustee or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
 
(h)           General Provisions Relating to Transfers and Exchanges.
 
(i)           To permit registrations of transfers and exchanges, Hancock shall
execute and the Trustee shall authenticate the Global Note, and the Definitive
Notes at the Registrar’s request.
 
(ii)          No service charge shall be made to a Holder for any registration
of transfer or exchange, but Hancock may require payment of a sum sufficient to
cover any stamp or transfer tax or similar governmental charge payable in
connection therewith (other than any such stamp or transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
2.11, 3.6, 3.7, 3.8 and 9.5 hereto).
 
(iii)         The Global Note and Definitive Notes issued upon any registration
of transfer or exchange of the Global Note shall be the valid obligations of
Hancock, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Note and Definitive Notes surrendered upon such
registration of transfer or exchange.
 
(iv)         The Registrar shall not be required: (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening of
fifteen (15) Business Days before the day of any selection of Notes for
redemption under Section 3.2 hereof and ending at the close of business on the
day of selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part, or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest payment
date.
 
(v)          Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and Hancock may deem and treat the Person in whose
name any Note is registered as the absolute owner of such Note for the purpose
of receiving payment of principal of and interest on such Notes and for all
other purposes, and neither the Trustee, any Agent nor Hancock shall be affected
by notice to the contrary.
 
 
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(vi)         The Trustee shall authenticate the Global Note and Definitive Notes
in accordance with the provisions of Section 2.2 hereof.
 
(i)           Legends.
 
(i)           Subordination Legend on Global Note and Definitive Notes.  Until
the termination of the subordination arrangements in accordance with Section
11.9 hereof, the Trustee will cause to be clearly, conspicuously and prominently
inserted on the face of each Note as well as any replacements thereof, the
following legend (or such other notice reasonably acceptable to the Credit
Facility Agent) in substantially the following form:
 
“THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN ARTICLE XI OF THE INDENTURE BETWEEN
THE COMPANY AND THE TRUSTEE DATED NOVEMBER 20, 2012.  EACH HOLDER OF THIS
INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE
PROVISIONS OF ARTICLE XI APPLICABLE TO A HOLDER.”
 
(ii)           Global Note Legend.  The Global Note shall bear a legend in
substantially the following form:
 
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY SUCH
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.6 OR IN ACCORDANCE WITH SECTION 9.6 OF THE
INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.6(e) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITORY
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.”
 
“UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.  UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (“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 SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.  OR SUCH OTHER
ENTITY AS MAY BE 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.”
 
 
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SECTION 2.7
REPLACEMENT OF NOTES.

 
If any mutilated Note is surrendered to the Trustee, or Hancock and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, Hancock shall issue and the Trustee, upon the written order of Hancock
signed by two Officers of Hancock, shall authenticate a replacement Note if the
Trustee’s requirements are met.  If required by the Trustee or Hancock, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and Hancock to protect Hancock, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced.  Hancock and the Trustee may charge the Holder of a replacement Note
for their expenses in replacing a Note.
 
Every replacement Note is an additional obligation of Hancock and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
 
 
SECTION 2.8
OUTSTANDING NOTES.

 
The Notes outstanding at any time are all the Notes authenticated by the Trustee
except for those cancelled by it, those delivered to it for cancellation, those
reductions in the interest in the Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this section as
not outstanding.  Except as set forth in Section 2.9 hereof, a Note does not
cease to be outstanding because Hancock or an Affiliate of Hancock holds the
Note.
 
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser as defined in Article 8 of the
UCC.
 
If the principal amount of any Note is considered paid under Section 4.1 hereof,
it ceases to be outstanding and interest on it ceases to accrue.
 
If the Paying Agent (other than Hancock, a Subsidiary or an Affiliate of any
thereof) holds, on a redemption date or maturity date, money sufficient to pay
Notes payable on that date, then on and after that date such Notes shall be
deemed to be no longer outstanding and shall cease to accrue interest.
 
 
SECTION 2.9
TREASURY NOTES.

 
In determining whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver or consent, Notes owned by Hancock, or
by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with Hancock, shall be considered as though
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Trustee knows are so owned shall be so disregarded.
 
 
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SECTION 2.10
TEMPORARY NOTES.

 
Until Definitive Notes are ready for delivery, Hancock may prepare and the
Trustee shall authenticate temporary Notes upon a written order of Hancock
signed by two Officers of Hancock.  Temporary Notes shall be substantially in
the form of Definitive Notes but may have variations that Hancock considers
appropriate for temporary Notes (but shall, for the avoidance of doubt, contain
the legends required under Section 2.6 hereof) and as shall be reasonably
acceptable to the Trustee.  Without unreasonable delay, Hancock shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes, as applicable.
 
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
 
 
SECTION 2.11
CANCELLATION.

 
Hancock at any time may deliver Notes to the Trustee for cancellation.  The
Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to
them for registration of transfer, exchange or payment.  The Trustee and no one
else shall cancel all Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy cancelled Notes (subject
to the record retention requirement of the Exchange Act).  Certification of the
destruction of all cancelled Notes shall be delivered to Hancock.  Hancock may
not issue new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.
 
 
SECTION 2.12
DEFAULTED INTEREST.

 
If Hancock defaults in a payment of interest on the Notes, it shall pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the
Notes.  Hancock shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed
payment.  Hancock shall fix or cause to be fixed each such special record date
and payment date, provided that no such special record date shall be less than
10 days prior to the related payment date for such defaulted interest.  At least
15 days before the special record date, Hancock (or, upon the written request of
Hancock, the Trustee in the name and at the expense of Hancock) shall mail or
cause to be mailed to Holders a notice that states the special record date, the
related payment date and the amount of such interest to be paid.
 
 
SECTION 2.13
RECORD DATE.

 
The record date for purposes of determining the identity of Holders of the Notes
entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be as provided for in TIA Section 316(c).
 
 
SECTION 2.14
COMPUTATION OF INTEREST.

 
Interest on the Notes shall be computed on the basis of a 360-day year comprised
of twelve 30-day months.
 
 
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SECTION 2.15
CUSIP NUMBER.

 
Hancock in issuing the Notes may use a “CUSIP” number, and if it does so, the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes.  Hancock shall promptly
notify the Trustee of any change in the CUSIP number.
 
ARTICLE III

 
REDEMPTION AND REPURCHASE
 
 
SECTION 3.1
NOTICES TO TRUSTEE.

 
If Hancock elects to redeem Notes pursuant to the optional redemption provisions
of Section 3.7 hereof, it shall furnish to the Trustee, at least 45 days (unless
a shorter period is acceptable to the Trustee) but not more than 60 days before
a redemption date, an Officers’ Certificate setting forth (i) the paragraph of
the Notes and clause of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
 
 
SECTION 3.2
SELECTION OF NOTES TO BE REDEEMED.

 
If less than all of the Notes are to be redeemed at any time, selection of the
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or by such other method as the Trustee considers fair and appropriate.  In the
event of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.
 
The Trustee shall promptly notify Hancock in writing of the Notes selected for
redemption and, in the case of any Note selected for partial redemption, the
portion of the principal amount thereof to be redeemed.  Notes and portions of
Notes selected shall be in amounts of $1,000 or integral multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding principal amount of Notes held by such Holder, even if not an
integral multiple of $1,000, shall be redeemed.  Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
 
The provisions of the two preceding paragraphs of this Section 3.2 shall not
apply with respect to any redemption affecting only the Global Note, whether the
Global Note is to be redeemed in whole or in part.  In case of any such
redemption in part, the unredeemed portion of the principal amount of the Global
Note shall remain outstanding.
 
 
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SECTION 3.3
NOTICE OF REDEMPTION.

 
At least 30 days but not more than 60 days before a redemption date, Hancock
shall mail or cause to be mailed, by first class mail, a notice of redemption to
each Holder whose Notes are to be redeemed at its registered address.
 
The notice shall identify the Notes to be redeemed and shall state:
 
(a)           the redemption date;
 
(b)           the redemption price;
 
(c)           if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
 
(d)           name and address of the Paying Agent;
 
(e)           that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
 
(f)           that, unless Hancock defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
 
(g)           the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
 
(h)           the CUSIP number, noting that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
 
If any of the Notes to be redeemed is in the form of the Global Note, then such
notice shall be modified by Hancock to the extent appropriate to accord with the
Applicable Procedures for redemptions.
 
At Hancock’s request, the Trustee shall give the notice of redemption in
Hancock’s name and at Hancock’s expense; provided, however, that Hancock shall
have delivered to the Trustee, at least 45 days prior to the redemption date
(unless a shorter time is acceptable to the Trustee), an Officers’ Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.
 
 
SECTION 3.4
EFFECT OF NOTICE OF REDEMPTION.

 
Once notice of redemption is mailed in accordance with Section 3.3 hereof, Notes
called for redemption become irrevocably due and payable on the redemption date
at the redemption price.  A notice of redemption may not be
conditional.  Failure to give such notice by mailing to any Holder of Notes or
any defect therein shall not affect the validity of any proceedings for
redemption of other Notes.
 
 
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SECTION 3.5
DEPOSIT OF REDEMPTION PRICE.

 
On or prior to the redemption date, Hancock shall deposit with the Trustee or
with the Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 2.4 hereof) immediately
available funds sufficient to pay the redemption price of and accrued and unpaid
interest, if any, and Additional Amounts, if any, on all Notes to be redeemed on
that date.  The Trustee or the Paying Agent shall promptly return to Hancock any
money deposited with the Trustee or the Paying Agent by Hancock in excess of the
amounts necessary to pay the amount referred to in the immediately preceding
sentence.
 
If Hancock complies with the provisions of the preceding paragraph, on and after
the redemption date, interest shall cease to accrue on the Notes or the portions
of Notes called for redemption.  If a Note is redeemed on or after an interest
record date but on or prior to the related interest payment date, then any
accrued and unpaid interest (and Additional Amounts, if any) shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date.  If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of Hancock to comply with the
preceding paragraph, interest (and Additional Amounts, if any) shall be paid on
the unpaid principal, from the redemption date until such principal is paid, and
to the extent lawful on any interest not paid on such unpaid principal, in each
case at the rate provided in the Notes and in Section 4.1 hereof.
 
 
SECTION 3.6
NOTES REDEEMED IN PART.

 
Upon surrender of a Note that is redeemed in part (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form reasonably satisfactory to the Company and the Trustee, duly executed by
the Holder thereof or such Holder’s attorney duly authorized in writing),
Hancock shall issue and, upon Hancock’ written request, the Trustee shall
authenticate for the Holder at the expense of Hancock a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.  The records
of the Registrar and the Depository shall reflect any partial redemption of the
Global Note.
 
 
SECTION 3.7
OPTIONAL REDEMPTION.

 
The Notes shall be subject to redemption for cash at the option of Hancock, in
whole or in part, upon not less than 30 nor more than 60 days’ notice to each
Holder of Notes to be redeemed at a redemption price equal to (i) 100.000% of
the principal amount thereof, plus (ii) any accrued and unpaid interest, plus
(iii) any Additional Amounts thereon to the redemption date.  Any redemption
pursuant to this Section 3.7 shall be made pursuant to the provisions of
Sections 3.1 through 3.6 hereof and subject to Article XI hereof.
 
 
SECTION 3.8
MANDATORY REPURCHASE.

 
(a)           Upon the occurrence of a Change of Control and subject to
Hancock’s right to redeem all of the Notes pursuant to Section 3.7 and subject
to Article XI hereof, each Holder of Notes shall have the right to require
Hancock to repurchase all or any part (equal to $1,000 or an integral multiple
thereof if in part) of such Holder’s Notes pursuant to the offer described below
(the “Change of Control Offer”) at an offer price in cash equal to 101.000% of
the aggregate principal amount thereof plus accrued and unpaid interest and
Additional Amounts, if any, thereon to the date of purchase (the “Change of
Control Payment”).  The offer to repurchase shall be made in the Change of
Control Notice and shall offer to repurchase Notes pursuant to the procedures
required by this Indenture and described in the Change of Control Notice.  If
any of the Notes subject to a Change of Control Offer is in the form of the
Global Note, such notice shall be modified by the Company to the extent
appropriate to accord with the Applicable Procedures for repurchases.  Hancock
shall comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.  To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 3.8,
Hancock shall comply with the applicable securities laws and regulations and not
be deemed to have breached its obligation under this section by virtue of its
compliance with such securities laws or regulations.
 
 
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The Change of Control Offer shall remain open for a period of at least 20 days
following its commencement but no longer than 40 days, except to the extent that
a longer period is required by applicable law (the “Change of Control Offer
Period”).  No later than five Business Days after the termination of the Change
of Control Offer Period (the “Change of Control Purchase Date”), Hancock shall
purchase all Notes validly tendered and not properly withdrawn pursuant to the
Change of Control Offer.  Payment for any Notes so purchased shall be made in
the same manner as interest payments are made on the Notes.
 
If the Change of Control Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest and Additional Amounts, if any, shall be paid to the Person in whose
name a Note is registered at the close of business on such interest record date,
and no additional interest will be payable to Holders who tender Notes pursuant
to the Change of Control Offer.
 
Within 30 days following any Change of Control, Hancock shall send, by first
class mail, a notice to each of the Holders, with a copy of each such notice to
the Trustee.  The notice shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Change of Control
Offer.  The Change of Control Offer shall be made to all Holders.  The notice,
which shall govern the terms of the Change of Control Offer, shall state:
 
(i)           that the Change of Control Offer is being made pursuant to this
covenant and the length of time the Change of Control Offer shall remain open;
 
(ii)          the purchase price and the Change of Control Purchase Date;
 
(iii)         that any Note which is not validly tendered or are otherwise not
accepted for payment shall continue to accrue interest;
 
 
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(iv)         that, unless Hancock defaults in making such payment, any Note
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Purchase Date;
 
(v)          that Holders electing to have a Note purchased pursuant to any
Change of Control Offer shall be required to surrender the Note, with the form
entitled “Option of Holder to Elect Purchase” on the reverse of the Note
completed, or transfer by book-entry transfer, to Hancock, the Depository, or a
Paying Agent at the address specified in the notice no later than the close of
business on the last day of the Change of Control Offer Period; and
 
(vi)         that Holders shall be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the last day of
the Change of Control Offer Period, a telegram, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note (or specified portion thereof) purchased.
 
Notwithstanding the foregoing provisions of this section, Hancock shall not be
required to make a Change of Control Offer following a Change of Control if a
third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements  set forth in this section
applicable to a Change of Control Offer made by Hancock and purchases all Notes
validly tendered and not withdrawn under such Change of Control Offer. 
 
On the Change of Control Purchase Date, Hancock will, to the extent lawful and
to the extent expressly permitted under Article XI hereof, (1) accept for
payment all Notes or portions thereof validly tendered and not properly
withdrawn pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so validly tendered and not properly withdrawn and (3)
deliver or cause to be delivered to the Trustee the Notes so accepted together
with an Officers’ Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by Hancock.  The Paying Agent shall promptly
mail to each Holder of Notes so validly tendered and not properly withdrawn the
Change of Control Payment for such Notes, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any.
 
(b)           Except as set forth in Section 3.8(a) and subject to Article XI
hereof, Hancock is not required to make any mandatory redemption, purchase or
sinking fund payments with respect to the Notes prior to the Maturity Date.
 
ARTICLE IV
 
COVENANTS
 
 
SECTION 4.1
PAYMENT OF NOTES.

 
Hancock shall pay or cause to be paid the principal of, premium, if any, and
interest and Additional Amounts, if any, on the Notes on the dates and in the
manner provided in the Notes.  Principal, premium, if any, and interest and
Additional Amounts, if any, shall be considered paid on the date due if the
Paying Agent, if other than Hancock or a Subsidiary thereof, holds as of 10:00
a.m.  Eastern Time on the due date money deposited by or for the benefit of
Hancock in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest and Additional Amounts, if any,
then due.
 
 
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Hancock shall pay or cause to be paid interest on overdue principal, premium, if
any, and interest and Additional Amounts, if any, on the Notes on the dates and
in the manner provided in the Notes.
 
 
SECTION 4.2
MAINTENANCE OF OFFICE OR AGENCY.

 
Hancock shall maintain an office or agency (which may be an office of the
Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes
may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon Hancock in respect of the Notes and this
Indenture may be served.  Hancock shall 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 Hancock 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 of the Trustee.
 
Hancock may also from time to time designate 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, however,
that no such designation or rescission shall in any manner relieve Hancock of
its obligation to maintain an office or agency in the Borough of Manhattan, New
York City, for such purposes.  Hancock shall 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.
 
Hancock hereby designates the Corporate Trust Office of the Trustee as one such
office or agency of Hancock in accordance with Section 2.3 hereof.
 
 
SECTION 4.3
ADDITIONAL AMOUNTS.

 
Hancock will make all payments of principal of, premium, if any, and interest
on, each Note free and clear of, and without withholding or deduction for or on
account of, any current or future taxes, levies, imports, deductions,
withholdings, collections, duties, assessments or charges of whatever nature and
any fines, penalties, interest or liabilities with respect thereto imposed,
levied, collected, withheld or assessed by or on behalf of any jurisdiction with
which Hancock has any connection (including any jurisdiction from or through
which payments under the Notes are made) or any political subdivision or
authority therein or thereof having power to tax (referred to herein as a “Tax”
or “Taxes”), unless such withholding or deduction is required by law or by
regulation or governmental policy having the force of law.  In the event that
any such withholding or deduction for or on account of any Tax is required,
(excluding any Taxes imposed on a Holder by the jurisdiction (or by a political
subdivision thereof) under the laws of which (or under the laws of a political
subdivision of which) the Holder is organized or if such Holder is an
individual, the jurisdiction (or by a political subdivision thereof) of which
such Holder is a citizen or resident), Hancock will pay such additional amounts
(“Additional Amounts”) as will result in receipt by each Holder of any Note of
such amounts as would have been received by such Holder or the beneficial owner
with respect to such Note had no such withholding or deduction of Taxes been
required, provided that:
 
 
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(a)           No Additional Amounts shall be payable for or on account of any
Tax which would not have been imposed but for:
 
(1)           the existence of any present or former connection between such
Holder or the beneficial owner of such Note and any jurisdiction with which
Hancock has any connection (including any jurisdiction from or through which
payments under the Notes are made) or any political subdivision or authority
therein (other than merely holding such Note), including, without limitation,
such Holder or the beneficial owner of such Note being or having been a
national, domiciliary or resident of or treated as a resident thereof or being
or having been present or engaged in a trade or business therein or having had a
permanent establishment therein;
 
(2)           the presentation of such Note (where presentation is required)
more than 30 days after the date on which the payment in respect of such Note
became due and payable or provided for, whichever is later, except to the extent
that such Holder would have been entitled to such Additional Amounts if it had
presented such Note for payment on any day within such period of 30 days;
 
(3)           the failure of such Holder or the beneficial owner of such Note to
comply with a request by Hancock addressed to such Holder (A) to provide
information concerning the nationality, residence or identity of such Holder or
such beneficial owner or (B) to make any declaration or other similar claim or
satisfy any information or reporting requirement, which, in the case of (A) or
(B), is required or imposed by a statute, treaty, regulation or administrative
practice of the taxing jurisdiction as a precondition to exemption from all or
part of such tax, assessment or other governmental charge; or
 
(4)           any combination of items (1) , (2) and (3) (collectively, the
“Excluded Taxes”).
 
(b)           No Additional Amounts shall be payable to any Holder who is not
the beneficial owner of such Note (including a fiduciary or partnership) to the
extent that the beneficial owner of such Note would not have been entitled to
such Additional Amounts had it been the Holder of the Note.
 
In the event that Hancock fails to pay any Taxes (other than Excluded Taxes)
when due to the appropriate taxing authority and a Holder is subsequently
assessed by such taxing authority in respect of such Taxes, Hancock shall pay
such Taxes assessed to the taxing authority.  In the event that a Holder
previously shall have paid such Taxes to the taxing authority, Hancock shall
promptly indemnify and reimburse such Holder in respect of all such Taxes so
paid plus interest at the rate borne by the Notes.
 
 
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Whenever there is mentioned, in any context, the payment of principal, premium
or interest in respect of any Note or the net proceeds received on the sale or
exchange of any Note, such mention shall be deemed to include the payment of
Additional Amounts provided for in this Indenture to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to this Indenture.
 
 
SECTION 4.4
PAYMENT CERTIFICATIONS.

 
At least ten (10) days prior to the first date on which payment of principal and
any premium, interest or Additional Amounts, if any, on the Notes is to be made,
and at least ten (10) days prior to any subsequent such date if there has been
any change with respect to the matters set forth in the Officers’ Certificate
described in this section, Hancock will furnish the Trustee and the Paying
Agent, if other than the Trustee, with an Officers’ Certificate instructing the
Trustee and the Paying Agent whether such payment of principal, premium,
interest or Additional Amounts, if any, on the Notes (whether or not in the form
of Definitive Notes or the Global Note) shall be made to the Holders without
withholding for or on account of Taxes, unless the withholding or deduction of
such Taxes is then required by law.  If any such withholding shall be required,
then such Officers’ Certificate shall specify the amount, if any, required to be
withheld on such payments to such Holders and Hancock will pay to the Trustee or
the Paying Agent the Additional Amounts pursuant to the terms of this Indenture
and the Notes.  Hancock shall indemnify the Trustee and the Paying Agent for,
and hold them harmless against, any loss, liability or expense reasonably
incurred without negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers’ Certificate furnished to them pursuant to this section.
 
 
SECTION 4.5
COMPLIANCE CERTIFICATE.

 
(a)           Hancock shall deliver to the Trustee, within one hundred twenty
(120) days after the end of each fiscal year, an Officers’ Certificate stating
that a review of the activities of Hancock and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether Hancock has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificates that to the best of
his or her knowledge Hancock has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action Hancock is taking, or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action Hancock is taking or proposes to take
with respect thereto.
 
 
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(b)           Hancock shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer of Hancock becoming aware of
any Default or Event of Default, an Officers’ Certificate specifying such
Default or Event of Default and what action Hancock is taking or proposes to
take with respect thereto.
 
 
SECTION 4.6
COMPLIANCE WITH TIA.

 
Hancock agrees to comply with all provisions of the TIA applicable to it,
including without limitation, Section 314(b) thereof.
 
 
SECTION 4.7
MAINTENANCE OF EXISTENCE.

 
(a)           Hancock and each Guarantor shall at all times preserve, renew and
keep in full force and effect its existence and rights and franchises with
respect thereto and maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts and Permits necessary
to carry on the business as presently or proposed to be conducted, other than as
permitted in this Indenture and other than the termination or expiration of
leases in the ordinary course of business; provided, however, that neither
Hancock nor any Guarantor shall be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Hancock and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.
 
(b)           Neither Hancock nor any Guarantor shall change its name unless
each of the following conditions is satisfied: (i) Trustee shall have received
not less than thirty (30) days prior written notice from Hancock of such
proposed change in its corporate name, which notice shall accurately set forth
the new name; and (ii) Trustee shall have received a copy of the amendment to
the certificate of incorporation or formation of Hancock or such Guarantor
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation or organization of Hancock or such Guarantor as
soon as it is available.
 
(c)           Neither Hancock nor any Guarantor shall change its chief executive
office or its mailing address or organizational identification number (or if it
does not have one, shall not acquire one) unless Trustee shall have received not
less than thirty (30) days’ prior written notice from Hancock of such proposed
change, which notice shall set forth such information with respect thereto as
Trustee may require and Trustee shall have received such agreements as Trustee
may reasonably require in connection therewith.  Neither Hancock nor any
Guarantor shall change its type of organization, jurisdiction of organization or
other legal structure.
 
 
SECTION 4.8
NEW COLLATERAL LOCATIONS.

 
Hancock and each Guarantor may only open any new location, provided (a) Hancock
or Guarantor (i) gives Trustee twenty (20) days prior written notice of the
intended opening of any such new location, (ii) prior to the opening of any new
location or the relocation of any Collateral or other assets or properties
thereto, grants to the Trustee, for the benefit of the Trustee and the Holders,
a security interest in and Lien on such assets or properties (which security
interest and lien shall be subject to the provisions of Article XI hereof),
(iii) causes such Lien to be duly perfected in any manner permitted by law, and
(iv) executes and delivers, or causes to be executed and delivered, to the
Trustee such agreements, documents, and instruments, including opinions of local
counsel, as Trustee may deem reasonably necessary or desirable to protect its
interests in the Collateral, assets and properties at such location.
 
 
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SECTION 4.9
COMPLIANCE WITH LAWS, REGULATIONS, ETC.

 
(a)           Hancock and each Guarantor shall, and shall cause any Subsidiary
to, at all times, comply in all material respects with all laws, rules,
regulations, licenses, approvals, orders and other Permits applicable to it and
duly observe all requirements of any foreign, Federal, State or local
Governmental Authority.
 
(b)           Hancock and each Guarantor shall indemnify and hold harmless
Trustee and the Holders and their respective directors, officers, employees,
agents, invitees, representatives, successors and assigns, from and against any
and all losses, claims, damages, liabilities, costs, and expenses (including
reasonable attorneys’ fees and expenses) directly or indirectly arising out of
or attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Hancock or any
Guarantor and the preparation and implementation of any closure, remedial or
other required plans.  All representations, warranties, covenants and
indemnifications in this section shall survive the payment of the Notes and the
termination of this Indenture.
 
 
SECTION 4.10
PAYMENT OF TAXES AND CLAIMS.

 
Hancock and each Guarantor shall, and shall cause any Subsidiary to, promptly
pay and discharge all material Taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
Taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Hancock or the Guarantor, as the
case may be; provided, that (i) adequate reserves with respect to such contest
are maintained on the books of Hancock or Guarantor, in accordance with GAAP;
(ii) no Lien shall be imposed to secure payment of such charges (other than
payments to warehousemen and/or bailees) that is superior to any of the Liens
securing the Notes and such contest is maintained and prosecuted continuously
and with diligence and operates to suspend collection or enforcement of such
charges; (iii) none of the Collateral becomes subject to forfeiture or loss as a
result of such contest; and (iv) Hancock or the Guarantors shall promptly pay or
discharge such contested charges, Taxes or claims and all additional charges,
interest, penalties and expenses, if any, and shall deliver to Trustee evidence
reasonably acceptable to Trustee of such compliance, payment or discharge, if
such contest is terminated or discontinued adversely to such Hancock or
Guarantor or the conditions set forth in this section are no longer met.
 
 
SECTION 4.11
INSURANCE.

 
Hancock and each Guarantor shall, and shall cause any Subsidiary to, at all
times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated.
 
 
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SECTION 4.12
FINANCIAL STATEMENTS AND OTHER INFORMATION.

 
Hancock and each Guarantor shall, and shall cause each Subsidiary to, keep
proper books and Records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
each of Hancock, such Guarantor and their respective Subsidiaries, in accordance
with GAAP.  So long as any Notes are outstanding, Hancock shall furnish to all
Holders and to the Trustee, within 135 days after Hancock’s fiscal year end,
annual financial information required to be contained in a filing with the
Commission on Form 10-K.  Such annual financial information may be delivered to
the Holders and the Trustee in any manner permitted under the rules and
regulations promulgated by the Commission.  Annual information filed with the
Commission via the EDGAR system will be deemed to be delivered to the Trustee as
of the time of such filing via EDGAR for purposes of this section.
 
 
SECTION 4.13
SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC.

 
Hancock and each Guarantor shall not, and shall not permit any Subsidiary to,
directly or indirectly,
 
(a)           sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for:
 
(i)           Permitted Dispositions,
 
(ii)          the issuance of Capital Stock of Hancock consisting of common
stock pursuant to a restricted stock award, an employee stock option or grant or
similar equity plan or 401(k) plans of Hancock for the benefit of its employees,
directors and consultants, provided, that, in no event shall Hancock be required
to issue, or shall Hancock issue, Capital Stock pursuant to such stock plans or
401(k) plans which would result in a Change of Control or other Event of
Default,
 
(iii)         the sublease by Hancock or any Guarantor of any Real Property
leased by Hancock or a Guarantor; provided, that, as to any such sublease, (A)
after giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing, and (B) such sublease shall be on commercially
reasonable prices and terms in a bona fide arm’s length transaction,
 
(iv)         Licenses and sublicenses of Intellectual Property by Hancock or a
Guarantor to Hancock or another Guarantor in the ordinary course of business and
consistent with past practices,
 
 
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(v)          any sale, issuance, assignment, lease, license, transfer,
abandonment or other disposition of any Capital Stock or Indebtedness to any
other Person or any of its assets to any other Person to the extent permitted
under the Credit Facility, or
 
(vi)         issuance of the New Warrants pursuant to the Warrant Exchange and
the Specified Common Stock in accordance with the terms of the Specified
Warrants.
 
(b)           wind up, liquidate or dissolve except that any Guarantor or
Subsidiary of Hancock may wind up, liquidate and dissolve, provided, that, each
of the following conditions is satisfied: (i) the winding up, liquidation and
dissolution of such Guarantor or other Subsidiary shall not violate any law or
any order or decree of any court or other Governmental Authority in any material
respect and shall not conflict with or result in the breach of, or constitute a
default under, any indenture, mortgage, deed of trust, or any other agreement or
instrument to which Hancock or any Guarantor is a party or may be bound, (ii)
such winding up, liquidation or dissolution shall be done in accordance with the
requirements of all applicable laws and regulations, (iii) effective upon such
winding up, liquidation or dissolution, all of the assets and properties of such
Guarantor or other Subsidiary shall be duly and validly transferred and assigned
to its shareholders, free and clear of any liens, restrictions or encumbrances
other than the security interest and liens of the Credit Facility and this
Indenture, (iv) Trustee shall have received all documents and agreements that
Hancock or Guarantor has filed with any Governmental Authority or as are
otherwise required to effectuate such winding up, liquidation or dissolution,
(v) neither Hancock nor Guarantor shall assume any obligations or liabilities as
a result of such winding up, liquidation or dissolution, or otherwise become
liable in respect of any Indebtedness or liabilities of the entity that is
winding up, liquidating or dissolving, unless such Indebtedness is otherwise
expressly permitted hereunder, (vi) Trustee shall have received not less than
ten (10) Business Days prior written notice of the intention of such Guarantor
or Subsidiary to wind up, liquidate or dissolve, and (vii) as of the date of
such winding up, liquidation or dissolution and after giving effect thereto, no
Default or Event of Default shall exist or have occurred; or
 
(c)           agree to do any of the foregoing.
 
 
SECTION 4.14
ENCUMBRANCES.

 
Hancock and each Guarantor shall not, and shall not permit any Subsidiary to,
create, incur, assume or suffer to exist any security interest, mortgage,
pledge, Lien, charge or other encumbrance of any nature whatsoever on any of its
assets or properties, including the Collateral, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice
of any security interest or Lien with respect to any such assets or properties,
except:
 
(a)           the security interests and liens arising out of or securing the
Credit Facility;
 
(b)           the security interests and liens arising out of the Existing
Indenture and the other Existing Indenture Documents or securing the Existing
Notes;
 
 
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(c)           the security interest and liens arising out of this Indenture and
the Collateral Documents;
 
(d)           liens securing the payment of Taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Hancock or such Guarantor or Subsidiary, as the case may be,
and with respect to which adequate reserves have been set aside on its books;
 
(e)           non-consensual statutory liens (other than liens securing the
payment of Taxes) arising in the ordinary course of Hancock’s, such Guarantor’s
or a Subsidiary’s business to the extent: (i) such liens secure Indebtedness
which is not overdue or (ii) such liens secure Indebtedness relating to claims
or liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Hancock, such
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
 
(f)           zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of Hancock, a Guarantor or a Subsidiary as currently conducted thereon
or materially impair the value of the Real Property which may be subject
thereto;
 
(g)           purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under this Indenture;
 
(h)           pledges and deposits of cash by Hancock or any Guarantor after the
date hereof in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of Hancock or such Guarantor as of the
date hereof;
 
(i)           pledges and deposits of cash by Hancock or any Guarantor after the
date hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations in each case in the ordinary course of business consistent
with the current practices of Hancock or such Guarantor as of the date hereof;
 
(j)           liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by Hancock or any Guarantor located on the
premises of Hancock or a Guarantor (but not in connection with, or as part of,
the financing thereof) from time to time in the ordinary course of business and
consistent with current practices of Hancock or such Guarantor and the
precautionary UCC financing statement filings in respect thereof;
 
 
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(k)           liens or rights of setoff against credit balances of Hancock with
Credit Card Issuers or Credit Card Processors or amounts owing by such Credit
Card Issuers or Credit Card Processors to Hancock in the ordinary course of
business, but not liens on or rights of setoff against any other property or
assets of Hancock, pursuant to the Credit Card Agreements (as in effect on the
date hereof) to secure the obligations of Hancock to the Credit Card Issuers or
Credit Card Processors as a result of fees and chargebacks;
 
(l)           statutory or common law liens or rights of setoff of depository
banks with respect to funds of Hancock or any Guarantor at such banks to secure
fees and charges in connection with returned items or the standard fees and
charges of such banks in connection with the deposit accounts maintained by
Hancock and any Guarantor at such banks (but not any other Indebtedness);
 
(m)           judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, and (iii) a stay of
enforcement of any such liens is in effect;
 
(n)           the security interests and liens which are permitted under the
Credit Facility whether or not otherwise permitted by this Indenture; or
 
(o)           non-consensual security interests and liens which are not
permitted by the other provisions of this Indenture to secure Indebtedness and
other liabilities in an amount not to exceed $115,000 in the aggregate.
 
 
SECTION 4.15
INDEBTEDNESS.

 
Hancock and each Guarantor shall not, and shall not permit any Subsidiaries to,
incur, create, assume, become or be liable in any manner with respect to, or
permit to exist, any Indebtedness, or Guarantee, assume, endorse, or otherwise
become responsible for (directly or indirectly), the Indebtedness, performance,
obligations or dividends of any other Person, except:
 
(a)           the Notes (or any refinancing thereof);
 
(b)           the Existing Notes and the Indebtedness of Hancock and the other
Loan Parties under the Existing Indenture and the other Existing Indenture
Documents (or any refinancing thereof);
 
(c)           the Credit Facility and the Indebtedness of Hancock and the other
Loan Parties under the Credit Facility Documents (or any refinancing thereof);
 
(d)           purchase money Indebtedness (including Capital Leases) arising
after the date hereof to the extent secured by purchase money security interests
in Equipment (including Capital Leases) and purchase money mortgages on Real
Property not to exceed $2,875,000 in the aggregate at any time outstanding so
long as such security interests and mortgages do not apply to any property of
Hancock, Guarantor or Subsidiary other than the Equipment or Real Property so
acquired, and the Indebtedness secured thereby does not exceed the cost of the
Equipment or Real Property so acquired, as the case may be;
 
 
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(e)           the Indebtedness of Hancock or any Guarantor to Hancock or any
other Guarantor or any other Subsidiary of Hancock arising pursuant to loans
permitted under this Indenture;
 
(f)           Indebtedness of Hancock or any Guarantor entered into in the
ordinary course of business pursuant to a Hedge Agreement; provided, that, (i)
such arrangements are not for speculative purposes, and (ii) such Indebtedness
shall be unsecured, except to the extent such Indebtedness constitutes part of
the obligations arising under or pursuant to Hedge Agreements with any Bank
Product Provider that are secured under the terms of the Credit Facility;
 
(g)           unsecured Guarantees by Hancock or a Guarantor of the obligations
of Hancock or a Guarantor arising pursuant to a lease from a third party in a
bona fide arm’s length transaction of real property for use as a retail store
location in the ordinary course of the business of Hancock or a Guarantor;
provided, that, (i) the Person issuing such Guarantee is permitted hereunder to
incur directly the obligation that is being guaranteed and (ii) as of the date
on which such Guarantee is issued no Event of Default exists or has occurred and
is continuing;
 
(h)           Indebtedness of Hancock or any Guarantor arising after the date of
this Indenture to any third person not otherwise provided for in this section,
provided, that, in each case, each of the following conditions is satisfied and
Hancock certifies to the Trustee that each of the following conditions is
satisfied: (i) such Indebtedness shall be subject and subordinate in right of
payment to the right of Holders to receive the prior indefeasible payment and
satisfaction in full payment of all of the Notes, (ii) as of the date of
incurring such Indebtedness and after giving effect thereto, no Default or Event
of Default shall exist or have occurred, (iii) as of the date of incurring such
Indebtedness and after give effect thereto, the Interest Coverage Ratio is
greater than 2.0, and (iv) such Indebtedness shall not exceed $20,000,000 at any
time;
 
(i)           intercompany indebtedness between (i) Hancock and any Subsidiary
of Hancock and (ii) any Subsidiary of Hancock and any other Subsidiary of
Hancock; and
 
(j)           Indebtedness permissible under the Credit Facility which is not
permitted by the other provisions of this section.
 
 
SECTION 4.16
LOANS, INVESTMENTS, ETC.

 
Hancock and each Guarantor shall not, and shall not permit any Subsidiary to,
directly or indirectly, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary immediately prior
to such merger) any Capital Stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit or all or a substantial part of
the assets or property of any other Person (whether through purchase of assets,
merger or otherwise), or form or acquire any Subsidiaries, or agree to do any of
the foregoing (each of the foregoing an “Investment”), except:
 
 
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(a)           Permitted Investments;
 
(b)           Permitted Acquisitions;
 
(c)           Investments by Hancock, a Guarantor or other Subsidiary of Hancock
in another Guarantor or other Subsidiary of Hancock, in each case after the date
hereof, provided, that, to the extent that such Investment gives rise to any
Indebtedness, such Indebtedness is permitted hereunder and to the extent that
such Investment gives rise to the issuance of any shares of Capital Stock, such
issuance is permitted hereunder;
 
(d)           loans by Hancock or a Guarantor to another Guarantor after the
date hereof; and
 
(e)           the loans and advances permitted under the Credit Facility which
are not permitted by the other provisions of this section.
 
For purposes of determining compliance with this Section 4.16, in the event that
an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described herein, Hancock may classify such Indebtedness in its
sole discretion in one of the classes above and shall be entitled to divide and
classify an item in more than one category.
 
 
SECTION 4.17
RESTRICTED PAYMENTS.

 
Hancock and each Guarantor shall not, and shall not permit any Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except:
 
(a)           Hancock may make Restricted Payments with respect to its Capital
Stock payable solely in additional shares of its Capital Stock that satisfies
the requirements for issuance of Capital Stock by Hancock under Section 4.13(a)
hereof;
 
(b)           Subsidiaries of Hancock or any Guarantor may make Restricted
Payments to Hancock or to other Subsidiaries of Hancock;
 
(c)           A Guarantor may make Restricted Payments to another Guarantor for
the purpose of paying dividends in respect of the Capital Stock of a Guarantor;
 
(d)           Hancock and Guarantors may repurchase Capital Stock consisting of
common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan or upon the vesting of restricted
stock in any such employee in accordance with the provisions of the restricted
stock plan, provided, that, as to any such repurchase, each of the following
conditions is satisfied: (i) as of the date of the payment for such repurchase
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing, (ii) such repurchase shall be paid with funds
legally available therefor, (iii) such repurchase shall not violate any law or
regulation or the terms of any indenture, agreement or undertaking to which
Hancock or such Guarantor is a party or by which such Hancock or Guarantor or
its or their property are bound, and (iv) the aggregate amount of all payments
for such repurchases in any calendar year shall not exceed $4,600,000;
 
 
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(e)           Hancock may make Restricted Payments for the purpose of paying
dividends and paying other distributions in respect of its Capital Stock or the
repurchase of its Capital Stock in an amount not to exceed $1,150,000 in the
aggregate in any calendar year and not to exceed $3,450,000 in the aggregate
during the term of this Indenture, provided, that, as of the date of any such
payment and after giving effect thereto, no Default or Event of Default shall
exist or have occurred; and
 
(f)           Hancock may make payments (voluntary, mandatory or otherwise) of
principal, interest and all other obligations (whether in cash or in kind) with
respect to all permitted Indebtedness, as set forth in Section 4.15 of this
Indenture.
 
 
SECTION 4.18
TRANSACTIONS WITH AFFILIATES.

 
Hancock and each Guarantor shall not, directly or indirectly, purchase, acquire
or lease any property from, or sell, transfer or lease any property to, any
officer, director or other Affiliate of Hancock or a Guarantor, except (a) in
the ordinary course of Hancock’s or a Guarantor’s business and upon terms no
less favorable to Hancock or a Guarantor than Hancock or a Guarantor would
obtain in a comparable arm’s length transaction with an unaffiliated person, (b)
for any purchase or acquisition by Hancock or a Guarantor from Hancock or
another Guarantor, any sale or transfer by Hancock or a Guarantor to Hancock or
another Guarantor, or any lease of any property by Hancock or a Guarantor from
Hancock or another Guarantor or lease of any property from Hancock or a
Guarantor to Hancock or another Guarantor and (c) transactions expressly
permitted by this Indenture.  The provisions of this paragraph shall not apply
to:
 
(a)           An issuance of securities, or other than payments, awards or
grants in cash, securities or otherwise pursuant to or the finding of,
employment arrangements, stock options and stock ownership plans approved by the
Board of Directors.
 
(b)           Loans or advances to employees in the ordinary course of business
in accordance with past practice. 
 
(c)           The payment of reasonable fees to directors of the Company and its
subsidiaries who are not employees of Hancock or its subsidiaries.
 
(d)           Any transaction on arm’s length terms with persons that are not
Affiliates at the time of such transaction, but that become Affiliates as a
result of such transaction.
 
(e)           The issuance of any capital stock. 
 
(f)           Transactions pursuant to the terms of any agreement currently in
effect or amendments, renewals or extensions that have terms not less favorable
to Hancock than those under the original agreement. 
 
 
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SECTION 4.19
COMPLIANCE WITH ERISA.

 
Hancock and each Guarantor shall, and shall cause each of its ERISA Affiliates
to: (a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal and State law; (b)
not terminate any Pension Plan so as to incur any material liability to the
Pension Benefit Guaranty Corporation; (c) not allow or suffer to exist any
prohibited transaction involving any Plan or any trust created thereunder which
would subject Hancock, a Guarantor or an ERISA Affiliate to a material tax or
other material liability on prohibited transactions imposed under Section 4975
of the Code or ERISA; (d) make in all material respects all required
contributions to any Plan (determined without regard to any waiver) which it is
obligated to pay under the Pension Funding Rules or the terms of such Plan; (e)
not engage in a transaction that would reasonably be expected to be subject to
Section 4069 or 4212(c) of ERISA; or (f) not allow or suffer to exist any
occurrence of a “reportable event” within the meaning of Section 4043 of ERISA
and the regulations issued thereunder with respect to any Pension Plan
(excluding those for which the provision for 30-day notice to the Pension
Benefit Guaranty Corporation has been waived by regulation) or any other event
or condition which presents a material risk of termination by the Pension
Benefit Guaranty Corporation of any Pension Plan that is a single employer plan,
which termination would reasonably be expected to result in any material
liability to the Pension Benefit Guaranty Corporation.
 
 
SECTION 4.20
CHANGE IN BUSINESS.

 
Hancock and each Guarantor shall not engage in any business other than the
business of Hancock or a Guarantor on the date hereof and any business
reasonably related, ancillary or complimentary to the business in which Hancock
or a Guarantor is engaged on the date hereof.
 
 
SECTION 4.21
LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES.

 
Hancock and each Guarantor shall not, directly, or indirectly, create or
otherwise cause or suffer to exist any encumbrance or restriction which
prohibits or limits the ability of any Subsidiary of Hancock or a Guarantor to
(a) pay dividends or make other distributions or pay any Indebtedness owed to
Hancock or a Guarantor or any Subsidiary of Hancock or a Guarantor; (b) make
loans or advances to Hancock or a Guarantor or any Subsidiary of Hancock or a
Guarantor, or (c) transfer any of its properties or assets to Hancock or a
Guarantor or any Subsidiary of Hancock or a Guarantor; whether now owned or
hereafter acquired, except for encumbrances and restrictions arising under (i)
applicable law, (ii) this Indenture, (iii) the Credit Facility, (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of Hancock or a Guarantor or any Subsidiary of Hancock or a
Guarantor, (v) customary restrictions on dispositions of real property interests
found in reciprocal easement agreements of Hancock or a Guarantor or any
Subsidiary of Hancock or a Guarantor, (vi) any agreement relating to
Indebtedness incurred by a Subsidiary of Hancock or a Guarantor prior to the
date on which such Subsidiary was acquired by Hancock or such Guarantor and
outstanding on such acquisition date, and (vii) the extension or continuation of
contractual obligations in existence on the date hereof; provided, that, any
such encumbrances or restrictions contained in such extension or continuation
are no less favorable to the Holders than those encumbrances and restrictions
under or pursuant to the contractual obligations so extended or continued.
 
 
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SECTION 4.22
CREDIT CARD AGREEMENTS.

 
Hancock and each Guarantor shall (a) observe and perform all material terms,
covenants, conditions and provisions of the Credit Card Agreements to be
observed and performed by it at the times set forth therein; and (b) at all
times maintain in full force and effect the Credit Card Agreements and not
terminate, cancel, surrender, modify, amend, waive or release any of the Credit
Card Agreements, or consent to or permit to occur any of the foregoing; except,
that, Hancock or any Guarantor may terminate or cancel any of the Credit Card
Agreements in the ordinary course of the business of Hancock or such Guarantor
and to the extent permitted under the Credit Facility.
 
 
SECTION 4.23
AFTER ACQUIRED REAL PROPERTY.

 
If Hancock or any Guarantor hereafter acquires any Real Property, fixtures or
any other property that is of the kind or nature described in the Mortgage and
such Real Property, fixtures or other property is adjacent to, contiguous with
or necessary or related to or used in connection with any Real Property then
subject to a Mortgage, or if such Real Property is not adjacent to, contiguous
with or related to or used in connection with such Real Property, then if such
Real Property, fixtures or other property at any location (or series of
adjacent, contiguous or related locations, and regardless of the number of
parcels) has a fair market value in an amount equal to or greater than $287,500
(or if an Event of Default exists, then regardless of the fair market value of
such assets), without limiting any other rights of the Trustee or the Holders,
or duties or obligations of Hancock or any Guarantor, Hancock or such Guarantor
shall execute and deliver to Trustee for the benefit of the Trustee and the
Holders a mortgage, deed of trust or deed to secure debt, in form and substance
substantially similar to the Mortgage and as to any provisions relating to
specific state laws and in form appropriate for recording in the real estate
records of the jurisdiction in which such Real Property or other property is
located granting to Trustee a lien and mortgage on and security interest in such
Real Property, fixtures or other property (except as Hancock or such Guarantor
would otherwise be permitted to incur hereunder or under the Mortgage) provided,
that, as to any such Real Property that is not adjacent, contiguous or related
to Real Property then subject to a Mortgage, if the purchase price for such Real
Property is paid with the initial proceeds of a loan from a financial
institution giving rise to Indebtedness permitted under this Indenture, then
Hancock or such Guarantor shall not be required to execute and deliver such
mortgage, deed of trust or deed to secure debt in favor of the Trustee and the
Holders with respect to such Real Property.
 
 
SECTION 4.24
FOREIGN ASSETS CONTROL REGULATIONS, ETC.

 
The issuance of the Notes will not violate the Trading With the Enemy Act (50
USC §1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the
foreign assets control regulations of the United States Treasury Department (31
C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign Assets Control
Regulations”) or any enabling legislation or executive order relating thereto
(including, but not limited to (a) Executive order 13224 of September 21, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed.  Reg.  49079 (2001)) (the “Executive
Order”) and (b) the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law
107-56).  Neither Hancock nor any of its Subsidiaries is or will become a
“blocked person” as described in the Executive Order, the Trading with the Enemy
Act or the Foreign Assets Control Regulations or engages or will engage in any
dealings or transactions, or be otherwise associated, with any such “blocked
person.”
 
 
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SECTION 4.25
FURTHER ASSURANCES.

 
(a)           In the case of the formation or acquisition by Hancock or a
Guarantor of any Subsidiary after the date hereof, as to any such Subsidiary,
(i) Hancock or the Guarantor forming such Subsidiary shall cause any such
Subsidiary to execute and deliver to Trustee, the following: (A) an absolute and
unconditional Guarantee of payment of the Notes in the form of Exhibit B, (B) a
security agreement granting to Trustee for the benefit of the Trustee and the
Holders a security interest and Lien upon all of the assets of any such
Subsidiary of the type or category of the assets of Hancock and the Guarantors
subject to the security interests and Liens pursuant hereto (in each case,
subject to Article XI hereof), and (C) such other agreements, documents and
instruments previously delivered under this Indenture with respect to assets of
the type or category of assets of Hancock and the Guarantors subject to the
security interests and Liens pursuant hereto.
 
(b)           In the case of an acquisition of assets (other than Capital Stock)
by Hancock or a Guarantor pursuant to a Permitted Acquisition after the date
hereof, Trustee shall have received: (i) evidence that Trustee has valid and
perfected security interests in and liens upon all purchased assets, and (ii)
the agreement of the seller consenting to the collateral assignment by Hancock
or the Guarantor purchasing such assets of all rights and remedies and claims
for damages of Hancock or the Guarantor relating to the Collateral (including,
without limitation, any bulk sales indemnification) under the agreements,
documents and instruments relating to such acquisition.
 
(c)           At the request of Trustee at any time and from time to time,
Hancock and the Guarantors shall, at their expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Indenture.
 
 
SECTION 4.26
LEASEHOLD ESTATES.

 
Neither Hancock nor any Guarantor shall, nor shall any of them permit any of
their Subsidiaries to, enter into any leasehold mortgage, deed of trust or any
other agreement irrespective of how so identified which grants to any third
party a leasehold mortgage in such leasehold estate and the properties and
assets located therein except to the extent permitted under the Credit Facility.
 
ARTICLE V

 
SUCCESSORS
 
 
SECTION 5.1
MERGER, CONSOLIDATION OR SALE OF ASSETS OF HANCOCK.

 
Hancock shall not, in a single transaction or series of related transactions,
consolidate or merge with or into (whether or not Hancock is the surviving
corporation), or directly and/or indirectly through its Subsidiaries sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets determined on a consolidated basis for Hancock and
its Subsidiaries taken as a whole in one or more related transactions, to
another Person unless (i) Hancock is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than Hancock)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of one of the states of the United States; (ii) the Person formed by or
surviving any such consolidation or merger (if other than Hancock) or the Person
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of Hancock under the Notes and
this Indenture pursuant to a Supplemental Indenture in the form set forth as
Exhibit B; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) Hancock shall have delivered to the Trustee an
Officers’ Certificate and an Opinion of Counsel addressed to the Trustee with
respect to the foregoing matters.
 
 
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SECTION 5.2
SUCCESSOR CORPORATION OF HANCOCK SUBSTITUTED.

 
Upon any consolidation or merger, or any sale, assignment, transfer, lease
conveyance or other disposition of all or substantially all of the properties or
assets of Hancock in accordance with Section 5.1 hereof, the successor
corporation formed by such consolidation or into or with which Hancock is merged
or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for, Hancock under this
Indenture and the Notes (so that from and after the date of such consolidation,
merger, sale, lease, conveyance or other disposition, the provisions of this
Indenture referring to “Hancock” shall refer instead to the successor
corporation and not to Hancock), and may exercise every right and power of
Hancock under this Indenture with the same effect as if such successor Person
had been named as Hancock herein; provided, however, that the predecessor
corporation shall not be relieved from the obligation to pay the principal,
premium if any, and interest and Additional Amounts, if any, on the Notes except
in the case of a sale of all or substantially all of Hancock’s properties or
assets that meets the requirements of Section 5.1 hereof.
 
ARTICLE VI

 
DEFAULTS AND REMEDIES
 
 
SECTION 6.1
EVENTS OF DEFAULT.

 
An “Event of Default” occurs if:
 
(a)           Hancock defaults in the payment of interest on, or Additional
Amounts with respect to, any Note when the same becomes due and payable and the
Default continues for a period of 30 days;
 
 
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(b)           Hancock defaults in the payment of the principal of or premium, if
any, on any Note when the same becomes due and payable at maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise;
 
(c)           Hancock fails to comply with any of its other agreements or
covenants in, or provisions of, the Notes or this Indenture and the Default
continues for a period of 60 days after there has been given to Hancock by the
Trustee or to Hancock and the Trustee by the Holders of at least 50.1% in
principal amount of the outstanding Notes a written notice specifying such
Default and requiring it to be remedied and stating that such notice is a
“Notice of Default” hereunder;
 
(d)           a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Hancock or any Guarantor (or the payment of
which is guaranteed by Hancock or any Guarantor), whether such Indebtedness or
Guarantee exists on the date of this Indenture or shall be created thereafter,
which default (i) is caused by a failure to pay principal of or premium, if any,
or interest on such Indebtedness prior to the expiration of the applicable grace
period provided in such Indebtedness on the date of such default (a “Payment
Default”) or (ii) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5,750,000 or more;
 
(e)           a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against Hancock or any of
its Subsidiaries, and such judgment or judgments are not paid, discharged or
stayed for a period of 60 days, provided that the aggregate of all such
undischarged and unpaid judgments exceeds $5,750,000;
 
(f)           Hancock or any of its Significant Subsidiaries or group of
Subsidiaries that, together taken (as of the latest audited consolidated
financial statement for Hancock and its Subsidiaries), would constitute a
Significant Subsidiary (a “Group of Subsidiaries”), pursuant to or within the
meaning of the Bankruptcy Code:
 
(i)           commences a voluntary case;
 
(ii)          consents to the entry of an order for relief against it in an
involuntary case;
 
(iii)         consents to the appointment of a Custodian of it or for all or
substantially all of its property;
 
(iv)         makes a general assignment for the benefit of its creditors; or
 
(v)          generally is not paying its debts as they become due;
 
 
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(g)           a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that, in each case remains unstayed and in effect for 30
consecutive days, and that:
 
(vi)         is for relief against Hancock or any Significant Subsidiary or
Group of Subsidiaries in an involuntary case;
 
(vii)        appoints a Custodian of Hancock or any Significant Subsidiary or
Group of Subsidiaries or for all or substantially all of the property of Hancock
or any Significant Subsidiary or Group of Subsidiaries; or
 
(viii)       orders the liquidation of Hancock or any Significant Subsidiary or
Group of Subsidiaries; or
 
(h)           the security interest in the Collateral shall cease to be in full
force and effect or enforceable in accordance with the terms of the Collateral
Documents or this Indenture.
 
The term “Custodian” means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
 
 
SECTION 6.2
ACCELERATION.

 
If an Event of Default (other than an Event of Default specified in clause (f)
or (g) of Section 6.1) occurs and is continuing, the Trustee, upon the written
direction of the Holders of at least 50.1% in aggregate principal amount of the
then outstanding Notes, by written notice to Hancock, may declare the unpaid
principal of and any premium and accrued interest, and Additional Amounts, if
any, on all the Notes to be due and payable.  Upon such declaration, 100% of the
principal amount of the Notes plus any premium and accrued and unpaid interest,
and Additional Amounts, if any, on the Notes shall be due and payable
immediately.  If an Event of Default specified in clause (f) or (g) of Section
6.1 relating to Hancock, any Significant Subsidiary or any Group of Subsidiaries
occurs, all such amounts shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.  The Holders of a majority in principal amount of the then outstanding
Notes by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest or Additional Amounts that has become due solely because of the
acceleration) have been cured or waived.  The Trustee may withhold from Holders
of the Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
 
 
SECTION 6.3
OTHER REMEDIES.

 
If an Event of Default occurs and is continuing, the Trustee may, if indemnified
to its satisfaction pursuant to Section 7.1(e) hereof, and shall, upon having
been requested so to do by the Holders of at least 50.1% in aggregate principal
amount of the then outstanding Notes and having been indemnified to its
satisfaction pursuant to Section 7.1(e) hereof, pursue any available remedy to
collect the payment of principal, premium, if any, and interest and Additional
Amounts, if any, on the Notes or to enforce the performance of any provision of
the Notes, this Indenture or the Collateral Documents, in each case, subject to
Article XI hereof.
 
 
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The Trustee may maintain a proceeding even if it does not possess any of the
Notes or does not produce any of them in the proceeding.  A delay or omission by
the Trustee or any Holder of a Note in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default.  All remedies are cumulative
to the extent permitted by law.
 
 
SECTION 6.4
WAIVER OF EXISTING DEFAULTS.

 
Subject to Section 6.7 and Section 9.2, Holders of not less than a majority in
aggregate principal amount of the then outstanding Notes by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of the principal of, premium and
Additional Amounts, if any, or interest on, the Notes (including in connection
with an offer to purchase).  Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
 
 
SECTION 6.5
CONTROL BY MAJORITY.

 
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it, including, without limitation, under the Collateral Documents, provided
that Trustee is indemnified to its satisfaction pursuant to Section 7.1(e)
hereof.  However, the Trustee may refuse to follow any direction that conflicts
with law, this Indenture or the Collateral Documents or that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Notes or
that may involve the Trustee in personal liability.
 
 
SECTION 6.6
LIMITATION ON SUITS.

 
A Holder of a Note may pursue a remedy with respect to this Indenture or the
Notes only if (and subject to Article XI hereof):
 
(a)           the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
 
(b)           the Holders of at least 50.1% in aggregate of the principal amount
of the then outstanding Notes make a written request to the Trustee to pursue
the remedy;
 
(c)           such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense pursuant to Section 7.1(e) hereof;
 
 
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(d)           the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
 
(e)           during such 60-day period the Holders of a majority in aggregate
of the principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
 
 
SECTION 6.7
RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.

 
Notwithstanding any other provision of this Indenture but subject to Article XI
hereof, the right of any Holder of a Note to receive payment of principal,
premium and Additional Amounts, if any, and interest on the Note, on or after
the respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
 
 
SECTION 6.8
COLLECTION SUIT BY TRUSTEE.

 
If an Event of Default specified in Section 6.1 (a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against Hancock for the whole amount of principal
of, premium and Additional Amounts, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due to
the Trustee under Section 7.7.
 
 
SECTION 6.9
TRUSTEE MAY FILE PROOFS OF CLAIM.

 
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to Hancock (or
any other obligor upon the Notes), its creditors or its property and will be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof.  To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise.  Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, or any adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
 
 
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SECTION 6.10
PRIORITIES.

 
If the Trustee collects any money pursuant to this Article, it shall, subject to
Article XI hereof, pay out the money in the following order:
 
First: to the Trustee, its agents and attorneys for amounts due under Section
7.7 hereof, including payment of all compensation, expenses and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
such collection;
 
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Additional Amounts, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Additional Amounts, if any, and
interest, respectively; and
 
Third: to Hancock or to such party as a court of competent jurisdiction shall
direct.
 
The Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 6.10.
 
 
SECTION 6.11
UNDERTAKING FOR COSTS.

 
In any suit for the enforcement of any right or remedy under this Indenture or
in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant.  This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant
to Section 6.7 hereof, or a suit by Holders of more than 10% in aggregate of the
principal amount of the then outstanding Notes.
 
ARTICLE VII
 
TRUSTEE
 
 
SECTION 7.1
DUTIES OF TRUSTEE.

 
(a)           If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.
 
(b)           Except during the continuance of an Event of Default:
 
 
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(i)           the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
 
(ii)           in the absence of bad faith on its part the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.  However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
 
(c)           The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
 
(i)             this paragraph does not limit the effect of paragraph (b) of
this section;
 
(ii)            the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
 
(iii)           the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.5 hereof.
 
(d)           Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to the
provisions of this section.
 
(e)           No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability.  The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
 
(f)           The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with Hancock.  Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
 
(g)           The Trustee is hereby authorized to act on behalf of the Holders
as collateral agent, secured party, beneficiary, or pledgee under the Collateral
Documents, as appropriate, and to exercise such powers and to perform such
duties as are set forth in the Collateral Documents on their behalf, together
with such other powers as are reasonably incident thereto.
 
 
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SECTION 7.2
RIGHTS OF TRUSTEE.

 
(a)           The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person.  The
Trustee need not investigate any fact or matter stated in the document.
 
(b)           Before the Trustee acts or refrains from acting, it may require an
Officers’ Certificate or an Opinion of Counsel or both.  The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers’ Certificate or Opinion of Counsel.  The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
 
(c)           The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any attorney or agent
appointed with due care.
 
(d)           The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
 
(e)           The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, Records and premises of Hancock, personally or by agent or attorney.
 
(f)           Unless otherwise specifically provided in this Indenture and
subject to Section 7.2(b), any demand, request, direction or notice from Hancock
shall be sufficient if signed by an Officer of Hancock.
 
(g)           The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
 
(h)           The Trustee shall not be liable with respect to the validity or
perfection of any security interest to be created under this Indenture.
 
 
SECTION 7.3
INDIVIDUAL RIGHTS OF TRUSTEE.

 
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with Hancock or any Affiliate of Hancock
with the same rights it would have if it were not Trustee.  However, in the
event that the Trustee acquires any conflicting interest (as defined in the
Trust Indenture Act) it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as Trustee or resign.  Any Agent may
do the same with like rights and duties.  The Trustee is also subject to
Sections 7.10 and 7.11 hereof.
 
 
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SECTION 7.4
TRUSTEE’S DISCLAIMER.

 
The Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for Hancock’s use of the proceeds from the Notes or any money paid to Hancock or
upon Hancock’s direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or any other document in connection
with the sale of the Notes or pursuant to this Indenture other than its
certificate of authentication.
 
 
SECTION 7.5
NOTICE OF DEFAULTS.

 
If a Default or Event of Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default
or Event of Default within 90 days after it occurs.  Except in the case of a
Default or Event of Default in payment of principal of, premium, if any, or
interest or Additional Amounts, if any, on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.
 
 
SECTION 7.6
REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.

 
Within 60 days after each May 30 beginning with May 30, 2013, and for so long as
Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted).  The
Trustee also shall comply with TIA Section 313(b).  The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
 
A copy of each report at the time of its mailing to the Holders of Notes shall
be mailed to Hancock and filed with the Commission and on any stock exchange on
which the Notes are listed in accordance with TIA Section 313(d).
 
 
SECTION 7.7
COMPENSATION AND INDEMNITY.

 
Hancock shall pay to the Trustee from time to time such compensation as agreed
to between Hancock and the Trustee for its acceptance of this Indenture and
services hereunder and under the Collateral Documents.  The Trustee’s
compensation shall not be limited by any law on compensation of a trustee of an
express trust.  Hancock shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services.  Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee’s agents and
counsel.
 
 
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Hancock shall indemnify the Trustee against any and all losses, liabilities or
expenses (including reasonable attorneys’ fees) incurred by it arising out of or
in connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
Hancock or any Guarantor (including this Section 7.7) and defending itself
against any claim (whether asserted by Hancock, any Guarantor or any Holder or
any other Person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder or thereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith.  The Trustee shall notify Hancock promptly of any claim for which it may
seek indemnity.  Failure by the Trustee to so notify Hancock shall not relieve
Hancock of its obligations hereunder.  Hancock shall defend the claim and the
Trustee shall cooperate in the defense.  The Trustee may have separate counsel
and Hancock shall pay the reasonable fees and expenses of such counsel.  Hancock
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
 
The obligations of Hancock under this Section 7.7 shall survive the resignation
or removal of the Trustee and the satisfaction and discharge of this Indenture.
 
To secure Hancock’s payment obligations in this section, the Trustee shall have
a Lien prior to the interest of the Holders of the Notes but junior to the Lien
in favor of the Credit Facility Agent, for itself and on behalf of the Credit
Facility Secured Parties, on all money or property held or collected by the
Trustee, except that held in trust to pay principal, premium and Additional
Amounts, if any, and interest on particular Notes.  Such Lien shall survive the
satisfaction and discharge of this Indenture.
 
When the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.1(f) or 6.1(g) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
 
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the
extent applicable.
 
 
SECTION 7.8
REPLACEMENT OF TRUSTEE.

 
A resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this section.
 
The Trustee may resign in writing at any time and be discharged from the trust
hereby created by so notifying Hancock.  The Holders of Notes of a majority in
aggregate of the principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and Hancock in writing.  Hancock may remove
the Trustee if:
 
(a)           the Trustee fails to comply with Section 7.10 hereof;
 
(b)           the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
 
(c)           a Custodian or public officer takes charge of the Trustee or its
property; or
 
 
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(d)           the Trustee becomes incapable of acting.
 
If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, Hancock shall promptly appoint a successor
Trustee.  Within one year after the successor Trustee takes office, the Holders
of a majority in aggregate of the principal amount of the then outstanding Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
Hancock.
 
If a successor Trustee does not take office within 60 days after the retiring
Trustee notifies Hancock of its resignation or is removed, the retiring Trustee,
Hancock, or the Holders of Notes of at least 10% in aggregate of the principal
amount of the then outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
 
If the Trustee, after written request by any Holder of a Note who has been a
Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
 
A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to Hancock.  Thereupon, the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture.  The
successor Trustee shall mail a notice of its succession to Holders of the
Notes.  The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.7
hereof.  Notwithstanding replacement of the Trustee pursuant to this Section
7.8, Hancock’ obligations under Section 7.7 hereof shall continue for the
benefit of the retiring Trustee.
 
 
SECTION 7.9
SUCCESSOR TRUSTEE BY MERGER, ETC.

 
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor
Trustee.  Such successor Trustee shall assume all rights and obligations
hereunder and under the other Indenture Documents (including, without
limitation, the subordination provisions set forth in Article XI).  Within 30
days of such event, the successor Trustee shall mail a notice of its succession
to Hancock, the Holders of the Notes and the Credit Facility Agent.
 
 
SECTION 7.10
ELIGIBILITY; DISQUALIFICATION.

 
There shall at all times be a Trustee hereunder that is a corporation organized
and doing business under the laws of the United States of America or of any
state thereof that is authorized under such laws to exercise corporate trustee
power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $10.0
million (in the case of each successor Trustee) as set forth in its most recent
published annual report of condition.
 
 
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This Indenture shall always have a Trustee who satisfies the requirements of TIA
Section 310(a)(1), (2) and (5).  The Trustee is subject to TIA Section 310(b).
 
 
SECTION 7.11
PREFERENTIAL COLLECTION OF CLAIMS AGAINST HANCOCK.

 
The Trustee is subject to TIA Section 31l(a), excluding any creditor
relationship listed in TIA Section 311(b).  A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
 
ARTICLE VIII
 
SATISFACTION AND DISCHARGE; DEFEASANCE
 
 
SECTION 8.1
OPTION TO EFFECT LEGAL AND COVENANT DEFEASANCE.

 
Hancock may, at the option of its Board of Directors evidenced by a resolution
set forth in an Officers’ Certificate, at any time, elect to have Section 8.2 or
8.3 hereof be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article VIII but subject, in each case, to
Article XI hereof.
 
 
SECTION 8.2
LEGAL DEFEASANCE AND DISCHARGE.

 
Upon Hancock’s exercise under Section 8.1 hereof of the option applicable to
this Section 8.2, Hancock and each Guarantor shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes (including
the Subsidiary Guarantees) on and after the date the conditions set forth in
Section 8.4 hereof are satisfied (hereinafter, “Legal Defeasance”).  For this
purpose, Legal Defeasance means that Hancock and the Guarantors shall be deemed
to have paid and discharged the entire Indebtedness represented by the
outstanding Notes (including the Subsidiary Guarantees), which shall thereafter
be deemed to be “outstanding” only for the purposes of Section 8.6 hereof and
the other sections of this Indenture referred to in (a) and (b) below, and to
have satisfied all its other obligations under such Notes, the Subsidiary
Guarantees and this Indenture (and the Trustee, on demand of and at the expense
of Hancock, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.4 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest and Additional Amounts, if any, on such Notes when such
payments are due, (b) Hancock’s obligations with respect to such Notes under
Article II and Section 4.2 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and Hancock’s and the Guarantors’
obligations in connection therewith and (d) this Article VIII.
 
 
SECTION 8.3
COVENANT DEFEASANCE.

 
Upon Hancock’s exercise under Section 8.1 hereof of the option applicable to
this Section 8.3, Hancock and each Guarantor shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Sections 4.5, 4.8, 4.9 and 4.11
through 4.26 hereof with respect to all outstanding Notes on and after the date
the conditions set forth in Section 8.4 hereof are satisfied (hereinafter,
“Covenant Defeasance”), and such Notes will thereafter be deemed not
“outstanding” for the purposes of any direction, waiver, consent or declaration
or act of Holders of the Notes (and the consequences of any thereof) in
connection with such covenants, but will continue to be deemed “outstanding” for
all other purposes hereunder (it being understood that such Notes will not be
deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes and Subsidiary
Guarantees, Hancock and the Guarantors may omit to comply with and will have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply will not constitute a Default or an Event of Default pursuant to Section
6.1 hereof, but, except as specified above, the remainder of this Indenture and
such Notes and Subsidiary Guarantees will be unaffected thereby.
 
 
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SECTION 8.4
CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

 
The following shall be the conditions to application of Section 8.2 or 8.3 to
the outstanding Notes and the Subsidiary Guarantees:
 
(a)           Hancock must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in United States dollars,
non-callable U.S. government securities, or a combination thereof, in such
amounts as will be sufficient to pay the principal of, premium, if any, and
interest and Additional Amounts, if any, on the outstanding Notes at the Stated
Maturity or on the applicable redemption date, as the case may be, and Hancock
must specify whether the Notes are being defeased to maturity or to a particular
redemption date;
 
(b)           In the case of an election pursuant to Section 8.2 hereof, Hancock
shall have delivered to the Trustee an Opinion of Counsel in the United States
confirming that (i) Hancock has received from, or there has been published by,
the Internal Revenue Service a ruling or (ii) since the date of this Indenture,
there has been a change in the applicable United States federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such Legal Defeasance and will be subject to United States federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
 
(c)           In the case of an election pursuant to Section 8.3 hereof, Hancock
shall have delivered to the Trustee an Opinion of Counsel in the United States
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
Covenant Defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
 
 
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(d)           no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or insofar
as Section 6.1(g) or 6.1(h) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
 
(e)           such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture with the exception of Article XI hereof)
to which Hancock or any of its Subsidiaries is a party or by which Hancock or
any of its Subsidiaries is bound, including, without limitation, the Credit
Facility;
 
(f)           Hancock shall have delivered to the Trustee an Officers’
Certificate stating that the deposit was not made by Hancock with the intent of
preferring the Holders of Notes over any other creditors of Hancock or with the
intent of defeating, hindering, delaying or defrauding creditors of Hancock or
others; and
 
(g)           Hancock shall have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or Covenant
Defeasance, as applicable, have been complied with.
 
 
SECTION 8.5
SATISFACTION AND DISCHARGE OF INDENTURE.

 
This Indenture shall be discharged and shall cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of Notes,
as expressly provided for in this Indenture), as to all outstanding Notes when:
 
(a)           either (i) all the Notes theretofore authenticated and delivered
(other than Notes pursuant to Section 2.7 hereof which have been replaced or
paid and Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by Hancock and thereafter repaid to Hancock or
discharged from such trust) have been delivered to the Trustee for cancellation
or (ii) all of the Notes (a) have become due and payable, (b) will become due
and payable within the remaining term of the then current Interest Period (as
defined in the Notes) or (c) if redeemable at the option of Hancock, are to be
called for redemption within the remaining term of the then current Interest
Period under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of Hancock, and
Hancock shall have irrevocably deposited or caused to be deposited with the
Trustee cash in United States dollars, non-callable U.S. government securities,
or a combination thereof, in an amount sufficient in the written opinion of a
firm of independent public accountants delivered to the Trustee (which delivery
shall only be required if U.S. government securities have been so deposited) to
pay and discharge the entire Indebtedness on the Notes not theretofore delivered
to the Trustee for cancellation, for principal of, premium, if any, and interest
and Additional Amounts, if any, on the outstanding Notes to the date of deposit
together with irrevocable instructions for Hancock directing the Trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be;
 
(b)           Hancock has paid all other sums payable under this Indenture; and
 
 
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(c)           Hancock has delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel stating that all conditions precedent under this Indenture
relating to the satisfaction and discharge of this Indenture have been complied
with.
 
 
SECTION 8.6
DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS.

 
Subject to Section 8.7 hereof, all money and non-callable U.S. government
securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.6, the
“Trustee”) pursuant to Section 8.4 or 8.5 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including Hancock acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest and
Additional Amounts, if any, but such money need not be segregated from other
funds except to the extent required by law.
 
Hancock shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable U.S. government
securities deposited pursuant to Section 8.4 or 8.5 hereof or the principal and
interest received in respect thereof.
 
Anything in this Article VIII to the contrary notwithstanding, the Trustee shall
deliver or pay to Hancock from time to time upon the request of Hancock, any
money or non-callable U.S. government securities held by it as provided in
Section 8.4 or 8.5 hereof which are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance,
Covenant Defeasance or satisfaction and discharge.
 
 
SECTION 8.7
REPAYMENT TO HANCOCK.

 
Subject to applicable escheat and abandoned property laws, any money deposited
with the Trustee or any Paying Agent, or then held by Hancock, in trust for the
payment of the principal of, premium if any, Additional Amounts, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
and premium, if any, Additional Amounts, if any, or interest has become due and
payable shall be paid to Hancock on its request or (if then held by Hancock)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a creditor, look only to Hancock for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of Hancock as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of Hancock cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to Hancock.
 
 
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SECTION 8.8
REINSTATEMENT.

 
If the Trustee or Paying Agent is unable to apply any United States dollars or
non-callable U.S. government securities in accordance with Section 8.6 hereof,
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then Hancock’s
and each Guarantor’s obligations under this Indenture and the Notes and the
Subsidiary Guarantees shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.2, 8.3 or 8.5 hereof, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.6 hereof, as the case may be; provided, however, that, if Hancock
makes any payment of principal of, premium, if any, Additional Amounts, if any,
or interest on any Note following the reinstatement of its obligations, Hancock
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
 
ARTICLE IX
 
AMENDMENT, SUPPLEMENT AND WAIVER
 
 
SECTION 9.1
WITHOUT CONSENT OF HOLDERS OF NOTES.

 
Notwithstanding Section 9.2 of this Indenture, but subject to Section 11.10,
Hancock, the Guarantors and the Trustee may amend or supplement this Indenture,
the Collateral Documents and the Notes without the consent of any Holder of a
Note:
 
(a)           to cure any ambiguity, defect or inconsistency;
 
(b)           to provide for certificated Notes in addition to or in place of
uncertificated Notes;
 
(c)           to provide for the assumption of Hancock’s obligations to the
Holders of the Notes pursuant to Article V hereof;
 
(d)           to make any change that would provide any additional rights or
benefits to the Holders of the Notes, to further secure the Notes, to add to the
covenants of Hancock for the benefit of the Holders of the Notes or to surrender
any right or power conferred upon Hancock, or to make any change that does not
adversely affect the legal rights hereunder of any Holder of the Notes;
 
(e)           to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act;
 
(f)           to add any additional Guarantor or to release any Guarantor from
its Subsidiary Guarantee in accordance with this Indenture; or
 
(g)           to effectuate the replacement of a Credit Facility Loan Agreement
as contemplated in this Indenture.
 
 
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Upon the request of Hancock accompanied by a resolution of its Board of
Directors authorizing the execution of any such amendment or supplement, and
upon receipt by the Trustee of the documents described in Section 9.6 hereof,
the Trustee shall join with Hancock in the execution of any amendment or
supplement authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amendment
or supplement that affects its own rights, duties or immunities under this
Indenture or otherwise.
 
 
SECTION 9.2
WITH CONSENT OF HOLDERS OF NOTES.

 
Except as provided below in this Section 9.2 and subject to Section 11.10,
Hancock and the Trustee may amend or supplement this Indenture and the Notes
with the consent of the Holders of at least a majority in aggregate of the
principal amount of Notes then outstanding (including consents obtained in
connection with a purchase of or tender offer or exchange offer for the Notes).
 
Upon the request of Hancock accompanied by a resolution of its Board of
Directors authorizing the execution of any such amendment or supplement, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 9.6 hereof, the Trustee shall join with
Hancock in the execution of such amendment or supplement unless such amendment
or supplement affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amendment or supplement.
 
It shall not be necessary for the consent of the Holders of Notes under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
 
After an amendment, supplement or waiver under this section becomes effective,
Hancock shall mail to the Holders of Notes affected thereby a notice briefly
describing the amendment, supplement or waiver.  Any failure of Hancock to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such amendment, supplement or waiver.
 
Subject to Sections 6.4 and 6.7 hereof and the provisions of this section, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive any existing Default or Event of Default or compliance in
a particular instance by Hancock with any provision of this Indenture or the
Notes.  However, without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Notes held by a non-consenting Holder):
 
(a)           reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
 
(b)           reduce the principal of or Additional Amounts payable with respect
to any Note, change the fixed maturity of any Note or alter or waive any of the
provisions with respect to the redemption or repurchase of the Notes, except as
provided above with respect to Section 3.8 hereof;
 
 
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(c)           reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
 
(d)           waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the Payment
Default that resulted from such acceleration);
 
(e)           make any Note payable in money other than that stated in the
Notes;
 
(f)           make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest, premium, if any, or Additional Amounts, if any, on
the Notes;
 
(g)           waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants under Section 3.8 hereof);
 
(h)           make any change in Section 6.4 or 6.7 hereof or in this Section
9.2;
 
(i)           except as provided in Article VIII and Article XI hereof, or in
accordance with the terms of any Subsidiary Guarantee, release a Guarantor from
its obligations under its Subsidiary Guarantee or make any changes in the Notes
or the Subsidiary Guarantees that would change the ranking thereof to anything
other than pari passu in right of payment to pari passu or senior Indebtedness
of Hancock or the applicable Guarantor;
 
(j)           release any of the Collateral from the Lien of this Indenture
except in accordance with the terms of this Indenture; or
 
(k)           make any modification to the provisions in Section 4.18 hereof
that would adversely affect the rights of Holders to receive Additional Amounts
as described thereunder.
 
 
SECTION 9.3
COMPLIANCE WITH TRUST INDENTURE ACT.

 
Every amendment or supplement to this Indenture or the Notes shall be set forth
in an amended indenture or Supplemental Indenture that complies with the Trust
Indenture Act as then in effect.
 
 
SECTION 9.4
REVOCATION AND EFFECT OF CONSENTS.

 
Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder’s Note, even if notation of the consent is not made on any
Note.  However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective.  An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
 
 
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SECTION 9.5
NOTATION ON OR EXCHANGE OF NOTES.

 
The Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated.  Hancock in exchange for all Notes
may issue and the Trustee shall authenticate new Notes that reflect the
amendment, supplement or waiver.
 
Failure to make the appropriate notation or issue a new Note shall not affect
the validity and effect of such amendment, supplement or waiver.
 
 
SECTION 9.6
TRUSTEE TO SIGN AMENDMENTS, ETC.

 
The Trustee shall sign any amendment or supplement authorized pursuant to this
Article IX if the amendment or supplement does not adversely affect the rights,
duties, liabilities or immunities of the Trustee.  Hancock may not sign an
amendment or supplement until the Board of Directors approves it.  In executing
any amendment or supplement, the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive and (subject to Section 7.2) shall
be fully protected in relying upon, in addition to the documents required by
Section 9.2, an Officers’ Certificate and an Opinion of Counsel stating that the
execution of such amended indenture or Supplemental Indenture is authorized or
permitted by this Indenture, if applicable.
 
ARTICLE X
 
SECURITY AND PLEDGE OF COLLATERAL
 
 
SECTION 10.1
GRANT OF SECURITY INTEREST.

 
To secure the full and punctual payment when due and the full and punctual
performance of the Obligations under the Notes and this Indenture, in addition
to the security interests, liens and other rights in the Collateral granted the
Trustee for the benefit of the Trustee and the Holders pursuant to the
Collateral Documents, Hancock hereby conveys, grants, assigns, transfers,
pledges, sets over, confirms and grants a security interest to the Trustee, for
the benefit of the Trustee and the Holders, in any and all property of every
kind and nature now owned or hereafter acquired from time to time, conveyed,
pledged, assigned or transferred as and for additional security hereunder by the
Company or by anyone on its behalf, including specifically any and all funds
held by the Trustee hereunder.
 
 
SECTION 10.2
REPRESENTATIONS AND WARRANTIES.

 
Hancock hereby represents and warrants on the Initial Issue Date as follows:
 
 
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(i)           is the record and beneficial owner of the Collateral pledged by it
hereunder, free and clear of any Lien, except for Permitted Liens and the Lien
created by this Indenture;
 
(ii)          it has full corporate power, authority and legal right to pledge
all the Collateral pledged by it pursuant to this Indenture and the Collateral
Documents; and
 
(iii)         the pledge in accordance with the terms of this Indenture and the
Collateral Documents creates a valid and perfected Lien on the Collateral,
securing the payment and performance of the Obligations under the Notes.
 
 
SECTION 10.3
FURTHER ASSURANCES.

 
Hancock agrees that at any time and from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or that the Trustee may reasonably request
in order to perfect and protect any Lien granted or purported to be granted
hereby or to enable the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.
 
 
SECTION 10.4
TRUSTEE APPOINTED ATTORNEY-IN-FACT.

 
Hancock hereby appoints the Trustee as its attorney-in-fact, with full authority
in the place and stead and in its name or otherwise, from time to time in the
Trustee’s discretion but only after the occurrence and during the continuance of
an Event of Default, to take any action and to execute any instrument which the
Trustee may deem necessary or advisable in order to accomplish the purposes of
this Article X, including to receive, endorse and collect all instruments made
payable to Hancock, representing any dividend, interest payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.  This power, being coupled with an interest, is
irrevocable.
 
 
SECTION 10.5
TRUSTEE MAY PERFORM.

 
If Hancock fails to perform any agreement contained in this Article X or in the
Collateral Documents, the Trustee may itself perform, or cause performance of,
such agreement, and the expenses of the Trustee incurred in connection therewith
shall be payable by Hancock under Section 7.7.
 
 
SECTION 10.6
TRUSTEE’S DUTIES.

 
The powers conferred on the Trustee under this Article X are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers.  Except for the safe custody of any Collateral in its
possession, if any, and the accounting for moneys actually received by it
hereunder, the Trustee shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.
 
 
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SECTION 10.7
APPLICATION OF PROCEEDS.

 
Upon the occurrence and during the continuance of an Event of Default and after
the acceleration of the Notes pursuant to Section 6.2 (so long as such
acceleration has not been rescinded), all cash proceeds received by the Trustee
in respect of any sale of, collection from, or other realization upon, all or
any part of the Collateral, shall be applied by the Trustee in the manner
specified in Section 6.10.
 
 
SECTION 10.8
CONTINUING LIEN.

 
This Indenture and the Collateral Documents shall create a continuing Lien on
the Collateral that shall (i) remain in full force and effect until payment in
full of the Notes, (ii) be binding upon Hancock and its successors and assigns,
and (iii) inure to the benefit of the Trustee and its successors, transferees
and assigns.
 
 
SECTION 10.9
CERTIFICATES AND OPINIONS.

 
The Company shall comply with (a) TIA Section 314(b), relating to Opinions of
Counsel regarding the Lien of this Indenture and (b) TIA Section 314(d),
relating to the release of Collateral from the Lien of this Indenture and
Officers’ Certificates or other documents regarding fair value of the
Collateral, to the extent such provisions are applicable.  Any certificate or
opinion required by TIA Section 314(d) may be executed and delivered by an
Officer of Hancock to the extent permitted by TIA Section 314(d).
 
ARTICLE XI

 
SUBORDINATION OF INDENTURE DEBT AND INDENTURE DOCUMENTS
 
 
SECTION 11.1
GENERAL.

 
The Indenture Documents and the Indenture Debt (including, for the avoidance of
doubt and without limitation, all principal, interest, fees, prepayment premiums
or any other obligations arising under the Indenture Documents) shall be and
hereby are subordinated, and the payment of the Indenture Debt (and, for the
avoidance of doubt, any redemption or repurchase of the Indenture Documents
and/or the Indenture Debt or in connection with any put rights) is deferred
until the Discharge of all Credit Facility Debt, whether now or hereafter
incurred or owed by Hancock or any other Loan Parties.  Notwithstanding the
immediately preceding sentence, Hancock shall be permitted to pay, and the
Holders shall be permitted to receive, any regularly scheduled cash payment of
interest on the Notes for so long as at the time of such payment, or after
giving effect thereto, no Credit Facility Default or Credit Facility Event of
Default has occurred and is continuing under the Credit Facility Loan Agreement
or would occur after giving effect thereto.  Hancock shall also be permitted to
pay, and the Trustee shall be permitted to receive, compensation specified in
Section 7.7 as in effect on the date hereof.
 
 
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SECTION 11.2
ENFORCEMENT.

 
(a)           Neither the Trustee nor any Holder may take or omit to take any
action or assert any claim with respect to the Indenture Documents or the
Indenture Debt or otherwise which is inconsistent with the provisions of this
Article XI.  Without limiting the foregoing and except to the extent (and only
to such extent) (i) as is necessary, so long as no Credit Facility Default or
Credit Facility Event of Default has occurred and is then continuing under the
Credit Facility Loan Agreement or would occur after giving effect thereto, to
collect any sums expressly permitted to be paid by Hancock pursuant to Section
11.1, or (ii) that the commencement of a legal action may be required to toll
the running of any applicable statute of limitation, neither the Trustee nor any
Holder will assert, collect or enforce the Indenture Documents, Indenture Debt
or any part thereof or take any action to foreclose or realize upon the
Indenture Documents, Indenture Debt or any part thereof or take any Lien
Enforcement Action until the termination of the Standstill Termination Date,
provided that the Trustee shall have given at least ten (10) days written notice
to the Credit Facility Agent of the Trustee’s or the Holders’ intention to take
such enforcement action (which notice may be given prior to the Standstill
Termination Date), provided, further that no such enforcement action may be
taken by the Trustee or any Holder at any time (i) if a Senior Credit Facility
Payment Event of Default is then continuing or (ii) if Credit Facility Agent is
diligently pursuing in good faith an enforcement action against the Collateral.
 
(b)           Until the Discharge of all Credit Facility Debt, neither the
Trustee nor any Holder shall have any right of subrogation, reimbursement,
restitution, contribution or indemnity whatsoever from any assets of Hancock or
any other Loan Party or any provider of collateral security for the Credit
Facility Debt.  The Trustee, for itself and on behalf of each Holder, further
waives any and all rights with respect to marshalling.
 
 
SECTION 11.3
PAYMENTS HELD IN TRUST.

 
The Trustee and each Holder will hold in trust and immediately pay over to the
Credit Facility Agent, for the account of the Credit Facility Secured Parties,
in the same form of payment received, with appropriate endorsements, for
application to the Credit Facility Debt any cash amount that Hancock or any
other Loan Party pays to the Trustee or such Holder with respect to the
Indenture Debt or, as collateral for the Credit Facility Debt, any other assets
of Hancock or any other Loan Party that the Trustee or such Holder may receive
with respect to the Indenture Debt and/or the Indenture Documents, in each case,
except with respect to payments expressly permitted pursuant to Section
11.1.  For the avoidance of doubt, any proceeds of any third party surety or
third party hedging arrangement received by the Trustee or any Holder from any
Person (other than a Loan Party) that does not constitute Collateral hereunder
shall be for the account of the Trustee and the Holders.
 
 
SECTION 11.4
DEFENSE TO ENFORCEMENT.

 
If the Trustee or any Holder, in contravention of the terms of this Article XI,
shall commence, prosecute or participate in any suit, action or proceeding
against Hancock or any other Loan Party, then Hancock may interpose as a defense
or plea the making of this Article XI, and the Credit Facility Agent or any
Credit Facility Lender may intervene and interpose such defense or plea in its
name or in the name of Hancock or such Credit Facility Loan Party.  If the
Trustee or any Holder, in contravention of the terms of this Article XI, shall
attempt to collect any of the Notes or enforce any of the Indenture Documents,
then the Credit Facility Agent, any Credit Facility Lender or Hancock may, by
virtue of this Article XI, restrain the enforcement thereof in the name of the
Credit Facility Agent or such Credit Facility Lender or in the name of Hancock,
respectively.  If the Trustee or any Holder, in contravention of the terms of
this Article XI, obtains any cash or other assets of Hancock or any other Loan
Party as a result of any administrative, legal or equitable actions, or
otherwise, the Trustee, for itself and on behalf of the Holders, agrees
forthwith to pay, deliver and assign to the Credit Facility Agent, for the
account of the Credit Facility Secured Parties, with appropriate endorsements,
any such cash for application to the Credit Facility Debt and any such other
assets as collateral for the Credit Facility Debt.
 
 
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SECTION 11.5
BANKRUPTCY, ETC.

 
(a)           Payments Relating to Notes.  At any meeting of creditors of
Hancock or in the event of any case or proceeding, voluntary or involuntary, for
the distribution, division or application of all or part of the assets of
Hancock or the proceeds thereof, whether such case or proceeding be for the
liquidation, dissolution or winding up of Hancock or its business, a
receivership, insolvency or bankruptcy case or proceeding, an assignment for the
benefit of creditors or a proceeding by or against Hancock for relief under any
Bankruptcy Law, the Credit Facility Agent is hereby irrevocably authorized at
any such meeting or in any such proceeding to receive or collect for the benefit
of the Credit Facility Secured Parties any cash or other assets of Hancock
distributed, divided or applied by way of dividend or payment, or any securities
issued on account of any Indenture Debt, and apply such cash to or to hold such
other assets or securities as collateral for the Credit Facility Debt, and to
apply to the Credit Facility Debt any cash proceeds of any realization upon such
other assets or securities that the Credit Facility Agent in its discretion
elects to effect, until the Discharge of all Credit Facility Debt, rendering to
the Trustee and the Holders any surplus to which the Trustee and the Holders are
then entitled.
 
(b)           Securities by Plan of Reorganization or
Readjustment.  Notwithstanding the foregoing provisions of Section 11.5(a), each
Holder shall be entitled to receive and retain any securities of Hancock or any
other corporation or other entity provided for by a plan of reorganization or
readjustment (i) the payment of which securities is subordinate, at least to the
extent provided in this Article XI with respect to Indenture Debt, to the full
and final payment of all Credit Facility Debt under any such plan of
reorganization or readjustment and (ii) all other terms of which are acceptable
to the Credit Facility Lenders and the Credit Facility Agent.
 
(c)           Voting Rights.  At any such meeting of creditors or in the event
of any such case or proceeding, the Trustee and each Holder shall retain the
right to vote and otherwise act with respect to the Indenture Documents
(including, without limitation, the right to vote to accept or reject any plan
of partial or complete liquidation, reorganization, arrangement, composition or
extension), provided that neither the Trustee, for itself and on behalf of the
Holders, nor any Holder shall vote with respect to any such plan or take any
other action in any way so as to contest (i) the validity of any Credit Facility
Debt or any collateral therefor or guaranties thereof, (ii) the relative rights
and duties of any holders of any Credit Facility Debt established in any
instruments or agreements creating or evidencing any of the Credit Facility Debt
with respect to any of such collateral or guaranties or (iii) the Trustee’s or
any Holder’s obligations and agreements set forth in this Article XI.
 
 
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(d)           Liquidation, Dissolution, Bankruptcy Generally.  In the event of
any Proceeding involving any Loan Party:
 
(i)           Except as otherwise specifically permitted in this Article XI,
until Discharge of all Credit Facility Debt, neither the Trustee nor any Holder
shall assert, without the prior written consent of Credit Facility Agent, any
claim, motion, objection or argument in respect of all or any part of the
Collateral in connection with such Proceeding which could otherwise be asserted
or raised in connection with such Proceeding by the Trustee or such Holder as a
secured creditor of any Loan Party.  Without limiting the generality of the
foregoing, (A) except to the extent permitted by Section 11.5(d)(vi)(B), neither
the Trustee nor a Holder may object to or oppose (or support any other Person in
objecting to or opposing) any sale or other disposition of all or any part of
the Collateral free and clear of Liens or other claims of the Trustee or such
Holder under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code or any other law applicable to such Proceeding if Credit
Facility Agent and/or the Credit Facility Lenders have consented to such sale or
disposition; (B) except to the extent permitted by Section 11.5(d)(vi)(B),
neither the Trustee nor any Holder may challenge (or support any other Person in
challenging) any use of cash collateral or debtor-in-possession financing
consented to or provided by the Credit Facility Agent or any Credit Facility
Lender (whether consented to or provided by the Credit Facility Agent or any
Credit Facility Lender, a “DIP Financing”), such DIP Financing shall be on such
terms and conditions and in such amounts as the Credit Facility Agent and/or
such Credit Facility Lender, in its sole discretion, may decide and, in
connection therewith, any Loan Party may grant to such participating Credit
Facility Agent and/or Credit Facility Lender (or any agent or representative
thereof) Liens upon all of the property of such Loan Party, which Liens (x)
shall secure payment of all Credit Facility Debt whether such Credit Facility
Debt arose prior to the commencement of such Proceeding or at any time
thereafter and all other financing provided by any Credit Facility Lender and/or
the Credit Facility Agent during the Proceeding and (y) shall be superior in
priority to the liens and security interests, if any, in favor of the Trustee
and the Holders on the assets of such Loan Party on the same terms and
conditions as provided herein; provided, however that in connection with any
such use of cash collateral or DIP Financing, the Holders shall have the right
to request a replacement Lien in post-petition assets of Hancock the Loan
Parties as adequate protection of their interests which shall be junior and
subordinate to all Liens granted pursuant to such consent to use cash collateral
or DIP Financing with the same priorities afforded the Liens granted to the
Holders pursuant to this Article XI; (C) other than a request by the Holders for
a replacement lien referred to in clause (B)(ii) herein, neither the Trustee nor
any Holder may assert (or support any other Person in asserting) any right it
may have to “adequate protection” of its interest in any Collateral in any
Proceeding; (D) the Trustee and the Holders shall turn over to the Credit
Facility Agent for the pro rata benefit of the Credit Facility Secured Parties
and the Credit Facility Agent any “adequate protection” of its interest in any
Collateral that the Trustee or any Holder receives in any Proceeding for
application to the Credit Facility Debt owed to the Credit Facility Agent and/or
the Credit Facility Secured Parties; and (E) neither Trustee nor any Holder may
seek to have the automatic stay of Section 362 of the Bankruptcy Code lifted or
modified with respect to any Collateral, to appoint a trustee or examiner under
Section 1104 of the Bankruptcy Code or to convert or dismiss (or support any
other Person in converting or dismissing) such Proceeding under Section 1112 of
the Bankruptcy Code, in each case without the prior written consent of the
Credit Facility Agent; provided, that, in the case of this clause (E), if the
Credit Facility Secured Parties and/or the Credit Facility Agent seek such
aforementioned relief, the Trustee, on its own behalf and on behalf of the
Holders, hereby irrevocably consents thereto and shall join in any such motion
or application seeking such relief if requested by the Credit Facility
Agent.  The Trustee, on its own behalf and on behalf of the Holders, waives any
claim it may now or hereafter have arising out of the election of the Credit
Facility Agent and/or the Credit Facility Secured Parties, in any Proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b) of
the Bankruptcy Code.
 
 
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(ii)          Except as otherwise expressly set forth herein, the Credit
Facility Agent shall have the exclusive right to file proofs of claim and other
pleadings and motions with respect to any Collateral in any Proceeding.  Subject
to the limitations set forth in this Article XI, the Credit Facility Agent may
(but shall have no obligation or duty to) file appropriate proofs of claim and
other pleadings and motions with respect to any Indenture Debt in any Proceeding
if and to the extent a proper proof of claim with respect to such Indenture Debt
has not been filed by the Trustee or a Holder in the form required in such
Proceeding at least ten (10) days prior to the expiration of the time for filing
thereof.  In furtherance of the foregoing, the Trustee, on its own behalf and on
behalf of the Holders, and each Holder hereby appoints the Credit Facility Agent
as its attorney-in-fact, with full authority in the place and stead of the
Trustee or such Holder and full power of substitution and in the name of the
Trustee or such Holder or otherwise, to execute, file and deliver any document
or instrument that the Credit Facility Agent is required or permitted to file or
deliver pursuant to this Section 11.5(d)(ii), such appointment being coupled
with an interest and irrevocable.
 
(iii)         The Trustee and each Holder shall execute and deliver to the
Credit Facility Agent all such agreements, instruments and other documents
confirming the above authorizations and all such proofs of claim, assignments of
claim and other instruments and documentation, and shall take all such other
action as may be reasonably requested by the Credit Facility Agent to enforce
such claims and carry out the intent of this Section 11.5(d).
 
(iv)         The Credit Facility Debt shall continue to be treated as Credit
Facility Debt and the provisions of this Article XI shall continue to govern the
relative rights and priorities of the Credit Facility Agent and the Credit
Facility Secured Parties and the Trustee and the Holders even if all or part of
the Credit Facility Debt or the Liens securing same are subordinated, set aside,
avoided, invalidated or disallowed in connection with any Proceeding.
 
(v)           To the extent that any Credit Facility Secured Party or the Credit
Facility Agent receives payments (whether in cash, property or securities) on
the Credit Facility Debt or Collateral which are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any Bankruptcy Law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Credit Facility Debt, or part thereof,
intended to be satisfied shall be revived and continue in full force and effect
as if such payments or proceeds had not been received by such Credit Facility
Secured Party or the Credit Facility Agent.
 
 
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(vi)         Notwithstanding any other provision of this Article XI, (A) the
Trustee and each Holder shall be entitled to file any necessary responsive or
defensive pleadings in opposition to any motion, claim, adversary proceeding or
other pleading made by any Person objecting to or otherwise seeking the
disallowance of the claims of the Trustee or such Holder, including without
limitation any claims secured by the Collateral, if any, (B) the Trustee and
each Holder shall be entitled to file any pleadings, objections, motions or
agreements which assert rights or interests available to unsecured creditors of
the Loan Parties arising under either the Bankruptcy Code or applicable
non-bankruptcy law, and (C) subject to Section 11.5(d)(ii), the Trustee and each
Holder shall be entitled to file any proof of claim and other filings and make
any arguments and motions that are, in each case, in accordance with the terms
of this Article XI and necessary to preserve their rights with respect to the
Indenture Debt and the Collateral; provided, that notice of intent to take any
such action shall be given by the Trustee or such Holder, as applicable, to the
Credit Facility Agent not less than the earlier of (x) fifteen (15) Business
Days prior to the taking of such action and (y) ten (10) Business Days less than
the number of days available by order of any applicable bankruptcy court in
which to file any such claim, filing, pleading, objection, motion or agreement,
as the case may be.
 
 
SECTION 11.6
LIEN SUBORDINATION.

 
The Liens securing the Credit Facility Debt, the Credit Facility Loan Agreement
and the other Credit Facility Documents shall be senior to the Liens securing
the Indenture Debt and the Indenture Documents irrespective of the time of the
execution, delivery or issuance of any thereof or the filing or recording for
perfection of any thereof or the filing of any financing statement or
continuation statement relating to any thereof.
 
(a)           New Liens.  At any time prior to the Discharge of all Credit
Facility Debt, (a) neither the Trustee nor any Holder may demand or accept the
grant of any additional Liens on any asset of a Loan Party to secure any
Indenture Debt unless such Loan Party has granted, or concurrently therewith
grants, a Lien on such asset to secure the Credit Facility Debt, and (b) the
Credit Facility Agent shall not demand or accept the grant of any additional
Liens (other than DIP Financing Liens) on any asset of a Loan Party to secure
any Credit Facility Debt unless such Loan Party has granted, or concurrently
therewith grants, a Lien on such asset to secure the Indenture Debt, with each
such Lien to be subject to the provisions of this Article XI.  Without limiting
any other right or remedy available to the Credit Facility Agent, the Credit
Facility Secured Parties, the Trustee or the Holders, any amounts received by or
distributed to any such Person pursuant to or as a result of any Lien granted in
contravention of this section shall be subject to this Article XI.
 
(b)           Further Assurances.  The Trustee and each Holder agrees, upon
request of the Credit Facility Agent at any time and from time to time, to
execute such other documents or instruments as may be requested by the Credit
Facility Agent further to evidence of public record or otherwise the senior
priority of the Credit Facility Debt as contemplated hereby.
 
 
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(c)           Books and Records.  The Trustee agrees to maintain on its books
and records such notations as the Credit Facility Agent may reasonably request
to reflect the subordination contemplated hereby and to perfect or preserve the
rights of the Credit Facility Agent hereunder.
 
(d)           Release of Guaranties and Collateral.  Without limiting any of the
rights of the Credit Facility Agent or any Credit Facility Secured Party under
the Credit Facility Loan Agreement, the other Credit Facility Documents or
applicable law, in the event that the Credit Facility Agent releases or
discharges any guaranties of the Credit Facility Debt given by guarantors which
have also guarantied the Indenture Debt or releases or discharges any security
interests in, or mortgages or liens upon, any collateral securing the Credit
Facility Debt and also securing the Indenture Debt or consent to Hancock or any
other Loan Party entering into any sale or other disposition of collateral
including, without limitation, any agency agreements for the sale of Hancock’s
or such Loan Party’s assets, such guarantors or (as the case may be) (each of
the foregoing being, a “Release Event”) such collateral shall thereupon be
deemed to have been released from all such guaranties or security interests,
mortgages or liens in favor of the Trustee and any Holder, and the Trustee and
such Holder shall be deemed to have consented to any such sale or disposition
(including, without limitation, in relation to any agency agreement).  The
Trustee, for itself and on behalf of each Holder, agrees that, within ten (10)
days following the Credit Facility Agent’s written request therefor, the Trustee
will execute, deliver and file any and all such termination statements, mortgage
discharges, lien releases and other agreements and instruments as the Credit
Facility Agent reasonably deems necessary or appropriate in order to give effect
to the preceding sentence.  The Trustee and each Holder hereby irrevocably
appoints the Credit Facility Agent, and its successors and assigns, and its
officers, with full power of substitution, the true and lawful attorney(s) of
the Trustee and such Holder for the purpose of effecting any such executions,
deliveries and filings if and to the extent that the Trustee shall have failed
to perform such obligations pursuant to the foregoing provisions of this Section
11.6(e) within such ten (10) day period.
 
 
SECTION 11.7
CREDIT FACILITY LENDERS’ FREEDOM OF DEALING.

 
(a)           Modification of Credit Facility Documents.  Hancock, the other
Loan Parties and the Credit Facility Secured Parties may agree to increase the
amount of the Credit Facility Debt or otherwise modify the terms of any of the
Credit Facility Debt or the Credit Facility Documents, and the Credit Facility
Secured Parties may grant extensions of the time of payment or performance to
and make compromises, including releases of collateral or guaranties, and
settlements with Hancock and all other Persons, in each case without the consent
of the Trustee, any Holder or Hancock and without affecting the agreements of
the Trustee, any Holder or Hancock contained in this Article XI; provided,
however, that nothing contained in this Section 11.7 shall constitute a waiver
of the right of Hancock itself to agree or consent to a settlement or compromise
of a claim which the Credit Facility Agent or any Credit Facility Secured Party
may have against Hancock.
 
(b)           Modification of the Indenture Documents.  Until the Discharge of
all Credit Facility Debt and notwithstanding anything to the contrary contained
in any Indenture Document, neither the Trustee nor any Holder shall, without the
prior written consent of the Credit Facility Agent, amend or otherwise modify
any of the terms of any of the Notes or any other Indenture Documents if the
effect thereof is to: (i) increase the rate of interest on any of the Notes
(except in connection with the imposition of the default rate of interest in
accordance with the Indenture Documents as in effect on the date hereof), (ii)
change to earlier dates upon which payments of principal or interest on the
Notes are due; or (iii) change or amend any other term of the Indenture
Documents if such change or amendment would result in a Credit Facility Default
or Credit Facility Event of Default under the Credit Facility Loan Agreement or
increase the obligations of any Loan Party or confer additional material rights
on any Holder or any other holder of the Indenture Debt in a manner adverse in
any respect to any of the Credit Facility Secured Parties, except to the extent
such change or amendment causes the terms of the Indenture Documents to be the
same as or less restrictive than the applicable provision under the Credit
Facility Loan Agreement.
 
 
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SECTION 11.8
HANCOCK’S OBLIGATIONS ABSOLUTE.

 
Nothing contained in this Article XI shall impair, as between Hancock, on the
one hand, and the Trustee and the Holders, on the other hand, the obligation of
Hancock to pay to the Trustee and the Holders all amounts payable in respect of
the Indenture Documents as and when the same shall become due and payable in
accordance with the terms thereof, or prevent the Trustee and Holders (except as
expressly otherwise provided in Section 11.2 or Section 11.6) from exercising
all rights, powers and remedies otherwise permitted by this Indenture, and the
other Indenture Documents and by applicable law upon a default in the payment of
the Notes or under any Indenture Document, all, however, subject to the rights
of the Credit Facility Agent and the Credit Facility Secured Parties as set
forth in this Article XI.
 
 
SECTION 11.9
TERMINATION OF SUBORDINATION.

 
This Article XI shall continue in full force and effect, and the obligations and
agreements of the Trustee, the Holders, Hancock and the Loan Parties hereunder
shall continue to be fully operative, until the Discharge of all Credit Facility
Debt which shall be final and not avoidable.  To the extent that Hancock, any
Loan Party or any other guarantor of or provider of collateral for the Credit
Facility Debt makes any payment on the Credit Facility Debt that is subsequently
invalidated, declared to be fraudulent or preferential or set aside or is
required to be repaid to a trustee, receiver or any other party under any
Bankruptcy Law or any other state or federal law, common law or equitable cause
(such payment being hereinafter referred to as a “Voided Payment”), then to the
extent of such Voided Payment, that portion of the Credit Facility Debt that had
been previously satisfied by such Voided Payment shall be revived and continue
in full force and effect as if such Voided Payment had never been made.  In the
event that a Voided Payment is recovered from the Credit Facility Agent or any
Credit Facility Secured Party, an Credit Facility Event of Default shall be
deemed to have existed and to be continuing under the Credit Facility Loan
Agreement from the date of the Credit Facility Agent’s or such Credit Facility
Secured Party’s initial receipt of such Voided Payment until the full amount of
such Voided Payment is restored to the Credit Facility Agent or such Credit
Facility Secured Party.  During any continuance of any such Credit Facility
Event of Default, this Article XI shall be in full force and effect with respect
to the Indenture Debt and the Indenture Documents.  To the extent that the
Trustee or any Holder has received any payments with respect to the Indenture
Debt subsequent to the date of the Credit Facility Agent’s or any Credit
Facility Secured Party’s initial receipt of such Voided Payment and such
payments have not been invalidated, declared to be fraudulent or preferential or
set aside or are required to be repaid to a trustee, receiver, or any other
party under any Bankruptcy Law or any other state or federal law, common law or
equitable cause, the Trustee or such Holder, as applicable, shall be obligated
and such payment so made or received shall be deemed to have been received in
trust for the benefit of the Credit Facility Agent or such Credit Facility
Secured Party, and the Trustee or such Holder, as applicable, shall be obligated
to pay to the Credit Facility Agent for the benefit of the Credit Facility Agent
or (as the case may be) such Credit Facility Secured Party, upon demand, the
full amount so received by the Trustee or such Holder during such period of time
to the extent necessary fully to restore to the Credit Facility Agent or such
Credit Facility Secured Party the amount of such Voided Payment.  Upon the
Discharge of all Credit Facility Debt, which payment of the Credit Facility Debt
shall be final and not avoidable, this Article XI will automatically terminate
without any additional action by any party hereto.
 
 
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SECTION 11.10
THIRD PARTY BENEFICIARY STATUS AND AMENDMENTS AND OTHER MODIFICATIONS TO
INDENTURE DOCUMENTS.

 
(a)           The Trustee and each Holder hereby acknowledges and agrees that
the Credit Facility Agent and each Credit Facility Secured Party is a third
party beneficiary of this Article XI.
 
(b)           The Trustee and each Holder each hereby acknowledges, covenants
and agrees that, notwithstanding any other provisions in this Indenture, the
Notes, the Collateral Documents or any other Indenture Documents, this Article
XI and any references to this Article XI (or any Sections in Article XI herein)
in the Indenture, the Notes, the Collateral Documents or the other Indenture
Documents shall not be amended, waived, supplemented or otherwise modified
without the prior written consent of the Credit Facility Agent for so long as
the Credit Facility is outstanding.
 
ARTICLE XII
 
MISCELLANEOUS
 
 
SECTION 12.1
TRUST INDENTURE ACT CONTROLS.

 
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
 
 
SECTION 12.2
NOTICES.

 
Any notice or communication by Hancock or the Trustee to the others is duly
given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight air
courier guaranteeing next day delivery, to the others’ address:
 
 
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If to Hancock or a Guarantor:
Hancock Fabrics, Inc.
Attention: Chief Financial Officer
One Fashion Way
Baldwyn, MS 38824
Telephone No.  (662) 365-6112
Telecopier No.  (662) 365-6025
With a copy to:
O’Melveny & Myers LLP
Attention: C. Brophy Christensen, Jr., Esq.
Two Embarcadero Center, 28th Floor
San Francisco, CA 94111
Telephone No.  (415) 984-8700
Telecopier No.  (415) 984-8701
   
If to the Trustee:
Deutsche Bank National Trust Company
Attention: Victoria Douyon
222 South Riverside Plaza, 25th Floor
Chicago, IL 60606
Telephone No.  (312) 537-8126
Telecopier No.  (312) 537-1009
With a copy to:
Macaulay Law Ltd.
Attention: Susan J.  Macaulay
310 Park Avenue, Ste.  101
River Forest, IL 60305
Telephone No.  (708) 366-3700
Telecopier No.  (708) 298-0526

 
Hancock or the Trustee, by notice to the others, may designate additional or
different addresses for subsequent notices or communications.
 
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
 
Any notice or communication to a Holder shall be mailed by first class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar.  Any notice or communication shall also be so mailed to any Person
described in TIA Section 313(c), to the extent required by the Trust Indenture
Act.  Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
 
If a notice or communication is mailed in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.
 
If Hancock mails a notice or communication to Holders, it shall mail a copy to
the Trustee and each Agent at the same time.
 
 
SECTION 12.3
COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.

 
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Notes.  Hancock, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
 
 
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SECTION 12.4
CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

 
Upon any request or application by Hancock to the Trustee to take any action
under this Indenture, Hancock, upon request, shall furnish to the Trustee:
 
(a)           an Officers’ Certificate in form reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 12.5 hereof)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
 
(b)           an Opinion of Counsel in form reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 12.5 hereof)
stating that, in the opinion of such counsel, all such conditions precedent and
covenants have been satisfied.
 
 
SECTION 12.5
STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

 
Each certificate (other than the certificates provided pursuant to Section 4.20)
or opinion with respect to compliance with a condition or covenant provided for
in this Indenture shall include:
 
(a)           a statement that the person making such certificate or opinion has
read such covenant or condition;
 
(b)           a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
 
(c)           a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether such covenant or condition has been complied
with; and
 
(d)           a statement as to whether, in the opinion of such person, such
condition or covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on an Officers’
Certificate or certificates of public officials.
 
 
SECTION 12.6
GOVERNING LAW.

 
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
 
 
SECTION 12.7
LEGAL HOLIDAYS.

 
In any case where a payment date shall not be a Business Day, then
(notwithstanding any other provisions of this Indenture or the Notes) payment of
interest or principal (and premium, if any) need not be made on such date but
may be made on the next succeeding Business Day with the same force and effect
as if made on the interest payment date or date established for payment of
defaulted interest pursuant to Section 4.1 or the Maturity Date, and no interest
shall accrue with respect to such payment for the period from and after such
interest payment date or date established for payment of defaulted interest
pursuant to Section 4.1 or Maturity Date, as the case may be, to the next
succeeding Business Day.
 
 
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SECTION 12.8
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.

 
No past, present or future director, officer, employee, incorporator or
stockholder of Hancock, as such, shall have any liability for any obligations of
Hancock under the Notes, this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation.  Each Holder by
accepting a Note waives and releases all such liability.  The waiver and release
are part of the consideration for issuance of the Notes.
 
 
SECTION 12.9
NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

 
This Indenture may not be used to interpret any other indenture, loan or debt
agreement of Hancock or its Subsidiaries or of any other Person.  Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
 

 
SECTION 12.10
SUCCESSORS.

 
All agreements of Hancock in this Indenture and the Notes shall bind its
successors.  All agreements of the Trustee in this Indenture shall bind its
successors.
 

 
SECTION 12.11
SEVERABILITY.

 
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
 

 
SECTION 12.12
COUNTERPART ORIGINALS.

 
The parties may sign any number of copies of this Indenture.  Each signed copy
shall be an original, but all of them together represent the same agreement.
 

 
SECTION 12.13
TABLE OF CONTENTS, HEADINGS, ETC.

 
The Table of Contents, Cross-Reference Table and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part of this Indenture and shall in no way modify or
restrict any of the terms or provisions hereof.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed, as of the
date first written above.
 

 
HANCOCK FABRICS, INC.
         
 
By:
/s/ ROBERT DRISKELL         Name:   Robert W.  Driskell     Title:    Executive
Vice President and       Chief Financial Officer  

 

 
DEUTSCHE BANK NATIONAL TRUST COMPANY,
     
as Trustee
         
 
By:
/s/ VICTORIA DOUYON       Name:   Victoria Douyon     Title:    Vice President  

 
 
By:
/s/ GAIL WILSON         Name:   Gail Wilson     Title:    Vice President  

 
 
 

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EXHIBIT A
 
(Face of Note)
Floating Rate Series A Secured Notes due 2017
 
CUSIP:
 
No. 
$

 
 
HANCOCK FABRICS, INC.
 
promises to pay to ______________  or registered assigns, the principal sum of
Dollars ($____________) on November 20, 2017.
 
Interest Payment Dates: February 20, May 20, August 20, and November 20
 
Record Dates: February 5, May 5, August 5, and November 5
 

   
This is one of the Notes referred to
     
in the within-mentioned Indenture:
         
HANCOCK FABRICS, INC.
  DEUTSCHE BANK NATIONAL TRUST         COMPANY,   By:     as Trustee   Print
Name: Robert W. Driskell        
Title:
Executive Vice President and Chief   By:       Financial Officer  
Name:
         
Title:
    By:          
Print Name: Larry D. Fair
  By:     Title: Vice President of Finance   Name:           Title:            
                    Authorized Signatory         Dated:                

 
 
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(Back of Note)
 
Floating Rate Series A Secured Notes due 2017
 
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN ARTICLE XI OF THE INDENTURE BETWEEN
THE COMPANY AND THE TRUSTEE DATED NOVEMBER 20, 2012.  EACH HOLDER OF THIS
INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE
PROVISIONS OF ARTICLE XI APPLICABLE TO A HOLDER.
 
[INSERT GLOBAL NOTE LEGEND AS APPLICABLE]
 
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
 
1.           INTEREST.  Hancock Fabrics, Inc., a Delaware corporation (the
“Company”), promises to pay interest, in cash, on the principal amount of this
Note at a variable rate of interest, adjusted quarterly, equal to LIBOR plus 12%
per annum until maturity and shall pay the Additional Amounts, if any, as
follows:
 
(a)           Interest and Additional Amounts, if any, shall be paid quarterly
on February 20, May 20, August 20, and November 20 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each, an
“Interest Payment Date”), to Persons who are registered Holders of Notes at the
close of business on the date that is 15 days immediately prior to an Interest
Payment Date (the “Record Date”), even if such Notes are cancelled after such
record date and on or before an Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest.  Quarterly
interest accrued and unpaid under this paragraph (a) will, to the extent lawful,
accrue interest at the rate provided in this Note.  Interest on the Notes shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from November 20, 2012, through the next succeeding
Interest Payment Date (the “Interest Period”).  The first Interest Payment Date
shall be February 20, 2013 and the last Interest Payment Date shall be November
20, 2017.
 
(b)           “LIBOR” shall mean, for each Interest Period, a rate of interest
determined by Trustee equal to the offered rate for deposits in United States
dollars for the applicable Interest Period that appears on Reuters Screen
LIBOR01 Page as of 11:00 a.m.  (London time), on the second full Business Day
next preceding the first day of each Interest Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be used).  If
such interest rates shall cease to be available from Telerate News Service (or
its successor satisfactory to the Trustee), LIBOR shall be determined from such
financial reporting service or other information as shall be reasonably
determined by the Trustee.
 
(c)           The Company shall pay interest entirely in money of the United
States that at the time of payment is legal tender for payment of public and
private debts for all amounts due.
 
 
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(d) The Company shall pay interest (including post-petition interest in any
Proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
Proceeding under any Bankruptcy Law) on overdue installments of interest and
Additional Amounts, if any (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful.  Interest shall be
computed on the basis of a 360-day year of twelve 30-day months.
 
2.           METHOD OF PAYMENT.  The Company shall pay principal, premium, if
any, interest and Additional Amounts, if any, on the Maturity Date and Interest
Payment Dates, as applicable, to the Persons who are registered Holders of
Notes.  The Notes shall be payable by wire transfer of immediately available
funds to the registered Holder of the Global Note and, with respect to
certificated Notes, by wire transfer of immediately available funds in
accordance with instructions provided by the registered Holders of certificated
Notes or, if no such instructions are specified, by mailing a check to each such
Holder’s registered address.
 
3.           PAYING AGENT AND REGISTRAR.  Initially, Deutsche Bank National
Trust Company, the Trustee under the Indenture, shall act as Paying Agent and
Registrar.  The Company may change any Paying Agent or Registrar without notice
to any Holder.  The Company or any of its Subsidiaries may act in any such
capacity.
 
4.           INDENTURE.  The Company issued the Notes under an Indenture dated
as of November 20, 2012 (“Indenture”) between the Company and the Trustee.  The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Sections 77aaa-77bbbb).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling.
 
5.           OPTIONAL REDEMPTION.  The Notes are subject to redemption for cash
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days’ notice to each Holder of Notes to be redeemed at a redemption
price equal to (i) 100.000% of the principal amount thereof, plus (ii) any
accrued and unpaid interest, plus (iii) any Additional Amounts thereon to the
redemption date.
 
6.           REPURCHASE AT OPTION OF HOLDER.  If there is a Change of Control,
the Company shall, subject to Article XI of the Indenture, be required to make
an offer (a “Change of Control Offer”) to repurchase all or any part (equal to
$1,000 or an integral multiple thereof if in part) of each Holder’s Notes at a
purchase price equal to 101.000% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon and Additional Amounts, if any, to the date
of purchase (the “Change of Control Payment”).  Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
 
7.           NOTICE OF REDEMPTION.  Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address.  Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed.  On and after the redemption date interest ceases
to accrue on Notes, or portions thereof called for redemption.
 
 
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8.            SECURITY.  To secure the due and punctual payment of the
principal, interest and Additional Amounts, if any, on the Notes and all other
amounts payable by the Company under the Indenture and the Notes when and as the
same shall be due and payable, whether at maturity, by acceleration or
otherwise, according to the terms of the Notes and the Indenture, the Company
has granted a security interest in the Collateral to the Trustee for the benefit
of the Holders of Notes pursuant to the Indenture.  The Collateral is subject to
release from the Lien of the Indenture to the extent provided therein.
 
9.            DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000.  The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture.  The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture.  The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part.  Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding interest payment date.
 
10.           PERSONS DEEMED OWNERS.  The registered Holder of a Note may be
treated as its owner for all purposes.
 
11.           AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes voting as a single class, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class.  Without the consent of any Holder of a Note, the Indenture
or the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for certificated Notes in addition to or in place of
uncertificated Notes, to provide for the assumption of the Company’s obligations
to Holders of the Notes in case of a merger or consolidation, or sale of
substantially all of the Company’s assets, to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
 
 
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12.           DEFAULTS AND REMEDIES.  Events of Default are identified in the
Indenture, and include, in summary form (the following summary being for
illustrative purposes only and not creating any additional Events of Default or
expanding any Events of Default identified in the Indenture): (a) default in
payment when due of the principal of or premium, if any, on the Notes; (b)
default for 30 days in the payment when due of interest or Additional Amounts,
if any, on the Notes; (c) failure by the Company for 60 days after notice to
comply with any of its other agreements in the Indenture or the Notes; (d) the
nonpayment within any applicable grace period after the final maturity, or the
acceleration by the Holders because of a default, of Indebtedness of the Company
or any Subsidiary, and the total amount of such Indebtedness unpaid or
accelerated exceeds $5,750,000; (e) failure by the Company or any of its
Subsidiaries to pay final judgments aggregating in excess of $5,750,000, which
judgments are not paid, discharged or stayed for a period of 60 consecutive
days; and (f) certain events of bankruptcy or insolvency with respect to the
Company.  If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 50.1% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable, subject to certain
conditions.  Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
shall become due and payable without further action or notice.  Holders may not
enforce the Indenture or the Notes except as provided in the Indenture.  Subject
to certain limitations, Holders of a majority in aggregate principal amount of
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power.  The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.  The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest and premium, if any, on, or the
principal of, the Notes.  The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company is
required upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default.
 
13.           DEFEASANCE; DISCHARGE.  The Indenture and the obligations under
the Notes may be defeased or discharged (subject to certain exceptions) upon
satisfaction of the conditions specified in Article VIII of the Indenture.
 
14.           TRUSTEE DEALINGS WITH COMPANY.  The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
 
15.           NO RECOURSE AGAINST OTHERS.  No recourse for the payment of the
principal of, premium, if any, or interest or Additional Amounts, if any, on any
of the Notes, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company contained in this Indenture or in any of the Notes, or because of the
creation of any Indebtedness represented thereby, shall be had against any
incorporator or past, present or future director, officer, employee, controlling
Person or stockholder of the Company.  Each Holder by accepting a Note waives
and releases all such liability.  The waiver and release are part of the
consideration for the issuance of the Notes.
 
 
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16.           AUTHENTICATION.  This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
 
17.           ABBREVIATIONS.  Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
 
18.           CUSIP NUMBERS.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders.  No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
 
The Company shall furnish to any Holder upon written request and without charge
a copy of the Indenture.  Requests may be made to:
 
Hancock Fabrics, Inc.
One Fashion Way
Baldwyn, MS 38824
Attention: President
ASSIGNMENT FORM
 
 
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To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
 
 

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(Insert assignee’s social security or tax I.D.  no.)
 
 

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(Print or type assignee’s name, address and zip code)
 
and irrevocably
appoint                                                                           
to transfer this Note on the books of the Company.  The agent may substitute
another to act for him.
 
 

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Date:                                                               
 

 
Your Signature:
         
(Sign exactly as your name appears on the face of this Note)
     
Signature Guarantee:
   

 
 
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OPTION OF HOLDER TO ELECT PURCHASE
 
If you want to elect to have this Note purchased by the Company pursuant to
Section 3.8 of the Indenture, check the box below:
 
[    ]
 
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 3.8 of the Indenture, state the amount you elect to have
purchased: $                               
 
Date:                                                      
 

 
Your Signature:
         
(Sign exactly as your name appears on the face of this Note)
     
Signature Guarantee:
          Tax Identification No.:   

 
 
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                                                                                SCHEDULE
OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
 
The following exchanges of a part of this Global Note for a Series A Definitive
Note, or exchanges of a part of a Series A Definitive Note for an interest in
this Global Note, have been made:
 
Date of Exchange
 
Amount of decrease in Principal Amount of this Global Note
 
Amount of increase in Principal Amount of this Global Note
 
Principal Amount of this Global Note following such decrease (or increase)
 
Signature of authorized officer of Trustee or Custodian
                 

 
 
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EXHIBIT B
 
FORM OF SUPPLEMENTAL INDENTURE
AND GUARANTEE
 
SUPPLEMENTAL INDENTURE AND GUARANTEE (this “Supplemental Indenture”), dated as
of November 20, 2012 , among                                (the “Guarantor”), a
subsidiary of Hancock Fabrics, Inc., a Delaware corporation (the “Company”), and
Deutsche Bank National Trust Company, as trustee under the indenture referred to
below (the “Trustee”).
 
WITNESSETH:
 
WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture (the “Indenture”), dated as of November 20, 2012 providing for the
issuance of an aggregate principal amount of Eight Million Two Hundred Four
Thousand Dollars ($8,204,000) of Floating Rate Series A Secured Notes due 2017
(the “Notes”);
 
WHEREAS, the Indenture provides that under certain circumstances the Guarantor
shall execute and deliver to the Trustee a supplemental indenture pursuant to
which the Guarantor shall unconditionally guarantee all of the Company’s
Obligations under the Notes and the Indenture on the terms and conditions set
forth herein; and
 
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to
execute and deliver this Supplemental Indenture.
 
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Notes as follows:
 
(a)           Capitalized Terms.  Capitalized Terms used herein without
definition shall have the meanings assigned to them in the Indenture.
 
(b)           Agreement to Guarantee.  The Guarantor hereby agrees as follows:
 
(i)           Along with all Guarantors, to jointly and severally Guarantee to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes or the Obligations of the Company
hereunder or thereunder, that:
 
(A)           the principal of, premium, if any, and interest and Additional
Amounts, if any, on the Notes shall be promptly paid in full when due, whether
at maturity, by acceleration, redemption or otherwise, and interest on the
overdue principal of to the extent and interest and Additional Amounts, if any,
on the Notes to the extent lawful, and all other Obligations of the Company to
the Holders or the Trustee hereunder or under the Indenture shall be promptly
paid in full or performed, all in accordance with the terms hereof and under the
Indenture; and
 
 
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(B)           in case of any extension of time of payment or renewal of any
Notes or any of such other Obligations, that same shall be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.  Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the same
immediately.
 
(ii)            The obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor.
 
(iii)           The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever.
 
(iv)          This Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture.
 
(v)            If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any Custodian, Trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
 
(vi)           The Guarantor shall not be entitled to any right of subrogation
in relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.
 
(vii)          As between the Guarantors, on the one hand, the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article VI of the Indenture for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article VI of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Guarantee.
 
(viii) The Guarantors shall have the right to seek contribution from non-paying
Guarantors so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
 
(ix) Notwithstanding the foregoing, in the event that this Guarantee would
constitute or result in a violation of any applicable fraudulent conveyance or
similar law of any relevant jurisdiction, the liability of the Guarantor under
this Supplemental Indenture and its Guarantee of the Notes shall be reduced to
the maximum amount permissible under such fraudulent conveyance or similar law.
 
 
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(c)           Execution and Delivery.  Each Guarantor agrees that the Guarantees
shall remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of such Guarantee of the Notes.
 
(d)           Guarantor May Consolidate, Etc.  on Certain Terms.
 
(i)           Subject to Section (e) hereof, the Guarantor may not consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not affiliated with
such Guarantor unless:
 
(A)           subject to Section (e) hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
Supplemental Indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Guarantee of the Notes on the
terms set forth herein or therein; and
 
(B)           immediately after giving effect to such transaction, no Default or
Event of Default exists.
 
(ii)           In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by Supplemental Indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of the Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor.  Such successor
Person thereupon may cause to be signed any or all of the Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee.  All the
Guarantees of the Notes so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Guarantees of the Notes theretofore and
thereafter issued in accordance with the terms of the Indenture as though all of
such Guarantees of the Notes had been issued at the date of the execution
hereof.
 
(iii)           Except as set forth in Articles IV and V of the Indenture, and
notwithstanding clauses (A) and (B) of Section (d)(i) hereof, nothing contained
in the Indenture or in any of the Notes shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor, or shall prevent any sale or conveyance of the property of a
Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or another Subsidiary Guarantor.
 
(e)           Releases.
 
(i)             In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all to the capital stock of any Guarantor, then such
Guarantor (in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) shall
be released and relieved of any obligations under the Supplemental Indenture and
its Guarantee of the Notes; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture, including without limitation Section 4.10 of the Indenture.  Upon
delivery by the Company to the Trustee of an Officers’ Certificate and an
Opinion of Counsel complying with Sections 11.4 and 11.5 of the Indenture to the
effect that such sale or other disposition was made by the Company in accordance
with the provisions of the Indenture, including without limitation Section 4.10
of the Indenture, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its obligations under its
Guarantee of the Notes.
 
 
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(ii)           Any Guarantor not released from its obligations under its
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under the Indenture
as provided in the Indenture.
 
(f)           No Recourse Against Others.  No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guarantor, as such,
shall have any liability for any obligations of the Company or any Guarantor
under the Notes, any Guarantees of the Notes, the Indenture or this Supplemental
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation.  Each Holder of Notes by accepting a Note waives
and releases all such liability.  The waiver and release are part of the
consideration for issuance of the Notes.  Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
 
(g)           New York Law to Govern.  THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
 
(h)           Counterparts.  The parties may sign any number of copies of this
Supplemental Indenture.  Each signed copy shall be an original, but all of them
together represent the same agreement.
 
(i)           Effect of Headings.  The Section headings herein are for
convenience only and shall not affect the construction hereof.
 
(j)           The Trustee.  The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guarantor and the Company.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.
 
Date: _________________
 

  [Guarantor]            
By:
      Name:       Title:               [                   ]     as Trustee    
        By:       Name:       Title:    

 
 
 
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